Nucor Fastener Division v. United States

Slip Op. 11-104

UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
NUCOR FASTENER DIVISION, :
:
Plaintiff, :
: Before: WALLACH, Judge
v. : Court No.: 09-00531
:
UNITED STATES, : PUBLIC VERSION
:
Defendant, :
:
and :
:
XL SCREW CORPORATION, et al., :
:
Defendant-Intervenors. :
:

[ Plaintiff’s motion is granted, and this matter is remanded to ITC. ]

Dated: August 11, 2011

Wiley Rein LLP (Alan H. Price, Daniel B. Pickard, and Maureen E. Thorson) for Plaintiff Nucor
Fastener Division.

James M. Lyons, General Counsel, Neal J. Reynolds, Assistant General Counsel for Litigation,
U.S. International Trade Commission (Mary Jane Alves) for Defendant United States.

Barnes, Richardson & Colburn (Matthew T. McGrath and Stephen W. Brophy) for Defendant-
Intervenors Porteous Fastener Co., Heads & Threads International LLC, Soule, Blake &
Wechsler, Inc., Indent Metals, LLC, XL Screw Corporation, Bossard North America, the Hillman
Group, Fastenal Co., and Fasteners and Automotive Products and Squire, Sanders & Dempsey,
LLP (Peter J. Koenig) for Defendant-Intervenors Brighton-Best International, Inc. and Brighton-
Best International (Taiwan) Inc.1

1
Defendant-Intervenors Porteous Fastener Co., Heads & Threads International LLC, Soule, Blake &
Wechsler, Inc., Indent Metals, LLC, XL Screw Corporation, Bossard North America, the Hillman Group, Fastenal
Co., and Fasteners and Automotive Products responded to Plaintiff’s Motion; Defendant-Intervenors Brighton-Best
International, Inc. and Brighton-Best International (Taiwan) Inc. did not. See Docket for Court No. 09-00531;
Defendant-Intervenors’ Response at 1.
 OPINION

Wallach, Judge:

I
INTRODUCTION

Plaintiff Nucor Fastener Division challenges the negative preliminary injury

determinations issued by the U.S. International Trade Commission (“ITC”) in antidumping and

countervailing duty investigations of certain standard steel fasteners (“CSSF”) from the People’s

Republic of China (“China”) and Taiwan.2 See Plaintiff’s Motion for Judgment on the Agency

Record, Doc. Nos. 32, 36 (“Plaintiff’s Motion”); Brief in Support of Nucor Fastener Division’s

Rule 56.2 Motion, Doc. Nos. 32, 36 (“Plaintiff’s Memo”); Certain Standard Steel Fasteners From

China and Taiwan; Determinations, 74 Fed. Reg. 58,978 (November 16, 2009); U.S.

International Trade Commission, Certain Standard Steel Fasteners from China and Taiwan,

Investigation Nos. 701-TA-472 and 731-TA-1171-1172 (Preliminary), USITC Pub. 4109

(November 2009) (“ITC’s Report”); Views of the Commission (November 19, 2009),

Confidential List (“CL”) 228 (“Views”); Certain Standard Steel Fasteners from China and

Taiwan, Staff Report to the Commission on Investigation Nos. 701-TA-472 and 731-TA-1171-

1172 (Preliminary) (November 2, 2009), CL 224 (“Staff Report”).3 The court has jurisdiction

pursuant to 28 U.S.C. § 1581(c). Because ITC’s reliance on certain data collected in these

investigations is arbitrary, capricious, and an abuse of discretion, Plaintiff’s Motion is

GRANTED, and this matter is REMANDED to ITC for action consistent with this opinion.

2
Use of the plural terms “determinations” and “investigations” is deliberate. See Shandong TTCA
Biochemistry Co. v. United States, 710 F. Supp. 2d 1368, 1372-74 (CIT 2010).
3
ITC’s Report comprises the public version of the Views, the public version of the Staff Report, and certain
other supporting documents. See Report. Pagination is different between the public and confidential versions of the
Views and between the public and confidential versions of the Staff Report. Compare Report with Views and Staff
Report.

2
 II
BACKGROUND

In 2009, in response to a petition filed by Plaintiff, the U.S. Department of Commerce

(“Commerce”) initiated and ITC instituted an antidumping duty investigation of CSSF from

Taiwan and both antidumping and countervailing duty investigations of CSSF from China. See

Certain Standard Steel Fasteners From the People’s Republic of China and Taiwan: Initiation of

Antidumping Duty Investigations (“AD Notice”), 74 Fed. Reg. 54,537 (October 22, 2009);

Certain Standard Steel Fasteners From the People’s Republic of China: Initiation of

Countervailing Duty Investigation, 74 Fed. Reg. 54,543 (October 22, 2009); Certain Standard

Steel Fasteners From China and Taiwan (“CVD Notice”), 74 Fed. Reg. 49,889 (September 29,

2009). Commerce’s initiation notices define CSSF as “certain standard nuts, standard bolts, and

standard cap screws, of steel other than stainless steel” and expressly exclude, inter alia, “bolts,

cap screws, and nuts produced for an original equipment manufacturer (OEM) part number

specific to any” automobile, work truck, medium-duty passenger vehicle, or aircraft, each as

elsewhere defined. AD Notice, 74 Fed. Reg. at 54,542-43; CVD Notice, 74 Fed. Reg. at 54,546-

47.

By the time Commerce issued these notices, however, ITC had already prepared and

transmitted its foreign producer,4 domestic producer, and domestic importer questionnaires. See

Memorandum from Catherine DeFilippo, Office of Investigations, ITC, to The Commission, Re:

Investigation Nos. 701-TA-472 and 731-TA-1171-1172 (Preliminary): Certain Standard Steel

Fasteners from China and Taiwan—Supplemental Memorandum to the Staff Report (November

5, 2009), CL 227 (“Supplemental Memo”). The instructions accompanying these questionnaires

provide a definition of CSSF that comes from the petition’s scope language and that therefore

4
In this opinion, a non-producing exporter is also a “producer” in the context of China or Taiwan.

3
makes no explicit reference to any automotive, aerospace, or OEM exclusion. See Instruction

Booklet: General Information, Instructions, and Definitions for Commission Questionnaires,

Certain Standard Steel Fasteners from China and Taiwan, Investigation Nos. 701-TA-472 and

731-TA-1172-1172 (Preliminary) (“Questionnaire Instructions”), Public List (“PL”) 8 at 5;

Certain Standard Steel Fasteners from the People’s Republic of China and Taiwan: Petition for

the Imposition of Antidumping and Countervailing Duties Pursuant to Section 731 of the Tariff

Act of 1930, As Amended, Volume I: Volume on Injury, CL 1 (“Petition”) at 3.5 The instructions

define “standard fasteners” as those “that can be described from nationally recognized consensus

standards documents and may be produced by any interested manufacturing facility.”

Questionnaire Instructions, PL 8 at 5. They also distinguish standard fasteners from “modified

standard” fasteners as well as from “specialty/patented fasteners,” a category that comprises

“proprietary-patented” fasteners and “engineered special parts.” Id.

ITC sent questionnaires to “all” firms it believed produced CSSF in the United States,

Staff Report at III-1-2, IV-1, certain firms it believed imported CSSF into the United States, id. at

IV-1, and certain firms it “believed to be possible producers or exporters of CSSF” in China or

Taiwan, id. at VII-1, VII-3. ITC received responses from 72 percent of those domestic producers

(26 of 36 firms), id. at III-1, 46 percent of those particular domestic importers (36 of 78 firms),

id. at IV-1, 35 percent of those particular foreign producers in China (12 of 34 firms), id. at VII-

5
Plaintiff’s petition defines the “scope of the requested investigations” as “certain standard nuts, bolts, and
cap screws of steel other than stainless steel.” Petition, CL 1 at 3. That definition further identifies the physical
characteristics of these fasteners, notes that they are “typically certified to the specifications published by” certain
organizations, and references six relevant customs subheadings “for convenience and customs purposes.” Id. at 3-4.
Although that definition provides no additional explanation of the term “standard,” Plaintiff states later in its petition
that the proposed scope “excludes proprietary or modified fasteners used by aerospace and automotive [OEMs]
(e.g., Boeing, Ford, General Motors, Chrysler). These products are produced to either proprietary standards (i.e.,
patented fasteners), or are produced to OEM customer proprietary prints that are modified beyond the standard
specification for OEM specific applications (otherwise known as ‘specials’) and consumed by that OEM.” Id. at 6-7.

