Itochu Building Products v. United States , 865 F. Supp. 2d 1332 ( 2012 )

Slip Op. 12- 122
UNITED STATES COURT OF INTERNATIONAL TRADE
ITOCHU BUILDING PRODUCTS,
Plaintiff,
v.
Before: Timothy C. Stanceu, Judge
UNITED STATES,
Court No. 11-00208
Defendant.
OPINION
[Denying motion for judgment on the agency record in an action contesting final results of a
changed circumstances review of an antidumping duty order]
Date: September 19, 2012
Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New
York, NY, argued for plaintiff. With him on the brief were Mark E. Pardo, Joseph M.
Spraragen, Andrew T. Schutz, and Bruce M. Mitchell.
Carrie A. Dunsmore, Trial Counsel, Civil Division, U.S. Department of Justice, of
Washington, DC, argued for defendant. With her on the brief were Tony West, Assistant
Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy. Of counsel on the
brief was Nathaniel J. Halvorson, Attorney-International, Office of the Chief Counsel for Import
Administration, U.S. Department of Commerce, of Washington, DC.
Stanceu, Judge: This litigation concerns an antidumping duty order issued by the
International Trade Administration, U.S. Department of Commerce (“Commerce” or “the
Department”) on certain steel nails (“subject merchandise”) from the People’s Republic of China
(“China”). Compl. ¶ 1 (July 21, 2011), ECF No. 8. At the request of the domestic industry,
Commerce conducted a review of the order based on changed circumstances and revoked the
Court No. 11-00208 Page 2
order as to four types of steel nails.1 Certain Steel Nails From the People’s Republic of China:
Final Results of Antidumping Duty Changed Circumstances Review, 76 Fed. Reg. 30,101(May 24, 2011) (“Final Results of Changed Circumstances Review”). Commerce made the
partial revocation effective as of August 1, 2009 despite all parties to the proceeding having
requested an earlier date, January 23, 2008. Id. at 30,102; Compl. ¶ 12. Plaintiff Itochu Building
Products (“Itochu” or “IBP”), a U.S. importer of subject merchandise, claims that Commerce
unlawfully chose the later date and seeks a remand directing that revocation occur as of the
earlier date and that plaintiff’s entries be liquidated accordingly. Compl. ¶ 3, Prayer for Relief.
Before the court is Itochu’s USCIT Rule 56.2 motion for judgment upon the agency
record. Pl.’s Rule 56.2 Mot. for J. upon the Agency R. (Dec. 5, 2011), ECF No. 19; Mem. of
Law in Supp. of Pl.’s Rule 56.2 Mot. for J. upon the Agency R. (Dec. 5, 2011), ECF No. 19
(“Pl.’s Mem.”). The court denies relief because plaintiff, although having informed the
1
The merchandise now excluded from the order is described as follows:
(1) Non-collated (i.e., hand-driven or bulk), two-piece steel nails having plastic or
steel washers (caps) already assembled to the nail, having a bright or galvanized
finish, a ring, fluted or spiral shank, an actual length of 0.500” to 8”, inclusive; and
an actual shank diameter of 0.1015” to 0.166”, inclusive; and an actual washer or cap
diameter of 0.900” to 1.10”, inclusive.
(2) Non-collated (i.e., hand-driven or bulk), steel nails having a bright or galvanized
finish, a smooth, barbed or ringed shank, an actual length of 0.500” to 4”, inclusive;
an actual shank diameter of 0.1015” to 0.166”, inclusive; and an actual head
diameter of 0.3375” to 0.500”, inclusive.
(3) Wire collated steel nails, in coils, having a galvanized finish, a smooth, barbed or
ringed shank, an actual length of 0.500” to 1.75”, inclusive; an actual shank diameter
of 0.116” to 0.166”, inclusive; and an actual head diameter of 0.3375” to 0.500”,
inclusive.
(4) Non-collated (i.e., hand-driven or bulk), steel nails having a convex head
(commonly known as an umbrella head), a smooth or spiral shank, a galvanized
finish, an actual length of 1.75” to 3”, inclusive; an actual shank diameter of 0.131”
to 0.152”, inclusive; and an actual head diameter of 0.450” to 0.813”, inclusive.
