Gerald Metals, Inc. v. U.S.

• Decision Date: 23 December 1997
• Docket Number: No. 97-1077,97-1077
• Citation: 132 F.3d 716
• Parties: GERALD METALS, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee. and Magnesium Corporation of America, International Union of Operating Engineers, Local 564, and United Steelworkers of America, Local 8319, Defendant-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 716

132 F.3d 716

19 ITRD 1961

GERALD METALS, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee and Magnesium Corporation of America, International Union of Operating Engineers, Local 564, and United Steelworkers of America, Local 8319 Defendant-Appellees.

No. 97-1077.

United States Court of Appeals Federal Circuit.

Dec. 23, 1997.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

April 13, 1998.

Joseph Brooks, Popham, Haik, Schnobrich & Kaufman, Ltd., of Washington, DC, argued for plaintiff-appellant. With him on the brief was Denise Cheung. Of counsel on the brief were Frederick P. Waite and Kimberly R. Young, Holland & Knight, of Washington, DC.

Andrea C. Casson, Attorney, United States International Trade Commission, of Washington, DC, argued for defendant-appellee United States. Also of counsel were Michael Deihl, Attorney, Office of General Counsel, U.S. International Trade Commission, of Washington, DC. With him on the brief were Lyn M. Schlitt, General Counsel and James A. Toupin, Deputy General Counsel.

William D. Kramer, Baker & Botts L.L.P., of Washington, DC, for defendants-appellees Magnesium Corporation of America, et al. On the brief were Charles M. Darling, IV, and Michael X. Marinelli.

Before MICHEL, CLEVENGER and RADER, Circuit Judges.

RADER, Circuit Judge.

The International Trade Commission (Commission) found that Russian, Ukrainian, and Chinese imports of pure magnesium at less than fair value (LTFV) injured the domestic industry. See Magnesium from China, Russia, and Ukraine, 60 Fed.Reg. 26,456-57 (Int'l Trade Comm'n 1995) (final). Gerald Metals, an importer, appealed the injury determination, with respect to the Ukrainian imports, to the United States Court of International Trade. The court affirmed, finding substantial evidence that the domestic industry was materially injured by reason of the LTFV Ukrainian imports. See Gerald Metals, Inc. v. United States, 937 F.Supp. 930, 942 (Ct. Int'l Trade 1996). Because, on this record, substantial evidence does not support the Court of International Trade's analysis, this court vacates and remands to the Court of International Trade for further proceedings.

I.

Primary magnesium is decomposed from raw materials into magnesium metal or alloy. The United States Department of Commerce, International Trade Administration (Commerce) divides primary magnesium into two classes, pure and alloy. Pure magnesium encompasses: (1) "pure" products that contain at least 99.8%, by weight, primary magnesium and (2) "off-specification pure" products that contain at least 50% to 99.8%, by weight, primary magnesium. Alloy magnesium contains 50% to 99.8%, by weight, primary magnesium; however, alloy is mixed with other chemical elements that constitute at least 1.5%, by weight, of the product.

Pure magnesium is both a chemical reagent in the desulfurization and chemical reduction industries and an input in the production of alloy. Pure magnesium has value in the markets for aluminum, steel, magnesium granule, and pharmaceuticals. During the period of investigation, from the beginning of 1992 through the first half of 1994, demand for pure magnesium in the United States remained relatively steady, with only a slight increase.

Due to the unique characteristics of magnesium production, production--both domestic and foreign--remains relatively steady. Pure and alloy magnesium production requires electrolytic cells that deteriorate if left unused. To avoid the high cost of rebuilding cells and to maximize production efficiency, producers generally maintain continuous and steady production levels of pure magnesium.

In August 1992, before the petition at issue was filed, the Commission had found that unfairly traded pure magnesium imports from Canada materially injured the domestic pure magnesium industry. See Magnesium from Canada, Inv. Nos. 701-TA-309 and 731-TA-528 (final), USITC Pub. 2550 (August 1992). Following this determination, Canadian imports declined. Imports from Russia, Ukraine, and China began entering the United States, in part due to liquidation of stockpiles of magnesium in the former Soviet Union.

On March 31, 1994, the Magnesium Corporation of America, the International Union of Operating Engineers, Local 564, and the United Steelworkers of America, Local 8319, filed an antidumping petition against these imports under section 773 of the Tariff Act of 1930, codified as amended at 19 U.S.C. § 1677(b) (1988). ^* See Gerald Metals, 937 F.Supp. at 932. Later, the Dow Chemical Company (Dow) joined the petition. See id. Commerce determined that pure and alloy magnesium imports were sold at LTFV under section 733(b) of the Tariff Act. See id.

