Union Camp Corp. v. U.S.

• Decision Date: 05 August 1996
• Docket Number: Court No. 94-08-00480.,Slip Op. 96-123.
• Citation: 941 F.Supp. 108
• Parties: UNION CAMP CORPORATION, Plaintiff, v. The UNITED STATES, Defendant, and Dastech International, Inc., et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

941 F.Supp. 108

UNION CAMP CORPORATION, Plaintiff, v. The UNITED STATES, Defendant, and Dastech International, Inc., et al., Defendant-Intervenors.

Slip Op. 96-123.

Court No. 94-08-00480.

United States Court of International Trade.

August 5, 1996.

Fenwick & West, Roger M. Golden and Phyllis E. Andes, Washington, DC, for Plaintiff.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director; Cynthia B. Schultz, U.S. Department of Justice, Civil

Division, Commercial Litigation Branch; Stacy J. Ettinger, Office of the Chief Counsel for Import Administration, for Defendant.

Williams, Mullen, Christian & Dobbins, P.C., William E. Perry, Washington, DC, for Defendants-Intervenors.

MEMORANDUM AND ORDER

WALLACH, Judge:

I

INTRODUCTION

Plaintiff Union Camp Corporation ("Union Camp") and Defendant-Intervenors¹ Dastech International, Incorporated, Guangdong Chemicals I/E Corporation (Group), ICC Chemical Corporation, Sinochem International Chemical Company, Limited, Sinochem Jiangsu I/E Corporation, and Tianjin Chemicals I/E Corporation ("Defendant-Intervenors" or collectively "Dastech") challenge as unsupported by substantial evidence and not in accordance with law certain aspects of the Department of Commerce, International Trade Administration's ("Commerce" or "ITA") final less-than-fair-value ("LTFV") determination in the antidumping investigation of Sebacic Acid from the People's Republic of China, published at 59 Fed.Reg. 28,053 (May 31, 1994) ("Final Determination"). Specifically, Union Camp contests Commerce's decision to use the Indian value of refined octanol-1 as the surrogate value of crude octanol-2, a subsidiary product of the sebacic acid production process. This decision, according to Union Camp, resulted in the allocation of costs for octanol-2 as a co-product of sebacic acid instead of the subtraction of costs as a by-product. Defendant-Intervenors contest Commerce's calculation of 1) a surrogate value for packing materials, and 2) a surrogate value for truck freight costs.

The Court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(A)(i)(I) (1988) and 28 U.S.C. § 1581(c) (1988).

For the reasons discussed below, the Court holds that Commerce's use of the Indian value of refined octanol-1 for octanol-2 was unsupported by substantial evidence in the record and not in accordance with law. Further, the Court affirms Commerce's calculation of the surrogate value for packing materials as supported by substantial evidence on the record and in accordance with law. In addition, the Court affirms Commerce's selection of a surrogate value for truck freight costs.

II

BACKGROUND

On July 19, 1993, Union Camp filed a petition with Commerce and the United States International Trade Commission ("ITC") alleging that sebacic acid² from the People's Republic of China ("PRC") was being sold at prices below fair market value to the detriment of the domestic industry. On December 27, 1993, Commerce found preliminary dumping margins for four Chinese respondents ranging from 20.01 to 40.25. Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Sebacic Acid From the People's Republic of China, 59 Fed.Reg. 565 (Jan. 5, 1994) ("Preliminary Determination"). Subsequent to verification conducted by Commerce officials, Commerce determined final dumping margins for the same four respondents ranging from 43.72 to 85.45. Final Determination, 59 Fed.Reg. at 28,053.

Upon notification of the ITC's final affirmative injury determination on July 5, 1994, Commerce published the antidumping duty order on July 14, 1994. Antidumping Duty Order: Sebacic Acid From the People's Republic of China (PRC), 59 Fed.Reg. 35,909.

Union Camp filed this action, contesting Commerce's use of the Indian value of octanol-1 for octanol-2, a subsidiary product produced as a result of the sebacic acid production process. Union Camp seeks remand to the ITA with instructions that Commerce value octanol-2 based on an appropriate cost of crude octanol-2 rather than on the Indian selling price for refined octanol-1, and then recalculate the by-product/co-product determination with the correct value.

