U.S. Steel Group v. U.S.

• Citation: 177 F.Supp.2d 1325
• Decision Date: 30 November 2001
• Docket Number: No. 00-03-00136.,Slip Op. 01-139.,00-03-00136.
• Parties: U.S. STEEL GROUP, A Unit of USX Corporation and Bethlehem Steel Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Nippon Steel Corporation, Defendant-Intervenor.
• Court: U.S. Court of International Trade

177 F.Supp.2d 1325

U.S. STEEL GROUP, A Unit of USX Corporation and Bethlehem Steel Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Nippon Steel Corporation, Defendant-Intervenor.

Slip Op. 01-139.

No. 00-03-00136.

United States Court of International Trade.

November 30, 2001.

Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan, Jeffrey D. Gerrish), Washington, DC, for Plaintiffs.

Robert D. McCallum, Jr., Assistant Attorney General, Atlanta, GA; David M. Cohen, Director, Michele D. Lynch, Janene Marasciullo, Attorneys, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C.; Stephen M. De Luca, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Of Counsel, for Defendant.

Gibson, Dunn & Crutcher LLP (Daniel J. Plaine, Andrea F. Dynes, Merritt R. Blakeslee, Lisa A. Murray), Washington, D.C., for Defendant-Intervenor.

OPINION

POGUE, Judge.

This matter is before the Court on the motion of U.S. Steel Group, a unit of USX Corporation, and Bethlehem Steel Corporation ("Plaintiffs"), for judgment on the agency record pursuant to USCIT Rule 56.2. Plaintiffs challenge the Department of Commerce's ("Commerce") calculation of the dumping margin for Nippon Steel Corporation ("NSC") in Certain Corrosion-Resistant Carbon Steel Flat Products from Japan: Final Results of Antidumping Duty Administrative Review, 65 Fed. Reg. 8,935 (Dep't Commerce Feb. 23, 2000) ("Final Results"). The Court denies Plaintiffs' motion and sustains the final results of the administrative review.

Background

On February 23, 2000, Commerce published its Final Results in the fifth administrative review of the antidumping duty order on corrosion-resistant carbon steel flat products from Japan. The period of review was August 1, 1997 through July 31, 1998. The review covered exports of two Japanese manufacturers, including NSC.¹

NSC sells corrosion-resistant carbon steel flat products ("CRS") to both the Japanese and U.S. markets. In calculating the dumping margin for NSC, Commerce compared sales to the same customer in both the home and U.S. markets. The customer, Customer A, is a trading corporation affiliated with Corporation B.² See Petitioner's Factual Information Re: NSC, Dun & Bradstreet Company Report, Customer A, Pro. Doc. No. 23 at 1, 5, 11 (Jan. 19, 1999).³ Corporation B uses a substantial quantity of NSC's products,⁴ and makes most of its purchases of NSC's CRS through Customer A. See Petitioners' Comments on NSC Response to Sections A-D of the Antidumping Questionnaire, Pro. Doc. No. 22 at 28 (Jan. 15, 1999) ("Petitioner's Comments on NSC Response to Sections A-D"); NSC Third Supplemental Questionnaire Response, Pro. Doc. No. 40 at 2 (May 24, 1999). NSC enters into price negotiations with both Customer A and Corporation B to set price ranges but not final prices. NSC also offers certain pricing arrangements to trading companies and end users,⁵ including Corporation B. See NSC Section A Response at A-20—A-22. In the U.S., Customer A is the importer of record, see NSC Response to Sections B-D of the Antidumping Questionnaire, Pro. Doc. No. 16, at C-46 (Dec. 8, 1998), and as such is responsible for payment of antidumping duties.

Plaintiffs assert (1) that the use of sales to the same customer in both the home and U.S. markets to determine normal value results in an unfair comparison, and (2) that the sales in question were outside the ordinary course of trade and should have been excluded from the normal value calculations.

Standard of Review

The Court will uphold an antidumping review determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

"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, 95 L.Ed. 456 (1951) (internal citations and quotations omitted); Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed.Cir. 1997). The possibility of drawing two inconsistent conclusions from the evidence does not mean that an agency's finding is not supported by substantial evidence. Consolo v. Fed. Maritime Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). A decision will be reviewed on the grounds invoked by the agency, see SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947), and the Court may "uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974).

