United States Steel Corp. v. United States

Slip Op. 08 – 82

UNITED STATES COURT OF INTERNATIONAL TRADE

UNITED STATES STEEL
CORPORATION,
Before: Richard W. Goldberg,
Plaintiffs, Senior Judge

MAVERICK TUBE CORP.,

Plaintiff-
Intervenor,

v. Court No. 07-00271

UNITED STATES,

Defendant,
PUBLIC VERSION
and

DALMINE, S.P.A., SIDERICA,
S.A.I.C., JFE STEEL
CORPORATION, NIPPON STEEL
CORPORATION, SUMITOMO METAL
INDUSTRIES LTD., HUSTEEL CO.,
LTD., SeAH STEEL CORP., SHELL
EXPLORATION & PRODUCTION, CO.

Defendant-
Intervenors.

OPINION

[The ITC’s second five-year review is sustained.]

Date: August 5, 2008

Skadden Arps Slate Meagher & Flom, LLP (James C. Hecht, John J.
Mangan, Robert E. Lighthizer, Stephen P. Vaughn) for Plaintiff
United States Steel Corporation.

Williams, Mullen, Clark & Dobbins (James R. Cannon, Jr., Dean A.
Barclay, Francisco J. Orellana) for Plaintiff-Intervenor
Maverick Tube Corp.
Court No. 07-00271 Page 2

James M. Lyons, General Counsel; Neal J. Reynolds, Assistant
General Counsel, Office of the General Counsel, United States
International Trade Commission (Marc A. Bernstein) for Defendant
United States.

White & Case, LLP (Gregory J. Spak, Kristina Zissis) for
Defendant-Intervenors Dalmine S.p.A., and Siderca S.A.I.C.

Robert C. Cassidy PLLC (Robert C. Cassidy, Jr.) and Wilmer,
Cutler, Pickering, Hale & Dorr, LLP (John D. Greenwald) for
Defendant-Intervenors JFE Steel Corporation, Nippon Steel
Corporation, and Sumitomo Metal Industries, Ltd.

Troutman Sanders LLP (Donald B. Cameron, Brady W. Mills, Jeffrey
S. Grimson, Julie C. Mendoza, Rudi W. Planert) for Defendant-
Intervenors Husteel Co., Ltd., and SeAH Steel Corp.

Jones, Walker, Waechter, Poitevent, Carrere & Denegre (Marc C.
Hebert) for Defendant-Intervenor Shell Exploration and
Production Co.

GOLDBERG, Senior Judge: This case is before the Court on

Plaintiff’s motion for judgment on the agency record. Plaintiff

United States Steel Corporation (“U.S. Steel”) seeks judicial

review of the U.S. International Trade Commission’s (“ITC”)

second five-year review of the orders against Oil Country

Tubular Goods (“OCTG”) from Argentina, Italy, Japan, Korea, and

Mexico. See Oil Country Tubular Goods from Argentina, Italy,

Japan, Korea, and Mexico, 72 Fed. Reg. 34480 (ITC, June 22,

2007) (“Five Year Review”). For the reasons that follow, the

Court sustains the results of the ITC’s second five-year review.

I. BACKGROUND

In 1995, the ITC determined that OCTG imports from

Argentina, Italy, Japan, Korea, and Mexico were causing material
Court No. 07-00271 Page 3

injury to U.S. producers. Subsequently, the U.S. Department of

Commerce published antidumping and countervailing duty orders on

these imports.1

In 2001, the ITC completed its first five-year review of

these orders. See Oil Country Tubular Goods from Argentina,

Italy, Japan, Korea, and Mexico, Inv. Nos. 701-TA-364, 731-TA-

711, 713-716 (first review), USITC Pub. 3434 (June 2001). In

this review, the ITC cumulatively assessed the impact of

revoking the collected orders and determined that revocation

would likely cause material injury to U.S. industry.

Accordingly, the orders were left in place.

In 2006, the ITC conducted its second five-year review of

the orders. During this investigation, the ITC decided not to

cumulate the impact of revoking all orders because it found that

the subject imports would compete differently upon revocation.

The ITC did, however, cumulate the Argentina, Italy, and Mexico

OCTG orders. After its investigation, the ITC found that

revoking the orders would not lead to the continuation or

reoccurrence of material injury to the domestic industry. U.S.

