Shakeproof Assembly Components Division of Illinois Tool Works, Inc. v. United States , 30 Ct. Int'l Trade 1173 ( 2006 )

Slip Op. 06-129
UNITED STATES COURT OF INTERNATIONAL TRADE
SHAKEPROOF ASSEMBLY COMPONENTS
DIVISION OF ILLINOIS TOOL WORKS,
INC., Before: Richard W. Goldberg,
Senior Judge
Plaintiff,
Court No. 05-00404
v.
UNITED STATES,
Defendant,
and
HANG ZHOU SPRING WASHER CO., LTD.,
Defendant-Intervenor.
OPINION
[Commerce’s redetermination results sustained.]
Date: August 25, 2006
McDermott Will & Emery LLP (David J. Levine and Raymond Paul
Paretzky) for Plaintiff Shakeproof Assembly Components
Division of Illinois Tool Works, Inc.
Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director; Jeanne E. Davidson, Deputy Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(David S. Silverbrand); Ada Bosque, Office of the Chief
Counsel, U.S. Department of Commerce, for Defendant the
United States.
White & Case LLP (William J. Clinton, Adams C. Lee, and Emily
Lawson) for Defendant-Intervenor Hang Zhou Spring Washer
Company, Ltd.
Court No. 05-00404 Page 2
Goldberg, Senior Judge: In Shakeproof Assembly
Components Division of Illinois Tool Works, Inc. v. United
States, 29 CIT ___, 412 F. Supp. 2d 1330 (2005) (“Shakeproof
I”), familiarity with which is presumed, the Court granted a
partial consent motion for voluntary remand of the final
results of an administrative review of an antidumping duty
order by the U.S. Department of Commerce (“Commerce”).
Commerce’s redetermination is now pending before the Court,
which has jurisdiction pursuant to 28 U.S.C. § 1581(c).
I. BACKGROUND
Shakeproof Assembly Components Division of Illinois Tool
Works, Inc. (“Plaintiff”) commenced this action to contest
one aspect of Commerce’s antidumping duty calculations in
Certain Helical Spring Lock Washers from the People’s
Republic of China, 70 Fed. Reg. 28274 (Dep’t Commerce May 17,
2005) (final results of administrative review) (the “Final
Results”). Id. at ___, 412 F. Supp. 2d at 1332-33. In
general terms, Plaintiff alleged that, in the Final Results,
Commerce had employed without explanation a new and erroneous
methodology to value a certain factor of production 1 involved
1
For imports from non-market economies like the People’s
Republic of China, Commerce may look to the cumulated value
of the imports’ factors of production to determine the
Court No. 05-00404 Page 3
in the making of helical spring lock washers (the “subject
imports”) by Hang Zhou Spring Washer Co., Ltd. (“Defendant-
Intervenor”) for sale into the United States during the
period of review. Id. Following initiation of this action,
Commerce moved the Court for a voluntary remand of the Final
Results to justify the use of its methodology or, if that was
not possible, to recalculate the antidumping duty based on a
justifiable methodology. Id. at ___, 412 F. Supp. 2d at
1333. The Court granted this motion. Id. at ___, 412 F.
Supp. 2d at 1339.
On remand, Commerce explored in greater detail the
contested factor of production – so-called plating services –
and the agency’s corresponding valuation methodology. See
Final Results of Redetermination Pursuant to United States
Court of International Trade Remand Order (Dep’t Commerce
imports’ normal value. See 19 U.S.C. § 1677b(c) (1999). As
the Court has previously noted:
Normal value is a critical variable in antidumping
calculations. It is intended to represent the price at
which subject imports are first sold in their home market
(or, where necessary, a comparable market). See 19 U.S.C. §
1677b(a)(1)(A)-(C) (1999). . . . Once calculated, the normal
value of subject imports is compared with their export price
(or, where necessary, their constructed export price) to
determine if the subject imports are being sold at less than
fair value (or dumped) in the United States. Id. §
1677b(a).
Shakeproof I, 29 CIT at ___, 412 F. Supp. 2d at 1332 n1.
