MacLean-Fogg Co. v. United States

Slip Op. 12 - 146

UNITED STATES COURT OF INTERNATIONAL TRADE

MACLEAN-FOGG CO., ET AL.,

Plaintiffs,

v.

UNITED STATES, Before: Donald C. Pogue,
Chief Judge
Defendant,
Consol.1 Court No. 11-00209
and

ALUMINUM EXTRUSIONS FAIR TRADE
COMMITTEE,

Defendant-Intervenors.

OPINION

[Commerce’s final results on redetermination are AFFIRMED.]

Dated: November 30, 2012

Thomas M. Keating, Lisa M. Hammond, and Kazumune V. Kano,
Hodes Keating & Pilon, of Chicago, IL, for Plaintiffs MacLean-
Fogg Co. and Fiskars Brand, Inc.

Mark B. Lehnardt, Lehnardt & Lehnardt LLC, of Liberty, MO,
for Plaintiff-Intervenors Eagle Metal Distributors, Inc. and
Ningbo Yili Import & Expert Co., Ltd.

Craig A. Lewis, T. Clark Weymouth, and Brian S. Janovitz,
Hogan Lovells US LLP, of Washington, DC, for Plaintiff-
Intervenor Evergreen Solar, Inc.

Tara K. Hogan, Trial Attorney, Commercial Litigation
Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for Defendant. With her on the briefs were

1
This action is consolidated with Court Nos. 11-00210, 11-
00220, and 11-00221.
Consol. Court No. 11-00209 Page 2

Stuart F. Delery, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Reginald T. Blades, Jr., Assistant
Director. Of counsel on the briefs was Joanna Theiss, Attorney,
Office of the Chief Counsel for the Import Trade Administration,
U.S. Department of Commerce, of Washington, DC.

Stephen A. Jones, Christopher T. Cloutier, Daniel L.
Schneiderman, Gilbert B. Kaplan, Joshua M. Snead, and Patrick J.
Togni, King & Spalding LLP, of Washington, DC, for Defendant-
Intervenor Aluminum Extrusions Fair Trade Committee.

Pogue, Chief Judge: This case returns to court

following remand in MacLean-Fogg Co. v. United States, 36 CIT

__, 853 F. Supp. 2d 1336 (2012) (“MacLean-Fogg III”). MacLean-

Fogg III found that the Department of Commerce’s (“the

Department” or “Commerce”) application, to the Plaintiffs, of

the all-others 374.15% countervailing duty (“CVD”) rate required

reconsideration or further explanation because Commerce failed

to properly explain why the assumption that Plaintiffs, like the

mandatory respondents in this investigation,3 used 100% of

3
When, as in this case, an investigation involves a large
number of potential respondents, the governing statute allows
Commerce to select a smaller number of respondents to act as
mandatory respondents. 19 U.S.C. § 1677f-1(e)(2). The
remaining respondents have the option of asking for voluntary
respondent status and submitting information for examination.
19 U.S.C. § 1677m(a); 19 C.F.R. § 351.204(d). Companies not
selected as mandatory or voluntary respondents receive a rate
that is calculated for “all-other” companies. 19 U.S.C.
§ 1671d(c)(1)(B)(i)(I). To calculate this all-others rate,
Commerce is directed by statute to use the weighted average rate
of all individually investigated companies, or, in the event
that these rates are calculated using adverse facts available
(“AFA”), any reasonable method, which may include use of rates
calculated using AFA. 19 U.S.C. § 1671d(c)(5)(A)(i)—(ii)
Consol. Court No. 11-00209 Page 3

subsidies available throughout the People’s Republic of China

(“PRC” or “China”) was remedial and not punitive. The court

ordered Commerce to either explain how its assumption was

remedial and not punitive, or, alternatively, recalculate the

rate applicable to the Plaintiffs’ merchandise.

On remand, Commerce recalculated the all-others rate,

finding appropriate a rate equal to the mandatory respondents’

preliminary rate: 137.65%. Final Results of Redetermination

Pursuant to Court Remand, ECF No. 80 at 1 (Dep’t Commerce Sept.