Steel challenges this determination arguing that: (1) the ITC

abused its discretion in failing to cumulate the impact of

1
After the initial investigation, antidumping duties were
imposed on OCTG imports from Argentina, Italy, Japan, Korea, and
Mexico. Additional countervailing duties were imposed on
Italian imports.
Court No. 07-00271 Page 4

revoking all orders; (2) the ITC’s material injury

determinations lack substantial evidence; and (3) the ITC failed

to provide a fair and impartial hearing.2

II. JURISDICTION & STANDARD OF REVIEW

The Court has jurisdiction over this action pursuant to 28

U.S.C. § 1581(c) (2000). The Court “shall hold unlawful any

determination, finding or conclusion found . . . to be

unsupported by substantial evidence on the record, or otherwise

not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i)

(2000). Substantial evidence “is something less than the weight

of the evidence, and the possibility of drawing two inconsistent

conclusions from the evidence does not prevent an administrative

agency’s finding from being supported by substantial evidence.”

Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933

(Fed. Cir. 1984) (quoting Consolo v. Fed. Maritime Comm’n, 383

U.S. 607, 619-20 (1966)). Moreover, the Court cannot substitute

its judgment for that of the ITC “nor must the court ‘displace

the [agency’s] choice between two fairly conflicting views, even

though the court would have justifiably made a different choice

had the matter been before it de novo.’” Allegheny Ludlum Corp.

v. United States, 30 CIT __, __, 475 F. Supp. 2d 1370, 1374

(2006) (citations omitted)).

2
U.S. Steel does not challenge the ITC’s findings regarding the
Mexico OCTG order.
Court No. 07-00271 Page 5

III. DISCUSSION
A. Cumulation

Under 19 U.S.C. § 1675(c) (2000), the ITC reviews, every

five years, whether revoking an order would be “likely to lead

to the continuance or reoccurrence of dumping. . . .”3 For this

review, the ITC may cumulate the impact of revoking multiple

orders if the statutory prerequisites are met. See 19 U.S.C. §

1675a(a)(7) (2000). No guidance, however, is given as to what

factors the ITC should consider in making its cumulation

determination. See Freeport Minerals Co. v. United States, 776

F.2d 1029, 1032 (Fed. Cir. 1985). The ITC’s discretion is not

completely unfettered as its determination “[must] be predicated

upon a judgment anchored in the language and spirit of the

relevant statutes and regulations.” See id. at 1032.

Here, the ITC based its cumulation decisions on the

differences in the post-revocation competitive conditions the

subject imports would likely face.4 Based on this factor, the

3
19 U.S.C. § 1675(c)(1) provides that:

5 years after the date of publication of . . . a
countervailing duty order . . . [or] an antidumping
duty order . . . the Commission shall conduct a review
to determine, in accordance with section 1675a of this
title, whether revocation of the countervailing or
antidumping duty order would be likely to lead to the
continuation or reoccurrence of dumping or a
countervailable subsidy . . . and of material injury.
4
U.S. Steel also objects to the separate methodology utilized by

(footnote continued)
Court No. 07-00271 Page 6

ITC cumulated the impact of revoking the Argentina, Italy, and

Mexico OCTG orders, but declined to cumulate these orders with

the Japan and Korea OCTG orders, or to separately cumulate the

Japan and Korea OCTG orders. U.S. Steel challenges these

determinations claiming that the ITC abused its discretion in

failing to address what it alleges is the essential purpose of

cumulation: preventing the hammering effect caused by

simultaneously revoking multiple orders.

i. The ITC Did Not Abuse Its Discretion in Not Cumulating
the Argentina and Italy Orders with the Japan and
Korea Orders.

The ITC determined that OCTG from Argentina, Italy, and

Mexico would compete differently than OCTG from Japan and Korea

upon revocation. The ITC based this decision primarily on the

fact that Tenaris, a global manufacturer controlling all OCTG

production in Argentina, Italy, and Mexico, had recently

purchased Maverick Tube Corporation (“Maverick”), a large U.S.

producer. According to U.S. Steel, this factor does not relate

to the language and spirit of the relevant statutes. U.S.

