Zhejiang Quzhou Lianzhou Refrigerants Co., Ltd. et al v. United States

Slip Op. 18-136
UNITED STATES COURT OF INTERNATIONAL TRADE
ZHEJIANG QUZHOU LIANZHOU
REFRIGERANTS CO., LTD
AND ZHEJIANG QUHUA
FLUOR-CHEMISTRY CO., LTD.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
ARKEMA INC., THE CHEMOURS
COMPANY FC LLC, HONEYWELL
INTERNATIONAL INC., AND
MEXICHEM FLUOR INC.,
Defendant-Intervenors.
Before: Mark A. Barnett, Judge
Court No. 17-00121
PUBLIC VERSION
OPINION
[Plaintiffs’ motion for judgment on the agency record is denied. Commerce’s Final
Determination is supported by substantial evidence and otherwise in accordance with
law; therefore, the Final Determination is sustained and judgment will enter for
Defendant.]
Dated: October 11, 2018
Jordan C. Kahn, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York,
NY, argued for Plaintiffs. With him on the brief were Ned H. Marshak and Max F.
Schutzman.
Kelly A. Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for Defendant. With her on the brief
were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 1 of 29

Court No. 17-00121 	Page 2
David Richardson, Attorney, Office of Chief Counsel for Trade Enforcement and
Compliance, U.S. Department of Commerce, of Washington, DC.
Jonathan Zielinski, Cassidy Levy Kent (USA) LLP, of Washington, DC, argued for
Defendant-Intervenors. With him on the brief were James R. Cannon, Jr. and Ulrika K.
Swanson.
Barnett, Judge: Plaintiffs Zhejiang Quzhou Lianzhou Refrigerants Co., Ltd.
(“Lianzhou”), and Zhejiang Quhua Fluor-Chemistry Co., Ltd. (“Quhua”) (together,
“Plaintiffs”), challenge the United States Department of Commerce’s (“Commerce” or
the “agency”) final determination in the antidumping duty investigation of 1,1,1,2
Tetrafluoroethane (R-134a) from the People’s Republic of China (“PRC” or “China”).
See 1,1,1,2 Tetrafluoroethane (R-134a) from the People’s Republic of China, 82 Fed.
Reg. 12,192 (Dep’t Commerce March 1, 2017) (final determination of sales at less than
fair value and aff. determination of critical circumstances, in part) (“Final
Determination”), ECF No. 19-4, and accompanying Issues and Decision Memorandum
(“I&D Mem.”), A-570-044 (Feb. 21, 2017), ECF No. 19-5. 1 Specifically, Plaintiffs
challenge Commerce’s denials of Lianzhou’s and Quhua’s requests for separate rates
and assignment thereto of the China-wide antidumping duty rate. 	See Confidential
Pls.’ Mot. for J. on the Agency R. and Mem. of Law in Supp. of Pls.’ Mot. for J. on the
Agency R. (“Pls.’ Mem.”), ECF No. 26. Defendant United States (“Defendant”) and
1 The administrative record is divided into a Public Administrative Record (“PR”), ECF
No. 19-1, and a Confidential Administrative Record (“CR”), ECF No. 19-2. Parties
submitted joint appendices containing record documents cited in their briefs. See Public
JA (“PJA”), ECF No. 42; Confidential JA (“CJA”), ECF Nos. 40-41. The court references
the confidential versions of the relevant record documents, if applicable, throughout this
opinion, unless otherwise specified.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 2 of 29

Court No. 17-00121 	Page 3
Defendant-Intervenors 2 support Commerce’s determination. See Def.’s Resp. to Pls.’
Mots. [sic] for J. on the Agency R. (“Def.’s Resp.”), ECF No. 32; Confidential Resp. Br.
of Arkema Inc., The Chemours Co. FC, LLC, Honeywell International Inc., and
Mexichem Fluor, Inc. (“Def.-Ints.’ Resp.”), ECF No. 33. For the following reasons,
Plaintiffs’ motion is denied.
B ACKGROUND
On March 23, 2016, Commerce initiated an investigation into 1,1,1,2
Tetrafluoroethane (R-134a) from China alleged to have been sold in the United States
at less than fair value. See 1,1,1,2 Tetrafluoroethane (R-134a) from the People’s
Republic of China, 81 Fed. Reg. 18,830, 18,830 (Dep’t Commerce April 1, 2016)
(initiation of less than fair value investigation), PR 27, CJA Tab 3, PJA Tab 3, ECF No.
40. 3 In the notice of initiation, Commerce directed exporters and producers seeking a
separate rate to submit a separate rate application and respond to Commerce’s quantity
and value questionnaire. Id. at 18,834. Commerce further instructed that companies
selected as mandatory respondents must respond to all parts of the agency’s
antidumping questionnaire to be eligible for a separate rate. Id.
Quhua timely submitted its separate rate application. See Quhua Separate Rate
Appl. (May 9, 2016) (“Quhua SRA”), CR 50-54, PR 70-71, CJA Tab 4, PJA Tab 4, ECF
No. 40. Commerce selected Lianzhou as a mandatory respondent; thus, Lianzhou
2 Defendant-Intervenors include Arkema Inc., The Chemours Co. FC, LLC, Honeywell
International Inc., and Mexichem Fluor, Inc. (collectively, “Defendant-Intervenors”).
3 The period of investigation is July 1, 2015 to December 31, 2015. Final
Determination, 82 Fed. Reg. at 12,192.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 3 of 29

Court No. 17-00121 	Page 4
submitted its request for a separate rate in Section A of its questionnaire response. See
Respondent Selection Mem. (Apr. 26, 2016) at 1, CR 34, PR 60, CJA Tab 10, PJA Tab
10, ECF No. 40; Lianzhou Sec. A Questionnaire Resp. (May 31, 2016) (“Lianzhou
AQR”) at 2-22, CR 66-83, PR 87-92, CJA Tab 5A, PJA Tab 5, ECF No. 40.
In September 2016, Commerce preliminarily denied Lianzhou’s and Quhua’s
separate rate requests. See Decision Mem. for Prelim. Determination (Sept. 29, 2016)
(“Prelim. Mem.”) at 17, PR 172, CJA Tab 6, PJA Tab 6, ECF No. 41; Prelim. Denial of
Separate Rates (Sept. 29, 2016) (“Separate Rate Mem.”), CR 151, PR 176, CJA Tab 7,
PJA Tab 7, ECF No. 41. 4 Commerce determined that Plaintiffs’ respective chains of
ownership each extended to the Chinese government because Lianzhou and Quhua
are wholly-owned by Zhejiang Juhua Co., Ltd. (“Zhejiang Juhua”), 5 which, in turn, is
majority owned (55.86 percent) by Juhua Group Corporation (“Juhua Group”), a state-
owned enterprise (“SOE”) supervised by the State-owned Assets Supervision and
Administration Commission (“SASAC”) of Zhejiang province. Id. at 2 & n.9 (citing
Quhua SRA at 16, Exs. 7D, 12). 6 Commerce also noted that Juhua Group may “elect
Zhejiang Juhua’s directors . . . in accordance with the number of shares it owns, i.e.,
4 Thereafter, Lianzhou did not participate as a mandatory respondent. See Prelim.
Mem. at 3 (explaining that Commerce did not issue supplemental questionnaires to
Lianzhou on the basis of its preliminary finding of ineligibility for a separate rate).
5 Zhejiang Juhua is a “publicly-traded company listed on the Shanghai Stock
Exchange.” Lianzhou AQR at 11 (emphasis omitted); see also Quhua SRA at 12.
6 Exhibit 7D consists of various public announcements regarding actions taken at
Zhejiang Juhua’s annual shareholder meetings. See Quhua SRA, Ex. 7D. Exhibit 12
consists of letters documenting Zhejiang Juhua’s appointment of Quhua’s executive
director, supervisor, general manager, and person in charge of finance. See Quhua
SRA, Ex. 12.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 4 of 29

