Itochu Bldg. Prods. v. United States ( 2014 )

Slip Op. 14- 37
UNITED STATES COURT OF INTERNATIONAL TRADE
ITOCHU BUILDING PRODUCTS,
Plaintiff,
Before: Timothy C. Stanceu, Judge
v.
Court No. 11-00208
UNITED STATES,
Defendant.
OPINION AND ORDER
[Remanding the final results of a changed circumstances review of an antidumping duty order on
certain steel nails from China]
Date: April 8, 2014
Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New
York, NY, argued for plaintiff. With him on the brief were Mark E. Pardo, Joseph M. Spraragen,
Andrew T. Schutz, and Bruce M. Mitchell.
Carrie A. Dunsmore, Trial Counsel, Civil Division, U.S. Department of Justice, of
Washington, DC, argued for defendant. With her on the brief were Tony West, Assistant
Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director.
Of counsel on the brief was Nathaniel J. Halvorson, Attorney–International, Office of the Chief
Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.
Stanceu, Judge: This case arose from a challenge to a final determination that the
International Trade Administration, U.S. Department of Commerce (“Commerce” or the
“Department”) issued in a “changed circumstances” review of an antidumping duty order on
certain steel nails from the People’s Republic of China (“China” or the “PRC”). See Certain
Steel Nails From the People’s Republic of China: Final Results of Antidumping Duty Changed
Circumstances Review, 76 Fed. Reg. 30,101, 30,101 (May 24, 2011) (“Final Results”).
Court No. 11-00208 Page 2
Commerce initiated the changed circumstances review in response to a request by one of the
petitioners in the antidumping duty investigation who requested revocation of the antidumping
duty order (the “Order”) as to four types of steel nails. Id. Commerce agreed to the partial
revocation of the Order and chose August 1, 2009 as the effective date. Id.Plaintiff Itochu Building Products (“Itochu” or “IBP”), a U.S. importer of subject
merchandise and a participant in the changed circumstances review, brought this action to
contest the Department’s final determination (the “Final Results”). Specifically, Plaintiff
challenged the August 1, 2009 effective date, arguing that Commerce should have made the
partial revocation effective as of January 23, 2008, the date of the preliminary determination in
the original antidumping duty investigation and the date supported by the parties to the review.
The court denied relief on plaintiff’s claim on the ground that plaintiff failed to exhaust
administrative remedies. Itochu Bldg. Products v. United States, 36 CIT __, __,
865 F. Supp. 2d 1332, 1339 (2012) (“Itochu I”), rev’d and remanded, 733 F.3d 1140(Fed. Cir. 2013).
Before the court is the mandate issued by the U.S. Court of Appeals for the Federal
Circuit (“Court of Appeals”) following Itochu Bldg. Products v. United States, 733 F.3d 1140(Fed. Cir. 2013) (“Itochu II”), which reversed the judgment the court issued in Itochu I and
remanded for further proceedings. CAFC Mandate in Appeal # 13-1044 (Nov. 22, 2013),
ECF No. 40. Addressing the merits of plaintiff’s claim, the court now orders Commerce to
reconsider the decision on the effective date of the partial revocation.
II. BACKGROUND
The background of this litigation is described in the court’s prior opinion and is
supplemented herein. See Itochu I, 36 CIT at __, 865 F. Supp. 2d at 1335-36.