Discussion

I. Fair Comparison

In calculating a dumping margin, Commerce compares the price of a good in the U.S. to its price in the exporting country, known as its normal value.⁶ 19 U.S.C. § 1677b(a) requires that this comparison be "fair," stating that "a fair comparison shall be made between the export price or constructed export price and normal value." The statute further states that "[i]n order to achieve a fair comparison ... normal value shall be determined as follows ...." Id. The paragraphs that follow set out the steps Commerce must take in determining normal value, and include adjustments and exclusions of sales intended to ensure the accuracy of the normal value determination and the resultant dumping margin calculation.

In the instant case, Commerce included home market sales from NSC to Customer A in its normal value determination, and also used sales to Customer A in determining the U.S. price. The dumping margin is therefore calculated using sales to the same customer in both markets. Plaintiffs contend that in using sales to the same customer in both markets, Commerce failed to make the "fair comparison" required by 19 U.S.C. § 1677b(a). Plaintiffs argue that both the seller and the customer had financial interests in avoiding antidumping duties and incentives to mask any dumping that was taking place, which rendered reported prices unreliable, see Pl.'s Mem. Supp. Mot. J. Agency R. ("Pl.'s Mem.") at 13, and created the potential for price manipulation. Id. at 21. Plaintiffs assert that these risks caused the price comparison to be unfair, and required the exclusion of the transactions even without actual evidence of inaccurate price reporting or price manipulation. See id. at 21-22.

Plaintiffs refer to three cases to support their claim that Commerce should have excluded from the price comparison the sales to Customer A in both markets. Koenig & Bauer-Albert AG v. United States, 22 CIT ___, 15 F.Supp.2d 834 (1998), involved the alteration of contract prices after the filing of an antidumping petition. The court upheld Commerce's decision to base the price comparison on the original, rather than the adjusted, contract price, because the adjusted, post-petition prices were considered potentially suspect and open to manipulation and Commerce had been unable to verify them. See Koenig, 22 CIT at ___, 15 F.Supp.2d at 840.

Koyo Seiko Co. v. United States, 20 CIT 920, 936 F.Supp. 1040 (1996), aff'd in part, vacated in part by 121 F.3d 726 (Fed.Cir. 1997), involved Commerce's discretionary decision to employ a set-splitting methodology to calculate the foreign market value of a product. The court noted that "[i]n the absence of set-splitting, a respondent may compel the use of constructed value by selling sets in one market and single [products] in another." Id. at 930, 936 F.Supp. at 1048. Concerned that such a practice could impede the calculation of the most accurate foreign market value possible and help to circumvent the antidumping laws, the court deferred to Commerce's reasonable choice of methods for achieving the most accurate calculation. Id.

Finally, in Zenith Elecs. Corp. v. United States, 15 CIT 394, 770 F.Supp. 648 (1991), rev'd on other grounds, 77 F.3d 426 (Fed. Cir.1996) this Court remanded for further investigation the issue of whether certain sales were fictitious because "there was sufficient material in the record to raise a reasonable suspicion that some or all of the Canadian sales were contrived for the purpose of serving as the basis for a favorable FMV calculation." Zenith, 15 CIT at 406, 770 F.Supp. at 659 (emphasis supplied). Under Zenith, Commerce has a duty to investigate further where there is sufficient evidence on the record to raise a reasonable suspicion that the sales in question are not representative of the market. See id. at 406-07, 770 F.Supp. at 659.

These three cases are distinguished by the fact that in each of them, Commerce had reason to believe the sales or prices in question were unreliable in some manner. In the instant case, however, Commerce did not find evidence that would raise a reasonable suspicion that the reported prices were unreliable or subject to manipulation, or that the sales in question were not representative of the market and should have been excluded. In fact, Commerce was able to verify NSC's pricing practices and relationships with Customer A and Corporation B. See Verification Memo. Plaintiffs apparently propose that Commerce has a duty to exclude sales from the margin calculation even in the absence of evidence suggesting their unreliability, but this proposition is unsupported in the statute, regulations, and case law.⁷

In the administrative review prior to the matter at issue here, Commerce found that it is not unusual for there to be sales to both markets through the same customer. Final Results at 8,940; see also Certain Corrosion-Resistant Carbon Steel Flat Products From Japan: Final Results of Antidumping Duty Administrative Review, 64 Fed.Reg. 12,951, 12,954 (Dep't Commerce Mar. 16, 1999) ("Fourth Review") ("That the customer in question purchased the identical product in both markets is not, in itself, unusual, nor suggestive of an intentional evasion or...