Bethlehem Steel Corp. v. U.S.

• Citation: 146 F.Supp.2d 927
• Decision Date: 29 May 2001
• Docket Number: Slip Op. 01-65.,No. 99-08-00524.,99-08-00524.
• Parties: BETHLEHEM STEEL CORPORATION, U.S. Steel Group, a Unit of USX Corporation, Ispat Inland Inc., LTV Steel Company, Inc. and National Steel Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Usinas SiderÚrgicas de Minas Gerais S/A, Companhia Siderúrgica Paulista and Companhia Siderúrgica Nacional, Defendant-Intervenors.
• Court: U.S. Court of International Trade

Page 927

146 F.Supp.2d 927

BETHLEHEM STEEL CORPORATION, U.S. Steel Group, a Unit of USX Corporation, Ispat Inland Inc., LTV Steel Company, Inc. and National Steel Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Usinas SiderÚrgicas de Minas Gerais S/A, Companhia Siderúrgica Paulista and Companhia Siderúrgica Nacional, Defendant-Intervenors.

Slip Op. 01-65.

No. 99-08-00524.

United States Court of International Trade.

May 29, 2001.

Dewey Ballantine LLP (Alan Wm. Wolff, Michael H. Stein, and Michael Castellano) and Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan and Worth S. Anderson), Washington, DC, for Plaintiffs.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Lucius B. Lau, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Rina Goldenberg and David R. Mason, Attorneys, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Washington, DC, for Defendant, of counsel.

Willkie, Farr & Gallagher (Christopher Dunn, Robert L. LaFrankie, and Karl von Schriltz), Pittsfield, MA, for Defendant-Intervenors.

OPINION

RIDGWAY, Judge.

This action challenges a July 1999 agreement between the U.S. Department of Commerce ("Commerce") and three Brazilian steel exporters ("Brazilian Exporters"),¹ suspending at the eleventh hour the investigation into the alleged dumping in the United States of certain steel products from Brazil. See Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil, 64 Fed.Reg. 38,792 (Dep't Commerce 1999) (suspension of antidumping investigation and entry of suspension agreement) (Public Administrative Record Document ("P.R.Doc.") No. 295) ("Notice of Suspension" or "Agreement").² That investigation was initiated at the behest of, among others, the plaintiff domestic steel producers here ("Domestic Producers").³ See 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 investigations). The Domestic Producers contend that the July 1999 Suspension Agreement is the product of a high stakes "bait and switch" maneuver (Tr. at 26),⁴ and that the Agreement is unlawful.

As the Domestic Producers have observed, a suspension agreement is essentially a unique form of settlement agreement: a settlement agreement to which the complainant—that is, the domestic industry —is not a signatory. Tr. at 4; see also 125 Cong. Rec. 20,168 (1979).⁵ While Congress has authorized Commerce to enter into suspension agreements, Congress has emphasized the limited circumstances in which such agreements are appropriate, and has established rigorous procedural safeguards to ensure that they are not abused to the detriment of domestic interests.⁶

The law on suspension agreements requires, among other things, that Commerce afford the domestic industry the opportunity to review and comment on any proposed agreement. 19 U.S.C. § 1673c(e)(1994). But the Domestic Producers note that the Proposed Agreement that Commerce proffered for review and comment in this case was materially different from the final Suspension Agreement that Commerce executed. See Proposed Agreement Suspending the Antidumping Investigation on Hot-Rolled Flat-Rolled Carbon-Quality Steel from Brazil (June 6, 1999) (P.R. Doc. No. 267) ("Proposed Agreement").

The Domestic Producers argue that Commerce's "bait and switch" of agreements failed to satisfy its notice, comment and consultation obligations under the applicable law. The Domestic Producers further assert that, under the facts of this case, Commerce cannot make the substantive determinations required to justify the Suspension Agreement.⁷

Pending before the Court is Plaintiffs' Motion for Judgment on the Agency Record (filed under USCIT Rule 56.2), in which the Domestic Producers request that the Court declare the Suspension Agreement null and void, and instruct Commerce to enter an antidumping duty order on the subject merchandise. Plaintiffs' motion is opposed by Defendant, the United States ("the Government"), as well as the Brazilian Exporters, who argue that Commerce's determination to suspend the antidumping investigation should be sustained in all respects.⁸

Plaintiff's motion is granted in part. For the reasons discussed below, this case is remanded to the Department of Commerce to enable it to comply with the notice, comment and consultation requirements of the statute (19 U.S.C. § 1673c(e)), to enable it to articulate a legal standard for making its public interest determination or otherwise explain the connection between the facts found and the choice made pursuant to the statute (19 U.S.C. § 1673c(d)(1)), and—if appropriate (i.e., in the case of a subsection (c) agreement, which requires a finding by Commerce that the investigation is "complex") —to enable it to interpret the phrase "large number" of transactions or adjustments in the context of the "extraordinary circumstances" requirement of the statute (19 U.S.C. § 1673c(c)(2)(B)(i)).

