Mexichem Fluor Inc. v. United States

179 F.Supp.3d 1238

Mexichem Fluor Inc., & E.I. DuPont de Nemours & Co., Plaintiffs,

v.United States, Defendant.

Slip Op. 16-54

Consol. Court No. 15-00004

United States Court of International Trade.

June 6, 2016

Paul W. Jameson , Schagrin Associates of Washington, DC, argued for Plaintiff Mexichem Fluor Inc. With him on the brief was Roger B. Schagrin .

James R. Cannon, Jr. , Cassidy Levy Kent (USA) LLP of Washington, DC, argued for Plaintiff-Intervenor E.I. DuPont de Nemours & Company. With him on the brief were John D. Greenwald and Jonathan M. Zielinkski.

Nataline Viray-Fung , Attorney, and Karl S. von Schriltz , Attorney-Advisor, Office of the General Counsel, U.S. International Trade Commission, of Washington, DC, argued for Defendant. With them on the brief were Dominic L. Bianchi , General Counsel, and Andrea C. Casson , Assistant General Counsel.

Ned H. Marshak , Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP of New York, NY, argued for Defendant-Intervenors Sinochem Environmental Protection Chemicals (Taicang) Co., Ltd, Zhejiang Quhua Fluor-Chemistry Co., Ltd. and Zhejiang Sanmei Chemical Industry Co., Ltd. With him on the brief were Max F. Schutzman and Kavita Mohan .

OPINION

Gordon, Judge:

This consolidated action involves the final determination of the U.S. International Trade Commission (“Commission” or “ITC”) that an industry in the United States is not materially injured or threatened with material injury by reason of imports of 1,1,1,2– Tetrafluoroethane (“R-134a”) from China. 1,1,1,2– Tetrafluoroethane from China, 79 Fed. Reg. 73,102 (Int'l Trade Comm'n Dec. 9, 2014) (final neg. determ.) (“Final Determination”); see also Views of the Commission, Inv. Nos. 701-TA-509 and 731-TA-1244 (Final), USITC Pub. 4503 (Dec. 2014) (“Views”).¹ Before the court are the motions for judgment on the agency record of Plaintiff Mexichem Fluor Inc. and the Chemours Company, successor-in-interest to Consolidated Plaintiff E.I. DuPont de Nemours & Co. See Mot. of Pl. Mexichem Fluor Inc. for J. on the R. Pursuant to R. 56.2 (July 31, 2015), ECF No. 30 (“Mexichem Br.”); The Chemours Co.'s (Successor-in-Interest to E.I. DuPont de Nemours & Co.) R. 56.2 Mot. for J. on the Agency R. (July 31, 2015), ECF No. 32 (“Chemours Br.”); see also Def. Int'l Trade Comm'n's Opp'n to Pls.' Mots. for J. on the Agency R. (Nov. 13, 2015), ECF No. 38 (“Def.'s Resp.”); Def.-Intervenors' Resp. to Pls.' R. 56.2 Mots. for J. upon the Agency R. (Nov. 13, 2015), ECF No. 40. The court has jurisdiction pursuant to Section 516A(a)(2)(A)(i)(I) and (B)(ii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(A)(i)(I), (B)(ii) (2012),² and 28 U.S.C. § 1581(c) (2012).

For the reasons set forth below, the court sustains the Final Determination on each of the issues raised.

I. Standard of Review

The court sustains the Commission's “determinations, findings, or conclusions” unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350–51 (Fed.Cir.2006). Substantial evidence has been described as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed.Cir.2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). Substantial evidence has also been described as “something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Fundamentally, though, “substantial evidence” is best understood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice§ 9.24[1] (3d ed. 2015). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action “was reasonable given the circumstances presented by the whole record.” 8A West's Fed. Forms, National Courts§ 3:6 (5th ed. 2015).

Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs judicial review of the Commission's interpretation of the Tariff Act. See United States v. Eurodif S.A., 555 U.S. 305, 316, 129 S.Ct. 878, 172 L.Ed.2d 679 (2009) (An agency's “interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.”).

II. Discussion

Two separate, but parallel, provisions of the Tariff Act of 1930, as amended, provide for the Commission to determine whether a domestic industry is materially injured, or threatened with material injury, by reason of unfairly subsidized or dumped imports.

