Global Commodity Group LLC v. United States ( 2013 )

United States Court of Appeals
for the Federal Circuit
______________________
GLOBAL COMMODITY GROUP LLC,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee,
AND
ARCHER DANIELS MIDLAND COMPANY,
CARGILL, INCORPORATED, AND TATE & LYLE
AMERICAS LLC,
Defendants-Appellees.
______________________
2012-1346
______________________
Appeal from the United States Court of International
Trade in No. 11-CV-0172, Judge Gregory W. Carman.
______________________
Decided: March 7, 2013
______________________
GEORGE W. THOMPSON, Neville Peterson LLP, of
Washington, DC, argued for plaintiff-appellant. With him
on the brief was RUSSELL A. SEMMEL.
2 GLOBAL COMMODITY GROUP LLC v. US
PATRICIA M. MCCARTHY, Assistant Director, Com-
mercial Litigation Branch, Civil Division, United States
Department of Justice, of Washington, DC, argued for
defendant-appellee, United States. On the brief were
STEWART F. DELERY, Acting Assistant Attorney General,
JEANNE E. DAVIDSON, Director, CLAUDIA BURKE, Assistant
Director, and CARRIE A. DUNSMORE, Trial Attorney. Of
counsel on the brief was MATT WALDEN, Attorney, Office
of the Chief Counsel for Import Administration, United
States Department of Commerce, of Washington, DC. Of
counsel was JONATHAN M. ZIELINSKI.
DANIEL L. SCHNEIDERMAN, King & Spalding, LLP,
of Washington, DC, argued for defendants-appellees,
Archer Daniels Midland Company, et al. With him on the
brief was JOSEPH W. DORN.
______________________
Before LOURIE, MOORE, and O'MALLEY, Circuit Judges.
O’MALLEY, Circuit Judge.
Global Commodity Group LLC (“GCG”) appeals the
Court of International Trade’s judgment, Global Commod-
ity Group LLC v. United States, 825 F. Supp. 2d 1328 (Ct.
Int’l Trade 2012) sustaining the Department of Com-
merce’s (“Commerce”) determination in Citric Acid and
Certain Citrate Salts: Final Determination on Scope
Inquiry for Blended Citric Acid from the People’s Republic
of China and Other Countries (“Final Scope Determina-
tion”), issued on May 2, 2011. In the Final Scope Deter-
mination, Commerce found the portion of GCG’s
merchandise consisting of citric acid from the People’s
Republic of China (“PRC”)—approximately 35 percent—
within the scope of the antidumping duty and countervail-
ing duty orders on citric acid and certain citrate salts
(citric acid) from the PRC. Because we owe significant
deference to Commerce’s own interpretation of scope
GLOBAL COMMODITY GROUP LLC v. US 3
orders, and we find Commerce’s interpretation of the
scope order to be reasonable, we affirm the lower court’s
ruling.
BACKGROUND
In 2009, following a petition by defendant-
intervenors-appellees Archer Daniels Midland Co., Car-
gill, Inc., and Tate & Lyle Americas (collectively, “Peti-
tioners”) and a related investigation, Commerce issued
Citric Acid and Certain Citrate Salts From Canada and
the People's Republic of China: Antidumping Duty Or-
ders, 74 Fed. Reg. 25,703 (May 29, 2009) and Citric Acid
and Certain Citrate Salts from the People's Republic of
China: Notice of Countervailing Duty Order, 74 Fed. Reg.
25,705 (May 29, 2009) (“the Orders”). The Scope of the
Orders section for each of the Orders states, in relevant
part:
The scope of this order includes all grades
and granulation sizes of citric acid, sodium
citrate, and potassium citrate in their un-
blended forms, whether dry or in solution,
and regardless of packaging type. The scope
also includes blends of citric acid, sodium cit-
rate, and potassium citrate; as well as blends
with other ingredients, such as sugar, where
the unblended form(s) of citric acid, sodium
citrate, and potassium citrate constitute 40
percent or more, by weight, of the blend.
