Slip Op. 10-48 UNITED STAT ES COURT OF INTERNATIONAL TRADE

___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ _ : MI D CONTI

NENT NA I LCORPOR ATI ON, : DAVI S W I RE CORP ORATI ON, MAZ E NAI L S : (DIVI SI ON OF W.H. MAZE COMPANY) and : TREASURE COAST FASTENERS, I NC., :

: Plaintiffs, : v. : Be fore : J ane A . Restani, Chief J udg e : UNI TED STATES, : Court No. 08-00225 : Def endant, : P ubl ic Ver sion : and : : I L L I NOI S TOOLWORKS , I

NC. and PASL ODE : FASTENE RS (SHANGHAI ) CO., L TD., : : Def endant- Interve nors. :

_________________________________________ :

OP INION [P laintiffs’ motion for judg ment on the ag ency rec ord in targ eted dumpingcase is denied and judgme nt is entered f

or the de fenda

nt.] Dated: Ma y 4, 2010 Wil ey Rein, L L P (Adam He nry Gordon a nd Maure en Elizabeth Thorson) f or the plaintiffs. Tony

West, Assist ant Attorney Gene ral; Jeanne E. Da

vidson, Director , Patricia M. McCarthy , Assistant Director , Commercial L itigation B ranc h, Civil Division, U.S. Department of Jus tice (D avid F. D ’Alessa ndris); Off

ice of Chief Counsel for Import Administration, U.S. Depa rtment of Commerce (Will iam G. I sasi, Har deep K . J osan and B rian Soiset), of c ounsel, for the def endant. McDe rmott, W ill & Emery , L L C (David John L evine) for the de fendantintervenor s.Court No. 08-00225 Pag e 2

Restani, Chief J udg e: This court a ction challeng es the De partment of Commerc e’s (“Commerc e”) final dete rmination rende red in a targ eted a

ntidumping duty

investigation of

cer tain steel nails from the People ’s Republic of China (“ PRC ”). See Certain Steel Na ils from the People’s Republic of

China: Final De termination of Sales at L ess Than F air Va lue and Par tial Affir mative Dete rmination of Critical Circumstance s, 73 Fe d. Reg . 33,977 (De p’t Commerce J une 16, 2008) ( “F inal Deter mination”). The pla intiffs, Mid Cont inent Nail Corporation, Davis Wire Corporation, Maze Na ils and Trea sure Coast F astene rs, Inc., collec tively the domestic industry , submitt ed a motion for judgment on the ag ency rec ord. F or the re asons stated be low, the cour t denies the plaintiffs’ motion and gr ants judg ment on the ag ency rec ord in favor

of the United States. BACK GR OUND I. Targete d Dumping

Targ eted dumpinganaly sis is “an alternative method for de termining the exist ence of marg ins of dumping in an inve stigation . . . .” Targ eted Dumpingin Antidumping Investig ations; Request for Comment, 72 Fe d. Reg . 60,651, 60,651 (De p’t Commerce Oct. 25, 2007) (“ Request for Comment”) . The purpose of this methodology is to enable Commerc e to identify dumping whe n a seller

is providing lowe r price s to only cer tain United States purcha sers “by compar ing the weighted ave rag e of the normal value s to the export prices (or c onstructed export prices) of

individual transactions for compar able mer chandise .” 19 U.S.C. § 1677f1(d)( 1)(B ); see Re quest for Comment. B y contra st, during a

n ordinary

antidumping investigation, Com merc e dete rmines “whe ther the subjec t mercha ndise is beingsold in theCourt No. 08-00225 Pag e 3

United States at less than fa ir value . . . by compar ing the weighted ave rag e of the normal value s to the weig hted ave rag e of the export prices (a nd constructe d export prices) f or compa rable

merc handise” or by

“compa ringthe normal va lues of individual transac tions to t he export prices (or c onstructed e x port price s) of individual transa ctions for c ompara ble merc handise.” 19 U.S.C. § 1677f-1( d)(1) (A). II. Com m erc e’s Investigation of Certain Stee l Nails f rom the P RC In May 2007, the plaintiffs filed pe titions with Comm erc e conc erningcer tain steel nails from the PRC. Certain Steel Nails from the People’ s Republic of China and the United Ara b Emirates: Initiation of Antidumpi ng Duty Investig ations, 72 Fe d. Reg . 38,816, 38,817 (De p’t Commerce J uly

