Court Opinion

ID: 2713788
Source: CourtListenerOpinion
Date Created: 2014-08-05 21:00:39.322663+00
Date Added: 2024-06-11T12:23:27.563016
License: Public Domain

Slip Op. 13 - 83

           UNITED STATES COURT OF INTERNATIONAL TRADE

 ZHAOQING NEW ZHONGYA ALUMINUM
 CO., LTD. and ZHONGYA SHAPED
 ALUMINUM (HK) HOLDING LTD.,

           Plaintiffs,

                  and

 EVERGREEN SOLAR, INC.,                PUBLIC VERSION

           Plaintiff-Intervenor,       Before: Donald C. Pogue,
                                               Chief Judge

                  v.                   Court No. 11-00181

 UNITED STATES,

           Defendant,

                  and

 ALUMINUM EXTRUSIONS FAIR TRADE
 COMMITTEE,

           Defendant-Intervenor.

                             OPINION

[Commerce’s final determination is AFFIRMED IN PART and REMANDED
IN PART]

                                              Dated: June 27, 2013

          Peter J. Koenig, Squire Sanders LLP, of Washington,
DC, for Plaintiffs Zhaoqing New Zhongya Aluminum Co., Ltd, and
Zhongya Shaped Aluminum (HK).
Court No. 11-00181                                       Page 2

          Craig A. Lewis and Theodore C. Weymouth, Hogan Lovells
LLP, of Washington, DC, for the 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
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.

           Alan H. Price, Derick G. Holt, Laura El-Sabaawi,
Maureen E. Thorson, Robert E. DeFrancesco, III, Wiley Rein LLP,
of Washington, DC and Stephen A. Jones, Gilbert B. Kaplan, and
Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC,
for Defendant-Intervenor, Aluminum Extrusions Fair Trade
Committee.

          Pogue, Chief Judge:   In this action, Plaintiffs,

producers and importers of extruded aluminum seek review of two

aspects of Commerce’s calculations of countervailing duties on

certain aluminum extrusions from the People’s Republic of China

(“PRC” or “China”).   See Aluminum Extrusions from the People’s

Republic of China, 76 Fed. Reg. 18,521 (Dep’t Commerce Apr. 4,

2011) (final affirmative CVD determination) (“Final

Determination”) and accompanying Issues and Decision Memorandum

(“I&D Memo”).   Plaintiffs first challenge Commerce’s inclusion

of import duties in its calculation of a world market price for

use as the benchmark for determining the benefit received from

government-supplied primary aluminum.   Plaintiffs also challenge

Commerce’s finding that a plot of land acquired by New Zhongya
Court No. 11-00181                                           Page 3

(hereinafter “Zhongya”) was, at the time of acquisition,

comparable to a fully developed Thai industrial park.    For the

reasons stated below, the court finds that Commerce’s inclusion

of import duties was in accordance with law, but that Commerce’s

finding that the land leased by Zhongya in 2006 was, at the time

the land use rights were acquired, comparable to a fully

developed industrial park was not supported by a reasonable

reading of the evidence of record.    Therefore, Commerce’s Final

Determination is affirmed in part and remanded in part.

             The court has jurisdiction pursuant to 28 U.S.C.

§ 1581(c).

                              BACKGROUND

    In its 2010 investigation of certain extruded aluminum

products from the PRC, Commerce determined that countervailing

duties (“CVD”s) were appropriate to offset subsidies provided to

Chinese producers of extruded aluminum.    See Aluminum Extrusions

from the People’s Republic of China, 76 Fed. Reg. 30,653 (Dep’t

Commerce May 26, 2011) (CVD order).    Specifically, during the

investigation, Commerce found that the respondents received

financial contributions in the form of primary aluminum inputs

supplied by companies that were government authorities.      I&D

Memo cmt. 21 at 96.    In deciding whether these financial

contributions conferred a benefit, Commerce selected an
Court No. 11-00181                                           Page 4

appropriate benchmark against which to measure the adequacy of

the price paid for government-supplied primary aluminum.      Id.

When selecting the appropriate benchmark, Commerce found that

actual transaction prices within the PRC were “significantly

distorted” due to a high percentage of state owned enterprises

in the market, and chose to use the world market price as the

appropriate benchmark.    Id.   In calculating the world market

prices, and in accordance with its regulations, Commerce

included applicable delivery charges and import duties.       19

C.F.R. § 351.511(2)(iv).    Plaintiffs challenge this calculation,

arguing that the inclusion of import duties was improper because

Plaintiffs paid no duties on their imports of primary aluminum

from Hong Kong.