Court No. 17-00121 	Page 5
55.86 percent.” Id. at 2. 7 Zhejiang Juhua, in turn, appoints Lianzhou’s and Quhua’s
executive director, supervisor, and general manager. Id. at 2 & nn.7,10 (citing, inter
alia, Lianzhou AQR at 22; 8 Quhua SRA at 16, Exs. 7D, 12). With respect to Lianzhou,
Commerce explained that “the general manager appoints other managers, including
deputy general managers.” Separate Rate Mem. at 2. With respect to Quhua,
Commerce explained that Article 9 of Quhua’s articles of association “establishes that
all operations, profit distribution, etc. are subject to review by Zhejiang Juhua, whose
management is subject to government control.” Separate Rate Mem. at 2 & n.11 (citing
Quhua SRA at 16, Exs. 7D, 12). 9
On March 1, 2017, Commerce affirmed its preliminary finding in the Final
Determination. 82 Fed. Reg. at 12,194 n.16. Commerce confirmed that Plaintiffs are
each “indirectly majority-owned by an SOE,” i.e, Juhua Group, and explained that it
“would expect any majority shareholder, including a government, to have the ability to
control, and an interest in controlling, the operations of the company, including the
7 Certain information treated as business proprietary in the Separate Rate
Memorandum and other record documents is disclosed herein on the basis of Plaintiffs’
representation to the court that the information is now public.
8 Commerce also cited to “Ex. A-9 at Art. 9” of Lianzhou’s Section A Questionnaire
Response. Separate Rate Mem. at 2 n.7. Exhibit A-9 consists of letters documenting
Zhejiang Juhua’s appointment of Lianzhou’s executive director, supervisor, and general
manager; thus, there is no Article 9 therein. See Lianzhou AQR, Ex. A-9. Article 9 of
Lianzhou’s articles of association, however, provides for Zhejiang Juhua’s appointment
of Lianzhou’s executive director, supervisor, and general manager. See Lianzhou AQR,
Ex. A-7 at Art. 9.
9 Quhua’s articles of association are appended to its separate rate application at Exhibit
10. Article 9 governs Zhejiang Juhua’s responsibilities as sole shareholder. See Quhua
SRA, Ex. 10 at Art. 9.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 5 of 29

Court No. 17-00121 	Page 6
selection of management and the [company’s] profitability.” I&D Mem. at 12 & n.65
(citing Lianzhou AQR at 11; Quhua SRA at 12). According to Commerce, “the majority
ownership holding in and of itself means that the government exercises, or has the
potential to exercise, control over the company’s operations generally.” Id. at 11.
Commerce pointed to the “various responsibilities” assigned to Juhua Group in Zhejiang
Juhua’s articles of association, id. at 13 & n. 68 (citing Quhua SRA, Ex. 7C (“Zhejiang
Juhua Arts. of Assoc.”)), and Zhejiang Juhua’s active participation in Plaintiffs’ daily
operations, id. at 12-13 & n.67 (citing Lianzhou AQR at 25).
Commerce disagreed with Plaintiffs’ argument that Chinese law insulates them
from government control, finding instead that the various legal provisions relied upon by
Plaintiffs enable the government to “control the business activities of a company when
the government is a controlling shareholder.” Id. at 13 & n.73 (citation omitted).
Commerce further disagreed with Plaintiffs’ argument that their respective
articles of association place control over their day-to-day operations with their
respective managers. Id. at 14-15. Upon review of those documents, Commerce
determined that “Quhua’s and Lianzhou’s management is beholden to Zhejiang Juhua,
the sole owner of each company, whose board is controlled by Juhua Group, which is
wholly state-owned.” Id. at 14 & n.81 (citing Lianzhou AQR, Ex. A-7; Quhua SRA, Ex.
10). According to Commerce, “[t]he fact that Quhua’s and Lianzhou’s shareholder
appoints and changes the executive directors, general managers, and supervisors does
not prove the absence of government control when the only shareholder, who is
majority owned by SASAC, controls all shareholder decisions.” Id. at 15.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 6 of 29

Court No. 17-00121 	Page 7
Commerce also rejected Plaintiffs’ argument that the agency had impermissibly
relied on the mere potential for government control by failing to cite to a specific
instance of Juhua Group exercising its legal right to control or influence Plaintiffs’
exports of subject merchandise. Id. Commerce noted that Plaintiffs bear the burden of
rebutting the presumption of government control, and evidence demonstrated that
“Juhua Group, has the right to ‘[perform] supervision on, making suggestion for or
inquiry on the operation of Zhejiang Juhua, the sole shareholder of Quhua and
Lianzhou.’” Id. at 15 & n.89 (citing Zhejiang Juhua Arts. of Assoc., Art. 32(III)).
On May 18, 2017 Plaintiffs initiated this action challenging Commerce’s Final
Determination. Summons, ECF No. 1; Compl., ECF No. 8. Plaintiffs’ joint Rule 56.2
motion is fully briefed, and on September 11, 2018, the court heard oral argument. ECF
No. 47.
J URISDICTION AND S TANDARD OF REVIEW
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)(2012), 10 and 28 U.S.C. § 1581(c) (2012).
The court will uphold an agency determination that is supported by substantial evidence
and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial
evidence is ‘such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United States, 322 F.3d
10 All citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code,
2012 edition, unless otherwise stated.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 7 of 29

