E.I. DuPont de Nemours & Co. v. United States

Slip Op. 16-54
UNITED STATES COURT OF INTERNATIONAL TRADE
MEXICHEM FLUOR INC., & E.I. DUPONT
DE NEMOURS & CO.,
Plaintiffs,
v.
UNITED STATES,
Defendant.
PUBLIC VERSION
Before: Leo M. Gordon, Judge
Consol. Court No. 15-00004
OPINION
[Final negative injury determination sustained.]
Dated: June 6, 2016
Paul W. Jameson, Schagrin Associates of Washington, DC, argued for Plaintiff
Mexichem Fluor Inc. With him on the brief was Roger B. Schagrin.
James R. Cannon, Jr., Cassidy Levy Kent (USA) LLP of Washington, DC, argued
for Plaintiff-Intervenor E.I. DuPont de Nemours & Company. With him on the brief were
John D. Greenwald and Jonathan M. Zielinkski.
Nataline Viray-Fung, Attorney, and Karl S. von Schriltz, Attorney-Advisor, Office of
the General Counsel, U.S. International Trade Commission, of Washington, DC, argued
for Defendant. With them on the brief were Dominic L. Bianchi, General Counsel, and
Andrea C. Casson, Assistant General Counsel.
Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP of New
York, 	NY, 	argued 	for 	Defendant-Intervenors 	Sinochem 	Environmental 	Protection
Chemicals (Taicang) Co., Ltd, Zhejiang Quhua Fluor-Chemistry Co., Ltd. and Zhejiang
Sanmei Chemical Industry Co., Ltd. With him on the brief were Max F. Schutzman and
Kavita Mohan.
Gordon, Judge: This consolidated action involves the final determination of the
U.S. International Trade Commission (“Commission” or “ITC”) that an industry in the
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United States is not materially injured or threatened with material injury by reason of
imports of 1,1,1,2– Tetrafluoroethane (“R-134a”) from China. 1,1,1,2– Tetrafluoroethane
from China, 79 Fed. Reg. 73,102 (Int’l Trade Comm’n Dec. 9, 2014) (final neg. determ.)
(“Final Determination”); see also Views of the Commission, Inv. Nos. 701-TA-509 and
731-TA-1244 (Final), USITC Pub. 4503 (Dec. 2014) (“Views”). 1 Before the court are the
motions for judgment on the agency record of Plaintiff Mexichem Fluor Inc. and the
Chemours Company, successor-in-interest to Consolidated Plaintiff E.I. DuPont de
Nemours & Co. See Mot. of Pl. Mexichem Fluor Inc. for J. on the R. Pursuant to R. 56.2
(July 31, 2015), ECF No. 30 (“Mexichem Br.”); The Chemours Co.’s (Successor-in-
Interest to E.I. DuPont de Nemours & Co.) R. 56.2 Mot. for J. on the Agency R. (July 31,
2015), ECF No. 32 (“Chemours Br.”); see also Def. Int’l Trade Comm’n’s Opp’n to Pls.’
Mots. for J. on the Agency R. (Nov. 13, 2015), ECF No. 38 (“Def.’s Resp.”); Def.-
Intervenors’ Resp. to Pls.’ R. 56.2 Mots. for J. upon the Agency R. (Nov. 13, 2015), ECF
No. 40. The court has jurisdiction pursuant to Section 516A(a)(2)(A)(i)(I) and (B)(ii) of the
Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(A)(i)(I), (B)(ii) (2012),2 and 28
U.S.C. § 1581(c) (2012).
For the reasons set forth below, the court sustains the Final Determination on each
of the issues raised.
1 All citations to the Views and to the agency record are to their confidential versions.
2 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
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I. Standard of Review
The court sustains the Commission’s “determinations, findings, or conclusions”
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). More specifically, when reviewing
determinations, findings, or conclusions for substantial evidence, the court assesses
whether the agency action is reasonable given the record as a whole. Nippon Steel Corp.
v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been
described as “such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215
(Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
Substantial evidence has also been described as “something less than the weight of the
evidence, and the possibility of drawing two inconsistent conclusions from the evidence
does not prevent an administrative agency’s finding from being supported by substantial
evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally,
though, 	“substantial 	evidence” 	is 	best 	understood 	as 	a 	word 	formula 	connoting
reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1]
(3d ed. 2015). Therefore, when addressing a substantial evidence issue raised by a party,
the court analyzes whether the challenged agency action “was reasonable given the
circumstances presented by the whole record.” 8A West’s Fed. Forms, National Courts
§ 3:6 (5th ed. 2015).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of the
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Commission’s interpretation of the Tariff Act. See United States v. Eurodif S.A., 555 U.S.
305, 316 (2009) (An agency’s “interpretation governs in the absence of unambiguous
statutory language to the contrary or unreasonable resolution of language that is
ambiguous.”).
II. Discussion
Two separate, but parallel, provisions of the Tariff Act of 1930, as amended,
provide for the Commission to determine whether a domestic industry is materially
injured, or threatened with material injury, by reason of unfairly subsidized or dumped
imports. See 19 U.S.C. §§ 1671d(b), 1673d(b). The Commission will issue an affirmative
determination if it finds “present material injury or a threat thereof” and makes a “finding
of causation.” Hynix Semiconductor, Inc. v. United States, 30 CIT 1208, 1210, 431
F. Supp. 2d 1302, 1306 (2006) (citation and quotation marks omitted). In making a
material injury determination, the Commission evaluates “(1) the volume of subject
imports; (2) the price effects of subject imports on domestic like products; and (3) the
impact of subject imports on the domestic producers of domestic like products.” Id. (citing
19 U.S.C. § 1677(7)(B)(i)(I)-(III)). The Commission may also consider “‘such other
economic factors as are relevant in the determination.’” Id. at 1210, 431 F. Supp. 2d at
1306 (quoting 19 U.S.C. § 1677(7)(B)(ii)).