             Commerce also investigated allegations that China

provided land-use rights for less than adequate renumeration to

aluminum extrusion producers and concluded that provision of

such land-use rights constituted a countervailable subsidy.        I&D

Memo cmt. 24.    As with the supplies of primary aluminum,

Commerce sought to find an appropriate benchmark to determine

whether the respondents received any benefit.    Commerce selected

the purchase price of a fully developed industrial park in

Bangkok, Thailand, as the benchmark and found that when compared

to a land-use lease signed by Zhongya in 2006, Zhongya received

a benefit.    Id. at cmt. 24.   Plaintiffs also seek judicial
Court No. 11-00181                                         Page 5

review of this determination, arguing that the record as a whole

shows that the price Zhongya paid in 2006 was for land that

contained no infrastructure and required significant

improvements before manufacturing could occur, and therefore the

purchase price of a fully developed industrial park is not a

comparable benchmark.   Id.

                        STANDARD OF REVIEW

          The court will sustain Commerce’s “determination[s],

finding[s], or conclusion[s]” unless 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).    To be in

accordance with law, the agency’s decision must be authorized by

the statute, and consistent with the agency’s regulations. See,

e.g., Hontex Enter., Inc. v. United States, 27 CIT 272, 293, 248

F. Supp. 2d 1323, 1340 (2003).    When reviewing agency

determinations, findings, or conclusions for substantial

evidence, the court assesses whether the agency action is

reasonable given the record as a whole. Nippon Steel Corp. v.

United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006).

                              DISCUSSION

I. Import Duties
Court No. 11-00181                                           Page 6

            Plaintiffs first challenge Commerce’s inclusion of

import duties in its benchmark calculation when it investigated

Chinese producers imports of primary aluminum.    Specifically,

Plaintiffs assert that because they paid no import duties on

imports of primary aluminum from Hong Kong, Commerce’s inclusion

of import duties improperly inflates the benchmark value used to

determine the value of this benefit.2    Plaintiffs claim that

when, as here, Commerce uses world market prices, it errs in

including import duties in its calculations.

            19 C.F.R. § 351.511(a)(2) describes Commerce’s

methodology for calculating benefits received.    Generally,

Commerce compares the government price to the actual market

price for the good or service received.    19 C.F.R.

§ 351.511(a)(2)(i).    This is commonly referred to as a “tier-one

benchmark.”    See also I&D Memo cmt. 21 at 96 (noting that a

tier-one benchmark is preferred to a tier-two benchmark).

However, should Commerce determine, as it did here, that “there

is no usable market-determined price” to use as the benchmark,

then it proceeds to the second tier benchmark, the world market

     2
         Plaintiffs also claim that Commerce’s inclusion of
[[
              ]] was improper [[
                   ]] and therefore not supported by substantial
evidence. However, Commerce notes correctly that Plaintiffs
failed to raise this issue at the administrative level and thus
have not exhausted their administrative remedies on this issue.
See Dorbest, Ltd. v. United States, 604 F.3d 1363, 1375 (Fed.
Cir. 2010).
Court No. 11-00181                                        Page 7

price. See 19 C.F.R. § 351.511(a)(2)(ii); I&D Memo cmt. 20 at 94

(deciding that distortion in the PRC market makes tier-one

pricing unusable as a benchmark).   The regulation is specific in

stating that when using the world market price, Commerce is to

include delivery charges and import duties in its calculations.

19 C.F.R. § 351.511(a)(2)(iv) (“[Commerce] will adjust the

comparison price to reflect the price that a firm actually paid

or would pay if it imported the product.   This adjustment will

include delivery charges and import duties.”)

           Here, Commerce found that the “market for primary

aluminum is significantly distorted by the presence of companies

determined to be government authorities” and that the preferred

tier-one benchmark was therefore unusable.    I&D Memo cmt. 21 at

94, 96.   Pursuant to its regulation, Commerce then proceeded to

use tier-two pricing, the world market price, as a benchmark

price and adjusted it to include delivery charges and import

duties.   I&D Memo cmt. 20 at 94; 19 C.F.R. § 351.511(a)(2)(iv).