I. Background

A. The Suspension Agreement Statute

The statutory provisions authorizing suspension agreements in antidumping duty cases were added to the Tariff Act of 1930 as part of the Trade Agreements Act of 1979 ("the Act"), as a means of limiting the Government's discretion to suspend investigations. Although there was no specific statutory authorization for doing so, it was the practice of the Secretary of the Treasury—prior to the Act—to discontinue antidumping duty investigations at any time if it was determined that (1) possible margins of dumping were minimal relative to export volume, price revisions had been made to eliminate any likelihood of less than fair value ("LTFV") sales, and there were assurances that there would be no LTFV sales in the future; (2) sales to the United States had terminated and there were assurances that they would not resume; or (3) there were other circumstances making it inappropriate to continue the investigation. H. Rep. No. 96-317 at 67; see also S.Rep. No. 96-249 at 67, reprinted in 1979 U.S.C.C.A.N. 381 at 453 (1979) (briefly summarizing Treasury Department practice at the time). See generally Letter from Dewey Ballantine to Clerk of Court of International Trade (March 9, 2001) at 1 (summarizing use of suspension agreements prior to Trade Agreements Act).

The suspension agreement provisions were adopted to impose "strict limits on discontinuing or suspending investigations pursuant to deals with foreign governments or producers." 125 Cong. Rec. 20,163 (1979).⁹ The provisions were intended to make "major changes in ... [the then-existing] law and practice concerning the suspension of an investigation based on exporter agreements" by, inter alia, replacing certain general, subjective criteria then in use (e.g., "minimal" dumping margins) with "specific criteria and requirements"; eliminating the Secretary's "unfettered discretion" to terminate investigations; and "improv[ing] the procedural safeguards ... by providing increased participation by the petitioner." H. Rep. No. 96-317 at 63, 67.

With the Trade Agreements Act, Congress expressly authorized Commerce to suspend an antidumping duty investigation in certain circumstances where foreign exporters of the merchandise agree to take remedial action. 19 U.S.C. §§ 1673c(b)(m) (1994). In doing so, Congress recognized the potential advantages of suspension agreements, as a "means of achieving the remedial purposes of the [antidumping] law in as short a time as possible and with a minimum expenditure of resources by all parties involved." H. Rep. No. 96-317 at 63. Accord, S.Rep. No. 96-249 at 71, reprinted in 1979 U.S.C.C.A.N. 381, 457 (suspension agreements "permit rapid and pragmatic resolutions of antidumping duty cases").¹⁰

But Congress was equally mindful of the potential for abuse of suspension agreements. To ensure that such agreements are not entered into to the disadvantage of a petitioning domestic industry (for foreign policy or other political reasons), the statute is replete with stringent requirements that must be met before an agreement can be concluded. Congress emphasized that "the authority to suspend investigations [is to] be exercised within the carefully circumscribed limits" set forth in the law. H. Rep. 96-317 at 63; see also S.Rep. No. 96-249 at 71, reprinted in 1979 U.S.C.C.A.N. 381, 457 (to ensure that suspension agreements are used only in those cases where they "serve[] the interest of the public and the domestic industry affected," agency authority to suspend investigations is "narrowly circumscribed"); 125 Cong. Rec. 20,168-69 (Senator Heinz's understanding that suspension agreements permitted only "under certain narrowly constrained circumstances" confirmed by bill managers Senators Ribicoff and Roth). Congress further cautioned that "suspension is an unusual action which should not become the normal means for disposing of [antidumping] cases." S.Rep. No. 96-249 at 71, reprinted in 1979 U.S.C.C.A.N. 381, 457.

There are two distinct types of suspension agreements, both of which are relevant here—so-called "subsection (b) agreements" and "subsection (c) agreements."¹¹ Subsection (b) agreements eliminate all sales at less than fair value. Under such agreements, exporters must agree either to cease all exports, or to revise their prices to eliminate completely LTFV sales. 19 U.S.C. § 1673c(b). In contrast, subsection (c) agreements do not completely eliminate dumping; rather, they eliminate only its injurious effect. 19 U.S.C. § 1673c(c).

Prior to accepting either a subsection (b) or (c) agreement, Commerce must find both that "suspension of the investigation is in the public interest," and that "effective monitoring of the agreement by the United States is practicable." 19 U.S.C. § 1673c(d)....