Shakeproof Assembly Components v. U.S.

• Decision Date: 12 October 2001
• Citation: 268 F.3d 1376
• Parties: (Fed. Cir. 2001) SHAKEPROOF ASSEMBLY COMPONENTS, DIVISION OF ILLINOIS TOOL WORKS, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee. 00-1521 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1376

268 F.3d 1376 (Fed. Cir. 2001)

SHAKEPROOF ASSEMBLY COMPONENTS, DIVISION OF ILLINOIS TOOL WORKS, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

00-1521

United States Court of Appeals for the Federal Circuit

DECIDED: October 12, 2001

Appealed from: United States Court of International Trade Judge Judith M. Barzilay

[Copyrighted Material Omitted] Stephen M. Creskoff, Creskoff & Doram LLP, of Washington, DC, argued for plaintiff-appellant. Of counsel was Lisa E. Smilan.

Lucius B. Lau, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief was David M. Cohen, Director. Of counsel were Robert E. Nielsen, John D. McInerney, and Berniece A. Browne, Attorneys, Department of Commerce, of Washington, DC.

Before CLEVENGER, SCHALL, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

This case involves the appeal of the decision of the United States Court of International Trade that sustained the final antidumping determination issued by the United States Department of Commerce International Trade Administration ("Commerce"). Shakeproof Assembly Components v. United States, 102 F. Supp. 2d 486 (Ct. Int'l Trade 2000) ("Shakeproof II"). On November 19, 1997, Commerce issued its final determination regarding "Certain Helical Spring Lock Washers from the People's Republic of China." See Final Results of Antidumping Duty Administrative Review, 62 Fed. Reg. 61794-801 (Nov. 19, 1997) ("Final Determination"). The antidumping determination encompasses Helical Spring Lock Washers ("Washers") imported from Chinese manufacturer Zhejian Wanxin Group, Ltd. ("ZWG") between October 1, 1995 and September 30, 1996. Commerce ultimately assigned an antidumping margin of 14.15% on Washers imported from ZWG during the period of review. Shakeproof Assembly Components ("Shakeproof"), a United States manufacturer of Washers, challenges the methodology used by Commerce in its final determination. Shakeproof argues that the antidumping margin should instead be approximately 38%, based on its asserted normal value of the steel wire rod ("steel") used to manufacture the Washers.¹

For the reasons discussed below, we affirm.

I. BACKGROUND

On November 19, 1997, Commerce issued its Final Determination in this case. 62 Fed. Reg. 61794-801 (Nov. 19, 1997). Shakeproof challenged the determination before the United States Court of International Trade, and disputed the methodology by which Commerce calculated the value of the steel used to manufacture the Washers. Shakeproof argued that it was improper for Commerce to determine the value of the steel based on the price paid for steel imported by ZWG from the United Kingdom. Specifically, ZWG purchased approximately one-third (34.7%) of its steel from the United Kingdom, and the remaining two-thirds (65.3%) from domestic Chinese producers. Commerce established the normal value of 100% of the steel based on the import price of the steel purchased from the United Kingdom. Shakeproof argued that the normal value of the domestically purchased Chinese steel should instead be determined based on the "factors of production" using India as a surrogate country pursuant to 19 U.S.C. 1677b(c) (1994).

On July 29, 1999, the United States Court of International Trade remanded the case in order for Commerce to further explain "how its use of import prices to value the entire factor of production for steel wire rod promoted accuracy, including but not limited to how it was more accurate than the use of the surrogate value." Shakeproof Assembly Components v. United States, 59 F. Supp. 2d 1354, 1360-61 (Ct. Int'l Trade 1999) ("Shakeproof I"). The trial court reasoned that "[w]hether Commerce's use of imported prices to value an entire factor of production is reasonable is inextricably linked to whether the methodology promotes accuracy." Id. at 1358 (citing Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1445 (Fed. Cir. 1994)).

On September 27, 1999, Commerce responded to the trial court's remand order by issuing an additional explanation, entitled Final Results of Redetermination on Remand ("Remand Determination"). The Remand Determination stated:

The purpose of the factors of production methodology is to determine what [normal value] would be if the producer's costs were set by the market forces in a comparable economy. Because the import price is an actual market price paid by the [non-market economy] producer it provides a more accurate value than other potential surrogates. Therefore, the actual price paid for the imports constitutes the best available information for valuing this factor.

