739 F.Supp. 613 (CIT. 1990), 89-03-00152, Kerr-McGee Chemical Corp. v. United States
|Docket Nº:||Nos. 89-03-00152, 89-03-00170.|
|Citation:||739 F.Supp. 613|
|Party Name:||KERR-McGEE CHEMICAL CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and Mitsui Denman (Ireland) Ltd., Intervenor-Defendant. CHEMETALS, INC., Plaintiff, v. UNITED STATES, Defendant, and Mitsui Denman (Ireland) Ltd., Intervenor-Defendant.|
|Case Date:||June 05, 1990|
|Court:||Court of International Trade|
Drinker Biddle & Reath, W.N. Harrell Smith, IV, Washington, D.C., Aryeh S. Friedman, and Cynthia M. Lighty, Philadelphia, Pa., for plaintiff Kerr-McGee Chemical Corp.
Squire, Sanders & Dempsey, Ritchie T. Thomas, William D. Kramer, Dana M. Stein, and Miriam A. Bishop, Washington, D.C., for plaintiff Chemetals, Inc.
Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Jane E. Meehan, Gregory Shorin,
Atty.-Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, D.C., for defendant.
Marks Murase & White, Roger L. Selfe, Matthew J. Marks, Ramon P. Marks, and Neil E. McDonell, New York City, for intervenor-defendant.
MEMORANDUM AND ORDER
Plaintiffs move for judgment on the administrative record of Electrolytic Manganese Dioxide from Ireland; Final Determination of No Sales at Less Than Fair Value, 54 Fed.Reg. 8,776 (1989) (Final Determination) and ask the court to remand this matter to the International Trade Administration (ITA or Commerce) for a new determination of whether electrolytic manganese dioxide (EMD) from Ireland was or was likely to be sold in the United States at less than fair value (LTFV). Plaintiffs ask that the court direct ITA to extend its period of investigation (POI) to capture certain United States sales made by Mitsui Denman (Ireland) Ltd. (MDI). Plaintiffs also ask that ITA be required to use a standard for determining whether sales at LTFV are likely which does not require evidence of an irrevocable offer of sale, and that ITA be required to conduct a broader investigation, including verification at the premises of all potential U.S. purchasers of EMD.
EMD, manganese dioxide (MnO) that has been refined in an electrolytic process, is an intermediate product used in the production of dry cell batteries. On May 31, 1988, Kerr-McGee Chemical Corporation and Chemetals, Inc. (plaintiffs), the principal U.S. producers of EMD for sale on the open market, filed an antidumping petition on behalf of the U.S. industry producing EMD, alleging that EMD imports from Japan, Ireland, and Greece were being, or were likely to be, sold in the U.S. at LTFV and that such imports materially injure, or threaten material injury to, the domestic industry. See Plaintiffs' Petition for the Imposition of Antidumping Duties, Public Record Document (P.R. Doc.) 1.
On June 27, 1988, ITA initiated an antidumping investigation with respect to EMD from Ireland. Initiation of Antidumping Duty Investigation; Electrolytic Manganese Dioxide from Ireland, 53 Fed.Reg. 24,115 (1988). On the same day, it also initiated investigations with respect to EMD from Greece and Japan. Initiation of Antidumping Duty Investigation; Electrolytic Manganese Dioxide from Greece, 53 Fed.Reg. 24,114 (1988); Initiation of Antidumping Duty Investigation; Electrolytic Manganese Dioxide from Japan, 53 Fed.Reg. 24,11 6 (1988).
According to plaintiffs, ITA contacted them on August 1, 1988, to advise them that the Office of Investigations was too occupied to conduct the Irish EMD investigation, which would therefore be conducted by ITA's Office of Compliance, "an office of the ITA that does not generally conduct investigations under section 731 of the [Tariff] Act [of 1930]." Memorandum in Support of Plaintiffs' Motion for Judgment upon the Agency Record (P.Brief) at 5. The transfer of authority took place during the composition of ITA's questionnaire.
In their comments on ITA's draft questionnaire plaintiffs asserted, inter alia, that "most EMD purchasers observe an annual purchase cycle" and that "sales of EMD to U.S. battery producers are governed by long-term contracts of up to 3 years." P.R.Doc. 10, at 350. Commerce attempted to address plaintiffs' concern in designing its antidumping questionnaire. Commerce nevertheless decided to adhere to its standard practice and chose a six month POI, that is, December 1, 1987 through May 31, 1988. P.R.Doc. 20, at 602.
