US Magnesium LLC v. United States , 2012 CIT 64 ( 2012 )

Slip Op. 12-64
UNITED STATES COURT OF INTERNATIONAL TRADE
US MAGNESIUM LLC,
Plaintiff,
v.
Before Richard W. Goldberg, Senior Judge
Court No. 11-00076
UNITED STATES,
PUBLIC VERSION
Defendant,
and
PSC VSMPO-AVISMA CORP. and VSMPO-
TIRUS, US INC.,
Defendant-Intervenors.
OPINION & ORDER
[Plaintiff’s Motion for Judgment on the Agency Record is denied.]
Dated: May 16, 2012
Stephen A. Jones, King & Spalding LLP, of Washington, D.C., for plaintiff.
Peter L. Sultan, Attorney, Office of the General Counsel, U.S. International Trade Commission,
of Washington, D.C.; James M. Lyons, General Counsel; and Andrea C. Casson,
Assistant General Counsel, for defendant.
John M. Gurley and Diana Dimitriuc-Quaia, Arent Fox LLP, of Washington, D.C., for
defendant-intervenors.
Court No. 11-00076 Page 2
Goldberg, Senior Judge: Plaintiff US Magnesium LLC (“US Magnesium”) contests the
U.S. International Trade Commission’s (“the Commission”) negative determination in the sunset
review of the antidumping duty order on Magnesium Metal from the Russian Federation.
Magnesium from China and Russia, USITC Pub. 4214, Inv. Nos. 731-TA-1071-1072 (Feb.
2011) (Sunset Review Determination), published in the Federal Register at 76 Fed. Reg. 11,813(ITC Mar. 3, 2011).
Background
In 2005, the Commission determined that imports of magnesium metal from Russia and
China were causing material injury to the domestic industry. Magnesium from China and
Russia, USITC Pub. 3763, Inv. Nos. 731-TA-1071-1072 (Apr. 2005) (Final); Magnesium from
China and Russia, 70 Fed. Reg. 19,969 (ITC Apr. 15, 2005). Based on the affirmative final
determinations by the Commission and the United States Department of Commerce
(“Commerce”), Commerce issued antidumping duty orders on magnesium metal from Russia
and China. Notice of Antidumping Duty Order: Magnesium Metal from the People's Republic of
China, 70 Fed. Reg. 19,928 (Dep’t Commerce Apr. 15, 2005); Notice of Antidumping Duty
Order: Magnesium Metal from the Russian Federation, 70 Fed. Reg. 19,930 (Dep’t Commerce
Apr. 15, 2005).
In 2010, the antidumping duty orders were reviewed pursuant to the five-year sunset
review requirement of section 751(c) of the Tariff Act of 1930, 19 U.S.C. § 1675(c) (2006). The
Commission declined to cumulate the subject imports from China and Russia because it
Court No. 11-00076 Page 3
concluded that they were subject to different conditions of competition. The Commission based
this conclusion on the fact that: (1) imports from Russia are primarily pure magnesium, whereas
the scope of the order with respect to China is limited to alloy magnesium; (2) trends in the
capacity, production, and shipments of the two countries’ industries differ; (3) there is a raw
material shortage affecting the Russian industry; and (4) the Chinese and Russian industries
show different export trends.
The Commission also concluded that the circumstances warranted revocation of the
antidumping duty order with respect to magnesium metal from Russia. The Commission based
this conclusion on the fact that: (1) there has been a decline in the capacity, production, and
shipments of the Russian magnesium industry since the original investigations; (2) raw material
shortages affect the Russian producers; and (3) the Russian industry’s production has been
redirected toward its home market. The Commission determined that these factors limit the
availability and amount of magnesium that the Russian industry is able to ship to the United
States.
Based on the foregoing, the Commission concluded that revocation would not be likely to
lead to the continuation or recurrence of material injury to the domestic industry in the
reasonably foreseeable future. Specifically, the Commission found that revocation was: (1)
unlikely to lead to subject imports from Russia entering the United States in significant volumes
within a reasonably foreseeable time; (2) unlikely to lead to significant underselling by the
subject imports of the domestic like product, or to significant price depression or suppression,
Court No. 11-00076 Page 4
within a reasonably foreseeable time; and (3) unlikely to have a significant impact on the
domestic industry. Accordingly, the Commission revoked the antidumping duty order with
respect to Russia.