Steel’s position, however, artificially limits the ITC’s

Commissioners Pearson and Okun. These Commissioners first
evaluated the likely conditions of competition the imports would
face. As they found the subject imports were not likely to
compete under similar conditions, they did not continue and
evaluate whether the statutory cumulation requirements were met.
This analysis is accordance with law. Nothing in the cumulation
provision requires the ITC to consider any factors, but only
prohibits cumulation if these threshold requirements are not
met. See § 1675a(a)(7).
Court No. 07-00271 Page 7

statutory discretion. The Court has repeatedly allowed the ITC

to consider many factors related to differences in the likely

post-revocation conditions of competition. See Allegheny

Ludlum, 30 CIT at __, 475 F. Supp. 2d at 1377-78; Neenah Foundry

Co. v. United States, 25 CIT 702, 155 F. Supp. 2d 766 (2001).5

For example, in Olin Corporation-Brass Group v. United States,

the ITC based its decision not to cumulate on the fact that one

subject nation’s principal producer had an affiliated

relationship with a large U.S. producer, which the ITC

determined would cause its exports to compete differently than

those of the other subject nations upon revocation. See 28 CIT

29, 33-34 (2004). Here, Tenaris, the sole producer, made an

even more significant commitment to domestic production than the

producer in Olin by purchasing Maverick. The ITC relied on this

purchase to support its conclusion that Argentinean, Italian,

and Mexican OCTG will compete differently than OCTG from Japan

and Korea.6 Accordingly, the ITC did not abuse its discretion in

5
19 U.S.C. § 1675a(a)(7) specifically instructs the ITC to
consider whether subject goods would compete with each other
upon revocation of the order. Thus, the ITC has the
discretionary authority to consider differences in the relative
competitive conditions the goods would face upon revocation in
making its cumulation decision. See Allegheny Ludlum, 30 CIT at
__, 475 F. Supp. 2d at 1378.
6
The ITC also relied on the following in making its decision not
to cumulate: (1) the differences in the respective product
mixes; and (2) the differences in the relative importance of
home market sales. See Five Year Review at 15.
Court No. 07-00271 Page 8

basing its decision not to cumulate all of the OCTG orders on

its conditions of competition analysis.

ii. The ITC Did Not Abuse Its Discretion In Not Cumulating
the Japan and Korea Orders.

The ITC also relied on its assessment of the relative

conditions of competition as its basis for not cumulating the

Japan and Korea OCTG orders. Specifically, the ITC relied on

Japanese and Korean market behavior, including differences in

market participation, production capabilities, and capacity

utilization rates. U.S. Steel does not challenge these

findings, but again argues that the ITC abused its discretion in

relying on factors it views as unrelated to the purposes of

cumulative analysis. This argument fails. Reliance on

divergent historic or likely volume trends in cumulation

decisions has been repeatedly affirmed by the Court, and the ITC

did not abuse its discretion in relying on these considerations.

See Allegheny Ludlum, 30 CIT at __, 475 F. Supp. 2d at 1377-78;

Neenah Foundry, 25 CIT at 702, 155 F. Supp. 2d at 766.

B. Substantial Evidence and the ITC’s Material Injury
Determinations

During a five-year review, the ITC will revoke an order

unless it determines: (1) that dumping or subsidization is

likely to continue; and (2) that revocation will lead to the

continuation or reoccurrence of material injury within a

reasonably foreseeable time. See 19 U.S.C. § 1675(d)(2)(B). In
Court No. 07-00271 Page 9

making this decision, the ITC is required to consider whether

the “likely volume, price effect, and impact of imports of the

subject merchandise on the industry” will be significant if an

order is revoked. 19 U.S.C. § 1675a(a)(1)-(4). U.S. Steel

argues that the ITC made several erroneous findings which it

contends are not supported by substantial evidence.

