Republic Steel Co. v. United States, Court No. 82-2-00207.

• Decision Date: 22 July 1982
• Docket Number: Court No. 82-2-00207.
• Citation: 544 F. Supp. 901
• Parties: REPUBLIC STEEL CORPORATION, et al., Plaintiffs, v. UNITED STATES, et al., Defendants.
• Court: U.S. Court of International Trade

544 F. Supp. 901

REPUBLIC STEEL CORPORATION, et al., Plaintiffs, v. UNITED STATES, et al., Defendants.

Court No. 82-2-00207.

United States Court of International Trade.

July 22, 1982.

Cravath, Swaine & Moore, New York City (Alan J. Hruska, New York City, of counsel), for plaintiffs.

J. Paul McGrath, Asst. Atty. Gen., Washington, D. C., David M. Cohen, Branch Director, Commercial Litigation Branch, Velta A. Melnbrencis, Commercial Litigation Branch, and Robert Seely, Staff Atty., Import Administration, U. S. Dept. of Commerce, New York City, for defendants.

United States Steel Corp. amicus curiae by its Law Dept. (D. B. King, J. J. Mangan and Leslie Ranney, Pittsburgh, Pa., of counsel).

OPINION AND ORDER ON CROSS MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD

WATSON, Judge:

Plaintiffs brought this action to obtain judicial review of decisions by the Department of Commerce not to start a number of countervailing duty investigations and its decision not to start an antidumping duty investigation. The action originates in section 516A of the Tariff Act of 1930 (the Act) (19 U.S.C. § 1516a(a)(1)(A)(i)) and the Court has jurisdiction under 28 U.S.C. § 1581(c).

The matter is now before the Court on cross-motions for judgment on the Administrative Record under Rule 56.1 of the Rules of the Court. A brief was also received on behalf of amicus curiae, the United States Steel Corporation. Oral argument was held on July 15, 1982.

On January 11, 1982, plaintiffs filed a petition with the International Trade Administration of the Department of Commerce (ITA) and the United States International Trade Commission (ITC) seeking the assessment of countervailing duties and antidumping duties on the ground that the steel industry in the United States was being materially injured by, or threatened with injury from, the importation of nine types of steel products.¹ It was alleged that the products were being subsidized by ten foreign nations² as well as by the European Economic Community (EC). With respect to the petition for antidumping duties, it was alleged that the products from Romania were sold or were likely to be sold at less than fair value.

Under sections 702(c) and 732(c) of the Act (19 U.S.C. §§ 1671a(c) and 1673a(c)), which are parallel provisions governing the administrative treatment of the petition in countervailing duties and antidumping duties, the ITA had 20 days to determine the sufficiency of the petition and, depending on that determination, either start an investigation or dismiss the petition, with the publication of notice in the Federal Register in either instance.

On February 2, 1982, the ITA dismissed the petition insofar as it asked for the assessment of countervailing duties on four types of steel bars from the Netherlands and one type from Luxembourg on the ground that in recent years there had been no or only de minimus importations of those products. 47 Fed.Reg. 5743 and 5750. The ITA also dismissed the petition insofar as it asked for the assessment of antidumping duties on hot rolled and cold rolled carbon steel sheet from Romania on the same ground, as well as on the ground that there was no evidence of bona fide offers at less than fair value.

To the same effect, but without a published notice, the ITA did not initiate a separate investigation of the allegations relating to the EC.³ In other words, it did not treat the EC as a distinct country. Instead, when it determined to start investigations it limited each investigation to products from a single nation. When the nation was a member of the EC, the ITA announced in the notice of initiation of that investigation that it was proceeding to investigate both the national and the EC subsidies with respect to the products of that nation. 47 Fed.Reg. 5739-52.

The defendants make the assertion that by ascertaining the EC subsidies in each national investigation the ITA made an investigation of the EC. This assertion comes from a limited focus on section 702(c) of the Act (19 U.S.C. § 1671a(c)) and an inflation of its importance. That section states that if the ITA finds the petition sufficient it shall "commence an investigation to determine whether a subsidy is being provided." But the statutory provision which is central to the commencement of an investigation in the full sense is section 702(b) of the Act (19 U.S.C. § 1671a(b)) which states that "a countervailing duty proceeding shall be commenced" whenever an interested party files a sufficient petition with the ITA. The term "proceeding" is defined in the legislative history as "that activity which begins when a petition is filed under section 702(b) and ends upon the final disposition of the case, up to a revocation of a countervailing duty order, if any, under section 702, 703, 704, 705, or 751, as the case may be." S.Rep.No.96-249, 96th Cong., 1st Sess. 46 (1979), U.S.Code Cong. & Admin.News 1979, pp. 381, 432.

