Rhone Poulenc, SA v. United States

• Citation: 592 F. Supp. 1318,8 CIT 47
• Decision Date: 19 July 1984
• Docket Number: Court No. 81-1-00079.
• Parties: RHONE POULENC, S.A., and Rhone Poulenc, Inc., Plaintiffs, v. The UNITED STATES, Defendant, and PQ Corporation, Defendant-Intervenor.
• Court: U.S. Court of International Trade

592 F. Supp. 1318

8 CIT 47

RHONE POULENC, S.A., and Rhone Poulenc, Inc., Plaintiffs, v. The UNITED STATES, Defendant, and PQ Corporation, Defendant-Intervenor.

Court No. 81-1-00079.

United States Court of International Trade.

July 19, 1984.

Donohue & Donohue, Joseph F. Donohue, James A. Geraghty, and John M. Peterson, New York City, for plaintiffs.

Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch; Sheila N. Ziff, U.S. Dept. of Justice, Washington, D.C., for defendant.

Warren Maruyama, U.S. Intern. Trade Com'n, Washington, D.C., for defendant.

Mandel & Grunfeld, Bruce M. Mitchell and Steven R. Sosnov, New York City, for defendant-intervenor.

OPINION AND ORDER

RESTANI, Judge.

Plaintiffs, Rhone Poulenc, S.A., and Rhone Poulenc, Inc., ("Rhone Poulenc")¹ challenge the final determination of the United States International Trade Commission ("ITC" or "Commission"), pursuant to 19 U.S.C. § 1673d(b)(i)(A)(ii) (1982) that an industry in the United States is threatened with material injury by reason of imports of anhydrous sodium metasilicate (ASM) from France,² and the determination of the United States International Trade Administration, Department of Commerce ("ITA") of sales at Less Than Fair Value ("LTFV") pursuant to 19 U.S.C. § 1673d(a) (1982).³ This matter is before the court pursuant to plaintiffs' motion for review of administrative determinations upon the agency record under Rule 56.1.

Plaintiffs raise the following issues:

(1) Whether the Commission's determination that a United States industry is threatened with material injury is supported by substantial evidence and is otherwise in accordance with law, particularly:

(a) whether the Commission erred by failing to consider factors applicable to a finding of present material injury, specifically:

(1) import volume,

(2) effects of imports upon domestic prices, and

(3) impact of French ASM imports on the domestic ASM industry;

(b) whether the Commission improperly aggregated data in assessing injury to an industry;

(c) whether the Commission's consideration of developments in the Northeast market constituted a proper industry analysis;

(d) whether the Commission's consideration of developments in the commercial package market is appropriate and in accordance with law;

(e) whether the concurring opinion of a Commissioner was based upon speculation and conjecture and;⁴

(2) whether the ITA's disallowance of plaintiffs' claim for an adjustment to foreign market value is supported by substantial evidence and is in accordance with law. More specifically, plaintiffs challenge the disallowance of technical services expenses as a circumstances of sale adjustment to foreign market value and further, any limitation of the exporter's sales price offset adjustment because of a lower level of sales expenses in the United States than in the foreign market.

Background

ASM is a sodium silicate manufactured for use as an alkali source⁵ in detergent formulations. The largest importer of ASM is Rhone Poulenc, Inc. of Monmouth, New Jersey, which is a wholly owned subsidiary of the French producer and exporter, Rhone Poulenc, S.A., of Paris, France.

There are only four United States manufacturers of ASM. They are PQ Corporation ("PQ") of Valley Forge, Pennsylvania;⁶ Stauffer Chemical Company of Joliet, Illinois, Diamond Shamrock Corporation of Dallas, Texas, and Mayo Products Company, Division of Pennwalt Corporation of Smyrna, Georgia. These companies were found to produce ASM "like" the ASM imported by Rhone Poulenc, Inc.⁷ Furthermore, these companies were found to constitute the domestic industry against which the impact of less than fair value (LTFV) sales should be measured.⁸

Each United States ASM producer is vertically integrated. Each produces, in varying degrees, ASM for its own "captive" consumption in the manufacture of detergents. At the same time, each sells ASM in the so-called "commercial" market to other detergent manufacturers who use ASM in the production of independently-labeled detergents.

ASM is sold commercially in two forms. The "bulk" market consists of large volume consumers who take delivery in railway hopper cars or in 2,000 pound sacks. The "package" market consists of smaller quantity consumers.⁹ Packaged ASM is shipped in 100-pound sacks or 400-pound drums, and accounts for approximately two-thirds of the commercial market. During the relevant period,¹⁰ ASM imports were sold exclusively in the "package" market.

