Kombinat v. United States

• Decision Date: 26 March 2015
• Docket Number: Court No. 13–00324.,Slip Op. 15–26.
• Citation: 58 F.Supp.3d 1397
• Parties: KIROVO–CHEPETSKY KHIMICHESKY KOMBINAT, JSC, part of Uralchem, OJSC, Plaintiff, v. UNITED STATES, Defendant, and CF Industries, Inc. and El Dorado Chemical Company, Defendant–Intervenors.
• Court: U.S. Court of International Trade

58 F.Supp.3d 1397

KIROVO–CHEPETSKY KHIMICHESKY KOMBINAT, JSC, part of Uralchem, OJSC, Plaintiff

v. UNITED STATES, DefendantandCF Industries, Inc. and El Dorado Chemical Company, Defendant–Intervenors.

Slip Op. 15–26.

Court No. 13–00324.

United States Court of International Trade.

March 26, 2015.

John M. Gurley, Diana Dimitriuc–Quaia, and Tina Termei, Arent Fox LLP, of Washington, DC, for Plaintiff.

Veronica M. Onyema, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was David P. Lyons, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Valerie A. Slater and Margaret C. Marsh, Akin Gump Strauss Hauer & Feld LLP, of Washington, DC, for Defendant–Intervenors.

OPINION AND ORDER

CARMAN, Senior Judge:

Before the Court is the motion of Plaintiff Kirovo–Chepetsky Khimichesky Kombinat, JSC, part of Uralchem, OJSC (“Uralchem”) for judgment on the agency record pursuant to USCIT Rule 56.2. Mem. of Law in Supp. of Pl.'s Rule 56.2 Mot. for J. upon the Agency R. (“Mot. ”), ECF No. 25. Uralchem challenges a ruling by the Department of Commerce (“the Department” or “Commerce”) that Uralchem's solid fertilizer product known as NS 30:7 is covered by the scope of an antidumping duty order on solid fertilizer grade ammonium nitrate products from the Russian Federation.See id. at 1 (citing Mem. from E. Eastwood, to G. Taverman, re: Final Scope Ruling—NS 30:7 Solid Fertilizer Grade Ammonium Nitrate from the Russian Federation (Russia) (A–821–811) (Aug. 6, 2013), ECF No. 27 Tab 19, P.R.¹ 66 (“Final Scope Ruling ”)). Defendant United States (“the government”) opposes the motion. See Def.'s Resp. to Pl.'s Rule 56.2 Mot. for J. upon the Agency R. (“Opp. ”), ECF No. 30. Defendant–Intervenors CF Industries, Inc. and El Dorado Chemical Company (collectively “CF Industries”) also oppose the motion. See Def.-Intervenor's Resp. in Opp'n to Pl.'s Rule 56.2 Mot. for J. on the Agency R. (“CF Industries Opp. ”), ECF No. 31.

For the reasons that follow, the Court affirms Commerce's decision that Plaintiff's NS 30:7 product is within the scope of the antidumping duty order on solid fertilizer grade Russian ammonium nitrate products. Judgment will issue accordingly.

Background

On April 27, 2011, Commerce issued an antidumping duty order on solid fertilizer grade ammonium nitrate products from the Russian Federation. See Termination of Suspension Agreement on Solid Fertilizer Grade Ammonium Nitrate From the Russian Federation and Notice of Antidumping Duty Order, 76 Fed. Reg. 23,569 (Dep't Commerce Apr. 27, 2011) (“ADD Order ”).

On September 21, 2012, Uralchem requested that the Department issue a scope ruling “that Uralchem's ammonium sulfate nitrate identified as NS 30:7 ... is not within the scope of” the ADD Order. Uralchem's Request for a Scope Ruling at 1 (“Scope Ruling Request”), ECF No. 19, P.R. 1; see also Public App. to Pl.'s Mem. in Supp. of Rule 56.2 Mot. for Summary J. on the Agency R., Tab 1, ECF No. 27, App. of Docs. Supp. Def.'s Resp. to Pl.'s Rule 56.2 Mot. for J. upon the Agency R., Tab 1, ECF No. 32–1. Uralchem described NS 30:7 as “an ammonium sulfate nitrate, a solid fertilizer designed to provide a balanced ratio of nitrogen and sulfur nutrients to sulfur-deficient areas and sulfur-sensitive crops.” Scope Ruling Request at 2. According to chemical testing results submitted by Uralchem, NS 30:7 is a granular white or grey-yellow dry solid consisting predominantly of “a pair of double salts of ammonium nitrate and ammonium sulfate” that account for 59.1% of the product by weight. Id. at 4; see also id., Ex. 1. The next major component of NS 30:7 is “uncombined ammonium nitrate,” comprising 32.2% of the product by weight. Id. Finally, NS 30:7 is rounded out by 8.7% of uncombined ammonium sulfate and less than one percent each of additives, trace elements, and water. Id.

