National Steel Corp. v. US, Slip Op. 96-14. Court No. 93-09-00616-AD.

• Decision Date: 11 January 1996
• Docket Number: Slip Op. 96-14. Court No. 93-09-00616-AD.
• Citation: 20 CIT 100,913 F. Supp. 593
• Parties: NATIONAL STEEL CORPORATION, AK Steel Corporation, Bethlehem Steel Corporation, Gulf States Steel, Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Company, Inc., Sharon Steel Corporation, U.S. Steel Group a Unit of USX Corporation, WCI Steel, Inc., Plaintiffs, v. UNITED STATES, Defendant, Hoogovens Groep B.V. and N.V.W. (U.S.A.), Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

913 F. Supp. 593

20 CIT 100

NATIONAL STEEL CORPORATION, AK Steel Corporation, Bethlehem Steel Corporation, Gulf States Steel, Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Company, Inc., Sharon Steel Corporation, U.S. Steel Group a Unit of USX Corporation, WCI Steel, Inc., Plaintiffs, v. UNITED STATES, Defendant Hoogovens Groep B.V. and N.V.W. (U.S.A.), Inc., Defendant-Intervenors.

Slip Op. 96-14. Court No. 93-09-00616-AD.

United States Court of International Trade.

January 11, 1996.

Skadden, Arps, Slate, Meagher & Flom, Washington, DC (Robert E. Lighthizer, John J. Mangan, and Mark Del Bianco) for plaintiffs.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis), Edward Reisman, Attorney-Advisor, Office of the Chief Counsel for Import Administration, United States Department of Commerce, Washington, DC, of counsel, for defendant.

Powell, Goldstein, Frazer & Murphy, Washington, DC (Peter O. Suchman, Neil R. Ellis, and Niall P. Meagher) for defendant-intervenors.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

In this action, National Steel Corporation, AK Steel Corporation, Bethlehem Steel Corporation, Gulf States Steel, Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Company, Inc., Sharon Steel Corporation, U.S. Steel Group A Unit of USX Corporation, and WCI Steel, Inc. (Domestic Producers) and Hoogovens Groep B.V. and N.V.W. (U.S.A.), Inc. (Hoogovens), contest the final results of the remand determination filed by Commerce pursuant to this court's order in National Steel Corp. v. United States, 18 CIT ___, 870 F.Supp. 1130 (1994) hereinafter National Steel. The court remanded Commerce's final determination with respect to three issues.

The court directed Commerce to: (1) recalculate the adjustment to United States Price (USP) for the value added tax (VAT) not collected or rebated due to exportation; (2) articulate standards for determining the highest non-aberrant margin used as best information available (BIA); and (3) select a BIA margin indicative of the sales made by Hoogovens. Id. at ___, 870 F.Supp. at 1137-39. The parties challenge Commerce's remand determination. The court has jurisdiction over these issues pursuant to 19 U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1988).

Background

In National Steel, the court reviewed challenges to Commerce's investigation of cold-rolled carbon steel flat products from the Netherlands. See Final Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands, 58 Fed.Reg. 37,199, amended by Antidumping Duty Order, 58 Fed.Reg. 44,172 (Dep't Comm.1993) (determination reviewed) hereinafter Final Determination. Among other issues, the court reviewed Commerce's selection and application of the highest non-aberrant margin as BIA for a substantial number of omitted transactions within Exporter Sales Price data provided by Hoogovens' U.S. affiliate. The court upheld Commerce's selection of the highest non-aberrant margin as BIA, given substantial omissions in the ESP data, and Hoogovens' failure to meet statutory deadlines in correcting the deficiencies. The court found, however, that Commerce's selected margin appeared to be aberrant.

Commerce failed to provide an explanation of the term non-aberrant margin, or any method for distinguishing an aberrant margin from a non-aberrant one. Given the minuscule percentage of sales that had higher margins, and their insignificant proportion by volume of total sales, the court found that Commerce's selected margin likely would be aberrant. Accordingly, the court directed Commerce to provide standards for judging the highest non-aberrant margin, and to select a BIA margin indicative of Hoogovens' sales.

Further, the court considered Commerce's adjustment to the United States Price (USP) to account for the value-added tax (VAT). Commerce sought to eliminate the false dumping margin created when adjusting the VAT by applying the tax rate to the USP, rather than adding to the USP the actual amount of the tax imposed. The court, following Federal-Mogul Corp. v. United States, 17 CIT 1093, 834 F.Supp. 1391 (1993), found Commerce's tax-neutral methodology contrary to law, and remanded the tax adjustment to Commerce for recalculation.