74 Fed. Reg. at 25,703, 25,705. 1 GCG’s merchandise at
issue consists of 35% citric acid from the PRC and 65%
1 The remainder of the scope description states:
The scope of this order also includes all forms of
crude calcium citrate, including dicalcium citrate
monohydrate, and tricalcium citrate tetrahydrate,
4 GLOBAL COMMODITY GROUP LLC v. US
citric acid originating from other countries. On July 26,
2010, GCG requested a determination from Commerce,
pursuant to 19 C.F.R. § 351.225(c) that its merchandise
falls outside the scope of the Orders as a “blend” under
the second sentence of the scope language quoted above
where the unblended form of Chinese citric acid constitut-
ed less than 40%, by weight, of the blend.
Commerce instituted a scope inquiry in November
2010 and issued its Preliminary Determination on March
which are intermediate products in the production
of citric acid, sodium citrate, and potassium citrate.
The scope of this order does not include calcium cit-
rate that satisfies the standards set forth in the
United States Pharmacopeia and has been mixed
with a functional excipient, such as dextrose or
starch, where the excipient constitutes at least 2
percent, by weight, of the product. The scope of
this order includes the hydrous and anhydrous
forms of citric acid, the dihydrate and anhydrous
forms of sodium citrate, otherwise known as citric
acid sodium salt, and the monohydrate and mono-
potassium forms of potassium citrate. Sodium cit-
rate also includes both trisodium citrate and
monosodium citrate, which are also known as citric
acid trisodium salt and citric acid monosodium salt,
respectively. Citric acid and sodium citrate are
classifiable under 2918.14.0000 and 2918.15.1000
of the Harmonized Tariff Schedule of the United
States ("HTSUS"), respectively. Potassium citrate
and crude calcium citrate are classifiable under
2918.15.5000 and 3824.90.9290 of the HTSUS, re-
spectively. Blends that include citric acid, sodium
citrate, and potassium citrate are classifiable under
3824.90.9290 of the HTSUS. Although the HTSUS
subheadings are provided for convenience and cus-
toms purposes, the written description of the mer-
chandise is dispositive.
GLOBAL COMMODITY GROUP LLC v. US 5
7, 2011. In that determination, Commerce rejected GCG’s
argument that the term “other ingredients” in the scope
language referred to any product other than subject citric
acid. Rather, Commerce found that the “scope intention-
ally breaks blends of citric acid and blends with other
ingredients out into separate clauses, and only applies the
40 percent threshold to the latter.” J.A. 34. Because GCG
adds only non-subject citric acid to the subject citric acid,
Commerce recommended that GCG’s product be consid-
ered a blend of citrate products under the first clause of
the second sentence rather than a blend with other ingre-
dients meeting the specified exclusion. Commerce also
rejected GCG’s argument that its product was substan-
tially transformed in a third country through the blending
process and recommended that duties be assessed on
GCG’s product “according to the rates applicable to citric
acid from both the PRC and any other country represent-
ed in the blend, based upon the quantity and value of
citric acid from each country included in the blend.” J.A.
39. If the percentage of subject and non-subject citric acid
could not be accurately determined for GCG’s product,
then antidumping and countervailing duties would be
assessed based on the highest rate applicable to its con-
stituent sources.
In the Final Scope Determination, issued May 2,
2011, Commerce affirmed the findings of the Preliminary
Determination and recommended that the portion of
GCG’s product originating from the PRC be subject to the
scope of the Orders and that GCG’s product be assessed
duties according to the amount of PRC citric acid con-
tained in the product. Commerce altered its reasoning,
however, and recommended that GCG’s product not be
considered a “blend” within the meaning of the Orders.