Court No. 17-00121 	Page 8
1369, 1374 (Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB., 305 U.S. 197, 229
(1938)).
DISCUSSION
I. 	Legal Framework Governing Separate Rate Status in Proceedings
Involving Nonmarket Economy Countries
In antidumping duty proceedings involving a country, such as China, that
Commerce considers to have a nonmarket economy, Commerce employs a rebuttable
presumption that all enterprises operating within that country are controlled by the
government. See Huaiyin Foreign Trade Corp., 322 F.3d at 1372; Sigma Corp. v.
United States, 117 F.3d 1401, 1405 (Fed. Cir. 1997) (reviewing and affirming
Commerce’s use of the presumption); Jiangsu Jiasheng Photovoltaic Tech. Co., Ltd. v.
United States (“Jiasheng I”), 38 CIT ___, ___, 28 F. Supp. 3d 1317, 1338 (2014).
Commerce assigns each exporter of subject merchandise a single countrywide rate,
unless the exporter requests an “individualized antidumping duty margin” and
“demonstrate[s] an absence of state control” over its export-related activities, Huaiyin
Foreign Trade Corp., 322 F.3d at 1372, both in law (de jure) and in fact (de facto),
Jiangsu Jiasheng Photovoltaic Tech. Co., Ltd. v. United States (“Jiasheng II”), 39 CIT
___, ___, 121 F. Supp. 3d 1263, 1266 (2015); see also Sigma Corp., 117 F.3d at 1405
(“no manufacturer would receive a separate antidumping duty rate unless it could
demonstrate that it enjoyed both de jure and de facto independence from the central
government”). The exporter of subject merchandise bears the burden of showing it is
autonomous of government control. AMS Assoc., Inc. v. United States, 719 F.3d 1376,
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 8 of 29

Court No. 17-00121 	Page 9
1379-80 (Fed. Cir. 2013); see also Sigma Corp., 117 F.3d at 1405-06 (Commerce’s
decision to place the burden on exporters is justified because exporters have best
access to information) (citing Zenith Elecs. Corp. v. United States, 988 F.2d 1573, 1583
(Fed. Cir. 1993)).
To establish whether an exporter is eligible for a separate rate, Commerce
applies a test it first set forth in Sparklers from the People’s Republic of China, 56 Fed.
Reg. 20,588, 20,589 (Dep’t Commerce May 6, 1991) (final determination of sales at less
than fair value), and modified in Silicon Carbide from the People’s Republic of China, 59
Fed. Reg. 22,585, 22,586-87 (Dep’t Commerce May 2, 1994) (final determination of
sales at less than fair value); see also Policy Bulletin on the Topic of Separate-Rates
Practice and Application of Combination Rates in Antidumping Investigations involving
Non-Market Economy Countries (April 5, 2005) (“Policy Bulletin 05.1”) at 1-2, available
at http://enforcement.trade.gov/policy/bull05-1.pdf (last visited Oct. 4, 2018) (restating
the de jure and de facto criteria). Only Commerce’s finding pursuant to the de facto test
is challenged here. 11
To determine whether an exporter is free of de facto government control,
Commerce considers four factors: (i) whether export prices are set by or subject to the
approval of a governmental authority; (ii) whether the exporter has authority to negotiate
and sign contracts and other agreements; (iii) whether the exporter has autonomy from
the government in making decisions regarding the selection of its management; and (iv)
11 Commerce made no findings regarding de jure control. See I&D Mem. at 10-16.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 9 of 29

Court No. 17-00121 	Page 10
whether the exporter retains the proceeds of its export sales and makes independent
decisions regarding the disposition of profits or financing of losses. Policy Bulletin 05.1
at 2; see also Jiasheng I, 28 F. Supp. 3d at 1349.
Here, Commerce’s denial of a separate rate turned on Plaintiffs’ failure to
establish that it met the third criterion regarding management selection. I&D Mem. at
12-15. Plaintiffs challenge Commerce’s determination as lacking substantial evidence
and unlawful. See generally Pls.’ Mem.
II. 	Whether Commerce’s Determination is Supported by Substantial
Evidence
A. Parties’ Contentions
Plaintiffs contend that Commerce erroneously treated them as part of the PRC-
wide entity on the basis of mere potential for government control over management
selection through indirect majority ownership. Pls.’ Mem. at 31-35; Confidential Pls.’
Reply Br. (“Pls.’ Reply”) at 2-5, ECF No. 38. Plaintiffs further contend that extensive
record evidence demonstrates their autonomy from the government with regard to
management selection. Pls.’ Mem. at 28-31. Specifically, Plaintiffs contend that
Zhejiang Juhua’s articles of association and Chinese law together protect Zhejiang
Juhua from its controlling shareholder and ensure that “[t]he democratically elected
Zhejiang Juhua board selects its own management, as well as that for Plaintiffs.” Id. at
31 (asserting that “the public ownership of Zhejiang Juhua extinguishes any ability for
Juhua Group or SASAC to control the selection of Plaintiffs’ management.”). Plaintiffs
also contend that Commerce impermissibly denied their separate rate requests on the
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 10 of 29

Court No. 17-00121 	Page 11
basis of a single de facto criterion, id. at 24-28, and misapplied relevant judicial
precedent, id. at 35-41; see also Pls.’ Reply at 14-17 (seeking to distinguish cases
affirming separate rate denials when a state-owned enterprise held indirect majority
ownership). 12
Defendant and Defendant-Intervenors contend that Commerce’s reliance on
indirect majority ownership to find that Plaintiffs failed to rebut the presumption of
government control is supported by substantial evidence. Def.’s Resp. at 16-17, 19-25;
Def.-Ints.’ Resp. at 7-11. Defendant further asserts that Commerce properly relied on
Plaintiffs’ failure to demonstrate autonomy with regard to management selection to deny
their separate rate requests, Def.’s Resp. at 18-19, and Commerce’s determination is
consistent with relevant judicial precedent, id. at 26-31; see also Def.-Ints.’ Resp. at 11-
14.
B. Commerce’s Determination that Plaintiffs Failed to Rebut the Presumption
of Government Control is Supported by Substantial Evidence
Plaintiffs first challenge Commerce’s determination as “based entirely on
speculation” and “the mere potential for control” by their indirect majority government
owner. Pls.’ Mem. at 32, 35. Plaintiffs’ argument fails to recognize Commerce’s
reevaluation of the manner in which it interprets evidence of government ownership in
12 Plaintiffs also contend that Defendant-Intervenors have advanced several arguments
supporting Commerce’s determination that Commerce itself did not rely upon. Pls.’
Reply at 7-8 (citing Def.-Ints.’ Resp. at 4, 11-19). It is well settled that the court may
only sustain the agency's decision “on the same basis articulated in the order by the
agency itself.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168–69
(1962). Accordingly, the court limits its consideration to the grounds advanced by
Commerce.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 11 of 29