Court No. 11-00208 Page 3
Commerce issued the Order on August 1, 2008.1 Notice of Antidumping Duty Order:
Certain Steel Nails From the People’s Republic of China, 73 Fed. Reg. 44,961 (Aug. 1, 2008)
(“Order”). On September 22, 2009, Commerce initiated the first administrative review of the
Order, which pertained to entries of subject merchandise made during a period of
January 23, 2008 through July 31, 2009 (“period of review” or “POR”). Initiation of
Antidumping Duty & Countervailing Duty Admin. Reviews & Req. for Revocation in Part,
74 Fed. Reg. 48,224 (Sept. 22, 2009). Commerce issued the preliminary results of the first
1
The scope language in the antidumping duty order (the “Order”) provides that:
The merchandise covered by this proceeding includes certain steel nails having a
shaft length up to 12 inches. Certain steel nails include, but are not limited to,
nails made of round wire and nails that are cut. Certain steel nails may be of one
piece construction or constructed of two or more pieces. Certain steel nails may
be produced from any type of steel, and have a variety of finishes, heads, shanks,
point types, shaft lengths and shaft diameters. Finishes include, but are not
limited to, coating in vinyl, zinc (galvanized, whether by electroplating or
hotdipping one or more times), phosphate cement, and paint. Head styles include,
but are not limited to, flat, projection, cupped, oval, brad, headless, double,
countersunk, and sinker. Shank styles include, but are not limited to, smooth,
barbed, screw threaded, ring shank and fluted shank styles. Screw-threaded nails
subject to this proceeding are driven using direct force and not by turning the
fastener using a tool that engages with the head. Point styles include, but are not
limited to, diamond, blunt, needle, chisel and no point. Finished nails may be
sold in bulk, or they may be collated into strips or coils using materials such as
plastic, paper, or wire. Certain steel nails subject to this proceeding are currently
classified under the Harmonized Tariff Schedule of the United States (“HTSUS”)
subheadings 7317.00.55, 7317.00.65 and 7317.00.75.
Notice of Antidumping Duty Order: Certain Steel Nails From the People’s Republic of China,
73 Fed. Reg. 44,961, 44,961 (Aug. 1, 2008) (“Order”). As promulgated, the Order contained an
exclusion, as follows:
Excluded from the scope of this proceeding are roofing nails of all lengths and
diameter, whether collated or in bulk, and whether or not galvanized. Steel
roofing nails are specifically enumerated and identified in ASTM Standard
F 1667 (2005 revision) as Type I, Style 20 nails.
Id.Court No. 11-00208 Page 4
administrative review on September 15, 2010. Certain Steel Nails From the People’s Republic
of China: Notice of Prelim. Results & Prelim. Rescission, in Part, of the Antidumping Duty
Admin. Review, 75 Fed. Reg. 56,070 (Sept. 15, 2010).
On February 11, 2011, while the first administrative review was ongoing, Mid Continent
Nail Corporation (“Mid Continent”), a petitioner in the antidumping duty investigation,
requested a review based on changed circumstances, seeking revocation of the Order as to “[a]ll
unliquidated and future entries” of four types of steel nails.2 Req. for Changed Circumstances
Review 1-3 (Admin.R.Doc. No. 1). See Tariff Act of 1930 (“Tariff Act”) § 751(b), 19 U.S.C.
§ 1675(b); 19 C.F.R. §§ 351.216, 351.221(c)(3).3 Mid Continent sought revocation of the Order
as to these four types of nails on the ground that “the domestic industry no longer has an interest
in maintaining the Order with respect these specific products.” Req. for Changed Circumstances
Review 4. See id. 1-2 & n.2, Attach. 1. See also 19 C.F.R. § 351.222(g)(1)(i). Mid Continent
requested that the partial revocation be “effective as to all unliquidated entries back to the date of
the preliminary determination in the original investigation,” i.e., January 23, 2008. Req. for
Changed Circumstances Review 4. See Certain Steel Nails From the People’s Republic of
China: Prelim. Determination of Sales at Less Than Fair Value & Partial Affirmative
Determination of Critical Circumstances & Postponement of Final Determination, 73 Fed.
2For three of the four types of nails that were the subject of its request for a review based
on changed circumstances, Mid Continent Nail Corporation requested that the revocation pertain
to merchandise entries “whose packaging and packing marking . . . are clearly and prominently
labeled ‘Roofing’ or ‘Roof’ nails.” Req. for Changed Circumstances Review 3 (Admin.R.Doc.
No. 1) (Feb. 11, 2011). Commerce did not grant this request in the language effecting the partial
revocation. Certain Steel Nails From the People’s Republic of China: Final Results of
Antidumping Duty Changed Circumstances Review, 76 Fed. Reg. 30,101, 30,101 (May 24, 2011)
(“Final Results”).
3
All statutory citations herein are to the 2006 edition of the United States Code and all
citations to regulations are to the 2010 edition of the Code of Federal Regulations.
