Kerr-McGee Chemical Corp. v. U.S.

• Decision Date: 10 December 1997
• Docket Number: Slip Op. 97-170.,Court No. 96-02-00397.
• Citation: 985 F.Supp. 1166
• Parties: KERR-McGEE CHEMICAL CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and China Hunan International Economic Development (Group) Corporation, China Metallurgical Import & Export Hunan Corporation, and Minmetals Precious & Rare Minerals Import & Export Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

985 F.Supp. 1166

KERR-McGEE CHEMICAL CORP., et al., Plaintiffs, v. UNITED STATES, Defendant and China Hunan International Economic Development (Group) Corporation, China Metallurgical Import & Export Hunan Corporation, and Minmetals Precious & Rare Minerals Import & Export Corporation, Defendant-Intervenors.

Slip Op. 97-170.

Court No. 96-02-00397.

United States Court of International Trade.

December 10, 1997.

Gardner, Carton & Douglas, Washington, DC (W.N. Harrell Smith, IV, George N. Grammas), for plaintiffs Kerr-McGee Chemical Corporation and Elkem Metals Company.

Frank W. Hunger, Assistant Attorney General of the United States; David M. Cohen, Director, Jeanne E. Davidson, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Randi-Sue Rimerman), David J. Ross, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Counsel, Washington, DC, for defendant.

Dorsey & Whitney, Washington, DC (Munford Page Hall, II, Philippe M. Bruno), for defendant-intervenors China Hunan International Economic Development (Group) Corporation, China Metallurgical Import & Export Hunan Corporation, and Minmetals Precious & Rare Minerals Import & Export Corporation.

OPINION

CARMAN, Chief Judge:

Before this Court is plaintiffs' Motion for Judgment on the Administrative Record pursuant to U.S. CIT R. 56.2. Plaintiffs argue the Department of Commerce's ("Department" or "Commerce") Notice of Final Determination of Sales at Less Than Fair Value: Manganese Metal From the People's Republic of China, 60 Fed.Reg. 56,045 (Dep't Comm.1995) (final determ.) ("Final Determination"), as amended, Notice of Amended Final Determination and Antidumping Duty Order: Manganese Metal From the People's Republic of China, 61 Fed.Reg. 4,415 (Dep't Comm.1996) (am. final determ.) ("Amended Final Determination") should be set aside as unlawful and the case should be remanded to Commerce for further consideration. Plaintiffs request this Court remand the case to Commerce for it to (1) value manganese ore using an appropriate price for chemically comparable ore rather than using the Indian selling price for metallurgical grade ore, and recalculate the subject merchandise's normal value accordingly; and (2) reconsider whether electricity consumption reported by the defendant-intervenors is below practical minimums for electrolysis and may not include electricity consumed in other processes in the course of manufacturing manganese metal.

Defendants disagree, arguing Commerce's determinations are supported by substantial evidence on the record and are otherwise in accordance with law and ask this Court to sustain Commerce's Amended Final Determination. Defendant-intervenors oppose plaintiffs' motion and support defendant's position. This Court has jurisdiction under 28 U.S.C. § 1581(c) (1994), and for the reasons set forth below, denies Plaintiffs' Motion for Judgment on the Administrative Record and affirms Commerce's Amended Final Determination.

BACKGROUND

Plaintiffs, Kerr-McGee Chemical Corporation and Elkem Metals Company ("Kerr-McGee") are the sole producers of electrolytic manganese metal in the United States. The product is a virtually pure form of manganese used principally in the production of steel and aluminum sheet, but also in the manufacture of chemicals. Manganese metal is composed principally of manganese but also contains some impurities such as carbon, sulfur, phosphorous, iron and silicon. Manganese metal contains by weight not less than 95% manganese. It is produced only in the United States, South Africa, and more recently, in the People's Republic of China ("PRC").

Plaintiffs filed a petition on November 8, 1994, on behalf of the United States manganese metal industry, arguing Chinese companies were dumping manganese metal in the United States. Defendant-intervenors, China Hunan International Economic Development (Group) Corporation, China Metallurgical Import & Export Hunan Corporation, and Minmetals Precious & Rare Minerals Import & Export Corporation, are located in the PRC and export the subject merchandise to the United States.

