Appleton Papers Inc. v. United States

Slip Op. 13-
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
APPLETON PAPERS INC., 	:
:
Plaintiff, 	:
:
v. 	:
: Consol. Court No.: 12-00116
UNITED STATES, 	:
:
Defendant, 	: PUBLIC VERSION
:
and 	:
:
PAPER RESOURCES LLC, 	:
:
Defendant-Intervenor. 	:
:
OPINION
Held: 	Plaintiff’s 	motion 	for 	judgment 	on 	the 	agency 	record 	is
denied because the Department of Commerce’s final scope ruling is
supported 	by 	substantial 	evidence 	and 	is 	otherwise 	in 	accordance
with the law.
Dated: July 11, 2013
King & Spalding LLP (Gilbert B. Kaplan, Brian E. McGill, and
Joseph W. Dorn) for Appleton Papers Inc., Plaintiff.
Stuart F. Delery, Principal Deputy Assistant Attorney General;
Jeanne 	E. 	Davidson, 	Director, 	Reginald 	T. 	Blades, 	Jr., 	Assistant
Director, 	Commercial 	Litigation 	Branch, 	Civil 	Division, 	United
States 	Department 	of 	Justice 	(Joshua 	E. 	Kurland 	and 	Carrie 	A.
Dunsmore); Office of the Chief Counsel for Import Administration,
United 	States 	Department 	of 	Commerce, 	Whitney 	Rolig, 	Of 	Counsel,
for the United States, Defendant.
Greenberg Traurig, LLP (Rosa S. Jeong and Philippe M. Bruno)
for Paper Resources LLC, Defendant-Intervenor.
TSOUCALAS, 	Senior 	Judge: 	This 	consolidated 	action 	comes
87
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before the court on plaintiff Appvion, Inc.’s 1 (“Appvion”) motion
for 	judgment 	on 	the 	agency 	record 	challenging 	the 	United 	States
Department of Commerce’s (“Commerce”) determination in Final Scope
Ruling 	for 	Paper 	Resources, 	LLC’s 	Lightweight 	Thermal 	Paper
Converted 	and 	Packaged 	in 	the 	People’s 	Republic 	of 	China 	Using
Jumbo Rolls Produced in a Third Country, Case Nos. A-570-920 and C-
570-921 (Mar. 23, 2012), Public Rec. 2/32 (“Final Scope Ruling”). 2
See Preliminary Scope Ruling for Paper Resources, LLC’s Lightweight
Thermal 	Paper 	Converted 	and 	Packaged 	in 	the 	People’s 	Republic 	of
China Using Jumbo Rolls Produced in a Third Country, Case Nos. A-
570-920 and C-570-921 (Dec. 21, 2011), CR 2/11 (“Preliminary Scope
Ruling”). 	Commerce 	and 	defendant-intervenor 	Paper 	Resources 	LLC
(“Paper 	Resources”) 	oppose 	Appvion’s 	motion. 	For 	the 	reasons
stated below, Appvion’s motion is denied.
BACKGROUND
Lightweight 	thermal 	paper 	(“LWTP”) 	“is 	a 	paper 	coated 	with
1 By letter dated June 21, 2013, Appleton Papers Inc. notified
the 	court 	that 	it 	changed 	its 	name 	to 	Appvion, 	Inc. 	on 	May 	13,
2013. 	See Letter to the Hon. Tina Kimble, Clerk of the Court, re:
Appleton Papers Inc. v. United States (June 21, 2013), ECF No. 55.
2 All citations to the record are from the countervailing duty
inquiry (C-570-921). 	The record for the antidumping duty inquiry
(A-570-920) contains identical documents. 	See Def.’s Resp. Pl.’s
Mot. 	J. 	Agency 	R. 	at 	2 	n.1. 	Hereinafter, 	all 	documents 	in 	the
amended public record will be designated “PR” and all documents in
the 	confidential 	record 	designated 	“CR” 	without 	further
specification except where relevant. 	Documents listed in parts one
and 	two 	of 	the 	record 	will 	be 	cited 	as 	“1/X” 	and 	“2/X,”
respectively, with “X” referring to the document number within that
record.
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thermal 	active 	chemicals 	. 	. 	. 	which 	react 	to 	form 	an 	image 	when
heat 	is 	applied.” 	CR 	1/1 	at 	2. 	It 	is 	“specially 	intended 	to 	be
used 	in 	special 	printers 	containing 	thermal 	print 	heads.” 	Id.