Rather, Commerce found that GCG’s product “is commin-
gled citric acid, and for all intents and purposes, commin-
gled citric acid is still just citric acid. Functionally and
chemically, it is indistinguishable from citric acid that
6 GLOBAL COMMODITY GROUP LLC v. US
comes from a single source.” J.A. 44. Thus, according to
Commerce, the first sentence of the scope language from
the Orders quoted above—relating to unblended citrate
products—covers GCG’s product. Noting that the Har-
monized Tariff Schedule of the United States (“HTSUS”)
treats commingled citric acid differently from blends that
include citric acid, sodium citrate, and potassium citrate,
Commerce found that “GCG cannot have it both ways: if
its product is not a blend under the first clause of the
second sentence of the scope because of the scope’s
HTSUS references, it also cannot be a blend under the
second clause of that sentence that references blends with
other ingredients, since the same HTSUS number applies
to the entire sentence.” J.A. 45. Commerce therefore
recommended that duties be applied to GCG’s product
according to the methodology outlined in its Preliminary
Determination.
GCG commenced an action pursuant to 19 U.S.C. §
1516a(a)(2)(B)(vi) in the Court of International Trade
challenging Commerce’s Final Scope Determination. The
court framed the dispute as “whether Plaintiff’s product is
a blend, and specifically . . . whether non-subject citric
acid must qualify as ‘other ingredients’ within the mean-
ing of that clause.” Global Commodity Group, 825 F.
Supp. 2d at 1330. As it did below, GCG contended that
“other ingredients” must be interpreted to mean any
ingredient other than subject citrates in contrast to Com-
merce’s conclusion that “other ingredients” refers to non-
citrate products. Id. Finding that “Commerce’s interpre-
tation of the phrase ‘other ingredients’ is not only permis-
sible, it is eminently reasonable,” the court held that
Commerce’s interpretation: 1) is not contrary to the terms
of the scope; 2) does not alter the language of the scope;
and 3) must be sustained in light of the significant defer-
ence owed to Commerce in interpreting scope provisions.
Id. at 1331. The Court of International Trade therefore
sustained Commerce’s determination that the portion of
GLOBAL COMMODITY GROUP LLC v. US 7
GCG's product originating from PRC falls within the
scope of the order and is subject to the corresponding
duties. Id.GCG timely appealed and we have jurisdiction pur-
suant to 28 U.S.C. § 1295(a)(5).
DISCUSSION
I.
Domestic producers of a particular product that
“believe that imports of certain competing goods are being
sold in the United States at less than fair market value
(i.e., being ‘dumped’) . . . may petition Commerce to im-
pose antidumping duties on the imports of the goods.”
King Supply Co. v. United States, 674 F.3d 1343, 1345
(Fed. Cir. 2012) (citing Walgreen Co. v. United States, 620
F.3d 1350, 1351 (Fed. Cir. 2010)). Commerce will then
initiate an investigation to preliminarily determine if
there is a reasonable basis to conclude that dumping is
occurring or is likely to occur. 19 U.S.C. §§ 1673a,
1673b(b)(1)(A). The U.S. International Trade Commission
will concurrently investigate whether there exists a
reasonable indication that a domestic industry has sus-
tained—or is threatened with—material injury. Id. §
1673b(a)(1)(A). After the conclusion of the investigations,
assuming final determinations of dumping and material
injury or threat of material injury, Commerce issues an
antidumping duty order covering the appropriate import-
ed merchandise. Id. § 1673d(c)(2). In its final determina-
tion, Commerce defines the scope of products that are
subject to the antidumping order. Walgreen, 620 F.3d at
1352.
When “[i]ssues arise as to whether a particular
product is included within the scope of an antidumping or
countervailing duty order or a suspended investigation,”
Commerce is called upon to inquire into the scope of an
8 GLOBAL COMMODITY GROUP LLC v. US
order and “issue[] ‘scope rulings’ that clarify the scope of
an order or suspended investigation with respect to par-
ticular products.” 19 C.F.R. § 351.225(a). The inquiry
that Commerce conducts in a scope ruling is governed by
the regulation set forth at 19 C.F.R. § 351.225(k), which
provides, in relevant part:
(k) [I]n considering whether a particular
product is included within the scope of an or-
der or a suspended investigation, the Secre-
tary will take into account the following:
(1) The descriptions of the merchan-
dise contained in the petition, the ini-
tial investigation, and the
determinations of the Secretary (in-
cluding prior scope determinations)
and the [International Trade] Com-
mission.
