Koenig & Bauer-Albert Ag v. U.S.

• Decision Date: 08 March 2000
• Docket Number: No. 96-10-02298.,Slip Op. 00-25.,96-10-02298.
• Parties: KOENIG & BAUER-ALBERT AG, et al., Plaintiffs, v. UNITED STATES, Defendant, and Goss Graphics, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

90 F.Supp.2d 1284

KOENIG & BAUER-ALBERT AG, et al., Plaintiffs, v. UNITED STATES, Defendant and Goss Graphics, Inc., Defendant-Intervenor.

Slip Op. 00-25.

No. 96-10-02298.

United States Court of International Trade.

March 8, 2000.

Shearman & Sterling (Thomas B. Wilner, Jeffrey M. Winton, Michael J. Chapman, and Meredith Kolsky Lewis) for Plaintiffs MAN Roland Druckmaschinen AG and MAN Roland Inc.; Kirkland & Ellis (Kenneth G. Weigel, Carol A. Rafferty, Nancy Kao, and Laura Fraedrich) for Plaintiffs Koenig & Bauer-Albert AG and KBA-Motter Corp.

David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director, James H. Holl, III, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; and Boguslawa B. Thoemmes, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, Of Counsel, for Defendant.

Wiley, Rein & Fielding (Charles Owen Verrill, Jr., Alan H. Price, Willis S. Martyn III, and Leslie Johnson Pujo) for Defendant-Intervenor.

OPINION

POGUE, Judge.

On June 23, 1998, this Court remanded certain aspects of the Department of Commerce's ("Commerce" or "the Department") determination in Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Germany, 61 Fed.Reg. 38,166 (Dep't Commerce 1996)(final determ.) ("Germany Final"). See Koenig & Bauer-Albert AG v. United States, 22 CIT ___, 15 F.Supp.2d 834 (1998) ("KBA I"). On September 17, 1998, Commerce issued its Final Results of Redetermination Pursuant to Remand (Redetermination List, Pub. Doc. 8, Conf. Doc. 4)(Sept. 17, 1998)("Redetermination").¹ On remand, Commerce did not adequately address the Court's concerns regarding the issues of "collapsing" and cost-averaging; thus the Court remanded these issues for a second time. See Koenig & Bauer-Albert AG v. United States, 23 CIT ___, ___, 44 F.Supp.2d 280, 287 (1999) ("KBA II"). On August 10, 1999, Commerce issued its Final Results of Redetermination Pursuant to Second Court Remand (Second Redetermination List, Pub. Doc. 5)(Aug. 10, 1999)("Second Redetermination"). The Court now reviews Commerce's Second Redetermination.

Standard of Review

The Court will uphold a Commerce determination in an antidumping investigation 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)(1994).

Background

MAN Roland Druckmaschinen AG and MAN Roland Inc. ("MAN Roland"), respondents in the underlying administrative proceeding before Commerce, produce large newspaper printing presses ("LNPPs") at a facility in the western German city of Augsburg; MAN Roland's wholly-owned subsidiary, MAN Plamag, produces LNPPs at a facility in the eastern German city of Plauen. The Plauen facility incurs lower labor and overhead costs than the Augsburg facility. See MAN Roland Supp. Questionnaire Secs C,D,E (Final List, Conf. Doc. 39)(Dec. 13, 1995)("MAN Roland Responses") at Sec. D, p. 54.

MAN Roland alleged throughout Commerce's investigation that it and MAN Plamag met the criteria for "collapsing," and that therefore, in calculating the cost of production ("COP")² and constructed value ("CV")³ of its LNPPs, Commerce should have averaged the labor and overhead costs of both factories. See Germany Final at 38,187-88.

I. Collapsing MAN Roland and MAN Plamag

a. Background

Collapsing is a practice whereby Commerce determines that affiliated companies should be regarded as one entity, and therefore calculates a single, weighted-average dumping margin to be assessed to the collapsed entity as a whole. See AK Steel Corp. v. United States, 22 CIT ___, ___, 34 F.Supp.2d 756, 764 (1998), aff'd in part, rev'd in part, 203 F.3d 1330 (Fed.Cir. 2000); Asociacion Colombiana de Exportadores v. United States, 22 CIT ___, ___ 6 F.Supp.2d 865, 893 (1998)("Asociacion Colombiana").

Commerce initially disagreed with MAN Roland's argument that MAN Roland and MAN Plamag should be collapsed. See Germany Final at 38,188. Apparently because it decided not to collapse the two companies, Commerce determined that "[it] should not average costs for [MAN Roland] and MAD [sic] Plamag." Id. In KBA I, the Court found Commerce's explanation insufficient and directed Commerce to reconsider on remand its decision not to average costs. See 22 CIT at ___, 15 F.Supp.2d at 849-50.