4
1, and an unspecified percent of those particular foreign producers in Taiwan, id. at VII-3.6

Some of these responses were deemed unusable as they were incomplete or untimely. Id. at III-1

nn.1, 5, IV-1 n.2. In addition, some responding firms certified that they did not produce, export,

or import CSSF during the period of investigation (“POI”), and others provided data relating

only to fasteners that were ultimately excluded from the scope of the investigation. Id. at III-1,

IV-1, VII-1, VII-3.

In its questionnaires, ITC asked domestic producers as well as importers to report their

transactions of CSSF and certain other fasteners during the period of investigation (“POI”)

running from January 2006 through June 2009. See Staff Report at III-1, IV-1, C-4. Based on the

responses of domestic producers, ITC concluded that Plaintiff is by far the largest domestic

producer of CSSF, accounting for [[ a certain ]] percent of reported production in 2008. Id. at III-

2. The two largest reporting domestic producers together account for [[ a larger ]] percent of

reported production in that year. Id. The reported production of a third firm, [[Producer A ]]

(“Producer A”), accounts for another [[ smaller ]] percent. Id. However, Plaintiff argued before

ITC that this firm manufactured only nonstandard [[ versions of a certain type of fastener ]] and

hence produced no CSSF during the POI. See Post-Conference Brief of Nucor Fastener (October

20, 2009), CL 234 at 1 n.3.

ITC’s domestic producer and importer questionnaires also solicited pricing data for the

four specific “CSSF product categories” that Plaintiff had proposed in its petition. Staff Report at

6
ITC sent questionnaires to 23 firms in Taiwan but received responses from at least 49 firms. Staff Report
at VII-3. According to ITC, “[m]ore questionnaires were received than sent because staff believes that the Taiwan
industry association circulated the Commission’s questionnaire among its members to increase participation in these
investigations.” Id. at VII-3 n.1. The Staff Report does not state whether ITC received responses from all of the
firms in Taiwan to which it sent questionnaires. Id. at VII-3.

5
V-8.7 Some of the responding firms “reported useable price information, but not necessarily for

all [pricing] products or periods.” Id. at V-8-9.8 That information covered between 1.1 and 3.6

percent of total reported CSSF shipments during the POI. Id. at V-9. ITC attributed these

“limited coverage ratios” to “the large number of CSSF products.” Id. at V-9 n.29.

In addition to these data, the domestic producer questionnaire requested “profit-and-loss

statements for CSSF only.” Id. at VI-3 n.1. However, some of the responding producers,

including Producer A, “instead estimated all of their CSSF costs based upon the ratio of CSSF

sales to all fastener sales. As a result, the [reported] profit margin for CSSF and all other

fasteners was the same.” Id. These firms together account for [[ a minority ]] percent of reported

production in 2008. Id. at III-2.

The domestic producer questionnaire also asked whether the recipient had experienced

any negative financial effects, lost revenues, or lost sales as a result of CSSF imports from China

and Taiwan and whether it anticipated any negative financial impacts from these imports. See,

e.g., U.S. Producers’ Questionnaire Response of Nucor Fastener, CL 101 (“Nucor’s

Questionnaire Response”) at III-14-15, VII-2-3. Six domestic producers accounting for [[ a very

significant ]] percent of reported 2008 production identified negative financial effects. See

Plaintiff’s Memo at 33-34, 37; Staff Report at III-2. Five of these firms alleged that they had lost

revenues or sales, and the sixth “stated that the prices of CSSF from China and Taiwan are so

low that the firm does not bother to provide competing price quotes when product from these

countries is being considered by a potential customer.” Staff Report at V-24; see id. at III-2.

7
For example, one of these four products is “Hex cap screw, Grade 8, type 1 steel, 5/8 inch diameter by 2
inches long, 18 threads per inch, fully threaded, and zinc phosphate and oil coating.” Staff Report at V-8.
8
Specifically, “[t]hree U.S. producers of CSSF, six U.S. importers of the specified CSSF products from
China, and nine U.S. importers of CSSF from Taiwan reported useable price information, but not necessarily for all
products or periods.” Staff Report at V-8-9.

6
 In a unanimous vote, ITC determined that “there is no reasonable indication that an

industry in the United States is materially injured or threatened with material injury by reason of

imports of [CSSF] from China and Taiwan.” Views at 3. To reach these determinations, ITC also

found “no likelihood that any evidence we would have obtained in any final phase of these

investigations would” provide any such indication. Id. at 9. ITC’s Views make extensive

reference to its Staff Report. See generally Views.9

Plaintiff now challenges ITC’s determinations. See Complaint, Doc. No. 6 (December 15,

2009). It alleges that ITC relies on manifestly insufficient and irrelevant data and fails to account

for information suggesting material injury. Plaintiff’s Memo at 2. Such errors, it argues, render

ITC’s determinations “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” Plaintiff’s Motion at 2; see Plaintiff’s Memo.

III
STANDARD OF REVIEW

In reviewing negative preliminary injury determinations, “the court shall hold unlawful

any determination, finding, or conclusion found . . . to be arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1).10

“Although this inquiry into the facts is to be searching and careful, the ultimate standard

of review is a narrow one. The court is not empowered to substitute its judgment for that of the

agency.” Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 28 L.

Ed. 2d 136 (1971), cited in Tex. Crushed Stone Co. v. United States, 35 F.3d 1535, 1540 (Fed.

Cir. 1994). Accordingly, the court reviews ITC’s application of—but does not itself apply—the
9
The ITC staff assigned to the instant investigations consisted of a supervisory investigator, an investigator,
an industry analyst, an economist, an accountant, a statistician, an investigatory intern, and two attorneys. See Staff
Report (cover page).
10
For a comparison of the “arbitrary and capricious” standard with the “substantial evidence” standard, see
Consol. Fibers, Inc. v. United States, 535 F. Supp. 2d 1345, 1352-54 (2008).

7
statutory “reasonable indication” standard. See Comm. for Fair Coke Trade v. United States, 27

CIT 774, 777 (2003); see also infra Part IV.A. The court “ascertain[s] whether there was a

rational basis for the determination” and “may only reverse [that] determination if there is a

‘clear error’ of judgment and where there is ‘no rational nexus between the facts found and the

choices made.’” Ranchers-Cattlemen Action Legal Found. v. United States, 23 CIT 861, 878, 74

F. Supp. 2d 1353 (1999) (citing Torrington Co. v. United States, 16 CIT 220, 223, 790 F. Supp.

1161 (1992) and quoting Conn. Steel Corp. v. United States, 18 CIT 313, 315, 852 F. Supp. 1061

(1994)). “Normally, an agency rule would be arbitrary and capricious if the agency has relied on

factors which Congress has not intended it to consider, entirely failed to consider an important

aspect of the problem, offered an explanation for its decision that runs counter to the evidence

before the agency, or is so implausible that it could not be ascribed to a difference in view or the

product of agency expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463

U.S. 29, 43, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983) (discussing agency rulemaking).

The tension inherent in this standard of review is captured in part by the Supreme Court’s

statement that “[w]hile we may not supply a reasoned basis for the agency’s action that the

agency itself has not given, we will uphold a decision of less than ideal clarity if the agency’s

path may reasonably be discerned.” Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419

U.S. 281, 285-86, 95 S. Ct. 438, 42 L. Ed. 2d 447 (1974) (internal citations omitted).

On one hand, “[t]he court can only review the reasoning that the Commission expresses.”

