Shandong Rongxin Import & Export Co. v. United States

Slip Op. 16-32
UNITED STATES COURT OF INTERNATIONAL TRADE
SHANDONG RONGXIN IMPORT &
EXPORT CO., LTD.,
Plaintiff,
v.
Before: Nicholas Tsoucalas,
UNITED STATES, Senior Judge
Defendant, Court No. 15-00151
AND
DIXON TICONDEROGA COMPANY,
Defendant-Intervenor.
OPINION AND ORDER
[Commerce’s final results in antidumping administrative review
are remanded.]
Dated: April 5, 2016
John J. Kenkel, Gregory S. Menegaz, J. Kevin Horgan, and Judith
Holdsworth, deKieffer & Horgan, PLLC, of Washington DC, for
plaintiff.
Robert M. Norway, Trial Attorney, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice, of Washington DC, for
defendant. With him on the brief were Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, Jeanne E. Davidson, Director,
Patricia M. McCarthy, Assistant Director, and Erica A. Hixon, Trial
Counsel. Of counsel on the brief was Amanda T. Lee, Office of the
Chief Counsel for Trade Enforcement and Compliance, U.S.
Department of Commerce, of Washington DC.
Felicia Leborgne Nowels and Sheryl D. Rosen, Akerman LLP, of
Tallahassee, FL, for defendant-intervenor.
Court No. 15-00151 Page 2
Tsoucalas, Senior Judge: Plaintiff, Shandong Rongxin
Import & Export Co., Ltd., (“Shandong”) contests Commerce’s Final
Results of the Antidumping Duty Administrative Review on Certain
Cased pencils from the People’s Republic of China (“PRC”), Certain
Cased Pencils From the PRC, 80 Fed. Reg. 26,897 (Dep’t Commerce
May 11, 2015) (Final Results of the Antidumping Duty Administrative
Review) (“Final Results”); Issues and Decision Memorandum for the
Final Results of Antidumping Duty Administrative Review: Certain
Cased Pencils from the PRC; 2012-2013, A-570-827, (Apr. 30, 2015)
(“I&D Memo”); Pl.’s Rule 56.2 Mot. for J. Upon the Agency R., Aug.
28, 2015, ECF No. 24 (“Pl’s Br.”). Defendant, United States
Department of Commerce (“Commerce”), and Defendant-Intervenor,
Dixon Ticonderoga Company (“Dixon”), oppose Shandong’s Motion.
Def.’s Opp’n, Dec. 18, 2015, ECF No. 30; Def-Inter. Opp’n, Dec.
18, 2015, ECF No. 34. For the following reasons, Commerce’s Final
Results are remanded.
BACKGROUND
Shandong is an exporter of pencils from the PRC whose
pencils are subject to an Antidumping Duty Order. Final Results,
80 Fed. Reg. at 26,897. On December 20, 2013, Dixon filed a
request for administrative review of Shandong. Req. for
Administrative Review, PR 1 (Dec. 20, 2013) ECF No. 27 (Sept. 4,
Court No. 15-00151 Page 3
2015) (“Req.”). Dixon’s request stated that “[a]s a United States
importer and manufacturer of subject merchandise, Petitioner is an
interested party under 19 U.S.C. § 1677(9) who may make this
request for administrative review pursuant to 19 C.F.R. §
351.213(b).” Id. at 1. The request was accompanied by a company
certification, signed by Dixon’s Chief Executive Officer (“CEO”),
Timothy Gomez, which stated that the information contained in the
submission is accurate. Id. at 3. On February 3, 2014, Commerce
initiated an administrative review of Shandong. I&D Memo at 2.
During the review, Shandong argued that, first, Commerce’s
initiation of the review of Shandong was void ab initio, because
Dixon failed to claim that it was a domestic interested party,
that is, a U.S. manufacturer of pencils during the period of
review, and second, Shandong deserves a separate rate, because it
can demonstrate the absence of government control, both in law (de
jure) and in fact (de facto). Pl. Br. at 3, 20-37.
In the Final Results, Commerce found that there is no
evidence “on the record that undermines or calls into question
Dixon’s certification [that it is an interested party].” I&D Memo
comment 2 at 9.
Court No. 15-00151 Page 4
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to
Section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c)
(2012), and Section 516A(a)(2)(A)(i) of the Tariff Act of 1930, 19
U.S.C. § 1516a(a)(2)(A)(i)(I) (2012). 1
The Court will hold unlawful Commerce’s determinations
that are unsupported by substantial evidence on the record, or not
otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).
To determine whether Commerce's interpretation and application of
the statute is “in accordance with law,” the courts review the
statute to determine whether “Congress has directly spoken to the
precise question at issue.” Chevron U.S.A. Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 842 (1984). “To ascertain whether
Congress had an intention on the precise question at issue, we
employ the ‘traditional tools of statutory construction.’” Timex
V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998)
(citing Chevron, 467 U.S. at 843 n.9). The tools of statutory
construction “include the statute’s structure, canons of statutory
construction, and legislative history.” Id. If the Court
determines that the statute is silent or ambiguous with respect to
1 Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2012 edition, and all
applicable amendments thereto.
