Mid Continent Nail Corp. v. United States

• Decision Date: 30 August 2013
• Docket Number: Slip Op. 13–115.,Court No. 11–00119.
• Citation: 949 F.Supp.2d 1247
• Parties: MID CONTINENT NAIL CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and Itochu Building Products Co., Inc., et al., Defendant–Intervenors.
• Court: U.S. Court of International Trade

949 F.Supp.2d 1247

MID CONTINENT NAIL CORPORATION, Plaintiff,
v.
UNITED STATES, Defendant,
and
Itochu Building Products Co., Inc., et al., Defendant–Intervenors.

Slip Op. 13–115.
Court No. 11–00119.

United States Court of
International Trade.

Aug. 30, 2013.

[949 F.Supp.2d 1251]

Adam H. Gordon, Wiley Rein LLP, of Washington, D.C., argued for Plaintiff. With him on the brief was Robert E. DeFrancesco, III.

Carrie Dunsmore, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant. With her on the brief were Tony West, Assistant Attorney General, Civil Division, and Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director, Commercial Litigation Branch. Of counsel on the brief was Nathaniel J. Halvorson, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, D.C.

Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, New York, argued for Defendant–Intervenors. With him on the brief were Bruce M. Mitchell and Andrew T. Schutz, of New York, New York, and Mark E. Pardo, Jeffrey O. Frank, and Elaine F. Wang, of Washington, D.C.

OPINION
RIDGWAY, Judge:

In this action, the Plaintiff domestic producer of steel nails Mid Continent Nail Corporation (“Mid Continent”) contests the final results, as amended, of the U.S. Department of Commerce's first administrative review ¹ of the antidumping duty order covering steel nails from the People's Republic of China (“PRC”). SeeCertain Steel Nails From the People's Republic of China: Final Results of the First Antidumping Duty Administrative Review, 76 Fed.Reg. 16,379 (March 23, 2011) (“Final Results”); Certain Steel Nails From the People's Republic of China: Amended Final Results of the First Antidumping Duty Administrative Review, 76 Fed.Reg. 23,279 (April 26, 2011) (“Amended Final Results”).²

[949 F.Supp.2d 1252]

Pending before the court is Mid Continent's Amended Motion for Judgment on the Agency Record. Mid Continent contests two aspects of Commerce's Final Results—specifically, Commerce's selection of mandatory respondents for individual review, and Commerce's treatment of certain entries of merchandise that were initially wrongly attributed to one particular company. See generally Amended Memorandum in Support of Mid Continent Nail Corporation's Rule 56.2 Amended Motion for Judgment on the Agency Record (“Pl.'s Brief”); Reply Brief of Mid Continent Nail Corporation (“Pl.'s Reply Brief”).³

The Government as well as the Defendant–Intervenors—comprising a total of 15 producers, exporters, and importers of steel nails subject to the antidumping duty order—maintain that Mid Continent's claims are baseless and that the Final Results should be sustained. See generally Defendant's Memorandum in Opposition to Plaintiff's Rule 56.2 Motion for Judgment Upon the Agency Record (“Def.'s Brief”); Defendant–Intervenors' Memorandum in Opposition to Plaintiff's Rule 56.2 Motion for Judgment on the Agency Record (“Def.-Ints.' Brief”).⁴

Jurisdiction lies under 28 U.S.C. § 1581(c) (2006).⁵ As detailed below, Mid Continent's Amended Motion for Judgment on the Agency Record must be granted in part and denied in part.

I. Background

In this action, Mid Continent mounts two attacks on the Final Results in the first administrative review of the antidumping duty order on steel nails from the PRC. First, Mid Continent challenges Commerce's selection of two respondents

[949 F.Supp.2d 1253]

for individual examination. See generally Pl.'s Brief at 1, 6–10, 15; Pl.'s Reply Brief at 1–9. And, second, Mid Continent contests Commerce's determination concerning the liquidation instructions issued to the Bureau of Customs and Border Protection (“Customs”) for certain entries of merchandise that were initially attributed to Certified Products International Inc. (“CPI”). See generally Pl.'s Brief at 1–2, 13–15; Pl.'s Reply Brief at 9–15. The relevant facts are summarized below.

A. Commerce's Selection of Respondents for Individual Review

In an antidumping administrative review, Commerce generally is required to establish an individual dumping margin for “each known exporter and producer of the subject merchandise.” 19 U.S.C. § 1677f–1(c)(1). However, when a review involves a “large number” of exporters and producers, the statute authorizes Commerce to limit its determination of individual dumping margins to a “reasonable number” of exporters or producers, which are referred to as “mandatory respondents.” See19 U.S.C. § 1677f–1(c)(2); Antidumping Manual, Chap. 10 at 6 (Dep't Commerce Oct. 13, 2009) (“AD Manual”).