16, 2007). In J uly

2007, Commerce initiated a targ eted dumping investigation of cer

tain steel nails from the PRC for the pe riod of Apr il 1, 2006, through Ma rch 31, 2007. I d. In September 2007, Commerc e sele cted I llinois Tool Works Inc. and Paslode Fa steners ( Shang hai) Co., Ltd. (“Paslode” ) and X ingya Gr oup (“X ingya”) as the mandatory responde nts in the investigation. Certa in Steel Nails From the People ’s Republic of China: Preliminary

Deter mination of Sales at L ess Than F air Va lue and Par tial Affirmative Deter mination of Critical Circumstances a nd Postponement of Final De termination, 73 Fe d. Reg

. 3928, 3930 (De p’t Commerce J an. 23, 2008) ( “Preliminary Deter mination”). In Dec ember 2007, the plaintiffs submitted an alleg ation of targ eted dumpingag ainst Paslode and Xingy a. I d. at 3931. In its P reliminary Deter mination, publis hed on January 23, 2008, Commerce use d the methodolog y

it had acc epted in a pr evious investiga tion to conclude that tar g eted dumpingCourt No. 08-00225 Pag e 4

had occ urre d. I d. at 3939–40. The f ollowing month, Commerce amende d its P reliminary 1 Deter mination to correc t significa nt minis terial e rror s with respec t to the calculation of Paslode’s antidumping duty

(AD) marg in. See Certain Steel Na ils From the People’ s Republic of China: Amended Pre liminary

Deter mination of Sales at L ess Than F air Va lue, 73 Fe d. Reg . 7254 (De p’t Commerce F eb. 7, 2008) ( “Amende d Preliminary Deter mination”). In the Amende d Preliminary Deter mination, Com merc e ca lculated a n AD mar g in of 4.70 perc ent for Paslode wher eas Xing y a’s AD marg in remaine d unchang ed at 44.57 pe rce nt. I d. at 7255. At that time, howeve r, Commerce stated that it intended to develop a new methodolog y

to assess Paslode and X ingya’s alleg ed tar g eted dumpingand re quested c omments on the matter. Preliminary Deter mination, 73 Fe d. Reg . at 3939.

On April 21, 2008, Commerce informed the pla intiffs of its new methodolog y (“the nails test”) a

nd set a sixt een da

y deadline f

or comments. (Pls.’ Documenta ry App. 2 Acc ompanying Me m. of L aw in Supp. of Pls.’ Rule 56.2 Mot. for J . Upon the Ag ency R. (“Pls.’ App.”) Tab 6–8.) T he nails test consists of two stag es. Proposed Methodology for I dentifying

The P/2 test provides “that whe re the weig hted-a vera g e net pr ice to an a lleg ed tar g eted 1 purcha ser or

reg ion is more than 2 per cent lowe r than the w eig hted-avera g e net pr ice to nontarg eted pur chase rs or re g ions in [ merc handise]/month combinations repr esentinga preponde ranc e of the targ eted qua ntity , a ‘pattern’ of

‘sig nificant’ price diff

ere nces” exis ts. I ssues and De cision Memorandum for the Fina l Deter

mination of the L ess-Tha n-F air-V alue Investig ation of Coated F ree Sheet Paper from the Republic of

Kore a, A- 580-856, POR 10/01/05-09/30/06, at 3–4 (Oct. 17, 2007), a vailable at http:// ia.ita.doc.g ov/frn/summary /KOREA-SOUTH/E7- 21035-1.pdf ( last visited Apr. 29, 2010). The plaintiffs point out that they wer e af forde d only

fourtee n day s to comment beca use 2 Commerce ma de cla

rifications on April 24, 2008. See Investig ation of Certa in Steel Nails from the People’s Republic of

China: I ssues and De cision Memorandum, A- 570-909, POI10/01/06- 03/31/07, at 4 (J une 6, 2008) ( “I ssues and De cision Memorandum” ), ava ilable at http:// ia.ita.doc.g ov/frn/summary /PR C/E8-13474-1.pdf (la st visit ed Apr . 29, 2010).Court No. 08-00225 Pag e 5

and Ana ly

zing Tar g eted Dumpingin Antidumping Investig ations; Request for Comment, 73 Fe d. Reg . 26,371, 26,372 (De p’t Commerce May 9, 2008) (“ Proposed Methodolog y ”). The first stag e, the “ standard de viation test,” requir es Commerce to calculate a standa rd devia tion for all of the sale price s of an item fr om a par ticular e x porter. I d. Commerce the n must add toge ther the volume for a ll of the items sold at a price below one sta ndard de viation from the we ighte daver ag e pric e. I ssues and De cision Memorandum a t 20. I f this combined volume exceeds thirty -three perc ent of the total volume of sa les of that item from the pa rticular e x porter, the first stag e of the test is satisfied. I d. The sec ond stag e of the test, the g ap test, is satisfied if the volume of sales that qualify under a price g ap compa