A. Volume
In performing its volume analysis, the Commission must “‘consider whether the
volume of imports of the merchandise, or any increase in that volume, either in absolute
terms or relative to production or consumption in the United States, is significant.’”
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Shandong TTCA Biochemistry Co. v. United States, 35 CIT ___, ___, 774 F. Supp. 2d
1317, 1322 (2011) (quoting 19 U.S.C. § 1677(7)(C)(i)).
The 	Commission 	found 	that 	subject 	import 	volume 	and 	market 	share 	was
“significant in absolute terms and relative to consumption.” Views at 24. The Commission
also noted an increase in subject imports between 2011 and 2012. Id. Nevertheless, the
Commission determined that the volume of subject imports did not cause adverse effects
to the domestic industry. The Commission reasoned that a domestic supply shortage
beginning in 2010 and persisting “at least through the end of 2011” caused certain
purchasers to turn to subject imports. Views at 21-23. As the shortage eased, “the market
stabilized in 2012,” and subject imports declined “on both a relative and absolute basis”
in 2013. Id. at 23.
1. Subject Import Volume Data Source
i. Contentions
Mexichem argues that the Commission should have evaluated subject import
volume on a quarterly basis rather than an annual basis. Mexichem Br. at 21-22.
Mexichem contends that the Commission “ignored” the increase in subject import volume
in the fourth quarter of 2012, which in turn undermines the Commission’s finding that the
2011 supply shortage caused the increase. Id. at 22. According to Mexichem, increased
subject import volume in the fourth quarter of 2012 could not have resulted from the
domestic shortage. Id. at 21-22.
Chemours argues that the Commission should have measured subject import
market share using U.S. shipments of subject imports that importers reported rather than
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official import statistics. Chemours Br. at 22. Chemours insists that imports of R-134a are
kept in inventory and delivered as demand for air conditioning, which is weather
dependent, dictates, and that imports held in inventories do not have market effects.
Chemours also argues that shipment data are “essential” to calculate market share shifts
on an “apples-to-apples basis.” Id.
ii. Analysis
The court does not agree with Mexichem that the Commission’s evaluation of
subject import volume on an annual rather than quarterly basis was unreasonable. The
Commission followed its longstanding practice of assessing subject import volume and
market share on an annual basis. As the Commission explained, the quarterly data that
Mexichem prefers is less reliable than the annual data. Views at 4 n.4. Specifically, the
quarterly data are limited to official import statistics covering imports entered under
HTSUS subheading 2903.39.2020, see Mexichem Br. at 21, which cannot account for
R-134a 	misclassified 	under 	other 	HTSUS 	provisions. 	Views 	at 	4 	n.4; 	1,1,1,2–
Tetrafluoroethane from China, Inv. Nos. 701-TA-509 and 731-TA-1244 (final), at IV-1 n.4
(Int’l Trade Comm’n Oct. 31, 2014) (final staff report) (confidential version) (“Conf. Rep.”).
To address this problem, the Commission combined the official import statistics for
HTSUS subheading 2903.39.2020 with data for R-134a imported under other HTSUS
provisions, which the Commission requested and obtained from importers directly. Views
at 4 n.4. Because Mexichem’s proposed methodology omits these misclassified imports,
the Commission reasonably chose its traditional methodology to analyze subject import
volume. Furthermore, the Commission does not appear to have overlooked increased
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import volume due to its methodology selection: the Commission explicitly recognized
that subject import volume increased between 2011 and 2012.3 Views at 21.
The court also does not agree with Chemours that the Commission should have
measured subject import market share using U.S. shipments. The Commission’s typical
practice is to use subject import volume to calculate subject import market share when
accurate data on U.S. shipments of subject imports are unavailable. See BIC Corp. v.
United 	States, 	21 	CIT 	448, 	461, 	964 	F. 	Supp. 	391, 	404 	(1997) 	(sustaining 	the
Commission’s 	use 	of 	import 	data 	where 	questionnaires 	from 	importers 	were
“incomplete”). Here, the Commission applied this practice because of reliability issues
with the responding importers’ U.S. shipment data. Specifically, certain importers, 4
accounting for a significant percentage of all subject imports, 5 reported that they did not
track shipments by supplier or country of origin, meaning they had to either estimate their
U.S. shipments of subject imports or else report U.S. shipments that included some
amount of domestically-produced R-134a. See Conf. Rep. at Table IV-1; Importers’
Questionnaire Responses at Questions II-5, II-10. The Commission therefore reasonably
relied on official import data to measure subject import market share instead of U.S.
shipment data. Conf. Rep. at Table IV-6.
3 Subject import volume increased by [[ 	]] short tons. Views at 21.
4 [[ 	]].
5 [[ 	]]%. Conf. Rep. at Table IV-1.
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2. Subject Import Volume Increase
i. Contentions
Mexichem challenges the Commission’s finding that the domestic supply shortage
caused the increased volume of subject 	imports. Mexichem Br. at 18-26, 28-35.
Mexichem asserts that the shortage ended in 2011, id. at 27, and contends that the
Commission’s finding is unreasonable because purchasers “bought even more imported
R-134a in 2012 than they had in 2011.” Id. at 29. Mexichem also challenges the
Commission’s conclusion that the market “stabilized” in 2012 because “imports continued
to increase and prices continued to fall” in that year. Id. at 27-28. Mexichem points to
quarterly and annual subject import volume data and purchasers’ responses in support
of its arguments.