US Magnesium brought this appeal, challenging the Commission’s determinations in the
sunset review.
Jurisdiction and Standard of Review
This Court has jurisdiction pursuant to section 201 of the Customs Court Act of 1980, 28
U.S.C. § 1581(c) (2006).
This Court upholds the Commission’s determinations unless they are “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. §
1516a(b)(1)(B)(i). The Commission has “discretion to make reasonable interpretations of the
evidence and to determine the overall significance of any particular factor in its analysis.” Goss
Graphics Sys., Inc. v. United States, 22 CIT 983, 1005, 33 F. Supp. 2d 1082, 1100 (1998), aff’d,
216 F.3d 1357 (Fed. Cir. 2000). “[E]ven if it is possible to draw two inconsistent conclusions
from evidence in the record, such a possibility does not prevent [the Commission’s]
determination from being supported by substantial evidence.” Nippon Steel Corp. v. United
States, 458 F.3d 1345, 1352 (Fed. Cir. 2006) (citing Am. Silicon Techs. v. United States, 261
F.3d 1371, 1376 (Fed. Cir. 2001)).
Court No. 11-00076 Page 5
Thus, this Court determines whether the agency’s determinations are “reasonable and
supported by the record as a whole, even if some evidence detracts from the Commission’s
conclusion.” Id. at 1352.
Discussion
US Magnesium challenges: (I) the Commission’s decision not to cumulate the subject
imports from Russia and China; and (II) the revocation of the order with respect to Russia as
unsupported by substantial evidence. For the following reasons, US Magnesium’s arguments
fail.
I. The Commission’s decision not to cumulate subject imports from China and
Russia is supported by substantial evidence
In sunset reviews, the Commission has discretion to cumulate subject imports from
different countries if certain conditions are met:
the Commission may cumulatively assess the volume and effect of imports of the
subject merchandise from all countries with respect to which reviews under [19
U.S.C. section 1675(b) or (c)] were initiated on the same day, if such imports
would be likely to compete with each other and with domestic like products in the
United States market. The Commission shall not cumulatively assess the volume
and effects of imports of the subject merchandise in a case in which it determines
that such imports are likely to have no discernible adverse impact on the domestic
industry.
19 U.S.C. § 1675a(a)(7). The Commission has discretion not to cumulate even if the
statutory factors are satisfied, provided that it has a reasoned basis for doing so that is
supported by substantial evidence. Nucor Corp. v. United States, 601 F.3d 1291, 1293
(Fed. Cir. 2010). Because the Commission may cumulate subject imports if they are
Court No. 11-00076 Page 6
likely to compete with each other and compete with domestic like products, the
Commission may consider differing conditions of competition in its cumulation analysis.
Id. at 1296.
To determine whether to cumulate the subject imports from China and Russia, the
Commission considered: (1) whether the subject imports from China or Russia were
likely to have a discernible adverse impact on the domestic industry; (2) whether there is
a likelihood of a reasonable overlap of competition among imports of magnesium from
China and Russia and the domestic like product; and (3) other considerations, including
the similarities and differences in the likely conditions of competition under which the
subject imports are likely to compete in the U.S. market.
The Commission determined that subject imports from China and Russia were
likely to have a discernible adverse impact on the domestic industry. The Commission
also determined that there would likely be a reasonable overlap of competition between
the subject imports and the domestic like product. However, the Commission’s
evaluation of other considerations, particularly the differences in the likely conditions of
competition, led the Commission to decide not to cumulate the subject imports from
China and Russia.
US Magnesium challenges the Commission’s decision not to cumulate on various
grounds, including that imports of alloy magnesium from Russia were not significant
because pure magnesium, which competes against alloy magnesium from China, is
Court No. 11-00076 Page 7
relevant to the analysis. US Magnesium also asserts that the Russian alloy magnesium
capacity data was unreliable.
US Magnesium further challenges the Commission’s determinations, claiming
that the Commission failed to acknowledge or discuss significant evidence that detracted
from its conclusion. However, the Commission is “‘not required to explicitly address
every piece of evidence presented by the parties’” during an investigation. Nucor Corp.
v. United States, 28 CIT 188, 234, 318 F. Supp. 2d 1207, 1247 (2004) (quoting USEC
Inc. v. United States, 34 F. App’x 725, 730–31 (Fed. Cir. 2002)). Moreover, provided
that “there is adequate basis in support of the Commission’s choice of evidentiary weight,
[this Court] and [the Federal Circuit], reviewing under the substantial evidence standard,
must defer to the Commission.” Nippon Steel, 458 F.3d at 1359.
