Bethlehem Steel Corp. v. U.S.

• Decision Date: 04 April 2001
• Docket Number: Court No. 00-03-00116.,Slip Op. 01-38.
• Citation: 140 F.Supp.2d 1354
• Parties: BETHLEHEM STEEL CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant, Pohang Iron & Steel Co., Defendant-Intervenor.
• Court: U.S. Court of International Trade

140 F.Supp.2d 1354

BETHLEHEM STEEL CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant Pohang Iron & Steel Co., Defendant-Intervenor.

Slip Op. 01-38.

Court No. 00-03-00116.

United States Court of International Trade.

April 4, 2001.

COPYRIGHT MATERIAL OMITTED

Dewey Ballantine LLP, (John Ragosta, Jennifer Danner Riccardi, Navin Joneja), Washington, D.C., for Plaintiffs.

Stuart E. Schiffer, Deputy Assistant Attorney General of the United States; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, Department of Justice; A. David Lafer, Senior Trial Counsel, International Trade Section, Civil Division, United States Department of Justice; William L. Olsen, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Cindy Buys, Office of the Chief Counsel for Import Administration, United States Department of Commerce, Washington D.C., for Defendant, of counsel.

Kaye, Scholer, Fierman, Hays & Handler (Donald B. Cameron, Julie C. Mendoza, Brady W. Mills), Washington, D.C., for Defendant-Intervenor.

OPINION

CARMAN, Chief Judge.

This action is before the Court on Bethlehem Steel Corporation (Bethlehem Steel) and U.S. Steel Corporation's (U.S. Steel) (collectively, Plaintiffs) Rule 56.2 Motion for Judgment on the Agency Record. At issue are several elements of the final and amended determinations in Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea, 64 Fed.Reg. 73,176 (Dep't Commerce 1999) (Final Determination), Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea, 65 Fed.Reg. 6,587 (Dep't Commerce 1999) (Amended Determination). The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c). The following sections provide an overview of the facts and events precipitating this action, as well as the contentions put forth by the parties.

BACKGROUND

On February 16, 1999, Plaintiffs and certain other domestic producers of cut-to-length steel plate products filed a countervailing duty petition alleging that manufacturers, producers, and exporters of subject merchandise from the Republic of Korea received countervailable subsidies within the meaning of 19 U.S.C. § 1671 (1994). Both the United States International Trade Commission (ITC) and the United States Department of Commerce (Commerce) investigated the allegations for subject merchandise imported during calendar year 1998. See Final Determination, 64 Fed.Reg. at 73,177. On April 8, 1999, the ITC determined that the United States' domestic industry was being materially injured or threatened with material injury by imports of subject merchandise from Korea. See Certain Cut-to-Length Steel Plate from the Czech Republic, France, India, Indonesia, Italy, Japan, Korea, and Macedonia, 64 Fed.Reg. 17,198 (Int'l Trade Comm., April 8, 1999). On July 29, 1999, Commerce preliminarily determined that certain Korean producers of subject merchandise had received countervailable subsidies. Commerce issued its final determination on December 29, 1999, and on February 10, 2000, issued an amended determination setting countervailable duty rates at 0.82% ad valorem for the Pohang Iron Steel Company (POSCO or Defendant-Intervenor) and 3.26% ad valorem for Dongkuk Steel Mill Co. (DSM). See Amended Determination, 65 Fed.Reg. at 6,587. Additionally, Commerce set 3.26% as the "all others" rate for companies not party to its investigation. See id.

On March 10, 2000, Bethlehem Steel and U.S. Steel filed a summons with this Court initiating suit.¹ In their complaint, Plaintiffs allege several causes of action that can be divided into three distinct claims.² Specifically, Plaintiffs allege: (1) Commerce's failure to investigate certain potentially countervailable subsidies renders the Final Determination unsupported by substantial evidence and not in accordance with law; (2) Commerce's failure to explicitly address certain issues raised by the parties during the course of its investigation renders the Final Determination unsupported by substantial evidence and not in accordance with law; and (3) Commerce's conclusion that the Voluntary Curtailment Adjustment (VCA) program did not confer a specific benefit is unsupported by substantial evidence and not in accordance with law. (Bethlehem Steel Corporation's and U.S. Steel Group, A Unit of USX Corporation's Rule 56.2 Motion for Judgment on the Agency Record, at 2-3) (Plaintiffs' Brief). The United States and the Defendant-Intervenor oppose Plaintiffs' motion.