“LWTP 	is 	typically 	produced 	in 	jumbo 	rolls 	that 	are 	converted 	to
narrower width rolls appropriate for its specific end uses.” 3 	Id.
Production of LWTP occurs in three stages: (1) manufacturing jumbo
rolls (“JRs”) of LWTP; (2) applying thermal coating to the JRs; and
(3) 	slitting 	and 	repackaging 	the 	coated 	JRs, 	a 	process 	called
“conversion.” 	Id. at 3–4.
LWTP from the People’s Republic of China (“PRC”) is subject to
antidumping 	duty 	(“AD”) 	and 	countervailing 	duty 	(“CVD”) 	orders.
See AD Orders: LWTP From Germany and the PRC, 73 Fed. Reg. 70,959
(Nov. 	24, 	2008); 	LWTP 	from 	the 	PRC: 	Notice 	of 	Amended 	Final
Affirmative CVD Determination and Notice of CVD Order, 73 Fed. Reg.
70,958 	(Nov. 	24, 	2008) 	(“CVD 	Order,” 	and 	collectively, 	the
“Orders”). 	The Orders contain identical scope language, covering:
certain [LWTP], . . . irrespective of dimensions; with or
without 	a 	base 	coat 	on 	one 	or 	both 	sides; 	with 	thermal
active coating(s) on one or both sides that is a mixture
of the dye and the developer that react and form an image
when 	heat 	is 	applied; 	with 	or 	without 	a 	top 	coat; 	and
without an adhesive backing.
CVD Order, 73 Fed. Reg. at 70,958 (internal footnotes omitted). 	An
explanatory 	footnote 	to 	the 	scope 	definition 	states 	that 	“[b]oth
jumbo 	and 	converted 	rolls 	(as 	well 	as 	LWTP 	in 	any 	other 	form,
3 LWTP’s end uses include “ATM receipts, credit card receipts,
gas pump receipts, retail store receipts, etc.” 	CR 1/1 at 2.
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presentation, 	or 	dimension) 	are 	covered 	by 	the 	scope 	of 	these
orders.” 	Id. at 70,958 n.1.
Paper Resources imports LWTP that is manufactured in JR form
and coated in [[ 	]] then is converted in the PRC by Shanghai
Hanhong Paper Company (“Hanhong”). 	See PR 2/1 at 1. 	In February
2011, Paper Resources requested that Commerce determine that LWTP
manufactured 	in 	this 	fashion 	is 	outside 	the 	scope 	of 	the 	Orders
because its country of origin is not the PRC. 	CR 1/1 at 1, 4–10.
Commerce initiated a scope inquiry in April 2011. 	See PR 1/9 at 1.
In 	the 	Preliminary 	Scope 	Ruling, 	Commerce 	found 	that 	Paper
Resources’s 	LWTP 	was 	outside 	the 	scope 	of 	the 	Orders 	because 	its
country 	of 	origin 	was 	not 	the 	PRC. 	CR 	2/11 	at 	11–12. 	Using 	its
substantial 	transformation 	analysis, 	Commerce 	concluded 	that 	the
conversion process was insufficient to change the country of origin
of [[ 	]] JRs because (1) JRs and converted rolls were of the
same 	class 	or 	kind 	of 	merchandise; 	(2) 	conversion 	operations
required only “minimal” capital investment and expertise; and (3)
conversion did not alter the JRs’ end use, mechanical properties,
or 	essential 	characteristic. 	See 	id. 	at 	6–12. 	Commerce 	also
declined to include an anti-circumvention inquiry in its country of
origin analysis. 	Id. at 13–15.
Commerce upheld the results of its preliminary determination
in 	the 	Final 	Scope 	Ruling. 	See 	PR 	2/32 	at 	3–4. 	Additionally,
Commerce declined Appvion’s request to impose a mandatory country
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of 	origin 	certification 	program 	on 	Hanhong 	and 	Paper 	Resources
because 	it 	did 	not 	first 	make 	an 	affirmative 	determination 	that
either party circumvented the Orders. 	Id. at 6.
