Heze Huayi Chemical Co., Ltd. v. United States

Slip Op. 21– 
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
:
CLEARON CORP. and OCCIDENTAL 	:
CHEMICAL CORP., 	:
:
Plaintiffs, 	:
: 	Before: Richard K. Eaton, Judge
v. 	:
: 	Consol. Court No. 17-00171
UNITED STATES, 	:
:
Defendant, 	:
:
and 	:
:
HEZE HUAYI CHEMICAL CO., LTD., 	:
:
Defendant-Intervenor. 	:
__________________________________________:
OPINION
[United States Department of Commerce’s second remand results are sustained.]
 	 	 	 	 	 	Dated: 0D\
James R. Cannon, Jr., Cassidy Levy Kent (USA) LLP, of Washington, DC, for Plaintiffs.
With him on the brief were Jonathan M. Zielanski and Ulrika K. Swanson.
Sonia M. Orfield, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for Defendant. With her on the brief were Brian M.
Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of Counsel on the brief was W. Mitchell Purdy, Attorney, Office of
the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of
Washington, DC.
Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, DC, for Defendant-
Intervenor. With him on the brief were J. Kevin Horgan and Alexandra H. Salzman.
Eaton, 	Judge: 	Before 	the 	court 	is 	the 	United 	States 	Department 	of 	Commerce’s
(“Commerce” or the “Department”) remand redetermination pursuant to the court’s order in
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Clearon Corp. v. United States, 44 CIT __, 474 F. Supp. 3d 1339 (2020) (“Clearon II”). See Final
Results of Redetermination Pursuant to Court Remand (Jan. 4, 2021), P.R.R. 3 (“Second Remand
Results”). 	Jurisdiction 	lies 	pursuant 	to 	28 	U.S.C. 	§ 	1581(c) 	(2018) 	and 	19 	U.S.C.
§ 1516a(a)(2)(B)(iii) (2018). The Second Remand Results are sustained.
BACKGROUND
This case involves a challenge to the results of Commerce’s first administrative review of
the countervailing duty order on chlorinated isocyanurates1 from the People’s Republic of China
(“China”). See Chlorinated Isocyanurates From the People’s Republic of China, 79 Fed. Reg.
67,424 (Dep’t Commerce Nov. 13, 2014) (countervailing duty order). In Clearon II, familiarity
with which is presumed, the court ruled that Commerce’s finding, based on adverse facts available,
that Consolidated Plaintiff and Defendant-Intervenor Heze Huayi Chemical Co., Ltd. (“Heze”), a
cooperative mandatory respondent, used and benefitted from China’s Export Buyer’s Credit
Program, lacked the support of substantial evidence. Importantly, the record contained evidence
in the form of uncontroverted declarations that supported Heze’s claims of non-use. The record
contained nothing to support a finding that there was information, necessary to Commerce’s
statutory “benefit” determination, that was missing (i.e., a gap in the factual record) that justified
using “facts otherwise available,” under 19 U.S.C. § 1677e(a).2 Commerce claimed that it would
1 	Chlorinated 	isocyanurates 	are 	“derivatives 	of 	cyanuric 	acid, 	described 	as
chlorinated s-triazine triones” that are used for water treatment, among other uses. See Clearon
Corp. v. United States, 43 CIT __, __, 359 F. Supp. 3d 1344, 1346 n.2 (2019) (citation omitted).
2 	The statute provides that, when necessary information is missing from the record,
Commerce must use “facts otherwise available.” 19 U.S.C. § 1677e(a). The statute also permits
Commerce to use an adverse inference when selecting from among the facts available, if “an
interested party,” including a foreign government, fails to cooperate with Commerce’s requests for
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be unduly burdensome to verify non-use without information regarding the operation of the Export
Buyer’s Credit Program that China refused to provide—a claim that Heze disputed. The court
directed the parties to “confer and agree upon a verification procedure to apply in this case,” and
further that Commerce was either to “verify Heze’s claims of non-use and, based on the results of
verification, 	determine 	whether 	Heze 	received 	a 	benefit 	under 	the 	program; 	or 	in 	the
alternative, . . . find, based on the existing record evidence, that neither Heze nor its customers
used or received a benefit under the program.” Clearon II, 44 CIT at __, 474 F. Supp. 3d at 1354.
