Court Opinion

ID: 820097
Source: CourtListenerOpinion
Date Created: 2013-02-10 19:36:02.62615+00
Date Added: 2024-06-11T15:37:38.800961
License: Public Domain

Slip Op. 12 - 113

              UNITED STATES COURT OF INTERNATIONAL TRADE

FINE FURNITURE (SHANGHAI)
LIMITED, et al.,

         Plaintiffs,

                 and

HUNCHUN FOREST WOLF INDUSTRY
COMPANY LIMITED, et al.,

         Plaintiff-Intervenors,
                                        Before: Donald C. Pogue,
                  v.                            Chief Judge

UNITED STATES,                          Consol. Court No. 11-005331

         Defendant,

                 and

THE COALITION FOR AMERICAN
HARDWOOD PARITY,

         Defendant-Intervenor.

                           OPINION AND ORDER

[affirming, in part, and remanding, in part, the Department of
Commerce’s Final Determination]

                                               Dated: August 31, 2012

          Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer,
Susan L. Brooks, Sarah M. Wyss, and Keith F. Huffman, Mowry &
Grimson, PLLC, of Washington, DC, for the Plaintiffs Fine
Furniture (Shanghai) Ltd.; Great Wood (Tonghua) Ltd.; and Fine
Furniture Plantation (Shishou) Ltd.

     1
        This action was consolidated with portions of the
complaints from Court Nos. 12-00009, 12-00017, and 12-00022.
Order, Apr. 5, 2012, ECF No. 50.
Consol. Ct. No. 11-00533                                  Page 2

          Francis J. Sailer, Mark E. Pardo, Andrew T. Schutz,
and Kavita Mohan, Grunfeld Desiderio Lebowitz Silverman &
Klestadt, LLP, of Washington, DC, for the Consolidated Plaintiffs
Baroque Timber Industries (Zhongshan) Co., Ltd.; Riverside
Plywood Corp.; Samling Elegant Living Trading (Labuan) Ltd.;
Samling Global USA, Inc.; Samling Riverside Co., Ltd.; Suzhou
Times Flooring Co., Ltd.; Shanghai Eswell Timber Co., Ltd.;
Shanghai Lairunde Wood Co., Ltd.; Shanghai New Sihe Wood Co.,
Ltd.; Shanghai Shenlin Corp.; Vicwood Industry (Suzhou) Co. Ltd.;
Xuzhou Shenghe Wood Co., Ltd.; and A&W (Shanghai) Woods Co., Ltd.

           Gregory S. Menegaz, J. Kevin Horgan, and John J.
Kenkel, deKieffer & Horgan, PLLC, of Washington, DC, for the
Plaintiff-Intervenors Changzhou Hawd Flooring Co., Ltd.; Dunhua
City Jisen Wood Industry Co., Ltd.; Dunhua City Dexin Wood
Industry Co., Ltd.; Dalian Huilong Wooden Products Co., Ltd.;
Kunshan Yingyi-Nature Wood Industry Co., Ltd.; and Karly Wood
Product Ltd.

          Jeffrey S. Neeley, Michael S. Holton, and Stephen W.
Brophy, Barnes, Richardson & Colburn, of Washington, DC, for
Plaintiff-Intervenors Hunchun Forest Wolf Industry Co. Ltd.;
Dunhua City Dexin Wood Industry Co., Ltd.; Nanjing Minglin Wooden
Industry Co., Ltd.; Dalian Penghong Floor Products Co., Ltd.;
Dongtai Fuan Universal Dynamics, LLC; Zhejiang Fudeli Timber
Industry Co., Ltd.; Dunhua City Jisen Wood Industry Co., Ltd.;
Fusong Qianqiu Wooden Product Co., Ltd.; Power Dekor Group Co.,
Ltd.; Jiafeng Wood (Suzhou) Co., Ltd.; Jiangsu Senmao Bamboo and
Wood Industry Co., Ltd.; Shenyang Haobainian Wooden Co., Ltd.;
Guangzhou Pan Yu Kang Da Board Co., Ltd.; Nakahiro Jyou Sei
Furniture (Dalian) Co., Ltd.; Yixing Lion-King Timber Industry
Co., Ltd.; Guangzhou Panyu Southernstar Co., Ltd.; Dalian Kemian
Wood Industry Co., Ltd.; Kunshan Yingyi-Nature Wood Industry Co.,
Ltd.; Fu Lik Timber (HK) Co. Ltd.; Puli Trading Ltd.; Zhejiang
Shiyou Timber Co., Ltd.; Shanghai Lizhong Wood Products Co.,
Ltd.; and Shenzhenshi Huanwei Woods Co. Ltd.

          Daniel L. Porter, Matthew P. McCullough, Ross E.
Bidlingmaier, and William H. Barringer, Curtis, Mallet-Prevost,
Colt & Mosle LLP, of Washington, DC, for the Plaintiff-Intervenor
the Bureau of Fair Trade for Imports & Exports, Ministry of
Commerce, People’s Republic of China.

          Alexander V. Sverdlov, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for the Defendant United States. With him on the
briefs were Stuart F. Delery, Acting Assistant Attorney General,
Jeanne E. Davidson, Director, and Claudia Burke, Assistant
Consol. Ct. No. 11-00533                                     Page 3

Director. Of Counsel on the briefs was Jonathan Zielinksi,
Senior Attorney, Office of the Chief Counsel for Import
Administration, U.S. Department of Commerce.

          Jeffrey S. Levin, Levin Trade Law, P.C., of Bethesda,
MD, and John B. Totaro, Jr., Neville Peterson, LLP, of
Washington, DC, for the Defendant-Intervenor the Coalition for
American Hardwood Parity.