Appvion 	challenges 	Commerce’s 	scope 	determination 	and 	the
decision not to impose a mandatory country of origin certification
program. 	See 	Pl.’s 	Br. 	Supp. 	Mot. 	J. 	Agency 	R. 	at 	2–4 	(“Pl.’s
Br.”). 	The 	court 	held 	oral 	argument 	on 	June 	27, 	2013. 	Oral
Argument, 	Appleton 	Papers 	Inc. 	v. 	United 	States, 	Consol. 	Ct. 	No.
12-00116 (Ct. Int’l Trade June 27, 2013) (“Oral Arg.”).
JURISDICTION
The 	Court 	has 	jurisdiction 	over 	this 	matter 	pursuant 	to
section 516A(a)(2)(B)(vi) of the Tariff Act of 1930 (the “Act”), 4
as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2006), and 28 U.S.C. §
1581(c).
STANDARD OF REVIEW
This Court must uphold Commerce’s scope determination 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). “Substantial evidence is ‘such relevant evidence
as 	a 	reasonable 	mind 	might 	accept 	as 	adequate 	to 	support 	a
conclusion.’” 	Huaiyin Foreign Trade Corp. (30) v. United States,
322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol. Edison Co. v.
4 	All 	further 	references 	to 	the 	Act 	will 	be 	to 	the 	relevant
provisions of Title 19 of the United States Code, 2006 edition, and
all applicable supplements thereto.
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NLRB, 	305 	U.S. 	197, 	229 	(1938)). 	This 	Court 	grants 	“significant
deference 	to 	Commerce’s 	interpretation 	of 	its 	own 	orders,”
Allegheny Bradford Corp. v. United States, 28 CIT 830, 842, 342 F.
Supp. 2d 1172, 1183 (2004), “[h]owever, Commerce cannot ‘interpret’
an antidumping order so as to change the scope of that order, nor
can Commerce interpret an order in a manner contrary to its terms.”
Duferco 	Steel, 	Inc. 	v. 	United 	States, 	296 	F.3d 	1087, 	1095 	(Fed.
Cir. 2002) (citing Eckstrom Indus., Inc. v. United States, 254 F.3d
1068, 1072 (Fed. Cir. 2001)).
“Courts 	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). 	“An abuse of discretion occurs where the decision is based
on an erroneous interpretation of the law, on factual findings that
are 	not 	supported 	by 	substantial 	evidence, 	or 	represent 	an
unreasonable 	judgment 	in 	weighing 	relevant 	factors.” 	WelCom
Prods., Inc. v. United States, 36 CIT __, __, 865 F. Supp. 2d 1340,
1344 (2012) (citing Star Fruits S.N.C. v. United States, 393 F.3d
1277, 	1281 	(Fed. 	Cir. 	2005)). 	“[A]n 	agency 	action 	is 	arbitrary
when 	the 	agency 	offers 	insufficient 	reasons 	for 	treating 	similar
situations differently.” 	SKF USA Inc. v. United States, 263 F.3d
1369, 1382 (Fed. Cir. 2001).
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DISCUSSION
Appvion does not argue that the conversion process in the PRC
substantially transformed the [[ 	]] JRs. 	Oral Arg. at 14:05;
see 	CR 	2/8 	at 	6 	(“Paper 	Resources 	is 	correct 	that 	[Appvion] 	does
not 	contend 	that 	the 	converting 	operations 	are 	sufficient 	to
transform [JRs].”). 	Instead, Appvion argues that Paper Resources’s
LWTP 	is 	subject 	merchandise 	because 	the 	Orders 	cover 	all 	LWTP
converted 	in 	the 	PRC. 	Pl.’s 	Br. 	at 	12–15. 	Accordingly, 	Appvion
insists it was inappropriate for Commerce to conduct a substantial
transformation 	analysis. 	Id. 	at 	20. 	Appvion 	also 	argues 	that
Commerce abused its discretion by declining to consider evidence of
circumvention 	in 	its 	scope 	ruling. 	See 	id. 	at 	22–26. 	Finally,
Appvion 	contends 	that 	Commerce’s 	failure 	to 	impose 	a 	mandatory
country of origin certification program was arbitrary, capricious,
and an abuse of discretion. 	See id. at 27–30.
I. Commerce’s Interpretation of the Scope Language
Appvion argues that the Orders cover all LWTP converted in the
PRC, 	regardless 	of 	the 	origin 	of 	the 	underlying 	JRs. 	Id. 	at 	13.
