Olympia Indus., Inc. v. U.S., Slip Op. 98-49.

• Decision Date: 17 April 1998
• Docket Number: Court No. 95-10-01339.,Slip Op. 98-49.
• Citation: 7 F.Supp.2d 997
• Parties: OLYMPIA INDUSTRIAL, INC., Plaintiff, v. The UNITED STATES, Defendant, and Woodings-Verona Tool Works, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

7 F.Supp.2d 997

OLYMPIA INDUSTRIAL, INC., Plaintiff, v. The UNITED STATES, Defendant, and Woodings-Verona Tool Works, Inc., Defendant-Intervenor.

Slip Op. 98-49.

Court No. 95-10-01339.

United States Court of International Trade.

April 17, 1998.

Graham & James (Lawrence R. Walders, Jeffery B. Denning), Washington, DC, for Olympia Indus., Inc.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Lesleyanne Koch Kessler), Office of the Chief Counsel for Import Administration, United States Department of Commerce (Karen L. Bland), of counsel, Washington, DC, for Defendant.

Wiley, Rein & Fielding (Charles Owen Verrill, Jr., Alan H. Price, Willis S. Martyn III), Washington, DC, for Defendant-Intervenor Woodings-Verona Tool Works, Inc.

OPINION

GOLDBERG, Judge.

In this action, the Court reviews the Department of Commerce's ("Commerce") Remand Determination of the Notice of Final Results of Administrative Review: Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, from the People's Republic of China, 60 Fed.Reg. 49,251 (Sept. 22, 1995) ("Final Results"). Plaintiff, Olympia Industrial Inc. ("Olympia"), a respondent in the underlying administrative review, contests one aspect of the Remand Determination. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994). The Court sustains the Remand Determination in part, and remands in part.

I. BACKGROUND

Olympia, a U.S. importer of heavy forged hand tools ("HFHTs") from the People's Republic of China ("PRC"), and defendant-intervenor, Woodings-Verona Tool Works, Inc. ("Woodings"), a U.S. producer of HFHTs and petitioner in the underlying agency action, commenced this consolidated case under 19 U.S.C. § 1516a and 28 U.S.C. § 2631(c) (1994) seeking judicial review of certain portions of the Final Results of Commerce's second administrative review. See Olympia Indus., Inc. v. United States, 21 CIT ___, 1997 WL 181529 (Apr. 10, 1997) ("Olympia I"). In Olympia I, both parties disputed the dumping margin results in the Final Results, focusing on certain values employed by Commerce when it calculated the foreign market value ("FMV") of the HFHTs imports using a factors of production ("FOP") analysis.¹ More specifically, Woodings challenged Commerce's Final Results on the grounds that Commerce erred when it (1) rejected certain Indian surrogate data based on a comparison of data from other market economy countries, and (2) valued shipping pallets that were assembled by the importer's suppliers based on surrogate data for the value of a finished pallet. On the other hand, Olympia alleged that Commerce erred when it (1) used surrogate country data to value the steel input when viable PRC import data was available, and (2) calculated inland freight expenses based on the longest distance between input suppliers to factory.

For the reasons discussed in Olympia I, the Court rejected Woodings arguments but accepted Olympia's challenges to the Final Results, and thus remanded two issues to Commerce. First, the Court agreed with Olympia that Commerce erred when it relied on surrogate country data to value the steel inputs. Accordingly, the Court instructed Commerce to solicit information bearing on whether the import data submitted by PRC trading companies is reliable. The Court then directed Commerce to use this information "to either change its methodology [for valuing steel inputs in its FOP analysis] or provide a clearly articulated rationale" explaining why the PRC import data from the trading companies should not be used. Olympia I, 21 CIT at ___, 1997 WL 181529 at *3. Second, the Court also agreed that Commerce erred in calculating inland freight; therefore, the Court instructed Commerce to reopen the record so parties could submit information on the percentage of steel purchased from suppliers and on the distances between suppliers and manufacturers. The Court further directed Commerce to adjust its inland freight calculation using the supplemented data.

