United States Court of International Trade

Commerce’s Final Scope Ruling Affirmed

Kirovo-Chepetsky Khimichesky Kombinat, JSC, part of Uralchem, OJSC v. United States and CF Industries, Inc. and El Dorado Chemical Company, concerns a scope ruling issued by the Department of Commerce (“Commerce”) concerning solid fertilizer imported from the Russian Federation.  Court No. 13-00324, Slip op. 15-26.  Plaintiff challenged Commerce’s determination that the product is covered by the antidumping duty order on solid fertilizer grade ammonium nitrate products from the Russian Federation, arguing that the Final Scope Ruling was not supported by substantial evidence, misapplied legal standards, and improperly excluded relevant evidence.

At the outset, plaintiff argued that the language of the scope ruling was unambiguous and that the subject solid fertilizer was clearly not covered by the order.  Since the product’s total nitrogen content attributable to ammonium nitrate is approximately 23 percent, which is significantly less than known ammonium nitrate products on the U.S. market, plaintiff argued that the subject solid fertilizer was not an “ammonium nitrate product” within the scope of the order.  The Court upheld Commerce’s conclusion that the language was ambiguous, noting the low barrier for justifying a finding of ambiguity in the scope language.

The Court affirmed the Final Scope Ruling, holding that it was supported by substantial evidence and otherwise in accordance with law.  Commerce’s conclusion that the subject solid fertilizer consisted of 70 percent ammonium nitrate for scope purposes was reasonable given Defendant-Intervenor’s evidence that the combined form in the double salts gave the product the agricultural function of an ammonium nitrate.  This evidence supported Commerce’s determination that the product was an ammonium nitrate product.  Furthermore, the Court held that plaintiff’s argument that Commerce is required to examine the product as imported in a scope determination, rather than in its condition after application to crops and dissolution by water, was without merit.  Commerce considered the use or function of the subject solid fertilizer since such was described in the petition and ITC report, but also examined samples upon importation and ultimately found the product’s double salts were relevant in calculating its ammonium nitrate content.

The Court also found plaintiff’s argument that Commerce improperly rejected untimely factual submissions unpersuasive.  While the regulations do not specifically provide deadlines applicable to scope rulings, such rulings are segments of antidumping duty proceedings that do have regulated time limits for submitting factual information.  It was reasonable for Commerce to interpret the antidumping proceeding regulation directing the agency to reject factual information that is not timely filed, as authorizing a deadline for submission in scope proceedings.  Therefore, Commerce did not act arbitrarily or capriciously, nor abuse its discretion in rejecting plaintiff’s late factual submissions. 

Remand Results Sustained in Circular Welded Carbon Steel Pipes and Tubes from Turkey Review

 In Toscelik Profil ve Sac Endustrisi A.S. v. United States et al., Court No. 13-371, Slip Op. 15-28 (April 1, 2015), Remand Results from Toscelik Profil ve Sac Endustrisi A.S. v. United States, 38 CIT ___, Slip Op. 14-126 (Oct. 29, 2014) (“Toscelik I”) were before the court.   The Toscelik I decision remanded Circular Welded Carbon Steel Pipes And Tubes From Turkey: Final Results of Countervailing Duty Administrative Review; Calendar Year 2011, 78 Fed. Reg. 64916 (Oct. 30, 2013).  Because the petitioner filed no comments and the Court found substantial evidence, the Court sustained the Remand Results. 

According to those results, the U.S. Department of Commerce (“Commerce”) determined that Toscelik’s overall net subsidy rate changed from 0.83% to 0.44% and was de minimis. On remand of the 2011 CVD review, Commerce’s reaction to the remand order was that “changes to an allocation stream may be appropriate under certain circumstances” but it determined on remand “that this is not one of those circumstances.” For the 2008 land subsidy, therefore, Commerce revised the benchmark to the weighted-average benchmark that had been utilized in the 2010 CVD Review.  For purposes of the 2010 land subsidy calculation, Commerce first removed all duplicative land quotes from the 2010 land benchmark prices. It then reviewed the 2010 land benchmark calculations and found “no evidence that any of the underlying data points should be considered . . . outliers or otherwise distortive.  Specifically, the allegedly comparatively expensive and developed land values identified by Toscelik and by the Court — e.g., Istanbul and Yalova — which were contained in the 2008 benchmark, are not in fact contained in the data set used to value the 2010 land subsidy.”

As for Turkish law 5084 – regional classifications by the Government of Turkey (GOT) did not provide Commerce with sufficient information about how the level of development in the 49 provinces in question relate to land prices. Commerce may use other information available to it such as industrial property reports, available data on prices, investment flows, etc.  Moreover, Commerce limited its  benchmark to land prices corresponding to calendar year 2010 and found that land purchased from Turkish government authorities cannot serve as an appropriate benchmark for land values under 19 CFR 351.511 (a)(2)(i), because it pertained to prices charged by the very provider of the good at issue. This approach was consistent with regular practice in line with other CVD proceedings.  

As for the Court’s questions in benchmark prices for 2008 sale of land to Toscelik,  in the 2010 CVD Review, because Commerce lacked benchmark prices that corresponded to the year in which the land transaction at issue occurred, Commerce relied upon benchmark land prices for years 2009, 2010, and 2011 (indexed to 2008) for purposes of calculating the 2008 land benchmark. In contrast, in the 2011 review, in which Commerce was examining the GOT’s 2010 sale of land to Toscelik, Commerce had at its disposal land benchmark prices for 2010. Commerce further found in these final results, that it will continue to benefit from the GOT’s sale of land to Toscelik in 2010 using available 2010 land prices to derive a contemporaneous land benchmark that reflected market conditions prevailing during the year of the government sale.

Finally, by using a simple average method in land benchmarking, Commerce in effect accorded equal weight to all the pricing variables that may have affected the pricing of land in the available sample, whereas the weight average method would provide more significance to the prices of the larger parcels even though, those particular parcels were less comparable in terms of other factors that might influence price than the other parcels of smaller size.  Given the imperfections of the information, Commerce felt this would provide a more appropriate approach.