China Steel Corp. v. U.S.

• Decision Date: 26 January 2004
• Docket Number: SLIP OP. 04-6. No. 01-01040.
• Citation: 306 F.Supp.2d 1291
• Parties: CHINA STEEL CORPORATION and Yieh Loong, Plaintiff, v. UNITED STATES, Defendant, and Bethlehem Steel Corporation; National Steel Corporation; United States Steel Corporation; Gallatin Steel Company; Ipsco Steel Inc.; Nucor Corporation; Steel Dynamics, Inc.; and Weirton Steel Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

306 F.Supp.2d 1291

CHINA STEEL CORPORATION and Yieh Loong, Plaintiff, v. UNITED STATES, Defendant, and Bethlehem Steel Corporation; National Steel Corporation; United States Steel Corporation; Gallatin Steel Company; Ipsco Steel Inc.; Nucor Corporation; Steel Dynamics, Inc.; and Weirton Steel Corporation, Defendant-Intervenors.

SLIP OP. 04-6. No. 01-01040.

United States Court of International Trade.

January 26, 2004.

COPYRIGHT MATERIAL OMITTED

Miller & Chevalier Chartered, Washington, DC (Karl Abendschein, Peter Koenig) for Plaintiff.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Jeanne E. Davidson, Deputy Director, Michael D. Panzera, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Augusto Guerra, Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant, of counsel.

Dewey Ballantine LLP, Washington, DC (Bradford L. Ward, Hui Yu) for Defendant-Intervenors Bethlehem Steel Corporation, National Steel Corporation, and United States Steel Corporation.

Schagrin Associates (Roger B. Schagrin) for Defendant-Intervenors Gallatin Steel Company, IPSCO Steel Inc., Nucor Corporation, Steel Dynamics, Inc., and Weirton Steel Corporation.¹

Opinion

POGUE, Judge.

This is a review of the Department of Commerce's Final Results of Redetermination Pursuant to Court Remand, Certain Hot-Rolled Carbon Steel Flat Products from Taiwan (Aug. 14, 2003) ("Remand Determ." or "Remand Determination").² The Department's Remand Determination followed the Court's decision in China Steel Corp. v. United States, 27 CIT ___, 264 F.Supp.2d 1339 (2003) ("CSC/YL I")³ (remanding aspects of Commerce's final affirmative antidumping duty determination in Certain Hot-Rolled Carbon Steel Flat Products from Taiwan, 66 Fed.Reg. 49,618 (Dep't Commerce Sept. 28, 2001) (notice of final determination of sales at less than fair value) ("Final Determ." or "Final Determination")).⁴ The remand order directed Commerce to reconsider aspects of the agency's final antidumping determination, specifically its affiliation determination, its use of Plaintiff's affiliate downstream sales data, and its adverse facts available determination.⁵ 27 CIT at ___, 264 F.Supp.2d at 1366, 1372. The Court also will review Plaintiff's corroboration issues, which were deferred in CSC/YL I. 27 CIT at ___, 264 F.Supp.2d at 1362 n. 21.

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2000). For the reasons set forth below, the Court sustains Commerce's Remand Determination and the agency's corroboration determination.

I. Standard of Review

This Court will uphold an agency determination 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).

II. Discussion

There are four issues presented. The Court must determine: (A) whether Commerce's affiliation determination is in accordance with law, (B) whether Commerce's determination that Plaintiff's home market sales to affiliates satisfy the five percent threshold required by its regulation, such that those sales should be used in calculating the dumping margin, is in accordance with law, (C) whether Commerce's application of adverse facts available is supported by substantial evidence and in accordance with law,⁶ and (D) whether Commerce's corroboration determination is in accordance with law.

A. Affiliation

In the Final Determination, Commerce treated Plaintiff as a single "collapsed" entity, and concluded that CSC/YL was affiliated with Yieh Hsing Enterprise Co., Ltd. ("YH"), Yieh Phui Enterprise Co., Ltd. ("YP"), and Persistence Hi-Tech Materials Inc. ("Persistence") pursuant to 19 U.S.C. § 1677(33)(F)-(G).⁷ Issues and Decision Mem., P.R. Doc. 151, Def.'s Ex. 8 at 6-7. Commerce made this conclusion because Yieh Loong, aware of the statutory definition of "affiliated parties," conceded affiliation with YH, YP, and Persistence in its section A questionnaire responses; Yieh Loong, YH, YP, and Persistence shared a common chairman of the board; Taiwanese law grants "extensive power" to chairmen of the board; and Yieh Loong, YH, and YP each own a minority stock interest in one another. Id.; Dep't of Commerce Mem. from Patricia Tran, Case Analyst, to File, Certain Hot-Rolled Carbon Steel Flat Products from Taiwan — China Steel Corporation (China Steel), Yieh Loong Enterprise (Yieh Loong), and affiliated resellers, C.R. Doc. 50, Def.'s Conf. Ex. 4 at 2 (Apr. 19, 2001). In reaching its conclusion, Commerce first found that Yieh Loong was affiliated with YH, YP, and Persistence. Issues and Decision Mem., P.R. Doc. 151, Def.'s Ex. 8 at 7. Commerce then concluded that "China Steel [wa]s affiliated with Yieh Loong's affiliates," because "[c]ollapsed companies constitute a single entity and therefore affiliates of either company are affiliates of the collapsed entity." See id. at 6-7. The Court sustained the agency's affiliation determination as supported by substantial evidence, but remanded the decision for further consideration of the temporal aspect of the parties' relationships as required by the agency's regulation. CSC/YL I, 264 F.Supp.2d at 1354.