Fair Coke, 27 CIT at 776 (quoting Altx, Inc. v. United States, 26 CIT 1425, 1426 (2002)

(applying the substantial evidence standard)). ITC must provide notice of its determination and

of “the facts and conclusions on which its determination is based.” 19 U.S.C. § 1673b(f). All of

“ITC’s conclusions must be based on evidence, not conjecture, and in no event may the court

8
‘supply a reasoned basis for the agency’s action that the agency itself has not given. . . .’” Fair

Coke, 27 CIT at 776 (quoting Bowman, 419 U.S. at 285-86). Likewise, the court “may not

accept . . . counsel’s post hoc rationalizations for agency action,” because such “action must be

upheld, if at all, on the basis articulated by the agency itself.” Motor Vehicle Mfrs. Ass’n, 463

U.S. at 50. “For purposes of affirming no less than reversing its orders, an appellate court cannot

intrude upon the domain which Congress has exclusively entrusted to an administrative agency.”

SEC v. Chenery Corp., 318 U.S. 80, 88, 63 S. Ct. 454, 87 L. Ed. 626 (1943).

On the other hand, “Congress did not mandate” that ITC “discuss every facet of its

investigation, but only ‘material issues of law or fact.’” Jeannette Sheet Glass Corp. v. United

States, 9 CIT 154, 161, 607 F. Supp. 123 (1985) (subsequent history omitted) (quoting House

Doc. No. 96-153, 96th Cong., 1st Sess. 27 (1979), reprinted in 1979 U.S.C.C.A.N. 655, 685).

This excludes arguments and facts that are “irrelevant or trivial.” Statement of Administrative

Action accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316 (1994)

(“SAA”) at 892, reprinted in 1994 U.S.C.C.A.N. 4040, 4215.11 “Absent some showing to the

contrary, the Commission is presumed to have considered all evidence in the record,” Conn.

Steel Corp., 18 CIT at 316 (quoting Rhone Poulenc, S.A. v. United States, 8 CIT 47, 55, 592 F.

Supp. 1318 (1984) (applying the substantial evidence standard)), and “a party attempting to

overcome [that] presumption must do more than assert a mere failure to discuss evidence,”

Dastech Int’l v. USITC, 21 CIT 469, 477, 963 F. Supp. 1220 (1997) (applying the substantial

11
The Uruguay Round Agreements Act (“URAA”) approved the new World Trade Organization
Agreement, and the agreements annexed thereto, “resulting from the Uruguay Round of multilateral trade
negotiations [conducted] under the auspices of the General Agreement on Tariffs and Trade.” 19 U.S.C.
§ 3511(a)(1). The SAA, which was submitted to and approved by Congress, see 19 U.S.C. § 3511(a)(2), is “an
authoritative expression by the United States concerning the interpretation and application of the Uruguay Round
Agreements and [the Uruguay Round Agreements] Act in any judicial proceeding in which a question arises
concerning such interpretation or application.” 19 U.S.C. § 3512(d).

9
evidence standard). More generally, an ITC determination is “presumed to be correct,” and

“[t]he burden of proving otherwise shall rest upon the party challenging” it. 28 U.S.C. § 2639.

In resolving this tension, the court is guided by two principles. First, “every party before

an agency of the United States has a right to expect a fair and logical determination containing as

much analysis as is necessary to adequately demonstrate the basis for its conclusions.” Usinor v.

United States, 26 CIT 767, 785 (2002) (applying the substantial evidence standard). Second,

“[t]he court is not empowered to substitute its judgment for that of the agency.” Citizens to Pres.

Overton Park, 401 U.S. at 416. Accordingly, while the court will necessarily exercise some

judgment at the extremes in order to determine whether evidence is trivial or fatal in relation to

ITC’s determinations, it will not otherwise reweigh evidence addressed in those determinations

or weigh evidence that should instead be addressed in a remand redetermination.

IV
DISCUSSION

Application of the law, see infra Part IV.A, to the facts of this matter, see supra Part II,

compels five main holdings. First, ITC improperly treats its import data as “comprehensive.”

See infra Part IV.B. Second, ITC identifies, and the court discerns, no rational basis for

unqualified reliance on Producer A’s questionnaire response. See infra Part IV.C. Third, ITC

permissibly relies on limited pricing data. See infra Part IV.D. Fourth, ITC sufficiently addresses

concerns about certain estimated data. See infra Part IV.E. Fifth, ITC sufficiently addresses

allegations of injury made by domestic producers. See infra Part IV.F.

10
 A
Statutory Overview

In making a preliminary injury determination in an antidumping or countervailing duty

investigation, ITC is statutorily required to:

determine, based on the information available to it at the time of the
determination, whether there is a reasonable indication that—
(A) an industry in the United States—
(i) is materially injured, or
(ii) is threatened with material injury, or
(B) the establishment of an industry in the United States is materially retarded,
by reason of imports of the subject merchandise and that imports of the subject
merchandise are not negligible.

19 U.S.C. § 1673b(a). As part of such a determination, ITC:

(i) shall consider—
(I) the volume of imports of the subject merchandise,
(II) the effect of imports of that merchandise on prices in the United States
for domestic like products, and
(III) the impact of imports of such merchandise on domestic producers of
domestic like products, but only in the context of production operations
within the United States; and
(ii) may consider such other economic factors as are relevant to the determination
regarding whether there is material injury by reason of imports.

19 U.S.C. § 1677(7)(B). In evaluating import volume, “the Commission shall consider whether”

that volume, “or any increase in that volume, either in absolute terms or relative to production or

consumption in the United States, is significant.” 19 U.S.C. § 1677(7)(C)(i). In evaluating price

effects:

the Commission shall consider whether—(I) there has been significant price
underselling by the imported merchandise as compared with the price of domestic
like products of the United States, and (II) the effect of imports of such
merchandise otherwise depresses prices to a significant degree or prevents price
increases, which otherwise would have occurred, to a significant degree.

19 U.S.C. § 1677(7)(C)(ii). Finally, in evaluating impact:

the Commission shall evaluate all relevant economic factors which have a bearing
on the state of the industry in the United States, including, but not limited to—

11
 (I) actual and potential decline in output, sales, market share, profits,
productivity, return on investments, and utilization of capacity,
(II) factors affecting domestic prices,
(III) actual and potential negative effects on cash flow, inventories,
employment, wages, growth, ability to raise capital, and investment,
(IV) actual and potential negative effects on the existing development and
production efforts of the domestic industry, including efforts to develop a
derivative or more advanced version of the domestic like product, and
(V) in a[n antidumping] proceeding . . . , the magnitude of the margin of
dumping.
The Commission shall evaluate all [such] relevant economic factors . . . within the
context of the business cycle and conditions of competition that are distinctive to
the affected industry.

19 U.S.C. § 1677(7)(C)(iii).

“ITC has consistently viewed [19 U.S.C. § 1673b(a)’s] ‘reasonable indication’ standard

as one requiring that it issue a negative [preliminary] determination . . . only when (1) the record

as a whole contains clear and convincing evidence that there is no material injury or threat of

such injury; and (2) no likelihood exists that contrary evidence will arise in a final investigation.”

Am. Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed. Cir. 1986). In applying this standard,

ITC “may weigh all evidence before it and resolve conflicts in the evidence.” Ranchers-

Cattlemen, 23 CIT at 878 (citing Am. Lamb, 785 F. 2d at 1002-04).

B
ITC Improperly Treats Its Import Data As “Comprehensive”

ITC asserts that it “was able to collect comprehensive data on CSSF in these

investigations,” Views at 4, including “comprehensive import data,” id. at 6.12 ITC relies on

these data—and on its characterization of them as comprehensive—in finding both “no

12
In City of Milwaukee v. Illinois, 451 U.S. 304, 101 S. Ct. 1784, 68 L. Ed. 2d 114 (1981), the Supreme
Court used the terms “all-encompassing” and “comprehensive” interchangeably in the context of statutory
displacement of federal common law and held that establishment by Congress of “a self-consciously comprehensive
program . . . strongly suggests that there is no room” for court-made improvements. City of Milwaukee, 451 U.S. at
318 (emphasis added); see also Webster’s Third New International Dictionary (2002) (defining “comprehensive” as
“covering a matter under consideration completely or nearly completely” or “accounting for or comprehending all or
virtually all pertinent considerations”).

