Texas Crushed Stone Company, Parker Lafarge, Inc. And Gulf Coast Limestone, Inc. v. The United States, and Vulcan Materials Company, Calizas Industriales Del Carmen, S.A., and Vulcan/ica Distribution Company

Citations: 35 F.3d 1535; 16 I.T.R.D. (BNA) 1705; 1994 U.S. App. LEXIS 25596Docket: 93-1481

Court: Court of Appeals for the Federal Circuit; September 15, 1994; Federal Appellate Court

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Texas Crushed Stone Company, Parker Lafarge, Inc., and Gulf Coast Limestone, Inc. (plaintiffs-appellants) appealed a judgment from the United States Court of International Trade (CIT) that upheld a negative preliminary determination by the United States International Trade Commission (ITC). The ITC found no significant dumping of crushed limestone imports from Mexico into a defined regional market in Southeast Texas. The appeal, numbered 93-1481, was decided by the United States Court of Appeals for the Federal Circuit on September 15, 1994. 

The antidumping statute aims to address sales of imported goods at less than fair value (LTFV) that may harm U.S. industries. If a U.S. industry is materially injured or threatened by such sales, antidumping duties can be imposed. Antidumping proceedings are initiated when parties file petitions with the ITC and the International Trade Administration (ITA). Key steps in the process include the ITA's decision to initiate an investigation based on the sufficiency of the petition and the ITC's preliminary determination regarding material injury within 45 days of the petition. If the ITC's preliminary determination is negative, the investigation is terminated. In this case, the ITC's conclusion that there was no reasonable indication of material injury led to the affirmation of the CIT's judgment.

An affirmative preliminary determination by the International Trade Administration (ITA) regarding Less Than Fair Value (LTFV) results in the suspension of duty liquidation and the requirement to post bonds for the merchandise. Conversely, a negative preliminary determination does not impose provisional remedies but allows the investigation to continue. The ITA must issue a final determination within 75 days of its preliminary finding, which can be extended; a negative final determination concludes the investigation. If the final determination is affirmative, the International Trade Commission (ITC) assesses material injury. A negative injury finding from the ITC leads to case termination, while a positive finding prompts the ITA to issue an antidumping duty order.

In this case, on May 20, 1992, parties filed petitions with the ITC and ITA, claiming material injury to a U.S. industry due to crushed limestone imports from Mexico at LTFV. The ITC conducted a preliminary investigation to assess whether there was reasonable indication of material injury, including a regional industry analysis. The analysis allows for the identification of separate markets based on localized production and demand characteristics. However, the ITC ultimately made a negative preliminary determination, concluding that there was no significant concentration of dumped imports in the proposed Southeast Texas Region, noting that a concentration of 80% or more of total imports typically meets statutory criteria for concentration.

In 1990, the import levels of crushed limestone from Mexico into the Southeast Texas Region were 55.1%, rising to 59.6% in 1991 and dropping to 54.3% in early 1992. The ITC determined that these percentages did not meet the statutory concentration requirement, which is necessary to proceed with an analysis of material injury or threat of material injury to domestic producers. The ITC utilized the "percent of imports" test to assess concentration, which evaluates the percentage of dumped imports relative to total imports in a specific region. Appellants argued that the ITC should have employed the "ratio of import penetration" test instead, which compares regional import penetration to national levels and contended that the ITC deviated from its previous practices by applying a stricter numerical cut-off. They also claimed that the ITC did not consider all relevant evidence and failed to assess threats of material injury.

Conversely, appellees defended the ITC's interpretation of the applicable statute as reasonable, emphasizing the agency's discretion in determining import concentration methods and asserting that there was no obligation to adhere to a specific numerical threshold. They argued that the ITC appropriately considered the complete record and concluded that no evidence warranted a reevaluation of potential material injury once concentration was not established.

The CIT upheld the ITC’s decision, affirming that it was not arbitrary or capricious, and concluded that the ITC reasonably interpreted the statute and acted within its discretion by using the percent of imports test.

The court determined that 19 U.S.C. Sec. 1677(4)(C) does not explicitly define "import concentration" and its legislative history does not mandate the ITC to utilize the import penetration ratio in its analysis. It concluded that there was no established prior ITC practice regarding the numerical cut-off under the import percentage test and clarified that Congress intended the ITC to evaluate each case based on its specific facts. The court rejected the appellants' claim that the ITC failed to apply the correct legal standard, asserting that the ITC conducted its concentration analysis on a complete record without expectation of contrary evidence emerging during the final investigation. 