Chemours argues that the Commission failed to consider market share gains by
subject imports and domestic excess capacity in finding that the supply shortage caused
the increased volume of subject imports. Chemours Br. at 20-22. Chemours insists that
capacity utilization decreased and remained at that lowered level while subject imports
increased. Id. at 21-22. Chemours asserts that domestic producers would have been able
to increase sales volume and market share “but for” subject imports. Id. at 22.
ii. Analysis
The court does not agree with Mexichem that subject import volumes in 2012
undermine the reasonableness of the Commission’s finding that the domestic supply
shortage caused the subject import volume increase. As the Commission reasonably
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explained, confidential correspondence indicates that purchasers were warned that the
supply shortage would continue into 2012. 6 Views at 2
2 & nn.93, 95. The Commission also explained that “purchasers were aware” that
a domestic producer 7 “had scheduled a plant shutdown in 2012 for maintenance, further
decreasing the available supply of domestically produced R-134a in 2012.” Id. at 22-23.
Moreover, the Commission explained that purchasers typically place orders in the fall for
delivery through the winter months. Id. at 23. These facts support the Commission’s
reasonable finding that “the duration of the supply shortage was uncertain at the time it
was occurring,” which caused “purchasers [that] wanted to ensure a stable supply of R-
134a” to “turn to China as a reliable source . . . both during the shortage and as the
shortage began to dissipate.” Id. (emphasis added). In the court’s view, 2012 subject
import volumes are consistent with the Commission’s conclusion.
The court also does not agree with Mexichem that the Commission’s finding that
the market “stabilized” in 2012 was unreasonable. In terms of subject import volumes as
a share of the U.S. market, the Commission noted the increase between 2011 and 2012,
but a decline between 2012 and 2013. 8 Id. Likewise, the Commission observed a decline
6 Specifically, in February 2012 [[ 	]]
warned of “[[ 	]].” Views at 22 (emphasis
added). Furthermore, [[ 	]] notified its
customers that [[ 	]]. Id.
7 [[ 	]]. Views at 22-23.
8 Specifically, [[ 	]]% in 2011, [[ 	]]% in 2012, and [[ 	]]% in 2013. Views at 23.
Subject imports also constituted a [[ 	]]% share in interim 2013, and a [[ 	]]% share
in interim 2014. Views at 23 n.103.
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in U.S. producers’ U.S. shipments as a share of the market between 2011 and 2012, but
an increase from 2012 to 2013. 9 Id. at 23-24. Subject import volumes appear to have
stabilized as the supply shortage eased, just as the Commission described. Id.
The court is also not persuaded by Chemours’s argument regarding the domestic
industry’s 	unused 	capacity. 	Chemours 	believes 	domestic 	producers 	would 	have
increased output “but for” subject imports, but fails to account for the numerous
documents indicating that domestic producers were unable or unwilling to meet demand
because of the shortage. See id. at 21-23 & nn.92-95 (quoting sources).
Consequently, the Commission reasonably found that the increase in the volume
of subject imports between 2011 and 2012 was a result of the domestic supply shortage.
B. Pricing
The Commission must evaluate whether:
(I) 	there 	has 	been 	significant 	price 	underselling 	by 	the 	imported
merchandise as compared with the price of domestic like products of the
United States, and
(II) the effect of imports of such merchandise otherwise depresses prices to
a significant degree or prevents price increases, which otherwise would
have occurred, to a significant degree.
19 U.S.C. § 1677(7)(C)(ii).
9 Specifically, [[ 	]]% in 2011, [[ 	]]% in 2012, and [[ 	]]% in 2013. Views at 23-
24.
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The Commission observed mixed instances of underselling and overselling. 10
Views at 25. As with its volume analysis, however, the Commission tied this pricing
pattern back to the domestic supply shortage. The Commission explained that domestic
prices declined during the period of investigation (“POI”) due to cessation of the shortage,
which had temporarily inflated prices. Id. at 28 & n.117. Because the shortage had been
most acute in the automotive aftermarket segment, the Commission explained, prices in
that segment were inflated the most and declined more than prices in other segments
after the shortage ended. Id. at 28. Additionally, the Commission observed that domestic
prices declined on all pricing products 11 after the shortage ended, regardless of whether
subject imports undersold or oversold a particular pricing product. Id. at 29. The
Commission also noted an increase in the domestic industry’s cost of goods sold
(“COGS”) to net sales ratio over the POI, but explained that the increase resulted from
the cessation of the supply shortage, which caused prices (and, consequently, net sales
value) to decline. Id. at 30.
The 	Commission 	ultimately 	determined 	that 	subject 	imports 	“did 	not 	have
significant price effects” because: (1) they “did not have the effect of depressing prices or
preventing price increases that would otherwise have occurred to a significant degree”;
10 Subject imports oversold the domestic like product in 35 of 66 quarterly price
comparisons, but the volume of undersold subject imports was [[ 	]] larger than
the volume of oversold subject imports. Views at 26.
11 “Pricing products” refers to the seven different R-134a products for which the
Commission sought pricing data. Conf. Rep. at V-5.
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(2) “the observed underselling did not lead to significant shifts in market share;” and
(3) instances of confirmed lost sales and revenues “do not outweigh the other data in the
record which, taken as a whole, show the lack of significant price effects.” Id. at 31.
1. Methodology Choice
i. Contentions
Mexichem 	challenges 	the 	Commission’s 	underselling 	methodology 	choice.
According to Mexichem, the Commission’s analysis compared U.S. and subject import
prices at different levels of trade. Mexichem’s Br. at 33-34. Mexichem asserts that the
Commission’s preferred import prices reflected differing levels of trade because they are
generally higher than direct import prices. See id. at 32-34.
Similarly, Chemours contends that the Commission should have collected and
used direct import pricing data. According to Chemours, the average unit values (“AUVs”)
of direct imports from China by four large repackagers 12 were generally lower than the
AUVs of domestic producer sales to those same repackagers. Chemours Br. at 18-19.
Chemours argues the Commission’s methodology choice led it to ignore the price effects
of bulk imports by these four large repackagers. Id. at 17-18.
12 [[ 	]]. Chemours Br. at 18-
19.
