Global Commodity Grp. LLC v. United States

• Decision Date: 07 March 2013
• Docket Number: No. 2012–1346.,2012–1346.
• Citation: 709 F.3d 1134
• Parties: GLOBAL COMMODITY GROUP LLC, Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee, and Archer Daniels Midland Company, Cargill, Incorporated, and Tate & Lyle Americas LLC, Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

709 F.3d 1134

GLOBAL COMMODITY GROUP LLC, Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee,andArcher Daniels Midland Company, Cargill, Incorporated, and Tate & Lyle Americas LLC, Defendants–Appellees.

No. 2012–1346.

United States Court of Appeals,Federal Circuit.

March 7, 2013.

George W. Thompson, Neville Peterson LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief was Russell A. Semmel.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee, United States. On the brief were Stewart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke, Assistant Director, and Carrie A. Dunsmore, Trial Attorney. Of counsel on the brief was Matt Walden, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC. Of counsel was Jonathan M. Zielinski.

Daniel L. Schneiderman, King & Spalding, LLP, of Washington, DC, argued for defendants-appellees, Archer Daniels Midland Company, et al. With him on the brief was Joseph W. Dorn.

Before LOURIE, MOORE, and O'MALLEY, Circuit Judges.

O'MALLEY, Circuit Judge.

Global Commodity Group LLC (“GCG”) appeals the Court of International Trade's judgment, Global Commodity Group LLC v. United States, 825 F.Supp.2d 1328 (Ct.Int'l Trade 2012) sustaining the Department of Commerce's (“Commerce”) determination in Citric Acid and Certain Citrate Salts: Final Determination on Scope Inquiry for Blended Citric Acid from the People's Republic of China and Other Countries (“Final Scope Determination”), issued on May 2, 2011. In the Final Scope Determination, Commerce found the portion of GCG's merchandise consisting of citric acid from the People's Republic of China (“PRC”)—approximately 35 percent—within the scope of the antidumping duty and countervailing duty orders on citric acid and certain citrate salts (citric acid) from the PRC. Because we owe significant deference to Commerce's own interpretation of scope orders, and we find Commerce's interpretation of the scope order to be reasonable, we affirm the lower court's ruling.

Background

In 2009, following a petition by defendant-intervenors-appellees Archer Daniels Midland Co., Cargill, Inc., and Tate & Lyle Americas (collectively, “Petitioners”) and a related investigation, Commerce issued Citric Acid and Certain Citrate Salts From Canada and the People's Republic of China: Antidumping Duty Orders, 74 Fed.Reg. 25,703 (May 29, 2009) and Citric Acid and Certain Citrate Salts from the People's Republic of China: Notice of Countervailing Duty Order, 74 Fed.Reg. 25,705 (May 29, 2009) (“the Orders”). The Scope of the Orders section for each of the Orders states, in relevant part:

The scope of this order includes all grades and granulation sizes of citric acid, sodium citrate, and potassium citrate in their unblended forms, whether dry or in solution, and regardless of packaging type. The scope also includes blends of citric acid, sodium citrate, and potassium citrate; as well as blends with other ingredients, such as sugar, where the unblended form(s) of citric acid, sodium citrate, and potassium citrate constitute 40 percent or more, by weight, of the blend.74 Fed.Reg. at 25,703, 25,705.¹ GCG's merchandise at issue consists of 35% citric acid from the PRC and 65% citric acid originating from other countries. On July 26, 2010, GCG requested a determination from Commerce, pursuant to 19 C.F.R. § 351.225(c) that its merchandise falls outside the scope of the Orders as a “blend” under the second sentence of the scope language quoted above where the unblended form of Chinese citric acid constituted less than 40%, by weight, of the blend.

Commerce instituted a scope inquiry in November 2010 and issued its Preliminary Determination on March 7, 2011. In that determination, Commerce rejected GCG's argument that the term “other ingredients” in the scope language referred to any product other than subject citric acid. Rather, Commerce found that the “scope intentionally breaks blends of citric acid and blends with other ingredients out into separate clauses, and only applies the 40 percent threshold to the latter.” J.A. 34. Because GCG adds only non-subject citric acid to the subject citric acid, Commerce recommended that GCG's product be considered a blend of citrate products under the first clause of the second sentence rather than a blend with other ingredients meeting the specified exclusion. Commerce also rejected GCG's argument that its product was substantially transformed in a third country through the blending process and recommended that duties be assessed on GCG's product “according to the rates applicable to citric acid from both the PRC and any other country represented in the blend, based upon the quantity and value of citric acid from each country included in the blend.” J.A. 39. If the percentage of subject and non-subject citric acid could not be accurately determined for GCG's product, then antidumping and countervailing duties would be assessed based on the highest rate applicable to its constituent sources.