On May 17, 1995, the Commission published its final determinations with respect to the subject imports. See Magnesium from China, Russia and Ukraine, USITC Pub. 2885, Inv. Nos. 731-TA-696-698 (May 1995) (hereinafter Determination ). The Commission unanimously found no material injury to the domestic industry due to LTFV imports of alloy magnesium from China and Russia. See Gerald Metals, 937 F.Supp. at 933. However, a plurality of three commissioners found material injury to the domestic industry by reason of LTFV imports of pure magnesium from Russia, Ukraine, and China; the remaining three commissioners dissented from this determination. See id. at 932-33. Because the commissioners were evenly divided on the question of material injury by reason of the pure magnesium imports, the views of the plurality finding material injury constitute the determination of the Commission, pursuant to 19 U.S.C. § 1677(11) (1994).

Gerald Metals appealed the Commission's material injury determination with respect to the LTFV imports of pure magnesium from the Ukraine. The antidumping petitioners, the Magnesium Corporation of America, the International Union of Operating Engineers, Local 564, and the United Steelworkers of America, Local 8319, also participated in the appeal as defendants-appellees. The record does not indicate any further participation by petitioner Dow.

Much of the record features information about imports from Russia. Specifically, the record shows, in the words of Vice Chairman Nuzum, that "a sizeable portion of the imports from Russia were fairly[-]traded. These imports undersold domestic product almost as frequently as did LTFV imports." Determination at 35 (Vice Chairman Nuzum, dissenting views). Similarly the record shows, in the words of Commissioner Crawford, that "[d]umped Russian imports and fairly[-]traded Russian imports are very close, if not perfect, substitutes for each other." Id. at 45 (Comm'r Crawford, dissenting views).

All pure magnesium from Russia originates with one of two producers--Avisma Titanium-Magnesium Works (Avisma) and Solikamsk Magnesium Works (SMW). Although trading companies can import Russian pure magnesium from only these two sources, Commerce assigned zero percent dumping margins to some companies, such as Gerald Metals, while assigning margins of 100.25% to other companies. Commerce assigned to all trading companies importing pure magnesium from Ukraine margins greater than zero, ranging from 36.05% to 104.27%. Commerce assigned a margin of 108.26% to all Chinese imports.

Gerald Metals imported both fairly-traded Russian pure magnesium and LTFV Ukrainian pure magnesium. Gerald Metals reasons that because fairly-traded Russian imports are substitutes for LTFV Russian imports, domestic purchasers of magnesium products could fill their demand without resort to LTFV imports. Thus, Gerald Metals argues, the LTFV goods did not cause the injury to domestic industry. Instead, the injury was the result of market forces other than unfair trading.

The Court of International Trade found substantial evidence to support the Commission's determination. Gerald Metals appeals. At issue before this court are the Commission's findings that: (1) the market availability of fairly-traded Russian pure magnesium imports did not preclude the causation of material injury by LTFV imports; (2) Dow closed a magnesium production plant in part due to the effect of the LTFV imports, including Ukrainian imports; and (3) the imposition of antidumping duties against Gerald Metals was remedial rather than penal.

II.

This court duplicates the Court of International Trade's review of the Commission's determinations, evaluating whether 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) (1994). Although technically "reviewing anew the [Commission's] determination, this court will not ignore the informed opinion of the Court of International Trade. That court reviewed the record in considerable detail. Its opinion deserves due respect." Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 983 (Fed.Cir.1994).

Applying an analytical framework outlined in Title 19, the Commission determines whether LTFV imports materially injure a domestic industry. See 19 U.S.C. § 1673d(b)(1) (1988). Section 1677(7)(A) defines "material injury" as a "harm which is not inconsequential, immaterial, or unimportant." 19 U.S.C. § 1677(7)(A) (1988). When determining whether imports have caused material injury to a domestic industry, the Commission evaluates:

(I) the volume of imports of the merchandise that is the subject of the investigation,

(II) the effect of imports of that merchandise on prices in the United States for domestic like products, and

(III) the impact of imports of such merchandise on domestic producers of domestic like products, but only in the context of production operations within the United States....

19 U.S.C. § 1677(7)(B)(i) (1988). Additionally, the Commission "may consider such other economic factors as are relevant to the determination." 19 U.S.C. § 1677(7)(B)(ii) (1988).

However, a showing that economic harm to domestic industry occurred when LTFV imports are...