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ii. Analysis
Here, the Commission reasonably chose its typical underselling methodology.
“[W]hile the statute requires the Commission to analyze underselling . . . the statute does
not stipulate how the Commission is to calculate the price of the imported merchandise
or the domestic like product,” leaving it to the Commission “to choose the manner in which
it calculates the prices, and how it compares them.” Celanese Chems., Ltd. v. United
States, 31 CIT 279, 294 (2007). Applying its usual approach here, the Commission based
its price analysis on seven representative products, accounting “for approximately 60.5
percent 	of 	U.S. 	producers’ 	U.S. 	commercial 	shipments 	and 	65.9 percent 	of 	U.S.
importers’ U.S. commercial shipments of imports from China during the POI,” Views at
25, and explained that the “pricing data on the record provides relatively high coverage
of both the domestic like product and subject imports.” Id. at 29, n.122. These two data
sets have the added advantage of covering the same sales activities (shipments to
unrelated U.S. customers), which enabled the Commission to make an apples-to-apples
comparison between the price of imported merchandise and the price of domestic like
products. See id. at 26-29. The Commission also reasonably explained that its “usual
practice is not to rely heavily on AUV data because changes in AUV data over time can
be a result of changes in product mix.” Id. at 29 n.125.
Mexichem observes that prices of U.S. importers’ U.S. shipments are higher than
direct import prices. As the Commission reasonably explained, however, U.S. importers’
U.S. shipments include “any sales markup that would typically be made by an importer
selling R-134a in the U.S. market,” such as transportation from the port to their facility,
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warehousing costs, and profit margins, among other things. See Views at 29 n.122. That
U.S. importers’ U.S. shipments are priced higher than direct import prices is therefore
neither surprising nor remarkable on this record.
The court also does not agree with Chemours’s arguments. While Chemours
would have preferred that the Commission collect and use direct import prices, “there is
no minimum standard set by Congress to measure the thoroughness of an investigation
by the Commission.” Diamond Sawblades Mfrs. Coalition v. United States, 32 CIT 134,
148 (2008). As the Commission explained, direct import prices would not provide as
accurate a picture of subject import underselling because domestic producers compete
with direct import prices plus the costs associated with direct importation. See Views at
29 n.122. Likewise, the Commission considered the price data reported by the four large
repackagers mentioned in Chemours’s brief, which covered sales of pricing products
derived from the R-134a they directly imported and repackaged into smaller containers. 13
In the end, “Plaintiffs’ preference for their own [underselling] methodology is
understandable,” but “‘the focal point . . . is not what methodology [Plaintiffs] would prefer,
but on whether the methodology actually used by the Commission was reasonable.’”
Shandong, 35 CIT at ___, 774 F. Supp. 2d at 1329 (citation omitted); see also JMC Steel
Group v. United States, 38 CIT ___, ___, 24 F. Supp. 3d 1290, 1300 (2014). Accordingly,
13 See Importers’ Questionnaire Responses of [[
]] at Questions II-5, III-2 ([[
]]).
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the Commission in this case reasonably applied its usual methodology in analyzing
subject import underselling.
2. Correlation Between Underselling and Market Share
i. Contentions
Both Plaintiffs challenge the Commission’s analysis of the relationship between
underselling and changes in market share on legal grounds. Specifically, Chemours
argues that the Commission was precluded as a matter of law from finding no adverse
price 	effects 	“simply 	because” 	there 	was 	no 	correlation 	between 	subject 	import
underselling and market share. See Chemours Br. at 15-17; see also 19 U.S.C.
§ 1677(7)(B)-(C) (describing “volume” separately from” price” as factors the Commission
“shall consider” in each case). Mexichem argues that the Commission unlawfully failed to
perform 	a 	market 	segmentation 	analysis 	when 	it 	found 	no 	correlation 	between
underselling and market share changes. Mexichem insists that the Commission was
required to perform a market segmentation analysis because the Commission considered
the effects of the supply shortage on separate segments of the domestic market. Pl.
Mexichem Fluor Inc. Reply‘s Br. at 16-18 (Jan. 21, 2016), ECF No. 49; see Mexichem Br.
at 23-25, 29-31.
Plaintiffs also argue that the only reasonable conclusion on this record is that
subject import underselling is in fact correlated with increased subject import market
share. See id. at 23-25; Chemours Br. at 29. Plaintiffs contend that the Commission
ignored what they view as a clear correlation between subject import underselling and
market share in the automotive aftermarket segment. See Mexichem Br. at 23-25, 29-31;
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Chemours Br. at 29. Mexichem in particular argues that the correlation between subject
import underselling and market share was clear from the purchasing patterns of certain
importer/purchasers,14 which according to Mexichem increased their purchases and
imports of R-134a from China due to lower prices. Mexichem Br. at 29-31.
ii. Analysis
The court does not agree that the Commission violated 19 U.S.C. § 1677(7)(B)(ii)
when it considered the connection between subject import underselling and volume.
As Chemours correctly asserts, the statute “does not require” any link between subject
import underselling and volume, and that subject imports may depress or suppress
domestic prices without increasing in volume or market share. Chemours Br. at 16; see
19 U.S.C. § 1677(7)(B)(ii). The statute also does not, however, preclude the Commission
from considering whether subject import underselling correlates with increased subject
import volume or market share, as would be expected if underselling is driving increased
purchases of subject imports. In fact, the statute provides that the Commission “may
consider such other economic factors as are relevant to the determination regarding
whether there is material injury by reason of subject imports.” 19 U.S.C. § 1677(7)(B)(ii).
The Commission therefore reasonably analyzed the correlation between subject import
trends and domestic industry performance, including the correlation between subject
import volume and price effects, as an economic factor relevant to the price effects of
14 [[ 	]]. Mexichem Br. at 29-31.