Court No. 11-00208 Page 5
Reg. 3,928 (Jan. 23, 2008). Two other petitioners in the antidumping duty investigation
submitted comments in support of Mid Continent’s requested partial revocation and revocation
date. See Letter from Nat’l Nail Corp. 1-2 (Mar. 1, 2011) (Admin.R.Doc. No. 3); Letter from
United Sources Inc. 1-2 (Mar. 24, 2011) (Admin.R.Doc. No. 8).4 Itochu also filed comments
supporting Mid Continent’s request, including the proposed scope and the proposed
January 23, 2008 effective date. Itochu’s Comments on the Changed Circumstances Review 2
(Feb. 22, 2011) (Admin.R.Doc. No. 2). On March 8, 2011, counsel for Itochu met with
Commerce officials and requested designation of January 23, 2008 as the effective revocation
date. Mem. of Law in Supp. of Pl.’s Rule 56.2 Mot. for J. upon the Agency R. (“Pl.’s Mem.”)
at Attach. 1 (Dec. 5, 2011), ECF No. 19.
Commerce issued the final results of the first administrative review on March 23, 2011,
Certain Steel Nails From the People’s Republic of China: Final Results of the First Antidumping
Duty Admin. Review, 76 Fed. Reg. 16,379 (Mar. 23, 2011), and, in response to allegations of
ministerial errors, issued amended final results on April 26, 2011, Certain Steel Nails From the
People’s Republic of China: Amended Final Results of the First Antidumping Duty Admin.
Review, 76 Fed. Reg. 23,279 (Apr. 26, 2011). On April 21, 2011, five days before publishing the
amended final results, Commerce issued a combined notice initiating an expedited changed
circumstances review of the Order under 19 U.S.C. § 1675(b) and announcing the Department’s
4
There were six petitioners in the antidumping investigation. Int’l Trade Admin.,
Analysis of Industry Support 4 (July 11, 2007) in Req. for Changed Circumstances Review
at Attach 1. Commerce made no finding in the Final Results, 76 Fed. Reg. at 30,101, that the
“[p]roducers accounting for substantially all of the production of the domestic like product to
which the order (or the part of the order to be revoke) . . . pertains have expressed a lack of
interest in the order, in whole or in part,” 19 C.F.R. § 351.222(g)(1)(i). This case does not
involve a claim that the producers who supported the changed circumstances request did not
account for substantially all production.
Court No. 11-00208 Page 6
preliminary decision to revoke the Order as to four types of steel nails (“Preliminary Results”).
Certain Steel Nails From the People’s Republic of China: Initiation & Prelim. Results of
Antidumping Duty Changed Circumstances Review, 76 Fed. Reg. 22,369, 22,369, 22,371
(Apr. 21, 2011) (“Prelim. Results”). Commerce preliminarily chose as the revocation date
August 1, 2009, which it characterized as “the earliest date for which entries of certain steel nails
have not been subject to a completed administrative review.” Id. at 22,371. Commerce invited
interested parties to comment on the Preliminary Results, id., but no party commented within the
specified period, Final Results, 76 Fed. Reg. at 30,101. On May 24, 2011, Commerce issued the
Final Results, in which it revoked the Order as to the four types of steel nails, effective
August 1, 2009.5 Id. at 30,102.
5
The merchandise now excluded from the Order as a result of the Department’s changed
circumstances review is as follows:
(1) Non-collated (i.e., hand-driven or bulk), two-piece steel nails having plastic or
steel washers (caps) already assembled to the nail, having a bright or
galvanized finish, a ring, fluted or spiral shank, an actual length of 0.500” to
8”, inclusive; and an actual shank diameter of 0.1015” to 0.166”, inclusive;
and an actual washer or cap diameter of 0.900” to 1.10”, inclusive.
(2) Non-collated (i.e., hand-driven or bulk), steel nails having a bright or
galvanized finish, a smooth, barbed or ringed shank, an actual length of
0.500” to 4”, inclusive; an actual shank diameter of 0.1015” to 0.166”,
inclusive; and an actual head diameter of 0.3375” to 0.500”, inclusive.
