Atlantic Sugar, Ltd. v. United States, Court No. 80-5-00754.

• Decision Date: 08 July 1981
• Docket Number: Court No. 80-5-00754.
• Citation: 519 F. Supp. 916
• Parties: ATLANTIC SUGAR, LTD., and Redpath Sugars, Ltd., Plaintiffs, v. UNITED STATES, Defendant, Amstar Corporation, Party-in-Interest.
• Court: U.S. Court of International Trade

519 F. Supp. 916

ATLANTIC SUGAR, LTD., and Redpath Sugars, Ltd., Plaintiffs, v. UNITED STATES, Defendant Amstar Corporation, Party-in-Interest.

Court No. 80-5-00754.

United States Court of International Trade.

July 8, 1981.

COPYRIGHT MATERIAL OMITTED

Rogers & Wells, Washington, D. C. (Robert V. McIntyre and George C. Smith, Washington, D. C., on the brief), for plaintiffs.

Stuart E. Schiffer, Acting Asst. Atty. Gen., Washington, D. C. (Francis J. Sailer, Commercial Litigation Branch, Washington, D. C., on the brief), for defendant.

Baker & McKenzie, Washington, D. C. (Thomas P. Ondeck, Washington, D. C., on the brief), and Sullivan & Cromwell, New York City (James H. Carter, New York City, on the brief), for party-in-interest.

MEMORANDUM AND ORDER

WATSON, Judge:

This is an action under Section 516A(a)(2) of the Tariff Act of 1930, (19 U.S.C. § 1516a(a)(2)). It was brought by Atlantic Sugar, Ltd. and Redpath Sugars, Ltd. for judicial review of a determination by the International Trade Commission (ITC) that the importation of refined sugar from Canada (previously found to have been sold here at less than fair value during the period of October 1, 1978 through March 31, 1979) was causing material injury to an industry in the United States.¹ The result of that determination was the issuance of a final antidumping duty order. This judicial review is for the purpose of deciding whether or not the determination was supported by substantial evidence and made in accordance with the law. 19 U.S.C. § 1516a(b)(1)(B).

The matter is now before the Court following motions by the plaintiffs and the government under rule 56.1, which is the Court's analogue for a motion for summary judgment when the review is to be based solely upon the administrative record. Amstar, the intervenor, is the domestic sugar producer whose petition initiated the investigation which resulted in the determination of material injury. It has participated in the briefing of the motion and the oral argument which ensued.

The case lends itself to discussion in two parts. In the first part are those issues which relate to the consequences of recently discovered errors connected to two of the findings made by the ITC. These were the finding that a regional industry existed and the finding that it was the producers of all, or almost all, of the production in the region who suffered material injury.

In the second part are those issues raised in claims made by plaintiffs, that various findings were not supported by substantial evidence or were otherwise not in conformity with the law.

I

The statutory guidelines for the determination of material injury in this antidumping investigation are contained in Section 771 of the Tariff Act of 1930, as added by the Trade Agreements Act of 1979 (19 U.S.C. § 1677). The first dispute centers on the finding by the ITC that the sugar producers of an eleven-state region of the Northeast United States should be treated as a separate industry. The relevant statutory language is found at 19 U.S.C. § 1677(4)(C) and reads as follows:

Regional industries. In appropriate circumstances, the United States, for a particular product market, may be divided into two or more markets and the producers within each market may be treated as if they were a separate industry if—

(i) the producers within such market sell all or almost all of their production of the like product in question in that market, and

(ii) the demand in that market is not supplied, to any substantial degree, by producers of the product in question located elsewhere in the United States.

A serious question has arisen with respect to the second of these two explicitly stated conditions. In its determination, the ITC stated that "only about 5.5 percent of the sales of producers located in states outside the region were to customers within the region." It further stated that it considered this amount to be "insubstantial." During the pendency of this action, however, the ITC realized that it had not made its calculation as a percentage of the demand in the Northeast region, as required by the statute. When the 5.5 percent of "outside" sales were properly calculated as a percentage of all sales within the N.E. region the figure rose to 12 to 16 percent for the period under study. This meant that 12 to 16 percent of the demand in the market was being supplied by producers located elsewhere in the United States.

Plaintiffs argue that these new figures are clearly substantial as a matter of law, being three to four times the percentage of sales represented by the imports, being substantial in an ordinary arithmetical sense; going markedly beyond the bounds intended by Congress to define a truly isolated market, and beyond the range in which agency discretion could conceivably be exercised. Plaintiffs ask the Court to set aside the injury determination as unlawful or, if it should see fit to remand the matter to the agency, to do so with instructions that the conditions for finding a separate industry do not exist.

Defendant argues that the Court should limit itself to remanding the question for the ITC to reconsider its finding based on the correct percentage.

Although the new figures are markedly larger the Court cannot say that, as a matter of law, they are beyond the realm of what can be considered insubstantial. For this reason, the Court will remand the question, not however, without expressing some of the factors which ought to be involved in the reconsideration.

The level of imports in a region is not a standard for measuring the substantiality of sales in the region from elsewhere in the United States. First, there is the distinction that imports need only be "significant" while the satisfaction of demand from elsewhere in the United States must not occur to any "substantial" degree. More importantly, there is a teleological distinction. The imports, which are in a "suspect" condition because they are being sold at less than fair value, are being examined for their significance as a possible cause of injury. Causal effect in such cases, if we may draw an analogy to the law of torts, can be demonstrated at a relatively low threshold level provided the cause is in "proximity." The sales from elsewhere are being examined to determine the isolation of a market, which is a more general question of condition, not cause and effect. Therefore, the quantity of fairly priced material from elsewhere in the U.S. may exceed that of imports sold at less than fair value without necessarily being "substantial" in the sense of the statute.

However, with respect to the ordinary meaning suggested by the phrase "to any substantial degree" the Court is concerned by the degree of market penetration shown in the corrected data. The Court notes the possible inconsistency between isolation and reliance on producers elsewhere for the satisfaction of 12 to 16 percent of demand. The Court is troubled by the prospect that permitting this degree of external domestic satisfaction of a market might allow an arbitrary or freehanded sculpting of regional markets. These are questions with which the ITC must grapple in its reconsideration.

The legislature took pains to carefully define the regional variation of the term "industry." It is conceivable that this definition may be subject to special considerations which are within the capacity of the ITC to determine and explain. For this reason, in this formative stage of the administration of the new law, and at this juncture of the action the Court does not undertake to state the limits of the phrase "to any substantial degree." It also refrains from judging whether analogies may be drawn, as suggested by plaintiffs, between the substantiality of the sales from elsewhere and such concepts as the substantiality of the lessening of competition required by § 3 of the Clayton Act (15 U.S.C. § 14). Consequently, the Court does not reach such examples as the finding in Standard Oil Co. v. United States, 337 U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371 (1949) that objectionable contracts which affected 6.7 percent of the business in a seven-state area went far toward supporting the inference that competition had been, or probably would be substantially lessened.

A proper respect for the role of the ITC suggests that it be allowed to complete an analysis of the corrected data and bring its expertise to bear on this question. The Court notes only that when the limits of the plain meaning of the statutory language are being tested, it is particularly important for the ITC to state with precision the reasoning which supports its conclusions. See generally, SCM Corporation v. United States, 84 Cust.Ct. ___, C.R.D. 80-2, 487 F.Supp. 96 (1980).

The same approach holds true for the second error discovered during the pendency of this proceeding. The second error bears on a subsequent step in the ITC's determination. When the existence of a separate regional industry has been determined, the law provides that material injury may be found if there is a concentration of dumped imports in that market and if the producers of all, or almost all, of the production within...