Chang Chun Petrochemical Co. v. United States

• Decision Date: 10 April 2013
• Docket Number: Court No. 11–00095.,Slip Op. 13–49.
• Citation: 906 F.Supp.2d 1369
• Parties: CHANG CHUN PETROCHEMICAL CO. LTD., Plaintiff, v. UNITED STATES, Defendant, and Sekisui Specialty Chemicals America, LLC, Defendant–Intervenor.
• Court: U.S. Court of International Trade

906 F.Supp.2d 1369

CHANG CHUN PETROCHEMICAL CO. LTD., Plaintiff,

v.UNITED STATES, Defendant,andSekisui Specialty Chemicals America, LLC, Defendant–Intervenor.

Slip Op. 13–49.

Court No. 11–00095.

United States Court of

International Trade.

April 10, 2013.

Edmund W. Sim, Kelly A. Slater, and Jay Y. Nee, Appleton Luff Pte Ltd., of Washington, DC, for Plaintiff.

Melissa M. Devine and L. Misha Preheim, Trial Attorneys, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for Defendant. With them on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Jonathan M. Zielinski, Senior Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce.

Daniel J. Plaine, Thomas M. Johnson, Jr., Andrea F. Farr, and James F. Doody, Gibson Dunn & Crutcher, LLP, of Washington, DC, for Defendant–Intervenor.

OPINION & ORDER

CARMAN, Judge:

Plaintiff Chang Chun Petrochemical Company Limited (“Plaintiff” or “CCPC”) contests the final determination by the United States Department of Commerce (“Defendant” or “Commerce”) in the investigation of an antidumping duty order on polyvinyl alcohol (“PVA”) from Taiwan. See Polyvinyl Alcohol from Taiwan, 76 Fed.Reg. 5,562 (Dep't of Commerce Feb. 1, 2011) (final determination of sales at less than fair value) (“ Final Determination ”), P.R.¹ 157, and accompanying Issues and Decision Memorandum, A–583–841 (Jan. 26, 2011) (“I & D Memo”), P.R. 153. Pursuant to its motion for judgment on the agency record challenging Commerce's Final Determination, Plaintiff seeks a remand to the agency for reconsideration of Commerce's decision to apply the targeted dumping methodology to CCPC's sales. Mot. for J. on the Agency R. 56.2, ECF No. 23.

Upon review of the underlying record and motion papers, the Court sustains in part and remands in part Commerce's Final Determination. Commerce did not provide an explanation of why the transaction-to-transaction method cannot be used in this investigation as required by the regulation at issue. Commerce also did not provide an explanation of why it declined to limit its application of the targeted dumping methodology in this particular case as required by the regulation at issue.

Procedural History

This case has a long procedural history, whereby the issues in the instant case arose from the timing of the interrupted investigation. Therefore, an outline of the relevant dates and corresponding events will contextualize the current issues. The subject product is polyvinyl alcohol (“PVA”), which is a water-soluble synthetic polymer, from the Republic of China (“Taiwan”).

In 1997, Commerce promulgated a targeted dumping regulation which supplemented the targeted dumping statute. See19 C.F.R. § 351.414(f) (2004)² (hereinafter referred to as the “2004 Regulation”).³

In September of 2004, Celanese Chemicals America, LLC (“Celanese”)—now known as Sekisui Specialty Chemicals America LLC (“Sekisui”), defendant-intervenor in this case, and a domestic producer of PVA—filed a petition against PVA from Taiwan that is the underlying administrative proceeding at issue. Celanese alleged all three types of targeted dumping ⁴—for customer, region and time period—concerning CCPC, plaintiff in this case and the only known producer of PVA in Taiwan during the period of investigation from July 2003 to June 2004. On October 4, 2004, Commerce initiated a less than fair value investigation on PVA from Taiwan. Polyvinyl Alcohol from Taiwan, 69 Fed.Reg. 59,204 (Dep't of Commerce Oct. 4, 2004) (initiation of antidumping duty investigation), P.R. 28.

On October 22, 2004, the International Trade Commission (“ITC” or “Commission”) preliminarily determined that the domestic PVA industry was not materially injured or threatened with material injury. Polyvinyl Alcohol from Taiwan, 69 Fed.Reg. 63,177 (Int'l Trade Comm'n Oct. 29, 2004) (preliminary determination). Consequently, Commerce terminated its investigation. Petitioner timely appealed the Commission's negative injury determination to this court.⁵

In January of 2007, the court issued a decision in PVC Case I and remanded it to the Commission for reconsideration. See Celanese Chems. Ltd. v. United States, 31 C.I.T. 279, 2007 WL 735024 (2007) (“PVC Decision I ”).⁶ Three months later, the Commission reversed its negative injury determination on remand. In November of 2008, the court sustained the Commission's remand results. Celanese Chems. Ltd. v. United States, 32 C.I.T. 1250, 2008 WL 5482052 (2008) (“ PVC Decision II ”).⁷ Defendant and defendant-intervenors timely appealed the court's affirmation of the Commission's remand results, but the appeals court upheld PVC Decision II without opinion. Celanese Chems. Ltd. v. United States, 358 Fed.Appx. 174 (Fed.Cir.2009).

