LOCAL 167, ETC. v. Marshall, 80-1138.

Citation643 F.2d 26
Decision Date05 March 1981
Docket NumberNo. 80-1138.,80-1138.
PartiesLOCAL 167, INTERNATIONAL MOLDERS AND ALLIED WORKERS' UNION, AFL-CIO, On Behalf of a GROUP OF AGGRIEVED WORKERS UNDER 19 U.S.C. § 2322, Petitioner, v. F. Ray MARSHALL, Secretary, United States Department of Labor, Respondent.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Elizabeth A. Kovalcik, Boston, Mass., with whom Angoff, Goldman, Manning, Pyle & Wanger, P.C., Boston, Mass., was on brief, for petitioner.

James A. Greene, Atty., U. S. Dept. of Labor, Washington, D. C., with whom Carin Ann Clauss, Sol. of Labor, Ronald G. Whiting, Associate Sol. and John R. Garson, Washington, D. C., for International Affairs, were on brief, for respondent.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

In November, 1979 the Crane Company closed the foundry it had operated since 1942 at Indian Orchard, Massachusetts. The foundry had produced steel castings used to make steam and water valves. Believing that the closing was due to import competition, representatives of the foundry workers applied to the Secretary of Labor for a certification of group eligibility to apply for benefits under the trade adjustment assistance provisions of the Trade Act of 1974, 19 U.S.C. §§ 2271-2322. The Secretary determined, after investigation, that increased imports had not "contributed importantly" to the closing of the foundry and therefore denied certification. The foundry workers, through their collective bargaining representative, Local 167, International Molders and Allied Workers' Union, AFL-CIO, petition for review of that decision, claiming that it was based on faulty methodology and questionable data. We conclude that the Secretary's decision is supported by substantial evidence and therefore affirm.

Under the worker adjustment assistance program, workers injured by import competition may receive benefits such as unemployment compensation, job search and relocation allowances, training, and other employment services. See generally Fortin v. Marshall, 608 F.2d 525, 525-26 (1st Cir. 1979); Usery v. Whitin Machine Works, Inc., 554 F.2d 498, 500 (1st Cir. 1977). To apply for benefits, a group of workers must first obtain a certification of group eligibility from the Secretary of Labor. The Secretary is required to certify a group of workers if he determines that three statutory criteria are met. We are concerned here only with the Secretary's negative determination of the third criterion:1

"that increases of imports of articles like or directly competitive with articles produced by such workers' firm or an appropriate subdivision thereof contributed importantly to such total or partial separation, or threat thereof, and to such decline in sales or production." 19 U.S.C. § 2272(3).

The key phrase "contributed importantly" is defined in § 2272 to mean "a cause which is important but not necessarily more important than any other cause."

Local 167 attacks both the methodology and the data relied upon by the Secretary to evaluate whether increasing imports "contributed importantly" to the foundry closing. First, petitioner objects to the Secretary's focus upon Crane customers who decreased their purchases of Crane products and increased their purchases of imports. Petitioner argues that this approach fails to detect more subtle forms of import substitution, as would occur if a customer decreased both imports and domestic purchases, while increasing the import share of its reduced total purchase requirements. Petitioner also contends that the data relied upon by the Secretary was incomplete because it was derived from a survey of fewer than all of Crane's customers, and unreliable because it was based, in part, upon the unverified representations of the Crane Company. Before considering these points, we first describe the Secretary's investigation and its results.

The OTAA Investigation

The Office of Trade Adjustment Assistance OTAA is the body within the Department of Labor charged with responsibility for investigating petitions for certification of group eligibility for worker adjustment assistance. 29 C.F.R. § 90.12 (1980). The investigation in this case occurred in two distinct phases. After receiving the foundry workers' petition, the OTAA published a Notice of Investigation, 44 Fed.Reg. 62378 (1979), inviting requests by interested parties for a public hearing. When no hearing request was received, the OTAA proceeded to evaluate the petition based upon information supplied by the Crane Company and available trade data. In this first phase of its investigation the OTAA limited itself to the market for steel castings — the product made at the Indian Orchard foundry. The OTAA concluded that steel castings imports had not "contributed importantly" to the closing of the foundry and, on January 4, 1980, published a Notice of Negative Determination to that effect. 45 Fed.Reg. 1164 (1980).

