Home Products International, Inc. v. United States

Slip Op. 09-144
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Leo M. Gordon, Judge
Consol. Court No. 07-00123
OPINION
[Final remand results sustained.]
Dated: December 17, 2009
Blank 	Rome 	LLP 	(Frederick 	L. 	Ikenson, 	Larry 	Hampel), 	for 	Plaintiff 	Home
Products International, Inc.
Tony 	West, 	Assistant 	Attorney 	General; 	Jeanne 	E. 	Davidson, 	Director;
Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice (Carrie Anna Dunsmore); and Office of the Chief Counsel
for 	Import 	Administration, 	U.S. 	Department 	of 	Commerce 	(Thomas 	M. 	Beline),
of counsel, for Defendant United States.
Garvey Schubert Barer (Ronald M. Wisla, William E. Perry, Lizbeth R. Levinson),
for Defendant-Intervenor Since Hardware (Guangzhou) Co., Ltd.
Gordon, Judge: 	This is a consolidated action arising from the first administrative
review of the antidumping duty order covering floor-standing, metal-top ironing tables
from the People’s Republic of China. 	See Floor-Standing, Metal-Top Ironing Tables
and Certain Parts Thereof from the People’s Republic of China, 72 Fed. Reg. 13,239
(Dep’t of Commerce Mar. 21, 2007) (final results and partial rescission), as amended
by, 72 Fed. Reg. 19,689 (Dep’t of Commerce Apr. 19, 2007) (amended final results)
(“Final Results”). 	Before the court are the Final Remand Results (July 10, 2008)
HOME PRODUCTS INTERNATIONAL, INC.,
Plaintiff,
v.
UNITED STATES,
Defendant.
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(ARemand Determination@) filed by the U.S. Department of Commerce (“Commerce”)
pursuant to Home Prods. Int’l, Inc. v. United States, 32 CIT __, 556 F. Supp. 2d 1338
(2008) (“Home Products”). 	Familiarity with the court’s decision in Home Products is
presumed. 	The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff
Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006), 1 and 28 U.S.C.
§ 1581(c) (2006).
I. 	Standard of Review
For 	administrative 	reviews 	of 	antidumping 	duty 	orders, 	the 	court 	sustains
determinations, findings, or conclusions of the U.S. Department of Commerce unless
they are “unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole.
Nippon 	Steel 	Corp. 	v. 	United 	States, 	458 	F.3d 	1345, 	1350-51 	(Fed. 	Cir. 	2006).
See also Dorbest Ltd. v. United States, 30 CIT 1671, 1675-76, 462 F. Supp. 2d 1262,
1268 (2006) (providing a comprehensive explanation of the standard of review in the
nonmarket economy context). 	Substantial evidence has been described as “such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” 	Dupont Teijin Films USA v. United States, 	407 F.3d 1211, 1215 (quoting
Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial evidence has also
been described as “something less than the weight of the evidence, and the possibility
1 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions
of Title 19 of the U.S. Code, 2006 edition.
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of 	drawing 	two 	inconsistent 	conclusions 	from 	the 	evidence 	does 	not 	prevent 	an
administrative agency’s finding from being supported by substantial evidence.” Consolo
v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). 	Fundamentally, though, “substantial
evidence” is best understood as a word formula connoting reasonableness review.
3 Charles H. Koch, Jr., Administrative Law and Practice § 10.3[1] (2d. ed. 2009).
Therefore, when addressing a substantial evidence issue raised by a party, the court
analyzes 	whether 	the 	challenged 	agency 	action 	“was 	reasonable 	given 	the
circumstances presented by the whole record.” 	Edward D. Re, Bernard J. Babb, and
Susan M. Koplin, 8 West’s Fed. Forms, National Courts § 13342 (2d ed. 2009).
II. 	Discussion
During the administrative review, which was the first for the antidumping duty
order, Commerce developed a new methodology to evaluate the reliability of input
purchases 	made 	by 	respondent 	Since 	Hardware 	(Guangzhou) 	Co., 	Ltd.
(“Since Hardware”) from a market economy supplier that was substantially owned by
nonmarket economy entities. 	Commerce established a benchmark of international
market prices derived from annualized export statistics and then compared Since
Hardware's input purchases against the benchmark. 	The average price of Since
Hardware’s 	hot-rolled 	steel 	inputs 	was 	above 	the 	benchmark, 	and 	Commerce
concluded that the prices paid for these inputs reflected market economy principles and
were therefore reliable. 	The average purchase price of Since Hardware's cold-rolled
steel inputs was below the benchmark, leading Commerce to conclude that the prices
paid for these inputs did not reflect market economy principles. As a result, Commerce
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derived 	a 	surrogate 	value 	for 	the 	cold-rolled 	steel 	inputs 	rather 	than 	use 	Since
Hardware's actual purchase price. 	Since Hardware and petitioner, Home Products
International, Inc. (“Home Products”), each challenged Commerce's newly created
methodology in this action. 	Commerce sought a voluntary remand, which the court
granted. Home Products, 32 CIT at __, 556 F. Supp. 2d at 1343.
