Hoogovens Staal Bv v. U.S.

Citation4 F.Supp.2d 1213
Decision Date13 March 1998
Docket NumberCourt No. 96-10-02394.,Slip Op. 98-27.
PartiesHOOGOVENS STAAL BV and Hoogovens Steel USA, Inc., Plaintiffs, v. UNITED STATES, Defendant. AK STEEL CORP., Bethlehem Steel Corp., Inland Steel Indus., Inc., LTV Steel Co., Inc., National Steel Corp., and U.S. Steel Group, Plaintiffs, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice (Lucius B. Lau) and John D. McInerney, Deputy Chief Counsel, David R. Mason, Attorney-Advisor, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, Washington, DC, for Defendant.

MEMORANDUM OPINION

DiCARLO, Senior Judge.

This matter is before the Court under USCIT Rule 56.2 on separate motions for judgment on the agency record brought by Hoogovens Staal BV and Hoogovens Steel USA, Inc. (collectively "Hoogovens") and by AK Steel Corporation, Bethlehem Steel Corporation, Inland Steel Industries, Inc., LTV Steel Company, Inc., National Steel Corporation and U.S. Steel Group (a unit of USX Corporation) (collectively "AK Steel"). The parties challenge aspects of the Commerce Department's final determination of the first administrative review in Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands, 61 Fed.Reg. 48,465 (Dep't Commerce 1996) [hereinafter Final Determination]. The two actions were consolidated on May 5, 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 Cold-Rolled Carbon Steel Flat Products from the Netherlands, 58 Fed. Reg. 44,172 (Dep't Commerce 1993). Hoogovens accounts for effectively all exports of such products from the Netherlands to the United States. N.V.W. (USA), Inc. ("NVW") is Hoogovens' wholly-owned U.S. sales office and the importer of record. Pursuant to a request by Hoogovens, Commerce initiated the first administrative review of the antidumping order for the period August 18, 1993 through July 31, 1994. Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands, 59 Fed.Reg. 46,391 (Dep't Commerce 1994). Commerce issued preliminary results in that review in July 1995, Certain Cold-Rolled Carbon Steel Flat Products from the Netherlands, 60 Fed.Reg. 35,893 (Dep't Commerce 1995) [hereinafter Preliminary Determination], and final results in September 1996, Final Determination.

In the Final Determination (but not in the Preliminary Determination), Commerce applied 19 C.F.R. § 353.26 (1994), the "reimbursement regulation," after finding that Hoogovens had reimbursed NVW for the cost of antidumping duties. This regulation, in relevant part, states:

(a) In general. (1) In calculating the United States price, the Secretary will deduct the amount of any antidumping duty which the producer or reseller:

(I) Paid directly on behalf of the importer; or

(ii) Reimbursed to the importer.

Id.

Customs alerted Commerce to the possibility of reimbursement after the Preliminary Determination had been published. Commerce issued two supplemental questionnaires to Hoogovens in February and August of 1996. Hoogovens responded with additional sales and financial documentation. Relying on the additional documents and Hoogovens' questionnaire responses, Commerce found that Hoogovens was reimbursing NVW for antidumping duties during the period of the first review.

Commerce subsequently found that no reimbursement had occurred during the second administrative review. Certain ColdRolled Carbon Steel Flat Products from the Netherlands, 62 Fed.Reg. 18,476, 18,478 (Dep't Commerce 1997) (final results of second review).

Hoogovens contests the validity of the regulation, arguing that Commerce had no statutory authority to issue it. Hoogovens also argues that even if the regulation is valid, it should not be applied to related parties, and, furthermore, the facts here do not support application of the regulation.

In a separate motion, AK Steel argues that antidumping duties should be deducted as "United States import duties" or other "costs, charges or expenses" from U.S. price in Commerce's margin calculation.

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 the 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. Commerce's Statutory Authority to Issue the Reimbursement Regulation

Hoogovens argues that Commerce had no statutory authority to issue the reimbursement regulation. It claims that the regulation is inconsistent with the overall statutory and regulatory scheme, which provides remedial, not punitive, relief. According to Hoogovens, the regulation doubles the statutory remedy, resulting in a punitive order.

