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

Slip Op. 07-184

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: December 21, 2007

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.

Jeffrey S. Bucholtz, 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 on

Plaintiffs’ motion for judgment upon the agency record.

Plaintiffs are Trustees in Bankruptcy of North American Rubber
Court No. 05-00539 Page 2

Thread Co., Inc., the successor-in-interest to the North

American Rubber Thread Co., Inc. (together, “NART”), and

Malaysian rubber manufacturer Heveafil, consisting of Filmax

Sdn. Bhd, Heveafil USA Inc., and Heveafil Sdn. Bhd. (together,

“Heveafil”).1 Plaintiffs seek judicial review of a decision by

the U.S. Department of Commerce (“Commerce”) to not initiate a

changed circumstances review of an antidumping duty order.

Plaintiffs allege that Commerce’s decision was arbitrary,

capricious, or otherwise not in accordance with law. For the

reasons that follow, the Court remands Commerce’s refusal to

initiate the changed circumstances review for further

consideration consistent with this opinion.

I. BACKGROUND

The procedural history of this case is set forth at length

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

United States, 30 CIT __, __, 464 F. Supp. 2d 1350, 1351-53

(2006) (“NART”). Briefly, the relevant facts are as follows:

In 1992, Commerce published an antidumping duty order on

extruded rubber thread from Malaysia (the “Order”).

Approximately six years later, Commerce completed an

administrative review of the Order for the period of October 1,

1
NART and Heveafil commenced separate actions in this Court
challenging Commerce’s refusal to initiate the second changed
circumstances review. Those actions were consolidated into the
present action.
Court No. 05-00539 Page 3

1995 through September 30, 1996. Heveafil challenged the

results of the 1995-1996 review, and liquidation of the entries

covered by that review was suspended.2

In 2004, Commerce granted Heveafil’s request to conduct a

changed circumstances review of the Order, pursuant to 19 U.S.C.

§ 1675(b)(1), on the basis that NART, the sole manufacturer of

the domestic like product, had filed for bankruptcy and ceased

operations. NART agreed with Commerce’s preliminary decision

that changed circumstances warranted revocation of the Order

effective October 1, 2003 — the first day of the most recent

period of administrative review and the only period for which an

administrative review had not been completed. Heveafil disputed

this effective date and argued that Commerce should revoke the

Order effective October 1, 1995. This earlier date would cover

all unliquidated entries of the subject imports. Commerce

ultimately revoked the Order and selected October 1, 2003 as the

effective date of revocation.3

2
Heveafil challenged those results before this Court and the
U.S. Court of Appeals for the Federal Circuit, which remanded
the case back to this Court. 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 present action.
3
Heveafil challenged the results of the first changed
circumstances review in this Court. That case has been stayed
pending the outcome of the present action.
Court No. 05-00539 Page 4

On February 18, 2005, NART changed its position supporting

Commerce’s effective date of revocation. NART requested that

Commerce initiate another changed circumstances review seeking

retroactive revocation of the Order effective October 1, 1995—

the earlier date requested by Heveafil in the first changed

circumstances review. NART explained in its request that it no

longer had an interest in the enforcement or existence of the

Order as of that earlier date.

Commerce then notified NART by letter of its refusal to

initiate the second changed circumstances review. Commerce

explained that a changed circumstances review must be conducted

in the context of an existing order and that “revoking an order

to cover entries subjected to a completed administrative review

would be contrary to the Department’s long-standing practice.”

See Compl., Dec. 6, 2005, Ex. 1 (Commerce’s response to request

for changed circumstances review dated June 15, 2005).

Specifically, Commerce stated that it was unable to conduct the

requested review because “1) all administrative reviews of [the

subject imports] have been completed; and 2) there is no

existing order for which to initiate a changed circumstances

review . . . .”4 Id.

4
In the letter stating its refusal to initiate, Commerce stated
two separate grounds for its decision: (1) the fact that all

(footnote continued)
Court No. 05-00539 Page 5

In the present action, Plaintiffs request the Court to

order Commerce to initiate a changed circumstances review to

consider changing the effective date of revocation of the Order

from October 1, 2003 to October 1, 1995.

II. JURISDICTION AND STANDARD OF REVIEW

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

NART, 30 CIT at __, 464 F. Supp. 2d at 1364 (denying Commerce’s

motion to dismiss for lack of subject matter jurisdiction and

failure to state a cause of action). When a matter is within

the subject matter jurisdiction of § 1581(i), the Court will set

aside an action by 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).