According to Appvion, Commerce abused its discretion by using the
substantial transformation test to “preclude[] relief for a portion
of 	subject 	merchandise,” 	namely, 	LWTP 	converted 	in 	the 	PRC 	using
JRs from a third country. 	Id. at 20. 	However, Appvion fails to
demonstrate 	that 	Commerce 	altered 	the 	scope 	of 	the 	Orders 	or
misapplied the substantial transformation test.
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“‘Commerce 	cannot 	interpret 	an 	antidumping 	order 	so 	as 	to
change the scope of that order, nor can Commerce interpret an order
in 	a 	manner 	contrary 	to 	its 	terms.’” 	King 	Supply 	Co. 	v. 	United
States, 674 F.3d 1343, 1348 (Fed. Cir. 2012) (quoting Walgreen Co.
v. 	United 	States, 	620 	F.3d 	1350, 	1354 	(Fed. 	Cir. 	2010)). 	“While
the petition, factual findings, legal conclusions, and preliminary
orders 	can 	aid 	in 	the 	analysis, 	they 	cannot 	substitute 	for 	the
language 	of 	the 	order 	itself, 	which 	remains 	the 	‘cornerstone’ 	in
any 	scope 	determination.” 	Walgreen, 	620 	F.3d 	at 	1357 	(citing
Duferco Steel, 296 F.3d at 1097). 	Therefore, it is the “explicit
terms” 	of 	an 	order 	that 	“must 	control 	[Commerce’s] 	subsequent
decisions in scope rulings.” 	Gleason Indus. Prods., Inc. v. United
States, 	31 	CIT 	393, 	398 	(2007) 	(not 	reported 	in 	the 	Federal
Supplement) (citing Duferco Steel, 296 F.3d at 1096–97).
Appvion 	cannot 	demonstrate 	that 	Commerce 	unlawfully 	altered
the 	scope 	of 	the 	Orders. 	AD 	and 	CVD 	orders 	cover 	a 	particular
class 	or 	kind 	of 	merchandise 	from 	a 	particular 	country. 	See 	19
U.S.C. §§ 1671, 1673; Ugine & ALZ Belg., N.V. v. United States, 31
CIT 1536, 1550, 517 F. Supp. 2d 1333, 1345 (2007) (“Commerce’s [AD]
and CVD orders must specify both the class or kind of merchandise
and 	the 	particular 	country 	from 	which 	the 	merchandise
originates.”), aff’d after remand, 551 F.3d 1339 (Fed. Cir. 2009).
The Orders state that “[b]oth jumbo and converted rolls . . . are
covered by the scope of these orders.” 	CVD Order, 73 Fed. Reg. at
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70,958 n.1. 	Accordingly, the Orders cover JRs and converted rolls
of Chinese origin. 	Ugine, 31 CIT at 1550, 517 F. Supp. 2d at 1345.
The scope definition simply does not address whether LWTP converted
in the PRC using JRs from a third country is subject merchandise.
Because 	it 	did 	not 	alter 	the 	plain 	meaning 	of 	the 	Orders,
Commerce’s 	decision 	to 	conduct 	a 	country 	of 	origin 	analysis 	was
reasonable. 5 	See 	id. 	at 	1551, 	517 	F. 	Supp. 	2d 	at 	1345 	(“[I]f
merchandise does not meet one of the parameters — either class or
kind, or country of origin — it is outside the scope of the [AD] or
CVD order.”).
Appvion 	also 	argues 	that 	Commerce 	abused 	its 	discretion 	by
using the substantial transformation analysis to exclude otherwise
subject 	LWTP 	from 	the 	scope 	of 	the 	Orders. 	Pl.’s 	Br. 	at 	20.
According to Appvion, application of the substantial transformation
test, 	and 	specifically 	the 	change 	in 	class 	or 	kind 	factor, 	is
improper 	in 	cases 	where 	the 	scope 	covers 	upstream 	and 	downstream
5 	Appvion 	also 	argues 	that 	Commerce’s 	interpretation 	of 	the
scope language does not reflect the intent of the petition, as it
intended 	the 	Orders 	to 	cover 	all 	LWTP 	converted 	in 	the 	PRC 	when
drafting 	the 	proposed 	scope 	language. 	See 	Pl.’s 	Br. 	at 	15.