Therefore, the Court does not have to examine whether there was substantial
evidence that supported a contrary conclusion, but rather, the Court must affirm “agency
factual determinations so long as they are reasonable and supported by the record when
considered as a whole, even though there may be evidence on the record which detracts
from the agency’s conclusions.” BIC Corp. v. United States, 21 CIT 448, 451, 964 F.
Supp. 391, 396 (1997) (emphasis added).
a. The Commission’s determination that Russian pure magnesium and Chinese
alloy magnesium are subject to different conditions of competition because of
their different principal uses is supported by substantial evidence
Court No. 11-00076 Page 8
US Magnesium argues that the Commission’s finding during the sunset review that pure
and alloy magnesium are subject to different conditions of competition is inconsistent with the
original determination, in which the subject imports from the two countries were cumulated. US
Magnesium asserts that the Commission’s conclusion is inconsistent with its definition of the
domestic like product, its finding that aluminum producers used the two types of magnesium
interchangeably, and its finding that imports from China and Russia are fungible.
First, “the purpose of the like product inquiry is to delimit the domestic industry that the
Commission will examine in its material injury determination.” BIC Corp., 21 CIT at 456, 964
F. Supp. at 400. In this case, the like product is pure and alloy magnesium. However, the court
has consistently recognized that “the Commission’s inquiry into product substitutability, i.e., to
what degree two or more products compete with each other, may differ according to context . . .
.” Id. at 455–56, 964 F. Supp. at 397–399.
In fact, “like product, cumulation, and causation are functionally different inquiries
because they serve different statutory purposes.” Id. at 455, 964 F. Supp. at 399. Because of
this, the different inquiries require a different level of fungibility and “the record may contain
substantial evidence that two products are fungible enough to support a finding in one context
(e.g., one like product), but not in another (e.g., cumulation or causation).” Id. at 455–56, 964 F.
Supp. at 399.
Here, the Commission defined domestic like product to include both pure and alloy
magnesium on the basis of six factors: (1) physical characteristics and uses; (2)
Court No. 11-00076 Page 9
interchangeability; (3) channels of distribution; (4) customer and producer perceptions of the
products; (5) common manufacturing facilities, production processes and production employees;
and (6) price. Views of the Commission, Conf. Rec. 274 at 8–14.
On the basis of these factors, the Commission determined that there was some overlap in
the uses for pure and alloy magnesium, although the principal use of each type of magnesium is
different.1 In addition, the Commission determined that for certain uses, the two types of
magnesium are not always interchangeable. Views of the Commission, Conf. Rec. 274 at 12.2
Thus, although there is evidence that there is some overlap in use for the two types of
magnesium, there is also evidence that there is limited interchangeability in other uses of
magnesium. This is not inconsistent because, as this Court has noted, “a finding of one like
product is not synonymous with a finding that two products are highly fungible. BIC, 21 CIT at
456, 964 F. Supp. at 400.
Thus, the Commission’s determination that the subject imports would compete under
different conditions of competition because of their different principal uses and limited
interchangeability in certain contexts is supported by substantial evidence.
b. The Commission’s determination that Russian pure magnesium and Chinese alloy
magnesium are subject to different conditions of competition because of different
capacity, production, and shipments trends is supported by substantial evidence
1
Specifically, pure magnesium is used principally in production of aluminum alloys, in iron and steel
desulfurization, and in titanium sponge production. On the other hand, alloy magnesium is used principally in
structural applications, mostly in castings and extrusions for the automotive industry.
2
For purposes of making castings, only alloy magnesium can be used.
Court No. 11-00076 Page 10
US Magnesium challenges the Commission’s determination that Russian pure and alloy
magnesium capacity, production, and shipments declined, whereas the Chinese alloy magnesium
industry expanded. US Magnesium criticizes the data upon which the Commission made its
determination as unreliable and argues that the Commission’s reliance on certain data was
unreasonable.