rison exceeds five perc ent “of the total 3 [vol ume] of sales of subjec t mercha ndise to the alleg edly

targ eted c ustomer.” Proposed Methodolog y , 73 Fe d. Reg . at 26,372, amende d by I ssues and De cision Memorandum at 21 n.15. The plaintiffs f

iled their ca se brief

in response to the na ils test on May 7, 2008. (See Pls.’ App. Ta

b 9.) On May

9, 2008, Commerce published the nails test and provided the public thirty

day s to comment. Proposed Methodolog y , 73 Fe d. Reg . at 26,372. Commerce subsequently

extended this deadline until J une 23, 2008. Antidumping Me thodologies f or Procee dings that I nvolve Signific ant Cost Change s Throug hout the Period of Investig ation (POI )/

Under its methodology , Commerce must: 3 [D] eter mine the total [vol ume] for which the diff ere nce be tween ( i) the salesweig hted ave rag e pric e to the alleg edly targ eted c ustomer and ( ii) the next hi g her sales-w eig hted ave rag e pric e to a non- targ eted c ustomer exceeds the aver ag e pric e g ap (w eig hted by

sales value ) for

the non-tar g eted group. Eac h of the pric e g aps in the non-tar g eted g roup would be w eig hted by the combined sa les associated with the pair of

price s to non-targ eted c ustomers that make up the g ap. Proposed Methodolog y , 73 Fe d. Reg . at 26,372, amende d by I ssues and De cision Memorandum at 21 n.15.Court No. 08-00225 Pag e 6

Period of Review(POR) that May Require Using

Shorter Cost Avera g ing Periods; Request for Comment and Proposed Methodolog y for I dentify

ing a nd Analy zing Tar g eted Dumpingin Antidumping Investig ations; Request for Comment, 73 Fe d. Reg . 32,557, 32,557 (De p’t Commerce June 9, 2008). On June 16, 2008, howeve r, Commerce published its Final Deter mination, which adopted the na ils test, and used it to calculate an AD ma rg in of zero perc ent for Paslode and 21.24 per cent f or Xing y a. F inal Deter

mination, 73 Fed. Reg . at 33,981. In August 2008, the plaintiffs filed a c omplaint contesting the Final Deter mination. I n Fe bruar

y 2009, the plaintiffs filed a motion for judgme nt on the ag ency rec ord pursuant to USCI T Rule 56.2. STANDARD OF REVIEW

The c ourt has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold Commerce’ s final deter

minations in AD investigations unless they are “unsupported by substantial evidence on the re cord, or otherwise not in ac corda nce w ith law.” 19 U.S.C. § 1516a(b) (1)( B) (i). DISCUSSIO N I. Reasonable Time und er 19 U .S.C. § 1677m (g)

The plaintiffs a lleg e that Commerce ’s ac tions deprived them of the ir due proc ess rig hts under the F ifth Amendment. (Me m. of L aw in Supp. of Pls.’ Rule 56.2 Mot. for J . Upon the Ag ency

R. (“Pls.’ Mem.”) 12–20.) The plaintiffs c laim that by providing the domestic industry only six teen da

y s to comment on the nails test, Commerce did not af ford e noug h time to submit m eaning ful comments to demonstrate a ll of the nails test’s err ors. (See I d. at 15.) In support of their position that the comment per iod was unre asonable , the plaintiffs cite the fac tsCourt No. 08-00225 Pag e 7

that Commerce ne eded “ sever al months” to develop the na ils test, that C ommerce ty pically aff ords par ties fifty day s to comment on preliminary deter minations, and that Commerce