Certain Steel Nails From the People’s Republic of China: Final Results of Antidumping Duty
Changed Circumstances Review, 76 Fed. Reg. 30,101 (May 24, 2011).
Court No. 11-00208 Page 3
Department of its position in favor of the earlier effective date prior to the publication of the
preliminary results of the changed circumstances review, declined to comment in response to the
published notice of the preliminary results and thereby waived its previous objection to the later
(August 1, 2009) effective date for the partial revocation of the order.
I. BACKGROUND
On July 16, 2007, Commerce initiated an investigation of sales at less than fair value of
certain steel nails from China. Certain Steel Nails from the People’s Republic of China & the
United Arab Emirates: Initiation of Antidumping Duty Investigations, 72 Fed. Reg. 38,816(July 16, 2007). Commerce issued an affirmative preliminary less-than-fair-value determination
on January 23, 2008. Certain Steel Nails From the People’s Republic of China: Prelim.
Determination of Sales at Less Than Fair Value & Partial Affirmative Determination of Critical
Circumstances and Postponement of Final Determination, 73 Fed. Reg. 3,928 (Jan. 23, 2008).
Commerce required, as of January 23, 2008, that all entries of subject merchandise be
accompanied by cash deposits in the amount of estimated antidumping duties and instructed U.S.
Customs and Border Protection (“Customs”) to suspend liquidation of subject entries made on
and after that date. Id. at 3,942. Commerce issued an affirmative final less-than-fair-value
determination on June 16, 2008, Certain Steel Nails from the People’s Republic of China: Final
Determination of Sales at Less than Fair Value & Partial Affirmative Determination of Critical
Circumstances, 73 Fed. Reg. 33,977 (June 16, 2008), and, on August 1, 2008, published the
antidumping duty order, Notice of Antidumping Duty Order: Certain Steel Nails from the
People’s Republic of China, 73 Fed. Reg. 44,961 (Aug. 1, 2008).
On September 22, 2009, Commerce initiated the first periodic administrative review of
the antidumping duty order on steel nails from China. Initiation of Antidumping &
Court No. 11-00208 Page 4
Countervailing Duty Admin. Reviews & Request for Revocation in Part, 74 Fed. Reg. 48,224,
48,226 (Sept. 22, 2009). The review pertained to entries made from the first date on which
liquidation was suspended, January 23, 2008, until July 31, 2009. Id.On February 11, 2011, a domestic producer filed a request, on behalf of itself and the
domestic industry, that Commerce revoke the order as to four types of nails through a changed
circumstances review. Certain Steel Nails From the People’s Republic of China: Initiation &
Prelim. Results of Antidumping Duty Changed Circumstances Review, 76 Fed. Reg. 22,369(Apr. 21, 2011) (“Initiation Notice”). That domestic producer, Mid Continent Nail Corporation
(“Mid Continent”), sought, as an effective date for the proposed partial revocation, January 23,
2008, the date of the beginning of the suspension of liquidation of entries of subject
merchandise. Id. at 22,371. Itochu requested the same effective date in a February 22, 2011
meeting with Commerce. Id. at 22,370. In a March 1, 2011 submission, another domestic
producer, National Nail Corp., also requested the January 23, 2008 effective date. Id. No other
parties participated in the changed circumstances review.
Commerce published the final results of the first administrative review of the order
(“Final Results”) on March 23, 2011. Certain Steel Nails From the People’s Republic of China:
Final Results of the First Antidumping Duty Admin. Review, 76 Fed. Reg. 16,379 (Mar. 23,
2011). Commerce then issued amended final results (“Amended Final Results”) on April 26,
2011, responding to allegations of ministerial errors in the March 23 results. Certain Steel Nails
From the People’s Republic of China: Amended Final Results of the First Antidumping Duty
Admin. Review, 76 Fed. Reg. 23,279 (Apr. 26, 2011).