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subject imports. See JMC, 38 CIT at ___, 24 F. Supp. 3d at 1300 (“A correlation analysis
entails tracking subject import trends in relation to trends in the domestic industry’s
performance and the court has approved its use to assess the price effects of subject
imports.”) (citing Comm. for Fair Coke Trade v. United States, 28 CIT 1140, 1168 (2004)).
The court also does not agree with Mexichem that the statute required the
Commission to conduct a market segmentation analysis. “[T]he [Commission] bears no
obligation to perform a market segmentation analysis” and “d[oes] not err in basing its
determination on data representing the experience of the domestic industry as a whole,
rather than on the experience of [different segments of the industry] separately.’”
NSK Corp. v. United States, 32 CIT 966, 983, 577 F. Supp. 2d 1322, 1340 (2008) (quoting
Tropicana Prods., Inc. v. United States, 31 CIT 548, 559-60, 484 F. Supp. 2d 1330, 1341
(2007)) (brackets in original); see also 19 U.S.C. § 1677(4)(A) (“The term ‘industry’ means
the producers as a whole of a domestic like product, or those producers whose collective
output of a domestic like product constitutes a major proportion of the total domestic
production of the product.”). During the investigation, Plaintiffs advocated a single
domestic like product and industry, and did not request the collection of segment-specific
performance data. The Commission defined a single domestic like product co-extensive
with the scope of the investigations, encompassing all R-134a, and thus a single domestic
industry comprised of all producers of R-134a. See Views at 8-9. The Commission
therefore reasonably based its analysis of subject import underselling and market share
trends on the market as a whole, while also considering the magnified effects of the supply
shortage on the automotive sector as relevant to that analysis. Id. at 17-19, 27.
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In any event, the Commission’s correlation finding was but one of several findings
supporting its conclusion that subject imports had no significant price effects. In addition
to finding no correlation between subject import underselling and market share, Views at
27, the Commission also found a mixed pattern of subject import underselling and
overselling, with overselling in a majority of quarterly comparisons. Id. at 26. The
Commission found that cessation of the shortage explained the decline in domestic prices
during the POI as well as the industry’s increasing COGS to net sales ratio. Id. at 28, 30.
The Commission found that domestic prices declined at a similar rate regardless of
whether subject imports undersold or oversold a particular pricing product. Id. at 29.
Taken as a whole, the Commission reasonably evaluated the relationship between
subject import prices and other relevant economic factors and concluded that subject
imports had no significant price effects.
The 	court 	is 	not 	persuaded 	that 	the 	Commission 	ignored 	subject 	import
underselling in the automotive aftermarket segment. See Mexichem Br. at 23-25, 29-31;
Chemours Br. at 29. The Commission found as a condition of competition that domestic
producers maintained long term contracts with original equipment manufacturers but
supplied the automotive aftermarket segment on a spot basis. The Commission explained
that domestic producers chose to fulfill their long term contractual obligations before
serving aftermarket purchasers in the spot market, which in turn concentrated the effects
of the supply shortage on the automotive aftermarket segment. Views at 19. The
Commission 	recognized 	that 	most 	subject 	imports 	were 	sold 	in 	the 	automotive
aftermarket because that was the segment that experienced the greatest shortage of
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R-134a, id. at 23, and that the domestic industry lost market share in the aftermarket
segment between 2011 and 2013. Id. at 33. In so finding, the Commission recognized
that most underselling would have occurred in the automotive aftermarket segment. Id.
at 18, 25; Conf. Rep. at Table IV-7. As the Commission explained, however, the domestic
industry “gained market share in the ‘other refrigerants’ application in which it faced
competition from subject imports” during the period so that its overall market share in
2013 was only “slightly” lower than in 2011.15 Views at 33.
The court also does not agree with Mexichem that the correlation between subject
import underselling and market share was clear from the purchasing patterns of certain
importer/purchasers. The Commission reasonably analyzed the relationship between
subject import underselling and market share by using pricing data reported by all
responding importers, covering 65.9 percent of their U.S. commercial shipments of
subject imports, and market share data covering the market as a whole. Views at 27
(citing Conf. Rep. at Tables IV-6, V-6). By contrast, Mexichem’s analysis focuses on only
three of 40 responding importers, accounting for a smaller share 16 of reported subject
import volume. Conf. Rep. at Table IV-1. Moreover, Mexichem compares the AUV of four
of these importers’ direct imports to the AUV of Mexichem’s sales of product 1 alone. See
Mexichem Br. at 29-31. When compared to the AUV of all domestic producer sales of
15 [[ 	]]% in 2013 as compared to [[ 	]]% in 2011. Views at 33.
16 [[ 	]]%. Conf. Rep. at Table IV-1.
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product 1, it turns out that direct import prices were higher than domestic prices in most 17
annual comparisons during 2011 and 2012. Conf. Rep. at Table V-3.
Finally, the court is not convinced that the only reasonable conclusion on this
record is that subject import underselling is correlated with increased subject import
market share. As the Commission pointed out, the domestic industry partly made up for
its declining market share in the aftermarket segment with increased market share in the
“other refrigerants” segment, resulting in little change to the industry’s overall market
share. Views at 27 n.114, 33. Plaintiffs rely heavily on the automotive aftermarket
segment, which as the Commission explained experienced the greatest increase in
subject import volume and the greatest decline in domestic prices as the shortage eased
because the shortage impacted that segment most acutely. Id. at 23, 28. The Commission
also explicitly found a “mixed” pattern of subject import underselling and overselling
during the POI. Id. at 26. Plaintiffs’ alternative interpretations of the same evidence do
not, in the court’s view, undermine the reasonableness of the Commission’s findings here.
3. The Domestic Supply Shortage
i. Contentions
Plaintiffs challenge the Commission’s finding that domestic prices declined from
levels inflated by the shortage as the domestic supply situation normalized in 2012.
