Advanced Technology & Materials Co. v. United States (938 F. Supp. 2d 1342, 2013)

OPINION

MUSGRAVE, Senior Judge:

Before the court are the second results of remand (“Second Remand Redetermination” or “R'R2 ”) from the U-S. Department of Commerce, International Trade Administration (“Commerce” or “Department”) on the investigation, into sales from the People’s Republic of China (“PRC”) of diamond sawblades and parts thereof at less than fair value (“LTFV”). See Slip Op. 12-147 (Sep. 30, 2012). The Second Remand Redetermination indicates it is conducted “under protest” in determining the AT & M entity ineligible for an anti-dumping duty rate separate from the PRC-wide rate after Commerce found AT & M did not choose its own management autonomously from the PRC state. RR2 at 20. This redetermination mooted the only other issue remanded for further explanation or reconsideration, ie., surrogate valuation of 30CrMo steel inputs.

The defendant and the petitioners-plaintiff, Diamond Sawblades Manufacturers Coalition (“DSMC”) argue for sustaining those results, while the three respondents comprising the collapsed “AT & M entity,” Advanced Technology & Materials, Co., Ltd. (“AT & M”), BGY, and Gang Yan Diamond Products, Inc., argue for further remand. The Second Remand Redetermination complies with the order of remand and will therefore be sustained.

I. Background

Immediate background is here provided, and familiarity with prior proceedings is presumed. The court previously examined the analysis, statements and conclusions of the First Remand Redetermination in the context of the available information of record and remanded, inter alia, the separate rate redetermination for the AT & M entity. Holding that the redetermination could not be sustained on the bases articulated by Commerce, it appeared to the court that important aspects of the problem had not been considered, and explanations counter to the evidence of record had been offered. See generally 885 F.Supp.2d 1343. Those concerns may be reduced to the following: (1) Commerce’s interpretation of “autonomy” in the selection-of-management prong of the separate rates test and its regard of the “ownership” of separate rate applicants for that purpose; (2) Commerce’s analysis of the three PRC laws and regulations of record; (3) the factual bases for Commerce’s analysis of the AT & M entity; and (4) Commerce’s articulation of the separate rate test generally, the relationship between de jure and de facto analyses, and specific questions arising therefrom as identified in the court’s order. Remanding these concerns for reconsideration and clarification, the court concluded as follows:

As to what that implies for purposes of remand, no opinion is here expressed, except that the court emphasizes it is not here substituting judgment for that of Commerce on these issues or insist ing upon application of the separate rates test in a certain way in contravention of Arkansas v. Oklahoma, 503 U.S. 91, 113, 112 S.Ct. 1046, 117 L.Ed.2d 239 (1992). The court simply seeks to discern the reasonableness of a determination, and the wisdom to do so. If necessary, upon remand Commerce may reopen the administrative record to gather additional information.

885 F.Supp.2d at 1363 (italics added). .

II. Second Remand Redetermination

In the Second Remand Redetermination, Commerce’s de facto analysis concluded that the AT & M entity did not rebut the presumption of state control and is therefore not eligible for a separate rate. See, e.g., RR2 at 3, n. 8 & 13. Commerce first explained that “CISRI held a majority share in AT & M at the outset of the period of investigation” and “given that CISRI was wholly-owned by SASAC, government control had the potential to pass from SASAC through to the AT & M Entity via CISRI” and thus “the question then must necessarily turn to whether this potential is exercised here.” Id. at 8. Commerce then explained that “CISRI placed four of its senior officials ... on AT & M’s board”, that “these four board mernbers were active in the selection of AT & M’s management”, and that of “the five AT & M board members that were not CISRI officials, all were nonetheless nominated by CISRI.” Id. at 8-9. Commerce addressed the additional evidence regarding AT & M’s and BGY’s management, see id., and concluded that “record evidence demonstrates that AT & M did not choose its own management autonomously.” Id. Thus, Commerce detennined that the “AT & M Entity is part of the [PRC]-wide entity and does -not qualify for a separate rate.” Id. The result of this determination mooted further consideration of the other issue on remand, the surrogate, valuation of 30CrMo steel inputs.

III. Discussion

A. Separate Rate Analysis

As prelude, neither DSMC nor AT & M urges further remand based upon Commerce’s de jure analysis or its decision that the valuation of steel inputs is moot. Further, Commerce did not make any de facto findings as to two of the four prongs, namely, whether the export prices are set by or subject to approval by a Chinese government agency or whether AT & M has authority to negotiate and sign contracts. See generally■ Remand Redetermination. As to the prong analyzing whether AT & M.retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses, Commerce determined that “[t]he record holds little evidence as to how interrelated finances between AT & M and CISRI influenced export functions.” Id. at 21. No party contests this finding; the only issue before the court is Commerce’s finding on the remaining prong of the de facto analysis that AT & M did not demonstrate autonomy from the PRC government in its selection of management.