Court No. 17-00121 	Page 12
connection with the presumption of government control as a result of a series of court
opinions issued in response to the Diamond Sawblades proceeding. See Diamond
Sawblades and Parts Thereof from the People's Republic of China, 71 Fed. Reg.
29,303 (Dep’t Commerce May 22, 2006) (final determination of sales at less than fair
value and final partial aff. determination of critical circumstances), as amended, 71 Fed.
Reg. 35,864 (Dep’t Commerce June 22, 2006); Advanced Tech. & Materials Co., Ltd. v.
United States (“AT&M I”), Slip. Op. 11-122, 2011 WL 5191016, at *1 (CIT Oct. 12,
2011); Advanced Tech. & Materials Co., Ltd. v. United States (“AT&M II”), 36 CIT ___,
885 F. Supp. 2d 1343 (2012); Advanced Tech. & Materials Co., Ltd. v. United States
(“AT&M III”), 37 CIT ___, 938 F. Supp. 2d 1342 (2013), aff’d, 581 F. App’x. 900, 901
(Fed. Cir. 2014); 13 I&D Mem. at 11 (noting Commerce’s ongoing evaluation of its
practice).
In litigation arising out of the Diamond Sawblades proceeding, the domestic
industry challenged Commerce’s grant of a separate rate to Advanced Technology &
Materials Co. Ltd., Beijing Gang Yan Diamond Products Company, and Gang Yan
Diamond Products, Inc. (collectively, “AT&M”). See AT&M I, 2011 WL 5191016, at *1.
Commerce had initially granted AT&M a separate rate even though AT&M was majority-
owned by the Central Iron and Steel Institute (“CISRI”), which, in turn, was wholly-
owned and controlled by SASAC. Id. at *5. At the time, Commerce did not consider the
“activities of [an exporter’s] owner, or its owner's parent company,” when conducting its
13 The affirmance is nonprecedential. See Fed. Cir. Rule 32.1(b).
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 12 of 29

Court No. 17-00121 	Page 13
separate rate analysis and, thus, had not addressed evidence showing that certain of
CISRI’s board-members sat on AT&M’s board and that AT&M’s president and vice
chairman sat on CISRI’s board. Id. at *10, *12. The court remanded Commerce’s
determination for further consideration of the implications of this indirect government
majority ownership. See id. at *10, *12, *14.
On remand, Commerce initially affirmed its separate rate determination. See
AT&M II, 885 F. Supp. 2d at 1348-49. Commerce did not find the overlapping board
membership between AT&M and CISRI compelling on the basis that candidates
nominated by CISRI to sit on AT&M’s board required unanimous consent to gain
appointment and, thus, CISRI did not “‘control’ AT&M’s board,” and further noted that
“CISRI's representatives on the board are a minority in number.” Id. at 1348-49.
The court again remanded Commerce’s determination for failure “to consider
important aspects of the problem.” Id. at 1349. The court noted that four of AT&M’s
nine directors were CISRI representatives and the absence of evidence that the five
“non-CISRI” directors were free from government control. Id. at 1358-59. The court
further noted that two of the “non-CISRI” directors occupied AT&M management
positions and, thus, were “beholden to the board that controls their pay.” Id. Because
“board members are properly presumed subject to governmental control, directly or
indirectly,” the court concluded that “true independence and autonomy remain[ed] in
doubt until proven otherwise.” Id. The court characterized Commerce’s reliance on the
absence of record evidence demonstrating SASAC’s exercise of its legal right to
intervene “in the selection of management and board members . . . as an evisceration of
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 13 of 29

Court No. 17-00121 	Page 14
the presumption of state control.” Id. at 1358. The court opined that the presumption
had not been rebutted to the point of shifting the burden to the domestic industry to
prove actual instances of government intervention. Id.
In the second remand redetermination, Commerce, under protest, 14 denied
AT&M’s separate rate request on the basis that it had not demonstrated autonomy from
the government with regard to management selection. AT&M III, 938 F. Supp. 2d at
1344. Commerce explained that “government control had the potential to pass from
SASAC through to [AT&M] via CISRI,” and this potential was exercised by CISRI’s
nomination of five AT&M board members and its placement of four of its officials on
AT&M’s board. Id. at 1345. The court sustained Commerce’s determination. Id. at
1353.
Commerce’s “protest” notwithstanding, in subsequent proceedings Commerce
has viewed evidence of majority government ownership as “mean[ing] that the
government exercises or has the potential to exercise control over the company’s
operations generally, which may include control over, for example, the selection of
management . . . .” Decision Mem. for the Prelim. Determination of the Antidumping
Duty Investigation of Carbon and Certain Alloy Steel Wire Rod from the PRC, A-570-
012 (Aug. 29, 2014) (“Steel Wire Rod Mem.”) at 6-7, available at https://enforcement.
trade.gov/frn/summary/prc/2014-21335-1.pdf (last visited Oct. 4, 2018). Accordingly,
14 By issuing a redetermination under protest, Commerce signals its disagreement with
the court’s opinion and preserves its right to appeal. See Meridian Prods. v. United
States, 890 F.3d 1272, 1276 n.3 (Fed. Cir. 2018) (citing Viraj Grp., Ltd. v. United States,
343 F.3d 1371, 1376 (Fed. Cir. 2003)).
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 14 of 29

Court No. 17-00121 	Page 15
Commerce now “consider[s] the level of government ownership where necessary.” Id.
at 7; see also id. at 8-9 (denying separate rates to certain exporters on the basis of
evidence of indirect majority government ownership); Issues and Decision Mem. for the
Final Aff. Determination in the Less-Than-Fair-Value Investigation of Hydrofluorocarbon
Blends and Components Thereof from the PRC, A-570-028 (June 21, 2016) at 50-53,
available at https://enforcement.trade.gov/frn/summary/prc/2016-15298-1.pdf (last
visited Oct. 4, 2018) (same); 1,1,1,2-Tetrafluoroethane from the PRC: Issues and
Decision Mem. for the Final Determination of Sales at Less Than Fair Value
Antidumping Duty Investigation, A-570-998 (Oct. 14, 2014) at 8-10, available at
https://enforcement.trade.gov/frn/summary/prc/2014-24903-1.pdf (last visited Oct. 4,
2018) (same).
The court recently addressed Commerce’s use of the word “potential” as it now
relates to government control in cases involving majority and minority government
ownership. See An Giang Fisheries Imp. and Exp. Joint Stock Co. v. United States (“An
Giang II”), 42 CIT ___, ___, 284 F. Supp. 3d 1350, 1361-64 (2018). 15 In An Giang II,
the court explained that, in the context of majority government ownership, “potential
control . . . is, for all intents and purposes, actual control” because “the majority
shareholder can typically control the operations of a company without actually removing
directors or management since it is clear that directors or management could be
15 An Giang II represents the court’s opinion following the remand ordered in An Giang
Fisheries Imp. and Exp. Joint Stock Co. v. United States (“An Giang I”), 41 CIT ___,
___, 203 F. Supp. 3d 1256 (2017).
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 15 of 29