However, 	Appvion 	does 	not 	identify 	any 	evidence 	in 	the 	record
supporting 	this 	assertion. 	See 	Pl.’s 	Br. 	at 	15; 	PR 	2/32 	at 	4
(“[T]here 	was 	no 	specific 	discussion 	during 	the 	investigation 	of
LWTP, in either the AD or CVD segments, as to whether JRs produced
in a third-country and converted in the PRC would be subject to the
[Orders].”); 	cf. 	Minebea 	Co. 	v. 	United 	States, 	16 	CIT 	20, 	22–24,
782 F. Supp. 117, 120–121 (1992) (Tsoucalas, J.) (finding that the
an order covered certain products not explicitly mentioned in the
scope 	definition 	where 	petition 	and 	numerous 	post-petition
submissions evidenced petitioner’s intent to include those products
within the scope), aff’d, 984 F.2d 1178 (Fed. Cir. 1993).
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forms 	of 	a 	product 	and 	manufacturing 	occurs 	across 	multiple
countries. 	Id. 	In 	such 	cases, 	Appvion 	contends, 	the 	downstream
processing “inherently cannot be sufficient to move the merchandise
from 	one 	class 	or 	kind 	to 	another,” 	and 	always 	indicates 	that 	a
substantial transformation did not occur. 	Id.
Appvion admitted before Commerce and the court that conversion
was not a substantial transformation. 	See CR 2/8 at 6; Oral Arg.
at 14:05. 	To the extent that Appvion is challenging the propriety
of 	Commerce’s 	use 	of 	the 	substantial 	transformation 	analysis,
however, 	this 	argument 	is 	unconvincing. 	This 	Court 	has 	upheld
Commerce’s 	use 	of 	the 	substantial 	transformation 	analysis 	as 	a
means of determining the country of origin of merchandise produced
in multiple countries. See E.I. DuPont de Nemours & Co. v. United
States, 	22 	CIT 	370, 	373–76, 	8 	F. 	Supp. 	2d 	854, 	858–59 	(1998)
(applying 	Chevron 	deference 	to 	the 	substantial 	transformation
test). 	The substantial transformation test “provides a yardstick
for determining whether the processes performed on merchandise in
a country are of such significance as to require that the resulting
merchandise be considered the product of the country in which the
transformation 	occurred.” 	Id. 	at 	373–74, 	8 	F. 	Supp. 	2d 	at 	858.
This is precisely the analysis that Commerce undertook below with
regards to the conversion process. 	See CR 2/11 at 6–12; PR 2/32 at
3–4. 	As the JRs from [[ 	]] were not substantially transformed
in the PRC, they were not of Chinese origin. 	See DuPont, 22 CIT at
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373–74, 8 F. Supp. 2d at 858. 	Accordingly, Paper Resources’s LWTP
was never subject merchandise. 	See Ugine, 31 CIT at 1551, 517 F.
Supp. 2d at 1345.
Ultimately, 	Appvion’s 	argument 	boils 	down 	to 	its 	claim 	that
the Final Scope Ruling denies relief from dumped LWTP from the PRC.
Pl.’s 	Br. 	at 	15. 	Appvion 	insists 	that 	Commerce’s 	determination
forces 	the 	filing 	of 	numerous 	petitions 	against 	any 	and 	all
countries 	from 	which 	Hanhong 	sources 	its 	JRs. 	See 	id. 	at 	15.
According 	to 	Appvion, 	this 	result 	is 	unreasonable 	because 	relief
may be denied if fair trade practices mask dumping or total import
volume does not surpass negligibility thresholds. 	Id. at 15–17.
As Commerce did not articulate a “statutorily consistent mechanism”
by which Appvion can obtain relief, Appvion insists that Commerce’s
decision is erroneous. 	Id. at 15.
Appvion simply fails to articulate a legal basis by which to
determine 	that 	Paper 	Resources’s 	LWTP 	is 	within 	the 	scope 	of 	the
Orders. 	Commerce was not required to include the LTWP within the
scope 	of 	the 	Orders 	simply 	because 	it 	was 	converted 	by 	Hanhong.
See 	DuPont, 	22 	CIT 	at 	375, 	8 	F. 	Supp. 	2d 	at 	859 	(“[A]ntidumping
orders 	apply 	to 	merchandise 	from 	particular 	countries, 	not
individual producers . . . .”). 	Rather, the dispositive issue was
the country of origin. 	See Ugine, 31 CIT at 1551, 517 F. Supp. 2d
at 	1345. 	And, 	as 	stated 	above, 	the 	country 	of 	origin 	of 	Paper
Resources’s LWTP was [[ 	]], not the PRC.
