CP Kelco US, Inc. v. United States

24 F.Supp.3d 1337

CP KELCO US, INC., Plaintiff

v. UNITED STATES, DefendantandJungbunzlauer Austria AG, Defendant–Intervenor.

Slip Op. 14–123.

Court No. 13–00287.

United States Court of International Trade.

Oct. 22, 2014.

Matthew J. Clark, Nancy A. Noonan, Matthew L. Kanna, and Keith F. Huffman, Arent Fox LLP, of Washington, DC, for plaintiff.

David A.J. Goldfine, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Dominic L. Bianchi, General Counsel, and Neal J. Reynolds, Assistant General Counsel for Litigation.

Frederick P. Waite, Kimberly R. Young, and William M.R. Barrett, Vorys Sater Seymour and Pease LLP, of Washington, DC, for defendant-intervenor.

OPINION

GOLDBERG, Senior Judge:

Plaintiff CP Kelco U.S. (“Kelco”), a domestic manufacturer of xanthan gum and petitioner in the antidumping proceeding that underlies this case, challenges the final determination of the International Trade Commission (the “Commission”) that domestic industry suffered no present material injury by reason of subject imports. Xanthan Gum from Austria and China, 78 Fed. Reg. 43,226 (ITC July 19, 2013) (notice of final determination); Xanthan Gum from Austria and China, USITC Pub. 4411, Inv. Nos. 731–TA–1202–1203 (July 2013) (final determination) (including public versions of both the “Views of the Commission” and the “Staff Report,” both hereinafter cited by reference to the confidential versions in the administrative record). Kelco's challenge takes the form of a motion for judgment on the agency record, brought pursuant to USCIT Rule 56.2.

For the reasons that follow, the court sustains the Commission's determination.

BACKGROUND

On June 5, 2012, Kelco filed a petition with the Department of Commerce and with the Commission. Kelco alleged that less-than-fair-value imports from Austria and China were materially injuring domestic industry, and were also threatening injury in the future. Xanthan Gum from Austria and China, 77 Fed. Reg. 34,997, 34,997 –98 (ITC June 12, 2013) (initiation of investigation). When such petitions are filed, the Commission's responsibility is to determine whether the petitioner or domestic industry has actually been, or will likely be, injured. 19 U.S.C. § 1673d(b) (2006). (The Department of Commerce is responsible for making the prior determination that less-than-fair-value importing has or has not occurred. Id. ) After a hearing and briefing on the matter, the Commission concluded that domestic industry was not suffering material injury, and was only threatened with material injury by those imports emanating from China. Views of the Commission (“Views”) at 3, 55–58, 60, CD 2–197 (Aug. 6, 2013), ECF No. 17 (Nov. 4, 2013). The Commission explained this determination in its customary Views of the Commission report. Kelco challenges the Commission's final determination, specifically the finding of no present material injury. Pl.'s Mot. for J. on Agency R. 1–3, ECF No. 25 (“Pl.'s Br.”).

Before reaching Kelco's specific claims, it is helpful to first foreground those claims with domestic industry, the Commission is required to consider three factors: volume of subject imports, the price effects of such imports, and the impact of such imports on domestic producers. 19 U.S.C. § 1677(7)(B)(i)(I)-(III). No one of the statutory factors need be dispositive. See Copperweld Corp. v. United States, 12 CIT 148, 156, 682 F.Supp. 552, 561–62 (1988) (Commission is free to assign “to a factor a varying degree of significance depending upon the facts of a particular case”). The Commission must also check whether the filing of the antidumping petition caused a post-petition change in any of the factors, the theory being that filing can chill less-than-fair-value importing and hide injury. 19 U.S.C. § 1677(7)(I). If the Commission finds post-petition effects, it has discretion to discount the post-petition data in order to reach an accurate injury determination. Id.

The Commission structured the Views of the Commission to align with this statutory framework. It considered each factor individually and then post-petition effects before weighing the factors together and concluding that domestic industry had suffered no material injury.