          Chief Judge Pogue: This is a consolidated action

seeking review of determinations made by the United States

Department of Commerce (“Commerce” or “the Department”) in the

countervailing duty (“CVD”) investigation of multilayered wood

flooring from the People’s Republic of China (“China”).2

Currently before the court is Plaintiffs’ Rule 56.2 Motion for

Judgment on the Agency Record.   In their motion, Plaintiffs

challenge three aspects of Commerce’s Final Determination: (1)

Commerce’s use of adverse facts available (“AFA”) in determining

the benchmark rate for calculating the benefit Plaintiff Fine

Furniture received from the provision of electricity for less

than adequate remuneration; (2) Commerce’s inclusion of the Basic

Electricity Tariff in the calculation of the electricity subsidy

rate in the Final Determination without notice and opportunity to

     2
       Multilayered Wood Flooring from the People’s Republic of
China, 76 Fed. Reg. 64,313 (Dep’t Commerce Oct. 18, 2011) (final
affirmative countervailing duty determination) (“Final
Determination”), and accompanying Issues & Decision Memorandum,
C-570-971, POI 09, Admin R. Pt. 2 Pub. Doc. 20, available at
http://ia.ita.doc.gov/frn/summary/PRC/2011-26892-1.pdf (last
visited Aug. 28, 2012) (“I & D Mem.”) (adopted in the Final
Determination, 76 Fed. Reg. at 64,313).
Consol. Ct. No. 11-00533                                     Page 4

comment by respondents; and (3) the inclusion of Shanghai Eswell

Enterprise Co., Ltd. and Elegant Living Corporation on the list

of non-cooperating companies.

          As explained below, the court (1) affirms Commerce’s

use of AFA in determining the benchmark for provision of

electricity at less than adequate remuneration; (2) affirms the

inclusion of the Basic Electricity Tariff as a component of the

electricity subsidy; and (3) remands the Final Determination to

Commerce to reconsider and remove or provide further explanation

for including Shanghai Eswell Enterprise Co., Ltd. and Elegant

Living Corporation on the list of non-cooperating companies.

          The court has jurisdiction pursuant to

§ 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19

U.S.C. § 1516a(a)(2)(B)(i) (2006)3 and 28 U.S.C. § 1581(c)

(2006).

                           BACKGROUND4

          This case arises from Commerce’s initiation of a

countervailing duty investigation of multilayered wood flooring

from China, on November 18, 2010, following a petition from

     3
       All further citations to the Tariff Act of 1930, as
amended, are to Title 19 of the U.S. Code, 2006 edition.
     4
       The following summary of facts is provided as general
background to the investigation at issue in this case; facts
specific to the determinations challenged are included in the
discussion of the relevant challenge.
Consol. Ct. No. 11-00533                                     Page 5

Defendant-Intervenor the Coalition for American Hardwood Parity

(“CAHP”). See Multilayered Wood Flooring from the People’s

Republic of China, 75 Fed. Reg. 70,719, 70,719 (Dep’t Commerce

Nov. 18, 2010) (initiation of countervailing duty investigation).

In its investigation, and pursuant to 19 U.S.C. § 1677f-1(c)(2),

Commerce limited the mandatory respondents to three companies and

their affiliates: (1) Fine Furniture (Shanghai) Ltd., Great Wood

(Tonghua) Ltd., and Fine Furniture Plantation (Shishou) Ltd.

(collectively “Fine Furniture”); (2) Zhejiang Layo Wood Industry

Co., Ltd. and Jiaxing Brilliant Import & Export Co., Ltd.

(collectively “Layo”); and (3) Zhejiang Yuhua Timber Co., Ltd.

(“Yuhua”). Respondent Selection Memo, C-570-971, POI 09 (Dec. 30,

2010), Admin. R. Pt. 1 Pub. Doc. 193 at 4; Multilayered Wood

Flooring from the People’s Republic of China, 76 Fed. Reg.

19,034, 19,038–39 (Dep’t Commerce Apr. 6, 2011) (preliminary

affirmative countervailing duty determination) (“Preliminary

Determination”).    In the Preliminary Determination, Commerce

assigned zero rates to Layo and Yuhua; a 2.25% rate to Fine

Furniture; a 2.25% all others rate for cooperating companies; and

a 27.01% rate for non-cooperating companies. Preliminary

Determination, 76 Fed. Reg. at 19,041–42.   Following comments on

the Preliminary Determination, Commerce issued the Final

Determination on October 18, 2011. Final Determination, 76 Fed.

Reg. at 64,313.    In the Final Determination, Commerce adjusted
Consol. Ct. No. 11-00533                                   Page 6

the subsidy rates as follows: Layo and Yuhua received de minimis

rates; Fine Furniture received a 1.50% rate; all other

cooperating respondents received a 1.50% rate; and all non-

cooperating respondents received a 26.73% rate. Final

Determination, 76 Fed. Reg. at 64,315–17.

                        STANDARD OF REVIEW

          “The court shall hold unlawful any determination,

finding, or conclusion found . . . to be unsupported by

substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

                            DISCUSSION

          A countervailing duty is imposed on an import whenever

Commerce determines that “the government of a country or any

public entity within the territory of a country is providing,

directly or indirectly, a countervailable subsidy . . . .” 19

U.S.C. § 1671(a).5   To be countervailable, a subsidy must provide

a financial contribution to a specific industry, and the

respondent must benefit.   See 19 U.S.C. § 1677(5)–(5A); Essar

Steel Ltd. v. United States, 34 CIT __, 721 F. Supp. 2d 1285,

     5
       To impose a countervailing duty, the International Trade
Commission must also find “material injury” to a domestic
industry, 19 U.S.C. § 1671(a); however, the ITC’s determination
is not at issue in this case.
Consol. Ct. No. 11-00533                                     Page 7

1292 (2010).

          When investigating whether the statute requires

imposition of a countervailing duty order, Commerce often

requires both the respondent and the foreign government to submit

factual information. Essar Steel, 34 CIT at __, 721 F. Supp. 2d

at 1297 (“Typically, foreign governments are in the best position

to provide information regarding the administration of their

alleged subsidy programs, including eligible recipients.    The

respondent companies, on the other hand, will have information

pertaining to the existence and amount of the benefit conferred

on them by the program.”).   In addition, when determining whether

or not a subsidy is countervailable, Commerce relies on facts

placed on the record by interested parties.

