Angus Chemical Co. v. US

• Decision Date: 09 April 1998
• Docket Number: No. 97-1166.,97-1166.
• Citation: 140 F.3d 1478
• Parties: ANGUS CHEMICAL COMPANY, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

140 F.3d 1478

ANGUS CHEMICAL COMPANY, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 97-1166.

United States Court of Appeals, Federal Circuit.

April 9, 1998.

Frederick L. Ikenson, Frederick L. Ikenson, P.C., Washington, DC, argued for plaintiff-appellant. With him on the brief was Larry Hampel. Also on the brief were Stephen Novack and P. Andrew Fleming, Novack and Macey, Chicago, IL.

Cynthia P. Johnson, Office of the General Counsel, U.S. International Trade Commission, Washington, DC, argued for defendant-appellee. With her on the brief were Lyn M. Schlitt, General Counsel, and James A. Toupin, Deputy General Counsel.

Before NEWMAN, PLAGER, and BRYSON, Circuit Judges.

PLAGER, Circuit Judge.

Angus Chemical Company ("Angus") appeals from a Court of International Trade decision,¹ sustaining a determination by the International Trade Commission ("ITC" or "Commission"),² that the U.S. industry producing nitromethane was not materially injured, or threatened with material injury, by imports from China at less than fair value ("LTFV"). After a careful review of the record, we conclude that the Commission's determination is supported by substantial evidence and is in accordance with the law. Accordingly, we affirm.

BACKGROUND

In 1993, Angus filed a petition with the ITC and the Department of Commerce ("Commerce") for the imposition of antidumping duties on imports of nitromethane from China. Angus, currently the sole U.S. producer of nitromethane, alleged that the domestic industry producing nitromethane was materially injured or threatened with material injury by imports from China that were sold in the United States at less than fair value.

Nitromethane is one of a group of chemicals known as nitroalkanes, which consist of an alkane molecule, such as methane, ethane, or propane, in which one of the hydrogen atoms has been replaced by a nitro group (- NO2). Nitromethane is used in a number of products, including fuels, explosives, solvents, preservatives, and pharmaceuticals. Angus's nitromethane production process results in the joint production of four nitroalkanes, of which nitromethane has the highest value.

The statutory scheme of the Tariff Act of 1930, as amended, calls for Commerce to determine whether the imports were being sold in the United States for less than fair value, and for the ITC to determine whether the domestic industry was materially injured or threatened with material injury by the imports. See 19 U.S.C. § 1673 (1988).³ Pursuant to the statute, and in response to Angus's petition, both Commerce and the ITC undertook the required investigations.

Commerce published a preliminary determination, 58 Fed.Reg. 59,237, and a final determination, 59 Fed.Reg. 14,834, concluding that imports of nitromethane from China were being sold, or were likely to be sold, at LTFV in the United States. Commerce found that Chinese nitromethane was sold at a dumping margin of 233.7%.

In the meantime, pursuant to 19 U.S.C. § 1673b(a) (1988), the ITC conducted its preliminary investigation. In its final determination, the Commission determined, by a vote of four to one, that the domestic industry was not materially injured or threatened with material injury by nitromethane imports from China. Nitromethane from the People's Republic of China, Inv. No. 731-TA-650 (Final), USITC Pub. 2773 (May 1994) ("Final Determination"). The Commission defined the domestic industry as all domestic producers of nitromethane during the period of investigation (1990 to 1993). Angus and W.R. Grace & Co. ("Grace") both produced nitromethane during portions of the period of investigation. Grace ceased production of nitromethane in mid-1992, for reasons unrelated to Chinese imports. Thus, by the end of the period of investigation, Angus was the sole member of the domestic industry.

All five of the commissioners⁴ joined in a portion of the Final Determination evaluating the condition of the domestic industry. Final Determination at I-8 to I-14. The Commission stated that it considered all economic factors relevant to the condition of the domestic industry, "within the context of the business cycle and conditions of competition that are distinctive to the affected industry," as required by 19 U.S.C. § 1677(7)(C)(iii) (1988). The Commission noted that Angus captively consumed a significant percentage of its nitromethane production,⁵ and that captive consumption attenuates competition between the domestic product and the subject imports.