"[T]he only context in which the discussion of whether to average the production costs of affiliated parties ... occur[s] is in the context of collapsing." KBA II, 23 CIT at ___, 44 F.Supp.2d at 287. Yet in its Redetermination, Commerce failed entirely to address the collapsing issue, while explaining at length its decision not to average the costs of MAN Roland and MAN Plamag. See Redetermination at 2-9. Upon review, the Court remanded the collapsing and cost-averaging issues for a second time, and ordered Commerce to "apply its collapsing practice as it then existed [i.e., at the time of Germany Final] and was later codified at 19 C.F.R § 351.401(f)."⁴ KBA II, 23 CIT at ___, 44 F.Supp.2d at 287.

In its Second Redetermination, Commerce applied its collapsing regulation and decided to collapse MAN Roland and MAN Plamag for purposes of calculating COP and CV. See Second Redetermination at 1. As a result, if affirmed by the Court, the revised final dumping margin of 39.53% will be applied to subject merchandise entered by either MAN Roland or MAN Plamag. See id. at 1-2.

b. Discussion

The antidumping statute does not directly address collapsing. Thus, in determining whether Commerce's collapsing practice is in accordance with the law, "the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ("Chevron"). In other words, the Court must determine whether Commerce's collapsing practice is a reasonable interpretation of the statute.

Commerce has interpreted the statute as giving it discretion to collapse and has developed a collapsing practice. See, e.g., Certain Pasta From Italy, 61 Fed.Reg. 30,326, 30,351 (Dep't Commerce 1996)(final determ.); Certain Hot-Rolled Carbon Steel Flat Products From Canada, 58 Fed. Reg. 37,099, 37,107 (Dep't Commerce 1993)(final determ.); Certain Granite Products From Spain, 53 Fed.Reg. 24,335, 24,337 (Dep't Commerce 1988)(final determ.).⁵ To conform with the Uruguay Round Agreements Act ("URAA"), Commerce promulgated 19 CFR § 351.401(f). See supra note 4.

Commerce's collapsing practice has been approved by the court as a reasonable interpretation of the antidumping statute. See Asociacion Colombiana 22 CIT ___, ___ 6 F.Supp.2d 865, 893; Queen's Flowers de Colom. v. United States, 21 CIT 968, 971-72, 981 F.Supp. 617, 622-23 (1997)("Queen's Flowers"). AK Steel confirmed that Commerce's collapsing practice continues following the passage of the URAA. See 22 CIT at ___, 34 F.Supp.2d at 765, aff'd, 203 F.3d 1330 (Fed.Cir.2000) at 22. Commerce's collapsing practice is a permissible construction of the statute, and is thus in accordance with the law.

Commerce's decision to collapse MAN Roland and MAN Plamag is also supported by substantial evidence. Commerce indicated that it collapsed MAN Roland and MAN Plamag because the two companies "satisfy all three criteria enumerated [in 19 C.F.R. § 351.401(f)] based on the totality of the facts relevant during the [period of investigation ("POI")]." Second Redetermination at 5. Commerce found that MAN Roland and MAN Plamag are affiliated companies, see Second Redetermination at 5 (citing MAN Roland Sec. A Questionnaire (Final List, Conf. Doc. 15)(Sept. 27, 1995) at 30); that MAN Roland and MAN Plamag have "production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities," see Second Redetermination at 5 & n. 4 (citing MAN Roland Case Brief (Final List, Conf. Doc. 97)(June 3, 1996) at 75); and that the two companies exhibit a "significant potential for the manipulation of price or production," see Second Redetermination at 5-6 (citing MAN Roland Responses at App. D-6-A, D-6-B; MAN Roland Supp. Questionnaire Secs. A,D,E (Final List, Conf. Doc. 50)(Jan. 31, 1996)("MAN Roland Supp. Questionnaire Resp.") at 56-58).

The decision to collapse is not contested by MAN Roland. See Comments on Draft Remand Determination (Second Redetermination List, Pub. Doc. 4)(June 30, 1999)("MAN Second Redetermination Comments").

II. Averaging MAN Roland and MAN Plamag's Production Costs

a. Background

The central dispute in this case is which costs of MAN Roland and MAN Plamag Commerce should average in determining the COM component of CV for the collapsed company. In the Second Redetermination, Commerce determined that it should not average the labor and overhead costs of MAN Roland and MAN Plamag, as requested by MAN Roland, because "the Department's normal practice is to compute costs on a control-number-(CONNUM-) specific basis."⁶ Second Redetermination at 6. All parties agree that each LNPP falling within the scope of the Germany Final investigation was a unique product. Id. at 7. Accordingly, each LNPP had been assigned a unique CONNUM. Id. Therefore, according to Commerce, "there was no need to weight-average production costs between the two factories" of the collapsed companies, because there was no matching CONNUM— that is, no identical LNPPs—produced at both factories.⁷ Id.

Commenting on Commerce's draft Second Redetermination, MAN Roland conceded that the two facilities did not produce "identical" LNPPs having the same CONNUM, but rejected Commerce's position that its "normal" or "established" practice is to average production costs only for identical merchandise. See MAN Second Redetermination Comments at 2. MAN Roland has alleged from the start...