4 provided the public ove r thirty day s to comment. (I d.) This claim lac ks merit. Congr ess has provide d a fa ir proce ss for commentingwithin the statutory languag e of 19 U .S.C. § 1677m . See 19 U.S.C. § 1677m(g ). Subsection (g ) provides that: Information that is submitted on a timely basis to the administering authority or the Commiss ion duringthe cour se of a proce edingunder this subtitle shall be subject to comment by

other pa rties to the proc eedingwithin such rea sonable time as the a dminist eringauthority or the Commission s hall provide. The administering authority and the Commission, before making a final dete rmination . . . shall cea se collectinginformation and sha ll provide the par ties with a final opportunity to comment on the information obtained by the administeringauthority or the Commi ssion . . . upon which the par ties have not pre viously

had an oppor

tunity to comment. Comments containing ne w fa ctual information shall be disreg arde d. 19 U.S.C. § 1677m(g) . Whether or not a c onstitut ional due proc ess rig ht exi sts in these circ umstances is an issue that need not be de cided he re be cause such a r ight would not re quire any more time to be a ffor ded to the plaintiffs than is alr eady require d by

statute. I f Commerce provides a time pe riod for c omments that is unreasonable , it would be in violation of the statute. Compare 19 U.S.C. § 1677m(g ), with Bor den I nc. v. United States, 23 CI T 372, 375 n.3 (1999), rev’ d on other g rounds, 7 F. A pp’x 938, 938–39 (2001) (holding that “[t] he cour t applies a rule of re ason in eva luating a dminist rative due proce ss claims”). Ac cording ly , the cour t considers the plaintiffs due proc ess ar g ument as a c laim that Comm erc e violated the statutory due proc ess require ment of 19 U.S.C. § 1677m(g ).

Under 19 C.F.R. § 351.309(c) (1)( i), any interested pa

rty for a final dete rmination in an 4 antidumping investig ation, may submit a case br ief “ 50 day s after the date of

publication of the preliminary

deter mination or results of re view . . . unless the Sec reta ry alters the time limit.” 19 C.F.R. § 351.309(c) (1)( i).Court No. 08-00225 Pag e 8 Gene rally , “[w]here a r ight to be he ard e x ists, due proce ss require s that rig ht be

acc ommodated at a me aning ful time and in a mea ningf ul manner.” Ba

rnhar t v. United States Trea sury Dep’ t, 588 F. Supp. 1432, 1438 (CI T 1984). Rec og nizi ng that “[w]i th more time most parties c ould improve the quality of their c omments,” courts a sk whether there is “evidenc e that g iven more time [a plaintiff] would have, in fa ct, provided more meaning ful comments.” Sichuan Chang hong Electric Co. v. United States, 466 F. Supp. 2d 1323, 1328 (CI T 2006). I f, howeve r, a pla intiff makes thoughtful comments that Commerce a ddresse s in its determination, then, “a s a pra ctical matter , [t he plaintiff] was not substantially deprive d of an oppor

tunity to be hear d befor e the a g ency .” B orden, 23 CI T at 375 n.3. This understa nding ha s previously

led the court to conc lude that a c omment period as br ief a s four da y s can be rea sonable. See Sichuan, 466 F. Supp. 2d at 1329.

Despite having a

full opportunity

to demonstrate that the c omment period wa s

unrea sonable by

prese nting the c ourt with additional critiques of the na ils test that they wer e not previously

aff orded the opportunity

to develop, the plaintiffs ha ve fa iled to provide any

new a nd convincingarguments. Although the plaintiffs filed a thor oug h case brief, the court notes that most of their arguments are simil ar, if not identica l, to the ones raise d at the administrative leve l. (Compare Pls.’ App. Tab 9, with Pls.’ Mem.) The plaintiffs c laim that they would have ma de many additional arguments if they wer e af forde d more time to comment, y et now provide only one such e x ample. (Pls.’ Mem. 18.) The y argue that the mea

n price was incor

rec tly used to calc ulate the standa

rd deviation. (I d.) The pla intiffs contend that if the statisti cally corr ect median pric e we re use d, Commerce might have f ound dumping in this case . (I d.) Contrary to the plaintiffs cla im, however , the use of a mean to ca lculate a

standard de viation is, by

definition,Court No. 08-00225 Pag e 9

a per fec tly

acc eptable sta

tisti cal method. Christine Ammer & Dea n S. Ammer, Dictionary

of Business a

nd Economics 397 (1977) . Although me dian ca n be substituted for mea

n in cer tain situations, such a substitut ion is not required. See g ener ally Yulia Gel, Weiwen Mia o & Joseph L . Gastwirth, The I mportance of Checkingthe Assumptions Underlying Statistical Ana ly sis: Gra phical Methods for

Assessing Normality , 46 J urimetrics J. 3, 26 (2005). In addition, such claims are mere ly

speculative—the plaintiffs do not offe r any numerica l evidence to support their contention that using a median w ould yield a diffe rent re sult. 5