          When an interested party has failed to submit necessary

information, Commerce may make its determination on the basis of

facts otherwise available (“FOA”), and in certain circumstances

on the basis of AFA. 19 U.S.C. § 1677e(a)–(b).6   Before Commerce

may employ FOA, 19 U.S.C. § 1677m(d) provides respondents with an

opportunity to remedy or explain deficiencies in their

submissions. § 1677e(a); Reiner Brach GmbH & Co.KG v. United

States, 26 CIT 549, 555, 206 F. Supp. 2d 1323, 1330 (2002)

     6
       The statute authorizes Commerce to make use of FOA when
(1) the record lacks necessary information or (2) a respondent
withholds information, fails to provide information, impedes a
proceeding, or provides unverifiable information. § 1677e(a).
Consol. Ct. No. 11-00533                                    Page 8

(quoting Mannesmannrohren-Werke AG v. United States, 23 CIT 826,

837–38, 77 F. Supp. 2d 1302, 1313 (1999)).   In addition, FOA are

only appropriate to fill gaps in the record evidence when

Commerce must rely on other sources to complete the record.

Zhejiang Dunan Hetian Metal Co. v. United States, 652 F.3d 1333,

1346 (Fed. Cir. 2011).   When Commerce can independently fill in

the gaps, without the requested information, FOA and adverse

inferences are not appropriate. See id. at 1348; Gerber Food

(Yunnan) Co. v. United States, 29 CIT 753, 767–68, 387

F. Supp. 2d 1270, 1283 (2005).   Nonetheless, if Commerce finds

“that an interested party has failed to cooperate by not acting

to the best of its ability to comply with a request . . .

[Commerce] may use an inference that is adverse to the interests

of that party in selecting from among the facts otherwise

available.” 19 U.S.C. § 1677e(b); Zhejiang, 652 F.3d at 1346.

I.   Commerce Properly Applied AFA in Determining the Benchmark
     for Provision of Electricity at Less than Adequate
     Remuneration

     A.   Background

          In the Final Determination, Commerce used adverse

inferences to determine that Plaintiff Fine Furniture received a

countervailable subsidy through the provision of electricity at

less than adequate remuneration (the “LTAR subsidy”). Final

Determination, 76 Fed. Reg. at 64,315.   Commerce made recourse to

adverse inferences because the Government of China (“GOC”) failed
Consol. Ct. No. 11-00533                                     Page 9

to provide requested information in the form of provincial

electricity price proposals. I & D Mem. Cmt. 4 at 43–44.

     The GOC did not provide a complete response to the
     Department’s January 3, 2011 questionnaire regarding
     the alleged provision of electricity for LTAR.
     Specifically, the Department requested that the GOC
     provide the original provincial price proposals for
     2006 and 2008 for each province in which a mandatory
     respondent or any reported “cross-owned” company is
     located. Because the requested price proposals are
     part of the GOC’s electricity price adjustment process,
     the documents are necessary for the Department’s
     analysis of the program. . . . Consequently, we
     determine that the GOC has withheld necessary
     information that was requested of it and, thus, that
     the Department must rely on “facts available” in making
     our final determination. Moreover, we determine that
     the GOC has failed to cooperate by not acting to the
     best of its ability to comply with our request for
     information as it did not respond by the deadline
     dates, nor did it explain to the Department’s
     satisfaction why it was unable to provide the requested
     information. Consequently, an adverse inference is
     warranted in the application of facts available.

I & D Mem. at 2 (footnotes omitted).   Using FOA and applying an

adverse inference, Commerce set a benchmark rate equal to the

highest rate reported in the provincial price schedules for

electricity. I & D Mem. at 3.

     B.   Analysis

          The dispute between the parties centers on whether the

adverse inferences drawn against the non-cooperating party, the

GOC, are rendered impermissible when they are collaterally

adverse to the cooperating party, Fine Furniture.   Fine Furniture

contends that the inferences drawn were impermissibly adverse to

Fine Furniture, who was a cooperating party in the investigation.
Consol. Ct. No. 11-00533                                    Page 10

Commerce, however, argues that it properly employed inferences

adverse to the GOC — the non-cooperating party — and that any

impact on Fine Furniture was simply collateral, which does not

render the inferences impermissible.   Neither party contests the

fact that the GOC failed to provide necessary information to

Commerce.

            Among the financial contributions that are potentially

countervailable is the provision of goods and services at less

than adequate remuneration. 19 U.S.C. § 1677(5)(E)(iv).   In order

to determine if a benefit is provided at less than adequate

remuneration, the price paid is compared with a price set by

“prevailing market conditions for the good or service being

provided . . . in the country which is subject to the

investigation or review.” § 1677(5)(E).   Commerce has promulgated

further regulations for determining this “benchmark” value. 19

C.F.R. § 351.511(a)(2)(i)–(iii) (2012)7; Essar Steel, 34 CIT at

__, 721 F. Supp. 2d at 1292.8

     7
       All subsequent citations to the Code of Federal
Regulations are to the 2012 edition, unless otherwise noted.
     8
       These regulations set up a three tier system for
determining the benchmark. First, “[t]he Secretary will normally
seek to measure the adequacy of remuneration by comparing the
government price to a market-determined price for the good or
service resulting from actual transactions in the country in
question.” 19 C.F.R. § 351.511(a)(2)(i). Second, if no market-
determined price is available from within the country in
question, then “the Secretary will seek to measure the adequacy
of remuneration by comparing the government price to a world
                                             (footnote continued)
Consol. Ct. No. 11-00533                                    Page 11

          In this case, no benchmarks consistent with 19 C.F.R.

§ 351.511(a)(2)(i)–(ii) were available.9   Therefore, Commerce

sought to value the benchmark by assessing the relationship of

the government price to market principles, pursuant to

§ 351.511(a)(2)(iii), but found that the GOC’s refusal to provide

the provincial price proposals prevented it from determining if

the prices were consistent with any market principles. I & D Mem.