III. DISCUSSION

A. Changed Circumstances Reviews

Antidumping law grants Commerce the authority to revoke an

antidumping order based on changed circumstances. See 19 U.S.C.

§ 1675(b), (d) (2000). Commerce is required to conduct a

changed circumstances review whenever it receives a request by

administrative reviews of extruded rubber thread from Malaysia
had been completed; and (2) there was no existing order for
which to initiate a changed circumstances review. Commerce did
not elaborate on the second ground (the “no existing order”
rationale) in the letter or in its brief. The Court is unable
to individuate these two separate arguments from Commerce’s
brief, and thus will address Commerce’s legal arguments as they
are raised in its brief.
Court No. 05-00539 Page 6

an interested party that “shows changed circumstances sufficient

to warrant a review” of an antidumping duty order.

§ 1675(b)(1). Commerce’s regulations elaborate on this

requirement, stating that Commerce may revoke an order if

“[p]roducers accounting for substantially all of the production

of the domestic like product to which the order (or the part of

the order to be revoked) . . . pertains have expressed a lack of

interest in the order, in whole or in part . . . .” 19 C.F.R.

§ 351.222(g) (2006); see Or. Steel Mills Inc. v. United States,

862 F.2d 1541, 1545 (Fed. Cir. 1988) (holding that lack of

industry support alone is a ground for revocation); Stainless

Steel Plate in Coils from Italy, 71 Fed. Reg. 15380 (Dep’t

Commerce Mar. 28, 2006) (final results of changed circumstances

review) (revoking countervailing duty order based on lack of

industry support).

In its request for a changed circumstances review, NART

clearly established lack of industry support for the

continuation of the Order as it applies to unliquidated entries

for the 1995-1996 period of review. In its refusal to initiate

the review, Commerce did not base its decision on whether NART

demonstrated changed circumstances sufficient to warrant a

review. Instead, Commerce stated that the agency was without

authority and it would be contrary to long-standing practice to
Court No. 05-00539 Page 7

revoke an order to cover entries subject to a completed

administrative review.

B. Authority to Conduct a Changed Circumstances Review for
Entries Subject to a Completed Administrative Review

Commerce argues that it unambiguously lacks the authority

to initiate a changed circumstances review concerning the 1995-

1996 entries because they were subject to a completed

administrative review. Commerce explicitly asks the Court to

apply step one of the two-step test set forth in Chevron U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984). In order to decide whether Commerce has interpreted a

statute in accordance with law, step one directs the Court to

determine “whether Congress has directly spoken to the precise

question at issue.” Id. at 842. To make this determination,

the Court first looks at the statute’s text to ascertain its

plain and unambiguous meaning. See Timex V.I., Inc. v. United

States, 157 F.3d 879, 882 (Fed. Cir. 1998). If the statute’s

plain meaning speaks directly to the precise question at issue,

that meaning is the law and the Court’s inquiry ends. See id.

(“Because a statute’s text is Congress’s final expression of its

intent, if the text answers the question, that is the end of the

matter.”).

Commerce claims that 19 U.S.C. § 1675(a) unambiguously

precludes the inclusion of unliquidated entries subject to a
Court No. 05-00539 Page 8

completed administrative review within the scope of a changed

circumstances review. Section 1675(a) governs periodic reviews

of countervailing or antidumping duty orders.5 The agency’s

determination pursuant to § 1675(a) is thus the basis for the

assessment of duties pursuant to the order. See

§ 1675(a)(2)(C). Once this determination is made and published,

Commerce claims that the results cannot be altered pursuant to a

changed circumstances review.6 According to Commerce, the

antidumping duties calculated in the final results of the 1995-

1996 administrative review must be assessed on the 1995-1996

entries.

Commerce fails to account for 19 U.S.C. § 1675(d)(3) in its

analysis. This statute governs the revocation of an order, and

states that a determination to revoke an order “shall apply with

respect to unliquidated entries of the subject merchandise which

are entered, or withdrawn from warehouse, for consumption on or

after the date determined by the administering authority.”