In March of 2010, the Commission notified Commerce of the affirmative preliminary injury determination, and accordingly, Commerce resumed its investigation. See Letter from Commission to Commerce, Re: Polyvinyl from Taiwan: Investigation No. 731–TA–1088 (Preliminary) (Remand), dated Mar. 25, 2010, P.R. 54. In September of 2010, Commerce issued its preliminary determination of dumping, Polyvinyl Alcohol from Taiwan, 75 Fed.Reg. 55,552 (Dep't of Commerce Sept. 13, 2010) (preliminary determination of sales at less than fair value and postponement of final determination) (“ Preliminary Determination ”), P.R. 127, and five months later its final determination of dumping, Final Determination, 76 Fed.Reg. at 5,562. The antidumping order was published in mid-March. Polyvinyl Alcohol from Taiwan, 76 Fed.Reg. 13,982 (Dep't of Commerce Mar. 15, 2011) (antidumping order) (“ AD Order ”), P.R. 162.

In December of 2008, during the time that the injury determination was being litigated and the administrative investigation was on hold, Commerce issued an interim final rule ⁸ which removed the targeted dumping regulation— 19 C.F.R. § 351.414(f)—that had been in effect at the time the PVA investigation was initiated in 2004.

At the heart of this case is whether Commerce properly applied the proper regulation. Plaintiff brings this action seeking review of Commerce's lack of explanation regarding its application of the targeted dumping regulation.

Standard of Review

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006). ⁹ The Court sustains determinations, findings or conclusions of an agency 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). Courts “look for a reasoned analysis or explanation for an agency's decision as a way to determine whether a particular decision is arbitrary, capricious or an abuse of discretion.” Wheatland Tube Co. v. United States, 161 F.3d 1365, 1369 (Fed.Cir.1998).

Discussion

Plaintiff's challenges can be boiled down to two issues. The first issue is whether Commerce applied the proper regulation to the instant investigation. Specifically, which regulation was applied—the regulation in effect at the time the investigation was initiated (the “2004 Regulation”) or the regulation in effect at the time the investigation was concluded (the “2011 Regulation”)? The second issue is whether Commerce properly applied the regulation to the instant investigation. Specifically, was Commerce's determination to apply the average to transaction methodology to all of CCPC's sales rather than just to the targeted sales supported by substantial evidence on the record or otherwise in accordance with law?

I. Statutory & Regulatory Framework

A. Statutory Framework

The dumping statute authorizes three methods ¹⁰ to determine “whether the subject merchandise is being sold in the United States at less than fair value” in an investigation: average-to-average, transaction-to-transaction, and average-to-transaction. See19 U.S.C. § 1677f–1(d)(1).¹¹ The statutory framework instructs that Commerce “shall” generally use one of the two methods described in subsection (A): either the average-to-average or the transaction-to-transaction. However, the statute provides an “exception” where Commerce “may” use the average-to-transaction method described in subsection (B) if two prerequisites are met: (1) there is a finding of targeted dumping; and (2) Commerce explains why such differences cannot be taken into account using either the average-to-average or transaction-to-transaction method. 19 U.S.C. § 1677f–1(d)(1)(B).

The first statutory requirement is for Commerce to find targeted dumping in at least one of three ways: to a customer, in a region or during a period of time. See id. The second statutory requirement is for Commerce to provide an explanation why the two general methodologies—average-to-average or transaction-to-transaction—are insufficient. While the statute prefers the two general methodologies over the exception methodology, it is silent as to when to apply the general two methodologies. See id. Further, the statute is also silent as to the body of sales to which Commerce will apply the exception methodology. When a statute is silent, Commerce is “entitled to formulate policy and make rules ‘to fill any gap left, implicitly or explicitly, by Congress.’ ” SKF USA Inc. v. United States, 254 F.3d 1022, 1030 (Fed.Cir.2001) ( quoting Chevron U.S.A., Inc. v. Nat'l Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (internal quotations omitted)).

B. Regulatory Framework

In May of 1997, exercising its gap-filling authority, Commerce promulgated a targeted dumping regulation. First, to fill the statutory gap, Commerce listed preferences between the general comparison methodologies in investigations, using the average-to-average “normally” and using the transaction-to-transaction “only in unusual situations.” See19 C.F.R. 351.414(c)(1). ¹² Regarding targeted dumping, Commerce essentially...