Target Corp. v. U.S.
| Decision Date | 18 September 2008 |
| Docket Number | Slip Op. 08-101. Court No. 06-00383. |
| Citation | 578 F.Supp.2d 1369 |
| Parties | TARGET CORPORATION, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Greenberg Traurig, LLP, Washington, DC (Jeffrey S. Neeley, David R. Amerine) for Plaintiff Specialty Merchandise Corporation, Inc.
Gregory G. Katsas, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (David S. Silverbrand, Michael J. Dierberg); and Office of Chief Counsel for Import Administration, U.S. Department of Commerce (Arthur D. Sidney), of counsel, for Defendant United States.
Barnes & Thornburg LLP, Washington, DC (Randolph J. Stayin, Karen A. McGee) for Defendant-Intervenor National Candle Association.
Plaintiffs Target Corporation ("Target"), Qingdao Kingking Applied Chemistry Co., Ltd., et al. ("Qingdao"), and Specialty Merchandise Corporation, Inc. ("SMC") challenge the U.S. Department of Commerce's ("Commerce") determination that petroleum wax candles with 50 percent or more palm or other vegetable-oil based waxes ("mixed-wax") are later-developed merchandise circumventing the antidumping duty order covering petroleum wax candles from China. See Petroleum Wax Candles from the People's Republic of China, 71 Fed.Reg. 59,075 (Dep't Commerce Oct. 6, 2006) (final determ. anticircumvention inquiry) ("Final Determination"), amended by Final Results Pursuant to Voluntary Remand, Target Corp. v. United States, Consol. Court No. 06-00383 (May 16, 2008) ("Voluntary Remand"). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(vi) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2000)1 and 28 U.S.C. § 1581(c) (2000). As discussed below, this action is remanded to Commerce for further consideration.
When reviewing an anticircumvention determination under 19 U.S.C. § 1516a(a)(2)(B)(vi) and 28 U.S.C. § 1581(c) (2000), the U.S. Court of International Trade sustains Commerce's determinations, findings, or conclusions unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). When reviewing whether Commerce's actions are unsupported by substantial evidence, the Court assesses whether the agency action is reasonable given the record as a whole. See Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed.Cir.2006). Additionally, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs judicial review of Commerce's interpretation of the antidumping statute. Dupont Teijin Films USA, LP v. United States, 407 F.3d 1211, 1215 (Fed.Cir.2005).
Commerce issued an antidumping duty order on petroleum wax candles from China in 1986. Petroleum Wax Candles from the People's Republic of China, 51 Fed. Reg. 30,686 (Dep't Commerce Aug. 28, 1986) (antidumping duty order) ("Petroleum Wax Candle Order" or "Order"). In the less than fair value ("LTFV") proceeding Commerce defined the subject merchandise, in relevant part, as "petroleum wax candles made from petroleum wax." Petroleum Wax Candles from the People's Republic of China, 51 Fed.Reg. 25,085 (Dep't Commerce July 10, 1986) (final less than fair value determination). For the corresponding injury investigation, the U.S. International Trade Commission ("ITC") defined the domestic like product, in relevant part, as candles "composed of over 50 percent petroleum wax." Candles from the People's Republic of China, USITC Pub. 1888 at 5, Inv. No. 731-TA-282 (Aug.1986) (final injury determination) ("Original Injury Determination").
subject merchandise "petroleum wax candles
(COMMERCE) made from petroleum wax"
________________________________________________________
domestic like product "candles composed of over
(ITC) 50 percent petroleum wax"
The ITC therefore interpreted Commerce's redundant qualifier "made from petroleum wax" to mean "composed of more than 50 percent petroleum wax." See id. This percentage benchmark proved dispositive in subsequent Commerce scope determinations involving mixed-wax candles. Commerce ruled at least seven times in a seven-year period that the ITC's percentage-based like product definition mandated that mixed-wax candles (containing less than 50 percent petroleum wax) be excluded from the scope of the Petroleum Wax Candle Order.2
Central to these prior scope rulings is the unstated but fundamental tenet of antidumping law that the domestic like product must encompass the subject merchandise: "an antidumping duty order must be supported by an ITC determination of material injury covering the merchandise in question." Wheatland Tube Co. v. United States, 21 CIT 808, 819, 973 F.Supp. 149, 158 (1997) (citing 19 U.S.C. § 1673), aff'd, 161 F.3d 1365 (Fed.Cir.1998).