5
As distinguished from changed circumstances reviews (governed
by 19 U.S.C. § 1675(b)), Commerce conducts a periodic
administrative review to review an existing antidumping duty
order and determine the appropriate amount of duty (if any) that
should continue to apply to the imports under review. It may be
conducted “[a]t least once during each 12-month period beginning
on the anniversary of the date of publication of a . . . duty
order . . . .” 19 U.S.C. § 1675(a).
6
Commerce does concede that it may reopen a completed
administrative review pursuant to its inherent authority to
remedy fraud. See Def.’s Resp. in Opp’n to Pls.’ Mot. for J. on
the Agency R. 9.
Court No. 05-00539 Page 9

§ 1675(d)(3). This section gives the agency discretion to

select the effective date of revocation and presents no conflict

with the provisions of § 1675(a) that Commerce discusses. In

its request to initiate a changed circumstances review, NART

does not challenge the results or the basis of the completed

1995-1996 review. Instead, it merely seeks retroactive

revocation of an order so the unliquidated entries will be

assessed under a different duty rate. Cf. Ugine and Alz

Belgium, N.V. v. United States, Slip Op. 07-145, 2007 Ct. Int’l

Trade LEXIS 146, at *46 (CIT Oct. 1, 2007) (holding that

Commerce is not barred from “regularly applying negative scope

determinations retroactively to unliquidated entries from

previous administrative review periods”).

Commerce fails to show that the text of § 1675(a)

unambiguously addresses the precise question at issue in this

case and adduces no evidence regarding congressional intent in

support of its argument. This Court has held that pursuant to

§ 1675(d)(3), “[i]f Commerce finds changed circumstances

sufficient to justify revocation, the effective date of

revocation is within Commerce’s discretion.” Okaya (USA), Inc.

v. United States, 27 CIT 1509, 1511 (2003). No statutory

language limits Commerce’s discretion to select an effective

date of revocation that predates a completed administrative

review. Contrary to its current position, Commerce itself has
Court No. 05-00539 Page 10

cited to §§ 19 U.S.C. 1675(b) and (d) and 1677m(h)7 to support

its decision to retroactively revoke an order covering

unliquidated entries subject to a previously completed review.

See Porcelain-on-Steel Cookware from Mexico, 67 Fed. Reg. 19553,

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

circumstances review) (“POS Cookware”).

As Commerce is not prevented by statute from initiating a

changed circumstances review to change the effective date of

revocation under the facts of this case, the Court will now

address Plaintiffs’ argument that Commerce acted arbitrarily and

capriciously, or otherwise not in accordance with law, when it

refused to initiate the changed circumstances review.

C. Commerce Failed to Provide a Reasonable Explanation for
Its Departure from Past Practices When It Refused to
Initiate a Changed Circumstances Review

The crux of NART’s argument is that Commerce’s refusal to

initiate the changed circumstances review was arbitrary,

capricious or otherwise not in accordance with law. Commerce

acts arbitrarily and capriciously when it “consistently followed

a contrary practice in similar circumstances and provided no

reasonable explanation for the change in practice.” Consol.

7
Section 1677m(h) states in relevant part: “[t]he administering
authority may . . . revoke an order . . . if the administering
authority determines that producers accounting for substantially
all of the production of th[e] domestic like product, have
expressed a lack of interest in the order . . . .” 19 U.S.C. §
1677m(h)(2) (2000).
Court No. 05-00539 Page 11

Bearings Co. v. United States, 348 F.3d 997, 1007 (Fed. Cir.

2003); see also British Steel PLC v. United States, 127 F.3d

1471, 1475 (Fed. Cir. 1997) (explaining that “[a]n agency is

obligated to follow precedent, and if it chooses to change, it

must explain why” (internal quotations omitted)).

In past agency decisions, Commerce has initiated changed

circumstances reviews upon the domestic industry’s expression of

no interest so as to revoke orders retroactively to cover

unliquidated entries. Commerce has done so even when certain

unliquidated entries had already been subject to a completed

administrative review or automatic assessment.8 See POS

Cookware, 67 Fed. Reg. at 19554; 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) (“CRS from the Netherlands”); Certain Hot-

Rolled Lead and Bismuth Carbon Steel Products from the United

Kingdom, 65 Fed. Reg. 13713, 13714 (Dep’t Commerce Mar. 14,

2000) (final results of changed circumstances review) (“Hot-

Rolled Lead and Steel”); Roller Chain, Other Than Bicycle, from

8
If no administrative review of an antidumping duty order is
requested, Commerce will instruct Customs to automatically
assess antidumping duties “at rates equal to the cash deposit
of, or bond for, estimated antidumping duties or countervailing
duties required on that merchandise at the time of entry, or
withdrawal from warehouse, for consumption . . . .” 19 C.F.R. §
351.212(c). An automatic assessment is in some ways the
functional equivalent of a completed administrative review.
Court No. 05-00539 Page 12

Japan, 64 Fed. Reg. 66889, 66890 (Dep’t Commerce Nov. 30, 1999)

(final results of changed circumstances review).