Affiliation is defined statutorily at 19 U.S.C. § 1677(33).⁸ Commerce also defines affiliation in its regulations at 19 C.F.R. § 351.102(b) (defining "[a]ffiliated person; affiliated parties" according to 19 U.S.C. § 1677(33)). In rendering an affiliation determination, Commerce's regulation further requires the agency to "consider the temporal aspect of a relationship in determining whether control exists; normally, temporary circumstances will not suffice as evidence of control." 19 C.F.R. § 351.102(b); see also Hontex Enters., Inc. v. United States, 27 CIT ___, ___, 248 F.Supp.2d 1323, 1343 (2003).

The Court pronounced its understanding of the agency's temporal determination in Hontex Enters., Inc. v. United States, 27 CIT at ___, 248 F.Supp.2d at 1344 n. 17, stating that "Commerce [is required to] weigh the nature of entities' contacts over time, and must determine how such contacts potentially impact each entity's business decisions. Sporadic or isolated contacts between entities, absent significant impact, would be less likely to lead to a finding of control." Id. In promulgating regulations governing the agency's temporal determination, however, Commerce also explained that it may find control where the parties' relationship during the period of review is short-term or brief in duration. Antidumping Duties; Countervailing Duties, 62 Fed.Reg. 27,296, 27,298 (Dep't Commerce May 19, 1997) (final rule) ("Final Rule").

[T]he Department normally will not consider firms to be affiliated where the evidence of "control" is limited, for example, to a two-month contract. On the other hand, the Department cannot rule out the possibility that a short-term relationship could result in control. Therefore, the Department will consider the temporal aspect of a relationship as one factor to consider in determining whether control exists. In this regard, we also should note that we do not intend to ignore a control relationship that happens to terminate at the beginning (or comes into existence at the end) of a period of investigation or review.

Id.

On remand, Commerce characterized China Steel's relationship with Yieh Loong as "extensive" and "long-term," rather than "short term," "temporary," or "limited." Remand Determ. at 2-3. Commerce decided that China Steel exercised "substantial" control over Yieh Loong for the last seven months of the period of investigation ("POI") (October 1, 1999 through September 30, 2000), and throughout the investigation itself (December 4, 2000 through April 23, 2001), for the following five reasons: (1) China Steel entered into a stock-purchase agreement with Yieh Loong on December 17, 1999, Letter from Peter Koenig and Kristen Smith, Ablondi, Foster, Sobin & Davidow, P.C., to U.S. Sec'y of Commerce, C.R. Doc. 31, Pl.'s Conf. Ex. 4 at 3 (Mar. 20, 2001) ("CSC's Mar. 20 Response"),⁹ (2) China Steel acquired a significant portion of Yieh Loong's equity on February 21, 2000, id. at 5; Remand Determ. at 3, (3) China Steel conceded that it "gained the management and operation right" for Yieh Loong, CSC's Mar. 20 Response, C.R. Doc. 31, Pl.'s Conf. Ex. 4 at 4, (4) China Steel shared two board members and a "supervisor" of Yieh Loong's board of directors, id., and (5) China Steel directed Yieh Loong's board of directors to appoint several of its own employees to high-ranking managerial positions at Yieh Loong, id. at Ex. A-25-C art. 1; see Remand Determ. at 2-3. Commerce therefore concluded that at the time the agency requested China Steel's downstream sales information, China Steel was in a position to obtain and submit downstream sales information from Yieh Loong for the entire POI. See id. at 3-4. Commerce also concluded that Plaintiff, as a collapsed entity, was in a position to compel Yieh Loong's affiliates to submit downstream sales data for the entire POI. See id.

Plaintiff makes two arguments challenging Commerce's temporal determination. First, Plaintiff asserts that it was not required to submit downstream sales information for Yieh Loong's affiliates until February 21, 2000, when China Steel became affiliated with Yieh Loong. See Pl.'s Comments at 8 (citing Pl.'s Br. Supp. Mot. J. Agency R. at 20) ("Pl.'s Br."). Second, Plaintiff contends that Yieh Loong was unable to compel its affiliates to produce the requested sales information when Commerce distributed its questionnaires because the common chairman between Yieh Loong, YP, and Persistence resigned from that position. Pl.'s Comments at 3-4. The Court finds both arguments unpersuasive.

As noted above, the agency's regulations require it to "consider" the temporal aspect of the affiliation relationship. The regulation's history clearly reveals that the duration of the...