13, 2012) (“Remand Results”) (citing Aluminum Extrusions from

the People’s Republic of China, 75 Fed. Reg. 54,302 (Dep’t

Commerce Sep. 7, 2010) (preliminary affirmative countervailing

duty determination)). Explaining that this rate is remedial and

not punitive, Commerce stated that the preliminary rate is not

based on all the subsidy programs that were identified in the

investigation and ultimately used in the final rate calculation

for the mandatory respondents. Rather, Commerce excluded

programs that were identified as used solely by the voluntary

respondents and assumed a lower subsidy rate for those programs

(“Section 1671d”); MacLean-Fogg Co. v. United States, 36 CIT __,
836 F. Supp. 2d 1367, 1374 n.9 (2012) (“MacLean-Fogg I”). In
addition, Commerce promulgated -- and this court has upheld --
19 C.F.R. § 351.204(d)(3), which states that for the purposes of
calculating the all-others rate, voluntary respondents’ rates
will not be considered. MacLean-Fogg I, 836 F. Supp. 2d at 1374
(noting Commerce’s concerns that voluntary respondents are a
self-selecting group more likely to have a lower CVD rate, the
inclusion of which could skew the all-others rate).
Consol. Court No. 11-00209 Page 4

than the subsidy rate used in the final rate calculation.

Remand Results at 22. Plaintiffs seek review of the reduced

rate. The court affirms Commerce’s rate because Commerce

adequately explained why the 137.65% rate is not punitive but is

a reasonable calculation for the all-others companies.

We have jurisdiction pursuant to Section 516A(2)(B)(i)

of the Tariff Act of 1930, as amended, 19 U.S.C.

§ 1516a(2)(B)(i) (2006) and 28 U.S.C. § 1581(c).4

BACKGROUND5

Commerce designated the three largest exporters of

extruded aluminum from China as mandatory respondents in this

investigation. MacLean-Fogg I, 836 F. Supp. 2d at 1370. When

the mandatory respondents failed to cooperate, Commerce resorted

to adverse facts available to calculate their CVD rate, with a

resulting rate of 374.15%. Id. at 1370-71; 19 U.S.C. § 1677f-

1(e)(2). Two companies asked for and received voluntary

respondent status. After its investigation of these

respondents, Commerce calculated final voluntary respondent CVD

4
All further citations to the Tariff Act of 1930, as
amended, are to Title 19 of the U.S. Code, 2006 edition.

The court has, on two previous occasions, remanded this
5

case to Commerce to explain how the calculation of the all-
others rate for non-mandatory respondents is reasonable.
Familiarity with the court’s prior decisions is presumed.
Consol. Court No. 11-00209 Page 5

rates which ranged from 8%-10%. Finally, pursuant to the

controlling statute and regulations, Commerce averaged the rates

calculated for the mandatory respondents and arrived at a rate

of 374.15% for the remaining companies, otherwise known as the

all-others companies. MacLean-Fogg I, 836 F. Supp. 2d at 1371;

see 19 C.F.R. § 351.204(d)(3).

Plaintiffs sought review, claiming that the statutory

language in Section 1671d unambiguously called for the all-

others rate to be calculated using only individually

investigated respondents, which in this case, Plaintiffs

claimed, were the voluntary respondents because those were the

only respondents who cooperated with Commerce’s investigation.

MacLean-Fogg I held that Section 1671d was ambiguous with regard

to the permitted data source and that Commerce was permitted to

use the AFA rate in calculating the all-others rate, provided it

did so in a reasonable manner. MacLean-Fogg I, 836 F. Supp. 2d

at 1373—74. Nonetheless, the court remanded the all-others rate

to Commerce for reconsideration because Commerce had failed to

articulate a logical connection between the AFA mandatory

respondent rate and the all-others companies. Id. at 1376.

A subsequent opinion concluded that Commerce’s

preliminary all-others rate in the preliminary determination was

also subject to review under the same reasonableness standard

because it had legal effect on the entries made during the
Consol. Court No. 11-00209 Page 6

interim time period between the issuance of the preliminary and

final CVD rates, both as a cash deposit rate and, if an annual

review was sought, as a cap on the final rate for those

particular entries. MacLean-Fogg Co. v. United States, 36 CIT

__, 853 F. Supp. 2d 1253, 1256 (2012) (“MacLean-Fogg II”). Thus

MacLean-Fogg II required consideration of the lawfulness of the

preliminary rate once Commerce provided a reasonable final CVD

rate. Id.