Specifically, the facts of CRS from the Netherlands are

strikingly similar to the present action. Commerce had

published an antidumping duty order for the subject imports on

August 19, 1993. About six years later, Commerce initiated a

sunset review and revoked the order on certain steel products

from several countries, including the Netherlands, effective

January 1, 2000. See Certain Carbon Steel Products from Canada,

Germany, Korea, the Netherlands, and Sweden, 65 Fed. Reg. 78467

(Dep’t Commerce Dec. 15, 2000) (revocation of order). After the

order was revoked, certain domestic parties requested a changed

circumstances review to retroactively revoke the order to August

19, 1993, because they expressed a lack of interest in the order

with respect to that time period. They indicated that their

revocation request pertained to all unliquidated entries made

from August 19, 1993 through January 1, 2000. The antidumping

duty order at issue was repeatedly subject to periodic

administrative reviews conducted and completed by Commerce

within that time period. See, e.g., Certain Cold-Rolled Carbon

Steel Flat Products From the Netherlands, 61 Fed. Reg. 48465

(Dep’t Commerce Sept. 13, 1996) (final results of administrative

review for August 18, 1993 to July 31, 1994). Commerce

initiated a changed circumstances review and ultimately revoked
Court No. 05-00539 Page 13

the order to the effective date of August 19, 1993. CRS from

the Netherlands, 67 Fed. Reg. at 9956-57.

In the present case, Commerce revoked the order to the

effective date of October 1, 2003. Then, in 2005, NART

expressed a lack of interest in the order and requested that it

be revoked retroactively to 1995. The Court sees no substantive

difference between the facts of CRS from the Netherlands and the

present action. In its refusal to initiate the changed

circumstances review, Commerce did not cite to or attempt to

distinguish this line of agency decisions.9

In both its refusal to initiate the changed circumstances

review and its response to NART’s motion, Commerce relies on

Coumarin from PRC. See Coumarin from the People’s Republic of

China, 69 Fed. Reg. 24122 (Dep’t Commerce May 3, 2004) (final

results of changed circumstances review) (“Coumarin from PRC”).

9
In its response to NART’s motion, Commerce claims that CRS from
the Netherlands, Hot-Rolled Lead and Steel, and POS Cookware are
irrelevant because they involved litigation settlements.
Commerce designates these cases as litigation settlements
because Commerce would not instruct Customs to liquidate entries
covered by completed reviews until ongoing litigation concerning
those reviews was dismissed. Commerce claims that it settled
this litigation pursuant to its authority to conduct litigation
on behalf of the United States under 28 U.S.C. § 516 and that
therefore, it is not bound by any decisions made in the course
of that litigation. In response, NART aptly points out that in
those investigations, Commerce revoked the orders retroactively
pursuant to the agency’s authority under 19 U.S.C. § 1675(b) and
(d) and/or § 1677m(h). Commerce’s argument has no merit, and
its reasoning in those investigations is relevant to
establishing agency precedent.
Court No. 05-00539 Page 14

Commerce asserts that this determination establishes that it has

a longstanding practice wherein revocations are not effective as

to entries subject to completed administrative reviews. To

support this claim, Commerce cited to the following language:

It is the Department’s practice to revoke an
antidumping duty order so that the effective date of
revocation covers entries that have not been subject
to a completed administrative review. If an
administrative review was not requested, the
Department’s practice is to revoke the order after the
most recent period for which the Department has issued
assessment instructions to U.S. Customs and Border
Protection.

Issues and Decision Memorandum, Coumarin from PRC, A-570-830, 3

(May 3, 2004), available at http://ia.ita.doc.gov/frn/

(citations omitted).