           Plaintiffs challenge the inclusion of import duties,

claiming that the regulation calls for adjusting the tier-two

benchmark to reflect what a firm actually paid or would pay, and

that because they paid no import duties, the tier-two benchmark

impermissibly includes such duties.   But Plaintiffs’

understanding of the regulations is flawed.    As the government

notes, both in its I&D Memo and before the court, Plaintiffs are
Court No. 11-00181                                        Page 8

asking for a “company-specific, tier-one benchmark” but have

failed to challenge Commerce’s finding that tier-one pricing is

unavailable.   Def.’s Opp’n to Pls.’ Mot. For J. on the Agency

R., ECF No. 53 at 11-12 (“Gov’t Br.”).   Therefore, Commerce’s

decision that tier-one pricing is unusable, and the consequent

use of the tier-two pricing, the world market price, as a

reasonable benchmark is well grounded in the applicable

regulations.   Accordingly, because the world market price by

regulation must include import duties, Commerce’s decision to

include such import duties in its calculation of the benchmark

is reasonable and in accordance with law.3   See Hontex, 27 CIT at

292–93, 248 F. Supp. 2d at 1340–41.

II. Land Use Benchmark

          Plaintiffs next claim that Commerce’s selection of a

fully developed industrial park purchase price in Bangkok,

Thailand as the land purchase price benchmark is not comparable

to Zhongya’s 50 year lease of wholly undeveloped land.

          Plaintiffs refer to numerous citations to the record

which show that, from the beginning of the investigation, it has

     3
       Plaintiffs also challenge the applicable regulation as
impermissibly violating the statute, 19 U.S.C. § 1677(5)(E).
However, not only is this argument barely set forth in
Plaintiffs’ brief, Plaintiffs failed to raise the issue at the
administrative level, and it is therefore not appropriate for
the court to consider it. See Dorbest, 604 F.3d at 1375.
Court No. 11-00181                                           Page 9

maintained that the land leased by Zhongya was completely

undeveloped and required significant development, such as

infrastructure for water and electricity, before it could be

used as a production facility.   See Pls.’ Mot. For J. on the

Agency R., ECF No. 44 at 5 n.11 (“Pls.’ Br.”)(listing extensive

record citations to documents showing that Zhongya developed the

land).    Indeed, the lease for Zhongya’s land contains an article

providing timelines for Zhongya to begin construction and

provides for repossession should Zhongya fail to do so in a

timely manner.   Zhongya Supplemental Questionnaire Resp. (Aug.

6, 2010), Admin. R. Con. Doc. 21 [Pub. Doc. 120] at 297, Exhibit

15.   Furthermore, the lease states that Zhongya is “solely

responsible for the construction and improvement of the

supporting facility of sewage and drainage” on the land.4      Id.

            Commerce fails to squarely address Plaintiffs’

argument that the land it leased was completely undeveloped in

2006 and required significant improvement.   In the I&D Memo,

Commerce cites a promotional website provided by Petitioners on

July 13, 2010, and claims that the data on the website dates

      4
       Plaintiffs have also submitted a copy of a construction
contract which they assert is for the construction of
infrastructure such as electricity, water, and gas. Pls.’ Br.
at 5 n.11 (citing Zhongya Third Supplemental Questionnaire Resp.
(Oct. 13, 2010), Admin. R. Con. 48 [Pub. Doc. 233], Exhibit 5).
Commerce has failed to address the construction contract or the
terms of the land lease in both its court briefings and the I&D
Memo.
Court No. 11-00181                                         Page 10

back to 2004.   I&D Memo cmt. 24 at 106.   The website exists to

promote the region in which Zhongya leased its land.   In its

brief to the court, Commerce notes that the excerpted pages have

a note stating, “Copyright 2004 ZhaoQing Government,” and the

website currently describes the region as an “industrial estate

which has been well-equipped with electricity, water, cable,

road {sic}. . . .”   Gov’t Br. at 18 (citing Petitioner’s First

New Subsidy Allegations (Jul. 13, 2010), Pub. Doc. 91, Exhibit 1

at 12).   This argument completely misses the point.   First,

promotional websites which exist to advertise and attract

business are not held to any standards of accuracy and fact and

do not carry the same weight as, for example, findings that

arise from a thorough administrative investigation.5   See

Constantine Polites v. United States, __ CIT __, 780 F. Supp. 2d

1351, 1356 n.11 (2011).   Because websites are fluid in nature

and may be edited at any point in time with no discernable

trace, a note that the pages are copyrighted 2004 does not

guarantee that the information was placed there in 2004.     While

it is, of course, for Commerce to decide the weight of this

evidence, F. Lli De Cecco Di Filippo Fara S. Martino S.p.A. v.