12
reasonable indication” of material injury or threat of material injury and “no likelihood that any

evidence we would have obtained in any final phase of these investigations would” provide any

such indication. Id. at 3, 9; see id. at 3-50; see also 19 U.S.C. § 1673b(a).13

Plaintiff challenges ITC’s characterization of its data as “comprehensive,” most

persuasively with regard to the import volumes documented and evaluated by ITC. See

Plaintiff’s Memo at 25-30.14 ITC obtained these volumes from the questionnaire responses of 30

importers, which represent only a portion of the 36 importers that provided some response,

which in turn represent only a portion of the 78 importers to which ITC sent a questionnaire,

which in turn represent only a portion of the “several hundred importers of subject merchandise”

alleged by Plaintiff in its petition. Plaintiff’s Memo at 26; see Staff Report at IV-1. In arguing

that “the basis for the agency’s [conclusion] that the import coverage was sufficient to enable a

reliable volume analysis [is] completely unclear,” Plaintiff identifies “three potential

explanations” for ITC’s conclusion and explains why “all are illogical.” Plaintiff’s Memo at 26.

Defendant defends these three bases and identifies no others. See Memorandum of Defendant

United States International Trade Commission in Opposition to Plaintiff’s Motion for Judgment

on the Agency Record (“Defendant’s Response”) at 27-33.15 The court discusses each in turn.

13
Indeed, the collection of “comprehensive” data would render unlikely the collection of additional
significant data, contrary or not.
14
This opinion uses the statutory term “volume,” 19 U.S.C. § 1677(7), to refer to the amount of imports,
which the instant investigations describe primarily in terms of weight, see, e.g., Views at 36-38.
15
Defendant states that Plaintiff “contests the Commission’s volume analysis primarily on the ground that
it disagrees with the Commission’s use of importer questionnaires to measure subject imports.” Defendant’s
Response at 28-29 (citing Plaintiff’s Memo at 2, 5-6, 10-12, 25-30, 38-39). Defendant then explains why ITC chose
to use questionnaire data rather than customs data. See id. at 29-30. To the extent that Defendant’s statement refers
to the ITC’s choice of questionnaire data over customs data, see id. at 29-30, Plaintiff correctly describes that
statement as “a clear mischaracterization” of its argument, Nucor Fastener Division’s Reply Brief, Doc. Nos. 60, 61
(“Plaintiff’s Reply”) at 12; see Plaintiff’s Memo at 2, 5-6, 10-12, 25-30, 38-39. However, the court construes
Defendant’s statement to refer to the way in which ITC used the questionnaire data rather than to ITC’s choice of
those data.

13
 First, Plaintiff questions both the meaning and the utility of ITC’s statement that the

“responses ultimately received from [the 30 importers] represented the large majority of known

CSSF imports from China and Taiwan between January 2006 and June 2009,” Views at 6; Staff

Report at IV-1. See Plaintiff’s Memo at 26. Plaintiff infers, and the court agrees, that “known

CSSF imports” refers to volumes reported by the 36 importers that provided at least a partial

response. See Plaintiff’s Memo at 26-27. The sole support of ITC’s statement in the Views is a

citation to the Staff Report, see Views at 6 n.19; the sole support of the same statement in the

Staff Report is a footnote discussing why responses received from six of the 36 importers were

not used and noting that only one of those six reported “CSSF imports in somewhat substantial

quantities” from a subject country, Staff Report at IV-1 n.2.

Defendant offers a different construction of ITC’s statement, contending that ITC

compared the importers responsible for the 30 responses “to its initial list of 78 firms that

appeared to be the major importers of all types of steel fasteners covered by these [customs]

subheadings.” Defendant’s Response at 30-31. In this way, “the Commission and its staff were

able to determine that they had received data from the large majority of significant known

imports of fasteners from China and Taiwan during the POI, indicating that they had good

coverage for importers who were the likely importers of subject CSSF.” Id. at 31. Defendant’s

construction, however, is problematic. Critically, the contention that supports it is entirely post

hoc; Defendant cites no record evidence of any such comparison. See Defendant’s Response;

Motor Vehicle Mfrs. Ass’n, 463 U.S. at 50. Moreover, the construction is undermined by ITC’s

assertion that five of the six relevant customs subheadings “contain[] large amounts of fasteners

14
not subject to these investigations.” Views at 5.16 Finally, if Defendant means “significant

known importers” rather than “significant known imports,” its construction might support a

conclusion that reported CSSF imports account for the majority of actual (i.e., known plus

unknown) CSSF imports. This, however, is not ITC’s stated conclusion; ITC instead refers only

to “known CSSF imports.” Views at 6; Staff Report at IV-1 (emphasis added).

Second, Plaintiff questions how the 30 “questionnaire responses show [that] a small

number of firms accounted for a large portion of CSSF imports,” Views at 6. See Plaintiff’s

Memo at 27. At most, Plaintiff argues, these data show that “a small number of firms accounted

for a large portion of” reported CSSF imports. Plaintiff’s Memo at 27. Defendant responds that

ITC’s observation is consistent with testimony at a staff conference that “this industry involved a

limited number of large importers.” Defendant’s Response at 31 (citing Preliminary Conference

in the Matter of Certain Standard Steel Fasteners from China and Taiwan (October 14, 2009), PL

46 (“Conference Transcript”) at 71, 107-08, 118, 207). However, the five transcript pages cited

by Defendant contain no such characterization of the import industry. See Conference Transcript,

PL 46 at 71, 107-08, 118, 207.17 Moreover, Defendant points to no record evidence

demonstrating or even discussing an overlap between the large importers that responded to the

questionnaire and the large importers that were allegedly referenced at that conference. See

Defendant’s Response at 30-33. Finally, neither ITC nor Defendant explains why the alleged

16
Although CSSF imports could conceivably constitute a “large majority” of the imports under
subheadings that nonetheless “contain[] large amounts of [non-CSSF] fasteners,” ITC provides no such explanation.
See Views; Staff Report.
17
In response to a question by the court, Defendant stated that these five pages had been cited in error. See
June 23, 2011 Oral Argument at 12:41:04-12:47:45. Pursuant to the court’s instruction, Defendant subsequently
filed a letter citing ten different pages. See Letter from Mary Jane Alves, Attorney-Advisor, U.S. International Trade
Commission, to Evan J. Wallach, Judge, U.S. Court of International Trade, RE: Nucor Fastener Division v. United
States, Court No. 09-00531 (June 24, 2011), Doc. No. 79, app. 2 (citing Conference Transcript, PL 46 at 65-66, 103-
04, 113-14, 175-77, 199). These ten pages also contain no such characterization of the import industry. See
Conference Transcript, PL 46 at 65-66, 103-04, 113-14, 175-77, 199.

15
presence of “a limited number of large importers” means that the aggregate imports of the

numerous nonresponding importers are necessarily small. See Views; Staff Report; Defendant’s

Response at 30-33.18 ITC appears to conclude that it can treat its sample of responding importers

as the universe of relevant importers based on an analysis in which it treats that sample as that

universe. Plaintiff correctly characterizes this logic as “entirely circular.” Plaintiff’s Memo at 27.

Third, Plaintiff questions the conclusion that ITC draws from comparing importer

responses with foreign producer responses. See id. at 27-30. In their respective responses, firms

in Taiwan reported exporting more subject merchandise to the United States than firms in the

United States reported importing from Taiwan. Compare Staff Report at IV-3 with id. at VII-4.

