Peer Bearing Co.-Changshan v. United States ( 2014 )

Slip Op. 14-15
UNITED STATES COURT OF INTERNATIONAL TRADE
PEER BEARING COMPANY-CHANGSHAN,
Plaintiff,
v.
UNITED STATES, Before: Timothy C. Stanceu, Judge
Defendant, Consol. Court No. 10-00013
and
THE TIMKEN COMPANY,
Defendant-intervenor.
OPINION AND ORDER
[Responding to defendant’s motion seeking clarification of court’s order of remand and setting
new due date for submission of remand redetermination]
Dated: February 13, 2014
John M. Gurley and Diana Dimitriuc Quaia, Arent Fox LLP, of Washington, DC, argued
for plaintiff. With them on the brief was Matthew L. Kanna.
L. Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for defendant. With him on the brief were Stuart F.
Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke,
Assistant Director. Of counsel on the brief was Joanna V. Theiss, Office of the Chief Counsel
for Import Administration, U.S. Department of Commerce, of Washington, DC.
William A. Fennell and Terence P. Stewart, Stewart and Stewart, of Washington, DC,
argued for defendant-intervenor. With them on the brief was Stephanie R. Manaker.
Stanceu, Judge: Defendant United States moves for clarification of a portion of a
June 6, 2013 order that the court issued in Peer Bearing Co.-Changshan v. United States,
37 CIT __, 914 F. Supp. 2d 1343 (2013) (“Peer Bearing”). Def.’s Mot. for Clarification 1
Consol. Court No. 10-00013 Page 2
(June 13, 2013), ECF No. 131 (“Def.’s Mot.”).1 Additionally, defendant requests an extension of
time, until forty-five days from the court’s decision on the motion for clarification, for the
International Trade Administration, U.S. Department of Commerce (“Commerce” or the
“Department”) to file the remand redetermination required by Peer Bearing. Id. at 3.
In this Opinion and Order, the court directs attention to certain aspects of Peer Bearing
that address the question defendant raises in its motion for clarification. The court declines to
modify the substance of its previous ruling and concludes that clarification of Peer Bearing
beyond what is set forth in this Opinion and Order is unnecessary. As requested by defendant,
id. at 3, the court extends the period in which Commerce shall submit the required remand
redetermination, allowing forty-five days from the date of this Opinion and Order.
I. DISCUSSION
A. Defendant’s Motion for Clarification
Defendant directs its motion for clarification to the third of six directives in the order set
forth in Peer Bearing. This directive resulted from plaintiff’s contesting the Department’s
ultimate finding, reached in the first remand redetermination, that certain tapered roller bearings
(“TRBs”) that had undergone processing in both the People’s Republic of China (“China” or the
“PRC”) and Thailand were of Chinese origin and therefore within the scope of an antidumping
duty order on TRBs and parts thereof from China. The court stated this directive as follows:
1
Plaintiff Peer Bearing Company-Changshan and the Timken Company, a plaintiff and
defendant-intervenor, did not expressly consent to, but did not oppose, defendant’s motion for
clarification. Neither party served a response within the fourteen-day deadline imposed by
USCIT Rule 7(d).
Consol. Court No. 10-00013 Page 3
Commerce shall submit to the court a second Remand Redetermination in which
it redetermines, in accordance with the requirements of this Opinion and Order,
the country of origin of certain tapered roller bearings (“TRBs”) that underwent
further processing in Thailand consisting of grinding and honing (finishing) of
cups and cones, and assembly; . . . .
Peer Bearing, 37 CIT at __, 914 F. Supp. 2d at 1357.
In its motion, defendant requests that the court clarify “whether the Court’s Order
requires Commerce to find that the TRBs were substantially transformed in Thailand and are
thus of Thai origin, or whether the order permits Commerce to make new findings under each of
the six criteria and make a determination based on these new findings.” Def.’s Mot. 2 (emphasis
in original). In positing these alternatives, defendant’s request for clarification incorrectly
interprets the court’s Opinion and Order in Peer Bearing. With respect to the first alternative,
defendant’s formulation too broadly describes the court’s holding. In stating its second
alternative, defendant incorrectly presumes that Peer Bearing “permits Commerce to make new
findings under each of the six criteria . . . .” Id. at 2. The court addresses each of these
points below.
1. Defendant Construes Too Broadly the Holding in Peer Bearing
Rather than direct Commerce to find that the TRBs were substantially transformed in
Thailand, the directive at issue requires Commerce to reconsider the country of origin of those
TRBs “in accordance with the requirements of this Opinion and Order.” Peer Bearing, 37 CIT
at __, 914 F. Supp. 2d at 1357. As Peer Bearing explained, “the record in this case lacks
substantial evidence to support the Department’s current determination that the TRBs processed
in Thailand were products of China for purposes of the antidumping duty order.” Id., 37 CIT
at __, 914 F. Supp. 2d at 1356. The court ruled solely on “the Department’s current
determination,” not on any future finding in a second remand redetermination, and grounded its
Consol. Court No. 10-00013 Page 4
ruling in the standard of review. Id.; see 19 U.S.C. § 1516a(b)(1)(B)(i). In doing so, the court
held, inter alia, that a number of the factual findings upon which Commerce based its ultimate
finding that the TRBs processed in Thailand were of Chinese origin were not based on
substantial record evidence. Peer Bearing, 37 CIT at __, 914 F. Supp. 2d at 1352-56.
Defendant’s motion recognizes this point. Def.’s Mot. 2 (“ . . . the Court ruled that substantial
evidence does not support certain findings by Commerce . . . .”).