Mexichem argues that the Commission overlooked the quantity of subject imported
17 Specifically, [[ 	]] annual comparisons. Conf. Rep. at Table V-3.
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pricing product that undersold domestic like product during the POI. Mexichem Br. at 31.
Chemours asserts that the Commission’s finding violates “basic principles of economics.”
Chemours Br. at 24-25. Chemours insists that the Commission actually “affirm[ed] the
link” between domestic price levels and rising subject imports when it attributed the
decline in prices during the POI to cessation of the supply shortage. Id. at 26. Chemours
further argues that the Commission ignored evidence indicating that prices declined more
for pricing products facing subject import competition than for the one product with no
subject import competition. Id. at 30-31. Chemours insists that the share by volume of
subject import underselling 18 “actually show[s]” that “underselling was pervasive.” Id.
Finally, 	Chemours 	contends 	that 	the 	Commission 	attached 	insufficient 	weight 	to
confirmed lost sales and revenue allegations. Id. at 31.
ii. Analysis
In arguing that the Commission should have measured the degree of subject
import underselling based on volume rather than quarters of underselling, Mexichem
essentially challenges the Commission’s methodological choice. The Commission has
historically measured the degree of subject import underselling by comparing the number
of quarterly price comparisons in which subject import underselling occurred to the
number of quarterly comparisons in which subject import overselling occurred. The court
has sustained this approach in the past. Nucor Corp. v. United States, 28 CIT 188, 246,
18 [[ 	]]%. Chemours Br. at 30.
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318 F. Supp. 2d 1207, 1257 (“[T]he [ITC] is not obligated to conduct a price comparison
analysis that accounts for variations in sales volumes.”) (quoting Nippon Steel, 182
F. Supp. 2d at 1341); see also Shandong, 35 CIT at ___, 774 F. Supp. 2d at 1327-29;
Coal. of Gulf Shrimp Indus., 39 CIT ___, ___, 71 F. Supp. 3d 1356, 1365-66 (2015).
Applying this methodology here, the Commission found that prices of domestically-
produced pricing products declined at a similar rate regardless of the degree of subject
import underselling. Specifically, domestic prices declined at a similar rate for product 1,
which subject import oversold in most comparisons; product 4, which subject imports
undersold in most comparisons; and products 5, 6, and 7, which had mixed patterns of
quarterly underselling and overselling. Views at 29. Although Mexichem identifies an
alternative methodology that supports its preferred outcome, the Commission here
applied its traditional methodology for assessing underselling and found that domestic
prices declined at a similar rate whether subject imports undersold or oversold particular
products. Id. at 24-29. This finding, in turn, reasonably supports the Commission’s
conclusion that prices dropped in response to the improved domestic supply situation
rather than subject import underselling. Id. at 31.
The 	court 	does 	not 	agree 	with 	Chemours 	that 	the 	Commission 	violated
“elementary” economic principles in finding no correlation between subject imports and
declining prices. CB at 24-25. “[U]nderselling combined with increasing import volumes
does not ‘necessarily indicate[] injury due to pricing in cases involving fungible products.’”
JMC, 38 CIT at ___, 24 F. Supp. 3d at 1303 (quoting Coal. for Pres. of Am. Brake Drum
& Rotor Aftermkt. Mfrs. v. United States, 22 CIT 520, 527-28, 15 F. Supp. 2d 918, 925
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Consol. Court No. 15-00004 	Page 23
(1998)) (emphasis added). The Commission recognized that subject imports were highly
substitutable for the domestic like product and that price was an important factor in
purchasing decisions. Views at 19-20. Nevertheless, as the Commission explained,
domestic prices for products 1, 4, 5, 6, and 7 dropped at similar rates regardless of
whether (and how much) subject imports undersold, oversold, or even competed with
those products. Id. at 29. The supply shortage, on the other hand, accounts for these
widespread price reductions as well as many other market conditions outlined in the
record. See id. at 17-19, 21-30. The Commission therefore reasonably concluded that the
cessation of the shortage rather than subject import underselling accounted for the
decline 	in 	domestic 	prices 	during 	the 	POI. 	Id. 	at 	28-29; 	see 	also 	Statement 	of
Administrative Action for the Uruguay Round Agreements Act, H.R. Doc. No. 103-316,
vol. 1 at 851-52 (1994) (explaining that the Commission must “ensure that it is not
attributing injury from other sources to the subject imports” (emphasis added)).
The court is also not convinced that the Commission ignored evidence that prices
declined more for pricing products facing subject import competition than for the one
product with no subject import competition. The Commission explicitly recognized that
“price declines occurred whether subject imports oversold or undersold the domestic like
product and regardless of whether subject imports were present in the market for a
particular pricing product.” Views at 29 (emphasis added). It appears that Chemours
simply disagrees with the Commission’s reasonable finding that the supply shortage,
rather than subject import underselling, caused the decline in prices. See id. at 28-29.
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The court also is not persuaded that the Commission attached insufficient weight
to evidence that a certain percent 19 of reported subject import sales volume undersold
the domestic like product. As discussed above, the Commission used its traditional
methodology of assessing underselling on a quarterly basis and was “not obligated to
conduct a price comparison analysis that accounts for variations in sales volumes.”
Nucor, 28 CIT at 246, 318 F. Supp. 2d at 1257 (citation omitted). The Commission
expressly recognized that the quantity of undersold subject imports was larger than the
quantity of oversold subject imports. Views at 26. The Commission explained, however,
that the volume of subject imports that undersold the domestic like product did not
correlate to subject import market share shifts. Id. at 27. Instead, the Commission found
that the only gain in subject import market share occurred between 2011 and 2012 as a
result of the domestic supply shortage. Id. In the court’s view, the Commission reasonably
weighed the evidence of underselling in concluding that subject imports did not cause the
observed price declines.
