Kern-Liebers USA, Inc. v. US

• Decision Date: 23 March 1995
• Docket Number: Slip Op. 95-50. Court No. 93-09-00551-AD.
• Citation: 19 CIT 393,881 F. Supp. 618
• Parties: KERN-LIEBERS USA, INC., Plaintiff, v. The UNITED STATES, Defendant, and AK Steel Corporation, Bethlehem Steel Corporation, Gulf States Steel Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Co., Inc., National Steel Corporation, Sharon Steel Corporation, U.S. Steel Group A Unit of USX Corporation, and WCI Steel, Inc., Intervenor-Defendants.
• Court: U.S. Court of International Trade

881 F. Supp. 618

19 CIT 393

KERN-LIEBERS USA, INC., Plaintiff, v. The UNITED STATES, Defendant and AK Steel Corporation, Bethlehem Steel Corporation, Gulf States Steel Inc. of Alabama, Inland Steel Industries, Inc., LTV Steel Co., Inc., National Steel Corporation, Sharon Steel Corporation, U.S. Steel Group A Unit of USX Corporation, and WCI Steel, Inc., Intervenor-Defendants.

Slip Op. 95-50. Court No. 93-09-00551-AD.

United States Court of International Trade.

March 23, 1995.

Porter, Wright, Morris & Arthur, Washington, DC (Leslie Alan Glick), for plaintiff.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, and Velta A. Melnbrencis, Asst. Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice; and

Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce (Jeffrey C. Lowe), Washington, DC, of counsel, for defendant.

Skadden, Arps, Slate, Meagher & Flom, Washington, DC (Robert E. Lighthizer and John J. Mangan) and Dewey Ballantine, Washington, DC (Alan Wm. Wolff, Michael H. Stein, Bradford L. Ward and Guy C. Smith), for intervenor-defendants.

Memorandum

AQUILINO, Judge:

The plaintiff importer of merchandise described as "certain cold-rolled seat belt retractor spring steel with a specific chemical composition, restricted inclusion levels, and a particular microstructure and tensile strength"¹ complains of the refusal of the International Trade Administration, U.S. Department of Commerce ("ITA") to exclude such imported material from the scope of its final determination of sales of certain cold-rolled steel products from Germany at less than fair value, 58 Fed.Reg. 37,136 (July 9, 1993), amended, 58 Fed.Reg. 44,170 (Aug. 19, 1993).

I

The record of the proceedings before the ITA indicates that an identical product is not manufactured domestically, nor did the underlying petition of the domestic industry focus on the imported product per se. Whereupon the respondent importer requested exclusion from the ensuing investigation and affirmative determination based on the following grounds, among others:

Seat belt retractor steel springs are a unique product because the steel produced must meet the rigid standards of the National Highway Transportation Safety Administration. Federal Motor Vehicle Safety Specification 209 outlines specifications for seat belt retractor springs to ensure motor vehicle safety. Kern-Liebers is the primary source of these products in the United States, and no domestic steel producer can uniformly meet the specifications imposed by the U.S. Government or supply the quantities needed by Kern-Liebers....

... The U.S. produced hot band steel product does not meet the specifications for maximum inclusion levels, the standard for durability of seat belt retractor springs, and cannot be used in cold rolling the product.

* * * * * *

Seat belt retractor steel used for producing seat belt retractor springs is a different "class or kind" of merchandise than the products produced by petitioners. The specifications for Kern-Lieber's sic product are distinct from that manufactured by petitioners. The expectations of Kern-Lieber's sic customers for these products are extremely high. Whereas the steel described in the petition is distributed to wholesalers and distributors, seat belt retractor steel is imported or purchased directly from the producer and converted to springs through a manufacturing process by Kern-Liebers and sold directly to the end-users. Finally, the highly specialized use of the steel manufactured by Kern-Liebers differs from the use of the steel that is manufactured by petitioners.²

In denying exclusion, the ITA stated its position generally as to all the claims regarding scope, including that now at bar, to wit:

... All of the products listed ... are flat-rolled and clearly fall within the chemical (i.e., carbon steel) ... characteristics indicated in the scope description. Furthermore, unless specifically excluded, all ... cold-rolled ... products meeting those criteria are included within the scope regardless of any other technical properties which the steel may possess. While all of these products possess some physical characteristics which make them different from other steel products, none of those differences rise to the level of class or kind distinctions and only reflect relatively minor variations within the overall ... cold-rolled ... classes or kinds. Were the Department to subdivide the scope to reflect every particular type of carbon steel flat product produced, we would have been faced with creating an absurdly large or even infinite number of classes or kinds....

Regarding the other Diversified Products criteria, the ultimate uses and purchaser expectations of the products listed ... are similar to those of other products within their respective classes or kinds .... The cold-rolled products in the list ... will be used in applications in which surface characteristics and narrower tolerances are important, and consumers will expect the product to possess the qualities of a steel product which has been flat-rolled at ambient temperatures.... Carbon steel flat products in the three classes or kinds are generally sold both directly to end users as well as to service centers; that the products ... may be more likely to be sold directly to end users does not differentiate them from other products in those classes or kinds. Lastly, products in the ... cold-rolled ... classes or kinds are all advertised in the same manner, that is, in producer catalogs and other promotional literature. Certain products ... may be developed by the manufacturer in cooperation with one or more end users and might not necessarily be included in such advertising. However, this possible difference in the method of advertising does not support the assertion that the products listed ... constitute separate classes or kinds.

Regarding like product issues, in the absence of persuasive evidence that the like products and domestic industries identified by the ITC are inappropriate to follow for purposes of standing, it is the Department's usual practice to defer to the like product descriptions developed by the ITC.... In these investigations, the like product descriptions written by the ITC in its preliminary injury determinations are equivalent to the Department's scope definitions. Thus, we believe that the products listed ... do not constitute separate like products, and that petitioners do have standing regarding these particular products.... Petitioners are not required to manufacture every product within the like product designation ... and the statute does not require the Department to consider the domestic availability of a particular product within the scope when considering a scope exclusion request....

58 Fed.Reg. at 37,076.

In its complaint filed herein, the plaintiff avers, inter alia, that the ITA "failed in its statutory duty to investigate and analyze each scope exclusion request individually and make specific findings of fact" para. 4 and that the agency should not have relied on the like-product analysis of the International Trade Commission ("ITC"). The complaint also states that the ITA did conclude that hot-rolled seat-belt retractor steel was not within the scope of its determination and that, since the same special characteristics which distinguish that product apply to the cold-rolled counterpart, the determination on its face is an inconsistent application of the facts and the law. The plaintiff prays that the court either reverse the agency's determination or, at a minimum, remand to the ITA for specific findings in accordance with the factors approved by the Court of International Trade in Diversified Products Corp. v. United States, 6 CIT 155, 572 F.Supp. 883 (1983), and subsequent cases. This relief is sought via a motion for judgment on the agency record per CIT Rule 56.2.

The defendant opposes the motion on grounds that the ITA has broad discretion to define the scope of its investigations; that the scope defined herein, namely, cold-rolled carbon steel flat products, covers plaintiff's retractor steel in accordance with the petition's description of merchandise and the ITC's determination(s); and that analysis a la Diversified Products confirms inclusion. The intervenor-defendants add in further opposition that they are not...