The court also dismissed the appellants' argument regarding the ITC's failure to consider evidence of potential material injury, stating that the prerequisites for an affirmative regional industry determination include the existence of a regional market, concentration of dumped imports, and material injury to regional producers. Since the requirement for regional import concentration was not met, the ITC was not obligated to analyze material injury evidence, leading to the conclusion that such evidence was unnecessary.

Regarding the standard of review, the CIT is bound by 19 U.S.C. Sec. 1516a(b)(1), which requires it to deem a determination unlawful if found arbitrary, capricious, or not in accordance with law. The CIT’s decision is upheld unless the ITC's preliminary determination is deemed arbitrary or capricious. In reviewing the ITC’s actions, the court must ensure that relevant factors were considered and that there was no clear error in judgment, recognizing that it cannot substitute its judgment for that of the agency.

On appeal, the appellants reiterated their arguments, highlighting that the ITC allegedly abused its discretion by applying the percent of imports test for analyzing "concentration of dumped imports." The court’s review of the ITC's statutory interpretation involves evaluating whether the agency’s construction aligns with the statute it administers.

Determining if Congress has directly addressed a specific legal question is the primary consideration. If Congress's intent is clear, that intent must be followed. If it is not, the court assesses whether the agency's interpretation is a permissible construction of an ambiguous statute. The ITC receives Chevron deference due to its expertise under the antidumping statute. Section 1677(4)(C) of 19 U.S.C. indicates that material injury from dumped imports may be identified through "concentration," but does not define "concentration" or the method for assessing it. Consequently, there is no clear congressional intent regarding the necessity of using the ratio of import penetration test for the ITC's concentration inquiry. Legislative history provides no definitive guidance, with conflicting interpretations presented in both Senate and House Reports regarding the determination of concentration based on import ratios. The Senate Report suggests concentration "will be found" when the import ratio is higher in a regional market, while the House Report and the 1979 Statement of Administrative Action indicate that concentration "could be found" under similar conditions, thereby reflecting ambiguity rather than a clear directive from Congress.

Congress has not clearly indicated the criteria for determining the concentration of dumped imports in a region, leading to deference to the International Trade Commission's (ITC) interpretation unless deemed unreasonable. The appellants argue that the ITC's reliance on the percent of imports test in this case deviates from its past practices, but this claim is rejected. The ITC has consistently applied the percent of imports test for analyzing import concentration, utilizing the ratio of import penetration test only in specific situations. There is no established numerical cut-off for this test; historically, the ITC has considered 80% or more as sufficient concentration, while percentages below this threshold are typically deemed insufficient, although exceptions exist. The ITC's case-by-case analysis method is affirmed, and it effectively balances interests under the antidumping statute. This statute permits regional injury assessments, which can reveal significant harm in isolated areas, although antidumping duties based on such findings impact the entire U.S. market. The ITC's approach is thus seen as reasonable, with a focus on ensuring appropriate application of regional analyses to avoid unjustified duties on a nationwide scale.

The ITC's case-by-case approach is deemed a legitimate policy choice in interpreting the statute, utilizing the ratio of import penetration test selectively, particularly when imports are dispersed or when the regional industry represents a significant share of the national industry. In this instance, crushed limestone imports were concentrated in the 10-state Mississippi River/Gulf Coast region rather than widely dispersed, which could disrupt broader trade if antidumping duties were imposed based solely on a small Texas region's injury. The ITC reasonably applied the percent of imports test, declining the ratio of import penetration test in this context.

Appellants argue that the ITC's ruling was arbitrary and violated the legal standard for negative preliminary determinations, claiming the ITC overlooked evidence of possible increased import concentration and material injury by the final determination. However, the ITC's preliminary determination is based on whether there is a reasonable indication of material injury or threat, supported by a complete record that did not suggest contrary evidence would emerge. The statutory requirement emphasizes a reasonable indication of injury, not further inquiry. The ITC's refusal to consider certain evidence regarding material injury is consistent with the statute, which allows for finding material injury in a regional industry only if there is a concentration of dumped imports affecting nearly all producers in that market.

Concentration of dumped imports and material injury or threat of material injury are essential criteria for a positive regional industry analysis. The ITC concluded that the concentration requirement was unmet, thereby precluding further examination of material injury. Consequently, the ITC's negative preliminary determination was upheld as lawful and not arbitrary or capricious, leading to affirmation by the CIT. Each party is responsible for its own costs. The document also notes that the ITC and ITA have distinct roles within the antidumping statute, with the ITC being an independent agency. Additionally, it outlines timelines for preliminary and final determinations by the ITC and ITA, and provides context regarding the origins of the Mexican crushed limestone involved in the case. It highlights the legislative history regarding the Trade Agreements Act of 1979 and the significance of prior agency interpretations in assessing deference to agency decisions.