Court No. 15-00151 Page 5
the specific issue, the question then becomes what level of
deference is owed Commerce’s interpretation, the traditional
second prong of the Chevron analysis. Chevron, 467 U.S. at 842-
43. See United States v. Mead Corp., 533 U.S. 218, 228 (2001).
“Chevron deference is afforded to Commerce’s statutory
interpretations as to the appropriate methodology . . . .” Pesquera
Mares Australes Ltda. v. United States, 266 F.3d 1372, 1379 (Fed.
Cir. 2001). Under Chevron, “if the statute is silent or ambiguous
with respect to the specific issue, the question for the court is
whether the agency’s answer is based on a permissible construction
of the statute.” Chevron, 467 U.S. at 843. A “permissible”
construction under Chevron is understood in terms of
reasonableness; only reasonable interpretations will be upheld by
the Court. See Koyo Seiko Co., Ltd. v. United States, 36 F.3d 1565,
1573 (Fed. Cir. 1994)(“Chevron requires us to defer to the agency's
interpretation of its own statute as long as that interpretation
is reasonable.”). To determine reasonableness, the Court looks to
the express terms of the statute, the objectives of the statute,
and the objectives of the statutory scheme as a whole. Wheatland
Tube Co. v. United States, 495 F.3d 1355, 1361 (Fed. Cir. 2007).
The Court will uphold Commerce’s determination unless it
is unsupported by substantial evidence on the record. 19 U.S.C.
Court No. 15-00151 Page 6
§ 1516a(b)(1)(B)(i). “[S]ubstantial evidence is more than a mere
scintilla. It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” Consol. Edison
Co. of NY v. NLRB, 305 U.S. 197, 229 (1938). Moreover,
“substantial evidence” must be measured by the record as a whole,
“including whatever fairly detracts from the substantiality of the
evidence.” Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562
(Fed. Cir. 1984). Commerce’s determination cannot be based on
“isolated tidbits of data which suggest a result contrary to the
clear weight of the evidence.” USX Corp. v. United States, 11 CIT
82, 84, 655 F. Supp. 487, 489 (1987). “[T]he substantial evidence
standard requires more than mere assertion of ‘evidence which in
and of itself justified [the . . . determination], without taking
into account contradictory evidence or evidence from which
conflicting inferences could be drawn.’” Gerald Metals Inc. v.
United States, 132 F.3d 716, 720 (Fed. Cir. 1997) (quoting
Universal Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)).
DISCUSSION
The issue the court must first address is whether
Commerce’s determination — that Dixon was a domestic interested
party with standing to request an administrative review — is
supported by substantial evidence and in accordance with law. If
Court No. 15-00151 Page 7
Commerce’s determination was not supported by substantial evidence
and in accordance with law, there is no reason to reach the second
issue of whether Shandong deserves a separate rate.
Each year during the anniversary month of the
publication of an antidumping duty order, a domestic “interested
party” may request in writing that the Secretary conduct an
administrative review “if the requesting person states why the
person desires the Secretary to review those particular exporters
or producers.” 19 C.F.R. § 351.213(b)(1) (2013). An interested
party means “a manufacturer, producer, or wholesaler in the United
States of a domestic like product.” 19 U.S.C. § 1677(9)(C)(2012).
Commerce may presume standing, absent evidence to the
contrary. See Zenith Electr. Corp. v. United States, 18 CIT 1145,
1149, 872 F. Supp. 992, 996 (1994) (citing Minebea Co. v. United
States, 984 F.2d 1178, 1181 (Fed. Cir. 1993)). “[T]he burden of
production of evidence to rebut standing has been allocated by the
Federal Circuit to the party challenging standing.” Id. at 1150
(citing Minebea, 984 F.2d at 1181).
“[T]he legislative history states that the ‘standing
requirements [should] be administered to provide an opportunity
for relief for an adversely affected industry and to prohibit
petitions filed by persons with no stake in the result of the
Court No. 15-00151 Page 8
investigation.’” Brother Indus. (USA), Inc. v. United States, 16
CIT 789, 793-94, 801 F. Supp. 751, 757 (1992) (citing S.Rep. No.
96–249, 96th Cong., 1st Sess. 63 (1979), U.S.Code Cong. & Admin.
News 1979, pp. 381, 449).
Shandong argues that Dixon failed to make a claim that
it was a domestic producer during the period of review, and
therefore Dixon does not have standing to request an administrative
review. Pl.’s Br. at 10-11. Shandong further argues that Dixon
implicitly claimed that Dixon manufactured pencils in China and
exported them to the U.S., pointing to Dixon’s claim that it was
a manufacturer of “subject merchandise” in the request for review.