Court No. 17-00121 	Page 16
removed.” Id. at 1359 (citing AT&M III, 938 F. Supp. 2d at 1348; Jiasheng II, 121 F.
Supp. 3d at 1266) (emphasis added). In contrast, when, as in An Giang II, there is
minority government ownership, the phrase “potential control” may not suggest “actual
control.” Id. Under those circumstances, “Commerce has required additional indicia of
control prior to concluding that a respondent company could not rebut the presumption
of de facto government control.” Id.; see also id. at 1361-1364 (affirming Commerce’s
denial of a separate rate in light of evidence that an exporter’s general director was
“beholden” to the minority government shareholder responsible for appointing him, as
well as evidence that company employees were “beholden” to the general director that
controlled their pay and had the ability to fire them).
The foregoing discussion demonstrates that Commerce views government
ownership differently depending on whether the government is a majority or minority
owner. Evidence of legal separation between an exporter subject to the nonmarket
economy presumption of government control and its parent company (and its parent’s
state-owned parent company) of the type relied upon by Plaintiffs here may rebut the
presumption of de facto control over management selection when the government holds
a minority stake. Cf. Jiasheng II, 121 F. Supp. 3d at 1268-73 (affirming Commerce’s
grant of a separate rate on the basis that evidence of minority ownership alone was
insufficient to demonstrate de facto control); An Giang II, 284 F. Supp. 3d at 1361-64
(affirming Commerce’s denial of a separate rate in light of evidence of minority
ownership plus instances of actual control). In contrast, when, as here, the government
owns a majority stake, legal separation between the exporter and its direct and indirect
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 16 of 29

Court No. 17-00121 	Page 17
parent companies does not rebut the presumption because of the ever-present potential
for the government to exert de facto control over the exporter’s operations and
management selection, and the expectation that it would do so. See I&D Mem. at 11-
12. In the latter instance, absent contrary evidence, 16 Commerce reasonably infers that
the government exerts de facto control by exercising its legal rights as a majority
shareholder of the exporter’s parent company, rendering each link in the chain of
ownership ultimately beholden to the government. See id. at 14; Jiasheng I, 28 F.
Supp. 3d at 1339 (“In both its de jure and de facto determinations, Commerce may
make reasonable inferences from the record evidence.”) (citing Daewoo Elecs. Co. v.
United States, 6 F.3d 1511, 1520 (Fed. Cir. 1993)); cf. AT&M II, 885 F. Supp. 2d at
1353 (explaining that Chinese corporate law protects the rights of investors; thus, when
the government is the controlling investor/shareholder, the law “subject[s] the investee
to governmental control”) (emphasis omitted). 17
Plaintiffs do not contest Commerce’s factual findings regarding Lianzhou’s and
Quhua’s respective chains of ownership. Pls.’ Mem. at 31-32 (citing I&D Mem. at 12).
16 The court addresses Plaintiffs’ assertion that Commerce has effectively rendered the
presumption “irrebuttable” infra, pp. 27-28.
17 Plaintiffs assert that, since 1994, Commerce has granted exporters a separate rate
despite “significant—and even 100 percent—government ownership.” Pls.’ Mem. at 18-
19 (citations omitted). In the only cited determination that post-dates the AT&M
litigation, the government held a minority stake in the relevant entity. See Issues and
Decision Mem. for the Admin. Review of the Antidumping Duty Order on Small Diameter
Graphite Electrodes from the PRC; 2014-2015, A-570-929 (Sept. 2, 2016) at 18-19,
available at https://enforcement.trade.gov/frn/summary/prc/2016-21782-1.pdf (last
visited Oct. 4, 2018).
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 17 of 29

Court No. 17-00121 	Page 18
Plaintiffs assert that record evidence nevertheless demonstrates autonomy with regard
to management selection. Pls.’ Mem. at 28-31. Plaintiffs’ assertion is unavailing.
Plaintiffs first point to the lack of direct involvement of SASAC/Juhua Group in the
selection or activities of Plaintiffs’ respective boards, and the lack of SASAC’s direct
involvement in the selection or activities of Zhejiang Juhua’s board. Pls.’ Mem. at 28
(citations omitted). Plaintiffs’ argument ignores that Juhua Group, an SOE, is the
majority owner of Zhejiang Juhua, and that Zhejiang Juhua, subject to that majority
ownership, is the sole owner of the Plaintiffs. See, e.g., I&D Mem. at 12 (discussing
evidence of indirect majority ownership).
Plaintiffs also point to various aspects of Zhejiang Juhua’s articles of association.
Pls.’ Mem. at 28-30. Plaintiffs argue that Article 39 “ensur[es] that [] Juhua Group is a
passive investor.” Pls.’ Mem. at 28; see also id. at 29 (“Zhejiang Juhua is required by its
[articles of association] to conduct its business operations as if it were 100 percent
owned by the public, without any ownership interest of Juhua Group.).” However,
Article 39—which provides, inter alia, that “[a] controlling shareholder . . . shall not take
advantage of its relationship to harm the interests of The Company,” and owes “a
fiduciary duty to The Company”—does not render Juhua Group a passive investor. See
Zhejiang Juhua Arts. of Assoc., Art. 39. Article 39 simply requires that any actions
Juhua Group takes as majority owner of Zhejiang Juhua are not harmful to Zhejiang
Juhua’s financial interest. See id.
Plaintiffs next assert that Articles 40, 42, and 199 of Zhejiang Juhua’s articles of
association, along with Articles 37, 39, 99, and 100 of the Company Law of the People’s
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 18 of 29

Court No. 17-00121 	Page 19
Republic of China ensure the democratic and transparent election of Zhejiang Juhua’s
board. Pls.’ Mem at 29; see also Lianzhou AQR, Ex. A-15 (Company Law of the
People’s Republic of China (effective March 1, 2014) (“PRC Company Law”). Article 39
of the PRC Company Law provides for the classification of shareholder meetings into
regular and interim meetings. PRC Company Law, Art. 39. Article 99 cross-references
and makes applicable Article 37, which provides for a company’s shareholders to elect
and replace its directors and supervisors, and to decide their pay. Id., Arts. 37, 99.
Article 100 states that “[t]he general meeting of a company shall hold an annual meeting
once every year.” Id., Art. 100. Articles 40 and 42 of Zhejiang Juhua’s articles of
association mirror those provisions. See Zhejiang Juhua Arts. of Assoc., Art. 40
(discussing the shareholders’ general meeting and associated functions, including
appointment and remuneration powers), Art. 42 (discussing the classification of
shareholder meetings). 18 None of these provisions, however, constrain Juhua Group’s
ability to elect Zhejiang Juhua’s directors in accordance with its majority shareholding.
See Separate Rate Mem. at 2; Zhejiang Juhua Arts. of Assoc., Art. 32(II) (providing for
voting in accordance with shareholdings).
Plaintiffs further assert that Articles 20 and 21 of the Code of Corporate
Governance for Listed Companies and Articles 56 and 86 19 of Zhejiang Juhua’s articles
18 Article 199 of Zhejiang Juhua’s articles of association sets forth rules governing
dissolution in the event of Zhejiang Juhua’s liquidation; thus, its relevance to Plaintiffs’
argument is unclear. See Zhejiang Juhua Arts. of Assoc., Art. 199.
19 Plaintiffs’ reference is to Article 82; however, their discussion suggests that this
reference is a typographical error and they intended to refer to Article 86. See Pls.’
Mem. at 29. Article 82 is discussed below. See infra, note 21 and accompanying text.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 19 of 29