Court No. 05-00404 Page 4
June 19, 2006), available at http://www.ia.ita.doc.gov/
remands/05-163.pdf at 2 (“Remand Results”). As in the Final
Results, Commerce established that plating services involved
the application of zinc plating or coating to the subject
imports during the production process. Id. at 2-4. Commerce
further established that, in valuing plating services in the
Final Results, Commerce had employed a methodology which
differed from the valuation methodology employed during the
immediately preceding administrative review of the subject
imports. Id. at 1. To resolve this discrepancy, Commerce
solicited information from Plaintiff and Defendant-Intervenor
regarding: the most appropriate way to value plating
services; the industry standard, if any, for such valuation;
and proposed surrogate values 2 to be used in valuing the
plating services performed on the subject imports. Id. at 2.
2
In valuing factors of production for imports from non-market
economies, Commerce is required to use, “to the extent
possible, the prices or costs of factors of production in one
or more market economy countries that are (A) at a level of
economic development comparable to that of the non-market
economy country, and (B) significant producers of comparable
merchandise.” 19 U.S.C. § 1677b(c)(4) (1999). In other
words, “the statutory provisions specifically authorize
Commerce to use surrogate countries to estimate the value of
the factors of production.” Shakeproof Assembly Components
Div. of Ill. Tool Works v. United States, 268 F.3d 1376, 1381
(Fed. Cir. 2001) (“Shakeproof 2001”).
Court No. 05-00404 Page 5
In response, Plaintiff provided Commerce with letters
from three industry experts stating that the standard
industry practice was to provide a fixed price for plating
services to be charged on the basis of the amount of lock
washer to be coated, rather than on the basis of the amount
of zinc coating used during the plating process (e.g., five
rupees per each kilogram of lock washer coated, as opposed to
five rupees per each kilogram of coating applied to the lock
washers). Id. at 5. Plaintiff also provided a letter (with
contact information) from Sudha Metal Finishers, an Indian
company which supplied the price quote used as the surrogate
value for plating services in the Final Results. Id. The
letter stated that that price quote had been provided on a
per kilogram of lock washers coated basis, not on a per
kilogram of zinc coating used basis. Id. The letter further
noted that the price quote used in the Final Results
reflected Sudha Metal Finishers’ prevailing rate for plating
services during March 2003, within the period of review. Id.
at 10. Plaintiff was unable to give additional details about
the price quote, including the manner in which the quote was
solicited, because the branch of Plaintiff’s organization
which had solicited the quote from Sudha Metal Finishers had
ceased to operate in the region. Id. at 5.
Court No. 05-00404 Page 6
For its part, Defendant-Intervenor responded by
providing three plating services price quotes from Indian
companies for the period between March and April 2004, after
the period of review. Id. at 4. Defendant-Intervenor also
provided the contact information for these companies. Id. at
6. However, the manner in which the price quotes were
solicited and the methodology by which the price quotes were
to be applied (i.e., on a per kilogram of lock washer coated
basis or a per kilogram of zinc coating used basis) were not
expressly spelled out in Defendant-Intervenor’s submission to
Commerce. Id.
From the information provided, Commerce made several
determinations which altered the calculations in the Final
Results. First, recognizing that the price quote used in the
Final Results had been applied on a per kilogram of zinc
coating used basis, Commerce rejected this methodology for
valuing plating services and instead adopted the methodology
used in the immediately preceding review period. Id. at 6,
15. That is, Commerce determined that it was most
appropriate to value plating services on a per kilogram of
lock washer coated basis. Id. Both Plaintiff and Defendant-
Intervenor supported this change in methodology in the Remand
Results.
Court No. 05-00404 Page 7
Second, Commerce evaluated the plating services
valuation information placed on the record during both the
original review and remand proceedings and determined that
the price quote provided by Plaintiff and used in the Final
Results was still the best surrogate value for plating
services. Id. at 6, 14-15. That is, Commerce found the
original price quote to be “the best available information”
for valuing plating services, id. at 14, and thereby rejected
the three additional price quotes supplied by Defendant-
Intervenor during the remand proceedings. Commerce justified
this evidentiary choice by noting that: (1) the appropriate
methodological application and means of solicitation of
Defendant-Intervenor’s price quotes were not clear from the
record evidence, id. at 5-6, 12-13; (2) the appropriate
methodological application and means of solicitation of
Plaintiff’s quote were established by record evidence, id.,
and (3) unlike Defendant-Intervenor’s price quotes,
Plaintiff’s price quote was contemporaneous with the period
of review, id. at 14. As a result, Commerce revised its
calculations in the Remand Results, resulting in a change in
the antidumping duty rate “from 0.00 percent to 19.48
percent” for Defendant-Intervenor. Id. at 15.