Indeed, for each of 2006, 2007, 2008, interim 2008, and interim 2009, the reported export

volume exceeds the reported import volume by [[ a significant ]] percent. Plaintiff’s Memo at 29

(citing Staff Report at IV-3, VII-4). Plaintiff concludes that these higher export volumes

demonstrate that the import volumes used by ITC are “significantly underreported.” Id. at 29.19

18
In support of its conclusion that “a small number of firms accounted for a large portion of CSSF imports
into the United States, with numerous other firms each importing significantly smaller amounts,” Views at 6, ITC
notes the “example” that “the 10 largest responding U.S. importers collectively accounted for 90.2 percent of
reported imports in 2008,” id. at 6 n.20. In other words, the other 20 domestic importers that provided usable
responses collectively account for 9.8 percent of reported imports in 2008. However, ITC did not receive responses
from 42 firms that each “represent[] greater than one percent of total imports from China or Taiwan under” HSTUS
statistical reporting number 7318.15.2030 “in 2008 or in January-June 2009” or that “may have imported more than
one percent of total imports from China or Taiwan under the aggregated data of” all six customs numbers during that
period. Staff Report at IV-1 n.1, cited in Views at 6 nn.17-18. (It is not clear whether these data also include 2006
and 2007. Compare Staff Report at IV-1 n.1 with Views at 6 n.16.) ITC has not explained why the aggregated
imports of these 42 firms are necessarily insignificant. See Views; Staff Report. Indeed, if CSSF imports were to
constitute a large majority of the fasteners imported under these customs numbers, see supra note 16, they would
necessarily be significant. Furthermore, neither ITC nor any party has pointed to record evidence comparing the
volumes of all imports recorded under these customs subheadings to the volumes of CSSF imports reported in the
questionnaire responses. See Views; Staff Report; Plaintiff’s Memo; Defendant’s Response; Defendant-Intervenors’
Response; Plaintiff’s Reply.
19
Indeed, ITC reports without qualification that “[t]he largest foreign producer [in Taiwan] in terms of
production . . . estimated that it accounted for . . . [[ a certain ]] percent of all exports of subject merchandise from
Taiwan to the United States in 2008.” Views at 7 n.22. This estimate implies that the volume of CSSF exported
from Taiwan to the United States in 2008 is [[ significantly larger than ]] the volume reported by responding
importers. Compare [[ Foreign Producers’/Exporters’ Questionnaire – Largest Taiwanese Producer, at 7 ]] with Staff
Report at IV-3.

16
 ITC reaches a different conclusion. Although it states that reported imports “are

somewhat more inclusive than” reported exports with respect to subject merchandise from

Taiwan, it also notes a “converse” imbalance with respect to subject merchandise from China.

Views at 7 n.25.20 The consequence of these opposing imbalances is that “producers in China

and Taiwan reported exports of subject merchandise to the United States in collective quantities

that are relatively similar to the quantities of subject merchandise imports collectively reported

by [domestic] importers for the period examined.” Id. at 7. According to Defendant, this rough

equivalence “yet again confirmed that it was reasonable to rely on the importer questionnaire

data.” Defendant’s Response at 32.

That conclusion is untenable. As Plaintiff notes, “[t]wo wrongs do not make a right, and

two incomplete and unreliable data sets do not become reliable through their combination.”

Plaintiff’s Memo at 29. At the data collection stage of ITC’s proceedings, CSSF from China and

CSSF from Taiwan are dissimilar; ITC offers no explanation for how undercounting the exports

of one can remedy undercounting the imports of the other.21 ITC does state that “[r]egardless of

which combination of data sets we examine, however, we arrive at the same conclusion,” Views

at 7 n.25, but identifies neither the analytic paths that it follows nor the particular conclusion to

which those paths all lead, see id.

20
Plaintiff also describes as “highly incomplete” the export data for CSSF from China. Plaintiff’s Memo at
28. In particular, “[t]he petition . . . identified nearly 900 producers of CSSF in Taiwan and China, with the majority
of these in China. However, the Commission sent questionnaires to only 34 Chinese producers, and received only
11 responses. The responding Chinese producers reported exports [to the United States] of [[ a number of ]] tons in
2008. Responding importers, by contrast, reported entries of [[ a significantly greater amount than ]] that amount of
Chinese CSSF over the same time period. Similar discrepancies exist with respect to all other time periods
measured by the Staff.” Id. (internal citations to the record omitted). The Staff Report does not explain how ITC
selected particular foreign producers. See Staff Report at I-4, VII-1, 3.
21
This use of conflation to demonstrate the validity of reported volumes is different from the statutorily
authorized use of cumulation to determine the significance of volumes. See 19 U.S.C. § 1677(7)(G).

17
 Because all three potential explanations are illogical, ITC has failed to supply a “reasoned

basis,” Bowman, 419 U.S. at 286, for characterizing and relying on manifestly incomplete import

data as “comprehensive,” Views at 4, 6. To the extent that “the agency’s path may [nonetheless]

reasonably be discerned,” Bowman, 419 U.S. at 285-86, that path appears to involve casual

conflation of a limited sample with the larger population from which that sample is drawn. ITC

first treats the reported import volumes as the actual import volumes. See Views at 36-37. ITC

then calculates “apparent U.S. consumption” by summing those reported import volumes with

the domestic volumes reported by domestic producers. Id. at 36.22 Finally, ITC calculates the

“[c]umulated subject imports’ share of apparent U.S. consumption” by dividing the reported

import volumes by that sum. Id. at 37. Unless ITC compares its coverage of domestic

production with its coverage of foreign imports, that final calculation is meaningless; a group

with a comparatively poor response would have an erroneously low calculated market share.23

Moreover, the year-to-year trends identified by ITC, see id. at 37, reflect the performance of the

responding firms and not necessarily the performance of the potentially fluid groups they

represent. In short, rather than “consider . . . the volume of imports of the subject merchandise,”

22
The phrase “apparent U.S. consumption” is a term of art that means “the sum of the domestic industry’s
U.S. shipments and imports from subject and non-subject countries.” Citric Acid and Certain Citrate Salts from
Canada and China, Investigation Nos. 701-TA-456 and 731-TA-1151-1152 (Final), USITC Pub. 4076 (May 2009) at
19, cited in Letter from Mary Jane Alves, Attorney-Advisor, U.S. International Trade Commission, to Evan J.
Wallach, Judge, U.S. Court of International Trade, RE: Nucor Fastener Division v. United States, Court No. 09-
00531 (June 24, 2011), Doc. No. 79; see June 23, 2011 Oral Argument at 12:18:10-12:18:22. There is no indication
that use of the word “apparent” implies an estimate. See Views; Staff Report; June 23, 2011 Oral Argument at
12:18:10-12:18:22.
23
ITC has previously recognized this problem. In the preliminary determinations affirmed in Torrington,
16 CIT 220, ITC was able to compare its coverage of domestic production with its coverage of foreign imports. See
Ball Bearings, Mounted or Unmounted, and Parts Thereof, from Argentina, Austria, Brazil, Canada, Hong Kong,
Hungary, Mexico, the People’s Republic of China, Poland, the Republic of Korea, Spain, Taiwan, Turkey and
Yugoslavia, USITC Pub. 2374 (April 1991) at A-17-18. Because these two coverage rates were similar, ITC
concluded that a comparison of the underlying data was proper. See id. at A-18-19. ITC also acknowledged
explicitly that its “[c]onsumption estimates are understated because not all producers and importers responded to the
Commission’s questionnaire.” Id. at A-18 n.21.

18
19 U.S.C. § 1677(7)(B)(i), ITC effectively considers only the volume of imports reported by a

self-selected subset of a subset.24

This is not to say that ITC must obtain perfect information in order to carry out its

statutorily mandated task. The court is aware of the “compromise which the ITC must make

between a perfectly accurate and an extremely rapid determination under this complex statute,”

Atl. Sugar, Ltd. v. United States, 744 F. 2d 1556, 1563 (Fed. Cir. 1984). In the context of a

negative preliminary injury determination, this court does not require complete data. See Comm.

for Fair Coke Trade v. United States, 28 CIT 1140, 1163 (2004) (holding that ITC’s use of

importer questionnaire responses accounting for a quantified majority of imports was not an

abuse of discretion); Torrington, 16 CIT at 222 (holding that ITC’s use of domestic producer

questionnaire responses accounting for a quantified majority of domestic production was not an

abuse of discretion).25

Nonetheless, a negative preliminary injury determination must still possess “a rational

basis in fact.” Am. Lamb, 785 F. 2d at 1004 (quoting S. Rep. No. 249, 252, 96th Cong., 1st Sess.