Finally, the Court does not agree with Chemours’s arguments about confirmed lost
sales and lost revenue allegations. Chemours overstates confirmed lost sales and
revenues by comparing them to industry sales and operating income in 2013 alone, even
though lost sales and revenues allegations were spread across the POI. See Conf. Rep.
19 [[ 	]]%. Chemours Br. at 30.
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Consol. Court No. 15-00004 	Page 25
at Tables V-13-14. Compared to the whole POI, lost sales and revenue allegations 20
amounted to a small percent of domestic industry sales 21 and were substantially lower
than the industry’s operating income in 2011 and 2012. 22 Id. at Table D-1. Most of the
confirmed lost sales and lost revenues occurred during and immediately following the
supply shortage in 2011 and 2012. 23 See id. at Tables V-13-14.
In any event, “the Commission must determine whether lost sales, together with
other factors, indicate a causal nexus between the imports at less than fair value and
material injury to the domestic industry.’” GEO Specialty Chems., Inc. v. United States,
33 CIT 125, 132-22 (2009) (quoting Maverick Tube Corp. v. United States, 12 CIT 444,
449, 687 F. Supp. 1569, 1575 (1988)) (emphasis added). Here, the Commission
considered confirmed lost sales and revenues and found that they did “not outweigh the
other data in the record which, taken as a whole, show the lack of significant price effects.”
Views at 31 n.132. As the Commission explained, subject import underselling was mixed
and did not correlate with subject import market share shifts; domestic prices declined
due to cessation of the shortage, and regardless of underselling, overselling, or even
competition from subject imports; and declining prices from cessation of the shortage
caused the industry’s COGS to net sales ratio to increase, notwithstanding the industry’s
20 $[[ 	]]. Conf. Rep. Table D-1.
21 [[ 	]]% of $[[ 	]]. Conf. Rep. Table D-1.
22 $[[ 	]] and $[[ 	]], respectively. Conf. Rep. Table D-1.
23 Specifically, [[ 	]]% of confirmed lost sales and [[ 	]]% of confirmed lost revenues.
Conf. Rep. at Tables V-13 to -14.
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stable COGS. See id. at 25-30. The Commission therefore reasonably found that other
evidence outweighed the confirmed lost sales and revenue allegations.
C. Impact
In 	evaluating 	the 	impact 	of 	subject 	imports 	on 	the 	domestic 	industry, 	the
Commission evaluates “all relevant economic factors which have a bearing on the state
of the industry,” including, but not limited to:
(I) actual and potential decline in output, sales, market share, profits,
productivity, return on investments, and utilization of capacity,
(II) factors affecting domestic prices,
(III) 	actual 	and 	potential 	negative 	effects 	on 	cash 	flow, 	inventories,
employment, wages, growth, ability to raise capital, and investment,
(IV) actual and potential negative effects on the existing development and
production efforts of the domestic industry, including efforts to develop a
derivative or more advanced version of the domestic like product, and
(V) in a proceeding [concerning the imposition of antidumping duties], the
magnitude of the margin of dumping.
19 U.S.C. § 1677(7)(C)(iii). The Commission must analyze these factors “within the
context of the business cycle and conditions of competition that are distinctive to the
affected industry.” Id.
The Commission found that largely stable demand during the POI was reflected in
the relatively stable performance of the domestic industry according to most measures,
including 	capacity, 	capacity 	utilization, 	production, 	U.S. 	shipments, 	market 	share,
employment, wages paid, hours worked, productivity, and net sales quantity. Views at 32-
34. The industry’s market share was only slightly lower in 2013 than in 2011, the
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Commission explained, because the industry offset market share lost in the aftermarket
segment with market share gains in the “other refrigerants” application, despite subject
import competition. Id. at 33.
The Commission recognized that the domestic industry suffered a severe decline
in operating income during the POI, as the domestic industry’s net sales revenues
declined more rapidly than the industry’s COGS. Id. at 34-35. The Commission explained,
however, the industry’s financial performance declined during the POI when prices that
were anomalously high due to the shortage in 2010 and 2011 began to return to pre-
shortage levels as the market stabilized in 2012 and 2013. Id. at 36. The Commission
observed that subject imports had no significant price effects, and found no correlation
between the domestic industry’s declining financial performance and subject import
volume and market share. Id.
1. The Domestic Supply Shortage
i. Contentions
Mexichem argues that the Commission unlawfully ignored the increase in the
domestic industry’s COGS to net sales ratio between 2010 and interim 2014, which in its
view showed injury by reason of subject imports. Mexichem Br. at 18-20, 36-38. Similarly,
Chemours argues that the Commission erred in finding that domestic prices returned “to
normal” in 2013 because, in its view, the decline in domestic prices to below cost by
interim 2014 could not be considered normal. Chemours Br. at 27.
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Consol. Court No. 15-00004 	Page 28
ii. Analysis
In the court’s view, the Commission lawfully focused on 2011-13 data for its
analysis of trends in the domestic industry’s COGS to net sales ratio. Views at 30, 34.
“The statute does not expressly command the Commission to examine a particular period
of time.” Kenda Rubber Indus. Co. v. United States, 10 CIT 120, 126-27, 630 F. Supp.
354, 359 (1986); see also Nitrogen Solutions Fair Trade Comm. v. United States, 29 CIT
86, 97, 358 F. Supp. 2d 1314, 1325 (2005) (“[T]he ITC’s broad discretion in choosing the
time frame for its investigation and analysis has consistently been upheld . . . .”). The
Commission here applied its normal practice in defining the POI for the final phase of its
investigations as 2011-13 and the first halves of 2013 and 2014. Mexichem did not
challenge this decision below by requesting that the Commission expand the POI to
include 2010 and to collect data covering 2010. See Mexichem’s Comments (1-69). Just
because Mexichem now identifies a different methodology that might support its own
narrative does not mean that the Commission’s normal practice is unlawful.