The dumping margins for respondents that qualify for a separate rate but are not subject to individual examination are based on the weighted average of the mandatory respondents' dumping margins, excluding rates that are zero, de minimis, or based entirely on adverse facts available. AD Manual, Chap. 10 at 7. Companies subject to a review that do not respond to Commerce's requests for information are considered to be part of the “non-market economy-wide entity” (“NME-wide entity”) and are assigned the “NME-wide rate.” Id.⁶

The first issue in this action is whether Commerce's decision to limit the number of mandatory respondents to two was lawful. Shortly after the administrative review in question was initiated, Commerce signaled its intent—in light of the large number of exporters and producers involved in the review—to use U.S. import data from Customs to select a limited number of respondents for individual review; and Commerce invited comments on that proposal. Mandatory Respondent Selection Notice at 1 (Pub.Doc. No. 26). In its first comments on respondent selection, Mid Continent stated that “analysis of the [customs] data indicates that [ Commerce ] reasonably should determine to limit the number of respondents in this review to two.” Mid Continent First Comments on Respondent Selection at 3 (Pub.Doc. No. 35) (emphasis added). Mid Continent emphasized that “[ n ] either the statute nor the regulations set[ s ] a minimum or limit on the number of respondents ..., or the volume of imports that should be covered,” opining that “those numbers will depend on a variety of factors, including the number of producers ... included in the review, the nature of the business operations, and the types of products that the

[949 F.Supp.2d 1254]

respondents produce.” Id. (emphasis added).

Mid Continent specifically urged Commerce to select Stanley and CPI as the two mandatory respondents for individual review. Mid Continent First Comments on Respondent Selection at 4. Mid Continent stated that, among other things, Stanley and CPI would “provide a representative sample of respondent types,” because CPI sourced subject merchandise from multiple Chinese producers. Id.

In making its respondent selection decision, Commerce determined that, in light of the fact that review had been requested as to 159 exporters and producers, and given the agency's resource constraints, it simply was not practicable to calculate individual margins for all respondents. See First Respondent Selection Memorandum at 2–3 (Pub.Doc. No. 123). Instead, relying on customs data, Commerce selected as mandatory respondents the two largest exporters by volume for the relevant period—specifically, Stanley and CPI, the two respondents that Mid Continent had advocated. See id. at 5; 19 U.S.C. § 1677f–1(c)(2)(B).

From the first days of the review, CPI had argued to Commerce that it should not be selected as a mandatory respondent, because it had no shipments to the United States during the period of review. See CPI Comments on Respondent Selection at 2–5 (Conf.Doc. No. 17). In the First Respondent Selection Memorandum, Commerce advised that, “if CPI claims it had no shipments during this [period of review], [Commerce] will consider it a no shipment respondent and then select another respondent.” First Respondent Selection Memorandum at 5. Commerce subsequently deselected CPI as a mandatory respondent in light of its claim of no shipments ( see CPI “No Shipment” Letter at 2–3 (Pub.Doc. No. 124)), and replaced CPI with Tianjin Xiantong Material & Trade Co., Ltd., which, together with Stanley, “account[ed] for the largest volume of exports that [could] be reasonably examined.” See Second Respondent Selection Memorandum at 2–3 (Pub.Doc. No. 142).

In response to Commerce's decision to replace CPI with one additional respondent, Mid Continent submitted comments, in which it argued, among other things, that Commerce should “select as mandatory respondents no fewer than five and up to eight of the largest exporters identified by the [customs] data.” Mid Continent Additional Comments on Respondent Selection at 11 (Conf.Doc. No. 66). One month later, when Tianjin Xiantong refused to participate in the administrative review, Mid Continent urged Commerce to select the next three largest exporters by export volume as mandatory respondents. Mid Continent Supplemental Comments on Respondent Selection at 2 (Conf.Doc. No. 74). Commerce replaced Tianjin Xiantong with Shandong Minmetal Co., Ltd., the next largest exporter by volume. See Third Respondent Selection Memorandum at 2 (Pub.Doc. No. 175).

Commerce thereafter issued its Preliminary Results, reflecting dumping margins of 6.48% for Stanley and 51.25% for Shandong Minmetal. SeeCertain Steel Nails From the People's Republic of China: Notice of Preliminary Results and Preliminary Rescission, in Part, of the Antidumping Duty Administrative Review, 75 Fed.Reg. 56,070, 56,077 (Sept. 15, 2010) (“Preliminary Results”). In addition, Commerce assigned dumping margins of 13.31% to the 24 “separate rate respondents” who were not individually reviewed based on the weighted average of the publicly available U.S. sales values for Stanley and Shandong Minmetal. See id., 75 Fed.Reg. at 56,074, 56,077. Eighty-two companies for which a review was requested did not apply for separate rate status...