Shieldalloy Metallurgical Corp. v. U.S.

• Decision Date: 19 November 1996
• Docket Number: Court No. 95-08-01034.,Slip Op. 96-186.
• Citation: 947 F.Supp. 525
• Parties: SHIELDALLOY METALLURGICAL CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and Galt Alloys, Inc., Defendant-Intervenor Plaintiff.
• Court: U.S. Court of International Trade

947 F.Supp. 525

SHIELDALLOY METALLURGICAL CORPORATION, Plaintiff, v. UNITED STATES, Defendant and Galt Alloys, Inc., Defendant-Intervenor Plaintiff.

Slip Op. 96-186.

Court No. 95-08-01034.

United States Court of International Trade.

November 19, 1996.

COPYRIGHT MATERIAL OMITTED

Cheryl Ellsworth, Herbert E. Harris II, Jeffrey S. Levin, Jennifer de Laurentiis (Harris & Ellsworth), Washington, DC, for plaintiff.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director; Lydia K. Griggsby, Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; David W. Richardson, General Attorney, International Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, Washington, DC, for defendant.

Jeffrey S. Neeley (Ross & Hardies), Washington, DC, for defendant-intervenor, plaintiff.

OPINION

POGUE, Judge:

Plaintiffs, Shieldalloy Metallurgical Corporation (Shieldalloy) and Galt Alloys, Inc. filed separate actions challenging aspects of the International Trade Administration's final determination in Ferrovanadium and Nitrided Vanadium from the Russian Federation, 60 Fed.Reg. 27957 (Dep't Commerce 1995) (Final Det.) [hereinafter Final Determination]. The two actions were consolidated by the Court on October 31, 1995. Galt, as defendant-intervenor, also opposes Shieldalloy's motion for summary judgment.

The Court has jurisdiction under 28 U.S.C. § 1581(c) (1994) and 19 U.S.C. § 1516a(a)(2)(A) (1994).

BACKGROUND

On May 31, 1994, Shieldalloy, a U.S. producer of ferrovanadium, filed a petition with the Department of Commerce (Commerce) and the United States International Trade Commission (ITC) alleging that imports of ferrovanadium and nitrided vanadium from Russia were being sold in the U.S. at less than fair value, and that an industry in the U.S. was materially injured, or threatened with material injury, by reason of these imports.

Vanadium is a grayish-white metallic element found in ores in the United States and Mexico, as well as in South America, Africa, and Russia. Vanadium is chiefly used in steel alloys to increase elasticity and tensile strength. J.G. Henderson, Metallurgical Dictionary 346, (Reinhold Publishing Corp. 1953).

Based on Shieldalloy's petition, Commerce initiated an antidumping duty investigation on June 20, 1994.¹ Commerce identified five parties as respondents to the investigation: Tulachermet, a Russian producer/exporter; Chusavoy, a Russian producer/exporter; Odermet, a United Kingdom exporter of Tulachermet ferrovanadium²; Galt Alloys, Inc. (Galt), a U.S. importer of the subject merchandise, treated as an exporter-respondent for purposes of this investigation; and Gesellschaft fur Electrometallurgie mbh (GfE), a German producer of ferrovanadium and nitrided vanadium³ affiliated with Shieldalloy.⁴

In an antidumping duty investigation, Commerce compares foreign market value and United States price⁵ to determine whether dumping exists, and the amount of the antidumping duty.

Some of the vanadium Shieldalloy sells in the United States comes from its affiliate, GfE, which obtains the vanadium from Russia. For purposes of the investigation of GfE, Commerce was required to use information on Shieldalloy's sales to unaffiliated purchasers to calculate GfE's United States price⁶. Shieldalloy was thus required to provide sales data to Commerce, putting Shieldalloy in the unusual position of being both a petitioner and a respondent in this case.

On May 26, 1995, Commerce issued its final determination of sales at less than fair value. The final dumping margins set by Commerce were as follows: a Russia-wide margin of 108 percent ad valorem for all manufacturers/producers/exporters other than Odermet, Galt and GfE; a margin of 10.10 percent ad valorem with respect to exports by Odermet; a margin of 3.75 percent ad valorem with respect to exports by Galt; and a margin of 11.72 percent ad valorem with respect to exports by GfE. 60 Fed.Reg. 27957.

On June 30, 1995, the International Trade Commission informed Commerce that it had issued a final affirmative determination that imports of Russian ferrovanadium and nitrided vanadium were injuring the U.S. domestic industry and on July 10, 1995, Commerce issued an antidumping duty order on ferrovanadium and nitrided vanadium from the Russian Federation.