Id. at 13; see also 19 U.S.C. § 1677(25) (subject merchandise means
“the class or kind of merchandise that is within the scope of an
investigation, a review, a suspension agreement, an order under
this subtitle or section 1303 of this title, or a finding under
the Antidumping Act, 1921.”) An interested party means “a
manufacturer, producer, or wholesaler in the United States of a
domestic like product” under Section 1677(9)(C), not a
manufacturer of subject merchandise, as stated in Dixon’s request.
19 U.S.C. §1677(9)(C); Req. at 1. Nevertheless, Shandong failed
to present this argument in its case brief at the administrative
level and therefore the court deems the argument waived. Pl.’s
Court No. 15-00151 Page 9
Admin. Case Br. at 15-16, PR 48 (Jan. 30, 2015), ECF No. 27 (Sept.
4, 2015) (“Pl.’s Admin. Case Br.”); See Husteel Co. Ltd. v. United
States, 39 CIT ___, ___, 77 F. Supp. 3d 1286, 1294 (2015).
Commerce contends that Shandong “fails to cite any
evidence that would undermine Dixon’s claim that it was a domestic
interested party.” Def.’s Opp’n at 8; I&D Memo at 9 (“there is no
evidence on the record that undermines or calls into question
Dixon’s certification.”). The court disagrees. During the review,
Shandong provided evidence that Dixon’s affiliated Chinese
exporter, Beijing Fila Dixon Stationary Company, Ltd., produces
Dixon’s pencils in China. Certain Cased Pencils From the PRC, 78
Fed. Reg. 42,932 (Dep’t Commerce July 18, 2013) (Final Results of
Antidumping Duty Administrative Review and Determination to Revoke
Order in Part; 2010-2011); Pl.’s Admin. Case Br. at 15.
Therefore, in light of the evidence Shandong provided, Commerce
may not presume standing. See Zenith, 18 CIT at 1149. 2 Commerce
failed to adequately address Shandong’s argument in the I&D Memo.
I&D Memo at 9.
2 In Zenith, the Court found that Commerce did not abuse its
discretion by not conducting a wide-ranging investigation of
Zenith’s standing where Respondent produced a prior statement of
intent to move assembly to Mexico (emphasis added). Zenith, 18
CIT at 1149-50. Unlike in Zenith, here, Shandong provided
actual evidence that Dixon’s affiliate produces pencils in
China. Cf. id.
Court No. 15-00151 Page 10
Commerce argues that its determination is supported by
substantial evidence, because Dixon’s CEO, Timothy Gomez,
certified in writing that Dixon is a U.S. producer of pencils.
Def.’s Opp’n at 8; Req. at 3. Nevertheless, Commerce failed to
explain how and why this certification trumps Shandong’s argument
to the contrary. See Motor Vehicle Mfr. Ass’n of the U.S. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (“[t]he agency
must examine the relevant data and articulate a satisfactory
explanation for its action including a ‘rational connection
between the facts found and the choice made.’”) (quoting Burlington
Truck Lines Inc. v. United States, 371 U.S. 156, 168 (1962).
Dixon asserts that Commerce’s standing determination was
supported by substantial evidence, because the antidumping duty
order on certain cased pencils from the PRC originates from a
petition filed in November 1992 by Dixon in which it was held to
be a U.S. producer; it has appeared in Sunset and Administrative
Reviews; and it receives Continued Dumping and Subsidy Offset Act
Disbursements. Def-Inter. Opp’n at 6-11. Nevertheless, Dixon
fails to appreciate that “an agency's discretionary order [must]
be upheld, if at all, on the same basis articulated in the order
by the agency itself.” Burlington Truck Lines, Inc., 371 U.S. at
169. Commerce articulated a different basis for its decision on
Court No. 15-00151 Page 11
standing; therefore, the court cannot uphold Commerce’s decision
for the reasons proffered by Dixon. See id.; I&D Memo at 9. 3
The court does not reach the issue of whether Shandong
deserves a separate rate until the threshold issue of standing is
resolved.
3 “Department's Position: Dixon has certified that it is a domestic
producer of pencils. Rongxin's [Shandong’s] assertion is
unsupported by factual information. Therefore, there is no
evidence on the record that undermines or calls into question
Dixon's certification. As a result, the Department finds no reason
to revisit Dixon's interested party status and determines that
Dixon is a domestic producer of pencils with standing to request
an administrative review.”
Court No. 15-00151 Page 12
ORDER
For the reasons stated above it is hereby,
ORDERED that this case is remanded to the Department of
Commerce, International Trade Administration, for further
explanation or reconsideration as may be appropriate. Commerce
shall have until May 5, 2016, to file its remand results. The
parties shall have until June 6, 2016, to file objections, and the
government shall have until July 6, 2016, to file its response.
SO ORDERED.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: April 5, 2016
New York, New York