Dastech is contesting Commerce's calculation of 1) a surrogate value for packing materials, and 2) a surrogate value for truck freight costs. Dastech seeks remand to the ITA with instructions to calculate the packing costs using an Indian domestic price for the surrogate value of packing material, to recalculate the weight of such materials, and to pro-rate the truck transportation costs based on surrogate values.

III

DISCUSSION

A The Standard Of Review For ITA Determinations Requires Affirmation Unless A Determination Is Unsupported By Substantial Record Evidence Or Otherwise Not In Accordance With Law

The Court "shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1988). Substantial evidence is "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, 217, 83 L.Ed. 126 (1938). "This restricted standard of review is reflective of the legislative intent that courts afford considerable deference to Commerce's expertise in administering the antidumping law.... [T]he deference granted to the agency's interpretation of the statutes it administers extends to the methodology it applies to fulfill its statutory mandate." GMN Georg Muller Nurnberg AG v. United States, 15 CIT 174, 178, 763 F.Supp. 607, 611 (1991) (citations omitted).

"The proper role of this court, then, is `to determine whether the methodology used by the ITA is in accordance with law,' and as `long as the agency's methodology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology.'" Id. (citing Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-05, 636 F.Supp. 961, 965-66 (citations omitted)).

B The ITA Must Use "Best Information Available" In This Case Because The PRC Is A Nonmarket Economy Country

When dealing with a nonmarket economy ("NME") country, such as the PRC, the statute provides that under certain conditions, Commerce chooses a "surrogate" country pursuant to 19 U.S.C. § 1677b(c) (1988). This provision requires Commerce to calculate foreign market value for NME products based on the "best information available" ("BIA") regarding the values of the "factors of production" in an appropriate market economy. 19 U.S.C. § 1677b(c)(1). In valuing NME factors of production, Commerce uses prices or costs of factors of production in a market economy country which is "at a level of economic development comparable" to that of the NME and which has "significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4).

Comparable merchandise is broader than the description of "same or similar" merchandise which is usually used in antidumping investigations. S.Rep. No. 71, 100th Cong., 1st Sess., at 106 (1987) ("Because the Commerce Department may have difficulties in getting detailed data from countries not subject to investigation, the bill gives the Commerce Department the authority to use `comparable merchandise' as the basis for foreign market value.").

Here, Commerce chose India as the surrogate country. Commerce used the Indian value of octanol-1 as the value for octanol-2, determining that octanol-1 was comparable merchandise to octanol-2. It is this decision by Commerce which is contested by Union Camp.

C Commerce's Decision To Use The Indian Value Of Refined Octanol-1 As The Value Of Crude Octanol-2 Was Unsupported By Substantial Evidence On The Record And Not In Accordance With Law

The Court finds that Commerce's determination to use the Indian value of octanol-1 to value octanol-2 was unsupported by substantial evidence on the record and not otherwise in accordance with law. Consequently, for the reasons discussed below, this portion of the Final Determination is remanded to Commerce.

Octanol-2 Is A By-Product Of The Sebacic Acid Production Process

As stated above, Commerce calculates foreign market value on the basis of the "value of the factors of production" in a surrogate market economy country when conducting NME investigations. See 19 U.S.C. § 1677b(c)(1). Once the surrogate values of the factors of production are determined, Commerce calculates the foreign market value by multiplying the verified factors of production by the appropriate surrogate values for the different inputs. Final Determination, 59 Fed.Reg. at 28,055.

Subsidiary chemical products are produced as "an unavoidable consequence" to the production of sebacic acid. Preliminary Determination, 59 Fed.Reg. at 569. In order to account for subsidiary products, Commerce calculated the total value of each subsidiary product produced in the production process as a percentage of the total value of sebacic acid and all subsidiary products yielded in the process. If the relative value of the subsidiary product was insignificant, Commerce considered it a "by-product" and subtracted its sales revenues from sebacic acid production costs. For a subsidiary product that had a significant relative value, Commerce considered it to be a "co-product" and its costs (material, labor, energy and factory overhead) were allocated among sebacic acid and the subsidiary products. Final Determination, 59 Fed.Reg. at 28,056.

Crude capryl alcohol is among the subsidiary products to the sebacic acid production process.³ The chemical term for capryl alcohol is 2-octanol, referred to as octanol-2 by the parties. Commerce used the Indian value of octanol-1 to value octanol-2, resulting in the...