On April 21, 2011, five days prior to the issuance of the amended final results of the
administrative review, Commerce issued a combined notice of initiation of a changed
Court No. 11-00208 Page 5
circumstances review under Section 751(b) of the Tariff Act, 19 U.S.C. § 1675(b), and notice of
the preliminary results of that review. Initiation Notice, 76 Fed. Reg. at 22,369. This notice
announced that Commerce preliminarily had determined that the order would be revoked as to
the four types of nails identified by Mid Continent. Id. at 22,371. The notice acknowledged that
Mid Continent requested revocation of the order as of January 23, 2008 but declined to adopt
that date, stating that “the Department does not find this to be consistent with its recent practice.”
Id. The Department explained that its practice was “to revoke (in whole or in part) an
antidumping duty order so that the effective date of revocation covers entries that have not been
subject to a completed administrative review.” Id. Commerce chose as the revocation date
August 1, 2009, which it characterized as “the earliest date for which entries of certain steel nails
have not been subject to a completed administrative review.” Id.
Commerce provided an opportunity for comments on the April 21, 2011 notice, stating
that “[i]nterested parties are invited to comment on these preliminary results. Written comments
may be submitted no later than 14 days after the date of publication of these preliminary results.”
Id. Commerce then stated that it would “issue the final results of this changed circumstances
review . . . no later than 270 days after the date on which this review was initiated, or within 45
days if all parties agree to our preliminary results. See 19 CFR 351.216(e).” Id.
On May 24, 2011, Commerce issued the final results of the changed circumstances
review. Commerce announced that no comments had been received in response to the
publication of the combined notice initiating, and announcing preliminary results of, the changed
circumstances review, that the order would be revoked as to the four types of nails for which
revocation had been requested, and that the partial revocation would take effect as of August 1,
2009. Final Results of Changed Circumstances Review, 76 Fed. Reg. at 30,101-02. In the notice
Court No. 11-00208 Page 6
announcing the final results of the review, the Department reiterated the reason for its choice of
the August 1, 2009 effective date, stating that “[t]he Department’s recent practice has been to
select the date after the most recent period for which a review was completed or issued
assessment instructions [sic] as the effective date.” Id. at 30,102 n.5.
Challenging the decision to select the August 1, 2009 effective date, plaintiff brought this
action by filing a summons on June 22, 2011 and a complaint on July 21, 2011. Summons, ECF
No. 1; Compl. Itochu filed its motion for judgment on the agency record on December 5, 2011.
On September 13, 2012, the court held oral argument on this motion.
II. DISCUSSION
The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980,
28 U.S.C. § 1581(c) (2006), which grants this court jurisdiction of any civil action commenced
under section 516A of the Tariff Act of 1930 (“Tariff Act”), 19 U.S.C. § 1516a(a)(2)(B)(iii)
(2006), including the present action challenging the final results of a review based on changed
circumstances issued under section 751 of the Tariff Act, 19 U.S.C. § 1675(b). The court must
“hold unlawful any determination, finding, or conclusion found . . . to be unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i) (2006).
The essence of plaintiff’s claims is that the Department acted contrary to law in refusing
to adopt the requested effective date of January 23, 2008 and instead making the partial
revocation of the order effective as of August 1, 2009. See Pl.’s Mem. 3 (claiming that the
Department’s decision “is contrary to administrative practice, judicial precedent, [and] basic
principles of fairness, . . . is inconsistent with the fundamental purpose of the [antidumping duty]
law,” and lacks a rational basis). As relief, plaintiff seeks an order remanding to Commerce the
Court No. 11-00208 Page 7
final results of the changed circumstances review with instructions to issue new final results with
an effective date of January 23, 2008 for the partial revocation and to direct Customs to liquidate
plaintiff’s entries of the excluded nails entered on an after that date without the assessment of
antidumping duties. Id. at 35-36 and draft order.
Without reaching the question of whether the decision contested in this case was lawful,
the court concludes that plaintiff is not entitled to relief on its claims. Itochu waived any
objection to the decision Commerce reached on the question of the effective date for the partial
revocation, as set forth in the final results of the changed circumstances review, when it declined
to file comments in response to the combined notice of initiation and notice of preliminary
results of that review.