There is no evidence befor e the c ourt, there fore , to sugg est that the plaintiffs would have pr ovided more me aning ful comments if they wer e af forde d additional time to comment. Acc ording ly , the cour t holds that Com merc e af forde d the plaintiffs a r easona ble time to comment under 19 U .S.C. § 1677m (g ). II. The Nails T est

The plaintiffs c halleng e the F inal Deter mination on the gr ounds that the nails test violates 19 U.S.C. § 1677f-1(d)( B) and 19 C.F.R. § 351.414(f )(1) (i) and the ref

ore, Commerc e’s conclusion is not supported by substantial evidence . Specifica lly , the plaintiffs ar g ue that in investigating their

claim of tar g eted dumping , Commerce imprope rly considere d only

identical products, used a

statistically

invalid methodology , and unre asonably define d terms. (Reply

Br . of Mid Conti nent Nail Corporation, Davis Wi re Corpor ation, Maze Nails and Tr easur e Coast Fa steners, I

nc. (“ Pls.’ Reply ”) 6–10.) This claim lacks mer it.

Fur thermore , the plaintiffs have failed to e stablish that it would have been f utile to seek 5 additional time for comment. The plaintiffs stated at or al ar g ument that althoug h no formal reque st was made, inf

ormal conve rsations with Commerce indicated that a r equest would be denied. Give n the lack of a re cord on this, and in the c ontext of this case there is no reason to presume what Commerce would have done in the fac e of a formal r equest.Court No. 08-00225 Pag e 10 Under 19 U.S.C. § 1677f-1(d)( 1)(B ), which e ssentially define s the targ eted dumping r emedy , Commerce “ may deter mine whether

the subject mer chandise is beingsold in the United States at less than f air va lue by

compar ing the weig hted ave rag e of the normal value s to the export prices (or

constructe d export prices) of individual transactions for compar able

merc handise,” but only

if “ther e is a pattern of e x port price s (or c onstructed e x port price s) for compar able mer chandise that differ signific antly

amongpurcha sers, re g ions, or periods of time.” 19 U.S.C. § 1677f-1(d)( B) . In addition, 19 C.F.R. § 351.414(f)( 1)(i) pr ovided that Commerce must use “standar d and appr opriate statistical tec hniques” whe n deter mining whe ther sale s qualify for this section. 19 C.F.R. § 351.414(f )(1) (i). 6 Gene rally , courts lac k an “inde pendent a uthority to tell the [ ag ency] how to do i ts job” when a

statute does not spec ify

“any Congr essionally

mandated pr ocedur e or me thodology for a ssessment of the statutory tests.” U.S. Steel Group v. United States, 96 F .3d 1352, 1362 (F ed. Cir. 1996). This silence has bee n interpre ted as “ an invitation” for a n ag ency administering unfair tr ade la

w to “per form its duties in the way it believes most suitable” and c ourts will uphold these dec isions “[ s]o l ongas the [ag ency]’s analy sis does not violate any statute and is not otherwise a

rbitrar y and ca pricious.” I d. A. Com m erc e’s dec ision to consider only identical p roducts is sup ported by sub stantial evidence. The plaintiffs f

irst claim that Commerce’ s decision to test only identical produc ts

Commerce w ithdrew 19 C.F.R. § 351.414(f ) on De cembe r 10, 2008. Withdrawal of the 6 Reg ulatory

Provisions Governing Targ eted Dumpingin Antidumping Duty Investig ations (“Revoc ation”), 73 F ed. Reg74,930, 74,932 (De p’t Commerce , Dec . 10, 2008). At the time of the Fina l Deter

mination, however , this regulation was ef fec tive.Court No. 08-00225 Pag e 11

was in violation of the cle ar la ng uag e of 19 U .S.C. § 1677f-1(d)(B ), which instruc ts Comm erc e to consider “ compar able mer chandise .” (Pls.’ Reply 7.) I dentical mer chandise is compara ble

merc handise. See 19 U.S.C. § 1677(16). In some ca ses it may be a sma ller subset of a ll compar able mer chandise . I d. In a ca se such a s this, however, where all or virtually all the 7 alleg edly targ eted sa les had identica l matches, the statutory languag e does not re quire Commerc e to do more. (De f.’s Supp. Br . and Confidential App. 2.) Ba sed on this rec ord, the c ourt