Commerce then provided its first set of remand

results. See MacLean-Fogg III, 853 F. Supp. 2d at 1338. In

these results, Commerce did not recalculate the all-others rate,

but rather, provided data showing that the rate calculated for

the mandatory respondents is logically connected to the all-

others companies because the mandatory respondents comprise a

significant portion of the Chinese extruded aluminum producers

and exporters and thus are representative of the Chinese

extruded aluminum industry as a whole. In contrast, the all-

others companies and voluntary respondents make up a fraction of

the market. Therefore, and the court agreed, it was reasonable

to use the mandatory respondents’ rate in Commerce’s calculation

because the mandatory respondents were more representative of

business practices in the Chinese extruded aluminum market. Id.

at 1341. MacLean-Fogg III concluded that Commerce had provided

sufficient reasoning for excluding voluntary respondents’ rates
Consol. Court No. 11-00209 Page 7

from the all-others rate calculation. Nonetheless, MacLean-Fogg

III also concluded that Commerce failed to explain how the all-

others rate was remedial and not punitive when it assumed use of

all subsidy programs across the PRC while at the same time

stating that the all-others companies were significantly smaller

than the mandatory respondents. Id. at 1341—43.

Accordingly, the court ordered Commerce to reconsider the all-

others rate or further explain its reasoning. Id.

In response to the court’s second remand order,

Commerce submitted the remand results currently under review.

In these remand results, Commerce has chosen to designate the

all-others rate as equal to the preliminary rate it calculated

for the mandatory respondents: 137.65%. Commerce reasons that

because this rate does not utilize the full measure of subsidy

programs used to calculate the final 374.15% rate, and excludes

all programs that were used only by the voluntary respondents,

it is in keeping with the court’s order to calculate a rate that

is remedial and not punitive. Additionally, by reverting to the

preliminary determination rate, Commerce assumed program-

specific subsidy rates of 8.54%, which are approximately 2%

lower than the final rate calculated for the mandatory

respondents. Defendant’s Response to Comments Regarding the

Second Remand Redetermination, ECF No. 85 at 27-28 (“Defendant’s

Reply”).
Consol. Court No. 11-00209 Page 8

Plaintiffs argue that the all-others rate is still

punitive because it includes more subsidy programs than the all-

others companies could utilize, and is based on high usage rates

of the subsidy programs, rates that are not in keeping with

historical trends and voluntarily submitted information. Joint

Plaintiffs’ Comments on Commerce’s Second Remand

Redetermination, ECF No. 83 at 2-4 (“Plaintiffs’ Comments”).

Furthermore, Plaintiffs assert that the reasonableness of the

preliminary rate is still under consideration by the court and

request an opportunity to further brief their claims once the

court has ruled on the Second Remand Determination. Id. at 2

n.2. Plaintiffs argue that the all-others rate should be based

on the rates assessed on voluntary respondents and historical

data identified from similar or identical programs. Id. at 36-

38.

STANDARD OF REVIEW

When reviewing Commerce’s determinations in a

countervailing duty investigation, the court determines whether

they are “unsupported by substantial evidence on the record, or

otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i). Substantial evidence is evidence which,

considering the record as a whole, “a reasonable mind might
Consol. Court No. 11-00209 Page 9

accept as adequate to support a conclusion.” Universal Camera

Corp. v. NLRB, 340 U.S. 474, 477, 491 (1951) (citing Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). The conclusion

Commerce reaches need not be the best or only possible

conclusion, merely a reasonable one. See Nat’l Cable &

Telecomms. Assn. v. Brand X Internet Servs., 545 U.S. 967, 980

(2005).

DISCUSSION

As an initial matter, Plaintiffs assert that Commerce

must take into consideration the “limited geographic footprint”

of the all-others companies when assuming use of subsidy

programs.6 Plaintiffs’ Comments at 13. Of the subsidy programs

that Commerce factored into its CVD rate calculations, some were

available only to producers and exporters located in specific

geographic areas.7 See id. at 14—15. Plaintiffs assert that

because the record shows none of the all-others companies had a

6
Plaintiffs also raise an argument that has been heard and
settled, namely that the all-others rate is unreasonably based
on AFA and is not permitted by statute. But the statute
expressly permits the use of AFA rates in the calculation of the
all-others rate. See MacLean-Fogg I, 836 F. Supp. 2d at 1373—74.
7
Plaintiffs point out that ten location-specific programs
were available only in certain regions and provinces. Relying
on the addresses provided by Petitioners before the
investigation began, Plaintiffs claim that Commerce unreasonably
included subsidy programs from two cities where the all-others
companies do not have a presence. Plaintiffs’ Comments at 15.
Consol. Court No. 11-00209 Page 10

presence in two cities, Liaoyang and Wenzhou, Commerce

unreasonably included the subsidy programs from the two

localities in its calculations. Furthermore, Plaintiffs

contend, when Commerce included every location-specific subsidy

program in its calculations, Commerce unreasonably assumed that

each all-others company was somehow present in and able to avail

itself of subsidy programs across the entire PRC. Id. at 15.