STANDARD OF REVIEW

This Court will sustain a final determination by Commerce unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (1994). Substantial evidence is more than a "mere scintilla" of evidence. Primary Steel, Inc. v. United States, 834 F.Supp. 1374, 1380 (C.I.T.1993). It consists of "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938); Matsushita Elec. Indus. Co., Ltd. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984).

DISCUSSION

Plaintiffs raise three major challenges to Commerce's methods and conclusions in the Final Determination. For clarity, specific facts pertaining to these issues, as well as the parties contentions are set forth below.

A. Commerce's Decisions Not to Investigate Certain Potentially Countervailable Subsidies

Plaintiffs contend Commerce's failure to investigate two potentially countervailable subsidies renders the Final Determination unsupported by substantial evidence and otherwise not in accordance with law. Because the facts and legal analysis surrounding these two contentions differ, this section discusses each separately.

1. Commerce's Decision Not to Investigate the Korean Government's Waiver and Reduction of Import Duties on the Slab Subsidy Program is Unsupported by Substantial Evidence and Otherwise Not in Accordance with Law

a. Background

On July 8, 1999, Plaintiffs (then, petitioners) alleged that the Korean government had provided subsidies to the Korean steel industry through the reduction and waiver of normal import duties on steel slab—the main input into the subject merchandise. Specifically, Plaintiffs alleged the tariff rate was lowered from eight percent to one percent during the first half of 1998 and to three percent during the second half of 1998. The record indicates that POSCO imported slab throughout the first quarter of 1998 and that DSM imported slab during the entire year. (Plaintiffs' Brief, at 28).

On August 11, 1999, Commerce notified petitioners that it did not intend to investigate this subsidy allegation because the allegation was not made at least forty days prior to the July 26, 1999, Preliminary Determination as required by 19 C.F.R. § 351.301(d)(4)(i)(A). See Memorandum from Team to David Mueller, Director, Office of CVD/AD Enforcement VI, dated August 11, 1999, reprinted at, Plaintiff's Appendix, at Tab 13; see also, Final Determination, 64 Fed.Reg. at 73,194-95. Commerce further noted that it would not have investigated the allegation even if it had been timely made because Plaintiffs "failed to demonstrate how a temporary reduction in a tariff rate for slab would confer a benefit upon the export of subject merchandise." Final Determination, 64 Fed.Reg. at 73,195.

b. Contentions of the Parties

Plaintiffs contend Commerce is statutorily obligated to investigate subsidies discovered during the course of a proceeding when those subsidies "appear to be countervailable." (Plaintiffs' Brief, at 29, citing, 19 U.S.C. § 1677d). Plaintiffs further contend the record clearly demonstrates that the slab subsidy program meets the requirements for countervailability: (1) government action; (2) benefit; and (3) specificity.

Given the apparent countervailability of the program, Plaintiffs argue Commerce was obligated to investigate their allegation —an obligation that was neither mitigated by the constraints of 19 C.F.R. § 351.301(d)(4)(i)(A), nor the availability of duty drawback. Plaintiffs argue that 19 C.F.R. § 351.301(d)(4)(i)(A) not only provides Commerce with the discretion to accept allegations filed after the forty day deadline, but that the regulation has been superceded by 19 U.S.C. § 1677d and 19 C.F.R. § 351.311(b) (1999). Plaintiffs point to 19 U.S.C. § 1677d and argue that "the statute required Commerce to include newly discovered subsidy practices in the investigations so long as certain threshold requirements are met, regardless of the stage at which the practices are discovered." (Id. at 31.) Similarly, Plaintiffs argue 19 C.F.R. § 351.311(b) requires Commerce to include newly discovered subsidy practices within its investigation if "sufficient time remains before the scheduled date for the determination." (Id.) In the present case, Plaintiffs note that more than 170 days elapsed between the date Commerce was notified of the allegation (July 8, 1999) and the date the Final Determination was issued (December 29, 1999). Accordingly, Plaintiffs argue Commerce had more than sufficient time to investigate this allegation and, therefore, its failure to do so is unsupported by substantial evidence and otherwise not in accordance with law.

The United States contends Commerce acted within its discretionary authority when it chose not to investigate the alleged slab subsidy. Although acknowledging that Commerce is statutorily obligated to investigate subsidies discovered during the course of a proceeding, the United States argues "this obligation is tempered by the practical reality that Commerce may simply lack the resources or the time to properly investigate new subsidy allegations made late in the course of the proceeding." (Defendant's Opposition to the Motion for Judgment Upon the Agency Record Filed By Plaintiffs Bethlehem Steel Group and U.S. Steel Group, at...