Anshan Iron & Steel Co., Ltd. v. U.S.

• Decision Date: 22 September 2004
• Docket Number: SLIP OP. 04-121.,Court No. 02-00088.
• Citation: 358 F.Supp.2d 1236
• Parties: ANSHAN IRON & STEEL COMPANY, LTD., et al., Plaintiffs, v. UNITED STATES of America Defendant, and United States Steel Corporation, and Gallatin Steel Company, et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

358 F.Supp.2d 1236

ANSHAN IRON & STEEL COMPANY, LTD., et al., Plaintiffs, v. UNITED STATES of America Defendant, and United States Steel Corporation, and Gallatin Steel Company, et al., Defendant-Intervenors.

SLIP OP. 04-121.

Court No. 02-00088.

United States Court of International Trade.

September 22, 2004.

Lafave & Sailer, LLP, Washington, DC (Francis J. Sailer, Arthur J. Lafave III), for Plaintiffs Anshan Iron & Steel Co., Ltd., and Benxi Iron & Steel (Group) Co., Ltd White & Case, LLP, Washington, DC (William J. Clinton, Adams C. Lee, Robert G. Gosselink, William J. Moran) for Plaintiff Shanghai Baosteel Group Corp., Baosteel America, Inc., and Baosteel Group International Trade Corp.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; Stephen C. Tosini, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; Patrick V. Gallagher, Senior Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant, of counsel.

Skadden, Arps, Slate, Meagher & Flom, LLP, Washington, DC (John J. Mangan), for Defendant-Intervenors United States Steel Corp.

Schagrin Associates, (Roger B. Schagrin) for Defendant-Intervenors Gallatin Steel Co., IPSCO Steel Inc., Steel Dynamics, Inc. and Weirton Steel Corp.

Wiley, Rein & Fielding, LLP, Washington, DC (Timothy C. Brightbill), for Defendant-Intervenors Nucor Corp.

OPINION

WALLACH, Judge.

I Introduction

This matter is before the court following remand to the United States Department of Commerce, International Trade Administration (the "Department," "Commerce" or "ITA"). In Anshan Iron & Steel Company, Ltd., et al., v. United States, 27 CIT ___, 2003 WL 22018898 (July 16, 2003) ("Anshan I"), this court remanded Commerce's determination contained in Final Determination of Sales at Less Than Fair Value: Certain Hot Rolled Carbon Steel Flat Products from the People's Republic of China, 66 Fed.Reg. 49,632 (Sept. 28, 2001) ("Final Determination") and the accompanying Issues and Decision Memorandum for the Less than Fair Value Investigation of Certain Hot Rolled Carbon Steel Flat Products from the People's Republic of China: April 1, 2000 through September 30, 2000 (Sept. 21, 2001) ("Decision Memo"). Pub. Doc. 349, Appendix to Memorandum of Law in Support of Baosteel's Rule 56.2 Motion for Judgment Upon The Agency Record ("Baosteel App.") Attachment 4. Plaintiffs Anshan Iron & Steel Company, Ltd., New Iron & Steel Company, Ltd. and Angang Group International Trade Corporation ("Plaintiff Anshan" or "Anshan"); Benxi Iron & Steel Company, Ltd., Benxi Steel Plate Company, Ltd., and Benxi Iron & Steel Group International Economic and Trade Company, Ltd. ("Plaintiff Benxi" or "Benxi"); and Shanghai Baosteel Group Corporation, Baosteel American, Inc., and Baosteel Group International Trade Corporation ("Plaintiff Baosteel" or "Baosteel") (collectively "Plaintiffs") had moved for judgment upon the agency record pursuant to USCIT Rule 56.2, challenging certain aspects of Commerce's decision. Pursuant to this court's ruling in Anshan I, Commerce reconsidered certain aspects of its Final Determination and issued its Final Results Pursuant to Remand (Nov. 7, 2003) ("Remand Results"). Plaintiffs now challenge Commerce's continued reliance upon surrogate values for Plaintiffs' self-produced intermediate inputs.

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994). For the reasons set forth below, Commerce's Redetermination is remanded for action consistent with this opinion.

II Background

Plaintiffs produce and export certain hot-rolled carbon steel flat products from China. In the process of producing hot-rolled steel, Plaintiffs utilize both purchased and self-produced inputs. Among their self-produced intermediate inputs are electricity generated from the processing of purchased coal, as well as oxygen, nitrogen, and argon gases. These inputs are produced from various purchased materials, including, inter alia, iron ore, scrap, coal, water, and other chemicals. See Anshan I, 2003 WL 22018898, **1-2.

Plaintiffs provided a factors of production database to the Commerce Department on February 26, 2001, in which they reported their consumption of coal and other material, energy, and labor factors used to produce the intermediate inputs. Commerce confirmed the accuracy of the reported factors during on-site verification.

