Al Tech Speciality Steel Corp. v. United States

• Decision Date: 21 November 1983
• Docket Number: Court No. 83-1-00118.
• Citation: 6 CIT 245,575 F. Supp. 1277
• Parties: AL TECH SPECIALITY STEEL CORPORATION; Armco, Inc.; Carpenter Technology Corporation; and Cricible Stainless Steel Division of Colt Industries, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Ugine Aciers and Intsel Corporation, Intervenors.
• Court: U.S. Court of International Trade

575 F. Supp. 1277

6 CIT 245

AL TECH SPECIALITY STEEL CORPORATION; Armco, Inc.; Carpenter Technology Corporation; and Cricible Stainless Steel Division of Colt Industries, Inc., Plaintiffs, v. UNITED STATES, Defendant and Ugine Aciers and Intsel Corporation, Intervenors.

Court No. 83-1-00118.

United States Court of International Trade.

November 21, 1983.

Collier, Shannon, Rill & Scott, Washington, D.C. (David A. Hartquist, Paul C. Rosenthal and David L. Dick, Washington, D.C., on briefs), for plaintiffs.

J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director, Commercial Lit. Branch, Washington, D.C. (Velta A. Melnbrencis, New York City, on briefs), for defendant.

Covington & Burling, Washington, D.C. (Harvey M. Applebaum, Washington, D.C., on briefs), for intervenors.

Opinion and Order

MALETZ, Senior Judge:

In this action plaintiffs, American producers of specialty steel, challenge the final results of an administrative review conducted by the Department of Commerce, International Trade Administration (ITA), pursuant to section 751(a) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1675(a) (Supp.IV 1980). See 48 Fed.Reg. 2,808 (1983). That review focused on a 1973 dumping finding involving stainless steel wire rods imported from France and produced by intervenors. The ITA determined that a de minimis dumping margin of 0.3% existed for the review period.

Plaintiffs have moved for review of the ITA's determination pursuant to rule 56.1 of the rules of this court. In their motion they take issue with two procedural aspects of the ITA's section 751 review. The first is the decision by the ITA not to conduct a cost-of-production investigation under section 773(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979, 19 U.S.C. § 1677b(b) (Supp. IV 1980).¹ The other is the ITA's refusal to verify information submitted by intervenors Ugine Aciers and Intsel Corporation (Ugine Aciers) in the course of the ITA's review.² The government has defended its actions through a cross-motion for judgment upon review of the administrative determination.

For the reasons that follow, the court is of the view that the showing by plaintiffs of home market sales below cost of production was insufficient to warrant a cost-of-production investigation by the ITA. However, the court agrees with plaintiffs' contention that the ITA should have verified the information submitted by Ugine Aciers in the course of the ITA's section 751 review. Accordingly, plaintiffs' rule 56.1 motion is granted in part and denied in part; the government's cross-motion is granted in part and denied in part; and the case is remanded to the ITA with instructions to verify the information supplied by Ugine Aciers during the instant section 751 review.

The court first considers plaintiffs' claim that there was reasonable grounds to believe or suspect that Ugine Aciers' home market sales were below its cost of production.

I

Section 773(b) of the Trade Agreements Act of 1979 provides that the ITA shall investigate a foreign manufacturer's cost of production "whenever it has reasonable grounds to believe or suspect that sales in the home market ... have been made at prices which represent less than the cost of producing the merchandise in question ...." 19 U.S.C. § 1677b(b). The phrase "reasonable grounds to believe or suspect" is not, of course, self-defining. In an effort to give content and meaning to those words, this court in Connors Steel Co. v. United States, 2 CIT 242, 527 F.Supp. 350 (1981), announced a general evidentiary threshold amounting to less than the probable cause needed to secure a search warrant. Id. at 248, 527 F.Supp. at 357. When that threshold is met, the ITA must conduct a cost-of-production inquiry. Id. at 249, 527 F.Supp. at 357-58.

While helpful here in some measure, this general evidentiary standard falls somewhat short of providing clear guidance dispositive of the myriad factual situations that will undoubtedly arise. There is, however, an instructive body of law stemming from the Supreme Court's decision in Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968), wherein courts have grappled with the slippery concept of "reasonable suspicion." The upshot has been the formulation of detailed guidelines for determining whether vel non such suspicion exists in a given case.³ The teaching of Terry and its progeny is that in order for reasonable suspicion to exist there must be "a particularized and objective basis for suspecting" the existence of certain proscribed behavior, taking into account the totality of the circumstances—the whole picture. United States v. Cortez, 449 U.S. 411, 417, 101 S.Ct. 690, 695, 66 L.Ed.2d 621 (1981); United States v. Merritt, 695 F.2d 1263, 1268 (10th Cir.1982), cert. denied, ___ U.S. ___, 103 S.Ct. 1898, 77 L.Ed.2d 286 (1983). Elaborating on these criteria the Supreme Court explained in Cortez:

The idea that an assessment of the whole picture must yield a particularized suspicion contains two elements, each of which must be present .... First, the assessment must be based upon all of the circumstances....