Cmt. 4 at 43–44.   Because it did not have the data to value a

benchmark, Commerce relied upon FOA, 19 U.S.C. § 1677e(a), in the

form of the provincial price schedules on the record.    Because

     8
      (footnote continued)
market price where it is reasonable to conclude that such price
would be available to purchasers in the country in question.”
§ 351.511(a)(2)(ii). Finally, if neither an actual market-
determined price nor a world market price is available, “the
Secretary will normally measure the adequacy of remuneration by
assessing whether the government price is consistent with market
principles.” § 351.511(a)(2)(iii).
     9
       As all parties agree in their responses to the court’s
further briefing request, electricity in China cannot be valued
through actual transactions in the country, § 351.511(a)(2)(i),
because rates are set by the government, nor can electricity be
valued using a world market price, § 351.511(a)(2)(ii), because
it cannot be purchased on the world market. See Def.’s Resp. to
the Court’s June 25, 2012 Letter at 3, ECF No. 73; Pls.’ Letter
Br. at 3, ECF No. 74; see also Countervailing Duties, 63
Fed. Reg. 65,348, 65,377 (Dep’t Commerce Nov. 25, 1998) (final
rule) (“We will consider whether the market conditions in the
country are such that it is reasonable to conclude that the
purchaser could obtain the good or service on the world market.
For example, a European price for electricity normally would not
be an acceptable comparison for electricity provided by a Latin
American government, because electricity from Europe in all
likelihood would not be available to consumers in Latin
America.”).
Consol. Ct. No. 11-00533                                     Page 12

the necessary information was lacking as a result of the GOC’s

refusal to provide it, Commerce also applied an adverse inference

pursuant to 19 U.S.C. § 1677e(b).

          Fine Furniture’s plea for the use of neutral facts in

calculating the benchmark is not without some persuasive force.

Often, the calculation of the benefit is drawn from the record

submissions of the respondent companies. See Essar Steel, 34 CIT

at __, 721 F. Supp. 2d at 1297 (“[T]he agency then attempts to

use information provided by the individual respondent companies

regarding the benefit, if any, conferred by the particular

program.”).   Where the respondents have placed evidence on the

record consistent with the Department’s regulations for

calculating benchmarks, see 19 C.F.R. § 351.511(a)(2), Commerce

would be expected to consider such evidence.   Furthermore, if an

alternative benchmark meeting such criteria were available on the

record and did not adversely affect a cooperative party, such a

benchmark would be superior to one which does adversely affect a

cooperative party.10

     10
       Commerce is correct that the inference drawn in this case
was not directly adverse to Fine Furniture. It is true that Fine
Furniture is adversely affected by the use of the highest rates
included in the provincial price proposals. However, the
inference drawn was prompted by the GOC’s failure to cooperate
and was adverse to the interests of the GOC. We do not treat the
GOC and Fine Furniture as a joint entity in making our
determination; rather, we acknowledge that, in the context of a
CVD investigation, an inference adverse to the interests of a
non-cooperating government respondent may collaterally affect a
                                             (footnote continued)
Consol. Ct. No. 11-00533                                     Page 13

          The problem for Fine Furniture is that there is no such

benchmark on the record in this case.   Commerce employed FOA

because the lack of the provincial price proposals prevented it

from determining whether the electricity rates provided by

respondent companies were set pursuant to market principles.

§ 351.511(a)(2)(iii).   Because the price proposals were necessary

to determine the benchmark rate, and the GOC refused to provide

them, Commerce also applied an adverse inference.11   Though Fine

Furniture was put on notice by the benchmark regulation, it did

not place on the record any alternative benchmarks consistent

     10
      (footnote continued)
cooperative respondent. While such an inference is permissible
under the statute, it is disfavored and should not be employed
when facts not collaterally adverse to a cooperative party are
available.
     11
       In the letter briefing requested by the court, Plaintiffs
argue that there was sufficient indicia in the record for
Commerce to determine that the provincial price schedules
reflected market-determined rates. Pls.’ Letter Br. at 3–4. When
reviewing Commerce’s determinations on a substantial evidence
standard, the court considers whether the determination is
supported by substantial evidence on the record as a whole. See
Gerald Metals, Inc. v. United States, 132 F.3d 716, 720 (Fed.
Cir. 1997). “[T]he possibility of drawing two inconsistent
conclusions from the evidence does prevent an administrative
agency’s finding from being supported by substantial evidence,”
Consolo v. Fed. Maritime Comm’n, 383 U.S. 607, 620 (1966), and
“[t]he court is not empowered to substitute its judgment for that
of the agency.” Citizens to Pres. Overton Park, Inc. v. Volpe,
401 U.S. 402, 416 (1971), abrogated on other grounds by Califeno
v. Sanders, 430 U.S. 99, 105 (1977). Though there is some
evidence on the record suggesting that the provincial price
schedules could reflect market-determined prices, the court will
not upset Commerce’s determination that the provincial price
proposals were a critical element in arriving at such a
conclusion.
Consol. Ct. No. 11-00533                                   Page 14

with § 351.511(a)(2).

          Fine Furniture did propose what it terms a “neutral

benchmark,” which would be calculated by averaging all rates

within the same user category of the provincial price schedule as

Fine Furniture’s rate, and argued that its proposed benchmark

would be more appropriate.   However, there is nothing to indicate

that Fine Furniture’s proposed neutral benchmark would more

accurately reflect a market-determined price for electricity.

Therefore, Fine Furniture’s proposed neutral benchmark is, in

fact, not a benchmark, see § 351.511(a)(2), because it fails to

establish the relationship that Fine Furniture’s electricity

rates bear to a market determined rate.   In a situation such as

this, where an interested party “failed to cooperate by not

acting to the best of its ability to comply with a request for

information,” 19 U.S.C. § 1677e(b), and that information was

necessary to the subsidy calculation, 19 U.S.C. § 1677e(a) —

thereby fulfilling the prerequisites for the use of both FOA and

adverse inferences — Commerce acted within its statutory

authority in applying both FOA and an adverse inference.

