AK Steel Corp. v. U.S.

• Decision Date: 23 February 2000
• Citation: 203 F.3d 1330
• Parties: (Fed. Cir. 2000) AK STEEL CORPORATION, INLAND STEEL INDUSTRIES, INC.(now Ispat Inland, Inc.), BETHLEHEM STEEL CORPORATION, LTV STEEL COMPANY, INC., NATIONAL STEEL CORPORATION, and U.S. STEEL GROUP, a Unit of USX Corporation, Plaintiffs-Appellants, v. UNITED STATES, Defendant- Appellee, and DONGBU STEEL CO., LTD. and UNION STEEL MANUFACTURING CO., LTD., Defendants-Appellees, and POHANG IRON & STEEL CO., LTD., POHANG COATED STEEL CO., LTD. and POHANG STEEL INDUSTRIES CO., LTD., Defendants-Appellees. 99-1296 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1330

203 F.3d 1330 (Fed. Cir. 2000)

AK STEEL CORPORATION, INLAND STEEL INDUSTRIES, INC.(now Ispat Inland, Inc.), BETHLEHEM STEEL CORPORATION, LTV STEEL COMPANY, INC., NATIONAL STEEL CORPORATION, and U.S. STEEL GROUP, a Unit of USX Corporation, Plaintiffs-Appellants, v. UNITED STATES, Defendant- Appellee, and DONGBU STEEL CO., LTD. and UNION STEEL MANUFACTURING CO., LTD., Defendants-Appellees, and POHANG IRON & STEEL CO., LTD., POHANG COATED STEEL CO., LTD. and POHANG STEEL INDUSTRIES CO., LTD., Defendants-Appellees.

United States Court of Appeals for the Federal Circuit

99-1296

DECIDED: February 23, 2000

Appealed from: United States Court of International Trade Judge Jane A. Restani

[Copyrighted Material Omitted]

Michael H. Stein, Dewey Ballantine LLP, of Washington, DC, argued for plaintiffs-appellants, AK Steel Corporation, et al. With him on the brief were Bradford L. Ward, Jennifer Danner Riccardi, and Paul A. Christodoulou. Of counsel were Joon Peter Kim and Andrew John Conrad.

Donald B. Cameron, Kaye, Scholer, Fierman, Hays & Handler, LLP, of Washington, DC, argued for defendants-appellees, Dongbu Steel Co., Ltd., et al.With him on the brief were Julie C. Mendoza and Dean C. Garfield.

Lucius B. Lau, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee, United States. With him on the brief were David W. Ogden, Acting Assistant Attorney General; and David M. Cohen, Director. Of counsel on the brief were Stephen J. Powell, Chief Counsel; Elizabeth C. Seastrum, Senior Counsel; Bernd G. Janzen, and William G. Isasi, Attorneys, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Spencer S. Griffith, Akin, Gump, Strauss, Hauer & Feld, L.L.P., of Washington, DC, argued for defendants-appellees, Pohang Coated Steel Co., Ltd., et al. With him on the brief were Sukhan Kim and Sydney H. Mintzer.

Before MICHEL, PLAGER and LOURIE, Circuit Judges.

MICHEL, Circuit Judge.

AK Steel Corporation, Inland Steel Industries, Inc., Bethlehem Steel Corporation, LTV Steel Company, Inc., National Steel Corporation, and U.S. Steel Group (collectively "domestic producers" or "appellants") appeal the judgment of the United States Court of International Trade in this anti-dumping duties case. The court upheld the International Trade Administration, United States Department of Commerce's ("Commerce") decision: (1) using a three-part test adopted informally in 1987 to determine whether certain sales to U.S. buyers of Korean steel by U.S. affiliates of the Korean producers¹ are properly classified as Export Price ("EP") sales rather than Constructed Export Price ("CEP") sales, and (2) declining to apply the "fair-value" and "major-input" provisions of 19 U.S.C. §§ 1677b(f)(2)-(3) (1994) to transfers among affiliated steel producers in Korea that it had treated as one entity for purposes of the anti-dumping determination. As a consequence of these methods and their manner of application, the duty rates were minimal. The domestic producers therefore filed suit in the trial court challenging these methods as contrary to the anti-dumping statutes. See AK Steel Corp. v. United States, 34 F. Supp. 2d 756 (Ct. Int'l Trade 1998). We hold that the three-part test employed by Commerce is contrary to the express terms defining EP and CEP in the statute as amended in 1994 and therefore reverse-in-part and remand for a redetermination of the anti-dumping duties. As to the fair-value and major-input provisions, however, we hold that Commerce's decision not to apply those provisions to the transactions was reasonable and within its discretion, and therefore we affirm-in-part.