66, reprinted in 1979 U.S.C.C.A.N. 449, 638); see supra Part III. In a perfect world, that factual

basis would include truly comprehensive data on imports—actual volumes, actual market shares,

and the actual changes in each throughout the entire POI. See 19 U.S.C. § 1677(7). In the

necessarily imperfect world of antidumping and countervailing duty determinations, see Atl.

24
Although “[t]he term ‘industry’ means the producers as a whole of a domestic like product, or those
producers whose collective output of a domestic like product constitutes a major proportion of the total domestic
production of the product,” 19 U.S.C. § 1677(4)(A), no party identifies a corresponding provision for importers, see
Plaintiff’s Memo; Defendant’s Response; Defendant-Intervenors’ Response; Plaintiff’s Reply.
25
In Fair Coke, the “questionnaire responses report import data from firms accounting for approximately
80% of U.S. imports from China during the period of investigation, and virtually all U.S. imports from Japan during
that same period.” Fair Coke, 28 CIT at 1163. In Torrington, the “information provided by the 25 producers
represented a substantial majority of domestic production, accounting for an estimated 74%, by quantity, of
producers’ total shipments of complete ground ball bearings in 1989 and for 68%, by value, of 1989 producers’ total
shipments of ball complete [sic] ground bearings and parts.” Torrington, 16 CIT at 222; see also supra note 23.

19
Sugar, 744 F. 2d at 1563, that basis must include at least a candid recognition of and response to

inherent limitations, see Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. ITC’s unsupported

statement that its limited data are comprehensive demonstrates a complete failure “to consider an

important aspect of the problem” and amounts to “an explanation for its decision that runs

counter to [its] evidence.” Id. Treating those data as pieces of the full picture is analytical;

treating them as the full picture is arbitrary.

C
ITC Identifies, And The Court Discerns, No Rational Basis For Unqualified Reliance On
Producer A’s Questionnaire Response

Plaintiff argues that Producer A is not a CSSF producer and hence not part of the

domestic “industry” as that term is defined in 19 U.S.C. § 1677(4)(A). See Plaintiff’s Memo at

12-15. In support of this claim, Plaintiff relies primarily on Producer A’s questionnaire response.

See id.26

ITC’s domestic producer questionnaire asks the recipient to “[r]eport the value of [its]

U.S. shipments of the specified merchandise during the specified periods” and refers the reader

to “definitions in the instruction booklet.” E.g., Producer A’s Response at II-11.27 It segregates

the “specified merchandise” into “Fasteners less than 6mm in diameter,” “CSSF,” “Modified

standard fasteners,” “Specialty/Patented fasteners,” and “Other.” Id. “Specialty/Patented

fasteners,” in turn, are subdivided into “Automotive,” “Aerospace,” and “Other.” Id. ITC

26
While conceding that Plaintiff raised to ITC the “issue about whether to include [Producer A] in the
domestic industry,” Defendant’s Response at 18 n.19, Defendant states that Plaintiff did so “solely in a footnote” of
its administrative post-conference brief, id. at 16. Plaintiff states that it also raised this issue in a subsequent email
to ITC that is not listed in ITC’s administrative record index. See Plaintiff’s Memo at 14. If Plaintiff wants the court
to consider this extrarecord evidence, it should make a motion to supplement or amend the administrative record.
See Giorgio Foods, Inc. v. United States, Slip Op. 11-27, 2011 Ct. Intl. Trade LEXIS 34 (March 8, 2011).
27
“Producer A’s Response” refers to [[ U.S. Producers’ Questionnaire Response of Producer A, as amended
by a subsequent supplemental response. Certain responses changed substantially between the two. ]]

20
appears to have intended for any given fastener to fall into one and only one of these seven

categories. See Questionnaire Instructions, PL 8 at 5; see also Defendant’s Response at 17.28

Producer A’s response, however, suggests significant confusion. For each period,

Producer A reported production of [[ fastener type ]], CSSF, [[ fastener type ]], [[ fastener type ]],

and no others. Producer A’s Response at II-11. For each period, the value of those [[ fastener

types]] is equal to the combined value of the [[ fastener types ]] and CSSF. See id. For 2008, for

example, Producer A reported producing [[ fastener type ]] worth [[ a certain amount ]], CSSF

worth [[ a certain amount ]], [[ fastener type ]] worth [[ a certain amount ]], and [[ fastener type

]] worth [[ a certain amount ]]. Id. The sum of [[ a certain amount ]] and [[ a certain amount ]] is

[[ a certain amount ]]. In other words, Producer A appears to have classified the same fasteners

as both standard and nonstandard, placing them simultaneously within and beyond the scope of

the investigations.

Other aspects of Producer’s A response also suggest confusion about the meaning of

these critical categories. When asked whether it “produce[s] other products on the same

equipment and machinery used in the production of CSSF,” Producer A answered in the

affirmative but then reported that CSSF accounted for 100 percent of its products so produced.

Id. at II-3. Similarly, when asked whether it “produce[s] other products using the same

production and related workers employed to produce CSSF,” Producer A again answered yes but

reported that CSSF accounted for 100 percent of its products so produced. Id. at II-5. When
28
ITC’s Supplemental Memo does not sufficiently address how these categories map onto the scope
announced by Commerce. See Supplemental Memo, CL 227 at 1 (“[T]he Commission had already asked
questionnaire respondents to report data on fasteners for these automotive and aerospace applications separately.”);
compare Petition, CL 1 at 6 (excluding “proprietary or modified fasteners used by aerospace and automotive
[OEMs]”) with Questionnaire Instructions, PL 8 at 5 (excluding “modified standard” fasteners, “proprietary-
patented” fasteners, and “engineered special parts”) with AD Notice, 74 Fed. Reg. at 54,543 and CVD Notice, 74
Fed. Reg. at 54,547 (each excluding fasteners “produced for an [OEM] part number specific to” an automobile,
work truck, medium-duty passenger vehicle, or aircraft); see also supra note 5 and accompanying text. Indeed, the
parties disagree about the meaning of Commerce’s exclusions. Compare Plaintiff’s Memo at 12-13 with Defendant’s
Response at 17 and Defendant-Intervenors’ Response at 14-15.

21
asked to compare sub-6mm fasteners with CSSF, Producer A stated that [[ it manufactures a

certain type of product ]]. Id. at II-13a. When asked whether it had produced specialty/patented

fasteners, Producer A answered [[ a certain way ]], id. at II-13c , notwithstanding its earlier

reporting of [[ another answer ]], id. at II-11. When asked about the anticipated “negative impact

of CSSF from China or Taiwan,” Producer A responded that [[ its production differs from other

reporting producers ]]. Id. at III-15. When asked to “identify the principal direct downstream

products associated with” its sales of CSSF, Producer A listed [[ products and/or uses that appear

incompatible with CSSF ]]. Id. at V-12. And when asked how “changes in the prices of raw

materials affected . . . selling prices and quantities of its U.S.-produced CSSF,” Producer A listed

only [[ raw material 1 ]] and [[ raw material 2 ]]. Id. at V-13 (emphasis added). Plaintiff alleges

that the production of CSSF, which expressly exclude [[ a fastener type ]], Questionnaire

Instructions, PL 8 at 5, would not involve these raw materials. Plaintiff’s Memo at 13.29

Although Producer A’s sales manager did “certify that the information herein supplied in

response to [ITC’s] questionnaire is complete and correct to the best of my knowledge and

belief,” Producer A’s Response at 1, subsequent correspondence between ITC and Producer A

suggests that such knowledge was limited. In a communication to ITC regarding an unrelated

discrepancy in the questionnaire response, [[the staff of Producer A had not familiarized

themselves with the agency’s definitions of CSSF and other fastener products ]]. [[ Email from

Producer A Staff Member, to John Ascienzo, ITC, included in Subsequent Email from Producer

A Staff Member, to John Ascienzo, ITC ]].

