Trustees in Bankruptcy of North American Rubber Thread Co. v. United States

Slip Op. 08-66

UNITED STATES COURT OF INTERNATIONAL TRADE

TRUSTEES IN BANKRUPTCY OF
NORTH AMERICAN RUBBER THREAD
CO., INC., FILMAX SDN. BHD.,
HEVEAFIL USA, INC., AND
HEVEAFIL SDN. BHD.,
Before: Richard W. Goldberg,
Plaintiffs, Senior Judge

v. Consol. Court No. 05-00539

UNITED STATES,

Defendant.

OPINION

[Commerce’s refusal to initiate a changed circumstances review
is remanded.]

Date: June 10, 2008

Miller & Chevalier Chartered (Peter J. Koenig) for Plaintiff
Trustees in Bankruptcy of North American Rubber Thread Co., Inc.

White & Case, LLP (Walter J. Spak, Emily Lawson, and Jay C.
Campbell) for Plaintiffs Filmax Sdn. Bhd., Heveafil USA, Inc.,
and Heveafil Sdn. Bhd.

Gregory G. Katsas, Acting Assistant Attorney General; United
States Department of Justice; Jeanne E. Davidson, Director, and
Patricia M. McCarthy, Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice,
(Stephen C. Tosini); David W. Richardson, Of Counsel, Office of
Chief Counsel for Import Administration, Department of Commerce
for Defendant United States.

GOLDBERG, Senior Judge: This case is before the Court following

a court-ordered remand. See Tr. in Bankr. of N. Am. Rubber
 Court No. 05-00539 Page 2

Thread Co. v. United States, 31 CIT __, 533 F. Supp. 2d 1290

(2007) (“NART”). In NART, the Court ordered the U.S. Department

of Commerce (“Commerce”) to provide a reasonable explanation for

its departure from past agency practice, or in the alternative

to conduct a changed circumstances review. For the reasons

stated below, the Court remands Commerce’s results for further

proceedings consistent with this opinion.

I. STANDARD OF REVIEW

The Court has jurisdiction under 28 U.S.C. § 1581(i). When

reviewing an action under section 1581(i), the Court will set

aside a decision of Commerce if it is “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law.”

5 U.S.C. § 706(2)(A) (2000); see 28 U.S.C. § 2640(e) (2000).

II. BACKGROUND

The procedural history of this case is set forth in greater

detail in the Court’s previous opinions. See NART, 31 CIT at

__, 533 F. Supp. 2d at 1291—93; Tr. in Bankr. of N. Am. Rubber

Thread Co. v. United States, 30 CIT __, __, 464 F. Supp. 2d

1350, 1351—53 (2006). However, the relevant facts are as

follows: In 1992, Commerce published an antidumping duty order

on imports of extruded rubber thread from Malaysia. When North
 Court No. 05-00539 Page 3

American Rubber Thread Co. (“NART”),1 the sole domestic

manufacturer of extruded rubber thread, filed for bankruptcy,

Filmax Sdn. Bhd, Heveafil USA Inc., and Heveafil Sdn. Bhd

(collectively “Heveafil”) requested a changed circumstances

review. NART agreed that the antidumping duty order should be

revoked as to entries after October 1, 2003. Heveafil, however,

argued that the order should be revoked back to October 1, 1995;

a date effectively encompassing all of its entries.2 Upon

investigation, Commerce revoked the antidumping duty order as to

entries after October 1, 2003.

After this review, NART changed its position and asked

Commerce to conduct a second changed circumstances review to

determine whether the order should be revoked to October 1,

1995. Commerce refused, arguing that revoking an order subject

to a completed administrative review would violate long-standing

1
NART refers both to the former company and the plaintiffs in
the current case, Trustees in Bankruptcy of North American
Rubber Thread Co., Inc., its successor-in-interest.
2
Revocation of the order through October 1, 1995 would result in
the revocation of any duties incurred between October 1, 1995
and September 30, 1996 only. Liquidation during this period was
suspended due to ongoing litigation related to Commerce’s
periodic review of that period. See Heveafil Sdn. Bhd. v.
United States, Appeal Nos. 02-1085, 02-1086, 02-1087 (Fed. Cir.
Mar. 19, 2003) (unpublished). That case has been stayed pending
the outcome of the current action. All entries from the other
periods have previously been liquidated.
 Court No. 05-00539 Page 4

agency practice. NART and Heveafil challenged this refusal.3 In

NART, the Court noted that Commerce, contrary to its position

that it was long-standing agency practice not to revoke an order

subject to a completed review, had done so on several occasions.