Essentially, U.S. Steel attacks the substantiality of the ITC’s

findings by offering its own evidence in support of an alternate

conclusion. However, “the question of the reviewing Court is

‘not whether we agree with the Commission’s decision, nor

whether we would have reached the same result as the Commission

had the matter come before us for decision in the first

instance.’” United States Steel Group v. United States, 96 F.3d

1352, 1357 (Fed. Cir. 1996). It is the ITC’s “task to evaluate

the evidence it collects during its investigation” and to decide

“the weight to be assigned a particular piece of evidence.” Id.

at 1357. “In short, the Court does ‘not make the determination;

[it] merely vet[s] the determination.” Comm. for Fair Beam

Imps. v. United States, 31 CIT __, __, 477 F. Supp. 2d 1313,

1319 (2007) (citations omitted). For the reasons that follow,

the Court finds that the ITC’s material injury determinations

are supported by substantial evidence.
Court No. 07-00271 Page 10

i. The Argentina and Italy OCTG Orders

The ITC determined that revoking the cumulated Argentina

and Italy OCTG orders would not cause material injury to U.S.

OCTG producers. As required by section 1675a(a), the ITC

considered the volume and price impacts of revoking the orders

in making its injury determinations. U.S. Steel now argues that

several aspects of the ITC’s determinations are not supported by

substantial evidence. Specifically, U.S. Steel objects to the

ITC’s conclusions regarding: (1) Tenaris’ acquisition of

Maverick; (2) Tenaris’ expressed interest in obtaining business

from multinational oil companies; (3) the attractiveness of the

U.S. OCTG price; (4) Tenaris’ acquisition of Hydril, Inc.

(“Hydril”); and (5) the likely price impact of revoking the

cumulated Argentina and Italy OCTG orders.

1. ITC’s Consideration of Tenaris’ Maverick
Acquisition

U.S. Steel first argues that the ITC erred in concluding

that Tenaris’ Maverick acquisition would limit the company’s

post-revocation OCTG exports from Argentina and Italy.

According to U.S. Steel, Tenaris has indicated that it will

increase its exports to the United States if the order is

revoked; particularly of high-grade OCTG products which Maverick

cannot produce domestically.7 However, the ITC addressed this

7
OCTG production is generally divided into two categories: (1)
seamless or high-grade OCTG; and (2) welded or low-grade OCTG.
Court No. 07-00271 Page 11

argument finding that Tenaris’ exports to the United States will

be limited by its three billion dollar investment in Maverick,

and in finding that as prices for high and low-grade OCTG “are

interrelated, any attempt by Tenaris to establish low prices for

[for high-grade OCTG] would reduce the prices it could get for

the Maverick product.” Five Year Review at 34. The ITC also

found credible statements by Tenaris officials indicating that

the company purchased Maverick to obtain U.S. market prices, and

would only export OCTG to the United States as necessary to

complement domestic production.

The ITC’s determination is supported by substantial

evidence. The ITC reasonably concluded that Tenaris’ exports of

Argentinean and Italian OCTG to the United States would be

constrained by its substantial investment in Maverick and that

Tenaris’ business model would only require limited subject

exports to fill product gaps. Tenaris’ production data

indicates that it already exports to the U.S. high grade OCTG

from non-subject mills in Canada and Romania (i.e., OCTG

Maverick is incapable of producing), and would only need to

bring in Argentinean and Italian OCTG to fill product gaps. The

fact that several U.S. firms utilize a similar strategy further

supports the ITC’s conclusion, and in all, substantial evidence
Court No. 07-00271 Page 12

supports the ITC’s conclusion regarding the impact of the

Maverick acquisition.8

2. ITC’s Consideration of Sales to Multinational
Oil Companies

Next, U.S. Steel argues that the ITC erred in not granting

greater weight to Tenaris’ expressed interest in selling OCTG to

multinational oil companies. Specifically, U.S. Steel argues

that this interest will lead the company to export significant

volumes of OCTG to the United States. In support of this

argument, U.S. Steel points to several statements by Tenaris’

officials discussing the company’s interest in doing business

with the oil companies. However, the ITC discounted the overall

importance of this sector based on the following findings: (1)

that the great majority of oil rigs in the United States are

owned and operated by independent contractors, not by

multinational oil companies; and (2) that direct sales to end

users account for only a fraction of the domestic OCTG market.

