167 F.Supp.2d 1353 (CIT. 2001), 00-09-00477, ALTX, Inc. v. United States

Docket Nº:Court No. 00-09-00477.
Citation:167 F.Supp.2d 1353
Party Name:ALTX, INC., American Extruded Products, Corp., DMV Stainless USA, Inc., Salem Tube, Inc., Sandvik Steel Co., Pennsylvania Extruded Tube Company, and United Steel Workers of America, AFL-CIO/CLC, Plaintiffs, v. THE UNITED STATES, and the United States International Trade Commission, Defendants, and Sumitomo Metal Industries, Nippon Steel Corporation
Case Date:September 19, 2001
Court:Court of International Trade
 
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167 F.Supp.2d 1353 (CIT. 2001)

ALTX, INC., American Extruded Products, Corp., DMV Stainless USA, Inc., Salem Tube, Inc., Sandvik Steel Co., Pennsylvania Extruded Tube Company, and United Steel Workers of America, AFL-CIO/CLC, Plaintiffs,

v.

THE UNITED STATES, and the United States International Trade Commission, Defendants,

and

Sumitomo Metal Industries, Nippon Steel Corporation, Kawasaki Steel Corporation, NKK Corporation, Kobe Steel Ltd., and Sanyo Special Steel Company, Defendant-Intervenors.

No. SLIP OP. 01-116.

Court No. 00-09-00477.

United States Court of International Trade.

Sept. 19, 2001

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Collier Shannon Scott, PLLC, Washington, DC (David A. Hartquist, Jeffrey S. Beckington, and R. Alan Luberda) for plaintiffs.

Lyn M. Schlitt, General Counsel, Marc A. Bernstein, Assistant General Counsel, United States International Trade Commission, Washington, DC (Rhonda M. Hughes), for defendants.

Wilmer, Cutler & Pickering, Washington, DC (John D. Greenwald, Leonard Shambon, and Lynn M. Fischer) for defendant-intervenors.

OPINION

RESTANI, Judge.

Plaintiffs Altx, Inc., American Extruded Products Corp., DMV Stainless USA, Inc., Salem Tube, Inc., Sandvik Steel Co., Pennsylvania Extruded Tube Company, and United Steelworkers of America, AFL-CIO/CLC (collectively "Altx") appear before the court on a motion for judgment upon the agency record pursuant to USCIT Rule 56.2, challenging the final negative injury and threat determinations of the United States International Trade Commission ("ITC" or "Commission") in Circular Seamless Stainless Steel Hollow Products from Japan, Inv. No. 731-TA-859 (Final), USITC Pub. 3344 (Aug.2000). 1

JURISDICTION AND 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).

DISCUSSION

The ITC's material injury analysis requires an evaluation of (1) the volume of subject imports, (2) the effect of such imports on prices for the domestic like product in the United States, and (3) the impact of such imports on U.S. producers of the domestic like product. 19 U.S.C. § 1677(7)(B)(i). Only after the consideration and explanation of all three factors may the Commission arrive at a final determination. See Angus Chem. Co. v. United States, 140 F.3d 1478, 1484-85 (Fed.Cir.1998).

I. Volume

The statute directs the Commission to "consider whether the volume of imports of the [subject] merchandise, or any increase in that volume, either in absolute terms or relative to production or consumption in the United States, is significant." 19 U.S.C. § 1677(7)(C)(i). The ITC concluded that subject import volume was not "significant" during the period of investigation ("POI"), "notwithstanding

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the increases in subject import volume and market penetration from 1997 to 1998." Circular Seamless Stainless Steel Hollow Products from Japan: Views of the Commission (Sept. 5, 2000), ITC App., C.R. Doc. 212, at 17 [hereinafter " Final Determination "]. The Commission identified the following four observations in support of its volume conclusion: (1) Subject import volumes actually declined during the period when the domestic industry performed poorly; (2) The "consistent" and "substantial" drop of subject import volume was not, as plaintiffs argue, in reaction to the filing of the petition; (3) Nonsubject imports may have played a significant role in the market, displacing domestic like products; and (4) Competition between subject imports and the domestic like product was somewhat attenuated. Id. at 15-17.

A. Correlation between import volumes and performance of the domestic industry

Although it acknowledged that subject import volumes almost doubled between 1997 and 1998, the Commission found that subject import volumes "then declined consistently and substantially thereafter." 2 Id. at 16-17. Also noted in the Final Determination are declines in both subject import market share and value between 1998 and 1999. Id. at 15. Emphasizing these downward indicators in the latter part of the POI, the Commission concluded that there could be no correlation between subject imports and the condition of the domestic industry, which actually weakened when subject import volumes declined in 1999. Id. at 17.

