Shakeproof Assembly Components v. U.S.

Citation59 F.Supp.2d 1354
Decision Date29 July 1999
Docket NumberSlip Op. 99-70.,Court No. 97-12-02066.
PartiesSHAKEPROOF ASSEMBLY COMPONENTS DIVISION OF ILLINOIS TOOL WORKS, INC., Plaintiff, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

Creskoff & Doram, L.L.P. (Stephen M. Creskoff, Robert T. Hume, Lisa E. Smilan), Washington, DC, for Plaintiff.

David W. Ogden, Acting Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Lucius B. Lau), Robert E. Nielsen, Senior Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for Defendant, of counsel.

OPINION

BARZILAY, Judge.

This case is before the Court on Plaintiff's USCIT R. 56.2 Motion for Judgment Upon an Agency Record. Plaintiff challenges certain aspects of the Department of Commerce, International Trade Administration's ("Commerce" or "ITA") final determination in Certain Helical Spring Lock Washers from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 62 Fed.Reg. 61794-801 (Nov. 19, 1997) ("Final Determination"). Defendant partially opposes Plaintiff's motion, but agrees that a remand is required to enable Commerce to recalculate the value for steel scrap by eliminating duplicate total quantity and value figures for the period April 1995August 1995. For the reasons that follow the Court remands the case to the agency to explain how the use of import price data for steel wire rod to value all steel wire rod, including domestically sourced rod, promotes accuracy in this case, to recalculate the steel scrap factor by eliminating duplicative data and certain import data which were aberrational and to explain why good cause did not exist to verify the steel wire rod import price information submitted by the respondent. The Court has jurisdiction under 28 U.S.C. § 1581(c) (1994) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (1994).

I. INTRODUCTION

The present controversy arises out of the third administrative review conducted by Commerce stemming from an October, 19, 1993, antidumping duty order1 respecting helical spring lock washers ("washers") from the People's Republic of China. Commerce assigned Hangzhou Spring Washer Plant, subsequently known as Zhejian Wanxin Group, Co. ("ZWG"), a respondent in the original investigation, an individual dumping margin. On November 15, 1996, Commerce initiated the third annual review covering the period October 1, 1995September 30, 1996. See 61 Fed. Reg. 58513. Commerce published its preliminary determination on July 11, 19972 and its Final Determination on November 19, 1997.3

No one challenged Commerce's designation of China as a nonmarket economy and so Commerce used a factors of production analysis, pursuant to 19 U.S.C. § 1677b(c) (1994) to determine the normal value for the washers produced by ZWG.4 Commerce without objection, chose India as the appropriate surrogate country pursuant to 19 U.S.C. § 1677b(c)(4). Plaintiff challenges Commerce's use of the price paid for steel wire rod imported from the United Kingdom by ZWG, accounting for 34.7 percent of ZWG's total purchases of steel wire rod during the period of review ("POR"), to value all steel wire rod. Additionally, Plaintiff argues that Commerce failed to verify the price information ZWG submitted and miscalculated the final dumping margin by using duplicative and aberrational data.

II. STANDARD OF REVIEW

In reviewing a challenge to Commerce's determination in an antidumping administrative review, the Court is to hold unlawful a determination, finding or conclusion by Commerce that is unsupported by substantial evidence or otherwise not in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B)(i) (1994). Substantial evidence is "such relevant evidence as a reasonable mind might accept to support a conclusion." Consolidated Edison v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938); accord Matsushita Elec. Indus. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984).

To determine whether Commerce has acted in accordance with law the court must undertake the two step analysis prescribed by Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). First the court must determine whether the statute speaks to the precise question at issue. See id. at 842, 104 S.Ct. 2778. If the statute is clear or the legislative history unambiguously expresses Congress' intent then the matter is at an end, for the agency cannot contravene the will of Congress. See id. at 842-843, 104 S.Ct. 2778. Second, if the court determines the statute is silent or ambiguous, the question to be asked is whether the agency's construction of the statute is permissible. See id. at 843, 104 S.Ct. 2778. Essentially, this is an inquiry into the reasonableness of Commerce's interpretation. See Fujitsu General Ltd. v. United States, 88 F.3d 1034, 1038 (Fed.Cir.1996). Provided Commerce has acted reasonably, the court may not substitute its judgment for the agency's. See IPSCO, Inc. v. United States, 965 F.2d 1056, 1061 (Fed.Cir.1992). Substantial deference is accorded to Commerce's statutory interpretations since the ITA is the "`master' of the antidumping laws." Torrington Co. v. United States, 68 F.3d 1347, 1351 (Fed.Cir.1995).