Court No. 05-00404 Page 8
II. STANDARD OF REVIEW
The Court must sustain any determination, finding, or
conclusion made by Commerce in the Remand Results 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) (1999).
With respect to the substantial evidence requirement,
the U.S. Supreme Court has defined this term to mean “more
than a mere scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474,
477 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197,
229 (1938) (quotation mark omitted)).
With respect to the in accordance with law requirement,
the Court must defer to an agency’s reasonable construction
of an ambiguous statute. Allegheny Ludlum Corp. v. United
States, 367 F.3d 1339, 1343 (Fed. Cir. 2004) (citing Chevron,
U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984)). Further, “the
deference granted to the agency’s interpretation of the
statutes it administers extends to the methodology it applies
to fulfill its statutory mandate.” GMN Georg Muller Nurnberg
AG v. United States, 15 CIT 174, 178, 763 F. Supp. 607, 611
(1991) (citing, inter alia, Chevron, 467 U.S. at 844-45;
Court No. 05-00404 Page 9
Amer. Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed.
Cir. 1986)).
III. DISCUSSION
While Plaintiff is predictably pleased with the Remand
Results, Defendant-Intervenor objects to Commerce’s revised
valuation of plating services. Specifically, Defendant-
Intervenor takes issue with Commerce’s exclusive reliance on
Plaintiff’s quote as a surrogate value for the plating
services factor of production. Defendant-Intervenor’s
Comments on the Department of Commerce Remand Determination
(“Def.-Int.’s Br.”) at 5-6. Defendant-Intervenor does not
argue that the quote supplied by Plaintiff should not have
been used. Rather, Defendant-Intervenor simply argues that
its quotes also should have been included in Commerce’s
valuation of plating services because its quotes were: (1)
intended to be applied on a per kilogram of lock washer
coated basis, the methodology adopted by Commerce in the
Remand Results, id. at 6-10; (2) as reliable and
representative of the factor of production as Plaintiff’s
price quote used by Commerce in the Remand Results, id. at
15-17; and (3) no further outside the period of review than
price quotes Commerce has used to value factors of production
Court No. 05-00404 Page 10
in previous reviews of the subject imports and other past
investigations, id. at 17-20.
Even assuming arguendo that Defendant-Intervenor’s has
proven (contrary to Commerce’s findings) that its price
quotes (1) clearly employed the methodology adopted by
Commerce in the Remand Results and (2) were as representative
and reliable as the price quote used in the Remand Results,
the Court concludes that Commerce’s valuation of the plating
services factor of production using the record evidence most
contemporaneous with the period of review was reasonable.
Accordingly, for the reasons that follow, the Court sustains
the Remand Results.
A. COMMERCE’S VALUATION OF PLATING SERVICES IN THE REMAND
RESULTS IS IN ACCORDANCE WITH LAW.
First, Commerce has an established practice of favoring
surrogate values which are contemporaneous with the period of
investigation or review under consideration, and the Court
finds this practice to be in accordance with law. To value a
factor of production, Commerce must use the “best available
information[.]” 19 U.S.C. § 1677b(c)(1)(B) (1999). Congress
has left to Commerce’s discretion exactly what constitutes
such information. See Nation Ford Chem. Co. v. United
States, 166 F.3d 1373, 1377-78 (Fed. Cir. 1999). One of
Commerce’s established practices or methodologies for valuing
Court No. 05-00404 Page 11
factors of production is to utilize and rely on credible
surrogate values which are contemporaneous with the period of
investigation or review. See Import Administration Policy
Bulletin No. 04.1, Non-Market Economy Surrogate Country
Selection Process (2004), available at http://ia.ita.doc.gov/
policy/bull04-1.html (“In assessing data and data sources, it
is the Department’s stated practice to use investigation or
review period-wide price averages, . . . [and] prices that
are contemporaneous with the period of investigation or
review . . . .”); see also Shandong Huarong Gen. Corp. v.