In its Remand Determination, Commerce complied with the latter remand instruction, but not the former. On remand, Commerce did not seek additional information from the parties as to the reliability of the PRC steel import data. Rather, Commerce rejected the data in its entirety without review. In doing so, Commerce stated that its policy was only to evaluate inputs sourced from market-economy suppliers when those inputs are actually purchased by the NME manufacturer. Remand Determination, at 8-9. Because the import data at issue related to inputs purchased by NME trading companies, not by NME manufacturers, Commerce declined to solicit new information or to use the existing PRC import data. Commerce then concluded that "because there are no actual market-based prices for steel purchases by the manufacturer, we continue to use surrogate country data to value the steel input used in the production of HFHTs." Remand Determination, at 9-10.

Olympia objects to this aspect of the Remand Determination. Specifically, Olympia contends that Commerce's Remand Determination fails to use data that is the best information available to value one of the factors of production. The question thus posed is whether under the governing statute, is it reasonable for Commerce to ignore what is purportedly the best information available and instead resort to surrogate data when it employs a NME factors of production analysis?

II. STANDARD OF REVIEW

Commerce's remand determination will be sustained if it is supported by substantial evidence on the record and is otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B) (1994).

Although well told, to determine whether Commerce's interpretation of the statute is in accordance with law, the court applies the two-step test set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Chevron first directs the court "to determine whether Congress has directly spoken to the precise question at issue." Id. at 842-43, 104 S.Ct. 2778 (internal quotations and citations omitted). If the statute is unambiguous as to the issue at hand, then the court must give effect to the intent of Congress. Id. However, "[i]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778 (footnote omitted). Thus, the second element of the Chevron test directs the court to consider the reasonableness of an agency's interpretation.

If asked to review Commerce's factual findings, the court will uphold the agency if its findings are supported by substantial evidence. "Substantial evidence is something more than a `mere scintilla,' and must be enough reasonably to support a conclusion." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F.Supp. 961, 966 (1986) (citations omitted), aff'd., 5 Fed. Cir. (T) 77, 810 F.2d 1137 (1987). In applying this standard, the court affirms Commerce's factual determinations so long as they are reasonable and supported by the record as a whole, even if there is some evidence that detracts from the agency's conclusions. Atlantic Sugar, Ltd. v. United States, 2 Fed. Cir. (T) 130, 744 F.2d 1556, 1563 (1984).

III. DISCUSSION

A. Import Data for Steel Input Valuation

Commerce correctly points out that this issue turns upon the second prong of the Chevron test. The relevant statute, 19 U.S.C. § 1677b(c)(1) (1988), does not clearly delineate how Commerce should determine what constitutes the best information available. Hence, the Court must consider whether Commerce's outright rejection of the PRC trading companies' data without assessing its reliability or accuracy is reasonable. While the Court recognizes the difficulty of selecting a methodology that produces reasonably accurate estimates of the true factors of production in a NME case, it cannot conclude that Commerce's failure to inquire into the reliability of the data without explanation is reasonable.

The Court begins its discussion by turning to the relevant statute. Section 1677b(c)(1) provides:

If -

(A) the merchandise under investigation is exported from a nonmarket economy country, and

(B) the administering authority finds that available information does not permit the foreign market value of the merchandise to be determined under subsection (a) of this section, the administering authority shall determine the foreign market value of the merchandise on the basis of the value of the factors of production utilized in producing the merchandise and to which shall be added an amount for general expenses and profit.... Except as provided in paragraph (2), the valuation of factors shall be based upon the best available information regarding the values of such factors in a market economy or countries considered to be appropriate by the administering authority.

19 U.S.C. § 1677b(c)(1) (1988).

From the statute, it is clear that Commerce must identify and use the best information available when it values the factors of production. As should be apparent, the rationale for using the best information available is to obtain the most accurate dumping margin possible. See, e.g., Writing Instrument Mfrs. v. United States, 21 CIT ___, ___, 984 F.Supp. 629, 637 (1997). Indeed, accuracy is the touchstone of the antidumping statute. See Rhone Poulenc, Inc. v United States, 8 Fed. Cir. (T) 61, 67, 899 F.2d 1185, 1191 (1990). Thus, when Commerce uses the best information available to value the factors of production it acts in consonance with the statute.

Here, one of the trading company respondents submitted data it believed to be the best information available on the value of steel inputs used by the PRC HFHTs manufacturers. This data consisted of market-based prices paid by PRC trading...