‘Bad Faith’ Injury Redetermination Sidesteps CIT, Cherry-Picks Data, Fertilizer Importers Say

Its focus on product reshipment is a “bad faith” attempt to reach an affirmative injury determination, importers PhosAgro and Koch Fertilizers said.

PhosAgro also alleged that, for the same reason, ITC’s finding wrongly relied on less credible evidence, including a trade publication, rather than on questionnaire responses submitted “under oath.”

ITC initially found that exporters from Morocco and Russia had injuriously dumped phosphate fertilizer on U.S. markets in 2019 amidst flooding that reduced U.S. demand for it and the simultaneous shuttering of a U.S. production facility that cut down on domestic supply. The commission also said the exporters could have prevented oversupply by reshipping unwanted products already in the market.

After CIT remanded the injury determination for lack of evidence on both counts (see 2309190060), ITC reached the same affirmative finding. This time it said that domestic producers themselves could have filled the supply gap by circulating their excess product, rendering additional imports unnecessary (see 2401180045).

The commission’s post-remand questionnaires, which attempted to pin down the fertilizer market’s normal and potential reshipment levels, were just an attempt to “sidestep” CIT’s remand order, PhosAgro said.

“The Commission’s skewed supplemental remand questionnaire shows its intent to sidestep the Court’s specific factual query on remand related to reshipment,” it said. “The Commission was well aware from the Court’s decision and directive that the remand proceeding had nothing to do with inter-modal transportation, but the Commission asked about it anyway, over the objection of PhosAgro and others.”

CIT has already found that the only way for the ITC to demonstrate injury would be if it could show domestic fertilizer could cover the market’s supply gaps, PhosAgro said. The fact that it couldn’t “now stands unrebutted by substantial evidence,” it said.

It said the new questionnaire evidence confirms that counter-flow of supply is rare in the U.S. fertilizer market regardless of the supplier, "closing the Court’s open question on remand.”

Koch agreed, saying the record shows that exporters reasonably predicted more imports would be needed to combat the idling of domestic producer Mosaic’s fertilizer factory and that in 2019, “three consecutive weather events” then caused an “unanticipated and temporary” drop in demand. Mosaic, also a petitioner in the case, even “expressly” said that more imports would be needed after its factory closed, the importers said.

“Mosaic told its investors and the American farming community that its goal was to reduce its market share ‘from 55%, 60% market share to a more sustainable 50-ish percent market share,’ by ‘giving up 1 million tonnes [or 1.1 million ST] of market here in the U.S. intentionally,’ and that it viewed the idling as having ‘opened a hole for some imports to increase,’” PhosAgro said.

Both importers also accused the commission of cherry-picking evidence and relying on noncredible sources to reach its affirmative finding.

For example, PhosAgro said ITC’s determination used “Mosaic’s post hoc statement” that the supply gap created by its factory shuttering was only 700,000 ST, not the 1 million the company originally claimed. However, when considering another factory closure -- this one in Canada, owned by the company Nutrien -- that allegedly also increased U.S. demand for Moroccan and Russian fertilizer, ITC took Nutrien’s CEO at their contemporaneous word, it said.

“In a stunning reversal from its treatment of Mosaic’s statements, the Commission majority relies on Nutrien’s CEO’s statements that the loss in the Redwater capacity would be made up for by increased production in the United States,” it said.

The importers also said ITC, in a “drastic departure” from past practice, relied almost entirely on statements by a trade publication, Argus Media, to make its pricing analysis. The commission used Argus Media’s “hearsay’ claims to conclude the exporters were rampantly underselling in the fertilizer market even though questionnaires showed that the opposite was true -- 88% of the exporters’ products were actually oversold, PhosAgro said.

Citing numerous cases as precedent, PhosAgro said the commission almost always considers questionnaire evidence to be more credible.

PhosAgro said the commission also relied on initial statements made by a U.S. questionnaire respondent regarding its lost sales, even after that respondent changed its answer. This was even noted by ITC Chairman David Johanson, who dissented with the majority opinion.

It asked CIT to remand again and to provide more specific instructions to ITC to prevent another inappropriate redetermination.

“The unfair remand process is indicative of the fact that if the Court chooses to issue a second remand order, the Commission is again unlikely to conduct a fair second remand process absent specific directives from the Court,” it said.