MDI, the sole producer of EMD in Ireland, is 75% owned by MMS, a major Japanese EMD producer, 15% owned by Mitsui & Co., Ltd., Tokyo, 5% owned by Mitsui & Co., Ltd., London, and 5% owned by the Industrial Development Authority of Ireland. P.R.Doc. 76, at 755. Mitsui New York is Mitsui Tokyo's United States trading company. Id. at 754.
MDI's primary purchaser, and another corporation described here as the potential purchaser, comprise two of the three major purchasers of EMD in the United States. P.R.Doc. 14, at 283. Both purchasers also produce EMD. The primary purchaser produces it solely for its own use. Id. at 281. In late spring of 1987, a fire disabled the cell room of MDI's primary purchaser's EMD plant, forcing the purchaser to obtain all its EMD requirements from outside sources. P.R.Doc. 14, at 281.
Before a U.S. purchaser will use EMD of a particular kind from a particular supplier, the product must be "qualified".
The initial two qualification steps involve (step # 1) the chemical and physical analysis of the material followed by (step # 2) a laboratory scale battery test. This would typically require providing the customer with a 1 to 2 kilogram ("kg") sample. Step # 1 usually involves one to three months to complete although if the tests need to be repeated, the time can be significantly longer. In the second step several hundred simulated batteries (batteries not jacketed or packaged) are produced for testing purposes. The tests include those for tolerance and integrity. This latter step can take between six months to a year to complete.
Based on an acceptable product performance in the first two steps, qualification would proceed to (step # 3) a semi-line scale test. In this step the customer would be provided with a large sample size (estimated average of between 10-20 MTs [metric-tons]) in order to use the material in a small scale battery production run. The completed batteries produced in this run are usually stored for a period of six months (simulating the average 6 month shelf-life prior to sale) before they are subjected to a series of additional tests. Because of this storage period, step # 3 is the longest step in the qualification process, and typically averages between six months to a year.
The final step of qualification, the final line scale test (step # 4), would be the use by the potential customer of an even larger sample size of up to as much as 250 MTs for trial plant production. This requires stopping production and cleaning the line beforehand in order to run the product in the plants [sic] actual battery production line. The purpose of this last step, which is the shortest step to complete, is to check the processibility of the product and assure that no physical or mechanical problems arise in its expected operating environment. For these reasons, this final step needs to be done in the plant where production would physically occur.
P.R.Doc. 76, at 757-58.
Following issuance of the questionnaire and follow-up inquiries, counsel for MDI submitted a letter to Commerce which stated that:
(1) MDI had made no shipments of EMD to the United States during the investigation period;
(2) Neither MDI, nor its agents or affiliates[,] entered into contracts during or prior to the investigation period to make shipments of EMD produced by MDI to the United States during the investigation period;
(3) Neither MDI nor its agents or affiliates made any offers of sale during the investigation period of EMD produced by MDI;
(4) There are no open pre-existing contracts entered into prior to the investigation period which call for the shipment of EMD to the United States by MDI; and
(5) To the best of MDI's knowledge and belief, no EMD sold by MDI to third countries was later resold to the United States.
P.R.Doc. 25, at 465-66.
By letter dated September 15, 1988, plaintiffs responded to MDI's assertion and alleged that Bureau of Census data showed that there had been imports of EMD from Ireland since at least 1978 (when the bureau first began recording imports of EMD) until 1987, P.R.Doc. 27, at 476, and that the POI should be extended backward to begin in January of 1987 and thus include sales of EMD from Ireland reported as imports in January, March, and May of
1987. Id. at 479, 482. As a reason justifying such a retroactive enlargement of the POI, plaintiffs alleged that MDI's sales activity during the POI was "unusually depressed." Id. at 481-82 (quoting Certain Iron Metal Castings from India; Antidumping Final Determination of Sales at Less Than Fair Value, 46 Fed.Reg. 39,869, 39,870 (1981)).
By letter dated September 21, 1988, MDI replied that an extension of the POI was inappropriate according to ITA regulations and prior rulings. P.R.Doc. 32, at 523-29. MDI also stated, inter alia, that its primary U.S. purchaser had disqualified MDI EMD in early 1987 and that MDI's product remains disqualified for use in the primary purchaser's batteries. Id. at 520.
On October 17, 1988, ITA asked MDI to confirm information regarding its most recent sales to United States purchasers. P.R.Doc. 42, at 599. MDI responded to ITA's request for information by letter dated October 24, 1988. P.R.Doc. 46, Confidential Record Document (C.R.Doc.) 13. MDI stated that its primary U.S. customer had "disqualified MDI's EMD for use...
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