Kawasaki Steel Corp. v. U.S., Slip Op. 00-91.

• Decision Date: 01 August 2000
• Docket Number: Slip Op. 00-91.,Court No. 99-08-00482.
• Citation: 110 F.Supp.2d 1029
• Parties: KAWASAKI STEEL CORPORATION, Plaintiff, v. The UNITED STATES, Defendant, and Gallatin Steel; Ipsco Steel, Inc.; Steel Dynamics, Inc.; and Weirton Steel Corporation, Defendant-Intervenors, Bethlehem Steel Corporation; U.S. Steel Group — A Unit of USX Corporation; Ispat Inland Inc.; and Ltv Steel Co., Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

110 F.Supp.2d 1029

KAWASAKI STEEL CORPORATION, Plaintiff, v. The UNITED STATES, Defendant, and Gallatin Steel; Ipsco Steel, Inc.; Steel Dynamics, Inc.; and Weirton Steel Corporation, Defendant-Intervenors, Bethlehem Steel Corporation; U.S. Steel Group — A Unit of USX Corporation; Ispat Inland Inc.; and Ltv Steel Co., Inc., Defendant-Intervenors.

Slip Op. 00-91.

Court No. 99-08-00482.

United States Court of International Trade.

August 1, 2000.

Arent Fox Kintner Plotkin & Khan, PLLC (Robert H. Huey, Matthew J. Clark and Nancy A. Noonan) for plaintiff Kawasaki Steel Corporation.

David W. Ogden, Acting Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Kenneth Kessler), Linda S. Chang, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for defendant.

Shagrin Associates, Washington, DC, (Roger Banks and Roger Schagrin) for defendant-intervenors Gallatin Steel; IPSCO Steel, Inc.; Steel Dynamics, Inc.; and Weirton Steel Corporation.

Skadden Arps, Slate, Meagher & Flom LLP, Washington, DC, (Robert E. Lighthizer, John J. Mangan, and Jeffrey Gerrish) for defendant-intervenors Bethlehem Steel Corporation; U.S. Steel Group — a unit of USX Corporation; ISPAT Inland, Inc.; and LTV Steel Company, Inc.

OPINION

RESTANI, Judge.

This matter is before the court on plaintiffs motion for judgment upon the agency record pursuant to USCIT Rule 56.2. Plaintiff Kawasaki Steel Corporation ("KSC") challenges the determination of the United States International Trade Administration ("Commerce" or the "Department") in Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 64 Fed.Reg. 24,329 (Dep't Commerce 1999) (notice of final determination of sales at LTFV) [hereinafter "Final Determination"].

KSC argues that Commerce erred in concluding that KSC failed to comply to the best of its ability and in applying an adverse inference. KSC also argues that even if an adverse inference is warranted, Commerce should have considered KSC's level of cooperation and selected a less adverse margin.

Jurisdiction & Standard of Review

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994). In reviewing final determinations in antidumping duty investigations, the court will hold unlawful those agency determinations which are unsupported by substantial evidence on the record, or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (1994).

Background

On October 15, 1998, Commerce initiated an antidumping duty investigation of certain hot-rolled flat-rolled carbon-quality products ("hot-rolled steel" or "HRS") from Brazil, Japan, and the Russian Federation. Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil, Japan, and the Russian Federation, 63 Fed.Reg. 56,607 (Dep't Commerce 1998) (initiation of antidumping duty investigations). The period of investigation ("POI") covered July 1, 1997 through June 30, 1998. Id. at 56,610. Commerce initiated the investigation in response to a petition filed on September 30, 1998 by a group of U.S. Steel producers. Id. at 56,607. The petitioners included California Steel Industries ("CSI"), an affiliate of KSC.¹ Id.

CSI is a joint venture between KSC and the Brazilian conglomerate Companhia Vale do Rio Doce ("CVRD"). Final Determination, 64 Fed.Reg. at 24,368. Through their respective U.S. affiliates, KSC and CVRD each own 50 percent of CSI.² Id.

On October 6, 1998, prior to the commencement of the investigation, KSC's director, Makoto Iwahashi, sent a letter to CSI's vice president, James Declusin, notifying him of the possible need for CSI information and requesting CSI's cooperation in the impending investigation. KSC's Case Brief (Ex. 2) (Apr. 12, 1999), at 86, P.R. Doc. 311, Pl.'s App., Tab 3, at 1 [hereinafter "Letters"]. On October 13, 1998, two KSC officials, Mr. Ono and Mr. Asakura, met personally with Declusin. Verification Report, at 22, Def.'s App., Tab 12, at 4. At that time Declusin stated his willingness to cooperate with KSC as much as possible. Id. On October 19, 1998, Commerce issued section A of an antidumping questionnaire to KSC. Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Japan, 64 Fed.Reg. 8,291, 8,292 (Dep't Commerce 1999) (notice of preliminary determination of sales at LTFV) [hereinafter "Preliminary Determination"].