Court No. 17-00121 	Page 20
of association protect Zhejiang Juhua from its controlling shareholder. Pls.’ Mem. at 29-
30; see also Lianzhou AQR, Ex. A-16 (Circular of the China Securities Regulatory
Commission and the State Economic and Trade Commission on the Issuance of the
Code of Corporate Governance for Listed Companies, Jan. 7, 2002) (“Corp. Code
Circular”). Pursuant to Article 20, “controlling shareholders shall nominate the
candidates for directors and supervisors in strict compliance with . . . laws, regulations
and the company’s articles of association.” Corp. Code Circular, Art. 20. Article 21
prohibits “controlling shareholders [from] . . . directly or indirectly interfer[ing] with the
company’s [lawful] decisions or business activities.” Id., Art. 21. Articles 56 and 86 of
Zhejiang Juhua’s articles of association require “candidates for directors and
supervisors” to disclose affiliations with controlling shareholders, and prevent
shareholders from voting on matters in which they retain an interest. Zhejiang Juhua
Arts. of Assoc., Arts. 56, 86. These rules and requirements, however, exist alongside,
and do not undermine, Juhua Group’s “right to [perform] supervision on, making
suggestion for or inquiry on the operation of Zhejiang Juhua, the sole shareholder of
Quhua and Lianzhou.” I&D Mem. at 15 & n.89 (citing, inter alia, Zhejiang Juhua Arts. of
Assoc., Art. 32(III)) (internal quotation marks and additional citations omitted). 20
20 	Plaintiffs seek to rely on additional provisions of the Corp. Code Circular to
demonstrate Zhejiang Juhua’s independence from Juhua Group. See Pls.’ Mem. at 9-
10 (citing Corp. Code Circular, Arts. 22-27). While these provisions may demonstrate
de jure autonomy, the issue here is de facto control, which the cited provisions fail to
rebut.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 20 of 29

Court No. 17-00121 	Page 21
Plaintiffs additionally point to Zhejiang Juhua’s “cumulative voting” 21 system and
online voting procedures that permit “smaller shareholders to have greater
representation in voting.” Pls.’ Mem. at 30 (citing Zhejiang Juhua Arts. of Assoc., Art.
82). Even if that were true, Plaintiffs have not shown that these provisions constrain
Juhua Group’s exercise of its rights as majority shareholder.
Plaintiffs’ reliance on Articles 125, 127, and 137 of Zhejiang Juhua’s articles of
association also lacks merit. See id. at 30. Article 127 provides that each board
member holds one vote, while Article 125 provides that resolutions require more than
half of all votes to pass. See Zhejiang Juhua Arts. of Assoc., Arts. 125, 127. Juhua
Group’s ability to elect the majority of the board, however, means that it effectively
controls the majority of the votes. See id., Art. 32(II). Article 137 bars “[t]he person,
who assumes the posts other than the director in a controlling shareholder or an actual
controller,” from “assum[ing] the post of senior management in [Zhejiang Juhua].” Id.,
Art. 137. This provision, however, appears to leave open the possibility that Juhua
21 Cumulative voting
allows shareholders to cast all of their votes for a single nominee for the
board of directors when the company has multiple openings on its board.
In contrast, in "regular" or "statutory" voting, shareholders may not give
more than one vote per share to any single nominee. For example, if the
election is for four directors and you hold 500 shares (with one vote per
share), under the regular method you could vote a maximum of 500
shares for each one candidate (giving you 2,000 votes total—500 votes
per each of the four candidates). With cumulative voting, you are afforded
the 2,000 votes from the start and could choose to vote all 2,000 votes for
one candidate, 1,000 each to two candidates, or otherwise divide your
votes whichever way you wanted.
Quhua SRA, Ex. 7D (definition of “Cumulative Voting”); see also Zhejiang Juhua Art. of
Assoc., Art. 82 (governing cumulative voting procedures).
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 21 of 29

Court No. 17-00121 	Page 22
Group’s “directors” or “controllers” may in fact assume positions within Zhejiang Juhua’s
senior management, which positions include “general manager, deputy general
manager, person in charge of finance, and secretary of the Board of Directors.” See id.,
Art. 135.
In sum, Plaintiffs’ insistence that Zhejiang Juhua’s articles of association, the
PRC Company Law, and the Corp. Code Circular “extinguish[]” the government’s de
facto control of Lianzhou and Quhua fails to persuade. See Pls.’ Mem. at 32. Instead,
the cited provisions represent the legal vehicles through which Juhua Group exercises
its control over Zhejiang Juhua and, thus, Quhua and Lianzhou. There is, therefore,
substantial evidence supporting Commerce’s determination that Quhua’s and
Lianzhou’s management is “beholden” to Zhejiang Juhua, whose board is controlled by
the government-owned Juhua Group. See I&D Mem. at 14; Separate Rate Mem. at 2.
Having determined that Plaintiffs failed to demonstrate autonomy vis-à-vis
management selection, Commerce was not required to conduct further analysis. 22 “The
absence of de facto government control can be shown by evidence that the exporter
sets its prices independently of the government and of other exporters, negotiates its
22 Plaintiffs rely on Jiasheng I and Jiasheng II to support the proposition that Commerce
failed to consider “the totality of the circumstances,” including the de jure prong of the
separate rate test and the three additional de facto criteria. 	Pls.’ Mem. at 24-25 (citing
Jiasheng I, 28 F. Supp. 3d at 1339 n.160; Jiasheng II, 121 F. Supp. 3d at 1266); id. at
39. In neither case, however, does the court state that Commerce must consider each
criterion and prong and evaluate or weigh the exporter’s relative fulfillment of each. The
Jiasheng II court also recognized that Commerce’s post-Diamond Sawblades practice
generally precludes an exporter or producer from obtaining a separate rate when it is
majority-owned by the government, either directly or indirectly. 121 F. Supp. 3d at
1267.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 22 of 29

