Save Domestic Oil, Inc. v. United States, 03-1262.

• Decision Date: 30 January 2004
• Docket Number: No. 03-1262.,03-1262.
• Citation: 357 F.3d 1278
• Parties: SAVE DOMESTIC OIL, INC., Plaintiff-Appellant, v. UNITED STATES, and API Ad Hoc Free Trade Committee, and Saudi Arabian Oil Company, and Petroleos De Venezuela, S.A. and Citgo Petroleum Corporation, and Petroleos Mexicanos, P.M.I. Comercio Internacional S.A. De C.V., and Pemex Exploracion y Produccion, and BP Amoco and BP America, Inc. (now known as BP Corporation North America Inc.), Defendants-Appellees, and Chevron Corporation and Texaco Inc. (now known as ChevronTexaco Corporation), Exxon Corporation and Mobil Corporation (now known as Exxon-Mobil Corporation), and Shell Oil Company, Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1278

357 F.3d 1278

SAVE DOMESTIC OIL, INC., Plaintiff-Appellant, v. UNITED STATES, and API Ad Hoc Free Trade Committee, and Saudi Arabian Oil Company, and Petroleos De Venezuela, S.A. and Citgo Petroleum Corporation, and Petroleos Mexicanos, P.M.I. Comercio Internacional S.A. De C.V., and Pemex Exploracion y Produccion, and BP Amoco and BP America, Inc. (now known as BP Corporation North America Inc.), Defendants-Appellees, and Chevron Corporation and Texaco Inc. (now known as ChevronTexaco Corporation), Exxon Corporation and Mobil Corporation (now known as Exxon-Mobil Corporation), and Shell Oil Company, Defendants.

No. 03-1262.

United States Court of Appeals, Federal Circuit.

DECIDED: January 30, 2004.

Charles Owen Verrill, Jr., Wiley Rein & Fielding LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief was Timothy C. Brightbill. Of counsel was Daniel B. Pickard.

Michael D. Panzera, Attorney, Commercial Litigation Branch, Civil Division, United

States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief was David M. Cohen, Director. Of counsel on the brief was Jonathan Engler, Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC. Of counsel were Berniece A. Browne and John D. McInerney, Attorneys, United States Department of Commerce, of Washington, DC.

Harry L. Clark, Dewey Ballantine LLP, of Washington, DC, argued for defendant-appellee API Ad Hoc Free Trade Committee. With him on the brief were John W. Bohn and David A. Yocis. Of counsel was Bradford L. Ward.

Carolyn B. Lamm, White & Case LLP, of Washington, DC, for defendant-appellee Saudi Arabian Oil Company. With her on the brief were Adams C. Lee, and Frank J. Schweitzer. Of counsel was Frank H. Morgan and Francis A. Vasquez, Jr.

Thomas B. Wilner, Shearman & Sterling LLP, of Washington, DC, for defendants-appellees Petroleos De Venezuela, S.A., et al. Company. With him on the brief were Perry S. Bechky and Christopher M. Ryan. Of counsel was Kristine Huskey.

Lynn Marie Fischer, Wilmer, Cutler & Pickering, of Washington, DC, for defendants-appellees Petroleos Mexicanos, et al. With her on the brief were Gary N. Horlick and Peggy A. Clarke. Of counsel was John P. Maloney, Jr.

Robert E. Burke, Barnes, Richardson & Colburn, of Chicago, Illinois, for defendant-appellee BP Corporation North America, Inc. With him on the brief were Brian F. Walsh, Diane A. MacDonald, and Jane E. Welsh.

Before RADER, BRYSON, and PROST, Circuit Judges.

PROST, Circuit Judge.

Save Domestic Oil, Inc. ("SDO") appeals from a decision of the United States Court of International Trade dismissing its case and upholding the United States Department of Commerce's ("Commerce's") refusal to initiate countervailing duty ("CVD") and antidumping duty ("AD") investigations into crude oil imports from Iraq, Mexico, Saudi Arabia, and Venezuela. Save Domestic Oil, Inc. v. United States, 240 F.Supp.2d 1342 (Ct. Int'l Trade 2002). Because we agree with the Court of International Trade that Commerce properly considered the opposition of domestic importer-producers in determining whether the petitions had the requisite industry support, we affirm.

I

On June 29, 1999, SDO, a consortium of twelve U.S. crude oil producers, filed eight separate petitions seeking the imposition of CVD and AD upon crude petroleum oil products imported from Iraq, Mexico, Saudi Arabia, and Venezuela.¹

On August 9, 1999, Commerce dismissed SDO's petitions for lack of industry support. Certain Crude Petroleum Oil Products From Iraq, Mexico, Saudi Arabia, and Venezuela, 64 Fed. Reg. 44,480 (Dep't Commerce Aug. 16, 1999) (publishing Dismissal of Antidumping and Countervailing Duty Petitions, dated Aug. 9, 1999) ("Dismissal Determination"). In particular, Commerce dismissed the petitions because many of the large, integrated oil companies (e.g., Exxon, Texaco), sixteen of which joined to form the API² Ad Hoc Free Trade Committee ("API"), opposed the petition. API presented expert testimony that the imposition of duties would adversely affect its members as domestic producers (both as related to foreign producers and as importers) by lowering production, creating price instability, and reducing the diversity of oil supplies. Consequently, in determining the amount of support for the petitions, Commerce counted the opposition of the API members. Because approximately 67% of the regional domestic industry opposed the imposition of duties, Commerce dismissed SDO's petitions.