(3) Wire collated steel nails, in coils, having a galvanized finish, a smooth, barbed
or ringed shank, an actual length of 0.500” to 1.75”, inclusive; an actual shank
diameter of 0.116” to 0.166”, inclusive; and an actual head diameter of
0.3375” to 0.500”, inclusive.
(4) Non-collated (i.e., hand-driven or bulk), steel nails having a convex head
(commonly known as an umbrella head), a smooth or spiral shank, a
galvanized finish, an actual length of 1.75” to 3”, inclusive; an actual shank
diameter of 0.131” to 0.152”, inclusive; and an actual head diameter of 0.450”
to 0.813”, inclusive.
Final Results, 76 Fed. Reg. at 30,101.
Court No. 11-00208 Page 7
Challenging the Department’s selection of the August 1, 2009 effective date, plaintiff
brought this action by filing a summons on June 22, 2011 and a complaint on July 21, 2011.
Summons, ECF No. 1; Compl., ECF No. 8. Plaintiff filed a motion for judgment on the agency
record, Pl.’s Rule 56.2 Mot. for J. upon the Agency R. 1 (Dec. 5, 2011), ECF No. 19 (“Pl.’s
Mot.”); Pl.’s Mem. 1, which defendant opposed, Def.’s Memo. in Opp’n to Pl.’s Rule 56.2 Mot.
for J. upon the Agency R. 1 (Feb. 2, 2012), ECF No. 23 (“Def.’s Opp’n”). On March 28, 2012,
plaintiff made a submission advising the court of the intervening decision in Heveafil Sdn. Bhd v.
United States, 36 CIT __, Slip Op. 12-38 (Mar. 21, 2012) (“Heveafil”). Letter Advising the
Court of the Recent Decision in Heveafil Sdn. Bhd v. United States, Slip Op. 12-38
(Mar. 28, 2012), ECF No. 29. On September 13, 2012, the court held oral argument.
Concluding that Itochu failed to exhaust its administrative remedies, the court denied
relief on plaintiff’s claim. Itochu I, 36 CIT at __, 865 F. Supp. 2d at 1337-38 (citing Mittal Steel
Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383-84 (Fed. Cir. 2008)). The court reasoned
that Itochu had waived its objection to the August 1, 2009 date when it declined to comment on
the Department’s choice of this revocation date in the Preliminary Results despite the
Department’s specifically having requested comment on this issue. Id.On appeal, the Court of Appeals reversed the court’s judgment, determining that
application of the exhaustion doctrine was not “‘appropriate’” because “[i]n the circumstances
here, requiring exhaustion served no discernible practical purpose and would have risked harm to
Itochu,” Itochu II, 733 F.3d at 1142, by delaying the changed circumstances review, id. at 1147.
The Court of Appeals determined that Commerce had sufficient opportunity to consider Itochu’s
objections to the August 1, 2009 effective date due to Itochu’s argument in favor of the earlier
Court No. 11-00208 Page 8
date before Commerce published the Preliminary Results. Id. at 1146. The Court of Appeals
remanded the case for further proceedings. Id. at 1148.
II. DISCUSSION
Because Itochu I did not reach the question of whether the Department’s use of the
August 1, 2009 effective date was lawful, the court now addresses this question in response to
the mandate issued by the Court of Appeals.
The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980,
28 U.S.C. § 1581(c), which grants this Court jurisdiction over any civil action commenced under
section 516A of the Tariff Act, 19 U.S.C. § 1516a(a)(2)(B)(iii), including an action challenging
the final results of a changed circumstances review issued under section 751 of the Tariff Act,
19 U.S.C. § 1675(b). The court must “hold unlawful any determination, finding, or conclusion
found . . . to be unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” Id. § 1516a(b)(1)(B)(i).
Commerce conducts a changed circumstances review when an interested party submits a
request that “shows changed circumstances sufficient to warrant a review” of an antidumping
duty order. Id. § 1675(b). Following a review, Commerce may revoke an antidumping duty
order “in whole or in part.” Id. § 1675(d)(1). Providing no standard by which Commerce is to
determine an effective date for the revocation, the statute affords Commerce considerable
discretion. See id. § 1675(d)(3) (a determination to revoke, in whole or in part, “shall apply with
respect to unliquidated entries of the subject merchandise which are entered, or withdrawn from
warehouse, for consumption on or after the date determined by the administering authority”). At
issue in this case is the Department’s exercise of that discretion to make the partial revocation
effective as of August 1, 2009. In doing so, Commerce rejected the position of all interested
Court No. 11-00208 Page 9
parties that the effective date of the revocation should be January 23, 2008, the date of the
preliminary determination in the original investigation.
