CIT Affirms Commerce’s Broad Discretion in Determining Whether a Domestic Company May Request an Administrative Review

News & Insights
Feb 7, 2017

On February 3, 2017, the U.S. Court of International Trade (“CIT”) upheld the U.S. Department of Commerce’s (“Commerce”) finding that Dixon Ticonderoga Company (“Dixon”), as a U.S. producer of cased pencils, was entitled to request an administrative review of the entries of pencil imports shipped to the United States by a Chinese exporter, Shandong Rongxin Import & Export Co., Ltd. (“Rongxin”).  The Court’s opinion begins:

This is a case about pencils.  It is also a case about judicial review of administrative action, the use of social media in agency proceedings, and trade relief in the form of duties that are imposed by law on imports that are sold in the United States at less than fair value (“dumped”) and materially harm American industry or threaten it with material harm.

In the case, Rongxin challenged Dixon’s claim that the company had, in fact, produced cased pencils in the United States during the relevant period of review.  In a decision issued on April 5, 2016, the CIT remanded the final results of the administrative review to Commerce for reconsideration or further explanation as to Dixon’s legal standing.

Upon remand, Commerce re-opened the record and issued two questionnaires to Dixon seeking more information.  Dixon responded to these requests.  In June of last year, Commerce issued a redetermination again finding that Dixon was a producer of the domestic like product and, as such, possessed the necessary legal standing to request an administrative review of Rongxin’s shipments.

Rongxin continued to challenge Commerce’s determination, asserting that the agency (1) was without authority to re-open the record and seek more information from Dixon on remand; (2) had not based its finding that Dixon was a domestic producer on substantial evidence; and (3) had failed to follow its standard procedure in determining whether Dixon was a domestic producer.  The CIT rejected each of these arguments.

The CIT noted that the record before Commerce showed that Dixon had submitted certifications to U.S. Customs and Border Protection (“CBP”) attesting to its continued domestic operations producing pencils so as to participate in the Continued Dumping and Subsidy Offset Act program during the relevant period of review.  These certifications “made under the penalty of law and with knowledge that they were subject to verification by CBP . . . thus serve as evidence that Dixon manufactured pencils domestically during the POR.”  Further, the record included evidence related to work orders demonstrating “the production of lesser components that ultimately contribute to 2557 144-count boxes of golf pencils” by Dixon. The CIT also considered the relevance of evidence placed on the administrative record by Rongxin seeming to indicate that Dixon no longer manufactured pencils in the United States.  This evidence included a screenshot of “Dixon’s page on which states that ‘Dixon Ticonderoga Pencils are no longer made in the USA” and a screenshot of Dixon’s top twenty-five employees “generated on, which does not obviously contain an employee who would have overseen pencil production at the Macon facility during the POR.”  The CIT observed that “[s]everal courts have recognized the dangers of citing Wikipedia entries as legally probative evidence” and that “LinkedIn, like Wikipedia, is often an unreliable evidentiary source.”  Rongxin also submitted photographs of pencils produced by Dixon outside of the United States and challenged Commerce to demonstrate that such photographs were not entirely representative of Dixon’s manufacturing during the period of review.  The CIT found that Rongxin had conflated the actual inquiry on remand and “place[d] a burden that it should carry onto Commerce’s shoulders.”  The CIT found that the burden of production of evidence to rebut standing has been allocated by the Court of Appeals for the Federal Circuit to the party challenging standing.

The CIT also declined to adopt Rongxin’s argument that Commerce was obligated to determine whether Dixon had engaged in the U.S. production of the domestic like product through a six-factor test utilized by another federal agency, the U.S. International Trade Commission (“ITC”).  While the CIT recognized that Commerce had adopted that test to ascertain whether there was sufficient support within a U.S. domestic industry for a petition for the implementation of antidumping and/or countervailing duties, there was no legal reason why the same inquiry needed to be employed with regard to determine legal standing sufficient to request an administrative review, as “[t]he statute is silent as to a methodology Commerce must use in determining whether a petitioner is a producer in the United States of [the] domestic like product.”  The Court held that “Commerce has discretion to employ a suitable analysis” and found that the agency had “reasonably justified why it chose not to apply the six-factor ITC test.”

Although the CIT upheld Commerce’s determination that Dixon had legal standing to request an administrative review, the Court once again remanded the final results of the administrative review back to the agency to further evaluate whether Rongxin had established that it was not subject to the control of the government of the People’s Republic of China.