Id. at § 351.225(k). “Consequently, a scope ruling is a
highly fact-intensive and case-specific determination.”
King Supply Co., 674 F.3d at 1345.
In our review of Commerce’s Final Determination,
we reapply the same “substantial evidence” standard of
review that the Court of International Trade applied to its
review of Commerce’s determination. Sango Int'l L.P. v.
United States, 484 F.3d 1371, 1378 (Fed. Cir. 2007).
Thus, we uphold Commerce’s determination unless it is
unsupported by substantial evidence on the record or is
not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i);
Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393
(Fed. Cir. 1997). We grant significant deference to Com-
merce’s interpretation of a scope order and we will affirm
Commerce’s scope ruling unless the record lacks “such
relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Dupont Teijin Films
GLOBAL COMMODITY GROUP LLC v. US 9
USA, LP v. United States, 407 F.3d 1211, 1215 (Fed. Cir.
2005) (citing Consol. Edison Co. v. NLRB, 305 U.S. 197,
229 (1938)). Commerce may not, however, interpret the
scope of an order contrary to the order’s terms or in such a
way so as to change the scope of the order. Duferco Steel,
Inc. v. United States, 296 F.3d 1087, 1095 (Fed. Cir.
2002).
II.
On appeal, GCG reiterates the arguments made be-
low and contends that the only reasonable interpretation
of the scope order results in a finding that GCG’s product
is a blend of PRC citric acid and “other ingredients”—
namely non-subject citric acid. GCG also contends that
Commerce’s interpretation impermissibly expands the
scope of the order. For the reasons stated below, both
arguments lack merit.
GCG’s interpretation of the scope of the Orders—
that GCG’s product is a “blend[] with other ingredients,
such as sugar”—depends on a finding that the scope order
unambiguously draws a distinction between “subject
merchandise”—citric acid, sodium citrate, and potassium
citrate from PRC—and non-subject merchandise—
anything and everything else. In support of this argu-
ment, GCG points to the Petitioners’ explanation for
changes made to the scope of the Orders in response to an
inquiry regarding the inclusion of “blends of citric acid or
certain citrate salts.” J.A. 26-7. Petitioners stated that,
with the addition of the sentence referencing blends of
citric products, the scope of the Orders:
[N]ow specifically includes both blends of cit-
ric acid, sodium citrate, and potassium cit-
rate (the latter two hereinafter referred to as
“citrate salts,” and subject merchandise col-
lectively referred to as “citric products”), as
10 GLOBAL COMMODITY GROUP LLC v. US
well as blends with other ingredients in
which one or more of the citric products rep-
resent the predominant ingredient, by
weight or commercial value.
J.A. 27. This language, according to GCG, evidences a
concern over blending subject citric products (as defined
above) with other subject citric products but not over the
blending of subject citric products with non-subject mer-
chandise (including non-subject citric acid, sodium citrate,
and potassium citrate). Thus, GCG’s argues that the non-
subject citric acid in GCG’s product is properly understood
as an “other ingredient” and the unblended subject citric
acid from PRC constitutes less than 40% of the blend.
GCG’s interpretation of the Orders is not entirely
frivolous. The language added by the Petitioners argua-
bly refers to blends of subject citric products with other
subject citric products. We owe significant deference to
Commerce’s interpretation of a scope order, however, and
must evaluate Commerce’s position with that standard of
review in mind. See, e.g., Dupont Teijin Films, 407 F.3d
at 1215.
Commerce and Petitioners argue on appeal that
GCG arrives at its interpretation of the Orders only by
conflating the requirements that subject merchandise be
both the type of product specified in the scope order and
that it originate from the covered country. See, e.g., Ugine
& ALZ Belg., N.V. v. United States, 517 F. Supp. 2d 1333,
1345 (Ct. Int'l Trade 2007) (“For merchandise to be sub-
ject to an order, it must meet both parameters, i.e., prod-
uct type and country of origin.”) (citations omitted). Thus,
according to Commerce, if a product fails to meet either
parameter, it is not within the scope of the order. Be-
cause “originating from the PRC” is already a require-
ment for a product to be properly within the scope of the
order, Commerce sees no justification for reading “from
PRC” into various clauses of the scope order.
