Pam S.P.A. v. U.S. Depe. of Commerce

• Decision Date: 08 May 2003
• Docket Number: No. SLIP OP. 03-48,,Court No. 02-00144.,SLIP OP. 03-48,
• Citation: 265 F.Supp.2d 1362
• Parties: PAM, S.p.A., Plaintiff, v. UNITED STATES DEPARTMENT OF COMMERCE, Defendant, and New World Pasta Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

265 F.Supp.2d 1362

PAM, S.p.A., Plaintiff, v. UNITED STATES DEPARTMENT OF COMMERCE, Defendant, and New World Pasta Company, Defendant-Intervenor.

No. SLIP OP. 03-48,

Court No. 02-00144.

United States Court of International Trade.

May 8, 2003.

Riggle and Craven, David A. Riggle and (David J. Craven), Chicago, IL, for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General, United States Department of Justice, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, (Lucius B. Lau), Assistant Director, (David A. Harrington), Trial Attorney; Elizabeth Cooper Doyle, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant.

Collier Shannon Scott, PLLC, Paul C. Rosenthal, David C. Smith, and (Adam H. Gordon), Washington, DC, for Defendant-Intervenor.

OPINION

BARZILAY, District Judge.

I. INTRODUCTION

Plaintiff PAM S.p.A. ("PAM")¹ filed a USCIT R. 56.2 Motion for Judgment Upon an Agency Record, challenging certain aspects of the Department of Commerce's ("Commerce" or "Department") determinations in the antidumping administrative review that it conducted concerning PAM. See Notice of Final Results of Antidump ing Duty Administrative Review, Partial Rescission of Antidumping Duty Admin istrative Review and Revocation of Anti dumping Duty Order in Part: Certain Pasta From Italy, 67 Fed.Reg. 300 (Jan. 3, 2002) {"Final Results"). This Court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c).

II. BACKGROUND

On July 24, 1996, Commerce published in the Federal Register an antidumping duty order on certain pasta from Italy.² See Notice of Antidumping Duty Order and Amended Final Determination of Sales at Less Than Fair Value: Certain Pasta From Italy, 61 Fed.Reg. 38,547 (July 24, 1996). On July 20, 2000, Commerce published in the Federal Register notice of the "Opportunity to Request an Administrative Review" of this order for the period covering United States sales between July 1, 1999 and June 30, 2000. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investiga tion; Opportunity To Request Adminis trative Review, 65 Fed.Reg. 45,035 (July 20, 2000). Borden, Inc. and New World Pasta requested an administrative review on September 6, 2000 and that same day, Commerce initiated the administrative review of the antidumping duty order on pasta from Italy. See Initiation of Anti dumping and Countervailing Duty Ad ministrative Reviews and Requests for Revocation in Part, 65 Fed.Reg. 53,980 (Sept. 6, 2000).

On September 13, 2000, Commerce sent its questionnaire to PAM and the other respondents. PAM submitted its responses to sections A through C of the questionnaire by November 15, 2000. Commerce sent PAM a supplemental questionnaire requesting information about pasta cuts and their production on December 14, 2000. PAM submitted its section D responses pursuant to the Department's instructions by January 16, 2001. See Def Int's App. Ex. 3. On February 21, 2001, Commerce sent PAM another supplemental questionnaire seeking information concerning, among other things, a new production line at its D'Apuzzo facility.

In its section D response, PAM claimed a startup adjustment pursuant to 19 U.S.C. § 1677b(f)(1)(C) (1999), related to the installation of a "new production line" in its existing D'Apuzzo facility and stated that it had "remodeled an existing facility by addition of new machinery." Id. at 22. The Department's questionnaire also requested that PAM "explain how the production levels were limited by technical factors associated with the initial phase of commercial production." Id. at 23. PAM responded that the question "does not apply" because its new line did not begin to operate during the period of review ("POR"). Id.

On June 28, 2001, Commerce preliminarily determined that PAM sold the subject merchandise at kiss than normal value ("NV")³ with a dumping margin of 4.48 percent and denied PAM's requested startup adjustment. See Notice of Prelim inary Results and. Partial Rescission of Antidumping Duty Administrative Re view and Intent To Revoke Antidumping Duty Order in Part: Certain Pasta From Italy, 66 Fed.Reg. 34,414 (June 28, 2001) ("Preliminary Results").

