Kaiyuan Group Corp. v. U.S.

391 F.Supp.2d 1317

KAIYUAN GROUP CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and Pencil Section Writing Instrument Manufacturers Ass'n, et al., Defendant-Intervenors.

Slip Op. 05-103.

Court No. 02-00573.

United States Court of International Trade.

August 23, 2005.

DeKieffer & Horgan, (James Kevin Horgan) for Plaintiff Kaiyuan Group Corporation.

Lafave & Sailer LLP, (Francis J. Sailer) for Plaintiff China First Pencil Co., Ltd., et al.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; Michael D. Panzera, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; and Ada E. Bosque, Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant United States, of counsel.

Neville Peterson LLP, (George W. Thompson) for Defendant-Intervenors Pencil Section, Writing Instrument Manufacturers Association., et. al.

OPINION

WALLACH, Judge.

I Introduction

This matter comes before the court following the court's remand of May 14, 2004, to the United States Department of Commerce ("the Department" or "Commerce"). In Kaiyuan Group Corp. v. United States, 343 F.Supp.2d 1289 (CIT 2004) ("Kaiyuan I"), the court remanded Commerce's findings in Certain Cased Pencils from the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 67 Fed.Reg. 48,612 (Jul. 25, 2002) as amended in Notice of Amended Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Cased Pencils from the People's Republic of China, 67 Fed.Reg. 59,049 (Sept. 19, 2002).¹ On September 30, 2004, Commerce filed its Results of Redetermination Pursuant to Court Remand ("Remand Redetermination"). Plaintiffs, China First Pencil Co., Ltd. ("Plaintiffs" or "China First"), filed its Brief on Remand Results ("Plaintiff's Brief"). Defendant filed its Response to Plaintiffs' Comments Upon the Remand Determination ("Defendant's Response"); Defendant-Intervenors, Pencil Section, Writing Instrument Manufacturers Association et al. ("Defendant-Intervenors" or "WIMA"), filed their Response Brief Concerning Remand Results ("Defendant-Intervenor's Response"); and Plaintiffs' filed their Reply Brief on Defendant's Remand Determination ("Plaintiffs' Reply"). For the reasons set forth below, Commerce's Remand Redetermination is affirmed. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2002).

II Background

Commerce published its notice of final results and partial rescission of the 1999-2000 review on September 19, 2002. Certain Cased Pencils from the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 67 Fed.Reg. 48,612 (Jul. 25, 2002) as amended in Notice of Amended Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Cased Pencils from the People's Republic of China, 67 Fed.Reg. 59,049 (Sept. 19, 2002) ("Final Results").

A

In its initial questionnaire responses, China First stated that one of its shareholders, Shanghai Light Industry Group Co., Ltd. ("SLI"),² had administrative responsibility for the protection of Three Star Stationary Industry Co., Ltd.'s ("Three Star") state-owned assets. China First also stated that while it was under the oversight of SLI, it was neither affiliated with Three Star nor coordinated prices, suppliers, customers, or business operations with Three Star. Commerce examined China First's and Defendant-Intervenor's claims regarding the relationship between China First and Three Star during the course of the administrative review.³ Commerce concluded that "the degree of interaction between these two companies [was] far greater than ... previously believed and the form this interaction takes corresponds very closely to Order of Shanghai Light Industry Holding (Group), Order # (1997) 005 (`SLI Order # 5')⁴ as it was issued by SLI, indicating that the order may have been effectively implemented." Issues and Decision Memorandum for the Administrative Review of Certain Cased Pencils from the People's Republic of China: Final Results ("Issues and Decision Memorandum"), Comment 12 at 36.

China First

In Kaiyuan I, the court remanded the case to Commerce to, inter alia, (1) articulate specifically the portions of the existing collapsing statutes and regulations which are applicable or inapplicable in the non-market economy ("NME") context; and (2) to provide the court with a clearly articulated methodology for collapsing companies in NME countries. 343 F.Supp.2d at 1314-15.