Discussion

This court shall uphold Commerce's final determination in an antidumping duty investigation unless that determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1994). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)).

I. Defining Highest Non-aberrant Margin

Upon remand, Commerce followed two principles in its selection of the highest non-aberrant margin. First, Commerce sought a margin sufficiently adverse to be consistent with the statutory purposes of the BIA rule—to induce respondents to provide Commerce with complete and accurate information in a timely fashion. Second, Commerce sought a margin indicative of Hoogovens' sales. Commerce reasoned the BIA rate should be based on transactions involving substantial commercial quantities. Commerce selected a margin in which three percent of the transactions by volume—which constituted a significant number of transactions — had calculated margins with higher rates than the BIA rate. According to Commerce, therefore, these transactions did not represent a minuscule proportion of Hoogovens' sales.

Domestic Producers argue this methodology fails to properly implement the court's order. Domestic Producers contend Commerce has failed to provide a sufficient explanation as to the basis for its selected margin, or select a new highest non-aberrant margin indicative of Hoogovens' sales.

Domestic Producers claim whether a sale is non-aberrant ought to be determined by whether the sale on which the margin is based is representative of the respondent's customary selling practices and is made in normal commercial quantities. At no point, Domestic Producers contend, did the Court hold that a margin would be aberrant if there were not a substantial quantity of sales (either by tonnage or by number) with higher margins. (Domestic Steel Producers' Comments on Remand Det. of the Dep't of Comm., at 3.) hereinafter Domestics' Remand Br. Such a holding, Domestic Producers contend, would not have permitted selection of the highest non-aberrant margin.

According to Domestic Producers, Commerce defined an aberrant margin solely by whether sales with higher margins comprised only a minuscule quantity of Hoogovens' overall sales. Domestic Producers claim this is a bright-line test justifying a remand of Commerce's determination. Further, Domestic Producers also contend that Commerce improperly looked to the aberrance of individual margins in choosing the highest non-aberrant margin, rather than basing the highest non-aberrant margin upon Hoogovens' sales. (Domestics' Remand Br. at 5-6.)

Domestic Producers are in error. Commerce has avoided a bright line test. According to Commerce, "we have determined that the highest, non-aberrant margin should be established on a case-by-case basis," guided by the two principles noted previously. Redetermination on Remand, Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products and Certain Cold-Rolled Carbon Steel Flat Products From the Netherlands No. A-421-803/804 at 9 (Dep't Comm.1995) hereinafter Remand Redetermination. Commerce has the discretion to select the appropriate methodology for determining and selecting BIA, so long as that methodology is reasonable. Commerce's actions may be unreasonable if "the agency ... has ... rejected low margin information in favor of high margin information that was demonstrably less probative of current conditions." Rhone Poulenc, Inc. v. United States, 8 Fed.Cir. (T) 61, 67, 899 F.2d 1185, 1190 (1990).

Both the statute, 19 U.S.C. § 1677e(c) (1988), and the implementing regulation, 19 C.F.R. 353.37 (1995), define in what circumstances Commerce must resort to BIA. These provisions, however, give few guidelines as to what constitutes the appropriate BIA. Krupp Stahl A.G. v. United States, 17 CIT 450, 453, 822 F.Supp. 789, 792 (1993).

Commerce's two guidelines for selecting the highest non-aberrant margin, that the margin must be sufficiently adverse and that the margin must be indicative of current conditions, are reasonable. Commerce's selected margin must now have a rational relationship to the foreign manufacturer's sales. By demonstrating this relationship, Commerce can provide the link to respondent's customary selling practices. In this manner, Commerce's guidelines meet the basic goals of the BIA rule: to encourage compliance while determining current margins as accurately as possible, Rhone Poulenc, 8 Fed.Cir. (T) at 67, 899 F.2d at 1191 (1990); see also D & L Supply Co. v. United States, 19 CIT ___, 888 F.Supp. 1191, 1194-95 (1995). Accordingly, the court accepts Commerce's criteria for what they call the highest nonaberrant margin.

II. Selection of the Highest Non-aberrant Margin

Commerce selected a margin of 44.89 percent as the highest non-aberrant margin as BIA for certain U.S. sales Hoogovens had failed to report in the original investigation. Commerce had originally selected a margin of 157.51 percent as BIA in its Final Determination. National Steel, 18 CIT at ___, 870 F.Supp....