A. The Surrogate Value for Manganese Ore

The PRC is a country with a non-market economy. In antidumping investigations involving non-market economies, the Department is required to calculate the subject merchandise's normal value based on information regarding the factors of production in a surrogate country which has a market economy. The statute states if the merchandise subject to an antidumping investigation is exported from a country with a non-market economy, and "the administering authority finds that available information does not permit the normal value of the subject merchandise to be determined," 19 U.S.C. § 1677b(c)(1)(B) (1994), Commerce "shall determine the normal value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise." 19 U.S.C. § 1677b(c)(1) (1994). The statute requires Commerce, in valuing the factors of production, to "utilize to the extent possible, the prices or costs of factors of production in one or more market economy countries that are—(A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4) (1994). The factors of production utilized in producing merchandise are defined to include hours of labor required in production, quantities of raw materials employed, amounts of energy and other utilities consumed and representative capital cost, including depreciation. See 19 U.S.C. § 1677b(c)(3) (1994). Once Commerce has determined an appropriate surrogate country, it will use information on costs in that country to value each factor of production used in the nonmarket economy country. See 19 U.S.C. § 1677b(c)(2) (1994).

Plaintiffs proposed India be used as the surrogate country for valuing the factors of production for the antidumping investigation, because although no market economy comparable to the PRC produces manganese metal, India is a country of similar economic development to the PRC and is a significant producer of merchandise similar to manganese metal. Commerce agreed "India [was] the most suitable surrogate" country for purposes of the investigation because "India is at a level of economic development comparable to that of the PRC, and Indian export statistic indicate that the country is a significant producer of comparable merchandise." Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Manganese Metal From the People's Republic of China, 60 Fed.Reg. at 31,282, 31,284 (Dep't Comm.1995) (prelim. determ.) ("Preliminary Determination"), as amended, Amended Preliminary Determination of Sales at Less Than Fair Value: Antidumping Duty Determination: Manganese Metal From the People's Republic of China, 60 Fed.Reg. 37,875 (Dep't Comm. 1995).

Commerce calculated normal value based on the factors of production reported by the factories in the PRC which produced the subject merchandise for the exporters examined in the investigation. The factors used to produce manganese metal include materials, labor and energy. See Preliminary Determination, 60 Fed.Reg. at 31,284. To calculate normal value, Commerce multiplied the reported factor quantities by the appropriate surrogate values from India for those inputs purchased domestically from PRC suppliers. Where a respondent failed to provide certain factor information in usable form, Commerce relied upon publically available information from the antidumping petition, as well as best information available in valuing the factors. Id. In determining which surrogate value to use for each factor of production, Commerce selected, where possible, an average non-export value, which was representative of a range of prices within the period of investigation, or most contemporaneous with the period of investigation, specific to the input in question, and tax-exclusive. Id.

In the process of reaching its Preliminary Determination, Commerce considered five ores as possible surrogates for manganese ore produced in China. Manganese ore is a primary input into the production of manganese metal. Neither Commerce nor any of the parties were able to locate a surrogate for manganese ore that was identical to the ore used to produce manganese metal in the PRC. In the absence of an identical ore, Commerce had to choose between a number of non-identical surrogate ores. The five potential surrogates were (1) a price submitted by plaintiffs for low ferruginous peroxide ore (82-84 percent MnO₂)¹ ("ore one"); (2) a price submitted by defendant-intervenors for metallurgical grade manganese ore (30-35 percent Mn) from the 1993 Indian Minerals Yearbook ("ore two"); (3) an export price obtained by the Department for low-grade manganese ore (26-28 percent Mn content) based on an actual transaction price from the July 7, 1992 issue of the TEX Report,² reporting the price agreed to in a contract between an Indian mine and two Japanese purchasers for 25,000 tons of manganese ore ("ore three"); (4) a basket price based on grades of ore with a 30-35 percent manganese content obtained by the Department from the Indian Export Statistics ("ore four"); and (5) an average price obtained by Commerce for total Indian production of manganese ore, not differentiated by grade, during 1991-92, from the 1993 Indian Minerals Yearbook ("ore five") (Def.'s Chron. of Events ("Def.'s Chron.") at 1-2; Pls.' Chron. at 13.)³

In a letter to the Department dated March 20, 1995, defendant-intervenors suggested ore two as a possible surrogate for manganese ore used to produce manganese metal in China. On April 12, 1995, and again on May 23, 1995, plaintiffs responded to and challenged defendant-intervenors' submissions advocating ore two as a surrogate. Plaintiffs argued ...