8
U.S. Steel also points to statements by Tenaris officials
related to the company’s historic difficulties in obtaining
access to the U.S. OCTG market. According to U.S. Steel, these
statements indicate that Tenaris acquired Maverick to gain access
to the U.S. market and are compelling evidence of Tenaris’ intent
to increase its U.S. exports. Again, the weighing of the
evidence is the specific province of the ITC and
the Court only evaluates whether the ITC’s conclusions are
supported by substantial evidence. See Stalexport v. United
States, 19 CIT 758, 763-64, 890 F. Supp. 1053, 1059 (1995). The
ITC considered Tenaris’ statements but found them outweighed by
other evidence regarding the impact of the Maverick acquisition,
as discussed above. The ITC did not err in deciding not to grant
greater weight to these statements.
Court No. 07-00271 Page 13

Based on these findings, the ITC found that sales to

multinational oil companies are only a small fraction of the

overall U.S. OCTG market. As a result, the ITC determined that

even if Tenaris were to increase its exports to multinational

oil companies within the United States, these sales would not

have a significant impact on the volume of OCTG entering the

U.S. market from Argentina and Italy.

This determination is supported by substantial evidence.

The ITC did not ignore Tenaris’ comments regarding its interest

in doing business with multinational oil companies, but instead

found that these sales would not have a significant volume

impact based on the size and importance of this market sub-

sector. As the ITC noted, Tenaris did not express a similar

interest in supplying distributors or independent contractors

who operate the large percentage of U.S. oil wells. U.S.

Steel’s argument focused narrowly on Tenaris’ statements

regarding its plans and intentions as to the multinational oil

companies. Accordingly, the ITC reasonably determined that even

were Tenaris to increase its sales to this sector, these sales

would not have a significant volume impact.

3. ITC’s Conclusions Regarding the Attractiveness of
the U.S. Market Prices

U.S. Steel further challenges the ITC’s conclusion that

U.S. OCTG prices will not cause Tenaris to increase its exports

to the United States. In U.S. Steel’s view, the ITC erred in
Court No. 07-00271 Page 14

relying on Average Unit Value (“AUV”) data, which indicated that

Argentinean and Italian producers could obtain higher prices for

OCTG within their home markets. This argument, however,

misconstrues the ITC’s analytical process. Overall, the ITC

found that the record was mixed as to the attractiveness of the

U.S. market price for OCTG. Although there was testimony

indicating that the U.S. market price was higher than other

markets, other pricing information indicated that two out of

three of the Tenaris mills could obtain higher home market

prices for OCTG. Five Year Review at 30. Based on this mixed

data, the ITC determined that the U.S. price of OCTG was not a

significant enough of an incentive to cause subject producers to

shift significant exports to the U.S. market. Notably, U.S.

domestic producers, in support of the orders continuation

provided pricing data indicating higher home market prices for

the Argentinean and Italian producers. Id. at 30. Based on

this inconclusive pricing data, the ITC reasonably found that

“the record as a whole, did not support the proposition that

U.S. prices have been or are likely to be consistently higher

than the [subject OCTG] in their other markets.” Id. at 31.

4. ITC’s Consideration of the Impact of Tenaris’
Purchase of Hydril

U.S. Steel also argues that the ITC erred in concluding

that Tenaris’ acquisition of Hydril, a U.S. company specializing

in threading high-grade OCTG, would not lead Tenaris to export
Court No. 07-00271 Page 15

significant volumes of high-grade OCTG to the U.S. market. In

U.S. Steel’s view, Tenaris’ Hydril acquisition would lead the

company to export high-grade OCTG to the United States and

displace Hydril’s U.S. suppliers.