Defendant points to nothing in the record showing that ITC considered the discrepancies

in these data in relation to the scope of the investigations. See Defendant’s Response at 14-18;

29
Plaintiff asserts that [[ raw material 1 suggests an excluded product ]] and [[ raw material two also
suggests an excluded product ]]. Plaintiff’s Memo at 13.

22
see also Views; Staff Report. In other words, although ITC “is authorized to weigh evidence and

resolve conflicts in the data,” Defendant’s Response at 18 (citing, inter alia, Am. Lamb, 785 F.2d

at 999-1004), there is no indication that it did either in this circumstance. This apparent

omission, which contrasts with the Staff Report’s careful analysis of reporting methodology, see

infra Part IV.E, prevents the court from identifying a rational basis for the unqualified inclusion

of Producer A in ITC’s analysis, see Fair Coke, 27 CIT at 776.30

D
ITC Permissibly Relies On Limited Pricing Data

Plaintiff argues that “ITC erred in relying on pricing data so limited as to be unsupportive

of any conclusions at all.” Plaintiff’s Memo at 21 (capitalization modified). Plaintiff initially

explains, and neither Defendant nor Defendant-Intervenors dispute, that:

In order to assess subject price effects, the ITC has traditionally solicited quarterly
pricing data from U.S. producers and importers, with respect to a limited number
of “pricing products.” The ITC then compares quarterly U.S. and import selling
prices for the pricing products to determine underselling levels, and reviews
trends in U.S. and subject prices to determine whether subject imports have
resulted in U.S. price depression and/or suppression. If the data are to be useful,
the ITC must define the pricing products narrowly enough so that differences in
the merchandise reported in the pricing product data set do not impugn the
reliability or accuracy of the pricing data. At the same time, the pricing products
chosen must be widely sold enough, by both U.S. and foreign producers, to be
generally representative of prices for the domestic like product.

30
Although the market share and operating margin data provided in the Staff Report’s analysis of reporting
methodology suggest that ITC might have reached the same negative preliminary injury determinations had the
agency excluded, qualified, or questioned all of Producer A’s data, see infra Part IV.E, that is a question for ITC
rather than for the court, see supra Part III. By sustaining ITC’s determinations on the basis of such counterfactual
speculation, the court would risk impermissibly “substitut[ing] its judgment for that of the agency,” Citizens to Pres.
Overton Park, 401 U.S. at 416. See SEC v. Chenery Corp., 318 U.S. at 88.

23
Id. at 21-22 (internal footnote omitted); see Defendant’s Response at 33-37; Defendant-

Intervenors’ Response in Opposition to Plaintiffs’ Rule 56.2 Motion for Judgment upon the

Agency Record, Doc. Nos. 47, 53 (“Defendant-Intervenors’ Response”) at 24-27.31

In the instant investigations, ITC’s price analysis achieved only “limited coverage.” Staff

Report at V-9 n.29. As Plaintiff explains:

Only three of the nine U.S. producers that responded to the Commission’s
inquiries were able to report sales of any of the four [pricing] products [selected
by ITC]. Further, these producers could not consistently report sales of each
product across all quarters. As a result, quarterly U.S. prices were based on, at
most, the reported prices of [[a limited number of U.S. producers ]]. All told, the
U.S.-produced CSSF represented by the pricing products represented 3.6 percent
of reported U.S. commercial CSSF shipments during the [POI].

Pricing product data with respect to subject imports was similarly limited,
covering 1.1 percent of reported commercial shipments of [CSSF imported from
China] over the POI, and 2.4 percent of reported commercial shipments of [CSSF
imported from Taiwan over the POI]. Not all products could be reported for all
quarters, and price comparisons were in some cases based on [[ a very limited
number of foreign producers ]].

Plaintiff’s Memo at 22-23 (internal citations to Staff Report omitted); see also Staff Report at V-

8-14.

ITC understood the limited nature of these data: Both the Views and the Staff Report

document the same percentages noted by Plaintiff. See Views at 40 n.188; Staff Report at V-8-9.

ITC nonetheless concluded that the data are useable. See Views at 38-40. ITC also found that

“[h]igher coverage levels would be difficult to obtain in an industry such as this involving so

many product permutations and thus at least tens of thousands of [stock-keeping units].” Id. at 40

n.188 (citing Conference Transcript, PL 46 at 56, 124). In other words, ITC treats its pricing

31
Plaintiff also states that the selection of appropriate pricing products “often cannot be done at the
preliminary phase of the proceeding, and the agency often alters its pricing product choices for the final phase, in
order to obtain better quality data.” Plaintiff’s Memo at 22. However, the single set of investigations to which
Plaintiff cites does not establish that alteration of the pricing products occurs “often.” Id.

24
data as representative. In contrast, it treats its import volume data as exhaustive. See supra Part

IV.B.

Both ITC and Plaintiff may desire greater coverage, but representative sampling for the

purpose of assessing price effects is not inherently unreasonable or otherwise unlawful. See

Kern-Liebers USA, Inc. v. United States, 19 CIT 87, 114-15 (1995) (affirming negative final

injury determinations), aff’d sub nom. U.S. Steel Grp. – a Unit of USX Corp. v. United States, 96

F.3d 1352, 1366 (Fed. Cir. 1996); Granges Metallverken AB v. United States, 13 CIT 471, 480-

81, 716 F. Supp. 17 (1989) (affirming affirmative final injury determinations). “Sampling, like

averaging, is a necessary statistical technique without which the Commission’s task would be

virtually impossible.” U.S. Steel, 96 F.3d at 1366. The burden of “show[ing] that the sample

relied on by the Commission was not representative” falls on the party challenging that sample,

and “[g]eneral allegations that the [market at issue] is not homogeneous and that small samples

consequently yield skewed results are insufficient to meet this burden.” Id.

Although Plaintiff observes that “quarterly U.S. prices were based on, at most, the

reported prices of [[ a limited number of U.S. producers ]],” Plaintiff’s Memo at 22, Plaintiff

fails to argue why this sampling is not representative, see id. at 22-23. It also fails to indicate

which specific producers supplied most of the pricing data. See id. The court notes that Plaintiff

actually proposed the four pricing products selected by ITC, see Views at 39 n.187, and that

Plaintiff accounts for [[ a substantial ]] percent of reported domestic CSSF production in 2008,

Staff Report at III-2. Without additional context, Plaintiff’s reference to Co-Steel Raritan, Inc. v.

USITC, 31 CIT 58 (2007) is therefore misplaced. See Plaintiff’s Memo at 23-25; Co-Steel

Raritan, 31 CIT at 69.

25
 E
ITC Sufficiently Addresses Concerns About Certain Estimated Data

Plaintiff argues that ITC improperly accepted certain financial data that are based on a

methodology criticized in the Staff Report as “seldom reasonable.” Plaintiff’s Memo at 21

(quoting Staff Report at VI-3 n.1); see id. at 15-21.32 According to ITC, of the 36 firms to which

it sent domestic producer questionnaires, “9 provided useable data, 7 certified that they had not

produced CSSF since January 1, 2006, 8 provided data for fasteners that were no longer

considered CSSF once the scope of the investigations was finalized, and 2 provided incomplete

responses. The remaining 10 provided no response.” Staff Report at III-1 (internal footnotes

omitted). Of the nine producers that provided “useable” data, Producer A as well as three others

“had difficulty preparing profit-and-loss statements for CSSF only, and instead estimated all of

their CSSF costs based upon the ratio of CSSF sales to all fastener sales. As a result, the profit

margin for CSSF and all other fasteners was the same.” Id. at VI-3 n.1. Plaintiff infers that this

methodology also affected the “CSSF income, profits, [costs of goods sold], and other

performance indicators” reported by these particular producers. Plaintiff’s Memo at 16.