          If the record contained evidence that met one of the

three regulatory requirements for setting a benchmark, Fine

Furniture may have been able to argue that Commerce should have

relied upon that record evidence.   However, the neutral benchmark

requested by Fine Furniture does not meet this test.   The neutral
Consol. Ct. No. 11-00533                                      Page 15

benchmark is no better proxy for a market determined rate than

the AFA benchmark.   Without showing that the neutral benchmark

better complies with the statutory and regulatory requirements,

Fine Furniture is asking the court to substitute its judgment for

that of Commerce, but this is not the court’s role. Inland Steel

Indus., Inc. v. United States, 188 F.3d 1349, 1360–61 (Fed. Cir.

1999); Ad Hoc Shrimp Trade Action Comm. v. United States, 36 CIT

__, 828 F. Supp. 2d 1345, 1350 (2012).

           Accordingly, because Commerce’s decision to apply AFA

in calculating the LTAR subsidy is consistent with the statute

and regulations, and because the court does not substitute or

displace Commerce’s judgment with regard to the weight or

credibility of the evidence, the use of AFA in setting the LTAR

subsidy benchmark is affirmed.

II.   Commerce’s Failure to Provide Notice and Opportunity to
      Comment on Inclusion of the Basic Electricity Tariff Was
      Harmless Error

      A.   Background

           In the Final Determination, Commerce included the Basic

Electricity Tariff (“BET”) in the calculation of the benefit for

the LTAR subsidy. I & D Mem. at 14.      This cost was not included

in the calculation of the LTAR subsidy in the Preliminary

Determination. Id.      Nor were Plaintiffs given any notice that

Commerce had decided to include the BET in calculation of the

LTAR subsidy prior to publication of the Final Determination.
Consol. Ct. No. 11-00533                                       Page 16

     B.     Analysis

            Plaintiffs raise a procedural challenge to the

inclusion of the BET, arguing that Commerce’s failure to provide

notice and an opportunity for comment violated 19 U.S.C.

§ 1677m(g).12    Plaintiffs premise their argument, in large part,

on the contention that the BET was a separate subsidy from the

LTAR subsidy, and therefore, it required a separate subsidy

investigation.

            Commerce responds that the BET is not a separate

subsidy, rather it is a component of the LTAR subsidy.

Therefore, according to Commerce, the inclusion of the BET in the

Final Determination was merely the correction of an oversight in

the Preliminary Determination.

            Commerce’s response has weight because the BET is best

characterized as a component of the LTAR subsidy.    The BET is an

element of respondents’ overall electricity payment; therefore,

it is reasonable for Commerce to include the BET in the

calculation of benefit under the LTAR subsidy.    This

determination is also consistent with Commerce’s practice in

     12
          19 U.S.C. § 1677m(g) reads, in relevant part:

     [Commerce] . . . before making a final determination
     under section 1671d, 1673d, 1675, or 1675b of this
     title shall cease collecting information and shall
     provide the parties with a final opportunity to comment
     on the information obtained by [Commerce] . . . upon
     which the parties have not previously had an
     opportunity to comment.
Consol. Ct. No. 11-00533                                    Page 17

other countervailing duty determinations regarding merchandise

from China.13

           Nonetheless, our finding that the BET was an aspect of

the LTAR subsidy does not lead us to conclude that Commerce

followed proper procedure when it included the BET in the Final

Determination without first including it in the Preliminary

Determination or otherwise providing notice and an opportunity to

comment.   To the contrary, Commerce should have included the BET

in the Preliminary Determination, thereby permitting Plaintiffs

an opportunity to challenge that determination at the

administrative level.   Commerce did not do this.   In this regard,

the inclusion of the BET was procedurally defective.14

     13
       See, e.g., Drill Pipe from the People’s Republic of
China, 76 Fed. Reg. 1971 (Dep’t Commerce Jan. 11, 2011) (final
affirmative countervailing duty determination) and accompanying
Issues and Decision Memorandum at 27, C-570-966, POI 09 (Jan. 11,
2011), available at
http://ia.ita.doc.gov/frn/summary/PRC/2011-392-1.pdf (last
visited Aug. 29, 2012); Pre-Stressed Concrete Steel Wire Strand
from the People’s Republic of China, 75 Fed. Reg. 28,557 (Dep’t
Commerce May 21, 2010) (final affirmative countervailing duty
determination) and accompanying Issues and Decision Memorandum at
33–34, C-570-946, POI 08 (May 14, 2010), available at
http://ia.ita.doc.gov/frn/summary/prc/2010-12292-1.pdf (last
visited Aug. 29, 2012).
     14
       The court need not decide whether the specific action
challenged here was a violation of 19 U.S.C. § 1677m(g). It is
sufficient to note that plaintiffs challenging agency action
before the Court of International Trade are required to exhaust
their administrative remedies. 28 U.S.C. § 2637(d) (2006);
Consol. Bearings Co. v. United States, 348 F.3d 997, 1003 (Fed.
Cir. 2003). When Commerce fails to provide an opportunity for
comment, it inhibits a plaintiff’s opportunity to exhaust its
                                             (footnote continued)
Consol. Ct. No. 11-00533                                     Page 18

          However, in the absence of a substantive challenge to

the inclusion of the BET, the procedural defect is harmless

error. See Cummins Engine Co. v. United States, 23 CIT 1019,

1032, 83 F. Supp. 2d 1366, 1378 (1999) (“In reviewing an agency’s

procedural error for which the law does not prescribe a

consequence . . . it is well settled that principles of harmless

error apply. . . . Under the rule of prejudicial error, or

harmless error analysis, the Court will not overturn an agency’s

action ‘if the procedural error complained of was harmless.’”

(quoting Barnhart v. United States Treasury Dep’t, 7 CIT 295,

302, 588 F. Supp. 1432, 1437 (1984))).