Court No. 17-00121 	Page 23
own contracts, keeps the proceeds of its sales (taxation aside), and selects its
management autonomously.” AMS Assoc., 719 F.3d at 1379 (citation omitted)
(emphasis added). The test is conjunctive; thus, “Commerce requires that exporters
satisfy all four factors of the de facto control test in order to qualify for separate rate
status.” Yantai CMC Bearing Co. Ltd. v. United States, 203 F. Supp. 3d 1317, 1326
(2017) (citing AT&M III, 938 F. Supp. 2d at 1349). Because Plaintiffs failed to satisfy
one de facto criterion, “Commerce had no further obligation to continue with the
analysis.” Id. at 1326; see also Shandong Rongxin Imp. & Exp. Co., Ltd. v. United
States (“Rongxin III”), 23 42 CIT ___, Slip Op. 18-107 at 19 (Aug. 29, 2018). 24
Finally, Plaintiffs’ argument that Commerce’s determination is inconsistent with
relevant judicial precedent lacks merit. Plaintiffs seek to distinguish the Diamond
Sawblades proceeding and Yantai CMC on the basis that those cases involved
instances of actual control and on the basis that those cases did not address the
protections afforded to publicly-traded companies by the Corp. Code Circular. Pls.’
Mem. at 36-37 (citing AT&M II, 885 F. Supp. 2d at 1352, 1356); Pls.’ Mem. at 39 (citing
Yantai CMC, 203 F. Supp. 3d at 1326). Plaintiffs appear to misunderstand their burden.
Commerce presumes that exporters from a nonmarket economy country, such as
23 The court decided Rongxin III following the court ordered remands in Shandong
Rongxin Imp. & Exp. Co., Ltd. v. United States (“Rongxin II”), 41 CIT ___, 203 F. Supp.
3d 1327 (2017), and Shandong Rongxin Imp. & Exp. Co., Ltd. v. United States, 40 CIT
___, 163 F. Supp. 3d 1249 (2016).
24 Accordingly, the court does not address Plaintiffs’ arguments regarding evidence
demonstrating the absence of de jure control or the absence of de facto control vis-à-vis
the remaining criteria. See Pls.’ Mem. at 25-28.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 23 of 29

Court No. 17-00121 	Page 24
China, are government-controlled unless the exporter demonstrates otherwise. See,
e.g., Huaiyin Foreign Trade Corp., 322 F.3d at 1372. Plaintiffs’ evidence, which
documented the unbroken chain of ownership from the Chinese government to
Lianzhou and Quhua and set forth the corporate and legal mechanisms pursuant to
which Juhua Group and Zhejiang Juhua discharge their ownership duties, failed to rebut
the presumption. Cf. AT&M II, 885 F. Supp. 3d at 1358. 25 The lack of evidence of
specific instances of actual control does not render Commerce’s finding unsupported by
substantial evidence; indeed, in the context of majority government ownership, requiring
Commerce to point to such evidence turns the presumption on its head by placing the
burden on petitioners to prove the absence of autonomy. See AMS Assoc., Inc., 719
F.3d at 1379-80 (the respondent/exporter bears the burden of demonstrating autonomy
from government control); cf. An Giang II, 284 F. Supp. 3d at 1359 (noting that, in the
context of minority ownership, Commerce requires additional evidence of control before
concluding that an exporter has failed to rebut the presumption). Plaintiffs’ attempts to
analogize the facts of this case to those in which the court has remanded Commerce’s
separate rate determinations are also unavailing. 26
25 Plaintiffs’ assertion that “Juhua Group would violate the PRC Company Law if it were
to appoint Zhejiang Juhua’s board members,” Pls.’ Mem. at 38 (emphasis omitted),
misses the point because Commerce made no such finding. Rather, Commerce relied
upon Juhua Group’s ability as majority shareholder to control “the operations of the
company, including the selection of management,” and its interest in so doing. I&D
Mem. at 12.
26 Plaintiffs point to the Jiasheng I court’s statement “that Commerce considers the
‘totality of the circumstances’ and does not rely solely on ‘the possibility for
governmental control over export activities.’” Pls.’ Mem. at 39 (quoting Jiasheng I, 28 F.
Supp. 3d at 1339 n.160, 1348). That case, however, involved minority government
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 24 of 29

Court No. 17-00121 	Page 25
In sum, Commerce’s finding that Plaintiffs failed to rebut the presumption of
government control is supported by substantial evidence.
III. 	Whether Commerce’s Determination is in Accordance with Law
A. Parties’ Contentions
Plaintiffs contend that Commerce misapplied the presumption of government
control. Pls.’ Mem. at 41-42. According to Plaintiffs, the evidence they submitted
rebutted the presumption; thus, Commerce impermissibly denied their separate rate
applications absent evidence of specific instances of actual control. Id. at 41-42; see
also Pls’ Reply at 10-14. Plaintiffs also assert that Commerce has “convert[ed] the
presumption into an irrebuttable finding of government control based on indirect
ownership” without “indicat[ing] what type of evidence would have been sufficient for
separate rates.” Pls.’ Mem. at 42. Plaintiffs further contend that Commerce departed
ownership. Thus, evidence tracing ownership to the government did not merit the
denial of a separate rate. Jiasheng I, 28 F. Supp. 3d at 1349. Plaintiffs assert that An
Giang I “compels remand” on the basis of the court’s finding that Commerce had
impermissibly relied on potential control to deny a separate rate request. Pls.’ Mem. at
40 (citing An Giang I, 203 F. Supp. 3d at 1291-92). In An Giang II, however, the court
clarified the relevance of potential control in cases concerning majority and minority
government control and affirmed Commerce’s determination. 284 F. Supp. 3d at 1359.
Plaintiffs also assert that Rongxin II “compels remand” on the basis of the court’s
remand therein for Commerce to explain the propriety of its reliance on a respondent’s
failure to fulfill one de facto criterion to deny a separate rate. Pls.’ Mem. at 40-41 (citing
Rongxin II, 203 F. Supp. 3d at 1348). Following remand, however, the Rongxin III court
affirmed Commerce’s determination that the exporter had failed to establish the
absence of de facto control solely on the basis of its failure to demonstrate autonomy
regarding management selection. Rongxin III, Slip Op. 18-107 at 19.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 25 of 29