The court did not reach the question of whether Commerce, in the second remand
redetermination, is required to arrive at an ultimate finding that the TRBs in question are of Thai
origin. Instead, the court left it to Commerce to decide, in the first instance, whether it is
possible to reach an ultimate finding of Chinese origin in the second remand redetermination.
The court did not presume or decide that an ultimate finding of Chinese origin in the second
remand redetermination could be sustained. Such an ultimate finding may or may not be
feasible, for it would have to contend with record evidence to the contrary and recognize the
significance of the court’s having disallowed a number of findings that were critical to the
country of origin determination. Some examples of the findings held in Peer Bearing to be
unsupported by substantial evidence suffice to clarify this point.
For instance, the court concluded that the record lacked substantial evidence to support
the Department’s finding that the processing performed in Thailand on the two major
components of the TRBs (cups and cones) imparted no substantial changes to the physical and
mechanical properties of the subject merchandise. Peer Bearing, 37 CIT at __, 914 F. Supp. 2d
at 1352-53. The court also found unsupported by substantial evidence the Department’s finding
that the processing in Thailand did not impart a substantial change to the essential character of
the subject merchandise. Id. This finding ignored the evidence demonstrating that no single
Consol. Court No. 10-00013 Page 5
component made in China imparted the essential character to the finished TRBs. Id. Also
lacking was substantial evidence that the nature, extent, and sophistication of the processing
performed in Thailand were not significant. Id., 37 CIT at __, 914 F. Supp. 2d at 1353-54.
Similarly, the court concluded that the record evidence did not support the finding that
investment in the equipment in Thailand was not “significant” in comparison to investment in the
equipment in China. Id. at 1354.
Because of the various flaws that Peer Bearing identified, the court could not sustain the
Department’s country of origin determination in the first remand redetermination. Any ultimate
country of origin finding Commerce reaches in its second remand redetermination must rest on
findings of fact that are supported by substantial evidence on the record and also must comply
with the other requirements of the court’s Opinion and Order in Peer Bearing.2
2. The Court Did Not Sustain All of the Department’s “Substantial Transformation” Criteria
Defendant’s second alternative, Def.’s Mot. 2 (“whether the order permits Commerce to
make new findings under each of the six criteria and make a determination based on these new
findings”), rests on an assumption that the court affirmed the criteria Commerce used to
determine the country of origin for the subject merchandise in the first remand redetermination.
In fact, the court did not do so.
The court found fault with the first and fifth criteria that Commerce applied to conclude
that no substantial transformation occurred. The first criterion considers whether both the
finished good and the finished and unfinished parts within the class or kind of merchandise are
2
In its Opinion and Order, the court did not preclude Commerce from reopening the
record to obtain and admit additional record evidence to support new findings of fact, instead
deferring to the general principle that the decision of whether or not to reopen the record upon
remand is a matter for an agency to decide. Peer Bearing Co.-Changshan v. United States,
37 CIT __, 914 F. Supp. 2d 1343 (2013).
Consol. Court No. 10-00013 Page 6
subject to the order. The court questioned the Department’s conclusion as to the first criterion
that “‘[t]he fact that both the finished and unfinished products are within the scope of the order
suggests that the TRBs are not substantially transformed in Thailand’” and noted that “the
Remand Redetermination offers no reasoning in support of this conclusion.” Peer Bearing,
37 CIT at __, 914 F. Supp. 2d at 1352 (quoting Final Results of Redetermination Pursuant to
Court Remand 8 (Apr. 11, 2012), ECF No. 107). The court explained that Commerce, in
reaching the unsupported conclusion, had misstated the question presented, which was whether
the finished and unfinished parts sent from China to Thailand were substantially transformed
when undergoing processing in Thailand resulting in finished TRBs. Id. As the court reasoned,
the hypothetical issue of whether “the Chinese-origin parts would have been considered subject
merchandise had they been exported to the United States” has no apparent relevance to that
question. Id.
As to the fifth criterion (ultimate use), the court found multiple flaws in the Department’s
analysis. Among those flaws was the erroneous finding that the inclusion of finished and
unfinished parts within the scope of the Order “indicates that both finished and unfinished TRBs
are intended for the same ultimate end-use, that is, a finished TRB that can ultimately be used in
a downstream product.” Id., 37 CIT at __, 914 F. Supp. 2d at 1355. This finding erred in
presuming that unfinished TRBs are at issue in this case and that the scope of the Order is
relevant to the question of ultimate end use, which is an issue of fact. Id. The court also found
flawed the Department’s finding that the expected use of the unfinished TRB components is the
same use as that of finished TRBs. Id.
Consol. Court No. 10-00013 Page 7
B. The Court Grants Additional Time for Submission of the Second Remand Redetermination
In light of the above discussion, the court grants defendant’s request that Commerce be
allowed forty-five days from the date of this Opinion and Order to file the second remand
redetermination.
II. CONCLUSION AND ORDER
Upon consideration of the court’s Opinion and Order dated June 6, 2013, defendant’s
Motion for Clarification, and all other papers and proceedings had herein, it is hereby
ORDERED that the International Trade Administration, U.S. Department of Commerce
shall submit its second remand redetermination within forty-five (45) days from the date of this
Opinion and Order; it is further
ORDERED that Peer Bearing Company-Changshan (“CPZ”) and The Timken Company
(“Timken”) shall have thirty (30) days from defendant’s filing of the second remand
redetermination to file any comments thereon; and it is further
ORDERED that defendant shall have fifteen (15) days from the filing of CPZ’s or
Timken’s comments, whichever is later, in which to file any response to such comments.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: February 13, 2014
New York, New York