SDO appealed Commerce's decision to the Court of International Trade. On September 19, 2000, the court held, inter alia, that Commerce should have applied a "common stake" analysis with respect to the importing domestic producers, comparing each individual producer's import dependency to its stake in the domestic industry. Save Domestic Oil, Inc. v. United States, 116 F.Supp.2d 1324 (Ct. Int'l Trade 2000). The Court of International Trade therefore remanded the case to Commerce.

On August 7, 2001, Commerce upheld its original dismissal, again considering the opposition of the integrated oil producers. Administrative Determination Pursuant To Court Instructions: Antidumping and Countervailing Duty Petitions on Certain Crude Petroleum Oil Products from Iraq, Mexico, Saudi Arabia, and Venezuela (Dep't Commerce Aug. 7, 2001) ("Remand Determination"). In particular, Commerce considered the opposition of ARCO, BP-Amoco, Coastal, Chevron, Conoco, Exxon, Fina, Marathon, Mobil, Murphy, Phillips Petroleum, Shell, and Texaco. See id. at 29 n. 49. Applying the "common stake" analysis as dictated by the Court of International Trade, Commerce developed a matrix to compare each company's dependency on imports (none, low, significant, high) to its stake in domestic production (based on factors such as production volume, number of workers, number of new wells drilled, number of wells in operation, oil-field-related capital expenditures, and reserve holdings). See id. at 18-19, 22. Performing the analysis on a company and country-specific basis, Commerce determined whether it would disregard a company's opposition to a country-specific petition. Id. at 39. In the end, Commerce concluded that approximately 60% of the domestic industry opposed SDO's various petitions. It therefore dismissed the petitions. Id. at 40.

SDO again appealed to the Court of International Trade. The court, however, upheld Commerce's dismissal, finding that Commerce did not have to disregard the opposition of domestic importer-producers because it found that the opposition arose out of the producers' domestic interests. Save Domestic Oil, 240 F.Supp.2d at 1353-57. In particular, the court found that the high level of U.S. dependency on crude oil imports justified including the large, integrated-producers' opposition. Id. at 1355. Noting the discretion given to Commerce in performing its analysis, as well as the lack of an established rule or bright-line test, the Court of International Trade approved Commerce's matrix analysis because it adequately accounted for the particular characteristics of the domestic crude oil industry. Id. at 1355-57.

SDO filed a timely appeal to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II

We review decisions of the Court of International Trade reviewing Commerce's CVD and AD determinations by applying "anew" that court's standard of review as set forth in 19 U.S.C. § 1516a(b)(1)(A). PPG Indus., Inc. v. United States, 978 F.2d 1232, 1236 (Fed.Cir.1992). Accordingly, we will uphold Commerce's determination unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(A) (2000). This deferential standard requires only that Commerce "articulate a satisfactory explanation for its action including a `rational connection between the facts found and the choice made.'" Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)).

Under the statute, CVD and AD investigations may be initiated either by the administering authority (Commerce) or by petition. 19 U.S.C. §§ 1671a (CVD), 1673a (AD).³ When evaluating whether to initiate such investigations by petition, Commerce must "determine if the petition has been filed by or on behalf of the industry." Id. §§ 1671a(c)(1)(A)(ii)(CVD), 1673a(c)(1)(A)(ii)(AD). To that end, Congress has established specific rules. See id. §§ 1671a(c)(4)(CVD), 1673a(c)(4)(AD). Specifically, Commerce shall find that the industry supports the petition if:

(i) the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and

(ii) the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petition.

Id. §§ 1671a(c)(4)(A)(CVD), 1673a(c)(4)(A)(AD). In determining the level of domestic support, however, Commerce is required to disregard the opposition of domestic producers related to foreign producers, unless those domestic producers can demonstrate that they would be adversely affected by the imposition of duties as domestic producers. Id. §§ 1671a(c)(4)(B)(i)(CVD), 1673a(c)(4)(B)(i)(AD). Also, Commerce may disregard the opposition of domestic producers of a like domestic product who also import the subject merchandise. Id. §§ 1671a(c)(4)(B)(ii)(CVD), 1673a(c)(4)(B)(ii)(AD). The latter sections, dealing with Commerce's discretion to include the opposition of domestic importer-producers, are the focus of our analysis here.

On appeal, SDO presents two primary arguments: (1) Commerce improperly...