In its impact determination, the ITC relied on a statement

by U.S. Steel’s CEO which indicated that he did not believe

Tenaris’ acquisition would imperil U.S. Steel’s role as a

supplier of high-grade OCTG to Hydril. See Five Year Review at

31. The ITC found this statement to be credible evidence that

this acquisition would not cause significant product

displacement, particularly as U.S. Steel was [ ]. Tenaris

officials also testified that the Hydril acquisition may result

in a greater need for U.S.-produced OCTG product, as a key

component of Tenaris’ global strategy. Additionally, the ITC

found no evidence indicating that, even if Tenaris began

exporting additional high grade OCTG to the United States, the

exports would necessarily come from its Argentinean or Italian

mills rather than its other non-subject mills. In short, the

ITC reasonably relied on the testimony of U.S. Steel’s CEO and

Tenaris’ officials to support its conclusion regarding the

impact of the Hydril acquisition. These findings support the

ITC’s conclusions that the likely volume impact of the Hydril

acquisition will be insignificant.
Court No. 07-00271 Page 16

5. The ITC’s Likely Price Determination

Lastly, U.S. Steel argues that the ITC erred in concluding

that revocation of the Argentina and Italy OCTG orders would not

have a significant impact on the price of OCTG. U.S. Steel

again bases its argument on the ITC’s conclusions regarding

Tenaris’ Maverick acquisition, this time arguing that Tenaris

will focus on the high-grade OCTG market and drive down prices

for this segment. This argument hinges upon the fact that the

Maverick mill is only capable of producing low-grade OCTG, and

U.S. Steel’s insistence that Tenaris will import significant

volumes of high-grade OCTG due to Maverick’s limited production

capabilities.

U.S. Steel oversimplifies the ITC’s analysis. The ITC

found that any attempt by Tenaris to lower the U.S. market price

of high-grade OCTG would also drive down the prices of low-grade

OCTG, and harm its investment in Maverick. This finding relies

on the interrelationship of high and low-grade OCTG prices, and

the strong market demand for OCTG. In its investigation, the

ITC found that prices for welded (low-grade) and seamless (high-

grade) OCTG were highly interconnected, and that welded and

seamless OCTG were to a degree, substitutable or capable of

performing the same functions. The ITC also looked at pricing

data and found that price movements within this sector are

largely fueled by demand, which is very strong despite
Court No. 07-00271 Page 17

substantial market penetration and increases in import volume.

Based on these findings, the ITC concluded that revocation of

the order would not have a significant impact on the price of

U.S. OCTG. U.S. Steel does not contest the accuracy of these

findings, but instead argues that the ITC failed to address its

concerns regarding Tenaris’ motivations in the high-grade OCTG

market. The ITC, however, reasonably addressed these concerns

in its evaluation of the interconnection of high- and low-grade

market sectors, particularly in its conclusions as far as

substitutability of the products in the operations of oil wells.

Accordingly, the ITC’s determinations that revocation of the

Argentina and Italy OCTG orders would not have a significant

price impact, and would not cause material injury to U.S.

producers are supported by substantial evidence.

ii. The Japan OCTG Order

The ITC also determined that revoking the Japan OCTG order

would not materially injure U.S. producers. U.S. Steel

challenges this decision; specifically, (1) the ITC’s likely

volume determination; and (2) the ITC’s likely price

determination.

1. The ITC’s Likely Volume Determination

The ITC found that while revoking the Japan OCTG order

would result in additional imports, these imports would be not

have a significant impact. U.S. Steel argues that the ITC
Court No. 07-00271 Page 18

failed to meaningfully address its concerns regarding the

importance of the Alaskan OCTG market. Specifically, U.S. Steel

objects to the ITC’s finding that “while subject Japanese

imports to Alaska did increase during the original period of

investigation, the domestic industry’s shipments to Alaska

increased by an even greater amount.” Five Year Review at 39.

According to U.S. Steel, this distinction is meaningless because

Japanese producers [ ] market share during this review, and

concerns regarding the Alaska market [ ]. In U.S. Steel’s view,

this reliance on pre-order data demonstrates that the ITC failed

to properly consider the importance of the Alaskan market.

The ITC reasonably discounted the importance of Alaskan

market. The ITC relied on the pre-order data in context with

several other findings related to likely market conditions,

including demand for OCTG in both the U.S. and world markets.

During the period of review, (1) Japanese capacity utilization

was very high — 98.3%; (2) Japanese production capacity was

anticipated to decrease in 2007, and only increase marginally

though 2008; and (3) current OCTG inventories were low and

mostly pre-sold to non-U.S. purchasers. The ITC also found that

Japanese producers would not substantially shift production from

non-subject products to subject OCTG because of existing

contractual relationships with customers within the home market.

Additionally, the Alaskan market only accounted for a small
Court No. 07-00271 Page 19

portion of the overall OCTG market—seven out of 1744 U.S. oil

rigs. These findings support the ITC’s conclusion that any

increase in Japanese OCTG imports would be insignificant when

placed in context with the large and growing U.S. OCTG market.

