Arkema, Inc. v. United States

• Decision Date: 16 February 2018
• Docket Number: Slip Op. 18–12,Court No. 16–00179
• Citation: 290 F.Supp.3d 1363
• Parties: ARKEMA, INC., The Chemours Company FC, LLC, Honeywell International Inc., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

290 F.Supp.3d 1363

ARKEMA, INC., The Chemours Company FC, LLC, Honeywell International Inc., Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 18–12

Court No. 16–00179

United States Court of International Trade.

February 16, 2018

James R. Cannon, Jr., Cassidy Levy Kent (USA) LLP, of Washington, DC, argued for the Plaintiffs Arkema, Inc., The Chemours Company FC, LLC, Honeywell International Inc. and Plaintiff–Intervenor The American HFC Coalition. With him on the brief were Jonathan M. Zielinski and Nina R. Tandon.

Patrick V. Gallagher, Jr., Attorney–Advisor, Office of the General Counsel, U.S. International Trade Commission, of Washington, DC, argued for Defendant United States. With him on the brief were Dominic L. Bianchi, General Counsel, and Andrea C. Casson, Assistant General Counsel for Litigation.

Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, NY, argued for Defendant–Intervenors Shandong Dongyue Chemical Co. Ltd., Zhejiang Sanmei Chemical Ind. Co., Ltd., Sinochem Environmental Protection Chemicals Co., Ltd., and Zhejiang Quhua Fluor–Chemistry Co., Ltd. With him on the brief were Max F. Schutzman and Jordan C. Kahn.

Frank Morgan, Trade Law Defense PLLC, of Alexandria, VA, argued for Defendant–Intervenor ICOR International Inc.

Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, DC, argued for Defendant–Intervenor National Refrigerants, Inc. With him on the brief was Jonathan M. Freed.

OPINION and ORDER

Gordon, Judge:

Gordon, Judge: This action involves the final affirmative material injury determination of the U.S. International Trade Commission ("ITC" or the "Commission") in the antidumping duty investigation covering hydrofluorocarbon ("HFC") blends and components from the People's Republic of China ("PRC"). See Hydrofluorocarbon Blends and Components from China, 81 Fed. Reg. 53,157 (Int'l Trade Comm'n Aug. 11, 2016) ("Final Determination"); see also Views of the Commission, USITC Pub. 4629, Inv. No. 731–TA–1279 (Final) (Aug. 2016), ECF No. 33–3 ("Views"); ITC Staff Report, Inv. No. 731–TA–1279 (July 8, 2016), as revised by Mem. INV–OO–062 (July 13, 2016), ECF Nos. 33–1 & 33–2 ("Staff Report").¹ Before the court is the USCIT Rule 56.2 motion for judgment on the agency record filed by Plaintiffs Arkema, Inc., The Chemours Company FC, LLC, Honeywell International Inc. and Plaintiff–Intervenor The American HFC Coalition (collectively, "Plaintiffs"). See Plaintiffs' Rule 56.2 Mot. J. Agency R., ECF No. 43 ("Pls.' Br."); see also Def. Int'l Trade Comm'n's Opp'n Pls.' Mot. J. Agency R., ECF No. 45 ("Def.'s Resp."); Pls.' Reply Br., ECF No. 60 ("Pls.' Reply Br."); Def.–Intervenors Shandong Dongyue Chemical Co. Ltd., Zhejiang Sanmei Chemical Ind. Co., Ltd., Sinochem Environmental Protection Chemicals Co., Ltd., and Zhejiang Quhua Fluor–Chemistry Co. Ltd.'s Opp'n Pls.' Mot. J. Agency R., ECF No. 50 ("Chinese Def.–Intervenors Resp."); Def.–Intervenor ICOR International Inc.'s Opp'n Pls.' Mot. J. Agency R., ECF No. 52; Def.–Intervenor National Refrigerants, Inc.'s Opp'n Pls.' Mot. J. Agency R., ECF No. 53 ("Nat'l Refrigerants Resp."). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012),² and 28 U.S.C. § 1581(c) (2012).