As further prelude, there are several interpretive nits to which the Second Remand Redetexmination’s analysis draws attention, which are aside from its findings. For example, in addition to note 2, supra, Commerce files disagreement with the “rejection” of its First Remand Redetermination “regarding the full effects of the SA-SAC Interim Regulations (and the weight it should be given) in the broader de jure and de facto analysis,- especially with respect to control over export activities, that comprises the Department’s separate rate test and the impact of ownership here, and are . conducting the remand under protest.” RR2 at 20 n. 47; see infra. The court only stated that the First Remand Redetermination could not be -sustained as articulated; it expressed no opinion-whatsoever on the “weight” the Interim Regulations should be given in the broader de jure and de facto analysis. With respect to “control over export activities,” the opinion merely drew attention to those provisions that facially appeared to have some bearing on that analysis in Order to elicit from Commerce further clarification and/or re-analysis on remand. On remand, Commerce was entirely free to explain any analytical error in the opinion or clarify its own earlier analyses in order to aid the court’s understanding.

In addition, under' a section entitled “Court’s Analysis of Ownership” [sic ] the Second Remand Redetermination states that the court “began its analysis by observing that CISRI’s[ ] ownership of AT & M should be considered relevant despite the Department’s long-standing practice of finding that corporate form may insulate a company from government eontrol.[]” RR2 at 3 (italics added, footnotes omitted). That does not quite restate the First Remand Determination’s actual statement of that practice; the First Remand Determination stated, in essence, that corporate form, per se, entirely insulates a company from government control, whereas the prior opinion only observed (again) that it is “settled” that government ownership alone is not dispositive of control. See Slip Op. 11-122 (Oct. 12, 2011) at 14, referencing Qingdao Taifa Group Co., Ltd. v. United States, 33 CIT 1090, 1100, 637 F.Supp.2d 1231, Í242 (2009). The opinion then observed that “corporate form in and of itself has never been found to ‘demonstrate’ insulation from governmental control [and been found dispositive on the absence of de jure control], or further de jure proof of the absence thereof in accordance with the separate rate test would serve no purpose.” 885 F.Supp.2d at 1350. That is simply a point of logic, not analysis of ownership. The Second Remand Redetermination seems to disclaim the point, but the redetermination also reflects Commerce’s own independent findings, notwithstanding, i.e., “[i]n response to and consistent with the Court’s analysis ... the Department finds that ownership is relevant to the separate rates analysis to the extent that ownership, as well as the degree of ownership, affects de facto control”. RR2 at 3.

The Second Remand Redetermination also states with regard to the PRC Interim Regulations that the court “held that the Department incorrectly treated the implementation of the Interim Regulations as a form-over-substance change in the law” and “failed to recognize that these regulations were an ‘obvious declaration of re-centralized de jure control’ ” RR2 at 4 (italics added). This, too, does not quite restate the’ case. The quoted observation by the court pertains to Interim Regulation Article 11, which provides that SA-SAC’s “invested enterprises shall accept the supervision and administration conducted by the State-owned assets and administration authority according to law”, upon which the court merely opined “[t]his seems an obvious declaration of re-centralized de jure control” (italics added in part). 885 F.Supp.2d at 1351. But seeming does not make it so — that is still for Commerce to decide. See, e.g., RR2 at 17 (“Pursuant to our examination of the Court’s opinion and remand order, we found that the SASAC law creates the potential for control, as opposed to definitively establishing either the absence of de jure government control or complete independence over export activities. Recognizing that the de jure evidence in this case did not clearly settle the issue of de jure control, we further scrutinized the record evidence to see if it substantiates an absence of defacto control....”). Consistent with the standard of review on these administrative determinations, such an observation ■ by the court is properly construed as dicta, not a “holding” or ratio decidendi. More precisely, the opinion only attempted circumspect examination of whether the substantial evidence of record supported Commerce’s conclusions on the Interim Regulations through juxtaposition of them against the undiscussed and seemingly contradictory evidence of record. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951); see, e.g., Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed.Cir.1994).

Further remand at this point, however, to readdress these and other like .points, appears unlikely to impact the results of remand. The court will therefore proceed. Cf. SKF USA dnc. v. United States, 30 CIT 1402, 452 F.Supp.2d 1335 (2006) (sustaining remand results after striking misconstrued matters), vacated oh other ground, 512 F.3d 1326 (Fed.Cir.2008).