          Because Plaintiffs do not raise any compelling

substantive arguments, the court finds no reason to remand the

case to Commerce for further explanation or proceeding.15

     14
      (footnote continued)
administrative remedies. While the court finds that it may hear
a challenge in such a case, see infra note 15, the procedural
defect may be relevant when the record is insufficiently
developed for the court to render a decision.
     15
       Plaintiffs would not have been barred from bringing
substantive claims before this court by the exhaustion of
administrative remedies doctrine. Prior case law supports the
court’s capacity to hear and decide a challenge on substantive
grounds that was not raised at the administrative level, when no
opportunity for comment was provided. See China Steel Corp. v.
United States, 28 CIT 38, 59, 306 F. Supp. 2d 1291, 1310 (2004)
(“[I]n determining whether questions are precluded from
consideration on appeal, the [Court of International Trade] will
assess the practical ability of a party to have its arguments
considered by the administrative body.” (citation omitted)); see
also Lifestyle Enter. v. United States, 35 CIT __, 768 F. Supp.
                                             (footnote continued)
Consol. Ct. No. 11-00533                                     Page 19

Plaintiffs’ primary argument, that Commerce should have initiated

a separate investigation of the BET subsidy, is unavailing

because Commerce reasonably determined that the BET was merely an

element of the larger LTAR subsidy.   Plaintiffs do not raise any

further substantive arguments in their letter brief to the court,

except for a fleeting reference to other non-included payments

purportedly analogous to the BET. Pls.’ Letter Br. at 6 (“Even

without the benefit of a proper investigation, however, there is

evidence to suggest that the BET is different from the other

electricity charges that Commerce found to be countervailable

subsidies.”).   What has been provided is insufficient for the

court to conclude that Plaintiffs have a substantive claim

regarding the BET.   Therefore, Commerce’s inclusion of the BET in

the benefit calculation for the LTAR subsidy in the Final

Determination without first addressing it in the Preliminary

Determination is harmless error.

     15
      (footnote continued)
2d 1286, 1300 n.17 (2011) (“A party, however, may seek judicial
review of an issue that it did not brief at the administrative
level if Commerce did not address the issue until its final
decision, because in such a circumstance the party would not have
had a full and fair opportunity to raise the issue at the
administrative level.”); Globe Metallurgical, Inc. v. United
States, 29 CIT 867, 873 (2005) (“The court has recognized certain
exceptions to the application of the exhaustion doctrine. One
such applicable exception arises when the respondent is not given
the opportunity to raise its objections at the administrative
level because Commerce did not address the issue until the final
determination.”).
Consol. Ct. No. 11-00533                                        Page 20

III. Inclusion of Elegant Living and Eswell Enterprise on the AFA
     List Was Not Supported by Substantial Evidence

        A.   Background

             In order to select mandatory respondents for the

instant CVD investigation, Commerce issued quantity and value

(“Q&V”) questionnaires to, inter alia, Shanghai Eswell Enterprise

Co., Ltd. (“Eswell Enterprise”), Elegant Living Corp. (“Elegant

Living”), and Times Flooring Co., Ltd. (“Times Flooring”).

Issuance of Q&V Questionnaires, C-570-971, POI 09 (Dec. 3, 2010),

Admin. R. Pt. 1 Pub. Doc. 91 attach. 1.    When no company under

these names responded, Commerce placed these companies on the

list of non-cooperating companies that would receive an AFA rate.

Preliminary Determination, 76 Fed. Reg. at 19,042.

             Following the Preliminary Determination, Plaintiffs

filed ministerial error allegations protesting the inclusion of

Eswell Enterprise, Elegant Living, and Times Flooring on the AFA

list.    In the ministerial error allegations, Plaintiff Shanghai

Eswell Timber Co., Ltd. (“Eswell Timber”) argued that Eswell

Enterprise was its non-exporting parent company, Eswell Timber

Ministerial Error Comments, C-570-971, POI 09 (Mar. 25, 2011),

Admin. R. Pt. 1 Pub. Doc. 256 at 1–2 (“Eswell Allegation”), and

Plaintiff Samling Group argued that Elegant Living and Times

Flooring represented inaccurate listings of, respectively,

Baroque Timber Industries (Zhongshan) Co., Ltd., (“Baroque

Timber”) and Suzhou Times Flooring Co., Ltd., Samling Group
Consol. Ct. No. 11-00533                                     Page 21

Ministerial Error Allegation, C-570-971, POI 09 (Mar. 24, 2011),

Admin. R. Pt. 1 Pub. Doc. 255 at 2 (“Samling Allegation”).

           In response to the ministerial error allegations,

Commerce requested additional information from Plaintiffs.

Ministerial Error Allegations Mem., C-570-971, POI 09 (Apr. 21,

2011), Admin. R. Pt. 1 Pub. Doc. 270 at 4; I & D Mem. Cmt. 6 at

47-48.   Eswell Timber provided business and shareholder

information outlining Eswell Enterprise’s ownership of Eswell

Timber and a statement from Eswell Enterprise confirming that it

did not independently export subject merchandise. Eswell Timber

Questionnaire Resp., C-570-971, POI 09 (June 30, 2011), Admin. R.

Pt. 1 Pub. Doc. 326 at 5, attach. 1 (“Eswell Resp.”).   Samling

Group provided information on its corporate and capital

structure, noting that, though no company under the name Elegant

Living existed within the Samling Group hierarchy, Baroque Timber

occasionally uses “Elegant Living” as a trade name. Samling Group

Questionnaire Resp., C-570-971, POI 09 (June 30, 2011), Admin. R.

Pt. 1 Pub. Doc. 325 exs. A, B (“Samling Resp.”); Samling 6/30

Questionnaire Public Version Narrative, C-570-971, ARP 09 (July

1, 2011), Admin. R. Pt. 1 Pub. Doc. 328 at 2 (“Samling Narrative

Resp.”).