The process does not deal with hard certainties, but with probabilities.... Finally, the evidence thus collected must be seen and weighed not in terms of library analysis by scholars, but as understood by those versed in the field ....

The second element contained in the idea that an assessment of the whole picture must yield a particularized suspicion is the concept that the process just described must raise a suspicion that the particular individual ... is engaged in wrongdoing. Chief Justice Warren, speaking for the Court in Terry v. Ohio, supra, said that "this demand for specificity in the information upon which ... action is predicated is this Court's central teaching ...."

Id. 449 U.S. at 418, 101 S.Ct. at 695 (emphasis in original). See also Marshall v. Barlow's, Inc., 436 U.S. 307, 320-21, 98 S.Ct. 1816, 1824, 56 L.Ed.2d 305 (1978) (probable cause in the administrative law context is established by specific evidence).

In the present case, plaintiffs drew several items to the ITA's attention which taken together, they contend, should have given rise to a "reasonable suspicion" on the ITA's part that Ugine Aciers was selling stainless steel wire rods in France below its cost of producing such merchandise. The government and Ugine Aciers counter that not only was this information presented in an untimely fashion by plaintiffs, it was also insufficient to create such a suspicion.

Assuming for the present the timeliness of plaintiffs' submission, the court believes that the information presented by them was much too general in nature to arouse a reasonable suspicion of below-cost-of-production sales by Ugine Aciers in its home market.⁴ The first two items plaintiffs referred to were a foreign steel industry press release entitled "Eurofer," and a European Commission paper. Those sources indicated that European steel producers had incurred significant increases in raw material and energy costs, but that prices had failed to keep pace. However, the Eurofer press release was a very general reference to costs for all European Community steel producers, lumping together both carbon and stainless steel manufacturers throughout the entire European Economic Community. Cf. Donovan v. Federal Clearing Die Casting Co., 655 F.2d 793, 797 & n. 9 (7th Cir.1981) ("We need not belabor the point that all newspaper reports are not of sufficient reliability to form the basis of a probable cause determination" in the context of an OSHA search warrant application.). The European Commission paper, when it did refer to the special steel industry, referred to an average of all European special steel prices and costs—not French stainless steel, and not Ugine Aciers' stainless steel wire rod.

Plaintiffs next maintain that a series of antidumping and countervailing duty petitions filed in early 1982 against nine European and non-European producers of carbon steel should have alerted the ITA to below cost-of-production sales in France by Ugine Aciers. But allegations of sales below cost of production with respect to diverse producers of carbon steel have little if any relevance to an administrative review of sales by a French producer of stainless steel wire rod. In this same connection, plaintiffs assert that an antidumping petition containing below-cost-of-production-sales allegations filed against French producers of stainless steel sheet and strip should have caused the ITA to believe or suspect similar such sales by Ugine Aciers. Given that Ugine Aciers does not manufacture or sell stainless steel sheet or strip, the chain of inferences required to reach the conclusion suggested by plaintiffs is far too tenuous.

Quoting from two American trade papers, plaintiffs further claim that a characterization of Ugine Aciers in one of those papers as a "loss-making" operation, and a statement in the other that Ugine Aciers had suffered a $105 million loss, should have provided the ITA with reasonable grounds to believe or suspect less-than-cost-of-production sales of stainless steel wire rod. Be that as it may, the mere use of the adjective "loss-making" fails to show less-than-cost-of-production sales of a single product sold in a discrete market where the company to which the adjective was applied sold a vast range of products in markets around the world. Cf. Federal Clearing Die Casting Co., 655 F.2d at 797 ("Mere journalistic prose is not the kind of underlying factual data upon which a magistrate can exercise independent judgment" in an OSHA administrative law context.). And as for the press statement regarding the $105 million loss, considering that Ugine Aciers is a highly diversified, world-wide exporter, evidence of a company-wide loss fails to adequately pinpoint below-cost-of-production sales of an individual product in one of the company's many markets.

The...