Commerce explained that, "the actual price paid for inputs imported from a market economy in meaningful quantities is the best available information and promotes accuracy in the dumping calculation." Commerce further stated that it would find imports "meaningful" if it could "reasonably conclude from the quantities sold, and other aspects of the transactions, that the price paid is a reliable market economy value for the input." Commerce indicated that, in the present case, ZWG purchased 65.3% of the steel from seven domestic Chinese suppliers, and imported 34.7% of the steel from the United Kingdom. Commerce also noted that the amount imported from the United Kingdom "exceeded the amounts purchased from any one of the seven" domestic Chinese suppliers. Commerce determined that ZWG imported "meaningful" amounts of identical steel from the United Kingdom. Moreover, Commerce explained why the import price was more accurate than a surrogate value:

In [non-market economy] countries we do not have market economy prices and, thus, are forced to resort to the best available information, which is often a surrogate value. At best, this surrogate value represents only an estimate of what [a non-market economy] producer might pay for the factor in question if it were operating in a market economy setting. In this case, however, we have an actual, market economy price for steel wire rod paid by the [non-market economy] producer in question. It is an actual price determined by market economy forces which has been paid to the market economy supplier by the respondent in convertible currency. Thus, the actual market economy price is both reliable and accurate.

Thus, Commerce concluded that the United Kingdom import price was a more reliable and more accurate basis for establishing the normal value of the domestic steel.

On June 9, 2000, the United States Court of International Trade affirmed the Remand Determination. Shakeproof II, 102 F. Supp. 2d at 496. The trial court reasoned that the Remand Determination demonstrated "how its use of import prices promotes accuracy." Id. at 495. Shakeproof timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. 1295(a)(5) (1994).

II. STANDARD OF REVIEW

The Court of International Trade reviews Commerce's decision to determine whether it is "unsupported by substantial evidence in the record, or otherwise not in accordance with law." 19 U.S.C. 1516a(b)(1)(B)(i) (1994). We reapply this standard of review to Commerce's determination. Cemex v. United States, 133 F.3d 897, 900 (Fed. Cir. 1998).

We review questions of statutory interpretation without deference. U.S. Steel Group v. United States, 225 F.3d 1284, 1286 (Fed. Cir. 2000). In reviewing an agency's construction of a statute that it administers, this court addresses two questions as required by the Supreme Court's decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). The first question is "whether Congress has directly spoken to the precise question at issue." Id. at 842. If so, this court and the agency "must give effect to the unambiguously expressed intent of Congress." Id. at 843. If, however, Congress has not spoken directly on the issue, this court addresses the second question of whether the agency responsible for filling a gap in the statute has rendered an interpretation that "is based on a permissible construction of the statute." Id.; see also United States v. Mead Corp., 121 S. Ct. 2164, 2185 (2001); Micron Tech., Inc. v. United States, 243 F.3d 1301, 1308 (Fed. Cir. 2001). In other words, Commerce's interpretation will not be set aside unless it is "arbitrary, capricious, or manifestly contrary to the statute." Chevron, 467 U.S. at 844.

In antidumping cases, this court has previously recognized "Commerce's special expertise," and it has "accord[ed] substantial deference to its construction of pertinent statutes." Micron Tech., Inc. v. United States, 117 F.3d 1386, 1394 (Fed. Cir. 1997). Even where Commerce has not engaged in notice-and-comment rulemaking, its statutory interpretations articulated in the course of antidumping proceedings draw Chevron deference. United States v. Mead Corp., 121 S. Ct. 2164, 2171 (2001) (holding that an "[a]dministrative interpretation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority"); Am. Silicon Techs. v. United States, 261 F.3d 1371 (Fed. Cir. 2001). See also Pesquera Mares Australes Ltda. v. United States, et al, No. 00-1427, 2001 WL 1117927 (Fed. Cir. Sept. 25, 2001).

III. DISCUSSION

Commerce's decision to determine the normal value of all steel based on the purchase price of steel imported from the United Kingdom is based on its interpretation of 19 U.S.C. 1677b(c) (1994). The statutory provision requires Commerce to determine the normal value of merchandise exported from a non-market economy country "on the basis of the value of the factors of production utilized in producing the merchandise." 19 U.S.C. 1677b(c)(1) (1994). Specifically, the statute provi...