Fertilizer Exporter Contests ITC's Findings Regarding US Producers' Ability to Reship From Inventories

The issues in the case coalesced around three findings from the commission: that "reshipment of domestic producer inventories was possible, reducing the U.S. market’s need for imports"; that import volumes, including those sold to buyers "denied domestic supply or exported to Canada," caused oversupply in the U.S. market; and "low-priced" imports depressed U.S. prices.

OCP said that all three of the ITC's findings were unsupported by substantial evidence, and that the commission failed to show the U.S. industry was injured "by reason of" subject imports. Instead, "there was only one culprit" for the injury: "three consecutive seasons of unprecedented and unforeseeable rainfall," the brief said. This case isn't about multiple causes of injury, as the commission claims, but, rather, it's about the fact that the "unforeseeable weather constituted the sole cause of injury."

In the decision, Judge Stephen Vaden, who has since left the court and been replaced in the case by Judge M. Miller Baker, noted that the injury determination rested on the "critical finding" that U.S. producers were able to reship delivered inventories and found the finding was unsupported by substantial evidence (see 2508070055). However, on remand, the ITC "attempts to disclaim its reliance on reshipment" by converting the finding into a "list of factors" and claiming U.S. producers' ability to relocate inventories "was only one factor" in support of the finding that "inventories in low-demand regions should be counted as supply available from U.S. sources."

The commission now claims four factors underpin this finding: the U.S. industry's "excess capacity, substantial inventories, extensive locations, and expansive multi-modal distribution network." In response, OCP said three of the factors, the inventories, locations and distribution network, "are just facts of the same inventory reshipment finding," which the court found to be unsupported by the evidence.

The ITC failed to explain why U.S. producer inventories could be treated as available to meet demand without any evidence of "routine inventory reshipment," the brief said. The commission continued to rely on the fact that, "theoretically," an intermodal distribution network could allow for reshipment despite the fact that Vaden said the ITC can't continue relying on purely conjectural data.

The commission additionally failed to "grapple with the lack of evidence of meaningful inter-regional inventory reshipment by domestic producers," as Vaden instructed, instead dodging the issue by "noting that" U.S. producers didn't report they were unable to serve the U.S. market from their inventories. "This is far from evidence affirmatively demonstrating that domestic producers could serve the domestic market from existing inventories located in low-demand regions," the brief said.

OCP argued that the commission's volume analysis fares no better on remand. Vaden told the ITC to "arrive at a reasonable conclusion" about the U.S. market, including by addressing domestic producers' refusal to sell to large domestic fertilizer distributors and imports that were then exported to Canada. OCP said the commission failed to address either point.

The commission said on remand that domestic producers didn't "categorically" refuse to make sales to U.S. distributors, but rather they did sell to them "while declining to make other sales based not on business strategy but on price." OCP argued that these findings "directly contradict the Commission’s earlier recognition that domestic producers refused to sell to distributors they consider competitors, are unsupported by substantial evidence, and do not comply with the Order." For instance, the ITC acknowledged that domestic producers admitted they didn't sell to large domestic distributors who compete for sales to downstream customers "as a business strategy."

The ITC's "new finding" that U.S. producers didn't sell to distributors for price reasons is "not supported," the brief said. Instead, the record shows that "large domestic distributors offered to purchase domestic fertilizers at 'market prices,' not at allegedly lower prices offered by subject imports." The commission bases its claim on only one "unsubstantiated claim" from petitioner Mosaic and "a single piece of evidence" from "years before" the investigation period that doesn't show distributors substituting U.S. products with lower-priced imports, the brief said.

The commission's analysis of the price effects of subject imports also fails, OCP argued. The ITC failed to comply with Vaden's order to account for its finding of "lower priced" imports in the face of "contradictory data," the exporter said, noting that the commission just stuck with its prior analysis. The ITC failed to provide a "rational connection between its recognition of the 'prevalence of overselling' and its finding that subject imports were lower priced and caused lost sales and price depression," the brief said.