In its supplemental questionnaire to PAM, Commerce noted that PAM had "failed to provide all the information requested in the original questionnaire regarding these startup costs." Def-InVs App. Ex. 4 at 1. PAM responded it had added "new machinery" in the form of a "new long cut production line," which required periodic closures of the plant. Id. at 2. PAM maintained that "production levels were limited because the new line was not yet ready to produce pasta and the existing lines could not produce pasta because the installation of the new line made it impossible for the old line to operate." Id. at 4. Commerce denied the request in the Preliminary Results, determining that PAM did not meet the criteria for a startup adjustment pursuant to 19 U.S.C. § 1677b(f)(1)(C)(ii). Preliminary Results at 34,419. Specifically, Commerce concluded that the new line did not constitute a "new production facility" or a "new product" that required substantial additional investment, and the new line did not constitute a "substantial retooling" of its existing facility. Commerce determined the addition of a new production line within an already existing facility was a "mere improvement," which, as the Uruguay Round Agreements Act, Statement of Administrative Action ("SAA")⁴ states, does not qualify for a startup adjustment.

On August 7, 2001, Commerce received PAM's administrative case brief. In a December 5, 2001 letter, PAM supplemented its brief with a request that Commerce combine shape categories 5 (short cuts), 6 (specialty short cuts), and 7 (soupettes), asserting that Commerce acknowledged that it erred with respect to this issue in the judicial review of the third administrative review. See Final Results at 300 n. 2. In the Final Results, Commerce declined to combine shape categories, explaining that Commerce's remand request in the prior judicial review, which PAM claimed to be a "clear and unequivocal" admission of error, was simply a request for an opportunity to "review the record with regard to shape categories." Id. at 300.

On January 3, 2002, Commerce published the final results of the administrative review, again denying the startup adjustment and determining PAM's dumping margin to be 4.10 percent. Id. at 302. Commerce rejected PAM's request that its margin be calculated by comparing the weighted average of normal values to entire invoices and, instead, followed the standard methodology of comparing the weighted average of normal values to individual transactions. See Issues and Dec sion Memorandum for the Fourth Anti dumping Duty Administrative Review; Final Results of Review (Jan. 3, 2001) ("Issues and Decision Memo") at 12 (citing 19 C.F.R. § 351.414(c)(2)). Commerce also declined to permit PAM's non-dumped sales to be used to offset the dumping margins on sales that had been dumped. Id.

On February 28, 2002, PAM filed a complaint with this court, alleging that the Department's determination was unsupported by substantial evidence on the record and was otherwise not in accordance with law. See 19 U.S.C. § 1516a(B)(1)(B)(i). On October 7, 2002, PAM moved for Judgment upon an Agency Record pursuant to USCIT R. 56.2.

III. DISCUSSION

PAM challenges four separate issues in this case: first, whether Commerce's denial of a startup adjustment for PAM's new production line is supported by substantial evidence and is in accordance with law; second, whether the Department's calculation of PAM's dumping margin using the average-to-transaction method is in accordance with law; third, whether the Department erred by "zeroing"⁵ negative margins on individual transactions when calculating PAM's dumping margin; and fourth, whether the Department erred in its classification of certain pasta shapes.

This court must evaluate whether the findings in question are supported by substantial evidence on the record and are otherwise in accordance with law. See § 1516a(b)(1)(B)(i). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. of New York v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938); Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984).

A. COMMERCE'S DETERMINATION TO DENY A STARTUP ADJUST MENT FOR PAM'S NEW PRODUC TION LINE IS SUPPORTED BY SUBSTANTIAL EVIDENCE AND IS OTHERWISE IN ACCORDANCE WITH LAW.

PAM claimed a startup adjustment for its new pasta production line at its D'Apuzzo facility equal to the amount of the fixed overhead attributed to the period of time during which the D'Apuzzo facility was closed for the installation of the production line. In the Final Results, Commerce denied PAM's request for a startup adjustment, finding that the statutory criteria had not been satisfied.

To qualify for a startup adjustment, a producer must satisfy two requirements under the statute. In particular, Commerce will make an adjustment for startup costs when:

I) a producer is using new production facilities or producing a new product that requires substantial additional investment, and

II) production levels are limited by technical factors associated with the initial phase of commercial production.

19 U.S.C. § 1677b(f)(1)(C)(ii) (1999).

The statute does not define "new product" and "new production facility." See Pohang Iron and Steel Co. v. United States, 23 CIT 778, 782 (1999). However, the Department looks to the SAA for the interpretation of these terms. "`New production facilities' include[] the substantially complete retooling of an existing plant. Substantially complete retooling involves the replacement of nearly all production machinery or the equivalent rebuilding of existing machinery. A `new product' is one requiring substantial additional...