Rather than have Commerce repeat another conventional scope proceeding, the domestic interested party, National Candle Association ("NCA"), tried a different approach in 2004. NCA petitioned Commerce to initiate a later-developed merchandise anticircumvention inquiry and determine whether mixed-wax candles were circumventing the Order. Commerce initiated the inquiry. Petroleum Wax Candles from the People's Republic of China, 70 Fed.Reg. 10,962, 10,963 (Dep't Commerce Mar. 7, 2005) (notice of initiation anticircumvention inquiry) ("Notice of Initiation"). A later-developed merchandise anticircumvention inquiry is a specific type of scope inquiry governed by its own statutory provision, 19 U.S.C. § 1677j(d), which codified Commerce's administrative practice for analyzing whether later-developed merchandise fell within the scope of an antidumping duty order. H.R. REP. No. 100-576, at 601 (1988) (Conf.Rep.), reprinted in 1988 U.S.C.C.A.N. 1547, 1634 ()
As Commerce was commencing the later-developed merchandise anticircumvention inquiry, the ITC was coincidentally concluding a second five-year sunset review of the Petroleum Wax Candle Order. See Petroleum Wax Candles from China, USITC Pub. 3790, Inv. No. 731-TA-282 (July 2005) (second sunset review) ("Second Sunset Review"). The lone participant in the Second Sunset Review, NCA, urged the ITC to re-examine the domestic like product definition from the Original Injury Determination and include "all blended candles" regardless of the proportion of petroleum wax. Second Sunset Review at 7. The ITC obliged and redefined the domestic like product "to include all blended candles," or more simply, candles "containing any amount of petroleum wax." Id. at 9. In addition, the ITC concluded that revocation of the Petroleum Wax Candle Order "would be likely to lead to continuation or recurrence of material injury to an industry in the United States within a reasonably foreseeable time." Id. at 3. No party challenged the Second Sunset Review.
Subsequently, Commerce completed the anticircumvention inquiry and determined that mixed-wax candles containing "any amount" of petroleum wax are within the scope of the Petroleum Wax Candle Order. Final Determination, 71 Fed.Reg. at 59,077-78. Plaintiffs then commenced this action. Commerce, in turn, sought a voluntary remand which the court granted. In the Voluntary Remand Commerce slightly modified its legal analysis but did not change its determination. See discussion infra at pp. 12-13. Plaintiffs raise a number of challenges to Commerce's determination, including:
(1) that Commerce's interpretation of the phrase "later-developed merchandise" to cover merchandise that was in existence but commercially unavailable during the original investigation is contrary to the plain meaning of 19 U.S.C. § 1677j(d), and further, that Commerce's finding that mixed-waxed candles were commercially unavailable at the time of the original investigation is unsupported by substantial evidence;
(2) that Commerce's initiation of the anticircumvention inquiry on mixed-wax candles was contrary to Commerce's scope regulation, 19 C.F.R. § 351.225 (2004),3 the prior mixed-wax candle scope rulings, and case law governing the initiation of scope inquiries; and
(3) that Commerce's inclusion of mixedwax candles within the scope of the Order is a legally impermissible expansion of the Petroleum Wax Candle Order contrary to the domestic like product definition.4
As explained more fully below, the court is not persuaded by these arguments; nevertheless, the court cannot sustain Commerce's later-developed merchandise anticircumvention determination and therefore remands the matter to Commerce for further consideration.
A critical legal issue for Commerce during the administrative proceeding was whether mixed-wax candles were "laterdeveloped merchandise." This issue arose because record evidence indicated that mixed-wax candles may have existed at the time of the original investigation. Section 1677j(d)(1) defines "later-developed...
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