I. Subject–Import Volume

The Commission's directive in considering subject-import volume is to evaluate “whether the volume of imports of the merchandise, or any increase in that volume, either in absolute terms or relative to production or consumption in the United States, is significant.” 19 U.S.C. § 1677(7)(C)(i). Kelco argued in administrative briefing that domestic industry had lost market share to subject imports in three out of five end-use market segments: consumer applications, food and beverage, and industrial applications. According to Kelco, the only reason that domestic industry did not lose market share at the market-wide level was that these segment-specific losses were offset by a market-share gain in the oilfield segment. Pre-hr'g Br. at 19, CD 156 (May 14, 2013), ECF No. 17 (Nov. 4, 2013).¹ Kelco further argued that domestic industry's static overall market share was itself bad news, because apparent domestic consumption had risen, and domestic industry should have captured a preferential share of this growth. See Post-hr'g Br. at 3, CD 2–170;174 (May 30, 2013), ECF No. 17 (Nov. 4, 2013).²

In the Views of the Commission, the Commission acknowledged that subject-import volume was significant under the statute and had increased in absolute terms. Views at 36–37. The Commission nonetheless emphasized that subject-import market share had remained relatively stable at the market-wide level, though differing trends had manifested in different market segments. Id. at 36–37 & n. 142.³

II. Price Effects

The Commission's statutory task in evaluating price effects has two prongs: The Commission must examine both whether there has been price underselling in the United States and also whether imports have led to price depression or price suppression. 19 U.S.C. § 1677(7)(C)(ii).⁴ In administrative briefing, Kelco demonstrated underselling. Post-hr'g Br. at 4–6. Kelco also argued price suppression. Id. Kelco's method for detecting price suppression was to compare raw-materials costs to net sales (“NS”) values, on the theory that any increase in raw-materials costs not mirrored in increased NS values showed price suppression. Pursuant to this theory, Kelco provided evidence that increases in raw-materials costs had indeed outstripped NS-values gains, and that these increases would have been more noticeable had factory costs not decreased. Id. at 4–5. Kelco also noted that this trend was even more acute with respect to domestic industry's domestic sales, where NS average unit values (“AUVs”) had actually decreased slightly (while raw-materials costs had still increased). Id.

The Commission, in its analysis of price effects, acknowledged subject importers' underselling. Views at 47. But, looking to price depression and price suppression, the Commission concluded that the former was impossible, on grounds that domestic prices had generally [[Confidential Data Deleted ]]. Id. at 48 (citing Staff Report at V–6, V–7 tbls. V–1 to V–16, CD 2–179 (June 11, 2013), ECF No. 17 (Nov. 4, 2013)). The Commission further concluded that market-wide prices had not been suppressed, basing this conclusion on patterns in the COGS/NS ratio⁵ during the period of investigation (“POI”). Id. (cross-referencing Views at 56–58). As the Commission noted, although domestic producers' domestic-sales COGS/NS ratio [[Confidential Data Deleted ]] from 2010 to 2011—at first suggesting price suppression, see supra note 4—the same pattern occurred in those producers' export-sales COGS/NS ratio. Id. at 56–58. The Commission concluded from this information that domestic-sales price suppression could not have occurred, at least not by reason of subject imports. Id. As for the COGS/NS ratio from 2011 to 2012, the Commission noted that, although the domestic-sales ratio [[Confidential Data Deleted ]] while the export ratio [[Confidential Data Deleted ]], the rise in the domestic ratio was too small to credit as price suppressing. Id.

III. Impact

The statute requires the Commission to evaluate impact by examining a number of statutorily enumerated domestic performance indicators. 19 U.S.C. § 1677(7)(C)(iii). The Commission recounted the performance-indicator data in detail, and then summarized: “Most of the domestic industry's performance indicators improved or remained stable ... although some declined.” Views at 53.⁶ Kelco did not analyze domestic performance indicators in its administrative briefing, at least as that briefing is excerpted in Kelco's motion appendix. Confidential App. to Pl.'s Mot. for J. on Agency R., ECF No. 31.

IV. Post-petition Effects

After evaluating the material-injury factors, the Commission is required to consider “whether any change in [those factors] since the filing of the petition ... is related to the pendency of the investigation.” 19 U.S.C. § 1677(7)(I). The reason for this provision is that, as “[t]his court and [the Commission] consistently have recognized[,] the initiation of antidumping and countervailing duty proceedings can create an artificially low demand for affected imports, thus distorting the data on which [the Commission] relies in making its [injury] determination.”

USX Corp. v. United States, 11 CIT 82, 88, 655 F.Supp. 487, 492 (1987) (citing Rhone Poulenc, S.A. v. United States, 8 CIT 47, 53, 592 F.Supp. 1318, 1324 (1984) ). Accordingly, if the Commission does find such post-petition effects, it “may reduce the weight accorded to the data for the period after the filing of the petition in making its determination of material injury,” thereby curing the skewed injury data. 19 U.S.C. § 1677(7)(I).

Kelco argued in administrative briefing for a post-petition discount. As one argument that the filing of the petition...