Several months later, counsel for Local 167 sought administrative reconsideration of this decision. The OTAA deemed the request for reconsideration untimely, but agreed to reopen its original investigation to evaluate import competition in the market for valves, since the first phase of the investigation had revealed that most of the steel castings produced at the Indian Orchard foundry were used to manufacture valves at the Crane Company's Indian Orchard machine shop. The second phase of the investigation treated the foundry and machine shop as an integrated unit, and thus the "appropriate subdivision" of the firm for certification purposes. 19 U.S.C. § 2272. After examining valve import competition, the OTAA concluded that neither valve nor casting imports had contributed importantly to the foundry closing. A final Notice of Negative Determination was published in the Federal Register on May 23, 1980, 45 Fed.Reg. 35043 (1980).

In both phases of its investigation the OTAA employed a two-stage analysis, looking at the impact of import competition on the industry as a whole and on the individual firm. The object of the first stage is to determine possible indirect effects of import competition on the firm by examining the extent of import penetration industry-wide, as well as the recent trend in import purchases, both absolutely, in comparison to import levels in past years, and relatively, in comparison to domestic production and consumption. The second stage of the investigation is designed to determine whether customers of the firm in question have reduced their purchases of domestic products while increasing their purchases of imports. The OTAA gathers this information by submitting a questionnaire to a sample of firm customers.

The combined OTAA investigation reached the following results with respect to steel castings and valves.

A. Steel Castings

Based on the available data, the OTAA study showed that steel casting imports increased steadily in recent years both absolutely and relative to domestic shipments. Measured in absolute terms, imports increased in value 279.6 percent from 1975 to 1979. Part of this increase was due to inflation, but imports had also captured an increasing share of the American market; the ratio of imports to domestic shipments grew 155.5 percent over the same period. In the years immediately preceding the foundry closing, the import ratio decreased slightly from 1977 to 1978,2 but then almost doubled from 1978 to 1979. The OTAA found these increases significant, and perhaps even understated by the data, but discounted their potential impact since the level of import penetration was minimal, never amounting to more than 2.3 percent of domestic shipments.

The second phase of the investigation, concentrating on the Indian Orchard foundry, was simplified considerably by the OTAA's discovery that 90 percent of the foundry's output had gone to other facilities operated by the Crane Company. The OTAA accepted the statement of a representative of the Crane Company that it would replace the production of the Indian Orchard foundry from domestic sources, with the exception of one facility whose purchases amounted to less than one percent of the Indian Orchard foundry's annual output. Based on this information, the OTAA concluded, without conducting a customer survey, that there was no significant substitution of imported castings among foundry customers.

B. Valves

The trend in purchases of imported valves found by the OTAA roughly tracked that of castings: a small but increasing degree of import penetration. The study showed that valve imports increased in value 112.5 percent from 1975-79, while the ratio of imports to domestic shipments increased 41.6 percent over the same period; yet the ratio of imports to domestic shipments never exceeded 5.1 percent. Other factors indicated that the valve industry had not suffered from import competition. The OTAA study showed that, unlike the situation in the casting industry, employment in the valve industry had increased annually since 1975. The study also revealed that the United States had enjoyed a substantial balance of trade in valves each year since 1976, exporting approximately twice the amount by value that it imported.

To determine if increasing imports of valves had contributed to reduced demand for castings at the Indian Orchard machine shop, the OTAA surveyed a sample of four purchasers of valves from the machine shop. Together these customers accounted for 49 percent of valve sales in 1978 and 68 percent in 1979. The OTAA examined the customers' purchases over two sets of periods, comparing 1979 to 1978 and the first two months of 1980 to the same period in 1979. Over the first period it found that three of the four customers had increased valve purchases from Indian Orchard in 1979, compared to 1978, while maintaining or decreasing their purchases of imports. The fourth customer decreased purchases from Indian Orchard from 1978 to 1979, but, so...

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