Here, the Commission reasonably analyzed trends in the domestic industry’s
COGS to net sales ratio. Views at 30, 40. The Commission explained that domestic prices
were inflated by the supply shortage in both 2010 and 2011, meaning that the AUV of the
domestic industry’s net sales in 2010 was much higher, and the industry’s COGS to net
sales ratio much lower, than it would have been in the absence of the shortage. Views at
18, 28 & n.117, 36. More broadly, given the absence of any correlation between subject
import underselling and either market share shifts or domestic price declines, id. at 27-
29, and the inflated domestic prices that resulted from the shortage, id. at 28 & nn.117-
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Consol. Court No. 15-00004 	Page 29
18, the Commission concluded that the domestic industry’s declining operating income
during the POI resulted from resolution of the shortage rather than subject imports. Id. at
36. Mexichem’s argument that these data establish material injury by reason of subject
imports is an invitation for the court to reweigh this same evidence. Usinor v. United
States, 28 CIT 1107, 1111, 342 F. Supp. 2d 1267, 1272 (2004) (The CIT “may not reweigh
the evidence or substitute its own judgment for that of the agency.”). This the court will
not do.
The court also does not agree with Chemours that the Commission unreasonably
found that “falling prices in 2013 represented a return to ‘normal.’” Chemours Br. at 27.
The Commission expressly declined Plaintiffs’ invitation to speculate as to whether prices
were returning to their “natural equilibrium.” Views at 30 n.130. As the Commission
explained, “we have not purported to compute such prices” because “the statute does not
refer to ‘equilibrium’ prices” but rather “directs [the Commission] to ascertain whether the
effect of subject imports is to depress prices to a significant degree.” Id. at 30 n.130 (citing
19 U.S.C. § 1677(7)(C)(ii)(II)). Chemours’s argument is therefore not responsive to the
Commission’s finding that domestic “price declines occurred because prices were
anomalously high at the beginning of the POI . . . and began to return to their pre-shortage
levels as the market stabilized in 2012 and 2013.” Id. at 36.
2. Fixed Costs
i. Contentions
Mexichem argues that the Commission unlawfully failed “to mention the high fixed
costs and safety issues that are distinctive to the R-134a market.” Mexichem Br. at 39
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Consol. Court No. 15-00004 	Page 30
ii. Analysis
The court does not agree. The statute directs the Commission to “evaluate all
relevant economic factors . . . within the context of the business cycle and conditions of
competition that are distinctive to the affected industry.” 19 U.S.C. § 1677(7)(C)(iii).
Mexichem does not explain in its brief why “high fixed cost and safety issues” are relevant
to the impact subject imports have on the state of the industry or how “mention[ing]” these
factors would affect the Commission’s impact analysis. See Mexichem Br. at 39. The
court therefore deems this issue waived. United States v. Great Am. Ins. Co., 738 F.3d
1320, 1328 (Fed. Cir. 2013); see also Zhejiang Sanhua Co. v. United States, 39 CIT ___,
___, 61 F. Supp. 3d 1350, 1357-58 (2015) (explaining waiver).
3. Subject Import Inventories
i. Contentions
Chemours 	argues 	that 	the 	Commission 	failed 	to 	analyze 	subject 	import
inventories, which in its view caused an “inventory overhang” that depressed domestic
prices. See Chemours Br. at 23-24. Chemours identifies two previous determinations in
which the Commission found that an “inventory overhang” adversely affected domestic
prices. Chemours Br. at 23-24 (citing Certain Steel Grating from China, Inv. Nos. 701-TA-
465 and 731-TA-1161 (Final), USITC Pub. 4168 (July 2010) (“Steel Grating from China”);
Certain Orange Juice from Brazil, Inv. No. No. 731-TA-1089 (Final), USITC Pub. 3838
(Mar. 2006) (“Orange Juice from Brazil”)).
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ii. Analysis
The court does not agree that the Commission failed to analyze the effects subject
import inventories. The Commission expressly noted that “U.S. inventories of subject
merchandise did increase” from 2011 to 2013, but explained that “[t]he available data
indicate that any inventory buildup did not persist after the end of 2013.” Views at 40. The
Commission also considered whether “abnormally high inventories” in interim 2014
resulted in “record low” subject import prices. See id. at 35 n.148. As the Commission
explained, pricing data on the record actually showed that, “with one exception, subject
import prices increased during interim 2014.” Id. (emphasis added).
The court is also not convinced that the “inventory overhang” issues discussed in
Steel Grating from China or Orange Juice from Brazil compel a different outcome here.
Each Commission determination is sui generis, “involving a unique combination and
interaction of many variables, and therefore a prior administrative determination is not
legally binding on other reviews before this court.” U.S. Steel Corp. v. United States,
33 CIT 984, 1003, 637 F. Supp. 2d 1199, 1218 (2009) (citing Nucor Corp., 414 F.3d at
1340); see also Cleo Inc. v. United States, 501 F.3d 1291, 1299 (Fed. Cir. 2007) (“[P]rior
determinations by the Commission with regard to one industry typically provide little
guidance for later determinations with regard to different industries.”).
D. Threat
i. Contentions
Chemours challenges the Commission’s finding that there was “no link between
the dumped imports and that falling price levels in the U.S. market” as unreasonable for
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the same reasons Chemours challenged that finding in the material injury context.
Chemours Br. at 33-34.
ii. Analysis
Chemours does not identify any specific flaw in the Commission’s threat analysis.
See Chemours Br. at 33-34. The court therefore sustains the Commission’s threat
analysis as well. 28 U.S.C. § 2639(a)(1) (the Commission’s determinations are presumed
to be correct and the burden is on the party challenging the determination to demonstrate
otherwise).
III. Conclusion
For the foregoing reasons, the court sustains the Final Determination for each of
the issues Mexichem and Chemours have challenged in their motions for judgment on
the agency record. Judgment will be entered accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: June 6, 2016
New York, New York
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