Despite this broad language, Coumarin is distinguishable

for two important reasons. First, in its Coumarin decision,

Commerce recognized that it had the authority to revoke the

order to “the earliest date for which there are unliquidated

entries.” Id. at 4. Because there were no unliquidated entries

before the date of the last completed review, Commerce was not

confronted with the same situation as in the present action

(i.e., there are unliquidated entries that predate the most

recent completed administrative review).10 Second, the domestic

10
According to the Court’s understanding, the domestic industry
in Coumarin ceased production during the summer of 2002. No

(footnote continued)
Court No. 05-00539 Page 15

parties in Coumarin did not express a lack of industry support

retroactive to the earlier date. On the contrary, the domestic

industry made it clear that it supported the later date of

revocation, because it did not cease production until late 2002.

Id. at 2. In the present case, a change of heart concerning

industry support is precisely the reason NART has requested a

changed circumstances review. Consequently, Commerce has failed

to establish that it followed agency precedent when it refused

to initiate NART’s request.

“[W]hen an agency departs from its practice, it must

‘clearly set forth’ the ground ‘so that the reviewing court may

understand the basis of the agency’s action and so may judge the

consistency of that action with the agency’s mandate.’”

Hangzhou Spring Washer Co. v. United States, 29 CIT __, __, 387

F. Supp. 2d 1236, 1246 (2005) (quoting Atchison, Topeka & Santa

Fe Ry. Co. v. Wichita Bd. of Trade, 412 U.S. 800, 808 (1973)).

As noted above, Commerce does not attempt to distinguish the

reasoning set forth in CRS from Netherlands from the present

case. Of course, an agency has the discretion to change its

administrative review was requested for the period February 1,
2002 to January 31, 2003. Because no review was requested,
Commerce issued assessment instructions in accordance with 19
C.F.R. § 351.212(c). Commerce then stated that because the
parties did not request an administrative review, and the
automatic assessment instructions were posted, “February 1, 2003
is the earliest date for which there are unliquidated entries.”
Issues and Decision Memorandum, Coumarin from PRC 4.
Court No. 05-00539 Page 16

policies and practices as long as they are reasonable and

consistent with their statutory mandate. “Commerce may adapt

its views and practices to the particular circumstances of the

case at hand, so long as the agency’s decisions are explained

and supported by substantial evidence on the record.” Save

Domestic Oil, Inc. v. United States, 26 CIT 1380, 1395, 240 F.

Supp. 2d 1342, 1357 (2002). In this case, Commerce did not

attempt to explain why it acted contrary to its own precedent.

As such, Commerce’s decision is remanded for further

consideration.

IV. CONCLUSION

In light of the foregoing, Commerce’s decision to not

initiate the changed circumstances review requested by NART is

remanded for further consideration. A separate order will be

issued accordingly.

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

Date: December 21, 2007
New York, New York
 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.

ORDER

Upon consideration of Plaintiffs’ motion for judgment upon
the agency record and briefs in support thereof, Defendant’s
briefs in opposition thereto, upon all other papers and
proceedings had herein, and upon due deliberation, it is hereby

ORDERED that Commerce’s decision not to initiate the
changed circumstances review requested by Plaintiff Trustees in
Bankruptcy of North American Rubber Thread Co., Inc. (“NART”) is
remanded; and it is further

ORDERED that Commerce explain, if it is able, its basis for
refusing to initiate the changed circumstances review, in light
of its own past practice in Porcelain-on-Steel Cookware from
Mexico, 67 Fed. Reg. 19553 (Dep’t Commerce Apr. 22, 2002);
Certain Cold-Rolled Carbon Steel Flat Products from the
Netherlands, 67 Fed. Reg. 9956 (Dep’t Commerce Mar. 5, 2002);
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from
the United Kingdom, 65 Fed. Reg. 13713 (Dep’t Commerce Mar. 14,
2000); and it is further

ORDERED that if Commerce is unable provide a reasonable
explanation for its refusal to initiate the changed
circumstances review, it must initiate the review; and it is
further
 ORDERED that Commerce shall, within sixty (60) days of the
date of this Order, issue a remand determination in accordance
with the instructions provided herein; and it is further

ORDERED that the parties may, within twenty (20) days of
the date on which Commerce issues its remand determination,
submit briefs addressing Commerce’s remand determination, not to
exceed twenty (20) pages in length; and it is further

ORDERED that the parties may, within twenty (20) days of
the date on which briefs addressing Commerce’s remand
determination are filed, submit response briefs, not to exceed
fifteen (15) pages in length.

SO ORDERED.
_/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge

Date: December 21, 2007
New York, New York