     5
       The court notes that it is possible to find websites
advertising products that range from mundane health products to
“petite lap giraffes,” and that it is often difficult to discern
what is fact and what is “mere puffery” on these promotional
websites. See Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection
Serv., Inc., 911 F.2d 242, 246 (9th Cir. 1990).
Court No. 11-00181                                         Page 11

United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000), Commerce’s

weighing must not be unreasonable.   Universal Camera Corp. v.

NLRB, 340 U.S. 474, 477 (1951).   Second, the amenities currently

advertised as available in the general region have absolutely no

bearing on the condition of the specific plot as it existed when

Zhongya assumed the land use rights in 2006.

           Defendant-Intervenor argues that the publication date

of the website is irrelevant because the website states that by

“August 2005, more than 170 enterprises have found their homes

in the industrial park among which 60 have gone into operation.”

Resp. In Opp. to Pls.’ Mot. For J. on the Agency R., ECF No. 52

at 17.   Again, this argument misses the point.   Nothing in a

promotional website for the general region supports a finding

that the specific plot leased by Zhongya in 2006 was comparable

to a fully developed industrial park in Bangkok, Thailand.

Indeed, the language cited by Defendant-Intervenor, stating that

60 of 170 enterprises in that region were operational in 2005,

tends to suggest that the region in 2005 was not a fully

equipped industrial park allowing tenants to immediately begin

manufacturing.

           Commerce’s sole argument concerning the specific plot

leased by Zhongya also fails.   Commerce states that it

“collected” photographs during verification which show power

lines and a canal on or near the site.   Gov’t Br. at 17
Court No. 11-00181                                            Page 12

(“Concerning the parcel for which New Zhongya purchased land-use

rights, Commerce noted that, during verification, it collected

pictures showing power lines and a canal on or near the site.”);

I&D Memo at 107.     Commerce does not clearly indicate the

provenance of these photographs, but Plaintiffs state that they

were selectively chosen from a slideshow they created to show

the improvements they made to the land from 2005 to 2010.       Pls.’

Br. at 7.     Plaintiffs assert that the photographs Commerce used

were taken after Zhongya had completed its improvements to the

land and therefore these photographs do not show the condition

of the plot as it existed when Zhongya assumed the lease in

2006.   Id.    Given the record as a whole, the court is not

persuaded that these photographs provide substantial evidence

that the land Zhongya leased was a fully developed industrial

park in 2006, or that the photographs even depict the land as it

existed in 2006.

              In sum, the court cannot conclude that a reasonable

reading of the record as a whole supports Commerce’s rebuttal of

Plaintiffs’ claim that the land they leased was undeveloped in

2006 and therefore not comparable to a fully developed

industrial park.     Commerce relies on a 2010 screenshot of a

promotional website for the region to support its claim that the

plot as it existed in 2006 was a fully developed industrial park

and has not placed any evidence on the record rebutting or
Court No. 11-00181                                           Page 13

addressing Plaintiffs’ claims that photographs showing a canal

and power lines on or near the property were taken in 2010 and

not 2006.       The court therefore holds that Commerce’s finding

that the land as it existed in 2006 was comparable to a fully

developed industrial park is not supported by substantial

evidence and remands for reconsideration or further explanation.6

See Nippon Steel, 458 F.3d at 1350-51.

                                CONCLUSION

            For the reasons stated above, Commerce’s Final

Determination is affirmed in part and remanded in part for

reconsideration of its selection of a fully developed industrial

park as a benchmark for the land-use rights acquired by

Plaintiffs in 2006.       Commerce shall file its remand

determination with the court by August 5, 2013.      The parties

will have until August 19, 2013 to file comments, and Commerce

has until September 2, 2013 to file a response.

            It is so ORDERED.

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

Dated: June 27, 2013
       New York, NY

            6
            Plaintiffs challenge the Thai benchmark data on other
grounds, but because the court is remanding to Commerce for
reconsideration, it does not reach these arguments.
                             ERRATA

Zhaoqing New Zhongya Aluminum Co., Ltd. and Zhongya Shaped
Aluminum (HK) Holding Ltd., v. United States, Court No. 11-
00181, Slip Op. 13-83, dated June 27, 2013.

Page 3: Following the sentence ending on Line 11, place footnote
marker 1. Footnote 1 should read: “This action challenging a
final affirmative countervailing duty determination was brought
pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i).”

July 19, 2013