In the Remand Determination Commerce reexamined its benchmarking test.
Remand Determination at 6-7. 	Commerce explained that the benchmark resulted in a
substantial number of export sales falling below the average export price. 	Id. at 6.
According to Commerce, the invalidation of so many market economy purchases
“defies commercial reality” and is too inconsistent with 19 C.F.R. § 351.408(c)(1)
(2005), which provides that normally sales from a market economy are in accordance
with market economy principles. 	Id. 	Commerce thus concluded that using “average
export prices” established “an unduly high” threshold for whether Since Hardware’s
market economy input purchases were made in accordance with market economy
principles. Id.
In place of that test, which was difficult for Commerce (1) to reconcile with an
existing 	regulatory 	preference 	for 	using 	market 	economy 	prices, 	see 	19 	C.F.R.
§ 351.408(c)(1) (“[W]here a factor is purchased from a market economy supplier and
paid for in a market economy currency, the Secretary normally will use the price paid to
the market economy supplier.”); and see also Shakeproof Assembly Components,
Div. 	of 	Illinois 	Tool 	Works, 	Inc. 	v. 	United 	States, 268 	F.3d 	1376, 	1382-1383
(Fed. Cir. 2001) (reviewing Commerce’s use of market prices to value factors of
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production), and (2) to defend under subsequent judicial review, see, e.g., (Husteel Co.
v. United States, 31 CIT 740, 491 F. Supp. 2d 1283 (2007), opinion after remand,
Husteel Co. v. United States, 32 CIT __, 558 F. Supp. 2d 1357 (2008) (reviewing
Commerce’s application of 19 C.F.R. § 351.408(c)), Commerce reverted to its standard
practice for valuation of market economy inputs. 	Remand Determination at 7-8;
see 	also 	Antidumping 	Methodologies: 	Market 	Economy 	Inputs, 	Expected 	Market
Economy Wages, Duty Drawback; and Request for Comments, 71 Fed. Reg. 61,716,
61,717-19 (Dep’t of Commerce Oct. 19, 2006) (notice of change in methodology)
(“Market Economy Input Policy”) (explaining Commerce’s existing practice for valuing
factors of production that are procured in whole or in part from market economy
suppliers). 	After analyzing Since Hardware’s market economy inputs, Commerce
determined that the inputs met the criteria established in both Commerce=s valuation of
factors 	of 	production 	regulation, 	19 	C.F.R. 	§ 	351.408(c)(1), 	and 	Commerce=s
announced market economy input policy, Market Economy Input Policy, 71 Fed. Reg.
at 61,719. 	Remand Determination at 7-8. 	Commerce therefore based the factors of
production for the inputs on the market economy purchase price of the inputs. 	Id.
This determination was reasonable.
Home Products challenges Commerce=s determination to employ its existing,
known input methodology for valuing Since Hardware=s market economy purchases.
Invoking the general principle of administrative law that an agency must explain
departures 	from 	prior 	administrative 	precedent, 	Home 	Products 	contends 	that
Commerce failed to explain or reconcile its application of 19 C.F.R. § 351.408(c)(1) in
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the Remand Determination with a different application of the same regulation in the
subsequent administrative review of the same antidumping duty order. 	Comments of
Home Products at 10-13 (citing 2 R.J. Pierce, Administrative Law Treatise § 11.5
(4th ed. 2002)). 	Home Products therefore wants Commerce’s second administrative
review determination (a subsequent proceeding under the antidumping duty order) to
apply retroactively to the first administrative review (a prior administrative proceeding
under the same antidumping duty order). 	Commerce correctly rejected this argument
as “without merit.” Remand Determination at 11.
Due to the vagaries of a judicial review that has taken too long in this case,
Commerce did render the final results of the second administrative review before the
Remand Determination. 	Nevertheless, the second administrative review remains a
subsequent, 	non-precedential 	administrative 	decision 	for 	purposes 	of 	the 	first
administrative review. 	The general administrative law principle invoked by Home
Products applies to prior administrative precedents, and by definition, the second
administrative review determination is not a prior administrative precedent for purposes
of the first administrative review. 	Commerce is simply not required within a prior
administrative 	review 	remand 	proceeding 	to 	reconcile 	or 	explain 	a 	subsequent
administrative review proceeding arising under the same antidumping duty order. 	The
time 	for 	explaining 	potentially 	inconsistent 	administrative 	action 	in 	successive
administrative reviews (if challenged), arises in the latter of the two proceedings, not the
former. 	Commerce may, if it chooses, attempt to reconcile or true-up a prior decision
like the first administrative review with a subsequent decision if the opportunity arises on
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remand (subject to, among other things, the constraints of the administrative record and
standards of procedural fairness required by the statute, etc.), but it is not obligated to
do 	so. 	All 	that 	is 	required 	of 	Commerce 	is 	that 	its 	findings, 	conclusions, 	and
determinations 	in 	the 	prior 	proceeding 	be 	supported 	by 	substantial 	evidence
(be reasonable) and otherwise in accordance with law.
