Connors Steel Co. v. United States, Court No. 80-3-00478.

• Decision Date: 24 November 1981
• Docket Number: Court No. 80-3-00478.
• Citation: 527 F. Supp. 350,2 CIT 242
• Parties: CONNORS STEEL COMPANY, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

527 F. Supp. 350

2 CIT 242

CONNORS STEEL COMPANY, Plaintiff, v. The UNITED STATES, Defendant.

Court No. 80-3-00478.

United States Court of International Trade.

November 24, 1981.

COPYRIGHT MATERIAL OMITTED

Harris, Berg & Creskoff, Washington, D. C. (R. Christian Berg, Washington, D. C., on brief), for plaintiff.

J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Branch Director, Commercial Litigation Branch, New York City (Velta A. Melnbrencis, on brief), for defendant.

Graubard Moskovitz, McGoldrick, Dannet & Horowitz, New York City (Michael H. Greenberg and Charles L. Rosenzweig, New York City, on brief), for amicus curiae Cockerill-Sambre, S. A., and Cockerill-Stinnes Steel Corp.

WATSON, Judge:

The plaintiff, Connors Steel Corporation (Connors), brought this action under 19 U.S.C. § 1516(d) (1976) to contest a final determination made by the Secretary of the Treasury in September of 1979¹ that certain steel I-beams from Belgium were not being sold here at less than fair value. That determination ended an investigation under the Antidumping Act of 1921, as amended, 19 U.S.C. § 160, et seq., (1976). The investigation had begun in February of 1979, following a petition by Connors alleging that importations of steel beams were being sold in the United States at less than fair value and were causing injury to a United States industry. The subject of the petition and the investigation were steel I-beams manufactured in Belgium by Cockerill-Ougree-Providence et Esperance-Longdoy, S.A. (now Cockerill-Sambre, S.A.).²

The matter is now before the Court for decision on cross motions for judgment on the administrative record under Rule 56.1 of the Rules of the Court. An amicus curiae brief has been filed by the manufacturer of the beams, Cockerill-Sambre S.A. (Cockerill) and the importer, Cockerill-Stinnes Steel Corporation (CSSC).

The investigation of whether this class of articles was being sold here at less than fair value was the first part of the process of determining whether antidumping duties should be assessed. If sales at less than fair value had been found, the matter would have gone to the International Trade Commission for a determination of whether the relevant industry had been injured. 19 U.S.C. § 160(a) (1976).³

The Secretary's conclusion was based on a finding that the sale price to the United States was not less than the price in the Belgian home market for home consumption. Reference to the home market sales in Belgium for vindication of the fairness of the sale price to the United States was based on the following sequence of provisions in the statute: 19 U.S.C. § 160(c)(1) (1976)⁴ mandated an investigation of whether the sales to the United States were at less than fair value. 19 U.S.C. § 160(b)(1)(A) (1976)⁵ stated the obligation to determine whether the price was less than foreign market value. This in turn led to 19 U.S.C. § 164(a) (1976)⁶ which, broadly speaking, defines foreign market value as the price for home consumption.

Plaintiff argues that various aspects of the decision were not supported by substantial evidence and were not done in accordance with the law.⁷ It began by attacking the determination of home market sales in Belgium on four grounds: first, for an alleged failure to investigate whether the sales were actually for home consumption; second, for allegedly not being directed at sales which were on a "level of trade" comparable to the sales to the U.S.; third, for including sales to a related company; and fourth, for being so small in number as to be inadequate for purposes of comparison.

The Court finds no deficiency in these four aspects of the administrative determination. The responses of Cockerill and the destinations shown on some of the supporting invoices were sufficient to substantiate the finding that sales of these articles were made for home consumption in the Belgian market as required by 19 U.S.C. § 164(a). In the absence of any contrary or inconsistent information there was no obligation to probe more deeply on this point.

