Union Camp Corp. v. U.S.

• Decision Date: 27 March 1998
• Docket Number: Court No. 97-04-00483.,Slip Op. 98-38.
• Parties: UNION CAMP CORPORATION, Plaintiff, v. The UNITED STATES, Defendant, and Dastech International, Inc., ICC Industries, Inc., Guangdong Chemicals Import & Export Corp., Sinochem International Chemicals Co., Ltd., and Tianjin Chemicals Import & Export Corp., Defendants-Intervenors.
• Court: U.S. Court of International Trade

8 F.Supp.2d 842

UNION CAMP CORPORATION, Plaintiff, v. The UNITED STATES, Defendant and Dastech International, Inc., ICC Industries, Inc., Guangdong Chemicals Import & Export Corp., Sinochem International Chemicals Co., Ltd., and Tianjin Chemicals Import & Export Corp., Defendants-Intervenors.

Slip Op. 98-38.

Court No. 97-04-00483.

United States Court of International Trade.

March 27, 1998.

COPYRIGHT MATERIAL OMITTED

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

Frank H. Hunger, Asst. Atty. General; David M. Cohen, Director; U.S. Department of Justice, Civil Division, Commercial Litigation Branch,(Lucius B. Lau); Keun Ho Bae, of counsel, Office of the Chief Counsel for Import Administration, for Defendant.

Williams, Mullen, Christian & Dobbins, P.C., (William E. Perry, Thomas B. McVey, and W. David Snead), Washington, DC, for Defendants-Intervenors.

MEMORANDUM AND ORDER

WALLACH, Judge.

I INTRODUCTION

This consolidated action is before the Court on two motions for judgment upon the agency record pursuant to USCIT R. 56.2. Plaintiff Union Camp Corporation ("Union Camp") and Defendant-Intervenors Dastech International, Incorporated, ICC Industries, Incorporated, Guangdong Chemicals Import & Export Corporation, Sinochem International Chemicals Company, Limited, and Tianjin Chemicals Import & Export Corporation (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") decision in Sebacic Acid from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 62 Fed.Reg. 10,530 (Mar. 7, 1997) ("Final Results"). The Court has jurisdiction under 28 U.S.C. § 1581(c) (1994).

Union Camp contests five aspects of Commerce's decision. Commerce agrees to, and Defendant-Intervenors do not oppose, remand on three of Union Camp's challenges, and the fourth is moot in view of the Court's decision.¹ The remaining issue is Commerce's decision to use the Indian value of octanol-1 as the surrogate value of crude octanol-2, a subsidiary product of the sebacic acid production process.

Defendant-Intervenors contest Commerce's treatment of two sales of sebacic acid that were made through Sinochem International Chemicals Company, Ltd. ("SICC") on behalf of Sinochem Jiangsu Import and Export Corporation ("Jiangsu"). Commerce used Jiangsu's 243.4 percent margin to (1) assess antidumping duties for these sales and (2) establish SICC's future cash deposit rate.

For the reasons discussed below, the Court holds that Commerce's use of the Indian value of octanol-1 for octanol-2 was unsupported by substantial evidence on the record and not in accordance with law. The Court affirms Commerce's decision regarding the sales on behalf of Jiangsu.

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. Initiation of Antidumping Duty Investigation; Sebacic Acid from the People's Republic of China, 58 Fed.Reg. 43,339 (Aug. 16, 1993). After the appropriate investigations by Commerce and the ITC, it was determined that Union Camp's allegations had merit, and Commerce issued the Antidumping Duty Order: Sebacic Acid From the People's Republic of China (PRC), 59 Fed.Reg. 35,909 (July 14, 1994).

Union Camp and Dastech challenged the initial less than fair value determination.³ On August 5, 1996, this Court remanded to Commerce on the issue of the valuation of octanol-2 and upheld Commerce's actions in all other respects. Union Camp Corp. v. United States, 941 F.Supp. 108 (CIT 1996) ("Union Camp I"). This Court instructed Commerce "to value octanol-2 based on an appropriate cost (which may be the U.S. cost) of crude octanol-2 rather than the Indian selling price for refined octanol-1...." Id. at 119. Commerce complied with the Court's directions and used Union Camp's internal cost of octanol-2 found in the petition. The Court affirmed the remand results on April 11, 1997. Union Camp Corp. v. United States, 963 F.Supp. 1212 (CIT 1997).