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 agency 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) ; see also Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951) ("The substantiality of evidence must take into account whatever in the record fairly detracts from its weight."). 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. 2017). 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. 2017).

II. Discussion

In June 2015, after receiving a petition from Plaintiffs, the Commission commenced an investigation to determine whether imports of certain HFC blends and HFC components³ from China were causing or threatening to cause material injury to the U.S. industry pursuant to 19 U.S.C. § 1673d(b). See Final Determination. In its preliminary determination, the Commission found the "domestic like product" at issue to be "a single domestic like product consisting of HFC blends and HFC components within Commerce's scope definition." See Views at 10; see also 19 U.S.C. § 1677(10) ("The term ‘domestic like product’ means a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this subtitle."). Plaintiffs agreed with this finding, while Defendant–Intervenors argued that the Commission should instead find that HFC Blends and Components are two separate like products. See Views at 10–11. In its final determination, the Commission agreed with Defendant–Intervenors and found HFC Blends and Components to be separate like products. The Commission also unanimously concluded that imports of HFC Blends from China were causing material injury to a U.S. industry, but that imports of HFC Components from China were not causing or threatening to cause material injury to a U.S. industry. See Final Determination. Plaintiffs challenge both the ITC's determination that HFC Blends and HFC Components are not a single like product, and that imports of the HFC Components are not causing or threatening to cause material injury to a U.S. industry. See Pls'. Br. at 1; Pls.' Reply Br. at 21–23.

In addressing the issue of whether HFC Blends and HFC Components are a single domestic like product or two separate like products, the Commission utilized its semi-finished products analysis. See Views at 13–14. "In a semi-finished product analysis, the Commission currently examines: (1) whether the upstream article is dedicated to the production of the downstream article or has independent uses; (2) whether there are perceived to be separate markets for the upstream and downstream articles; (3) differences in the physical characteristics and functions of the upstream and downstream articles; (4) differences in the costs or value of the vertically differentiated articles; and (5) significance and extent of the processes used to transform the upstream into the downstream articles."Id. at 14 n.40.

Plaintiffs challenge the Commission's application of the semi-finished products analysis as unreasonable given the record. Specifically, Plaintiffs challenge as unsupported by substantial evidence the Commission's findings as to the "dedicated for use," "differences in value," and "the significance and extent of transformation processes" prongs, as well as the Commission's ultimate conclusion that HFC Blends and HFC Components are separate like products. See Pls.' Br. 7–24. Plaintiffs also contend that the ITC's findings as to four of the five prongs of its semi-finished products analysis were unreasonable or arbitrary when compared to prior agency decisions. Id. at 24–33. The court remands the Commission's Final Determination as to the "dedicated for use" and "value added" prongs for further reconsideration, and sustains the Final Determination as to all other challenges raised by Plaintiffs.

A. Dedicated for Use

The first prong in the ITC's semi-finished products analysis is whether the upstream articles, HFC Components, are dedicated for use in the production of the downstream articles, HFC Blends. See Views at 14. Here, the ITC found that "consumption of domestically produced inGscope HFC components for the production of outGofGscope HFC blends and more than 30 outGofGscope refrigerants was not insignificant during the [period of investigation ("POI") ]" ("dedicated for use finding"). Id. The ITC calculated that, during the POI, "[a]pproximately [X] percent⁴ [ ("X percent figure") ] of domestic production of inGscope HFC components was used in the production of outGofG scope refrigerant blends." Id.

Plaintiffs raise two challenges: (1) that the ITC's finding that HFC Components are not "dedicated for use" in the production of HFC Blends was unsupported by substantial evidence, and (2) that the ITC's dedicated for use finding was contrary to past practice. See Pls.' Br. 12–17, 28–30; Pls.' Reply Br. 2–9. Plaintiffs argue that the ITC incorrectly attributes the X percent figure as representing the percentage of HFC Components used in out-of-scope blends, arguing that the ITC misread its own data and that the X percent figure describes "the ratio of in-scope to out-of-scope blends." Pls.' Br. at 12. Plaintiffs contend that the ITC's adoption of this ratio as a proxy for the proportion of HFC Components used in...