Plaintiffs contest this conclusion regarding correlation with the state of the domestic industry. First, although the domestic industry performed favorably during the first part of the POI, at a time when subject import volumes increased significantly, Plaintiffs insist that the domestic industry's performance was directly attributable to [ ] by domestic producers. Pl.'s Reply Br., at 2-3. Controlling for [ ], Plaintiffs argue, reveals a weakening domestic industry between 1997 and 1998. 3 Second, Plaintiffs acknowledge that in 1999, the domestic industry, including exports, experienced a marked decline. Plaintiffs argue, however, that in a market with shrinking consumption, merchandise is consumed more slowly as stocks last longer. Consequently, increased purchases of subject import merchandise in 1997 and 1998 may have been consumed into the next year, thus harming the domestic industry only in 1999, as the data demonstrates. Pl.'s Reply Br., at 5 n. 1. 4 Finally, Plaintiffs point to the Commission's own econometric analysis, in which the ITC staff concluded that subject imports result in a 7.2% to 16.1% reduction in output in the domestic industry. Staff Report (Aug. 3, 2000), ITC App., C.R. Doc. 208, at F-3, cited in Pl.'s Initial Br., at 23-24.

In the Final Determination, the ITC does not explain how the decline of

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subject imports between 1998 and 1999 is dispositive of the significance of subject import volumes in light of Plaintiffs' arguments combined with its own econometric analysis. The statute directs the Commission to

include in a final determination of injury an explanation of the basis for its determination that addresses relevant arguments that are made by interested parties who are parties to the investigation or review (as the case may be) concerning volume, price effects, and impact on the industry of imports of the subject merchandise.

19 U.S.C. § 1677f(i)(3)(B) (emphasis added). Thorough consideration of such arguments and analyses is also an integral element of the Commission's responsibility to "examine the relevant data and articulate a satisfactory explanation for its action ...." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Cf. United States v. Nova Scotia Food Prods., 568 F.2d 240, 252 (2d Cir.1977) ("It is not in keeping with the rational [agency] process to leave vital questions, raised by comments which are of cogent materiality, completely unanswered."). The Final Determination merely cites to record evidence containing data on subject import indicators throughout the POI. 5 This off-handed reference to annual data cannot, by itself, constitute an acknowledgment of Plaintiffs' arguments, much less a reasoned explanation for discounting them, as the statute requires. 6 See Bethlehem Steel Corp. v. United States, 140 F.Supp.2d 1354, 1364 (CIT 2001). Furthermore, whatever discretion the Commission may have to reject deliberately the conclusions found in the agency's Staff Report, Acciai Speciali Terni, S.p.A. v. United States, 19 CIT 1051, 1058-59 (1995), it may not through its silence simply ignore a Staff Report analysis that contradicts the Commission's

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own conclusions where an interested party has specifically brought the possibly conflicting evidence to the agency's attention. 7 Therefore, the court cannot, without more, sustain the Commission's conclusions regarding the correlation between subject import volumes and the health of the domestic industry, as the Final Determination lacks needed explanation.

B. Declining volumes as a response to the filing of the antidumping petition

If the Commission finds that a change in the volume, price effects, or impact of subject imports since the filing of the petition is related to the pendency of the investigation, it may reduce the weight accorded to the relevant data. 19 U.S.C. § 1677(7)(I). Plaintiffs assert that rumors of an imminent antidumping petition, circulating in early 1999, could have affected purchasing and production of subject merchandise. In response, the Commission stipulated that "[e]ven if respondents were aware a few months into 1999, we do not find it credible that the drop in imports in the first half of 1999 can be attributed to such knowledge ...." Final Determination, at 16 n. 75. The Commission reasoned that because of the 13-26 week lag period between the purchaser's placement of the order and the arrival of the imports, any drop in volume measured during the asserted period of awareness, must have been initiated by a drop in orders placed 13-26 weeks earlier, long before rumors may have existed. Accordingly, the Commission concluded that any pre-filing awareness of the petition did not affect the volume of subject imports.

The Commission does not support its reasoning with substantial evidence. 8 The Commission relied solely on record evidence suggesting that Japanese importers tend to require 13-26 weeks from the time of order to arrival. See Staff Report, at II-29. Altx urges the use of another time period, between the time of export to delivery, which can be less than two...

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