This argument is meritless because the Commission received responses to questionnaires
from both Chinese and Russian producers that demonstrated precisely what the Commission
concluded, i.e., that there was a large and growing Chinese magnesium industry and a smaller,
contracting Russian magnesium industry. “It is the Commission’s task to evaluate the evidence
it collects during its investigation” and its decisions with respect to “the weight to be assigned a
particular piece of evidence . . . lie at the core of that evaluative process.” U.S. Steel Group v.
United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996).
In accordance with the Commission’s task, the Commission has “discretion to make
reasonable interpretations of the evidence and to determine the overall significance of any
particular factor in its analysis.” Goss Graphics, 22 CIT at 1005, 33 F. Supp. 2d at 1100. In
other words, this Court examines whether the Commission’s determinations are supported by
substantial evidence but does not substitute its analysis of the evidence for the Commission’s.
The Commission thoroughly examined and evaluated the evidence presented to it, and
there is substantial evidence showing different capacity, production, and shipment trends in the
respective countries. Thus, the Commission’s determination that Russian pure magnesium and
Court No. 11-00076 Page 11
Chinese alloy magnesium are subject to different conditions of competition because of different
capacity, production, and shipments trends is supported by substantial evidence.
US Magnesium attempts to undermine the Commission’s determination by asserting that
the available evidence was unreliable and/or that the Commission was unreasonable for relying
upon such evidence and should have relied upon other evidence. US Magnesium fails to point to
legal authority to support its claims. Furthermore, as noted, the Commission has discretion not
to cumulate subject imports in a five-year review. Nucor Corp., 601 F.3d at 1293. It is clear
from the record that the Commission examined a variety of factors in deciding whether to
cumulate. Its decision not to cumulate is, in fact, supported by substantial evidence, and it was
not unreasonable for the Commission to decide not to cumulate the subject imports. Therefore,
the Court upholds the Commission’s determination.
II. The Commission’s determination that revocation of the antidumping duty order
with respect to magnesium from Russia would not be likely to lead to
continuation or recurrence of material injury is supported by substantial
evidence
The Commission found that, although revocation of the order might lead to some increase
in subject imports from Russia, the imports were not likely to enter the United States in
significant volumes within a reasonably foreseeable time in the event of revocation because of
the constraints on capacity and production, as well as limitations on the availability of raw
materials. US Magnesium challenges this finding, arguing that the removal of the order would
likely lead Russian producers to increase production and redirect shipments to the U.S.
Court No. 11-00076 Page 12
In its analysis, the Commission must consider whether the subject imports are likely to
undersell the domestic product. 19 U.S.C §1675a(a)(3). The Commission used price
comparison data that showed that prices for U.S.-produced magnesium products increased over
the period of review. However, quarterly price comparisons between the subject imports from
Russia and the domestic product showed that Russian imports actually oversold the domestic
product.
More importantly, the Commission primarily based its conclusion that the subject imports
would not cause price effects upon the fact that there were not likely to be substantial volumes of
Russian magnesium entering the U.S. market. As the Commission determined in its cumulation
analysis, the changes in capacity, production, and shipment trends make it unlikely that the
Russian magnesium industry would import magnesium in significant volumes. The Commission
reasonably concluded that the Russian magnesium industry had substantially less magnesium to
ship to the United States in the event of the revocation of the order than at the time of the original
investigation. Because there would not be significant quantities of the subject imports in the
U.S. market, the Commission reasonably concluded that the subject volume and market share
would be too small to have significant, adverse effects on domestic magnesium prices.
Much like its arguments relating to the Commission’s determination not to cumulate, US
Magnesium, without citing any legal authority to bolster its claims, simply asserts that the
evidence is unreliable, that the Commission unreasonably relied upon certain evidence, and that
the Commission should have examined other evidence.
Court No. 11-00076 Page 13
However, this is insufficient to rebut the fact that there is substantial evidence on the
record that supports the Commission’s conclusions. As a result, this Court upholds the
Commission’s determination that revocation of the antidumping duty order with respect to
magnesium from Russia would not be likely to lead to continuation or recurrence of material
injury.
Conclusion and Order
Upon consideration of Plaintiff’s Motion for Judgment on the Agency Record and the
memoranda and accompanying materials in support thereof, and the opposition and supporting
materials thereto, and upon all the other papers and proceedings had herein, it is hereby
ORDERED that Plaintiff’s motion is denied; and it is further
ORDERED that judgment is entered in favor of Defendant.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated: May 16, 2012
New York, New York