Bethlehem Steel Corp. v. U.S.

• Decision Date: 14 October 1998
• Docket Number: Slip Op. 98-145.,Nos. 97-05-00862.,s. 97-05-00862.
• Citation: 27 F.Supp.2d 201
• Parties: BETHLEHEM STEEL CORP., AK Steel Corp., Inland Steel Indus., Inc., LTV Steel Co., Inc., National Steel Corp., and U.S. Steel Group, Plaintiffs, v. UNITED STATES, Defendant. Hoogovens Staal BV and Hoogovens Steel USA, Inc., Plaintiffs, v. United States, Defendant.
• Court: U.S. Court of International Trade

27 F.Supp.2d 201

BETHLEHEM STEEL CORP., AK Steel Corp., Inland Steel Indus., Inc., LTV Steel Co., Inc., National Steel Corp., and U.S. Steel Group, Plaintiffs, v. UNITED STATES, Defendant.

Hoogovens Staal BV and Hoogovens Steel USA, Inc., Plaintiffs, v. United States, Defendant.

Slip Op. 98-145.

Nos. 97-05-00862.

United States Court of International Trade.

October 14, 1998.

COPYRIGHT MATERIAL OMITTED

Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC, (James Hecht and Steven Monroe at the trial, Robert E. Lighthizer and John J. Mangan on the briefs) for plaintiffs Bethlehem Steel Corp. et al.

Powell, Goldstein, Frazer & Murphy LLP, Washington, DC, (Peter O. Suchman, Niall P. Meagher at the trial, Susan M. Mathews and David J. Sullivan with them on the briefs) for plaintiffs Hoogovens Staal BV et al.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial

Litigation Branch, Civil Division, U.S. Department of Justice (Lucius B. Lau) and David R. Mason, Attorney-Advisor, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, for defendant.

MEMORANDUM OPINION

DICARLO, Senior Judge:

This matter is before the Court under USCIT Rule 56.2 on motions for judgment on the agency record brought by Bethlehem Steel Corporation, AK Steel Corporation, Inland Steel Industries, Inc., LTV Steel Company, Inc., National Steel Corporation and U.S. Steel Group (collectively "Bethlehem Steel") and by Hoogovens Staal BV and Hoogovens Steel USA, Inc. (collectively "Hoogovens"). The parties challenge aspects of the Commerce Department's final results of administrative review in Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands, 62 Fed.Reg. 18,476 (Dep't Commerce 1997) [hereinafter Final Results], as amended by Cold-Rolled Carbon Steel Flat Products From the Netherlands, 62 Fed.Reg. 32,294 (Dep't Commerce 1997) (amended final admin. review) [hereinafter Amended Final Results]. The two actions were consolidated on September 25, 1997.

The Court has jurisdiction under 28 U.S.C. § 1581(c) (1994) and 19 U.S.C. § 1516a(a)(2)(A) (1994).

BACKGROUND

In August 1993, Commerce issued an antidumping duty order on certain cold-rolled carbon steel flat products from the Netherlands. Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands, 58 Fed.Reg. 44,172 (Dep't Commerce 1993) (antidumping order and amend. Final Determinations of Sales at Less Than Fair Value). Final results of the first administrative review were issued in September 1996. Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands, 61 Fed.Reg. 48,465 (Dep't Commerce 1996). In that review, Commerce found that Hoogovens was reimbursing its sales agent and importer, N.V.W. (USA), Inc. ("NVW"), for antidumping duties, in violation of 19 C.F.R. § 353.26 (1994), the "reimbursement regulation." Hoogovens appealed that finding to this court. See Hoogovens Staal BV v. United States, 22 CIT ___, 4 F.Supp.2d 1213(1998) (Mar. 13, 1998) [hereinafter Hoogovens I]. Subsequent to the first review, NVW was renamed Hoogovens Steel USA, Inc. ("Hoogovens USA"). In September 1995, Commerce initiated a second administrative review covering the period August 1, 1994 through July 31, 1995. Initiation of Antidumping Duty Administrative Reviews, 60 Fed.Reg. 46,817 (Dep't Commerce 1995).

Preliminary results were issued on October 4, 1996. Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands, 61 Fed.Reg. 51,888 (Dep't Commerce 1996) (prelim.admin.review) [hereinafter Preliminary Results]. Final results were issued on April 15, 1997, Final Results, 62 Fed.Reg. 18,476, and amended on June 13, 1997, Amended Final Results, 62 Fed.Reg. 32,294.

In September 1996, Hoogovens submitted a revised agency agreement that stated that Hoogovens USA (formerly NVW) would be responsible for any and all antidumping duties assessed on merchandise imported by it and that in no case would Hoogovens reimburse its importer for antidumping duties paid. Id. at 18,477. On February 28, 1997, Hoogovens reported the corporate reorganization of and capital infusion to Hoogovens USA. (P.R. 95 at 1.). On March 28, 1997, Hoogovens submitted information regarding a commercial bank loan to Hoogovens USA. (See P.R. 98.)