Secondly, the necessity to investigate whether a difference in "levels of trade" existed between the Belgian sales and the U.S. sales did not arise. The statute requires that the home market sales used for comparison must be in the usual wholesale quantity and in the ordinary course of trade. 19 U.S.C. § 164(a) (1976). The response from Cockerill that its prices in the two markets did not vary according to class of purchaser and that it did not offer quantity discounts was sufficient, absent any conflicting information, to make further investigation on this point unnecessary. The mere fact that average quantities were lower in the sales in Belgium does not contradict a finding that the sales were comparable under the statute.

Thirdly, as to the fact that 50 percent of the home market sales were to a related company, it need only be stated that the law does not remove sales to a related purchaser from consideration as part of home market sales. Common sense, of course, would indicate that strictly by themselves sales to a related purchaser would be a questionable guarantee of a fair home market price. However, if they are made at the same price as sales to independent purchasers, there is no reason why they cannot form part of the total quantity of home market sales used as a benchmark.

Fourthly, in the abstract there is no defect in the amount of sales relied on by the Secretary. The total sales for home consumption amounted to 6 percent of sales for export to countries other than the United States. Although this percentage is at the lower end of the scale, the Court cannot say that it would be an inadequate basis for comparison as a matter of law under 19 U.S.C. § 164(a) (1976). However, these are small percentages and the relative narrowness of the base they provide means that the possibility of a need for further investigation could not be foreclosed. When it is realized that the entire calculation ultimately depends on the 3 percent of sales represented by sales to independent parties, the fragility of the comparison is troubling, if not defective.

This brings the Court to plaintiff's most effective argument. Plaintiff attacks the Secretary's failure to investigate whether home market sales were below cost of production as provided for in 19 U.S.C. § 164(b) (1976). That provision reads as follows:

(b) Whenever the Secretary has reasonable grounds to believe or suspect that sales in the home market of the country of exportation, or, as appropriate, to countries other than the United States, have been made at prices which represent less than the cost of producing the merchandise in question, he shall determine whether, in fact, such sales were made at less than the cost of producing the merchandise. If the Secretary determines that sales made at less than cost of production (1) have been made over an extended period of time and in substantial quantities, and (2) are not at prices which permit recovery of all costs within a reasonable period of time in the normal course of trade, such sales shall be disregarded in the determination of foreign market value. Whenever sales are disregarded by virtue of having been made at less than the cost of production and the remaining sales, made at not less than cost of production, are determined to be inadequate as a basis for the determination of foreign market value, the Secretary shall determine that no foreign market value exists and employ the constructed value of the merchandise in question.

Although the Court agrees that the duty described in this provision did not arise here at the very beginning of the investigation, at a later stage it became unavoidable. The original petition focused on the overall necessity for a "less than fair value" determination. As will be further discussed, it contained some information which could have justified investigative suspicion of Cockerill's home market sale price. However, at that stage, the Court does not believe it is reasonable to posit a general duty of the agency to independently explore all the implications of the information supplied.

The sequence of events which gave rise to the duty to extend the investigation to Cockerill's cost of production occurred after the June 13, 1979 tentative determination that sales to the United States had not been made at less than fair value. 44 Fed.Reg. 33997 (1979).

Approximately 51 days before the date of the final decision, plaintiff for the first time called the attention of the agency to the necessity for a cost of production determination. In a pre-conference brief filed on July 24, 1979 it argued that the Customs Service had erred in not going beyond its examination of sales in Belgium to investigate the possibility that those sales were at less than cost of production. Document 80 in the Public File It cited in support its allegations that Cockerill's production was subsidized and it supplied information tending to show that Cockerill's sale price was below Connors' cost of production. At an administrative hearing on July 31, 1979 Connors added as support for the necessity of a cost of production determination an argument based on a constructed trigger price which it had included in its original petition. It reasoned that if Cockerill's sale price was below a constructed trigger price it was presumptively below its cost of production.

The final determination of the Secretary addressed these matters as follows:

Counsel for petitioner has claimed that Customs should have investigated the possibility of sales below the cost of production within the meaning of section 205(b) of the Act 19 U.S.C. § 164(b), based, inter alia, upon petitioner's allegation of subsidization from the Government of Belgium and the European Communities. An allegation of subsidization does not adequately place in issue sales below the cost of production under the Antidumping Act; to the contrary, to the extent a

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