In its Preliminary Determination, Commerce assigned surrogate values to Plaintiffs' intermediary inputs rather than including valuations for Plaintiffs' factors of production database. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From the People's Republic of China, 66 Fed.Reg. 22,183 (May 3, 2001) ("Preliminary Determination"). In order to calculate selling and general expenses, Commerce averaged the 1999-2000 financial statements of two Indian steel producers; Tata Iron and Steel Company, Ltd. ("TATA") and Steel Authority of India, Ltd. ("SAIL"). Id. at 22,193. To calculate profit, Commerce used excerpts of TATA's 2000-2001 financial statement. Id.

On September 21, 2001, Commerce issued its Decision Memo, and on September 28, 2004, Commerce issued its Final Determination. Commerce continued to value the intermediate energy inputs based upon the reported factor usage rates for each of the inputs, rather than valuing the inputs used to produce the intermediate inputs. Decision Memo at 17. For general expenses and profit, Commerce relied solely on an excerpt of TATA's 2000-2001 financial statement. Id. at 23-24. On October 15, 2001, and October 31, 2001, Plaintiffs Anshan, Benxi and Baosteel requested an opportunity to comment on what they considered new information referenced in Commerce's final determination. Commerce rejected this request and returned plaintiffs' letters, stating that they contained untimely argument.

On July 16, 2003, this court ruled that Commerce had deviated from its established practice of valuing factors of production of self-produced intermediate inputs without adequately addressing the deviation, and that Commerce should have adjusted Baosteel's factors of production to reflect its decision to treat Baosteel's defective hot-rolled sheets as non-prime merchandise under investigation sold in the home market. Anshan I, 2003 WL 22018898, **8-9, 14. Accordingly, Commerce was directed to either provide an adequate explanation for its deviation from previous practice, or assign surrogate values to Plaintiffs' factors of production for its self-produced intermediate inputs, and to "adjust Plaintiff Baosteel's factors of production calculations in order to reflect Commerce's decision not to treat Baosteel's defective sheets as a byproduct." Id. at 8-9, 16. Familiarity with the decision in Anshan I is presumed.

On November 7, 2003, Commerce filed Final Results Pursuant to Remand stating that it had

(1) provided an explanation for its methodology in assigning surrogate values to Respondents' self-produced factors in this investigation; and (2) adjusted Baosteel's reported factors by adding the total amount of defective hot-rolled sheet produced during the period of investigation ("POI") to the total amount of merchandise under investigation in the denominator of the factor of production ratios.

Remand Results at 1.

III Standard of Review

In reviewing Commerce's Final Determination, the court "shall hold unlawful any determination, finding, or conclusion found... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (1999); Fujian Mach. & Equip. Imp. & Exp. Corp. v. United States, 25 CIT 1150, 1152, 178 F.Supp.2d 1305 (2001). Substantial evidence has been defined as "more than a `mere scintilla,' as `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' "Nippon Steel Corp. v. United States, 337 F.3d 1373, 1379 (Fed.Cir.2003) (citing Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). "As long as the agency's methodology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." (Ceramica Regiomontana, S.A. v. United States, 636 F.Supp. 961, 10 CIT 399, 404-5 (1986), aff'd, 810 F.2d 1137 (Fed.Cir.1987)); Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed.Cir., 1984); see also Negev Phosphates, Ltd. v. United States, 699 F.Supp. 938, 12 CIT 1074, 1076-77 (1988) (holding that the court neither weighs the evidence nor substitutes its own judgment for that of the agency). However, "[t]he court will find a determination unlawful where Commerce has failed to carry out its duties properly, relied on inadequate facts or reasoning, or failed to provide an adequate basis for its conclusions." Rhone-Poulenc, Inc. v. United States, 927 F.Supp. 451, 20 CIT 573, 575 (1996) (citing Budd Co. Ry. Div. v. United States, 507 F.Supp. 997, 1 CIT 67, 70-76 (1980); Indus. Fasteners Group v. United States, 525 F.Supp. 885, 2 CIT 181, 190 (1981)).

IV Analysis

A Commerce's Valuation of Plaintiffs' Intermediate Inputs Continues to be Unsupported by the Evidence and Not in Accordance With Law

In Anshan I this court held Commerce's valuation of Plaintiff's inputs to be unsupported by substantial evidence and not in accordance with law. Anshan I, 2003 WL 22018898, **2-3. Thus, the court directed Commerce to "either (1) provide an adequate explanation for its deviation from previous practice, or (2) assign surrogate values to Plaintiffs' factors of production for its self-produced intermediate inputs." Id. at **8-9.

Commerce now claims to have clarified its position...