On October 21, 1998, Declusin testified for CSI as a petitioner before the International Trade Commission ("ITC"). Verification Report, at 22, Def.'s App., Tab 12, at 4. On October 27, 1998, KSC's managing director, Fumio Sudo, sent a letter to CSI's president, Lourenço Gonçalves, requesting his cooperation in the effort to respond to the questionnaire by providing KSC with information on CSI's sales as a reseller or further processor of the subject merchandise originating from KSC, together with relevant cost information. Letters, at 87, Pl.'s App., Tab 3, at 2. Gonçalves responded by providing KSC with the data for Section A of the questionnaire and agreeing to cooperate, but Gonçalves noted that CSI was a petitioner in the investigation and "eventually ... would be in a difficult position to supply some kind of information." Id., at 88, Pl.'s App., Tab 3, at 3.

Commerce issued questionnaire Sections B, C, D, and E to KSC on October 30, 1998. Preliminary Determination, 64 Fed.Reg. at 8,292. Section E of the questionnaire requests information pertaining to the further manufacturing or assembly of subject merchandise in the United States. A large percentage³ of KSC's sales of hot-rolled coil steel to CSI made during the POI was further processed into cold-rolled or galvanized steel or pipe. Analysis Memo, at 2, Def.'s App., Tab 13, at 2. On November 5, 1998, KSC's counsel contacted Gonçalves and attempted to make arrangements to visit CSI's facilities to gather data necessary for responding to Section E. Letters, at 89, Pl.'s App., Tab 3, at 4. Gonçalves rejected KSC's visitation request in a letter dated November 6, 1998. Id., at 90, Pl.'s App., Tab 3, at 5. Gonçalves stated:

Besides the fact that CSI is one of the petitioners in the antidumping investigation, I should inform you that some of the data you would like to have access [to] is confidential CSI data, and even [KSC] being one of our shareholders, we usually apply some restrictions to the disclosure of sensitive data .... This behavior has been adopted here at CSI in order to protect the company as an American steel company, regardless of the Brazilian and Japanese ownership.

Id.

In response to CSI's refusal, KSC's counsel met with Commerce officials on November 9, 1998 to inform the agency of the situation. See Letter from H & S to DOC (Dec. 18, 1998), at 1, C.R. Doc. 33, Pl.'s App., Tab 3, at 14. In a letter dated the next day, KSC requested that it be excused from answering Section E of the questionnaire based on CSI's reluctance to provide the necessary information. KSC letter to DOC (Nov. 10, 1998), at 2-4, C.R. Doc. 11, Def.'s App., Tab 1, at 3-5. KSC did not suggest an alternative method for providing the information. Id.

On November 16, 1998, Commerce received the Section A questionnaire responses from KSC. Preliminary Determination, 64 Fed.Reg. at 8,292. Commerce published its preliminary critical circumstances determination on November 30, 1998. Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan and the Russian Federation, 63 Fed. Reg. 65,750 (Dep't Commerce 1998) (preliminary determinations of critical circumstances). Commerce determined that there was a reasonable basis to believe or suspect that critical circumstances existed in respect to imports of hot-rolled steel from Japan. Id. at 65,750. Commerce issued a supplemental Section A questionnaire to KSC on December 4, 1998. Preliminary Determination, 64 Fed.Reg. at 8,292.

On December 8, 1998, KSC's counsel wrote another letter to CSI requesting Section E data, and noted the short time frame remaining for KSC to provide Commerce with the Section E response. Letters, at 91, Pl.'s App., Tab 3, at 10. On December 14, 1998, Gonçalves responded that because of CSI's accounting system, CSI was unable to provide the information requested. Id., at 94, Pl.'s App., Tab 3, at 13. Gonçalves further stated that while CSI could provide other information to KSC, "it would be difficult for us to provide such information within the time frame specified in your letter." Id. Gonçalves further stated his belief that "without being able to provide the important information of sales prices requested, the provision of other data requested by [KSC] would be neither usable nor useful in the investigation of [KSC] and therefore would be a waste of resources for both CSI and [KSC]." Id.

On December 18, 1998, KSC informed Commerce of KSC's continuing difficulties in gathering the requested CSI data. Letter from H & S to DOC, at 1, Pl.'s App., Tab 3, at 14. KSC's letter reminded Commerce of KSC's previous meeting and communication with the Department in November, regarding the CSI data, and further stated that KSC had "received no information, guidance, or response from the Department."⁴ Id. KSC renewed its request to be excused from responding to Section E of the questionnaire regarding CSI's sales of subject merchandise and further manufacturing of subject merchandise, because KSC was not able to provide it. Id., at 2, Pl.'s App., Tab 3, at 15.

On December 21, 1998, Commerce received KSC's responses to questionnaire Sections B, C, and D. Preliminary Determination, 64 Fed.Reg. at 8,292. On January 4, 1999, Commerce requested supplemental information from KSC on Sections B, C, and D. Id. Without specifically commenting on Section E, Commerce simply reissued Section E at the same time. Supplemental Sections B/C & E (Jan. 4, 1999), at 16-25, C.R. Doc 47, Def.'s App., Tab 9, at 3-12. On January 25, 1999, Commerce received KSC's responses...