Plaintiff, Shieldalloy, commenced this action in the United States Court of International Trade on August 8, 1995, appealing certain aspects of the May 26, 1995 Final Determination. Subsequently, Galt filed a summons and complaint with this Court contesting certain aspects of the department's final affirmative determination.

For purposes of this investigation, Commerce treated Russia as a non-market economy (NME) country. Therefore, pursuant to 19 U.S.C. § 1677b(c) (1988), Commerce determined the foreign market value of the merchandise at issue based on the value of the factors of production utilized in producing the merchandise. Commerce calculated the value of the various factors of production based upon their prices or costs in market economy countries. The statute requires that, to the extent possible, the surrogate prices come from countries that are "(A) at a level of economic development comparable to that of the non-market economy country, and (B) significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4) (1988).

Shieldalloy objected to the following aspects of Commerce's determination:

1) The use of Tulachermet's factors of production information instead of Best Information Available (BIA) to calculate foreign market value for Odermet;

2) Commerce's method for adjusting the price of South African vanadium slag (Vanadium slag is one of the raw materials used in the production of ferrovanadium and nitrided vanadium.);

3) Commerce's failure to adjust the calculated foreign market value for the subject merchandise to reflect the Russian producers' freight costs;

4) Commerce's method for converting foreign currencies to United States dollars;

5) Commerce's failure to inflate surrogate values from 1993 to period-of-investigation levels;

6) Commerce's use of Galt, rather than Galt/Hascor or Hascor alone as a respondent.

Galt objected to two aspects of Commerce's final determination:

1) Commerce's use of the GfE/Shieldalloy sales response rather than adverse BIA;

2) Commerce's reliance on the factory overhead figures submitted by GfE to calculate factory overhead for Russian producers.

STANDARD OF REVIEW

In reviewing a final antidumping determination, the Court of International Trade must determine whether Commerce's determination is in accordance with law, and whether Commerce's conclusion is supported by substantial evidence on the record. Section 516a(b)(1)(B)(i) of the Tariff Act of 1930, 19 U.S.C. § 1516a(b)(1)(B)(i) (1994). "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938); Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoted in Matsushita Elec. Indus. Co., Ltd. v. U.S., 3 Fed.Cir. (T) 44, 51, 750 F.2d 927, 933 (1984)).

The record consists of "(i) a copy of all information presented to or obtained by the Secretary, the administering authority, or the Commission during the course of the administrative proceeding, including all governmental memoranda pertaining to the case ...; and (ii) a copy of the determination, all transcripts or records of conferences or hearings, and all notices published in the Federal Register." 19 U.S.C. § 1516a(b)(2)(A) (1994).

As a general rule, an administrative agency must articulate the reasons supporting its decision, enabling the court to review whether the agency acted arbitrarily. Nachi-Fujikoshi Corp. v. U.S., 16 CIT 606, 609, 798 F.Supp. 716, 719 (1992) (citing Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285-86, 95 S.Ct. 438, 441-42, 42 L.Ed.2d 447 (1974)). "[I]n order to reach a judgment on the administrative record, the Court must have a basis for understanding the reasons for Commerce's actions." Timken Co. v. United States, 937 F.Supp. 953, 955 (CIT, 1996) (citing S.E.C. v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995 (1947)). "[W]here an explanation is lacking on the record, post hoc rationalization for Commerce's actions is insufficient." Id.

When Commerce's interpretation of the antidumping statute is challenged, this court applies the two-step analysis found in Chevron U.S.A. v. Natural Resources Defense Council, Inc.,⁷ as applied and refined by the Federal Circuit. Under Chevron, when a court reviews an agency's construction of the statute which it administers it must first determine whether Congress has directly spoken to the precise question at issue. If Congress has left a gap in the statute, "a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." 467 U.S. at 844, 104 S.Ct. at 2782.

DISCUSSION

Issues Raised by Shieldalloy

1. Use of Tulachermet's Factors of Production Values

Shieldalloy objects to Commerce's use of the factors-of-production values submitted by Tulachermet to calculate foreign market value for Odermet, a British exporter of Tulachermet ferrovanadium and nitrided vanadium.

In verifying Tulachermet's United States sales data, Commerce found significant discrepancies between the information reported by Tulachermet and the data in Tulachermet's sales records. Commerce also had difficulty in gaining access to some documents. This difficulty compromised part of the verification process. Thus, Commerce designated Tulachermet an "unresponsive respondent." Final Determination, 60 Fed.Reg. 27957, 27960.

Pursuant to 19 U.S.C. § 1677e⁸ Commerce...