Unites States, 25 CIT 834, 849, 159 F. Supp. 2d 714, 728
(2001) (noting that “Commerce’s practice is to use surrogate
value data that is contemporaneous with the period of
review.”). In other words, Commerce believes that, when
available in a reliable form representative of the factor of
production in question, valuation information contemporaneous
with a period of investigation or review generally
constitutes the best information. The reasonableness of this
methodology is manifest: in an original investigation or
administrative review, Commerce must establish the value of a
factor of production for a specific time period in order to
calculate the normal value of imports (and, in turn, their
dumping margin) within that time period as accurately as
Court No. 05-00404 Page 12
possible. See 19 U.S.C. § 1677b(a)(1)(A) (1999) (instructing
that normal value must be “the price . . . reasonably
corresponding to the time of the sales used to determine the
export price or constructed export price”). Commerce’s
reliance on valuation information from within that specific
time period is clearly an appropriate means of fulfilling
this statutory directive. Commerce properly employed this
reasonable methodology here. See Remand Results at 14
(determining that “[Plaintiff’s] price quote is the best
available information because it is contemporaneous with this
[period of review].”).
Further, the Court rejects Defendant-Intervenor’s
contention that Commerce has varied this methodology across
administrative reviews of the subject imports and other
investigations without explanation or justification.
Defendant-Intervenor observes that, in the immediately
preceding administrative review of the subject imports,
Commerce valued plating services using a price quote from
outside the period of review. Def.-Int.’s Br. at 18-19. In
addition, Defendant-Intervenor notes that Commerce has used
post-review surrogate values in other investigations. Id. at
19 (citing Folding Metal Tables and Chairs from the People’s
Republic of China, 71 Fed. Reg. 2905 (Dep’t Commerce Jan. 18,
Court No. 05-00404 Page 13
2006) (final determination); Certain Cut-to-Length Carbon
Steel Plate from Romania, 65 Fed. Reg. 54208 (Dep’t Commerce
Sept. 7, 2000) (preliminary determination)). Defendant-
Intervenor argues that, if Commerce was previously willing to
consider surrogate values from outside the period of review,
it was methodologically aberrant for Commerce to reject
similar valuation information in the Remand Results. Id.Defendant-Intervenor contends that, under administrative law
principles, Commerce was required to explain its departure
from prior practice and the agency’s failure to do so
rendered the Remand Results not in accordance with law. Id.In the Court’s view, Defendant-Intervenor confuses the
result for the method. Commerce applied the same methodology
in its two most recent reviews of the subject imports; that
is, for both reviews, the agency selected the most
contemporaneous surrogate values available from the reliable
record evidence to establish the value of plating services.
The difference between the two reviews is not the result of a
change in methodology by Commerce, but rather is attributable
to inevitable variances in the composition of the two
administrative records. It is not always possible for
Commerce to obtain reliable surrogate values from within the
specific period of investigation or review under
Court No. 05-00404 Page 14
consideration. 3 When this occurs, Commerce makes appropriate
allowances and adjustments to available surrogate values in
order to best approximate factor of production values during
the period of investigation or review. 4 However, when the
administrative record contains reliable surrogate values for
a factor of production from both within and without the
period of investigation or review, all other factors held
equal, Commerce consistently selects the most contemporaneous
information available to the agency. 5 That is what occurred
3
See Issues and Decision Memorandum for the Final Results of
Folding Metal Tables and Chairs from the People’s Republic of
China, A-570-868 (Jan. 9, 2006), available at
http://ia.ita.doc.gov/frn/summary/prc/E6-498-1.pdf at 35
(“While it would be ideal to have an international air
freight price quote from the [period of review], this
information is not publicly available and accessible to
[Commerce].”).
4
See Certain Cut-to-Length Carbon Steel Plate from Romania,
65 Fed. Reg. at 54210 (“Where any of the factor values were
from years other than [the period of review], we applied an
inflator or deflator, as appropriate, based on the consumer
price index so that all factor values would approximate
[period of review] costs.”).
5
See, e.g., Issues and Decision Memorandum for the 2003-2004
Antidumping Duty Administrative Review of Persulfates from
the People’s Republic of China, A-570-847 (Feb. 6, 2006)
available at http://ia.ita.doc.gov/frn/summary/prc/E6-2088-
1.pdf at 17-18 (disregarding one surrogate value and
selecting another because the latter was “much more
contemporaneous with the [period of review]”); Issues and
Decision Memorandum for the Administrative Review of the
Antidumping Duty Order on Fresh Garlic from the People’s
Republic of China, A-570-831 (June 13, 2005) available at
Court No. 05-00404 Page 15
here, rendering the methodology employed by Commerce in the
Remand Results consistent with the agency’s past practice.
In addition, the Court is not persuaded by the
alternative methodology advocated by Defendant-Intervenor.
