Shandong Huarong Machinery Co. v. U.S.

• Decision Date: 09 June 2006
• Docket Number: Court No. 04-00460.,Slip Op. 06-88.
• Parties: SHANDONG HUARONG MACHINERY CO., LTD., Shandong Machinery Import & Export Corporation, Liaoning Machinery Import & Export Corporation, and Tianjin Machinery Import & Export Corporation, Plaintiffs, v. UNITED STATES, Defendant, Ames True Temper, Deft.-Intervenor.
• Court: U.S. Court of International Trade

435 F.Supp.2d 1261

SHANDONG HUARONG MACHINERY CO., LTD., Shandong Machinery Import & Export Corporation, Liaoning Machinery Import & Export Corporation, and Tianjin Machinery Import & Export Corporation, Plaintiffs, v. UNITED STATES, Defendant Ames True Temper, Deft.-Intervenor.

Slip Op. 06-88.

Court No. 04-00460.

United States Court of International Trade.

June 9, 2006.

COPYRIGHT MATERIAL OMITTED

Hume & Associates, PC, Washington, DC (Robert T. Hume), for plaintiffs.

Peter D. Keisler, Assistant Attorney General, Civil Division, United States Department of Justice; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Stephen Carl Tosini), for defendant.

Wiley, Rein & Fielding, LLP, Washington, DC (Timothy C. Brightbill, Michael W. Schisa, and Daniel B. Pickard), for defendant-intervenor.

OPINION AND ORDER

EATON, Judge.

This consolidated action¹ is before the court on competing USCIT Rule 56.2 motions for judgment upon the agency record filed by Shandong Huarong Machinery Co., Ltd. ("Huarong"), Liaoning Machinery Import & Export Corp., Ltd. and Liaoning Machinery Import & Export Corp. (collectively "LMC"), Shandong Machinery Import & Export Corp. ("SMC"), and Tianjin Machinery Import & Export Corp. ("TMC") (collectively "plaintiffs"), and by defendant-intervenor Ames True Temper ("Ames").

By their motions, the parties contest certain aspects of the United States Department of Commerce's ("Commerce" or "the Department") final results of the twelfth administrative review of the antidumping orders covering heavy forged hand tools ("HFHTs") from the People's Republic of China ("PRC") for the period of review ("POR") beginning February 1, 2002, and ending January 31, 2003. See HFHTs, Finished or Unfinished, With or Without Handles, From the PRC, 69 Fed. Reg. 55,581 (ITA September 15, 2004) ("Final Results"), as amended, 69 Fed. Reg. 69,892 (December 1, 2004) ("Amended Final Results").

In addition, Ames challenges the liquidation instructions issued by Commerce to the United States Bureau of Customs and Border Protection ("Customs"). The court has jurisdiction over the antidumping determination pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(a)(2)(A)(i)(I), and over Ames' challenge to the liquidation instructions pursuant to 28 U.S.C. § 1581(i)(4). For the following reasons, Commerce's Final Results are sustained in part, and remanded in part.

BACKGROUND

In February 2003, in response to requests made by plaintiffs and Ames, Commerce initiated the twelfth administrative review of four antidumping duty orders originally published in 1991. See HFHTs, Finished or Unfinished, With or Without Handles, From the PRC, 68 Fed.Reg. 14,-394, 14,395 (ITA Mar. 25, 2003). The subject orders applied to merchandise categorized as bars/wedges, picks/mattocks, hammers/sledges, and axes/adzes sold by nearly ninety producers. Commerce focused its review on exporters of the subject merchandise, which included Huarong (axes/adzes, bars/wedges), SMC (axes/adzes, bars/wedges, picks/mattocks, hammers/sledges), LMC (axes/adzes, bars/wedges), and TMC (bars/wedges, axes/adzes, hammers/sledges, picks/mattocks). The Final Results were published on September 15, 2004. After commencement of the present action, certain ministerial errors contained in the Final Results were raised and corrected through a voluntary remand and the Amended Final Results were published on December 1, 2004.

In the Final Results, Commerce applied adverse facts available ("AFA") to plaintiffs' sales of subject merchandise on an order-specific basis. That is, "total" AFA² were applied to Huarong and LMC for their sales of merchandise within the scope of the axes/adzes and bars/wedges orders, and to TMC for its sales covered by the bars/wedges order. See Final Results 69 Fed.Reg. at 55,583. Partial AFA were applied to SMC's sales under the bars/wedges order. See id. Commerce also kept in place the antidumping orders against SMC's hammers and sledges and LMC's bars and wedges. See id. at 55,581; see also 19 C.F.R. § 351.222(d)(1) (2005). Ultimately, the Department calculated the country-wide antidumping duty rates ("PRC-wide") for HFHTs as follows: bars/wedges at 139.31%; picks/mattocks at 98.77%; hammers/sledges at 27.71%; and axes/adzes at 55.74%. See id. at 55,583.