8 conclude s that Commerce’ s decision to consider only identical mer chandise was supporte d by substantial evidence and wa s in acc ordanc e with law. B. Com m erc e’s use of standard d eviation is statistically valid . The plaintiffs c laim that Comm erc e’s use of standar d deviation in the nails test is

unrea sonable be cause “[a] st andar d deviation is simply a desc riptive measur e of a population; in other wor ds, standard de viation measure s descr ibe the dispersion of data, and then c alculate how sprea d out prices a

re f rom the ave rag e pric e.” ( Pls.’ Mem. 24.) The plaintiffs g o on to claim that “[a]t t he most basic leve l, then, the Depa rtment’s startingpoint violated the regulatory require ment that it use a ‘standa rd and a ppropriate ’ statistical technique to determine whether targ etingwas oc curr ing” beca use, contra

ry to Comm erc e’s a ssertion, “the standa rd deviation cannot va lidly

be used a s a method to ca lculate a ‘re lative measur e.’” (I d.)

I f Commerce must use other compa rable merc handise to compa re to U.S. sales it must 7 make a djustments to get close to a price which may be compa

red. 19 U .S.C. § 1677b(a) (6)( C)(ii); 19 C.F.R. § 351.411. These a djustments provide an opportunity for the introduction of inacc urac ies into the proce ss. In fac t, [ [ ] ] percent of the alleg edly

targ eted sa les had identica l matches. 8 (De f.’s Supp. Br . and Confidential App. 2.) Confidential Data Delete dCourt No. 08-00225 Pag e 12 Gene rally , a standa

rd deviation is defined as “ a mea sure of the tendenc y

of individual values to differ from the mea

n.” Christine Ammer & Dea n S. Ammer, Dictionary

of Business a

nd Economics 397 (1977) . “The standard de viation is the most common m easur e of dispersion,” whic h is “the total sprea d of the va lues in a fr equenc y distribution.” I d. at 122. In statistics, a fre quency

distribution i s “the org anization of data to show how of ten ce rtain value s

or ra ng es of va lues occ ur.” I d. at 170.

As previously

descr ibed, the nails test uses standa rd devia tion to measure the dispersion of value s in an exporter’s pric e data , to aid in identifying which of the e x porter’ s sales

wer e re latively

low compar ed to others. See Proposed Me thodology , 73 Fe d. Reg . at 26,372. 9 After the dispersion is identified, the na ils test requires Commerc e to use the thirty -three perc ent test to determine whe ther a “patter n” existed under the statute. I d. Thus, contra ry to the plaintiffs’ asse rtions, Comm erc e’s use of standar d deviation was, by definition, statisti cally

valid beca use it was used to mea sure the dispe rsion of the sale s prices. This aspec t of the nails test, 1 0

The plaintiffs a lso contend that Commerce ’s re liance on the word “ low” is ultra vire s 9 beca use it is not used within t he statute. (Pls.’ Mem. 24–25.) A lthough the pla intiffs are corr ect that the word “ low” does not a ppear within the lang uag e of 19 U .S.C. § 1677f-1(d)(B ), Commerce e x plains that this int erpr etation “strikes a balanc e betwe en two extremes, the f irst beingwher e any

price below the avera g e pric e is sufficie nt to dist inguish the a lleg ed tar g et from others . . . and the second be ing where only price s at the ver

y bottom of the price distribution are sufficie nt to dist inguish the a lleg ed tar g et from other s.” I ssues and De cision Memorandum at 17. Ba sed on the e vidence , the cour t is not convinced that the P/2 test is an inherently better 1 0 test. The P/2 test, which draw s a har d line at two-pe rce nt, is arguably only well suited for a particula r ty pe of ma rket. Hy pothetically , if the price s of the mar ket g reatly

varie d, most prices are likely to satisfy the two-pe rce nt require ment and this test may captur e too many

sales. Alternatively , if the price s were near ly uniform, fe w sales would satisfy the two-pe rce nt threshold and the te st may not capture enoug h. In contra st, a standar d deviation ca n be ca lculated for a ll ty pes of disper sions and there fore , provides Commerce with a consistent method to analy ze all markets.Court No. 08-00225 Pag e 13

there fore , is not in vi olation of 19 U.S.C. § 1677f-1(d)( B) (i). C. The nai ls test’ s defi nition s of “p atte rn” and “d if fer signif icantly” do n ot violate 19 U.S.C. § 1677f-1(d)(B)(i). The plaintiffs f

urther c halleng e Commerce ’s def initions of “pattern” a

nd “diffe r signific antly ” as a

rbitrar y , unexplained, and unre asonable . (Pls.’ Mem. 33–35.) Particular ly , the plaintiffs claim that Commerce ’s use of thirty -three perc ent in its “pattern” definition and five perc ent in its “differ

signific antly ” def

inition are see mingly

random va lues with no meaning

. (I d.) The pla intiffs contend that, in this case , these unre asonable definitions cause the nails test to overlook obvious targ eting