In the Preliminary Results, Commerce rejected the January 23, 2008 effective date
because it was not “consistent with its recent practice” of revoking an order “so that the effective
date of revocation covers entries that have not been subject to a completed administrative
review.” Prelim. Results, 76 Fed. Reg. at 22,371. In the Final Results, Commerce addressed the
revocation date issue in the same way but only in a footnote, in which it stated that “[t]he
Department’s recent practice has been to select the date after the most recent period for which a
review was completed or issued assessment instructions as the effective date.” Final Results,
76 Fed. Reg. at 30,102 n.5. As examples of its practice, the footnote cited two administrative
determinations issued in 2004; one involved a changed circumstances review of an antidumping
duty order on coumarin from China, the other a changed circumstances review of an
antidumping duty order on Chinese bulk aspirin. Id. (citing Notice of the Final Results of
Changed Circumstances Review & Revocation of the Antidumping Order: Coumarin from the
People’s Republic of China, 69 Fed. Reg. 24,122 (May 3, 2004); Notice of Final Results of
Changed Circumstances Review & Revocation of the Antidumping Duty Order: Bulk Aspirin
from the People’s Republic of China, 69 Fed. Reg. 77,726 (Dec. 28, 2004)).
Plaintiff argues that the Department’s choice of the August 1, 2009 effective date over
the January 23, 2008 date is irrational, “contrary to administrative practice, judicial precedent,
basic principles of fairness, and is inconsistent with the fundamental purpose” of the
antidumping laws. Pl.’s Mem. 3. Plaintiff seeks an order directing Commerce to issue new final
results of the changed circumstances review that adopt an effective date of January 23, 2008. Id.
at 35. Defendant counters that the Final Results must be sustained because the date of
Court No. 11-00208 Page 10
revocation is made a matter of the Department’s discretion by 19 U.S.C. § 1675(d)(3), because
the date Commerce chose was reasonable, and because Commerce permissibly followed its
practice “to select the date following the last date of the most recently completed review.”
Def.’s Opp’n 13-14.
In reviewing an agency decision, a court will “look for a reasoned analysis or explanation
for an agency’s decision as a way to determine whether a particular decision is arbitrary,
capricious, or an abuse of discretion.” Wheatland Tube Co. v. United States,
161 F.3d 1365, 1369 (Fed. Cir. 1998). The court must reject as arbitrary and capricious any
determination that “entirely failed to consider an important aspect of the problem.” Motor
Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)
(“State Farm”).
In the changed circumstances review, Commerce cloaked its decision in a “practice”
without explaining the reasons why it established such a practice in the first place. The Final
Results offer no explanation as to why a revocation date should not precede the date of a
completed administrative review of an order. Commerce failed to demonstrate that the practice
it identified pertains, or should pertain, to situations in which all parties to the proceeding
favored an effective date occurring before the date of completion of the most recent
administrative review and in which the choice of effective date was not in dispute among those
parties.
The Department’s mere citation to a practice is insufficient to save the reviewed decision
from arbitrariness. Lacking is a discussion of the competing factors that must inform any
rational selection of an effective date for a partial revocation of an antidumping duty order
following a changed circumstances review. That all parties to the review supported revocation
Court No. 11-00208 Page 11
as of the date of the preliminary determination must be viewed as one of those factors, yet it was
one that received no apparent consideration in the Final Results.
Plaintiff argues that, consistent with judicial precedent and past Department practice,
Commerce should have adopted the revocation date proposed by Mid Continent. Pl.’s
Mem. 2, 13-35. Plaintiff seeks an order compelling Commerce to apply the partial revocation to
all entries of merchandise affected by the changed circumstances review that were made on or
after January 23, 2008 and that remain unliquidated. Id. at 35-36, proposed order. Further,
plaintiff argues that “[t]he facts in this case compel a conclusion that the Department should have
agreed to Petitioner’s requested revocation date.” Id. at 2.