Commerce is granted authority to issue regulations to implement the antidumping statute. See 5 U.S.C. § 301; 19 U.S.C. §§ 1673-1677h. The Court need consider only whether the regulation is based on a permissible construction of the statute. Melamine Chem., Inc. v. United States, 732 F.2d 924, 928 (Fed.Cir.1984) (citations omitted); Consumer Prod. Div., SCM Corp. v. Silver Reed America, Inc., 753 F.2d 1033, 1039 (Fed.Cir.1985) (quoting Melamine) (agency's interpretation of its regulation must be reasonable and consistent with statute).

The antidumping statute provides a remedy to domestic producers injured by dumping. Chaparral Steel Co. v. United States, 901 F.2d 1097, 1103-04 (Fed.Cir.1990); BadgerPowhatan, Inc. v. United States, 9 CIT 213, 216-17, 608 F.Supp. 653, 656 (1985). Commerce has noted that "[t]he remedial effect of the law is defeated ... where exporters themselves pay antidumping duties, or reimburse importers for such duties." Color Television Receivers from the Republic of Korea, 61 Fed.Reg. 4,408, 4,410 (Dep't Commerce 1996) (final admin. review) [hereinafter Korean TVS]. The regulation is designed to preserve the statute's remedial purpose by discouraging foreign exporters from assuming the cost of duties. Id. at 4,410-11.

Commerce's statutory construction is a reasonable one. If the exporter assumes the cost of antidumping duties, an importer could continue to import at the lower, dumped price. U.S. producers would remain at a competitive disadvantage without the benefit of a viable remedy for the injury caused by the dumped imports. The regulation preserves the statutory remedy by accounting for the amount of duties reimbursed or paid by the exporter so that the final assessed duty will remedy the injury. Presumably, an exporter will be reluctant to continue paying the cost of antidumping duties because the margin will increase accordingly each time Commerce reviews it. Thus, the effect of the order on import prices will be preserved.

The regulation is consistent with the language of the statute and furthers the statutory purpose of remedying injury caused by unfairly traded imports. Commerce's decision to issue the reimbursement regulation is in accordance with the law.

II. Deference to Commerce's "New" Interpretation of the Reimbursement Regulation

Hoogovens argues that the Court's deference to Commerce is limited where Commerce has had no clear or longstanding interpretation of a regulation. It notes that Commerce has never before applied the reimbursement regulation to a foreign exporter and its U.S. subsidiary. Furthermore, Hoogovens argues, Commerce expressly decided not to apply the regulation to related-parties transactions in 1993 and thereafter, thus establishing a policy against such application during the time of this review. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof, 58 Fed.Reg. 39,729, 39,736 (Dep't Commerce 1993) (final admin. review) [hereinafter AFBs II]; Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof, 60 Fed.Reg. 10,900, 10,907 (Dep't Commerce 1995) (final admin. review) [hereinafter AFBs III].

Commerce is not required to follow its interpretation in AFBs II if new arguments or facts support a different conclusion. Citrosuco Paulista, S.A. v. United States, 12 CIT 1196, 1209, 704 F.Supp. 1075, 1088 (1988); see also Hussey Copper, Ltd. v. United States, 17 CIT 993, 997, 834 F.Supp. 413, 418 (1993). It may repudiate its prior reasoning, it may narrow the zone in which that reasoning applies, or it may find that particular facts in this case justify a departure from the general rule. Atchison, Topeka & Santa Fe Ry. Co. v. Wichita Bd. of Trade, 412 U.S. 800, 808, 93 S.Ct. 2367, 37 L.Ed.2d 350 (1973). If Commerce intends to depart from a prior position, however, it must give its reasons for doing so, thereby allowing the Court to "understand the basis of the agency's action and ... judge the consistency of that action with the agency's mandate." Id. at 808, 93 S.Ct. 2367.

Subsequent to AFBs II and AFBs III, Commerce reversed its position, finding that AFBs II was "inconsistent with both the plain language of the regulations and the regulatory history." Korean TVS ...

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