In effect then, it is the petition which begins the over-all proceeding and it is the petition which should control the objectives of the entire investigation unless it is found to be defective and dismissed within 20 days. The "proceeding" started by petition is the same thing as the "investigation" which is self-initiated by the ITA under section 702(a) (19 U.S.C. § 1671a(a)). In both cases the investigation must have a coherent purpose, which means that there must be a correspondence as soon as possible between the determination of the element of subsidy and the determination of the element of injury. This is the inescapable conclusion which flows from the mandate in 19 U.S.C. § 1671a(b) that "a countervailing duty proceeding shall be commenced." The entire proceeding must be commenced.

In dealing with the petition to examine its sufficiency, the ITA has a limited ministerial function. The law states that it shall determine only two things, first "whether the petition alleges the elements necessary for the imposition of a duty under section 701(a)" 19 U.S.C. § 1671(a) and second, whether the petition "contains information reasonably available to the petitioner supporting the allegations." If it finds a lack of alleged elements or information, it may dismiss the petition. On the other hand, if the petition is sufficient, the ITA has an obligation to maintain the proceeding in a form which corresponds to the petition and effectuates the coherent purposes of the entire proceeding. This means that it must not do anything which has the effect of altering the over-all investigation by precluding, or making discretionary, that which should be mandatory. By this the Court refers to the preliminary injury determination by the ITC, which happens to be the first determination required after a petition is found sufficient. By not treating the merchandise subsidized by the EC in separate investigations the ITA left the ITC with the understandable impression that the ITC could only measure injury on the basis of the subsidized production from each country separately. This was the apparent result of the fact that the ITC preliminary injury determination is stated in section 703(a) of the Act, (19 U.S.C. § 1671b(a)) by reference to "the merchandise which is the subject of the investigation by the ITA." If this is related back to a self-initiated investigation by the ITA, all is well. But if it is related back to a petition-initiated investigation, an alteration by the ITA of the objectives of the petition may tend to narrow the ITC's mandate.

The defendants argue that the ITC could nevertheless have made a unified injury determination for products subsidized by the EC. But this implies both that the ITC had the discretion to do so, which is an open question,⁴ and that it should have been left free to do so, which is definitely wrong. The unified consideration of injury should not be a matter of discretion when the petition alleges subsidy from a single source and that source is a country within the meaning of the law. When that occurs, the proceeding must encompass the alleged injury from all the merchandise subsidized by the country, and the ITA, in its processing of the petition, must not interfere with that objective. On the contrary, in its published announcement of the investigation it must recognize the larger implications of the form given to its subsidy investigations and take positive steps to fashion the investigations in a manner which corresponds to the full relief requested in the petition and which is in harmony with the duties of the ITC. In short, in a petition-initiated proceeding, because the operation of the statute gives the ITA determination and announcement of an investigation an apparent impact on the larger investigation, it must be done with a recognition of that impact and with a deference to the needs of the entire proceeding.

As regards the EC, this petition alleged the elements necessary for the imposition of countervailing duties and contained sufficient supporting information. No one argues otherwise and, in fact, the ITA "investigation" of EC subsidies is an acknowledgement that the petition was sufficient. Nevertheless, defendants claim that the ITA had discretion to determine whether the EC should be considered a country for the purpose of countervailing duty investigations. This arises from a misunderstanding of a statutory definition whose primary purpose, ironically, was to make it clear that customs unions are subject to the countervailing duty law in all respects. Section 771(3) of the Act (19 U.S.C. § 1677(3)) defines the term "country" for the purposes of countervailing duty proceedings as follows:

The term "country" means a foreign country, a political subdivision, dependent territory, or possession of a foreign country, and, except for the purpose of antidumping proceedings, may include an association of two or more foreign countries, political subdivisions, dependent territories, or possessions of countries into a customs union

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