Commerce notes in response that the rate used here is

based on an assumed use of 29 subsidy programs, which stands in

contrast to the 54 programs identified and used in the final

rate calculation for the mandatory respondents. Defendant’s

Reply at 8—9. Furthermore, the 137.65% rate does not include

the location-specific subsidy programs that were clearly

identified on the record as being used only by the voluntary

respondents. Id. Finally, Commerce explains that the data

Plaintiffs rely on to demonstrate that none of the all-others

companies are located in Liaoyang and Wenzhou is

unsubstantiated, and that it is not reasonable to extrapolate,

without investigation, that the addresses on file are the

locations of manufacturing facilities, or that there is no

cross-ownership or affiliation between the all-others companies.

Remand Results at 24—25. In sum, Commerce’s position is that it

is charged with fine-tuning an all-others rate based on

incomplete record evidence. Defendant’s Reply at 10—11.
Consol. Court No. 11-00209 Page 11

The court agrees with Commerce. The assumptions

guiding Commerce’s decision to use the preliminary rate are

reasonable given the limitations of the administrative record.

Plaintiffs’ reliance on the addresses provided in the Petition

is unavailing because Commerce raises the reasonable concern

that these addresses do not accurately convey locations of

manufacturing facilities nor does they account for potential

cross-ownership.

While Plaintiffs assert that no record evidence exists

to support Commerce’s claim that some of the all-others

companies may be cross-owned, there is similarly no record

evidence to establish that they are not cross-owned. Nor is

there evidence to support Plaintiffs’ assertions that the

addresses provided in the Petition are the addresses for

manufacturing facilities. Without gathering additional data –

which could have been submitted or obtained had the Plaintiffs

asked for voluntary respondent status – Commerce’s choice is a

reasonable one given the uncertainty surrounding the addresses

on record. When Commerce reduced the number of subsidy programs

used for its CVD rate calculation for the all-others companies,

it addressed the issue raised by MacLean-Fogg III that the all-

others rate was unreasonably assuming 100% use of all subsidy

programs available in the PRC.
Consol. Court No. 11-00209 Page 12

Plaintiff’s efforts to demonstrate that the current

rate is not a perfect fit and to provide alternative rates are

not without weight, but Commerce’s obligation is only to provide

a reasonable rate, not a perfect one. See Nat’l Cable &

Telecomms., 545 U.S. at 980.

Next, Plaintiffs contend that Commerce failed to

account for historic trends which show non-use of most alleged

subsidy programs and attack the program-specific subsidy rates

that go into calculating the final all-others rate, asserting

that these rates are aberrant and unrepresentative. Plaintiffs

propose several different subsidy rates, based on historic use

of subsidy programs and weighted averages. While these rates

could possibly be reasonable, they are not the only reasonable

ones. All that Commerce is required to provide is a reasonable

rate, not necessarily the one that this court or another party

feels is a better fit. See id.

Here Commerce was faced at the outset with “the

difficult task of selecting an all-others rate with limited

information before it.” MacLean-Fogg I, 836 F. Supp. 2d at

1376. Plaintiffs had the opportunity to ask for voluntary

respondent status and failed to do so. Plaintiffs’ effort to

detail possible rates based on historic trends and geographic

location is the type of effort and cooperation that the court

would hope parties would provide when they are individually
Consol. Court No. 11-00209 Page 13

investigated, whether as mandatory or voluntary respondents.

Furthermore, the court notes that Plaintiffs have the

opportunity to ask for voluntary status in an annual review of

their CVD rate. 19 C.F.R. § 351.221.

Finally, MacLean-Fogg II also concluded that the

lawfulness of the preliminary rate, which was based on the same

methodology that was remanded in MacLean-Fogg I, would be

reviewed following determination of a final rate. However, in

the interim, Commerce provided additional explanation, in its

subsequent remand results, showing that the preliminary

methodology was reasonable because the mandatory respondents in

this investigation comprise the vast majority of extruded

aluminum producers and exporters in China, whereas the all-

others companies represent a small fraction of the industry.

See MacLean-Fogg III, 853 F. Supp. 2d at 1339. Therefore, and

for the same reasons provided for the final rate in MacLean-Fogg

III, the methodology used to calculate the preliminary rate for

the mandatory respondents, and ultimately to calculate the all-

others rate as it has now been revised, is sustained.
Consol. Court No. 11-00209 Page 14

CONCLUSION

For the reasons stated above, Commerce’s final results

upon redetermination are AFFIRMED. Judgment will be entered

accordingly.

_____/s/ Donald C. Pogue_____
Donald C. Pogue, Chief Judge

Dated: November 30, 2012
New York, NY