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II. Circumvention
Appvion 	also 	argues 	that 	Commerce 	abused 	its 	discretion 	by
failing to consider evidence that Hanhong and Paper Resources were
circumventing 	the 	Orders. 	See 	Pl.’s 	Br. 	at 	22–26. 	According 	to
Appvion, Hanhong’s “shift to third-country suppliers represents a
change 	in 	the 	commercial 	practices 	(e.g., 	pattern 	of 	trade)
indicating circumvention of existing relief.” 	Id. at 23. 	Appvion
insists 	that 	Commerce 	also 	should 	have 	considered 	the 	following
evidence: Hanhong and Paper Resources waited three years to request
a scope ruling from Commerce; Paper Resources [[
]]; Hanhong
and Paper Resources [[
]]; and Hanhong [[
]]. 	See Pl.’s Br. at 23–26.
Generally, 	Commerce 	addresses 	circumvention 	issues 	under 	19
U.S.C. 	§ 	1677j, 	which 	grants 	it 	the 	power 	to 	include 	merchandise
within the scope of an order where that merchandise is of the same
class or kind as the covered merchandise and a large portion of the
merchandise’s 	value 	is 	derived 	from 	production 	in 	a 	covered
country, but minor downstream processing or assembly occurs in the
U.S. 	or 	a 	third 	country. 	See 	19 	U.S.C. 	§ 	1677j. 	Additionally,
Commerce 	has 	discretion 	to 	consider 	evidence 	of 	circumvention 	as
part 	of 	a 	country 	of 	origin 	analysis. 	See 	Issues 	and 	Decision
Memorandum 	for 	the 	Less-Than-Fair-Value 	Investigation 	of 	Certain
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Artist Canvas from the PRC at 7, Case No. A-570-899 (Mar. 22, 2006)
(recognizing 	that 	Commerce 	“may 	consider” 	the 	potential 	for
circumvention 	of 	an 	order 	in 	its 	country 	of 	origin 	analysis).
Commerce’s discretion is not unlimited, however, as it may not use
circumvention evidence to expand the scope of an order. 	E. Jordan
Iron Works, Inc. v. United States, 32 CIT 419, 422, 556 F. Supp. 2d
1355, 1358 (2008).
Here, Commerce declined to consider evidence of circumvention
for 	several 	reasons. 	See 	CR 	2/11 	at 	13–15. 	First, 	Commerce
explained that the Orders did not cover [[ 	]], the country in
which the JRs are produced, and therefore there was no concern that
relief 	under 	the 	Orders 	would 	be 	“eviscerated 	by 	moving 	minor
processing outside the country covered by the order.” 	Id. at 14.
Second, 	Commerce 	noted 	that 	the 	case 	did 	not 	lend 	itself 	to 	a
section 	1677j 	analysis 	because 	downstream 	processing 	occurred 	in
the 	covered 	country 	rather 	than 	in 	the 	U.S. 	or 	a 	third 	country.
Id. 	at 	14–15. 	Commerce 	also 	noted 	that 	this 	Court 	previously
upheld scope determinations conducted without considering evidence
of circumvention. 	Id. at 15.
Commerce’s 	decision 	was 	adequately 	explained 	and 	consistent
with the law. 	This Court has held that “a ‘scope ruling is not the
proper 	mechanism 	for 	addressing 	circumvention 	concerns.’” 	See
Laminated Woven Sacks Comm. v. United States, 34 CIT __, __, 716 F.
Supp. 2d 1316, 1328 (2010) (Tsoucalas, J.) (quoting E. Jordan Iron
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Works, 32 CIT at 422, 556 F. Supp. 2d at 1358). 	Moreover, because
conversion did not substantially transform the [[ 	]] JRs, CR
2/11 at 6–12 (unchanged in PR 2/32), Commerce risked expanding the
scope 	of 	the 	Orders 	by 	considering 	evidence 	of 	potential
circumvention. 	See 	E. 	Jordan 	Iron 	Works, 	32 	CIT 	at 	422, 	556 	F.
Supp. 	2d 	at 	1358. 	Accordingly, 	Appvion 	cannot 	demonstrate 	that
Commerce abused its discretion.