By seeking refuge in Commerce’s second administrative review results, Home
Products evinces the relative weakness of its specific challenges to Commerce’s
Remand 	Determination. 	Home 	Products 	contends 	that 	evidence 	on 	the 	record
demonstrates that Since Hardware’s market economy inputs were not sold based on
market 	economy 	principles 	and, 	therefore, 	Commerce 	must 	abandon 	its 	market
economy input methodology in favor of establishing a benchmarking test. Comments of
Home Products at 13-15. 	Commerce persuasively rejected this contention, explaining
that “Home Products’ ‘additional evidence’ amounts to examples where input sales
failed the benchmark test [Commerce] has disavowed. 	. . . [Commerce] does not find
that selling at prices below the average export price for the country in which the input
was produced constitutes evidence that prices were established inconsistent with
[market economy principles].” Remand Determination at 12-13.
Likewise, although Home Products argues that Commerce must abandon its
regulation and past practice and establish a test to determine whether market economy
purchases were made based on market economy principles, Home Products does not
provide any statutory or regulatory discussion or analysis. 	See Comments of Home
Products 	at 	13-15. 	As 	Commerce 	explained 	in 	the 	Remand 	Determination, 	the
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applicable 	statutes, 	“[do] 	not 	require 	[Commerce] 	to 	employ 	a 	benchmarking
methodology 	in 	order 	to 	test 	inputs 	provided 	by 	[a 	nonmarket 	economy]-owned
company located in [a market economy]. . . . [T]he Act does not directly address how to
value inputs provided by [market economy] suppliers.” 	Remand Determination at 11.
Commerce followed its existing, standard practice and concluded that Since Hardware’s
market economy purchase prices were the best available information to value those
inputs. 	Remand 	Determination 	at 	7-8; 	see 	also 	19 	C.F.R. 	' 	351.408(c)(1);
Shakeproof, 268 F.3d at 1382-83; and Market Economy Input Policy, 71 Fed. Reg.
at 	61,717-19. 	Record 	evidence 	supports 	Commerce’s 	conclusion 	that 	Since
Hardware=s market economy purchases fall within the provisions of Commerce=s market
economy input regulation and policy (that is, purchased with market economy currency
and the total volume of the inputs exceed 33 percent of the total volume from all
sources). 	Remand Determination at 8. 	Commerce’s valuation of Since Hardware’s
factors of production is therefore reasonable given the administrative record.
III. Conclusion
For the foregoing reasons, Commerce’s Remand Determination is supported by
substantial evidence and otherwise in accordance with law. 	The court will enter
judgment in favor of Defendant sustaining the Remand Determination and denying
Plaintiff’s motion for judgment on the agency record.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: December 17, 2009
New York, New York
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UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Leo M. Gordon, Judge
Consol. Court No. 07-00123
JUDGMENT
This case has been submitted for decision, and the court, after due deliberation,
having rendered opinions; now in conformity with those decisions, it is hereby
ORDERED that Plaintiff’s motion for judgment on the agency record is denied;
and it is further
ORDERED that judgment is entered for Defendant.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: 	December 17, 2009
New York, New York
HOME PRODUCTS INTERNATIONAL, INC.,
Plaintiff,
v.
UNITED STATES,
Defendant.
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NOTICE OF ENTRY AND SERVICE
This is a notice that an order or judgment was entered in the docket of this action,
and was served upon the parties on the date shown below.
Service was made by depositing a copy of this order or judgment, together with any
papers required by USCIT Rule 79(c), in a securely closed envelope, proper postage
attached, in a United States mail receptacle at One Federal Plaza, New York, New York
10278 and addressed to the attorney of record for each party at the address on the official
docket in this action, except that service upon the United States was made by personally
delivering a copy to the Attorney-In-Charge, International Trade Field Office, Civil Division,
United States Department of Justice, 26 Federal Plaza, New York, New York 10278 or to
a clerical employee designated, by the Attorney-In-Charge in a writing filed with the clerk
of the court.
or
Service was made electronically, by the Court’s CM/ECF system, upon those parties
that have filed a Notice of Consent to Electronic Service.
Tina Potuto Kimble
Clerk of the Court
Date: __________________________ 	By: _____________________________
Deputy Clerk
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