Meanwhile, on August 16, 1995, Commerce initiated an antidumping duty administrative review of sebacic acid from the PRC at issue in this case. Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 60 Fed.Reg. 42,500. The administrative review covered shipments of sebacic acid from the PRC to the United States during the period of July 13, 1994 through June 30, 1995. Final Results, 62 Fed.Reg. at 10,530. As in the initial investigation, Commerce used India as the surrogate country and was unable to locate an Indian value for octanol-2. Therefore, Commerce used the Indian value of octanol-1 for valuing octanol-2.

At verification, Commerce discovered that two sales which were reported as SICC sales were sales made by SICC on behalf of Jiangsu. Jiangsu did not participate in the administrative review. Consequently, Commerce determined that Jiangsu would be subject to the country-wide rate of 243.4 percent. Commerce assessed this rate to those sales. Because "SICC knowingly engaged in sales to the United States of [Jiangsu's] material, according to statements by SICC at verification, as an attempt to assist Jiangsu in avoiding posting of Jiangsu's higher antidumping duty cash deposits", Final Results, 62 Fed. Reg. at 10,532, Commerce included those two sales at the 243.4 percent rate in calculating the dumping margin to be applied to SICC.

III DISCUSSION

A Standard Of Review

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) (1994). "`Substantial evidence is something more than a "mere scintilla," and must be enough reasonably to support a conclusion.'" Primary Steel, Inc. v. United States, 17 CIT 1080, 834 F.Supp. 1374, 1380 (1993) (citation omitted). "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." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-5, 636 F.Supp. 961, 966 (1986), aff'd, 810 F.2d 1137 (Fed.Cir.1987).

In reviewing an agency's construction of the statute that the agency administers, the Court's initial inquiry is to determine "whether Congress has directly spoken to the precise question at issue." Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). "If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation." Id. at 843-44, 104 S.Ct. 2778. Consequently, "[t]he court will defer to the agency's construction of the statute as a permissible construction if it `reflects a plausible construction of the plain language of the statute[s] and does not otherwise conflict with Congress' express intent.'" Torrington Co. v. United States, 82 F.3d 1039, 1044 (Fed.Cir.1996) (citation omitted).

B Commerce's Determination To Value Octanol-2 Using The Indian Value Of Octanol-1 Was Unsupported By Substantial Evidence On The Record And Not In Accordance With Law

The PRC is a nonmarket economy ("NME") country. For NME investigations, the statute provides:

[Commerce] shall determine the normal value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise and to which shall be added an amount for general expenses and profit plus the cost of containers, coverings, and other expenses. Except as provided in paragraph (2), the valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by [Commerce].

19 U.S.C. § 1677b(c)(1) (1994). Thus, "Commerce's task in a nonmarket economy investigation is to calculate what a producer's costs or prices would be if such prices or costs were determined by market forces." Tianjin Mach. Import & Export Corp. v. United States, 16 CIT 931, 940, 806 F.Supp. 1008, 1018 (1992).

"[T]o the extent possible", the surrogate is a country "at a level of economic development comparable" to the NME and which has "significant producers of comparable merchandise." 19 U.S.C. § 1677b(c)(4) (1994). Commerce's regulations provide for the following order of preference in selecting comparable economies: (1) a market economy country at a stage of economic development comparable to that of the home market country, other than the United States; (2) a market economy country not at a stage of economic development comparable to that of the home market country, other than the United States; and (3) the United States. See 19 C.F.R. § 353.52(b) (1997).

Here, Commerce chose India as the surrogate country. Commerce calculated normal value by multiplying the verified factors of production by the appropriate surrogate values for the different inputs. See Sebacic Acid From the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 46,440, 46,442 (Sept. 3, 1996) ("Preliminary Results"). The production of sebacic acid results in the production of subsidiary chemical products. Commerce considers these products to be by-products or co-products. For purposes of calculating normal value, by-product sales revenues are subtracted from sebacic acid...