           Commerce eventually removed Times Flooring from the AFA

list but not Eswell Enterprise or Elegant Living. Final

Determination, 76 Fed. Reg. at 64,315-17; I & D Mem. Cmt. 6 at
Consol. Ct. No. 11-00533                                      Page 22

49.   According to Commerce, although the strong similarities in

names and addresses shared by the “Times Flooring” companies

justified merging the two, Baroque Timber and Elegant Living did

not share equally dispositive similarities. I & D Mem. Cmt. 6 at

49.   Commerce primarily justified its decision by relying on

evidence that separate companies within Samling Group used

“elegant living” as part of their names. Id.; Samling Resp.

ex. B.     Therefore, Commerce reasons, since a company separate

from Baroque Timber potentially existed, a separate response

should have been filed on behalf of Elegant Living. See I & D

Mem. Cmt. 6 at 49.      Likewise, Commerce concluded that Eswell

Enterprise was a separate company from Eswell Timber, and

therefore, it should have responded separately to the Q&V

questionnaire it received. Id.

      B.     Analysis

             In the instant case, Commerce emphasizes Plaintiffs’

failure to submit information by the Q&V deadline as a failure to

cooperate, thereby justifying the application of AFA. Def.’s

Resp. at 26–27.    And, certainly, setting and enforcing its own

deadlines is within Commerce’s discretion.     See, e.g., Reiner

Brach, 26 CIT at 559, 206 F. Supp. 2d at 1334 (“Commerce has

broad discretion to establish its own rules governing

administrative procedures, including the establishment and

enforcement of time limits . . . .”); Yantai Timken Co. v. United
Consol. Ct. No. 11-00533                                      Page 23

States, 31 CIT 1741, 1755, 521 F. Supp. 2d 1356, 1371 (2007) (“In

order for Commerce to fulfill its mandate to administer the

antidumping duty law, including its obligation to calculate

accurate dumping margins, its must be permitted to enforce the

time frame provided in its regulations.”).   Furthermore, this

Court has upheld Commerce’s enforcement of its regulatory

deadlines when it rejects new factual information submitted after

the applicable deadline and subsequently applies AFA. Hyosung

Corp. v. United States, 35 CIT __, Slip. Op. 11-34 at *9–11 (Mar.

31, 2011) (upholding Commerce’s use of adverse inferences when

the respondent failed to report that it did not have shipments of

subject merchandise in response to a Q&V questionnaire); see also

Uniroyal Marine Exps. Ltd. v. United States, 33 CIT __, 626 F.

Supp. 2d 1312, 1316–17 (2009); Yantai Timken, 31 CIT at 1755–56,

521 F. Supp. 2d at 1371; Reiner Brach, 26 CIT at 559, 206 F.

Supp. 2d at 1334.

           Nevertheless, Commerce’s discretion in rejecting

untimely information is not absolute.   Rather, as the Court of

Appeals has held, Commerce abuses its discretion when it refuses

to consider untimely “corrective” information. Timken U.S. Corp.

v. United States, 434 F.3d 1345, 1353–54 (Fed. Cir. 2006); NTN

Bearing Corp. v. United States, 74 F.3d 1204, 1208–09 (Fed. Cir.

1995).   “[A] regulation which is not required by statute,” such

as the timeliness regulation, “may, in appropriate circumstances,
Consol. Ct. No. 11-00533                                     Page 24

be waived and must be waived where failure to do so would amount

to an abuse of discretion.” NTN Bearing Corp., 74 F.3d at 1207.

In addition, when considering correction of an error at the

preliminary results stage, the court “balance[s] the desire for

accuracy . . . with the need for finality at the final results

stage.” Timken, 434 F.3d at 1353–54.   When a respondent seeks to

correct an error after the preliminary results but before the

final results, this court may require Commerce to analyze the new

information. See id.16

          When considering whether a rejection of untimely

information amounts to an abuse of discretion, the court weighs

the burden of accepting late submissions and the need for

finality against the statute’s goals of accuracy and fairness.

See Grobest & I-Mei Indus. (Vietnam) Co. v. United States, 36 CIT

     16
       The Court of Appeals recently held in PSC VSMPO-AVISMA v.
United States, Appeal No. 2011-1370, -1395 at *17 (Fed. Cir. July
27, 2012) that “[t]he role of judicial review is limited to
determining whether the record is adequate to support the
administrative action. A court cannot set aside application of a
proper administrative procedure because it believes that properly
excluded evidence would yield a more accurate result if the
evidence were considered.” However, PSC VSMPO-AVISMA is
distinguishable from the Court of Appeals’ prior holdings in NTN
Bearings and Timken. Whereas PSC VSMPO-AVISMA concerned
submission of factual information to supplement the record, NTN
Bearings and Timken concerned correction of errors at the
preliminary results stage. We do not read PSC VSMPO-AVISMA’s
holding that the court should not interfere with the creation of
the administrative record to be in tension with the court’s
responsibility to review Commerce’s consideration of errors for
abuse of discretion. Furthermore, in this case Commerce
requested new factual information to supplement the record, so
the concerns expressed in PSC VSMPO-AVISMA are not present.
Consol. Ct. No. 11-00533                                      Page 25

__, 815 F. Supp. 2d 1342, 1365 (2012); Fischer S.A. Comercio,

Industria & Agricultura v. United States, 34 CIT __, 700 F. Supp.

2d 1364, 1375–77 (2010).   “Thus, while deferring to Commerce’s

necessary discretion to set and enforce its deadlines, the court

will review on a case-by-case basis whether the interests of

accuracy and fairness outweigh the burden placed on the

Department and the interest in finality.” Grobest, 36 CIT at __,

815 F. Supp. 2d at 1365.   “Finality concerns only begin to

counterbalance accuracy concerns when [Commerce] reaches the

final results stage.” Fischer, 34 CIT at __, 700 F. Supp. 2d

at 1375.