On remand, Commerce did not confer with the parties on a verification procedure, nor did
it verify Heze’s claims of non-use. Rather, apparently choosing the alternative set out in
Clearon II, Commerce found “that based on the existing record evidence, neither [Heze] nor its
customers used or received a benefit under the program.” Second Remand Results at 2 (stating this
decision was made “under respectful protest”). Accordingly, Commerce removed “the [0.87
percent adverse facts available] subsidy rate for the Export Buyer’s Credit Program from [Heze]’s
final [countervailing duty] subsidy rate, which results in a 1.04 percent rate for [Heze].” Second
Remand Results at 9. The parties timely filed comments on the Second Remand Results. See
Clearon’s Cmts., ECF No. 64; Heze’s Cmts., ECF No. 66; Def.’s Resp. Cmts., ECF No. 65.
STANDARD OF REVIEW
The court will sustain a determination by Commerce unless it is “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i).
information to “the best of its ability.” Id. § 1677e(b)(1); see also Fine Furniture (Shanghai) Ltd.
v. United States, 748 F.3d 1365, 1371 (Fed. Cir. 2014).
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DISCUSSION
Plaintiffs Clearon Corp. and Occidental Chemical Corp. (collectively, “Clearon”) argue
that Commerce failed to comply with the court’s remand instructions by failing to confer with the
parties on a verification procedure. See Clearon’s Cmts. 1-2. Additionally, Clearon asks the court
“to revisit the rationale expressed in [Clearon II],” and to remand with instructions “to reinstate
[Commerce’s first remand redetermination].” Clearon’s Cmts. 2, 3.
Defendant the United States, on behalf of Commerce (“Defendant”), and Heze maintain
that the Department complied with Clearon II’s instructions and that Clearon waived its arguments
to the contrary because it failed to raise them before the agency when given the opportunity to
comment on the draft results. See Heze’s Cmts. 2; Def.’s Resp. Cmts. 6. They ask the court to
sustain the Second Remand Results. See Heze’s Cmts. 3-4; Def.’s Resp. Cmts. 8.
The court finds that Commerce has sufficiently complied with the court’s instructions in
Clearon II. Though the Department did not “confer and agree upon a verification procedure,” as
stated in the court’s instructions, Commerce ultimately chose the alternative decisional path
provided by the court that did not require verification, i.e., to rely on the uncontroverted record
evidence supporting Heze’s claims of non-use of the Export Buyer’s Credit Program. Based on
this evidence, Commerce determined on remand that substantial evidence did not support a finding
that the Export Buyer’s Credit Program—a government loan program—conferred a benefit on
Heze. See 19 U.S.C. § 1677(5)(B) (defining subsidy as a “financial contribution,” provided by an
“authority” to a person, by which a “benefit is . . . conferred”). Accordingly, Commerce removed
the subsidy rate determined for that program (0.87 percent) from the calculation of Heze’s final
countervailing duty rate, which reduced Heze’s rate from 1.91 percent to 1.04 percent. See Second
Remand Results at 9.
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As Heze and Commerce note, Clearon failed to submit comments on the draft remand
results when it had the opportunity to do so, thus raising the question of whether its arguments are
properly before the court. The court “shall, where appropriate, require the exhaustion of
administrative remedies.” 28 U.S.C. § 2637(d). Here, none of the arguments in Clearon’s
comments, asking the court to reconsider its rationale in Clearon II and to reinstate the
Department’s first remand redetermination, are new to the court, nor have they become more
persuasive with the passage of time. See, e.g., Clearon Cmts. 3 (emphasis added) (“If this Court
allows respondents to avoid countervailing duties because neither they nor their distributors
received subsidies directly from a foreign government, there will be an incentive for foreign
governments to pay subsidies to downstream users in order to assist their domestic exporters.”);
Clearon’s Resp. Cmts. Remand Results, ECF No. 52, 5-6 (arguing that U.S. “importers” or
“customers” are not limited to Heze’s direct customers under the Export Buyer’s Credit Program).
The court declines Clearon’s invitation to reconsider its rationale in Clearon II and reinstate
Commerce’s first remand results.
CONCLUSION
For the foregoing reasons, the Second Remand Results are sustained. Judgment will be
entered accordingly.
/s/ Richard K. Eaton
Richard K. Eaton, Judge
Dated:
New York, New York
0D\
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