Section 301 of the Customs Courts Act of 1980 provides that, in actions such as this one,
“the Court of International Trade shall, where appropriate, require the exhaustion of
administrative remedies.” 28 U.S.C. § 2637(d) (2006). It is appropriate here to require
exhaustion because Commerce expressly invited comments in the notice announcing the
preliminary results of the changed circumstances review. Initiation Notice, 76 Fed. Reg.
at 22,371 (“Interested parties are invited to comment on these preliminary results. Written
comments may be submitted no later than 14 days after the date of publication . . . .”). When no
party submitted comments, Final Results, 76 Fed. Reg. at 30,101, Commerce was justified in
presuming that all interested parties now concurred in all aspects of the preliminary results of the
changed circumstances review, including the choice of the effective date for the partial
revocation, regardless of whether those interested parties earlier had voiced objection. In the
absence of any party’s taking a position contrary to the preliminary results, the Department
adopted the preliminary results as the final results, without change. Id.
Court No. 11-00208 Page 8
The exhaustion requirement and the related doctrine of waiver require an interested party
to raise all relevant arguments at the time Commerce requests comments, even if the party raised
an argument previously. Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383-84
(Fed. Cir. 2008) (citing United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952)).
As the Supreme Court has explained, “[s]imple fairness to those who are engaged in the tasks of
administration, and to litigants, requires as a general rule that courts should not topple over
administrative decisions unless the administrative body not only has erred but has erred against
objection made at the time appropriate under its practice.” L.A. Tucker Truck Lines, 344 U.S.
at 37.
In Mittal Steel Point Lisas, the Court of Appeals held that Gerdau Ameristeel Corp., a
defendant-intervenor in litigation arising out of an antidumping duty order, waived its earlier-
expressed argument that Commerce should calculate an exporter’s credit expenses based on
export date rather than invoice date. 548 F.3d at 1382-83. Gerdau Ameristeel had raised that
argument in the proceedings before Commerce and again in litigation before this Court. Id.After Commerce on remand decided to calculate credit expenses based on invoice date, Gerdau
Ameristeel failed to preserve its position when it did not take the opportunity to comment on the
draft remand results. Id. Despite having raised its argument earlier, “Gerdau was procedurally
required to raise the issue before Commerce at the time Commerce was addressing the issue.”
Id. In a similar manner, Itochu waived its objection to an effective date of August 1, 2009 by not
commenting in response to the notice announcing the preliminary results of the changed
circumstances review. Due to the failure to exhaust administrative remedies, it is appropriate
that the court deny relief on Itochu’s claims.
Court No. 11-00208 Page 9
Plaintiff advances several reasons why the court should not apply the exhaustion
requirement in this case. First, plaintiff points out that the notice announcing the preliminary
results of the changed circumstances review did not solicit case briefs pursuant to 19 U.S.C.
§ 309(b)(1) and did not cite 19 C.F.R. § 351.309(c), a provision in the Department’s regulations
that, in paragraph (2), instructs parties that “[t]he case brief must present all arguments that
continue in the submitter’s view to be relevant to the Secretary’s final determination or final
results.” Pl.’s Reply to Def.’s Opp’n to Rule 56.2 Mot. for J. upon the Agency R. 6-8 (Mar. 16,
2012), ECF No. 27. (“Pl.’s Reply”). Plaintiff does not argue that Commerce was required by its
regulations to take these steps (and the court would see no merit in such an argument), instead
arguing that had Commerce cited § 351.309(c) and advised all parties of the requirement to file
case briefs, “Plaintiff would have been on notice that it arguably would lose its opportunity to
challenge the Department’s determination in this Court by not filing a post-preliminary Case
Brief.” Id. at 8. This argument is unconvincing. The requirement to exhaust administrative
remedies arose from the exhaustion doctrine as codified in 28 U.S.C. § 2637(d), independently of
§ 351.309(c)(2). The requirement to exhaust administrative remedies therefore applies in this
case despite the lack of a reference to § 351.309(c) in the notice announcing the preliminary
results of the changed circumstances review.
In this case, Commerce cannot be faulted for the manner in which it requested comments.