The Commission found that the industry data it evaluated reflected significant disruptions of domestic production during the period of investigation. A fire and explosion at Angus's plant on May 1, 1991 forced it to cease production for ten months, until March 1992. During that time period, Angus sold product from inventory, sold product that it purchased from Grace, and also sold product that it imported from China. Grace also experienced interruptions in its operations in 1990 and 1991. The Commission found that the industry data also reflected the decision of Grace to cease producing nitromethane in the second quarter of 1992, for reasons unrelated to the subject imports. The Commission found that Grace's decision resulted in many of the decreases in the domestic industry indicators for 1992.

The Commission found that Angus's current operations involve production in a different plant than in earlier years, with entirely different assets and cost structure. The Commission also noted that market conditions changed considerably during the period of investigation. The Commission found that, due to Grace's decision to cease production, purchasers have an interest in the imports as the only alternative source of nitromethane. Because of Grace's decision to cease production and Angus's use of a rebuilt plant, with its different asset and cost basis, the Commission found that 1993 is not directly comparable with 1990, the only other full year of production by the domestic industry during the period of investigation. The Commission found that a direct comparison of 1993 and 1990 data would distort the analysis of material injury by the LTFV imports, due to the significant structural changes in the domestic nitromethane industry and market. Accordingly, the Commission focused on the 1993 data and made only limited comparisons between 1993 data and 1990 data.

The Commission evaluated U.S. consumption of nitromethane and found that the quantity consumed decreased considerably from 1990 to 1991, but increased slightly in 1992 and 1993. Production and capacity declined considerably from 1990 to 1991 due to the 1991 explosion. In 1992, capacity returned to a level higher than that reported for 1990. Production also increased considerably in 1992, but did not reach the 1990 level. In 1993, capacity decreased only slightly despite the exit of Grace from the domestic industry, and production slightly increased above the 1992 level. Angus's production was higher in 1993 than total industry production in 1992, but not as high as the total industry in 1990.

Domestic producers' U.S. shipments of nitromethane decreased considerably in 1991 and 1992, due to the production shutdowns by Angus in 1991 and Grace in 1992. Shipments increased considerably in 1993. U.S. exports decreased from 1990 to 1991, then increased in 1992 and decreased slightly in 1993. The number of production and related workers producing nitromethane decreased from 1990 to 1991, increased in 1992, and decreased in 1993.

The Commission asked Grace and Angus to provide separate financial data for their nitromethane operations. Grace was unable to report its nitromethane operations data separately from its nitroparaffins data. Angus, on the other hand, reported its nitromethane operations separately. Accordingly, the Commission discussed the nitromethane operations of Angus separately from those of Grace. The Commission considered Grace's nitroparaffins data as the best information available on its nitromethane operations. Noting that Angus accounted for the bulk of industry data for 1990 to 1992, and for all of the data for 1993, the Commission stated that its analysis was based on the condition of the industry as a whole.

The Commission found that Angus's sales decreased considerably from 1990 to 1991, and by a smaller amount in 1992, then increased considerably in 1993, reflecting Angus's return to production. Grace's sales of nitroparaffins increased each year from 1990 to 1992, but decreased in 1993, reflecting its decision to cease production.

Based on this analysis, two of the commissioners, Chairman Newquist and Commissioner Rohr, found that the domestic industry producing nitromethane was not experiencing material injury.

In particular, they noted the robust performance of the domestic industry both before and following the ten-month shutdown of Angus's facility, as demonstrated by increases in 1993 in the industry's share of U.S. apparent consumption, shipments, capacity utilization, and net sales, as well as the strong performance in production and profitability. They noted that this strong performance occurred despite the departure of one domestic producer.

Final Determination at I-15 n.79.

Vice Chairman Watson and Commissioner Nuzum separately discussed the three factors specified in 19 U.S.C. § 1677(7)(B) (1988):(1) the volume of imports, (2) the effect of imports on U.S. prices, and (3) the impact of imports on domestic producers. As for volume of imports, they noted that the volume of imports from China increased dramatically from 1990 to 1991, due to a shortage of domestically-produced nitromethane caused by Angus's production shutdown. Vice Chairman Watson and Commissioner Nuzum noted that Angus itself imported a significant amount of nitromethane from China. They noted that import volumes decreased in 1992 and then decreased considerably more in 1993, as Angus stopped importing product and brought...