See 19 U.S.C. §§ 1671d(b), 1673d(b). The Commission will issue an affirmative determination if it finds “present material injury or a threat thereof” and makes a “finding of causation.” Hynix Semiconductor, Inc. v. United States, 30 CIT 1208, 1210, 431 F.Supp.2d 1302, 1306 (2006) (citation and quotation marks omitted). In making a material injury determination, the Commission evaluates “(1) the volume of subject imports; (2) the price effects of subject imports on domestic like products; and (3) the impact of subject imports on the domestic producers of domestic like products.” Id.(citing 19 U.S.C. § 1677(7)(B)(i)(I)-(III) ). The Commission may also consider “ ‘such other economic factors as are relevant in the determination.’ ” Id. at 1210, 431 F.Supp.2d at 1306 (quoting 19 U.S.C. § 1677(7)(B)(ii) ).

A. Volume

In performing its volume analysis, the Commission must “ ‘consider 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.’ ” Shandong TTCA Biochemistry Co. v. United States, 35 CIT ––––, ––––, 774 F.Supp.2d 1317, 1322 (2011) (quoting 19 U.S.C. § 1677(7)(C)(i) ).

The Commission found that subject import volume and market share was “significant in absolute terms and relative to consumption.” Views at 24. The Commission also noted an increase in subject imports between 2011 and 2012. Id. Nevertheless, the Commission determined that the volume of subject imports did not cause adverse effects to the domestic industry. The Commission reasoned that a domestic supply shortage beginning in 2010 and persisting “at least through the end of 2011” caused certain purchasers to turn to subject imports. Views at 21-23. As the shortage eased, “the market stabilized in 2012,” and subject imports declined “on both a relative and absolute basis” in 2013. Id. at 23.

1. Subject Import Volume Data Source

i. Contentions

Mexichem argues that the Commission should have evaluated subject import volume on a quarterly basis rather than an annual basis. Mexichem Br. at 21-22. Mexichem contends that the Commission “ignored” the increase in subject import volume in the fourth quarter of 2012, which in turn undermines the Commission's finding that the 2011 supply shortage caused the increase. Id. at 22. According to Mexichem, increased subject import volume in the fourth quarter of 2012 could not have resulted from the domestic shortage. Id. at 21–22.

Chemours argues that the Commission should have measured subject import market share using U.S. shipments of subject imports that importers reported rather than official import statistics. Chemours Br. at 22. Chemours insists that imports of R-134a are kept in inventory and delivered as demand for air conditioning, which is weather dependent, dictates, and that imports held in inventories do not have market effects. Chemours also argues that shipment data are “essential” to calculate market share shifts on an “apples-to-apples basis.” Id.

ii. Analysis

The court does not agree with Mexichem that the Commission's evaluation of subject import volume on an annual rather than quarterly basis was unreasonable. The Commission followed its longstanding practice of assessing subject import volume and market share on an annual basis. As the Commission explained, the quarterly data that Mexichem prefers is less reliable than the annual data. Views at 4 n.4. Specifically, the quarterly data are limited to official import statistics covering imports entered under HTSUS subheading 2903.39.2020, see Mexichem Br. at 21, which cannot account for R-134a misclassified under other HTSUS provisions. Views at 4 n.4; 1,1,1,2–Tetrafluoroethane from China, Inv. Nos. 701-TA-509 and 731-TA-1244 (final), at IV-1 n.4 (Int'l Trade Comm'n Oct. 31, 2014) (final staff report) (confidential version) (“Conf. Rep.”). To address this problem, the Commission combined the official import statistics for HTSUS subheading 2903.39.2020 with data for R-134a imported under other HTSUS provisions, which the Commission requested and obtained from importers directly. Views at 4 n.4. Because Mexichem's proposed methodology omits these misclassified imports, the Commission reasonably chose its traditional methodology to analyze subject import volume. Furthermore, the Commission does not appear to have overlooked increased import volume due to its methodology selection: the Commission explicitly recognized that subject import volume increased between 2011 and 2012.³ Views at 21.

The court also does not agree with Chemours that the Commission should have measured subject import market share using U.S. shipments. The Commission's typical practice is to use subject import volume to calculate subject import market share...