Nippon Steel Corp. v. U.S.

• Decision Date: 14 October 2004
• Docket Number: SLIP OP.04-131.,Court No. 00-09-00479.
• Citation: 350 F.Supp.2d 1186
• Parties: NIPPON STEEL CORPORATION, NKK Corporation, Kawasaki Steel Corporation and Toyo Kohan Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, Weirton Steel Corporation, Defendant-Intervenor.
• Court: U.S. Court of International Trade

350 F.Supp.2d 1186

NIPPON STEEL CORPORATION, NKK Corporation, Kawasaki Steel Corporation and Toyo Kohan Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant Weirton Steel Corporation, Defendant-Intervenor.

SLIP OP.04-131.

Court No. 00-09-00479.

United States Court of International Trade.

October 14, 2004.

Willkie Farr & Gallagher, Washington, DC (William H. Barringer, Christopher Dunn, James P. Durling, Daniel L. Porter, and Robert E. DeFrancesco) for plaintiffs.

Lyn M. Schlitt, Director of Office of External Relations, James M. Lyons, General Counsel, Marc A. Bernstein, Assistant General Counsel, United States International Trade Commission (Laurent de Winter and Neil Joseph Reynolds) for defendant.

Schagrin Associates (Roger B. Schagrin) for defendant-intervenor.

OPINION

RESTANI, Chief Judge.

Before the court is the United States International Trade Commission's ("Commission" or "ITC") second remand determination concerning tin- and chromium-coated steel sheet ("TCCSS") imports from Japan. In its original determination, the Commission concluded that the United States TCCSS industry was materially injured by reason of TCCSS imports from Japan ("subject imports") that were sold at less than fair value ("LTFV"). Tin-and Chromium-Coated Steel Sheet From Japan, 65 Fed.Reg. 50,005, USITC Pub. 3300, Inv. No. 731-TA-860 (final determ.) (Aug.2000) (A.R.2-148) [hereinafter Final Determination]. Although the court found the Commission's conclusions with respect to subject import volume supported by substantial evidence, the court ordered the Commission to reevaluate its analysis of the effect of subject imports on domestic pricing as well as its conclusions with respect to causation. Nippon Steel Corp. v. United States, 182 F.Supp.2d 1330, 1356 (CIT 2001) ("Nippon I").

On remand, the Commission again determined that the domestic industry was materially injured by reason of subject imports. Tin- and Chromium-Coated Steel Sheet from Japan, Inv. No. 731-TA-860 (final determ.) (March 2002) (A.R.2-261R) [hereinafter First Remand Determination]. After reviewing the Commission's explanations and the evidence, the court found otherwise. Nippon Steel Corp. v. United States, 223 F.Supp.2d 1349 (CIT 2002) ("Nippon II"). The court held that uncontested evidence established that LTFV subject imports did not have a material effect on domestic prices and that there was no valid reason to discount non-price factors or non-subject imports as the predominant cause of material injury. Id. Furthermore, the court found that a remand for reconsideration or recalculation was not necessary because the Commission had "demonstrated an unwillingness or inability to address the substantial claims made by the respondents or the concerns expressed by the court in Nippon I ..." Id. at 1371-72. Instead, the court vacated the affirmative injury finding and directed the Commission to enter a negative material injury determination. Id. at 1372.

The Commission appealed the court's decision in Nippon II. The Court of Appeals for the Federal Circuit held that this court abused its discretion by not returning the case to the Commission for further analysis. Nippon Steel Corp. v. International Trade Com'n, 345 F.3d 1379, 1381 (Fed.Cir.2003) ("Nippon III"). The Federal Circuit explained that "to the extent that the Court of International Trade engaged in refinding the facts (e.g., by determining witness credibility), or interposing its own determinations on causation and material injury itself, [it] ... exceeded its authority." Id. The Federal Circuit vacated the court's decision in Nippon II and remanded the case to the Commission to "attend to all the points made by the Court of International Trade, especially those of [Nippon II] which the Commission [had] not yet had the opportunity to address." Id. at 1382.

Therefore, the Commission considered the case on a second remand. In its second remand determination, the Commission determines that the domestic industry was materially injured by reason of Japanese imports. Tin- and Chromium-Coated Steel Sheet from Japan, Inv. No. 731-TA-860 (Feb.2004) (A.R.2-263R) [hereinafter Second Remand Determination].¹ Nippon Steel Corporation, NKK Corporation, Kawasaki Steel Corporation, and Toyo Kohan Co., Ltd., (collectively "Nippon" or "Plaintiffs"), challenge this determination on the grounds that the Commission's findings of price effects and causation remain unsupported by substantial evidence. For the reasons set forth below, the Commission's affirmative material injury determination is remanded with instructions to issue a negative material injury determination.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000). The court will uphold the Commission's final determination in an antidumping investigation unless it is "unsupported by substantial evidence on the record, or is otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (2000).