. (I d. at 35.) This cla im lacks merit. 1 1 As previously

discussed, Commerce included a thirty -three perc ent threshold require ment in its definition of “pattern.” I ssues and De cision Memorandum at 20. Comm erc e explained that it considered thirty -three perc ent re asonable for e stablishing a pa ttern of a ctivity

. I d. The c ourt has no re ason to disag ree .

Commerce de fined “ differ signific antly ” as a

ny situation when the five pe rce nt price g ap test is satisfied. I d. at 21–22. Commerce stated that it considere d a five perc ent The plaintiffs spe nd sever al pag es in their brie f deta iling hy pothetical data

sets in an 1 1 attempt to illus trate this point and thus, expose Com merc e’s test a s unrea sonable. (See Pls. Mem. 28–31.) The pla intiffs argue that these examples clear ly illust rate “tar g eted dumping ” under 19 U.S.C. § 1677f-1(d)( B) (i), but would not be cla ssified as such unde r Commerce ’s test. (I d. at 32.) The pla intiffs further contend that much like the se examples, the fa cts of this case clea rly support a findingof targ eted dumpingand that any finding otherwise c annot be supporte d by substantial evidence . (I d. at 29–30.) The plaintiffs’ examples, howeve r, ar e unconvinc ing beca use they oversimplify

a mar ket. Eac h example contains only a fe w hy pothetical pric es sprea d out at a g reat varianc e, cr eatinga mar ket wher e all of the extremely low price s fall within one standa

rd deviation of the ave rag e pric e. (See id. at 28–31.) Such a r esult occur s beca use the hy pothetical mar

kets also contain e x tremely high pr ices that off

set the low ones. ( See I d.) The price variation of these mar kets are unrea listi c, and the ref ore, r aise fe w pra ctical c oncer ns reg ardingthis methodology

.Court No. 08-00225 Pag e 14

differ ence as sig nificant, whe n used in combination with the thirty -three perc ent threshold, under the statutory

languag e. I d. at 22. Althoug h these tests may cre ate a standard that is more difficult to satisfy than the domestic industry would have pr efe rre d, the nails test “does not violate a ny statute and is not otherwise a rbitrar y and ca pricious.” U.S. Steel Gr oup, 96 F.3d at 1362. I n other AD contexts, and for a longperiod of time f ive per cent tests have been use d to measure signific ance for AD purposes. See , e.g ., 19 U.S.C. § 1677b(a)(1) (C) (1994) (using five pe rce nt test to determine home ma rket viability); id. § 1677b(a) (1)( B) (ii)(I I ) (1994) (using five pe rce nt test to determine third-c ountry marke t viability); 19 C.F.R. § 351.403(d) ( 1998) (usingfive perc ent test to determine whether to “ca lculate nor

mal value ba sed on the sale by an af filiated party”). F urthermor e, plaintiff ha s done nothing to attempt to establish that on this rec ord the five pe rce nt require ment is unreasona bly high. T he var ious aspects of the nails test do not violate the statutory

languag e of 19 U .S.C. § 1677f-1(d)(1) (B )(i) a nd are applied re asonably based on this recor d. 1 2 III. Withdraw al of

the Re gulatory P rovisions Gover nin g Targete d Dumping in Antidu m pin g Duty Investigations (“Revoc ation”), 73 F ed. Reg 74,930 ( Dept. Com m erc e, De c. 10, 2008). In Dec ember

2008, Commerce issued a n “interim final r

ule for the purpose of withdrawingthe re gulatory provisions gove rningthe targ eted dumpinganaly sis in antidumpi ng

The plaintiffs a lso contend that Commerce ’s test masks targ eted dumpingbeca use it 1 2 improperly

aver ag es all sales, both a lleg edly targ eted a

nd non-targ eted to ca lculate the a vera g emean pr ice. ( Pls.’ Mem. 25–26.) The plaintiffs c laim that this practice is “ distorting or bia sing the compar ison to a finding that targ etingdoes not exist .” (I d. at 26.) While including the alleg ed tar g eted sa les in the ave rag e-me an ca lculation could lower the mean, e x cluding such sales could lea d to the opposite result, perha ps raisingthe mean too hig h and incr easing the chanc e that an othe rwise non- targ eted sa le be c lassified as tar g eted. An inc lusion of these price s, there fore , is no less reasona ble than the e x clusion that the plaintiffs desire