Accordingly, the Court ordered Commerce to explain its departure

from its past practice, or in the alternative, to conduct a

changed circumstances review. On remand, Commerce again refused

to conduct a changed circumstances review arguing: (1) it lacked

the authority to revoke the antidumping duty order; and (2) that

the Court incorrectly interpreted its prior conduct as

establishing an agency practice.

III. DISCUSSION

Commerce must conduct a changed circumstances review

whenever an interested party has shown a change “sufficient to

warrant a review.” 19 U.S.C. § 1675(b)(1) (2000). Here,

Commerce’s refusal to conduct a second changed circumstances

review was not based on the merits of NART and Heveafil’s

request, but instead on its interpretation of the statutory

framework. In NART, the Court provided specific remand

instructions and the Court must now analyze whether Commerce’s

results comply with these instructions.

3
NART and Heveafil brought separate actions challenging
Commerce’s refusal to conduct a second changed circumstances
review. These actions were consolidated to form the present
action.
 Court No. 05-00539 Page 5

A. Commerce’s Interpretation of the Statutory Antidumping
Framework

In Commerce’s view, its decision not to conduct a changed

circumstances review was based on the fact that the only

unliquidated entries, the entries for the period from October 1,

1995 to September 30, 1996, were already subject to a completed

review. In Commerce’s view, the principle of “administrative

finality” unambiguously prevails over any discretion the agency

has in selecting an effective date of revocation; or in short,

that the completion of an administrative review unambiguously

precludes the agency from retroactively revoking an order. The

NART Court, however, already rejected this argument. See NART,

31 CIT at __, 533 F. Supp. 2d at 1293–95. Commerce’s current

remand results are only a more thorough attempt to support an

already rejected interpretation of the statutory framework.

B. Commerce is Unable to Provide a Reasonable Explanation
for Its Deviation From Past Agency Conduct

Commerce also fails to provide a reasonable explanation for

its departure from its past practice. Generally, “‘an agency

action is arbitrary when the agency offer[s] insufficient

reasons for treating similar situations differently.’” SKF USA,

Inc. v. United States, 263 F.3d 1369, 1382 (quoting Transactive

Corp. v. United States, 91 F.3d 232, 237 (D.C. Cir. 1996)).

Here, Commerce argues that it is not agency practice to revoke

orders already subject to completed administrative reviews.
 Court No. 05-00539 Page 6

According to Commerce, the prior scope rulings which appear to

adopt this practice were instead the result of litigation

settlements. See, e.g., Certain Cold-Rolled Carbon Steel Flat

Products from the Netherlands, 67 Fed. Reg. 9956, 9956—57 (Dep’t

Commerce Mar. 5, 2002) (final results of changed circumstances

review). In Commerce’s view, any subsequent confusion regarding

its past practice was solely due to “inartful drafting” by the

agency. The NART Court, however, already rejected Commerce’s

argument that its prior scope rulings lack precedential value.

NART, 31 CIT at __, 533 F. Supp. 2d at 1296 n.9. Additionally,

Commerce has previously revoked orders pursuant to its authority

under 19 U.S.C. § 1675(b) and (d) and/or § 1677m(h), or its

ability to determine an effective date of revocation. See,

e.g., Porcelain-on-Steel Cookware from Mexico, 67 Fed. Reg.

19553, 19554 (Dep’t Commerce Apr. 22. 2002) (final results of

changed circumstances review). Commerce fails to provide any

explanation for treating the current situation differently—

beyond the litigation settlement rationale rejected in NART.

See NART, 31 CIT __, 533 F. Supp. 2d at 1296 n.9. As such,

Commerce has again failed to provide a reasonable explanation

for its deviation from past agency practice.

IV. CONCLUSION

For the foregoing reasons, this matter is remanded for

further proceedings consistent with this opinion. On remand,
 Court No. 05-00539 Page 7

Commerce shall conduct the second changed circumstances review

requested by NART and Heveafil. A separate order will be issued

accordingly.

/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge

Date: June 10, 2008
New York, New York