Even if the ITC’s conclusion regarding the Alaska market

were in error, the Court will not remand if the ITC’s

determination, taken as a whole, is supported by substantial

evidence. See U.S. Steel Group, 96 F.3d at 1364-65. In the

present case, the ITC found that “limited unused capacity in the

Japanese industry, substantial commitments to existing

customers, limited motivation to increase imports by shifting

shipments from other customers or products, and likely continued

strong demand in the U.S. and worldwide markets” supported its

conclusion that revoking the Japan OCTG order was unlikely to

cause Japanese producers to export significant volumes of

product. Five Year Review at 39. Accordingly, the ITC’s volume

determination is supported by substantial evidence.

2. The ITC’s Likely Price Determination

U.S. Steel argues that the ITC improperly based its price

determination on data from the original investigation which was

used to establish the initial antidumping duty order. The ITC,

however, did not base its decision on the pre-order data alone,

but relied on this data in context with other available

evidence. Overall, the ITC found that the mixed pre-order
Court No. 07-00271 Page 20

record of Japanese underselling combined with current demand for

OCTG, the substantial pre-existing home market commitments of

Japanese producers, and relatively high world prices indicated

that revocation would not significantly impact the U.S. OCTG

price. This conclusion is supported by substantial evidence.

First, data from the original investigations provide support for

the ITC’s conclusion. This data indicates that even

historically, the record was mixed as to issue of whether

Japanese producers were undercutting the U.S. OCTG market price;

in 24 out of 40 quarterly comparisons, Japanese producers

oversold U.S. producers. Additionally, the Japanese OCTG sector

has operated at very high rates of capacity utilization, selling

most of its production [ ], and as a result, would be unlikely

to export significant volumes of OCTG to the U.S. market. The

ITC’s findings regarding the strength of the U.S. market and

world prices are undisputed by U.S. Steel. When the ITC’s

analysis is considered in total, substantial evidence supports

both the ITC’s determination regarding the price impact and its

conclusion that revoking the Japan OCTG order would not

materially injure U.S. OCTG producers.

iii. The Korea OCTG Order

Finally, U.S. Steel challenges the ITC’s decision that

revoking the Korea OCTG order would not significantly increase

the volume of Korean OCTG exports entering the U.S. market.
Court No. 07-00271 Page 21

Specifically, U.S. Steel argues that the ITC erred in: (1)

calculating Korea’s production capacity; and (2) in finding that

Korean producers would not engage in significant product

shifting upon revocation.

The ITC found that Korean OCTG producers would likely

utilize their remaining production capacity to produce subject

OCTG, but that this would not result in a significant increase

in exports because Korean producers had (1) limited unused

production capacity, and (2) strong home market demand for non-

subject welded products, which would limit Korean producers’

ability and incentive to shift production toward subject OCTG.

In calculating Korea’s capacity, the ITC did not assume that

Korean OCTG producers would devote all excess capacity to OCTG

production because this amount would be “well above the amount

of [OCTG] that Korean producers produced in any year of the

original investigation, first review, or current review.” Id.

at 41 n.295. The ITC set Korea’s capacity at [ ]; a figure

based on the unused production capacity during 2006, the last

year of the review. This figure resulted in an overall capacity

utilization rate of [ ]. Based on these assumptions, the ITC

found that Korean producers could increase their U.S. OCTG

exports by [ ]; an amount that in the context of the U.S.

market, it found would not have a significant impact.
Court No. 07-00271 Page 22

U.S. Steel argues that this capacity calculation is in

error because, in its view, the mere fact that Korea has not

historically utilized all of its capacity is no evidence that

they will not do so in the future. The ITC is required to

determine the likely volume of subject imports that will enter

the market upon revocation of the order, rather than the merely

possible. See § 1675a(a)(2). As such, the ITC reasonably

determined that the likely utilization rate would not exceed

historical levels and properly used this data as a capacity

benchmark.