In the Final Scope Determination, issued May 2, 2011, Commerce affirmed the findings of the Preliminary Determination and recommended that the portion of GCG's product originating from the PRC be subject to the scope of the Orders and that GCG's product be assessed duties according to the amount of PRC citric acid contained in the product. Commerce altered its reasoning, however, and recommended that GCG's product not be considered a “blend” within the meaning of the Orders. Rather, Commerce found that GCG's product “is commingled citric acid, and for all intents and purposes, commingled citric acid is still just citric acid. Functionally and chemically, it is indistinguishable from citric acid that comes from a single source.” J.A. 44. Thus, according to Commerce, the first sentence of the scope language from the Orders quoted above—relating to unblended citrate products—covers GCG's product. Noting that the Harmonized Tariff Schedule of the United States (“HTSUS”) treats commingled citric acid differently from blends that include citric acid, sodium citrate, and potassium citrate, Commerce found that “GCG cannot have it both ways: if its product is not a blend under the first clause of the second sentence of the scope because of the scope's HTSUS references, it also cannot be a blend under the second clause of that sentence that references blends with other ingredients, since the same HTSUS number applies to the entire sentence.” J.A. 45. Commerce therefore recommended that duties be applied to GCG's product according to the methodology outlined in its Preliminary Determination.

GCG commenced an action pursuant to 19 U.S.C. § 1516a(a)(2)(B)(vi) in the Court of International Trade challenging Commerce's Final Scope Determination. The court framed the dispute as “whether Plaintiff's product is a blend, and specifically ... whether non-subject citric acid must qualify as ‘other ingredients' within the meaning of that clause.” Global Commodity Group, 825 F.Supp.2d at 1330. As it did below, GCG contended that “other ingredients” must be interpreted to mean any ingredient other than subject citrates in contrast to Commerce's conclusion that “other ingredients” refers to noncitrate products. Id. Finding that “Commerce's interpretation of the phrase ‘other ingredients' is not only permissible, it is eminently reasonable,” the court held that Commerce's interpretation: 1) is not contrary to the terms of the scope; 2) does not alter the language of the scope; and 3) must be sustained in light of the significant deference owed to Commerce in interpreting scope provisions. Id. at 1331. The Court of International Trade therefore sustained Commerce's determination that the portion of GCG's product originating from PRC falls within the scope of the order and is subject to the corresponding duties. Id.

GCG timely appealed and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

I.

Domestic producers of a particular product that “believe that imports of certain competing goods are being sold in the United States at less than fair market value (i.e., being ‘dumped’) ... may petition Commerce to impose antidumping duties on the imports of the goods.” King Supply Co. v. United States, 674 F.3d 1343, 1345 (Fed.Cir.2012) (citing Walgreen Co. v. United States, 620 F.3d 1350, 1351 (Fed.Cir.2010)). Commerce will then initiate an investigation to preliminarily determine if there is a reasonable basis to conclude that dumping is occurring or is likely to occur. 19 U.S.C. §§ 1673a, 1673b(b)(1)(A). The U.S. International Trade Commission will concurrently investigate whether there exists a reasonable indication that a domestic industry has sustained—or is threatened with—material injury. Id. § 1673b(a)(1)(A). After the conclusion of the investigations, assuming final determinations of dumping and material injury or threat of material injury, Commerce issues an antidumping duty order covering the appropriate imported merchandise. Id. § 1673d(c)(2). In its finaldetermination, Commerce defines the scope of products that are subject to the antidumping order. Walgreen, 620 F.3d at 1352.

When “[i]ssues arise as to whether a particular product is included within the scope of an antidumping or countervailing duty order or a suspended investigation,” Commerce is called upon to inquire into the scope of an order and “issue[ ] ‘scope rulings' that clarify the scope of an order or suspended investigation with respect to particular products.” 19 C.F.R. § 351.225(a). The inquiry that Commerce conducts in a scope ruling is governed by the regulation set forth at 19 C.F.R. § 351.225(k), which provides, in relevant part:

(k) [I]n considering whether a particular product is included within the scope of an...