Uralchem noted in its Scope Ruling Request that NS 30:7 differs from other ammonium nitrate fertilizers “because its nitrogen content is derived from both ammonium nitrate and ammonium sulfate.” Id. at 2. Uralchem distinguished NS 30:7 on the grounds that its total nitrogen content “attributable to ammonium nitrate (both as double salts and in uncombined form) is only about 23%, which is a significantly smaller percentage of nitrogen than any known ammonium nitrate product on the U.S. market (the nitrogen content of ‘pure’ ammonium nitrate is 35%).” Id. Uralchem also pointed out that NS 30:7 contains “60% more ammonia nitrogen than nitrate nitrogen,” dissimilar from “subject merchandise under” the ADD Order. Id. at 2–3. Instead, Uralchem claimed, NS 30:7 is “designed to provide a balanced ration of two nutrients required for amino acid and protein synthesis in crops—sulfur and nitrogen—in a product that acts in a slower manner than the typical ammonium nitrate product.”Id. at 3. In sum, according to Uralchem, “differences in crystal structure, chemical composition and uses show that NS 30:7 is not ammonium nitrate covered by the scope” of the ADD Order. Id. Uralchem argued in the alternative that even if a plain reading of the scope did not exclude NS 30:7 due to lack of clarity, NS 30:7 should be excluded under the so-called Diversified Products criteria in 19 C.F.R. § 351.225(k). See id. at 3–4.

Commerce initiated a scope inquiry to determine whether NS 30:7 fell within the scope of the ADD Order and, after accepting submissions from the interested parties, found NS 30:7 to be within scope. See generally Final Scope Ruling. Plaintiff thereafter filed this suit to appeal the Final Scope Ruling. By its Rule 56.2 motion, Uralchem argues that the Final Scope Ruling is unsupported by substantial evidence, based upon a misapplication of legal standards governing scope determinations, flawed due to the illegal rejection of certain factual evidence, and arbitrary and capricious in that it ignored relevant evidence and arguments. Mot. at 1–3.

Jurisdiction & Standard of Review

The Court of International Trade exercises jurisdiction over scope determinations pursuant to section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c). In such proceedings, the court “shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i) ; see also NSK Ltd. v. United States, 481 F.3d 1355, 1359 (Fed.Cir.2007) (internal quotations and citations omitted). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Crawfish Processors Alliance v. United States, 483 F.3d 1358, 1361 (Fed.Cir.2007) (internal citations omitted). Substantial evidence may be “less than the weight of the evidence,” and a decision may still be supported by substantial evidence even where there is “the possibility of drawing two inconsistent conclusions from evidence.” Consolo v. Fed. Maritime Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). However, the Court must also ensure that the agency's decision is reasonable in the face of the record as a whole, including evidence which detracts from the agency's conclusion. See Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed.Cir.2006).

The legal framework by which Commerce conducts scope determinations stems from the agency's regulations, which provide that “[a]ny interested party may apply for a ruling as to whether a particular product is within the scope of an order.” 19 C.F.R. § 351.225(c). Rulings on scope ruling requests are governed by a three-step analysis. First, Commerce examines the scope language contained in the at-issue order to see if it is ambiguous and open to interpretation. Mid Continent Nail Corp. v. United States, 725 F.3d 1295, 1302 (Fed.Cir.2013) (internal citations omitted). Where Commerce finds the order's scope language not to be ambiguous, Commerce “states what it understands to be the plain meaning of the language” and may terminate the scope proceeding without further action. ArcelorMittal Stainless Belgium N.V. v. United States, 694 F.3d 82, 84 (Fed.Cir.2012). When Commerce finds that the scope language is ambiguous, it turns to the second step of its analysis. See 19 C.F.R. § 351.225(k)(1)-(2) and Mid Continent Nail, 725 F.3d at 1302. At the second step, Commerce seeks to interpret the ambiguity in the scope by reference to “[t]he descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of [Commerce] and the [International Trade] Commission.” 19 C.F.R. § 351.225(k)(1) (commonly called “(k)(1) materials” or “(k)(1) factors” in reference to this regulatory subsection.) Commerce will end the inquiry if it is able to interpret the scope at this second step. Only if the second step cannot resolve the ambiguity may Commerce move on to the third step of its analysis, at which it takes into consideration the following factors: “[t]he physical characteristics of the product,” “[t]he expectations of the ultimate purchasers,” “[t]he ultimate use of the product,” “[t]he channels of trade in which the product is sold,” and “[t]he manner in which the product is advertised and displayed.” 19 C.F.R. § 351.225(k)(2) (commonly called “(k) (2) materials” or “(k)(2) factors”); see Mid Continent Nail, 725 F.3d at 1302.

In reviewing scope determinations, the Court must give Commerce “substantial deference with regard to its interpretation of its own antidumping duty orders,” which are “particularly within the expertise and special competence of Commerce.” King Supply Co., LLC v. United States, 674 F.3d 1343, 1348 (Fed.Cir.2012) (citations and quotations omitted); accord Duferco Steel,...