The ASM industry possesses a few salient features which are notable. First, ASM, a fungible product, is highly price sensitive. Second, the production machinery used to manufacture ASM must be operated continuously, twenty-four hours a day, seven days a week, as profitability falls rapidly when capacity utilization declines. Third, there is decreasing demand for ASM in the United States market, and the foreign producer has capacity for increased production or for diverting production to the United States.

Opinion

Although it is well established that the administrative construction of a statute by the agency charged with its administration is entitled to great weight, Melamine Chemicals, Inc. v. United States, 732 F.2d 924 (Fed.Cir.1984) (citing Zenith Radio Corp. v. United States, 437 U.S. 443, 98 S.Ct. 2441, 57 L.Ed.2d 337 (1978)); Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1964); Selman v. United States, 498 F.2d 1354, 1356 (1974); Freeport Minerals Company v. United States, 7 C.I.T. ___, ___-___, 590 F.Supp. 1246 (1984), the determination at issue must be supported by substantial evidence on the record and may not be contrary to law. See 19 U.S.C. § 1516a(b)(1)(B) (1982); Armstrong Bros. Tool Co. v. United States (Daido Corporation, Steelcraft Tools Division, Party-in-Interest), 84 Cust.Ct. 16, 483 F.Supp. 312 (1980), aff'd, 67 CCPA 94, 626 F.2d 168 (1980), and cases cited therein; accord Alberta Gas Chemicals, Inc. v. United States, 1 C.I.T. 312, 321, 515 F.Supp. 780, 789 (1981); see also American Spring Wire Corporation v. United States, ___ C.I.T. ___, ___, 590 F.Supp. 1273 (1984) and cases cited therein; Southwest Florida Winter Vegetable Growers Association v. United States, 7 C.I.T. ___, 584 F.Supp. 10 (1984) (citing Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938) (Substantial evidence is defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion")).

Threat of Material Injury

The concept of "threat of material injury" arises in an area of the law which is, needless to say, far from "cut and dry." See Bethlehem Steel Corp. v. United States, ___ C.I.T. ___, ___, 590 F.Supp. 1237 (1984) ("... these are the early days of sophisticated interpretation, despite the long history of such laws ....").

The parties disagree over the threat of injury standard. Their disagreement centers around plaintiffs' position that the ITC and the court must look to the economic indicators of injury specified in the present injury standard in order to determine threat of injury. Defendants argue that there is no need to consider the material injury standard, but rather, that the legislative history is determinative in its discussion of demonstrable trends.¹¹ As discussed below, we find that in making its final determination, the Commission may not consider trends such as market penetration alone, but must consider such trends in conjunction with threat of the specific indicia of present material injury.

The Commission's statutory task is to determine whether an industry in the United States is materially injured or threatened with material injury by reason of imports being sold or likely to be sold at LTFV. Section 1673d(b)(1)(A)(ii) provides that the "Commission shall make a final determination of whether ... an industry in the United States ... is threatened with material injury ... by reason of imports of the merchandise with respect to which the administering authority has made an affirmative determination of sales at LTFV...."¹²

Threat of material injury is not defined in 19 U.S.C. § 1673d(b)(1)(A)(ii) or in any other section of the Act. The ITC's regulations provide no further definitional assistance. Moreover, what little agency practice in this area exists, offers limited guidance.

In contrast to the dearth of guidelines for the determination of threat of injury, the statute contains detailed specifications for the determination of material injury. In general, "`material injury' means harm which is non-inconsequential, immaterial, or unimportant." 19 U.S.C. § 1677(7)(A) (1982); 19 C.F.R. § 207.27 (1983). In making an injury determination, the Commission is required to consider, among other factors, the following:

(i) the volume of imports of the merchandise which is the subject of the investigation;

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

(iii) the impact of imports of such merchandise on domestic producers of like products.

19 U.S.C. § 1677(7)(B)(i)-(iii) (1982); see 19 C.F.R. § 207.26(a)(1)-(3) (1983).

Although economic factors indicating a threat of material injury vary from case to case, the factors required to be considered in a final determination of present injury must be reviewed in the threat of injury context to determine the imminence of actual injury. Cf. Republic Steel Corporation v. United States, ___ C.I.T. ___, ___, 591 F.Supp. 640 (1984) ("The essence of a threat lies in the ability and incentive to act imminently"). Had Congress directly considered this matter,¹³ it would have required the Commission when making its final determination to look to these concrete standards in assessing threat of material injury.¹⁴ The general construction of the antidumping laws and the policy of fair treatment to domestic and foreign industries require this result.¹⁵

There is support for the view expressed...