           In this case Commerce, following the Preliminary

Determination and in response to Plaintiffs’ ministerial error

allegations, sought additional evidence in support of Plaintiffs’

claims, which Plaintiffs subsequently placed on the record.

Commerce’s failure to take into account that evidence amounts to

an abuse of discretion where, as here, the concerns for accuracy

and fairness outweigh concerns of finality and agency burden.17

Furthermore, Commerce’s failure to take into account evidence on

the record that supported removing Elegant Living and Eswell

     17
       Because both the ministerial error allegations and the
new record evidence occurred prior to the Final Determination,
there are no significant finality concerns here. Nor does the
relatively small amount of new record evidence to be considered
present any concern with regard to agency burden. Cf. Fischer, 34
CIT at __, 700 F. Supp. 2d at 1376–77.
Consol. Ct. No. 11-00533                                      Page 26

Enterprise from the AFA list renders the determination

unsupported by substantial evidence. Universal Camera Corp. v.

NLRB, 340 U.S. 474, 488 (1951) (“The substantiality of evidence

must take into account whatever in the record fairly detracts

from its weight.”).

            The record contains evidence that Elegant Living is a

misidentification of Baroque Timber.   The Samling Group put

evidence on the record that Baroque Timber (1) uses “Elegant

Living” as a trade name and brand, (2) resides at the address

listed for Elegant Living, and (3) exports subject merchandise.

Samling Allegatin at 2; Samling Narrative Resp. at 1–2.

Furthermore, Samling Group submitted evidence demonstrating that

no company with the exact name of Elegant Living Corporation

exists within the company hierarchy. See Samling Resp. ex. B.18

            In rejecting the evidence supporting Plaintiffs’ claim,

Commerce pointed to Samling’s annual report to demonstrate the

existence of several “Elegant Living” companies within Samling

Group, notably a company in the PRC owned by Baroque Timber and

named Shanghai Elegant Living Timber Products. I & D Mem. Cmt. 6

at 49.    Commerce may be correct in asserting that because

“Elegant Living” could have identified multiple companies

separate from Baroque Timber, “additional Q&V Questionnaire

     18
       The court notes that the exact same evidence led Commerce
to remove Times Flooring from the AFA list. See I & D Mem. Cmt. 6
at 49.
Consol. Ct. No. 11-00533                                     Page 27

responses should have been submitted, even if they indicated ‘no

exports.’” Id.   However, such argument simply ignores the

evidence indicating that the “Elegant Living” in the petition was

Baroque Timber, as well as evidence that no actual Elegant Living

Corporation exists.19   Failure to take this evidence into account

fails the substantial evidence test.   If Commerce wishes to keep

an “Elegant Living” company on the AFA list, the interests of

accuracy and fairness demand that Commerce must either determine,

based on substantial evidence, that Elegant Living Corporation

does exist or determine what company within Samling Group, if

any, failed to cooperate.

          Commerce has a stronger case for including Eswell

Enterprise, but not one which ultimately meets the substantial

evidence standard.   A determination of affiliation or collapsing

falls to Commerce to decide and not to respondents in deciding

what information to supply. Cf. Reiner Brach, 26 CIT at 556–57,

206 F. Supp. 2d at 1331.    Moreover, the Q&V questionnaire clearly

requested from the recipient, Eswell Enterprise, information

regarding exportation of subject merchandise. Q&V Questionnaire,

C-570-971, POI 09 (Dec. 3, 2010), Admin. R. Pt. 1 Pub. Doc. 90

     19
        Commerce does not contend in its briefs that Elegant
Living Corporation exists. In this sense, there is no dispute
between the parties as to the existence of Elegant Living; rather
they dispute the application of AFA. It is difficult to see how
leaving Elegant Living on the AFA list serves any purpose when no
such company exported or will export anything to the United
States.
Consol. Ct. No. 11-00533                                       Page 28

Attach. 1.    The accompanying letter also warned that failure to

cooperate to the best of one’s ability could result in the use of

adverse inferences. Id. at 1.     Thus, Eswell Enterprise could have

simply responded with “no exports.”

             Had no further evidence regarding Eswell Enterprise

been placed on the record, our inquiry might end here. Cf.

Hyosung, 35 CIT at __, Slip. Op. 11-34 at *10–11.    However,

unlike the facts of Hyosung, where Commerce rejected untimely new

information, in this case Commerce sought and permitted

Plaintiffs to place additional information on the record.      This

includes evidence indicating that Eswell Enterprise is the parent

company of Eswell Timber and that Eswell Enterprise does not

independently export subject merchandise.

             Commerce may not request and subsequently ignore record

evidence.    As discussed above, Eswell Enterprises’s failure to

respond to the Q&V Questionnaire is not dispositive once a

correction is requested and new evidence is placed on the record.

Under these circumstances, Commerce must consider the evidence so

long as the concerns for accuracy and fairness outweigh those for

finality and agency burden — which they do here — and failure to

consider the evidence renders a determination unsupported by

substantial evidence.

             Because the record contains evidence permitting

Commerce to determine that Elegant Living and Eswell Enterprise
Consol. Ct. No. 11-00533                                      Page 29

were not companies that belonged on the AFA list and Commerce

unjustifiably failed to take into account this evidence, the

court finds Commerce’s decision unsupported by substantial

evidence and remands for reconsideration.

                            CONCLUSION

           In accordance with the foregoing opinion, the Final

Determination, is affirmed, in part, and remanded, in part.

           Commerce’s decisions to use AFA in calculating the

value of the LTAR subsidy and the inclusion of the BET in the

Final Determination are affirmed.   Commerce’s inclusion of

Elegant Living and Eswell Enterprises is remanded for

reconsideration or further explanation consistent with this

opinion.

           Commerce shall have until October 30, 2012, to complete

and file its remand redetermination.     Plaintiffs and Defendant-

Intervenors shall have until November 13, 2012, to file comments.

Plaintiffs, Defendant, and Defendant-Intervenors shall have until

November 27, 2012, to file any reply.

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

Dated: August 31, 2012
     New York, New York