The ITC also reasonably concluded that Korean producers

would not engage in significant product shifting upon revocation

of the OCTG order. U.S. Steel argues that this determination is

in error because steel producers generally prefer to produce

OCTG, and that the record contradicts the ITC’s conclusion

because it demonstrates that Korean producers have engaged in

some product shifting. The ITC found that Korean producers will

not engage in significant product shifting because of the Korean

producers’ substantial and long-lasting relationships with their

home market. During the review period, Korean producers devoted

[ ] of their total milling capacity to their home market. The

ITC also noted that the capacity utilization for non-subject

pipe and tubing was [ ] as opposed to [ ] for subject OCTG. The

fact that the capacity utilization rate for non-subject products
Court No. 07-00271 Page 23

was [ ] than the capacity utilization rate for subject OCTG, in

the ITC’s view, demonstrated that “Korean producers would not

have a strong incentive to shift production from other tubular

products with a stable, substantial home market in order to

increase exports of [OCTG].” Five Year Review at 42.9 The ITC

also discounted the product shifting pointed to by U.S. Steel,

finding that “[w]hile some increase in subject imports from

Korea is likely upon revocation” this would not be significant

because of limited OCTG capacity in relation to the overall U.S.

OCTG market, the growth in U.S. demand, the fact that Korean

OCTG producers already exported most of its products to the U.S.

and thus, would be unlikely to export more upon revocation, and

the fact that product shifting was unlikely. Id.

The ITC’s conclusion regarding product shifting is

supported by substantial evidence. First, the ITC reasonably

concluded that the substantial home market demand for non-

subject steel products would prevent producers from exporting

significant volumes of OCTG to the United States based on the

size and strength of the home market. Second, the ITC

reasonably concluded that although some increase in subject

9
U.S. Steel also claims that the ITC erred in finding the Korean
home market for non-OCTG products stable as from 2001-2006,
Korean sales [ ]. However, the ITC reasonably found this
market stable. Korean producers, throughout the period of
review, devoted [ ] of their overall capacity for home market
production. The Court will not re-weigh the ITC’s reasonable
assessment of the stability of the Korean home market.
Court No. 07-00271 Page 24

imports was likely, that these would not be significant in

relation to the growing U.S. OCTG market.

C. Fair and Impartial Hearing

U.S. Steel argues that it was denied its right to a fair

and impartial hearing because the ITC allowed Maverick to

testify in support of continuing the Japan and Korea OCTG

orders.10 The ITC held a public hearing on April 12, 2007.

Following its past practice, the ITC allowed the parties

supporting and opposing the continuation of the orders to

testify for an hour each. The ITC gave Maverick ten minutes to

testify in support of continuing the Japan and Korea OCTG

orders. U.S. Steel shared the remaining fifty minutes with the

other domestic producers. Parties in opposition to the orders

testified for a full sixty minutes, which was then followed by

unlimited questioning by the Commissioners and staff.

The statutory framework does not provide specific guidance

as to the type of hearing the ITC is to conduct within the five-

year review context. However, the legislative history provides

that the ITC must “permit full presentation of information and

views by the parties,” which includes affording parties “every

10
The relevant statutory provisions do not expressly provide a
right to a fair and impartial hearing. See 19 U.S.C. §
1677c(b). This language instead comes from the ITC’s
regulations authorizing it to conduct non-adjudicative hearings.
See 19 C.F.R. § 201.13(b)(2). Five year review hearings are non-
adjudicative and subject to this regulation. See Grupo Indus.
Camesa v. U.S., 18 CIT 461, 463, 853 F. Supp. 440, 442-43
(1994), aff’d 85 F.3d 1577 (Fed. Cir. 1996).
Court No. 07-00271 Page 25

possibility to respond to information submitted by other

parties.” S. Rep. No. 96-249, at 97, as reprinted in 1979

U.S.C.C.A.N. 381, 483. In this case, U.S. Steel and the other

domestic producers had ample opportunity to present their

information and to respond to the other parties. Notably, U.S.

Steel does not argue that it was prevented from presenting any

information during the hearing. There is no requirement in the

relevant statutes and regulatory provisions, or even in the

legislative history, that the ITC must allocate precisely the

same amount of time to each side in order to be fair and

impartial. Additionally, Maverick, as a domestic producer, has

a right to testify in support of continuing the Japan and Korea

OCTG orders. Accordingly, the ITC hearing was fair and

impartial.

IV. CONCLUSION

In light of the foregoing, the results of the ITC’s five-

year review in Oil Country Tubular Goods from Argentina, Italy,

Japan, Korea, and Mexico, Inv. Nos. 731-TA-711 and 731-716

(second review), USITC Pub. 3923 (June 2007) are sustained.

/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge

Date: August 5, 2008
New York, New York