OVERVIEW

TCCSS is a tin-coated flat-rolled steel product, primarily used in the production of containers for the food processing industry.² The domestic TCCSS industry is characterized by unique conditions of competition. For example, there are a relatively small number of buyers and sellers: Seven domestic suppliers ("suppliers" or "producers"), two dozen importers, and six major U.S. purchasers.³ In addition, the majority of U.S. suppliers are located in the Eastern and Midwestern United States and typically supply facilities in those areas.⁴ Although Japanese suppliers compete more heavily in the West, they supply purchasers throughout the United States. Id. at II-7, Table II-1. Non-subject imports, on the other hand, compete only in the East and Midwest, and during the period of investigation entered the U.S. market in larger volumes than Japanese imports. Id. at II-7, IV-5. Id. Nonetheless, domestic mills account for the majority of U.S. consumption.⁵ Furthermore, TCCSS is almost always sold pursuant to annual contracts that establish fixed prices and target volumes. Prior to entering into a contract, however, the majority of purchasers require suppliers to demonstrate an ability to make reliable deliveries, supply high-quality product and specialty items, and provide quality service. Id. at II-10. These non-price considerations are important factors to TCCSS purchasers. Id.

DISCUSSION

In the final phase of an antidumping duty investigation, the Commission determines whether an industry in the United States is materially injured by reason of the imports under investigation. 19 U.S.C. § 1673d(b). Material injury is defined as "harm which is not inconsequential, immaterial, or unimportant." 19 U.S.C. § 1677(7)(A). An affirmative material injury determination requires the Commission to find that the volume, price effects, and impact of the subject imports are significant, and that the material injury was by reason of the subject imports. Id. § 1677(7)(B); see also Gerald Metals, Inc. v. United States, 22 CIT 1009, 1012-13, 27 F.Supp.2d 1351, 1354-55 (1998). In this case, the court previously upheld the Commission's determination of a small but significant volume, and Plaintiffs did not challenge the Commission's findings on impact. Nippon I, 182 F.Supp.2d at 1340. Thus, the court now reviews the Commission's findings regarding (I) price effects, and (II) causation.

I. Price Effects

In evaluating the effect of subject imports on domestic prices, the Commission must consider whether there has been "significant price underselling by the imported merchandise," and whether the effect of such imports "otherwise depresses prices to a significant degree or prevents price increases, which otherwise would have occurred, to a significant degree." 19 U.S.C. § 1677(7)(C)(ii). In addition, the Commission must evaluate price effects within the context of the "conditions of competition that are distinctive to the affected industry." Id. § 1677(7)(C)(iii). In Nippon II, the court held that the Commission's finding of significant price effects was unsupported by substantial evidence. 223 F.Supp.2d at 1351-52. Specifically, the court found that the Commission (A) failed to explain its selection and compilation of price comparison data, (B) did not support its finding of significant underselling, (C) ignored evidence contradicting a finding of domestic price depression, and (D) did not consider the industry's unique conditions of competition. Id. The Commission addresses these concerns in its Second Remand Determination, however, the record as a whole continues to demonstrate that subject imports did not have a significant effect on domestic prices.

A. Selection and Compilation of Price Comparison Data

The Commission has "broad discretion in analyzing and assessing the significance of the evidence on price undercutting." Copperweld Corp. v. United States, 12 CIT 148, 161, 682 F.Supp. 552, 565 (1988). It must, however, "provide a reasonable explanation as to why it chose the evidence used to support its findings." Bratsk Aluminum Smelter v. United States, No. 03-00200, 2004 WL 1385848, *10 (CIT 2004). In Nippon II, the court held that the Commission failed to provide a reasonable explanation as to why it (1) separated out Purchaser A's different facilities and product types, (2) considered only bids that ultimately culminated in final sales, and (3) analyzed underselling data for only 1999.

1. Considering Purchaser A's Data Separately

The court previously held that the Commission failed to explain its decision to keep Purchaser A's separate facilities and product types in disaggregated form. Nippon II, 223 F.Supp.2d at 1355. As a result, the Commission now calculates a single aggregate unit price for Purchaser A's facilities and products and then includes that data in its price comparison tables.⁶ Plaintiffs challenge the Commission's aggregation of this data with respect to the bid and volume comparison table, Table...