AT & M strongly disagrees with the Remand Redetermination as contrary to Commerce’s longstanding practice, as logically unexplained, and as unsupported by the facts of record. It argues that it is not a producer or exporter of subject merchandise or a respondent in this case but is a shareholder in companies that produce such merchandise, that Commerce’s approach has been to determine whether the exporters (BGY for diamond sawblades and HXF for cores), which are part of the AT & M entity, have independence with regard to their export activities rather than in some general independence' from all governmental influence, and that the fact that Commerce has collapsed the companies for the purpose of applying one antidumping deposit rate does not' mean that the companies act as one unit in selling subject merchandise or in setting prices but rather Commerce has made the distinction between the collapsing analysis and the separate rates analysis “very clear”. AT & M Comments at 2-3, quoting Persulfates From the People’s Republic of China, 62 Fed.Reg. 27222 (May 19, 1997) (final determination), issues and decision memorandum at cmt. 2 (“The Department has a longstanding methodology for determining whether companies in a nonmarket economy are entitled to a separate rate. That methodology is separate and distinct from the ‘collapsing’ methodology in both focus and function. On the one hand, the separate rates test focuses specifically on whether there is government control ■ of a nonmarket company’s export activities. On the other hand, the ‘collapsing’ methodology focuses on the relationship between two or more affiliated companies, not their relationship vis-a-vis the government or other entities. There is no basis for applying a ‘collapsing’ analysis in this case.”).

The court has previously addressed similar points and perceives no reason for altering its prior opinion. See, e.g., 885 F.Supp.2d at 1349 (“There is no dispute that the focus of the separate rates test here is the AT & M entity’s export operations, that Commerce’s test applies only to exporters, and that CISRI is not an exporter, but. CISRI is still an owner, and even the AT & M entity agrees consideration of that ownership is relevant.”) & 1362 n. 21 (“Whatever their motivation, both [the collapsing and separate rate] tests obviously overlap on such matters as level(s) of ownership, the extent to which companies are directed by the same employees or board members, and interdependency of intertwined operations such as through involvement in production and pricing decisions or financing, et cetera. Cf. 19 C.F.R. § 351.401(f) with Sparklers From the People’s Republic of China, 56 Fed.Reg. 20588 (May 6, 1991) (final LTFV determination) ] ... at 20589 (respondent’s argument ‘that there is no evidence of coordination among the companies on such matters as price setting, market division, and production practices’) (italics added)”).

Next, AT & M takes issue with Commerce’s de facto finding of the absence of independence, characterizing it as based' solely on the corporate structure of the companies, the appointment of the officers of the companies, and the voting rights of the companies. AT & M contends there is no discussion of any facts showing the PRC government being involved in making export-related investment, pricing and output decisions of any producer of subject merchandise affiliated with AT & M, or choosing customers in the United States or in any other market, no discussion of what new standard is being applied, if any, to determine government control or lack thereof, and no discussion of what degree of influence on such decisions would be necessary for there to be de facto control, and'it identifies two “logical flaws” in the remand redetermination, the first of which, it argues, is that the redetermination “makes the leap” from “may constitute evidence” to “record evidence demonstrates that AT & 'M did not choose its >wn management autonomously” and therefore Commerce found “that the AT & M Entity is part of the PRC-wide entity and does not qualify for a separate rate.’ ” See AT & M Comments at 4. AT & M argues Commerce’s discussion does not hang together logically, in that certain facts are said to be of a nature that they “may constitute evidence” but are not stated to actually constitute evide’1'''' AT & M asks why, if Commerce had found that the facts “are” evidence rather than being items that “may constitute” evidence, did Commerce find that they are compelling evidence?

The defendant’s response is telling: “Regardless of its use of the word ‘may,’ Commerce explicitly found that ... CISRI (a 100-percent state-owned entity) was ‘active in the selection of AT & M’s management.’ ” Def.’s Resp. at 7, quoting RR2 at 9. The point is that “because AT & M had not shown autonomy in choosing its own management, Commerce found that AT & M had failed to rebut the presumption of state control.” Id., referencing id.

Next, AT & M contends there is no discussion of why Commerce made the eounterfactual finding that CISRI is the equivalent of the PRC .government. “If the Department actually is making a determination that entities such as CISRI are the equivalent of the [PRC] government, then it must offer evidence from the record in support of its conclusion” and explain why the “shareholder of the shareholder of the exporter” can be said to be influencing exports within the meaning of the separate rates test. AT & M Comments at 4.

This argument, however, seems to invert the burden of proof on the presumption. The defendant’s response is again telling:

... AT & M does not actually take issue with the four prongs making up Commerce’s separate rates test. See generally AT & M Comments. To the extent AT & M claims that Commerce did not sufficiently address or analyze the three other prongs, as Commerce explained: “the appointment of company officers and senior managers directly relates to one of the explicit