USX Corp. v. US

• Decision Date: 09 February 1987
• Docket Number: Court No. 85-03-00325.
• Parties: USX CORPORATION, f/k/a United States Steel Corporation, Plaintiff, v. The UNITED STATES and United States International Trade Commission, Defendants, and Propulsora Siderurgica, S.A.I.C., Defendant-Intervenor.
• Court: U.S. Court of International Trade

655 F. Supp. 487

11 CIT 82

USX CORPORATION, f/k/a United States Steel Corporation, Plaintiff, v. The UNITED STATES and United States International Trade Commission, Defendants and Propulsora Siderurgica, S.A.I.C., Defendant-Intervenor.

Court No. 85-03-00325.

United States Court of International Trade.

February 9, 1987.

U.S. Steel Corp. John J. Mangan, J. Michael Jarboe, Peter J. Koening and Robin K. Capozzi, Pittsburgh, Pa., for plaintiff.

Lyn M. Schlitt, Washington, D.C., General Counsel, Michael P. Mabile, Asst. General Counsel, Tallahassee, Fla., and Carol McCue Veratti, U.S. Intern. Trade Com'n, for defendants.

Mudge Rose Guthrie Alexander & Ferdon, David P. Houlihan, Jeffrey S. Neeley, Ann H. Price and Kevin B. Dwyer, Washington, D.C., for defendant-intervenor.

OPINION AND ORDER

RESTANI, Judge:

Plaintiff initiated this action to challenge a final negative determination of the International Trade Commission (ITC) regarding cold-rolled carbon steel plates and sheets from Argentina.¹ After finding that the U.S. cold-rolled carbon steel plate and sheet industry continues to be materially injured, ITC concluded that such injury was not by reason of Less Than Fair Value (LTFV) imports from Argentina. ITC also determined that LTFV imports from Argentina presented no threat of material injury. Plaintiff argues that these findings were in error for several reasons: 1) ITC failed to evaluate the significance of the volume of LTFV imports from Argentina; 2) ITC improperly based its negative determination on a finding of no confirmed instances of lost sales or revenue; 3) ITC failed to cumulate Argentine imports with those from several other countries; and 4) ITC's negative determination with respect to threat of material injury was based on stale data regarding capacity utilization in the Argentine steel industry. These contentions are addressed below, following a brief discussion of the factual background of the case.

Facts

Plaintiff filed its administrative petition with the United States Department of Commerce, International Trade Administration (ITA) and ITC on February 10, 1984. In its petition plaintiff alleged that cold-rolled sheet from Argentina was being sold, or was likely to be sold, in the United States at LTFV and, further, that such imports were a cause of material injury, or a threat thereof, to the corresponding domestic industry.

Following an affirmative preliminary material injury determination by ITC on March 26, 1984, ITA issued a preliminary determination that Argentine cold-rolled sheet was, or was likely to be sold in the United States at LTFV.² As a result of its determination, ITA ordered a suspension of liquidation with respect to all cold-rolled sheet from Argentina entered, or withdrawn from warehouse for consumption, on or after July 25, 1984.

In its final determination, ITA found that 100% of Argentine cold-rolled sheet was being sold in the United States at less than fair value. Weighted average dumping margins were 242.5% and 30.3% for two specific producers, and 122.3% for all others. 49 Fed.Reg. 48588, 48591 (1984). ITC subsequently initiated its final investigation, which disclosed the following facts.

The volume of Argentine cold-rolled steel imports rose constantly during the period under review, from zero tons in 1981, to 130,000 tons in 1983. During the first nine months of 1984, when liquidation of these imports was suspended, 116,000 tons were imported, which represented a 26% increase over the volume imported during the first three quarters of 1983. Following the initial introduction of Argentine cold-rolled steel into the U.S. market in 1982, levels of market penetration by Argentine imports remained fairly constant in the years reviewed by the investigation, fluctuating between .8% and .9% of the U.S. market.

The U.S. cold-rolled steel industry was mired in a recession when Argentine imports first entered the market in 1982. That year nine U.S. firms reported operating losses and the U.S. industry experienced an overall loss of $371 million. By the end of the investigatory period in 1984, the industry had shown some improvement. Shipments, capacity utilization, and employee hours had all increased by roughly 25% as compared with the industry's most depressed period in 1982. Prices of several products examined by ITC also showed increases of 10-12% from the deepest stages of the industry recession to September 1984.