III. Country of Origin Certification
Finally, 	Appvion 	argues 	that 	Commerce’s 	failure 	to 	impose 	a
mandatory 	country 	of 	origin 	certification 	program 	was 	arbitrary,
capricious, 	and 	an 	abuse 	of 	discretion. 	See 	Pl.’s 	Br. 	at 	27.
Appvion 	insists 	that 	Commerce 	ignored 	evidence 	in 	the 	record
evidencing a “high likelihood of past and current circumvention.”
Id. 	Appvion 	also 	argues 	that 	Commerce 	failed 	to 	explain 	why 	it
treated the instant case differently than other cases in which it
imposed 	country 	of 	origin 	and 	end-use 	certification 	programs
without an affirmative finding of circumvention. 	Id. at 28–30.
Commerce has a certain amount of discretion to act in order to
“prevent[] 	the 	intentional 	evasion 	or 	circumvention” 	of 	the 	Act.
See 	Tung 	Mung 	Dev. 	Co. 	v. 	United 	States, 	26 	CIT 	969, 	979, 	219 	F.
Supp. 2d 1333, 1343 (2002), aff’d, 354 F.3d 1371 (Fed. Cir. 2004).
To 	that 	end, 	Commerce 	may 	impose 	measures 	such 	as 	mandatory
certification programs where it believes they will be effective in
preventing future circumvention of its orders. 	See, e.g., Issues
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and 	Decision 	Memorandum 	for 	the 	Final 	Determination 	of 	the
Anticircumvention Inquiry of Certain Tissue Paper Products from the
PRC at 9–12, Case No. A-570-894 (Sept. 19, 2008) (imposing country
of origin certification requirements to address circumvention).
Appvion 	fails 	to 	demonstrate 	that 	Commerce 	abused 	its
discretion or acted in an arbitrary and capricious manner. 	First,
this Court has held that “certification is not part of an ordinary
scope analysis.” 	Laminated Woven Sacks, 34 CIT at __, 716 F. Supp.
2d at 1328. 	Second, Commerce adequately explained its decision.
In the Preliminary Scope Ruling, Commerce explained that Appvion’s
country 	of 	origin 	concerns 	could 	be 	“appropriately 	dealt 	with 	by
[Customs 	and 	Border 	Protection].” 	CR 	2/11 	at 	6. 	In 	the 	Final
Scope 	Ruling, 	Commerce 	did 	not 	impose 	a 	country 	of 	origin
certification 	program 	because 	it 	did 	not 	make 	an 	affirmative
finding 	of 	circumvention. 	See 	PR 	2/32 	at 	6. 	As 	Commerce
explained, 	there 	was 	“no 	precedent 	of 	[Commerce] 	establishing 	a
certification program to preempt unfounded circumvention.” 6 	Id.
Commerce 	also 	noted 	that 	end-use 	certification 	cases 	are 	not
6 	Appvion 	argues 	that 	Commerce’s 	decision 	was 	inconsistent
with 	Crystalline 	Silicon 	Photovoltaic 	Cells, 	Whether 	or 	Not
Assembled Into Modules, From the PRC: Preliminary Determination of
Sales at Less Than Fair Value, Postponement of Final Determination
and 	Affirmative 	Preliminary 	Determination 	of 	Critical
Circumstances, 	77 	Fed. 	Reg. 	31,309 	(May 	25, 	2012) 	(“Silicon
Cells”), 	in 	which 	it 	imposed 	country 	of 	origin 	certification
without an affirmative finding of circumvention. 	Pl.’s Br. at 28.
To the extent that Silicon Cells altered Commerce’s policy, it is
not 	relevant 	here 	because 	it 	was 	issued 	after 	the 	Final 	Scope
Ruling. 	Silicon Cells, 77 Fed. Reg. at 31,309.
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relevant 	because 	they 	involve 	different 	concerns 	— 	“avoid[ing]
liquidation 	of 	components 	intended 	to 	be 	used 	for 	subject
merchandise.” 	Id. 	Because Commerce provided a “reasoned analysis”
of its decision, the court finds that Commerce neither abused its
discretion 	nor 	acted 	in 	an 	arbitrary 	and 	capricious 	manner. 	See
Wheatland Tube, 161 F.3d at 1369.
CONCLUSION
For 	the 	foregoing 	reasons, 	the 	court 	finds 	that 	the 	Final
Scope Ruling is supported by substantial evidence on the record and
is otherwise in accord with the law.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: July 11, 2013
New York, New York
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