.Court No. 08-00225 Pag e 15

duty investigations.” Revocation, 73 F ed. Reg . at 74,930. Commerce explained that it “may have e stablished thresholds or other criter ia that have preve nted the use of this comparison methodology

to unmask dumping, c ontrary to the Congr essional intent. In that case , these provisions would act to deny relief to domestic industries suffer ing material injury from unfa irly trade d imports.” I d. at 74,931. The pla intiffs now cite these statements as e vidence to support their ar g uments that g iven more time they could have provided more meaning ful comments and that the nails test violates 19 U.S.C. § 1677f-1(d)( B)

.

Contrary to this proposit ion, courts have made it clea r that unre asonable ness cannot be inferr ed fr om a subsequent withdra wal. See F CC v. Fox Television Stations, I nc., 129 S. Ct . 1800, 1811 (2009) ( holding that a n ag ency “nee d not demonstrate to a c ourt’s satisfac tion that the re asons for the new policy are better tha

n the re asons for the old one; it suffices that the new policy

is permissible under the statute, that there a re g ood rea sons for it, and that the a g ency believes it to be be tter, which the conscious cha ng e of c ourse a dequate ly

indicates” ); GPX Int’l Tire Corp. v. United States, 645 F . Supp. 2d 1231, 1238 (CI T 2009) (holdingthat “[i] f the statutes are ambig uous, it does not matter whethe r Commerce ' s new interpr etation of the statutes conflicts with its old int erpr etation, bec ause the court is now looking at Commerce ' s new interpre tation and will give that interpre tation defe renc e if it is rea sonable” ).

Fur thermore , in the Revocation, Com merc e stated that it “believes the w ithdrawa l of this rule is not significa nt. Wi thdrawa l will allow the Depar tment to ex erc ise the discre tion intended by

the statute and, the reby , develop a prac tice that will allow intere sted parties to pursue all statutory

avenue s of re lief in this area .” Revoc ation, 73 Fe d. Reg . at 74,931. Commerce also provided that it “is not repla cingthese provisions with new pr ovisions. I nstead, the D epar tment isCourt No. 08-00225 Pag e 16

returningto a ca se-by -ca se adjudication, until additional experience allows the De partment to g ain a g reater unde rstandingof the issue.” I d. By its very terms, there fore , the Revocation is not an admission by

Commerce that the nails test is unlawful—it merely demonstrates that Commerce is dubious as to whe ther this particula r methodolog y

should be universa lly

applicable and announc es that Commerce will continue to searc h for a widely applicable test. 1 3 Acc ording ly , the Revocation has no eff ect on the c ourt’s conc lusions in t his case. CONCLUSION For the af oreme ntioned rea sons and base d on this recor d, the cour t concludes that utiliz ation of the “ nails test” for the targ eted dumpinganaly sis was rea sonable a nd Commerce’ s deter minations were suppor

ted by substantial evidence , and in ac corda nce w ith law. Acc ording ly , the plaintiffs’ Rule 56.2 motion for judg ment on the ag ency rec ord is denied. J udg ment, there fore , will be enter ed for the def endant.

/s/ J ane A . Restani

J ane A . Restani Chief J udg e Dated: This 4th day

of May , 2010. New Y ork, Ne w York.

The c ourt notes that the nails test has be en used by Commerce in thre e subseque nt 1 3 investigations, two of which occ urre d afte r the issuanc e of the Revoca tion. See Poly ethylene Retail Carrier

Ba g s from Indonesia: Preliminary Deter mination of Sales at L ess Than F air Va lue and Postponement of F inal Deter mination, 74 Fed. Reg . 56,807, 56,809 (De p’t Commerce Nov. 3, 2009); Poly ethylene Reta il Carrier B ag s From Ta iwan: Preliminary Deter mination of Sales at L ess Than F air Va lue and Postponement of F inal Deter mination, 74 Fed. Reg . 55,183, 55,188 (De p’t Commerce Oct. 27, 2009); Cer tain New Pneumatic Off- The-Roa d Tires fr om the People' s Republic of China: Fina l Affirmative Deter mination of Sales at L ess Than F air Va lue and Par tial Affir mative Dete rmination of Critical Circumstance s, 73 Fe d. Reg . 40,485, 40,485 (De p’t Commerce July

15, 2008).