Defendant-Intervenor suggests that, where the record contains
surrogate values from within and without the period of
review, Commerce should employ an averaging methodology,
Def.-Int.’s Br. at 19-20, whereby the outlying surrogate
values are presumably adjusted to reflect market conditions
during the period of investigation or review and combined
with surrogate values from within the period of investigation
or review. While not an impossible methodology to employ,
Defendant-Intervenor offers no compelling reason 6 for why such
http://ia.ita.doc.gov/frn/summary/prc/E5-3048-1.pdf at 26
(employing same rationale for selection of surrogate value
for factor of production).
6
Defendant-Intervenor suggests that because “[Plaintiff’s]
price quote may be tainted by the affiliation between
[Plaintiff] and the Indian company soliciting the price
quote,” an average of a range of prices from within and
without the period of review would result in a more accurate
surrogate value for the plating services factor of production
than reliance on only Plaintiff’s potentially misleading
price quote. Def.-Int.’s Br. at 19. However, Defendant-
Intervenor points to no evidence indicating that Plaintiff’s
affiliate “manipulated the circumstance by which the price
quote from [Sudha Metal Finishers] was solicited[.]” Id. at
13. It is also not facially apparent how Plaintiff’s
affiliation with the company soliciting the price quote would
necessarily have an impact on the independent company
Court No. 05-00404 Page 16
a constructed average would result in a more accurate
valuation here than simply using information taken directly
from the period of review. In any event, “Commerce need not
prove that its methodology was the only way or even the best
way to calculate surrogate values for factors of production,
as long as it was a reasonable way.” Coal. for the Pres. of
Am. Brake Drum and Rotor Aftermarket Mfrs. v. United States,
23 CIT 88, 118, 44 F. Supp. 2d 229, 258 (1999). Defendant-
Intervenor’s alternative approach does little to call into
question the reasonableness of Commerce’s established
methodology, which the Court finds to be in accordance with
law.
B. COMMERCE’S VALUATION OF PLATING SERVICES IN THE REMAND
RESULTS IS SUPPORTED BY SUBSTANTIAL EVIDENCE.
Second, substantial evidence supports Commerce’s choice
of Plaintiff’s price quote as a surrogate value for the
plating services factor of production in the Remand Results.
providing the price quote. As such, the Court rejects
Defendant-Intervenor’s unsubstantiated criticism of the price
quote used by Commerce in the Remand Results, as well as the
corresponding justification for Defendant-Intervenor’s
proposed alternative methodology. Cf. USCIT R. 11(b) (“By
presenting to the court . . . a pleading, written motion, or
other paper, an attorney or unrepresented party is certifying
that to the best of the person’s knowledge, information, and
belief, formed after any inquiry reasonable under the
circumstances . . . the allegations and other factual
contentions have evidentiary support . . . .”) (emphasis
added).
Court No. 05-00404 Page 17
It is uncontested that the price quote used by Commerce was
contemporaneous with the period of review and that the price
quotes rejected by Commerce came from outside the period of
review. In addition, the reliability and representativeness
of the price quote used by Commerce are not seriously in
dispute. See supra note 6. Even assuming that Defendant-
Intervenor’s price quotes were equal to Plaintiff’s price
quote in all other respects, the temporal difference between
these two sets of reliable record evidence was a sufficient
basis for Commerce’s evidentiary choice. 7 Because Commerce
selected the most contemporaneous surrogate value available
from among the reliable and representative valuation
information on the administrative record, the Court finds
that Commerce’s valuation of plating services in the Remand
Results is supported by substantial evidence.
7
The Court notes that this case is readily distinguishable
from Yantai Oriental Juice Co. v. United States, 26 CIT 605,
617 (2002), which found that contemporaneity is insufficient
to justify Commerce’s selection of a surrogate value under
certain circumstances. In Yantai, a dispute existed as to
whether Commerce’s chosen surrogate value adequately
represented or approximated the factor of production in
question, and the court rejected contemporaneity as an
adequate reason for overlooking these other potential
deficiencies in Commerce’s chosen surrogate value. Id.Here, because no dispute about the representativeness of
Commerce’s chosen surrogate value exists, Commerce may
properly differentiate between two otherwise reliable and
representative surrogate values on the basis of
contemporaneity.
Court No. 05-00404 Page 18
IV. CONCLUSION
The Court concludes that Commerce’s valuation of the
plating services factor of production is both in accordance
with law and supported by substantial evidence. The Court
therefore sustains the Remand Results. Judgment shall be
entered accordingly.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Date: August 25, 2006
New York, New York