STANDARD OF REVIEW

When reviewing a final antidumping determination from Commerce, 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). "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 1369, 1374 (Fed.Cir.2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). The existence of substantial evidence is determined "by considering the record as a whole, including evidence that supports as well as evidence that `fairly detracts from the substantiality of the evidence.'" Id. (quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir.1984)). "As long as the agency's methdology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana S.A. v. United States, 10 CIT 399, 404-05, 636 F.Supp. 961, 966 (1986), aff'd, 810 F.2d 1137, 1139 (Fed.Cir.1987) (citing Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)); see also Elkem Metals Co. v. United States, 27 CIT ___, ___, 276 F.Supp.2d 1296, 1301 (2003).

With respect to Ames' challenge to Commerce's liquidation instructions, this Court applies the standard of review set forth in 5 U.S.C. § 706(2) (2000) of the Administrative Procedure Act ("APA") and will "hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Consol. Bearings Co. v. United States, 412 F.3d 1266, 1269 (Fed.Cir.2005) (quoting 5 U.S.C. § 706(2); Humane Soc'y of the United States v. Clinton, 236 F.3d 1320, 1324 (Fed.Cir.2001)) (internal quotation marks omitted). Section 706 of the APA authorizes the court to review the agency determination under three different standards: (1) arbitrary or capricious; (2) abuse of discretion; or (3) not in accordance with law. See 33 Charles Alan Wright & Charles H. Koch, Jr., Federal Practice and Procedure: Judicial Review of Administrative Action § 8334, at 167 n. 2 (2006). "Under the `arbitrary and capricious' standard the scope of review is a narrow one." Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 442, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974). "Applying this standard of review, an administrative action is to be upheld if the agency has `considered the relevant factors and articulated a rational connection between the facts found and the choices made.'" Humane Soc'y of the United States, 236 F.3d at 1324-25 (quoting Baltimore Gas & Elec. v. Natural Res. Def. Council, Inc., 462 U.S. 87, 105, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983)).

DISCUSSION

I. Plaintiffs' Motion

A. Application of Total AFA to Huarong's, LMC's, and Company A's Sales of Bars/Wedges: Principal/Agent Relationships³

Huarong, LMC, and Company A (collectively "the Companies") contend that Commerce wrongfully applied total AFA to their sales of bars and wedges based on its determination that they misrepresented the nature of purported agency relationships.⁴ As part of its findings, Commerce concluded that "nearly all of the sales functions were conducted by the principal[s], and that the agent[s'] participation was limited, for the most part, to supplying invoices to the principal." Issues and Decisions Mem. for the Twelfth Admin. Rev. of the Antidumping Duty Orders on HFHTs From the PRC ("Issues and Decisions Mem.") at 46. Thus, Commerce found that the purported agents were merely vehicles employed by the principals to circumvent the payment of their assigned antidumping duty rates. See Def.'s Resp. to Mots. J. Ag. R. ("Def.'s Resp.") at 9. In Commerce's view, the Companies significantly impeded the administrative review by "continually misrepresent[ing] the true nature of their relationship with their principal or agent during the [period of review]." Issues and Decisions Mem. at 46.

The Companies, on the other hand, argue for the legitimacy of their agency relationships, and insist that an application of AFA to their bars/wedges sales is not justified because they "provided all the information requested by Commerce and cooperated to the best of their ability in [their] efforts to comply with Commerce's mandate." Pls.' Mem. of Pts. and Auth. in Supp. of Mot. J. Agency R. ("Pls.' Mem.") at 17.

In the Final Results, Commerce found the two claimed agency relationships to be shams. See Final Results 69 Fed.Reg. at 55,583 ("Huarong, LMC/LIMAC, and [Company A] participated in an `agent' sales scheme whereby one PRC company allowed another PRC company to enter subject merchandise under the first company's invoices."). In the first arrangement, Company A allegedly served as Huarong's agent for its sales of bars and wedges in the United States. In the second, LMC acted as Company B's purported agent for its U.S. bars and wedges sales. The Companies argue that neither relationship should serve as the basis for applying AFA because: (1)(a) the Companies submitted to Commerce all of the requested information as well as some additional documents that were not part of Commerce's demand, and thus did not impede Commerce's review and (b)...