In this action, Hoogovens claims 1) that it is entitled to a deduction of sales expenses from the home market price under 19 U.S.C. § 1677b(a)(7)(B) (1994), and 2) that Commerce's retroactive application of its new currency conversion methodology is contrary to law. See Final Results at 18,481-82.

Bethlehem Steel claims 1) that Commerce erroneously found that Hoogovens is no longer reimbursing its importer for antidumping duties, 2) that, in the alternative, Commerce should have deducted antidumping duties from the U.S. price as "United States import duties" or other "costs, charges or expenses," and 3) that Commerce exceeded its authority when it corrected ministerial errors and issued Amended Final Results after this action had commenced.

DISCUSSION

In reviewing antidumping investigations and determinations, this Court must hold unlawful any determination "unsupported by substantial evidence on the record, or otherwise not in accordance with law[.]" 19 U.S.C. § 1516a(b)(1)(B) (1994). "Substantial evidence is more than a mere scintilla. It means 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); accord FTC v. Indiana Federation of Dentists, 476 U.S. 447, 454, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986).

I. Constructed Export Price Offset Adjustment

Hoogovens claims that it is entitled to an offset adjustment under 19 U.S.C. § 1677b(a)(7)(B). An offset adjustment to the home market price is granted where home market sales are at a more advanced level of trade than constructed export price sales, but available data do not enable Commerce to quantify a direct adjustment to account for the difference in trade levels. 19 U.S.C. § 1677b(a)(7)(B) (1994). The court agrees with Commerce that Hoogovens has not produced evidence to support its claim for an adjustment.

The burden of producing evidence to justify the adjustment is on Hoogovens. See Statement of Administrative Action Uruguay Round Agreements Act, H.R. Doc. No. 103-316, at 829 (1994) [hereinafter "SAA"] ("as with all adjustments which benefit a responding firm, the respondent must demonstrate the appropriateness of such adjustment"); Final Results at 18,481-82 (adjustment not automatic; burden is on respondent to demonstrate that home market value is at different level of trade and more advanced stage of distribution than constructed export price).

To establish a difference in levels of trade under the statute, Hoogovens must show that each level involves the performance of different selling activities. 19 U.S.C. § 1677b(a)(7)(A)(i) (1994); SAA at 829 (1994). Selling functions might include, for example, market research, advertising, or other selling or service activities. (Dep't Commerce Suppl. Questionnaire, Pub. Doc. 28 at A-2 (Dec. 13, 1995).)

Hoogovens fails to meet that requirement. While it points to functional differences in its customers and differences in contract terms negotiated with each type of customer (Hoogovens Resp. to Sec. A of Dep't Commerce Questionnaire, Pub. Doc. 12 at 18-24 (Oct. 17, 1995)), Hoogovens fails to articulate any differences in its own selling functions, as required by statute. In fact, Hoogovens admits that it "cannot differentiate among the selling functions performed and services offered to different classes of home market or export price customers." (Hoogovens Resp. to Supplemental Questionnaire, Pub. Doc. 32 at 3-4 (Jan. 22, 1996).) Thus, it would appear that by its own admission Hoogovens does not perform different selling activities for its home market and U.S. constructed export price customers.

Instead of establishing different levels of distribution or different selling activities, Hoogovens limits its argument to a comparison of Commerce's calculation of home market and constructed export prices. It argues that because certain expenses (indirect selling expenses, service and warranty expenses and inventory carrying costs) were deducted from the constructed export price but not from the comparable home market price, there is an inherent difference in levels of trade. (Hoogovens Mot. J. on Agency R.) (Public Version) at 10 (citing Hoogovens' Resp. to Sec. B of Dep't Commerce Questionnaire, Pub. Doc. 24 at B-37 to B-46 (Nov. 14, 1995).)

Application of the offset adjustment provision entails more than an automatic deduction on the home market side to match deductions made on the U.S. price side, as Hoogovens seems to suggest. Because Hoogovens did not demonstrate different selling functions or otherwise establish a difference in levels of trade as required under 19 U.S.C. § 1677b(a)(7)(A),(B) (1994), Commerce's decision not to make the adjustment is in accordance with law.

In its discussion of this issue, the defendant notes that Commerce erred in its calculation of the constructed export price by deducting home market selling expenses that were not related to commercial activity in the United States. (Def. Mem. in Opp'n to Mots. J. Agency R. at 70.) See 19 U.S.C. § 1677a(d)(1)(D) (1994). Hoogovens argues that Commerce's error in calculation validates Hoogovens' own argument in favor of an offset adjustment by "comparing the sales activities included in the [constructed export price] after adjustment to those selling activities included in the [home market] sales prior to adjustment." (Hoogovens' Reply Brf. at 7.) However, as noted above, the offset adjustment requires more than a simple comparison of deductions made (or not made) on either side of the margin equation.

Hoogovens further complains that it did...