Despite these gains, in September 1984 the industry still lagged behind 1981 levels in shipments and employee hours, and showed an overall loss of $43 million. Prices of domestic steel products, though higher than prices during the industry recession, were only slightly higher than prerecession prices in 1982. These facts led ITC to conclude that the U.S. industry continued to be materially injured, but not by reason of LTFV imports from Argentina.

Determination of No Injury by Reason of LTFV Imports from Argentina

In reviewing this determination, the court must grant a proper level of deference to ITC. The views of this court may not be freely substituted for those of ITC; nor may reversal be predicated solely on an interpretation of the facts that seems more reasonable. Only if ITC's determination is not supported by substantial evidence, or if it was reached in a manner contrary to law, may it be overturned.

ITC is required to consider three factors when examining the causal connection between imports and material injury: 1) the volume of imports, 2) the effect of imports on prices of like domestic products, and 3) the impact of imports on domestic producers of like products. 19 U.S.C. § 1677(7)(B) (1982). ITC presented its brief discussion of these factors as follows. First, ITC noted that although imports from Argentina rose consistently from 1981 to 1984, only "minimal market penetration" was achieved throughout the period of the investigation. ITC Determination at 6. Second, ITC found that while Argentine imports undersold domestic cold-rolled sheets by margins ranging from 5% to 14%, it could not confirm any actual instances of lost sales and revenue due to Argentine imports. Id.

In light of the facts of this case, and relevant administrative and judicial precedent, this analysis must be rejected. Under the "substantial evidence" standard of review, the court must determine whether ITC's conclusions are supported by the evidence on the record as a whole. SSIH Equip. S.A. v. United States Int'l. Trade Comm'n., 718 F.2d 365, 382 (Fed.Cir.1983) (additional comments of Circuit Judge Nies, quoting from Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 488, 71 S.Ct. 456, 459, 464, 95 L.Ed. 456 (1951)). ITC may not rely upon isolated tidbits of data which suggest a result contrary to the clear weight of the evidence. In this case, the reasons presented by a majority of the commissioners, without further elaboration, cannot reasonably be said to support the result reached.

In its discussion of import volume, ITC focused exclusively on the level of market penetration achieved by Argentine imports. ITC's analysis of market penetration data consisted solely of the statement that levels of market penetration remained low and stable.³ Without discussing the significance of this trend or its relationship to other facts uncovered in the investigation, ITC then stated its bald conclusion that the U.S. industry had not been materially injured by reason of Argentine imports. The court has noted that "Congress has not only directed ITC to state its determinations but has also required the agency to explain those determinations...." SCM Corporation v. United States, 2 CIT 1, 3, 519 F.Supp. 911, 913 (1981) (emphasis in original) (quoting SCM Corporation v. United States, 84 Cust.Ct. 227, 242, 487 F.Supp. 96, 108 (1980)). In this case, ITC has failed to articulate any rational connection between low levels of market penetration by Argentine imports and its final negative determination. Under these circumstances, a remand is the proper remedy. See 2 CIT at 4, 519 F.Supp. at 913.

Congress, this court, and ITC itself have repeatedly recognized that it is the significance of a quantity of imports, and not absolute volume alone, that must guide ITC's analysis under section 1677(7). See Atlantic Sugar, Ltd. v. United States, 2 CIT 18, 23, 519 F.Supp. 916, 921-22 (1981). This view is reflected in the legislative history of the Trade Agreements Act of 1979, in which Congress acknowledged:

For one industry, an apparently small volume of imports may have a significant impact on the market; for another, the same volume might not be significant.

H.R.Rep. 317, 96th Cong., 1st Sess. 46 (1979).

In the past, ITC has recognized that import volume alone cannot be used to gauge accurately the effects of imports in the cold-rolled steel industry. ITC noted that cold-rolled steel is inherently price sensitive and fungible, and stated that "the impact of seemingly small import volumes ... is magnified in the marketplace." Certain Carbon Steel Products from Spain, USITC Pub. No. 1331, at 16-17 (1982). In the case cited above ITC based its affirmative finding on a level of market penetration of 0.5%, roughly one-half the level involved in this case.

In its brief, ITC has attempted to distinguish the Spanish steel case by arguing that industry conditions were far more depressed at the time that decision was rendered. See discussion of industry conditions, supra page 4. But this argument miscasts the real basis of the Spanish steel decision: the inherent fungibility and price sensitivity of the product. These factors make small quantities of imports particularly significant in the U.S. market. Although the general health of the U.S. industry may be one possible consideration in assessing the effect of a small volume of imports, it was not cited as a significant consideration in arriving at this negative determination. Furthermore, the mere fact that an industry has...