GLOBAL COMMODITY GROUP LLC v. US 11
Under Commerce’s interpretation, the Orders clear-
ly identify two types of blends within the scope of the
Orders: blends of citric acid, sodium citrate, and potassi-
um citrate; and blends with other ingredients. While
Commerce initially treated GCG’s citric acid as the first
type of blend—as a blend on multiple citric products—
none of the parties now contend that GCG’s citric acid is a
blend with other citrates. According to Commerce, the
second type of blend contemplates blends of citric acid
with “other” ingredients. In their view, the juxtaposition
of “other” in the second clause and the three named citric
products in the first clause indicates not only that the
second clause does not refer to blends of different types of
citric products but also that it does not refer to blends of
citric acid with itself. The inclusion of “sugar” as an
example of an “other” ingredient is strong evidence,
moreover, that “other” ingredients are low value, non-
citric products. And, as Commerce correctly notes, GCG
acknowledges that its product is indistinguishable from
pure citric acid and is classifiable under item
2918.14.0000 of the HTSUS, the classification for citric
acid, not under HTSUS item 3824.90.9290, the classifica-
tion for blends. While we agree with GCG that HTSUS
headings are not dispositive for purposes of interpreting a
scope order and determining how a particular product
should be treated by Commerce, they are certainly proba-
tive of whether a particular interpretation is reasonable.
Novosteel SA v. United States, 284 F.3d 1261, 1270 (Fed.
Cir. 2002) (“[R]eference to an HTSUS number is not
dispositive about the scope of an antidumping or counter-
vailing-duty order.”) (citations omitted).
Here, Commerce’s interpretation of the scope of the
Orders is reasonable. GCG has pointed to no evidence
that the Petitioners intended the second sentence cover-
ing blends to refer to products that are pure citric acid,
but are simply citric acid from multiple sources. And
Commerce’s interpretation of the first sentence already
12 GLOBAL COMMODITY GROUP LLC v. US
accomplishes what GCG asks of it: namely, only the
portion of the acid that is from the PRC is being held as
subject to the applicable duty. We therefore agree with
the Court of International Trade that Commerce’s deter-
mination that GCG’s acid is more akin to a commingling
of acid rather than a “blend” is a reasonable one.
GCG also argues that Commerce’s interpretation
impermissibly expands the scope of the Order by failing to
incorporate a reference to the country of origin for the
subject merchandise. See, e.g., Eckstrom Indus., Inc. v.
United States, 254 F.3d 1068, 1072 (Fed. Cir. 2001)
(“Commerce cannot ‘interpret’ an antidumping order so as
to change the scope of that order, nor can Commerce
interpret an order in a manner contrary to its terms.”).
According to GCG, by not reading in the phrase “from the
PRC” after each reference to “citric acid, sodium citrate,
and potassium citrate” in the scope of the Orders, the
Orders arguably cover non-subject merchandise such as
citrate products from other countries. We disagree and
fail to see how Commerce’s interpretation expands the
scope of the Orders beyond its plain terms. In fact, Com-
merce’s application of the Orders here, assessing a duty
on GCG’s product “according to the rates applicable to
citric acid from both the PRC and any other country
represented in the blend, based upon the quantity and
value of citric acid from each country included in the
blend,” evidences that Commerce’s interpretation appro-
priately accounts for both the physical scope of the prod-
uct as well as the country of origin. 2 See J.A. 39.
CONCLUSION
For the reasons stated above, we find Commerce’s
interpretation of the scope of the Orders to be reasonable
2GCG does not challenge Commerce’s findings re-
garding the country of origin.
GLOBAL COMMODITY GROUP LLC v. US 13
and, given the deference we show to Commerce’s interpre-
tations, the ruling of the Court of International Trade is
AFFIRMED.