Court No. 17-00121 	Page 26
from the separate rate methodology stated in Policy Bulletin 05.1 without adequately
acknowledging or explaining its departure therefrom. Id.
Defendant contends that Commerce applied properly the presumption of
government control and correctly found that Plaintiffs’ evidence failed to address Juhua
Group’s indirect control over Lianzhou and Quhua. Def.’s Resp. at 31. Defendant
further contends that Commerce adhered to its long-standing separate rate
methodology, and Plaintiffs’ arguments “amount to mere disagreement” with the
agency’s conclusion. Def.’s Resp. at 31-32. 27
B. Commerce Applied Properly the Presumption of Government Control
Plaintiffs assert that Commerce’s analysis ran afoul of Federal Circuit precedent
regarding the operation of presumptions. See Pls.’ Mem. at 41-42 (citing A.C.
Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020 (Fed. Cir. 1992), abrogated
on unrelated grounds by SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods.,
LLC, 137 S.Ct. 954, 959 (2017)). Quoting Aukerman’s discussion of Federal Rule of
Evidence 301, which governs what is referred to as the “bursting bubble” theory of
presumptions, 28 Plaintiffs assert they met their burden of producing the “minimum
quantum of evidence” necessary to rebut the presumption. Pls.’ Mem. at 41-42 (quoting
27 Defendant-Intervenors did not respond to Plaintiffs’ arguments regarding the
lawfulness of Commerce’s determination. See Def.-Ints.’ Resp. at 6-7 (presenting
arguments pertaining solely to the court’s substantial evidence review).
28 Pursuant to the bursting bubble theory, “a presumption is not merely rebuttable but
completely vanishes upon the introduction of evidence sufficient to support a finding of
the nonexistence of the presumed fact.” Aukerman, 960 F.2d at 1037-38 (discussing
the amount of evidence a patentee must proffer to rebut an alleged infringer’s assertion
that the patentee waited too long to file an infringement action).
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 26 of 29

Court No. 17-00121 	Page 27
Aukerman, 960 F.2d at 1037). The foregoing discussion demonstrates, however, that
Commerce properly found that Plaintiffs’ evidence wholly failed to rebut the presumption
of government control. See supra pp.18-25; I&D Mem. at 12-15. Thus, to the extent
Aukerman informs the court’s analysis, it is unhelpful to Plaintiffs’ position.
Additionally, the court disagrees with Plaintiffs’ assertion that Commerce has
“convert[ed] the presumption into an irrebuttable finding of government control based on
indirect ownership.” Pls.’ Mem. at 42. The presence of direct or indirect majority
government ownership may require exporters to surmount a high bar to demonstrate
the absence of de facto control, but it does not necessarily preclude exporters from
obtaining a separate rate. See Def.’s Resp. at 22-23 (noting, for example, the absence
of evidence “that [] Juhua Group did not actually vote its shares”); 29 cf. Yantai CMC, 203
F. Supp. 3d at 1325-26 (“That particular facts (majority ownership) may be sufficient
to support an agency determination of control, and the existence of those facts in this
particular case (i.e., indirect majority control by SASAC), does not alter the test into an
irrebuttable presumption; instead, it means that, on the basis of these facts, Plaintiff
29 Two opinions addressing Commerce’s separate rate analysis have suggested
otherwise. See An Giang II, 284 F. Supp. 3d at 1362 (“A respondent may rebut th[e]
presumption [of government control], unless record evidence demonstrates that the
majority shareholder is controlled by the government.”); Jiasheng II, 121 F. Supp. 3d at
1267 (Commerce’s practice “holds that . . . majority ownership [] ‘in and of itself’
precludes a finding of de facto autonomy.”) (citation omitted). At oral argument,
however, Defendant clarified that Commerce has not taken the position that majority
government ownership per se bars separate rate eligibility. Defendant posited the
possibility that evidence in the form of an article of association limiting a government-
owned entity from voting in accordance with its majority shareholding may compose
affirmative evidence breaking the chain of control, but noted that such evidence was
absent here. Oral Arg. Recording at 30:10-32:33.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 27 of 29

Court No. 17-00121 	Page 28
failed to rebut the presumption.”). That Commerce did not forecast the type of evidence
that would be sufficient to rebut the presumption does not render its determination
unreasonable or unsupported by substantial evidence.
C. Commerce Adhered to its Longstanding Separate Rate Analysis
Plaintiffs assert that Commerce deviated from Policy Bulletin 05.1 by (1) denying
a separate rate on the basis of a single de facto criterion and thereby treating
government ownership as dispositive; (2) relying on the potential for government control
instead of actual control; and (3) acting contrary to a prior proceeding in which
Commerce granted a separate rate notwithstanding evidence of government
involvement in management selection. Pls.’ Mem. at 42-43 (citations omitted); see also
Pls.’ Reply at 17-21. The court has largely dispensed with these arguments elsewhere.
See supra pp. 23 & n.22 (Commerce properly may rely on a single criterion); id. pp. 15-
17 (clarifying Commerce’s consideration of potential control in the context of majority
versus minority ownership and the implications thereto with regard to rebutting the
presumption); id. pp. 24-25 & n.26 (squaring this case with judicial precedent).
Briefly, Policy Bulletin 05.1 does not direct or otherwise require Commerce to
address each de facto criterion and the de jure prong of its separate rate test before
denying an exporter a separate rate. Policy Bulletin 05.1 at 1-2 (summarizing
Commerce’s separate rate test); see also Yantai CMC, 203 F. Supp. 3d at 1326;
Rongxin III, Slip Op. 18-107 at 19. Plaintiffs’ assertion that Commerce “treated
government ownership as dispositive,” Pls.’ Mem. at 43, overlooks Commerce’s
consideration of the degree of government ownership (majority or minority), and fails to
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 28 of 29

Court No. 17-00121 	Page 29
disprove the evidentiary bases supporting Commerce’s determination. Plaintiffs’
reliance on Jiasheng II30 to support the assertion that Commerce’s decision contradicts
prior determinations is unavailing. See id. (citing Jiasheng II, 121 F. Supp. 3d at 1269).
Jiasheng II concerned minority government ownership, see 121 F. Supp. 3d at 1269;
thus, government ownership was not dispositive of the degree of government control.
In sum, though Commerce now accords more weight to evidence of an exporter’s
government ownership as a consequence of the Diamond Sawblades proceeding, it
does so within the confines of its longstanding separate rate test. See I&D Mem. at 10-
12. Commerce has, moreover, placed exporters on notice of this change. See, e.g.,
Steel Wire Rod Mem. at 6-7. Plaintiffs may disagree with the conclusions Commerce
reaches on the basis of this evidence, but mere disagreement is not a sufficient basis to
remand Commerce’s determination. Accordingly, Commerce’s decision to deny
Plaintiffs’ requests for separate rates is in accordance with law.
CONCLUSION
For the foregoing reasons, Plaintiffs’ motion is denied. Judgment will enter
accordingly.
/s/ 	Mark A. Barnett
Mark A. Barnett, Judge
Dated: 	October 11, 2018
New York, New York
30 Plaintiffs identify the case as “Jiansheng I”; however, the accompanying reporter
volume and pin cite suggests that Plaintiffs intended to cite to Jiasheng II.
Case 1:17-cv-00121-MAB Document 54 Filed 10/18/18 Page 29 of 29