B Guangdong

During the course of the administrative review, Guangdong Provincial Stationery & Sporting Goods Import & Export Corp. ("Guangdong") responded to Commerce's questionnaires under protest, and requested that Commerce terminate its review because it only exported pencils produced by Three Star, and thus, claimed it was excluded by the order during the period of review. See Initiation of Antidumping Duty Investigations: Certain Cased Pencils From the People's Republic of China and Thailand, 58 Fed.Reg. 64,548 (Dec. 8, 1993). Guangdong had been excluded previously from the original antidumping order because Commerce determined both that Guangdong had a zero margin and that it exported pencils produced by Three Star.⁵ Notice of Final Determination of Sales at Less Than Fair Value: Certain Cased Pencils from the People's Republic of China, 59 Fed.Reg. 55,625, 55,631 (Nov. 8, 1994) ("Final Determination"). The Final Determination did not include the identities of the referenced producers; however, the antidumping order issued on December 28, 1994, excluded the exporter/producer combination China First/China First, and Guangdong/Three Star. See Kaiyuan I, 343 F.Supp.2d at 1296 n. 8. Commerce found in its Final Results that the China First/Three Star entity was distinct from the Three Star entity which was excluded from the antidumping order. Issues and Decision Memorandum, Comment 1 at 3.

In Kaiyuan I, the court remanded this issue to Commerce to (1) reevaluate Guangdong's rate in light of the court's decision that Commerce's collapsing methodology, as articulated, was not in accordance with the law; and (2) to reevaluate the application of the China-wide rate to Guangdong because Commerce effectively applied adverse facts to a participating and cooperative respondent. See Kaiyuan I, 343 F.Supp.2d, at 1315.

III Arguments

Defendant now says that it has complied with the court's remand instructions, articulated why it applied the applicable portions of the collapsing statute and regulations to a NME country, and provided the court with a clear methodology for collapsing China First and Three Star. Defendant's Response at 2. Defendant also states that it recalculated the facts available rate for Guangdong using a methodology which none of the parties contest. Id. at 3. Accordingly, Commerce argues that the Remand Redetermination should be sustained.

Plaintiffs continue to argue that (1) SLI Order # 5 was never implemented due to objections from both China First's Board of Directors and Three Star's Employee Representative Committee; (2) China First never took over Three Star, and China First's president never acted in the role as Three Star's president during the POR; (3) there was no intertwining of the two companies' commercial or manufacturing operations; (4) any loans between the two entities were based on commercial terms; (5) the "`indirect supervision'" contract between China First and Three Star was limited and did not give China First control over Three Star's manufacturing or sales operations; and (6) the two companies products have "never been marketed jointly." Plaintiffs' Brief at 4-5. Plaintiffs thus conclude that Commerce's decision to collapse China First and Three Star is unsupported by substantial evidence.

Defendant-Intervenors support Commerce's analysis, arguing that Commerce correctly determined that China First and Three Star were affiliated and should continue to be treated as a single entity under the antidumping duty order. Defendant-Intervenor's Response at 1.

IV Standard of Review

In reviewing a final antidumping duty decision, this court must decide whether Commerce's determination is in accordance with law and whether Commerce's conclusions are supported by substantial evidence on the record. See 19 U.S.C. § 1516a(b)(1)(B) (2000). Substantial evidence has been defined as "more than a `mere scintilla,' as `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' "Nippon Steel Corp. v. United States, 337 F.3d 1373, 1379 (Fed.Cir.2003); (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). To determine if substantial evidence exists, we review the record as a whole, including evidence that supports as well as evidence that "fairly detracts from the substantiality of the evidence." Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed.Cir.1984). Where the evidence is reasonably reliable, the court "will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-05, 636 F.Supp. 961, 965 (1986), aff'd 810 F.2d 1137 (Fed.Cir.1987). As such, Commerce's special expertise in administering the antidumping law entitles its decisions to deference from the courts. See, e.g., Micron Tech., Inc. v. United States, 117 F.3d 1386, 1394 (Fed.Cir.1997); Torrington Co. v. United States, 68 F.3d 1347, 1351 (Fed.Cir.1995).

V Discussion

A Commerce's Determination that Three Star and China First Should be Collapsed and Considered a Single Entity is in Accordance With the Law

In its remand, Commerce argues that it reasonably chose to apply the existing collapsing regulation at 19 C.F.R. § 351.401(f)⁶ to these NME companies as the approach does...