BACKGROUND

In 1993 Commerce issued an order imposing anti-dumping duties on certain steel products from Korea. See Certain Cold Rolled Steel Flat Products from Korea, 58 Fed. Reg. 44,159 (Dept. of Commerce 1993) (hereinafter "Certain Steel Products from Korea"). In August of 1995 both the domestic producers and the Korean producers requested an administrative review of that anti-dumping duty order. In its second administrative review of the anti-dumping duty order, Commerce classified all of the sales of the subject merchandise at issue in this appeal² as EP sales rather than CEP sales pursuant to 19 U.S.C. §§ 1677a(a)-(b) (1994). See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea, 62 Fed. Reg. 18,404, 18,434 (Dept. of Commerce 1997) (hereinafter "Final Results"). In addition, because Commerce had collapsed POSCO and its affiliates POCOS and PSI for purposes of assigning dumping margins, it opted not to apply the so-called "fair-value" and "major-input" provisions to transactions between those companies. Id. at 18,430.

I.

In calculating dumping margins, Commerce compares the "U.S. Price" to the "normal value" of the subject merchandise, imposing anti-dumping duties if, and to the extent, the former is lower than the latter. The U.S. Price is calculated using either the EP or CEP methodology. In general, Commerce uses the EP methodology for the U.S. Price when the foreign producer or exporter sells directly to an unrelated purchaser located in the United States. The CEP methodology is used when the foreign producer's or exporter's steel is sold to an unaffiliated U.S. buyer by an affiliated company located in the United States. If the CEP methodology is used, additional deductions are taken from the sales price to arrive at the U.S. Price. ³ The statute defines EP and CEP as follows:

a Export Price

The term "export price" means the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States . . . .

b Constructed Export Price

The term "constructed export price" means the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter . . . .

19 U.S.C. §§ 1677a(a) - (b).⁴

For the sales of steel produced by each of the appellees, Commerce calculated the U.S. Price using the EP methodology. In determining whether to classify the sales as EP or CEP, Commerce applied a three-part test it developed during a remand of a 1987 case, PQ Corp. v. United States, 652 F. Supp. 724, 733-35 (Ct. Int'l Trade 1987) (the "PQ Test"). Representing an interpretation of the above statute, the test has been applied when sales are made prior to importation to an unaffiliated U.S. purchaser by a foreign manufacturer's affiliated entity in the United States, as in the case of the sales at issue here. Using the PQ Test, Commerce classifies sales made by U.S. affiliates as EP sales if the following criteria are met:

(1) the subject merchandise was shipped directly from the manufacturer to the unrelated buyer, without being introduced into the inventory of the related shipping agent;

(2) direct shipment from the manufacturer to the unrelated buyer was the customary channel for sales of this merchandise between the parties involved;

(3) the related selling agent in the United States acted only as a processor of sales-related documentation and a communication link with the unrelated U.S. buyer.

See, e.g., Certain Stainless Steel Wire Rods from France, Final Determination of Sales at Less than Fair Value, 58 Fed. Reg. 68,865, 68,868-69 (1993).

All of the sales at issue in the present case were "back-to-back" sales. That is: the Korean producer sold the steel to an affiliated Korean exporter; the exporter sold it to a U.S. affiliate; and finally, the U.S. affiliate sold it to the unaffiliated U.S. purchaser. In most cases, however, the steel was shipped directly to the unaffiliated purchaser without entering the inventory of the U.S. affiliate. In the second administrative review, whether the sales of steel manufactured by the Korean producers satisfied the third prong of the test was one of the principal factual issues in dispute. In classifying the sales at issue, Commerce rejected the domestic producers' argument that the activities of the Korean producers' U.S. affiliates failed the third prong of the test because they "exceed[ed] those of a mere communications link or processor of documents." Final Results, 62 Fed. Reg. at 18,432.

II.

Commerce "collapsed" POSCO and its affiliates POCOS and PSI into one entity for purposes of the anti-dumping analysis and then levied a single anti-dumping duty on the entity. In the second administrative review, Commerce determined that "a decision to treat affiliated parties as a single entity necessitates that transactions among the parties also be valued based on the group as a whole . . . [thus] among collapsed entities, the fair-value and major-input provisions are not controlling." Final Results, 62 Fed. Reg. at 18,430. Therefore, in its 1995 review, Commerce declined to treat the transfers between the related companies as sales between affiliates but rather treated them as transfers between divisions of the same company and did not apply the fair-value and major-input provisions of 19 U.S.C. §§ 1677b(f)(2) - (3).

The domestic producers appealed the Final Results to the Court of International Trade, challenging the legality of the PQ Test and its application to the Appellees, the decision to collapse the POSCO affiliates and the determination that the fair-value and major-input provisions did not apply to transfers among the collapsed companies. The Court of International Trade sustained Commerce's Final Results, holding the PQ Test to be a reasonable interpretation of the statute...