Plaintiff cites Ugine & Alz Belgium, N.V. v. United States, 31 CIT 1536, 517 F. Supp.
2d 1333 (2007), aff’d 551 F.3d 1339 (Fed. Cir. 2009), and Canadian Wheat Bd. v. United States,
641 F.3d 1344, 1346-51 (Fed. Cir. 2011), in arguing that judicial precedent compels a conclusion
that revocation should apply to all unliquidated entries. Id. at 30-33. Neither of these decisions
establishes a precedent under which Commerce was required to make its revocation applicable to
all unliquidated entries on the facts of this case. Plaintiff also directs the court’s attention to the
decision of this Court in Heveafil, 36 CIT __, Slip Op. 12-38, in support of its argument that the
Department’s decision must be held to be unreasonable. Heveafil is not a binding precedent,
and, having arisen from a factual situation in which the sole producer of the domestic like
product had undergone bankruptcy and ceased operations, was not decided upon facts analogous
to those relevant here. See Heveafil, 36 CIT at __, Slip Op. 12-38, at 2-3.
Plaintiff’s argument pertaining to administrative precedent is also insufficient to support
a conclusion that Commerce was required to adopt the January 23, 2008 effective date. Plaintiff
cites various administrative decisions (other than the decisions involving coumarin and bulk
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aspirin, discussed above) that it claims support a conclusion that Commerce has a “practice of
selecting an effective date for a changed circumstances revocation requested by the domestic
industry.” Pl.’s Mem. 24. If such a practice exists, it cannot bind Commerce beyond imposing
an obligation to explain any departure made in an individual instance. See SKF USA Inc. v.
United States, 630 F.3d 1365, 1373 (Fed. Cir. 2011) (“SKF”) (“When an agency changes its
practice, it is obligated to provide an adequate explanation for the change.”). It certainly is not a
basis upon which the court could order Commerce to adopt the earlier effective date. On
remand, Commerce should address whether an administrative practice such as plaintiff describes
exists and, if so, the reasons why it chooses to follow it or not follow it in the circumstances
posed by the changed circumstances review.
For the reasons stated above, the court declines to issue the specific relief plaintiff seeks.
The court must order a remand of the Final Results due to the arbitrariness of that determination,
not because it concludes that the effective date of August 1, 2009 was, per se, impermissible
under 19 U.S.C. § 1675(d)(3) or disallowed under binding judicial precedent. The statutory
provision, as discussed above, provides Commerce with discretion in the selection of the
effective date for a partial revocation following a changed circumstances review, but that
discretion may not be exercised arbitrarily so as to decide the question presented without
considering the relevant and competing considerations. On remand, Commerce must reconsider
its decision as to effective date and provide adequate reasoning, grounded in the facts and
circumstances of this case, for any decision it reaches.
III. CONCLUSION AND ORDER
For the reasons discussed in the foregoing, the Department’s choice of an August 1, 2009
effective date for the partial revocation of the Order, as set forth in the Final Results, cannot be
Court No. 11-00208 Page 13
sustained. Therefore, upon consideration of all papers and proceedings in this case, and upon
due deliberation, it is hereby
ORDERED that the final determination of the International Trade Administration,
U.S. Department of Commerce (“Commerce” or the “Department”) in Certain Steel Nails From
the People’s Republic of China: Final Results of Antidumping Duty Changed Circumstances
Review, 76 Fed. Reg. 30,101 (May 24, 2011) be, and hereby is, set aside as unlawful and
remanded for reconsideration and redetermination in accordance with this Opinion and Order; it
is further
ORDERED that Commerce shall file, within sixty (60) days of the date of this Opinion
and Order, a new determination upon remand (“remand redetermination”) that conforms to this
Opinion and Order and redetermines the effective date of partial revocation as necessary; it is
further
ORDERED that plaintiff may file comments on the remand redetermination within
thirty (30) days from the date on which the remand redetermination is filed; and it is further
ORDERED that defendant may file a response to the aforementioned comments within
fifteen (15) days from the date on which the last comment is filed.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: April 8, 2014
New York, New York