III. DISCUSSION
A. The Statute Does not Speak to Whether Commerce May Use Import Prices to Value Domestically Purchased Materials.

Plaintiff argues that the use of import prices to value non-imported material is contrary to law because Congress has addressed the issue in 19 U.S.C. § 1677b(c) by providing for surrogate country values to be used to the extent possible and thus falls under the first step in the Chevron analysis. Chevron, 467 U.S. at 842, 104 S.Ct. 2778. Plaintiff claims that the statute requires Commerce to determine normal value "on the basis of the value of the factors of production ... [and] the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the [Department]." 19 U.S.C. § 1677b(c)(1). Furthermore, the statute provides that Commerce "shall utilize, to the extent possible, the prices or costs of factors of production in one or more market economy countries...." 19 U.S.C. § 1677b(c)(4).

Nowhere does the statute speak directly to any methodology Commerce must employ to value the factors of production, indeed the very structure of the statute suggests Congress intended to vest discretion in Commerce by providing only a framework within which to work. The statute requires Commerce to use the best available information, but does not define that term.5 See e.g., Olympia Indus. v. United States, 7 F.Supp.2d 997, 1000 (1998) ("The relevant statute does not clearly delineate how Commerce should determine what constitutes the [best available information]." (citation omitted)). If Congress had desired to restrict the material on which Commerce could rely, it would have defined best available information.

Another signal that Congress did not speak and therefore left Commerce discretion in developing the details of its methodology is the phrase "to the extent possible" in defining how Commerce is to value the prices or costs of factors of production. See 19 U.S.C. § 1677b(c)(4). Having decided that the statute grants discretion to Commerce to decide what qualifies as the best available information, the Court proceeds to examine whether Commerce acted reasonably pursuant to the second step in the Chevron analysis. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.

B. Since the Purpose of the Antidumping Law Is Accurate Calculations of Dumping Margins, Commerce's Use of Import Prices to Value Domestically Purchased Material Must Promote Accuracy to Be Reasonable.

In the Final Determination, Commerce used the import price paid for steel wire rod, which accounted for 34.7% of all steel wire rod used during the POR, to value the remaining 65.3% of the rod purchased domestically. Commerce defended its decision on three grounds. First, Commerce stated that it acted in accordance with an established administrative practice and judicial precedent. See 62 Fed.Reg. 61794, 61796. Second, Commerce found the amount of the imported steel wire rod to be significant. Id. Third, Commerce found the imported steel to be physically identical to the domestically purchased steel. Id.

Despite Commerce's representations, its actions with regard to import price data in this case do not follow clearly established administrative practice nor do they enjoy affirming judicial precedent. At the hearing held on this matter, Defendant's counsel conceded that this was an issue of first impression.6 See Transcript, at 46. Additionally, the judicial decision cited by Commerce in the Final Determination was limited to a situation where Commerce used the cost that manufacturers paid on the international market for the supplies they used. See Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1445 (Fed.Cir. 1994). Thus, the issue presented is one of first impression and although the standard of review does not change, the reasonableness of Commerce's new practice lacks judicial support.

Although Commerce claims that the amount of imported steel wire rod used in this case is significant, the Court cannot agree as there is no basis on which to evaluate what Commerce means when it uses the term. In the Final Determination, the only justification of Commerce's finding that the amount of imported steel wire rod was significant was that the imported steel accounted for approximately one-third of all steel wire rod used during the POR. See 62 Fed.Reg. 61795, 61796. The Court finds Commerce's explanation of the significance of the import volume to be deficient in several respects. As Commerce itself noted, "the purpose of the antidumping statute...

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