The regulation provides that “[a]ny interested party . . . may submit a ‘case brief’” in response to
“publication of the preliminary results” of a changed circumstances review, § 351.309(c)(1)(ii),
and Itochu was free to file a case brief, if it so chose, within the 14-day time limit set forth in the
Department’s notice. Commerce did not exceed its discretion by inviting comments without
requiring that such comments be in the form of case briefs. Nor can Commerce’s exercising its
Court No. 11-00208 Page 10
discretion in this way reasonably be construed as an indication that an interested party need not
file comments in order to preserve its position for a future judicial challenge to the final results
of the changed circumstances review.
Plaintiff argues, next, that any attempt it might have made to convince the Department to
change its mind on the issue of the effective date “would have been an exercise in futility.” Pl.’s
Reply 8. Futility is a recognized exception to the exhaustion requirement, but it is a narrow one
and is not satisfied merely by circumstances indicating that an agency would be unlikely to adopt
the position a party failed to assert. Corus Staal BV v. United States, 502 F. 3d 1370, 1379 (Fed.
Cir. 2007). Here, Commerce specifically requested comments on the preliminary results of the
changed circumstances review and did not indicate in its notice that there would be no possibility
of a change in position on the effective date issue.
Third, Itochu maintains that its filing comments objecting to the August 1, 2009 effective
date “would have resulted in a needless 225 day delay in revocation,” Pl.’s Reply 8, and at oral
argument asserted that Itochu would have be prejudiced financially by the resulting delay in
receiving refunds of duty deposits on its entries. This argument is also unconvincing. The
Department’s regulations, in 19 C.F.R. § 315.216(e), provide for an expedited issuance of final
results, i.e., within 45 days, “if all parties to the proceeding agree to the outcome of the review,”
and provide otherwise that the final results will issue in 270 days. It was reasonable for
Commerce to construe the words “outcome of the review,” as it apparently did here, to refer to
the preliminary results. Moreover, the delay posited by Itochu rests on speculation. Although it
is possible that Commerce would have taken the full 270 days had any party raised any
objection, it is also possible that Commerce would not have required the full period. Itochu
could have attempted to protect its interests by filing a short comment submission preserving its
Court No. 11-00208 Page 11
position on the effective date but also urging that Commerce, in any event, issue its final results
as expeditiously as possible.
Plaintiff also asserts the “pure legal question” exception to the exhaustion requirement,
arguing that “[i]n the instant case, IBP argued before the Department that as a matter of law the
Department was required to revoke the [antidumping duty] order as of the date requested by
Petitioner and to apply that decision to all unliquidated entries.” Pl.’s Reply 10. Plaintiff argues,
further, that “[t]he issue raised by IBP did not require any additional fact finding by the
Department and judicial review would not be significantly aided by an additional administrative
decision on this issue.” Id. at 11. This argument fails because Commerce was not required by
law to revoke the order as of the date requested by the petitioner. See 19 U.S.C. § 1675(d)(3).
The date of revocation is a matter for the Department’s reasonable exercise of discretion, not a
pure question of law.
Here, Commerce provided only a cursory explanation of its reason for exercising its
discretion in the way that it did (referring only to a recent practice), but the court will not review
that reasoning on the merits when plaintiff, like the other interested parties, lodged no formal
objection to the August 1, 2009 effective date in response to the published notice. In these
circumstances, the court’s reviewing the adequacy of the Department’s reasoning would be
particularly unfair to Commerce, whose dispensing with a better explanation is more
understandable than it would have been had plaintiff filed such a formal objection. As the court
observed previously, Commerce was justified, at the close of the comment period, in presuming
that Itochu no longer objected to the decision to make the partial revocation effective as of
August 1, 2009 rather than January 23, 2008.
Court No. 11-00208 Page 12
III. CONCLUSION
In summary, plaintiff failed to exhaust its administrative remedies prior to bringing its
judicial challenge to the final results of the changed circumstances review when it declined to
file comments in response to the Department’s published notice announcing the preliminary
results. In so doing, plaintiff waived any claims pertaining to the Department’s choice of
effective date for the partial revocation of the order. Considering all relevant circumstances, the
court finds on the record before it no justification for making an exception to the exhaustion
requirement. Pursuant to USCIT Rule 56.2, the court will enter judgment in favor of defendant.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: September 19, 2012
New York, New York