The Staff Report cogently explains why this methodology is problematic:

The ITC staff discourages producers in any investigation from estimating all of
their costs [for the subject merchandise] in [the manner described], because the
resulting cost structure and profitability will be the same for any and all products,
and this is often not the case. While it may be reasonable to base some costs,
such as [selling, general, and administrative] expenses and interest expense, on
the ratio of subject merchandise to all sales, it is seldom reasonable to base cost of
goods sold (direct materials, direct labor, and other factory costs) on such a ratio.
Producers must instead review their accounting and cost records and determine
the actual costs of the subject merchandise (in this case CSSF). The problems
associated with basing all costs upon the relative sales ratio becomes more

32
Defendant argues that Plaintiff “failed to exhaust its administrative remedies” by not questioning this
methodology in arguments to ITC. Defendant’s Response at 18 n.19. However, the Staff Report does provide such a
critique, see Staff Report at VI-3 n.1, and “[a] party may be excused from failure to raise an argument before the
administrative agency as long as the agency in fact considered the issue,” Holmes Prods. Corp. v. United States, 16
CIT 1101, 1104 (1992).

26
 pronounced when the subject merchandise makes up a relatively small portion of
the overall sales. This was the case for [[ some ]] of the four named producers.
Finally, the issue becomes particularly pronounced when the overall sales contain
a wide mix of high and low value products. In this particular case, the named
producers [[ also produced potentially high-value fasteners ]].

Staff Report at VI-3 n.1.

In contrast to the Staff Report, the Views refer only to the combined data “without

comment or acknowledgment.” Plaintiff’s Memo at 18; see Views at 44-45. The court’s task

would be simpler if the Views also recognized the limitations of these data or additionally

considered whether the CSSF-specific dataset demonstrates material injury that the total dataset

does not. Instead, the Views merely describe the industry’s financial performance through

exclusive reference to that total dataset. See Views at 44-45 (describing unit sales, operating

income, and operating margin).

However, the Staff Report also places the data problem in context, which permits the

court to discern, however tenuously, ITC’s analytical path. See Staff Report at VI-3 n.1. The

producers reporting general data “accounted for [[ a relatively small ]] percent of sales values

every period.” Id. In addition, the combined profit margin for all nine responding producers

closely tracks the combined profit margin for the producers reporting CSSF-specific data. See id.

at VI-2, VI-3 n.1. This is because two of the firms reporting CSSF-specific data account for a

substantial majority of reported domestic production. See id. at III-2. Accordingly, even though

Plaintiff is correct that the general estimates may “skew” the nominally CSSF-specific

performance data used by ITC, Plaintiff’s Memo at 16, the analysis provided in the Staff Report

demonstrates that this skew is minimal, see Staff Report at VI-3 n.1. Given ITC’s own Staff

Report, the court must conclude that ITC understood such a distortion to be both possible and

negligible. See Dastech, 21 CIT at 477. The methodology at issue, while flawed, is not fatal to

27
ITC’s determinations. See Conn. Steel Corp. v. United States, 30 CIT 1658, 1669 (2006)

(sustaining preliminary determinations that were based in part on domestic producer estimates);

cf. Atl. Sugar, 744 F.2d at 1562 (holding that overinclusion did not fatally distort ITC’s final

determinations).33

F
ITC Sufficiently Addresses Allegations Of Injury Made By Domestic Producers

ITC also found “no likelihood that any evidence we would have obtained in any final

phase of these investigations would change our determinations that there is no reasonable

indication that the domestic industry is materially injured or threatened with material injury by

reason of subject imports from China and Taiwan.” Views at 9; see Plaintiff’s Memo at 31-39.

At the outset, the reasons for remand discussed above compel reconsideration of this finding. See

supra Parts IV.B, C; cf. Plaintiff’s Memo at 38-89. Plaintiff further argues that “specific

information” on the record shows that final investigations would likely uncover evidence of

material injury or threat thereof. Plaintiff’s Memo at 31.

In support of its argument, Plaintiff relies on, inter alia, questionnaire responses

submitted by six domestic producers accounting for [[ a very significant ]] percent of reported

2008 production. See id. at 33-34, 37; see Staff Report at III-2. One portion of that

questionnaire, under “financial information,” asks each recipient whether it “experienced any

actual negative” financial effects “as a result of imports of CSSF from China or Taiwan” and

whether it “anticipate[s] any negative impact of” such imports. E.g., Nucor’s Questionnaire

Response, CL 101 at III-14-15 (capitalization modified). All six producers referenced by

33
Atl. Sugar, which applies the substantial evidence standard to an ITC determination under a different
statute, also warns against “inflating out of all proportion the importance of the laws with which the lower court
deals [by] expect[ing] that business people and corporate accountants would keep their books with an eye to an
obscure and wholly arbitrary statutory geographic region, which a relatively small Government agency might
declare for the purposes of one antidumping injury investigation.” Atl. Sugar, 744 F.2d at 1561.

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Plaintiff reported negative financial effects; multiple firms selected [[ a variety of such effects

from among a list provided in the questionnaire ]]. Plaintiff’s Memo at 33-34 (quoting

questionnaire responses); Staff Report at VI-13 (same). Some also alleged other negative

impacts, actual or anticipated, see Plaintiff’s Memo at 33-34, 37 (quoting questionnaire

responses); Staff Report at VI-13-14 (same), with one producer stating that [[ changes in subject

marketing strategies may increase the negative effects of subject imports ]], Plaintiff’s Memo at

34 (quoting questionnaire response); Staff Report at VI-13 (same), and another describing how

imports had [[ resulted in changes to product mix in an effort to reduce injury ]], Plaintiff’s

Memo at 34 (quoting questionnaire response).

Defendant argues that such “anecdotal data” do “not outweigh the hard statistical data

relied on by the Commission”34 and that, regardless, it “is decidedly not the Court’s role” to “re-

weigh the evidence.” Defendant’s Response at 38. Defendant-Intervenors add that, because such

declarations of injury “are normally contained in the petition itself or can be easily collected by

simply sending questionnaire responses to only domestic producers[, a]llowing an investigation

to proceed to the final stage based solely on the unsubstantiated allegations of interested parties

would make the statutory requirement of a preliminary investigation meaningless.” Defendant-

Intervenors’ Response at 33.35

ITC weighed the allegations cited by Plaintiff and expressly concluded that “contrary to

[the] claims otherwise, we do not find that the declines in the domestic industry’s performance

that occurred during the period examined were attributable to cumulated subject imports to any

significant degree.” Views at 50 (citing Staff Report at VI-12-14 (documenting the allegations)).

34
But see, e.g., supra Part IV.B.
35
But see Defendant-Intervenors’ Response at 15-16 (noting that “[f]irst, as part of its questionnaire
response, [Producer A] was required to certify to the completeness and accuracy of the information it was
submitting”).

29
Although ITC could have done more to explicitly “explain or counter” these allegations, Usinor,

26 CIT at 783, it has done enough to satisfy the applicable standard of review, see supra Part III.

Plaintiff’s argument with respect to a different portion of the domestic producer

questionnaire also fails. See Plaintiff’s Memo at 32-33 n.15. That portion, under “competition

from imports,” asks whether the recipient “[r]educe[d] prices” or “[r]olled back announced price

increases” in order to “avoid losing sales to competitors selling CSSF from China and/or

Taiwan” and whether it “los[t] sales of CSSF to imports of these products from China and/or

Taiwan.” E.g., Nucor’s Questionnaire Response, CL 101 at VII-2-3 (capitalization modified). In

contrast to the financial questions, these questions request detailed documentation of specific

transactions. Compare id. at III-14-15 with id. at VII-2-3. Several producers alleged such lost

revenue or lost sale transactions. See Views at 40 n.190; Staff Report at V-24-27. ITC stated that

the agency investigated allegations for which these domestic producers had “provided limited

information” but “generally was unable to substantiate them.” Views at 40 n.190. ITC also

concluded that Plaintiff “failed to provide adequate details to support” its petition allegations and

had been inconsistent, incomplete, or untimely in its responses. Id. Plaintiff argues that “ITC has

made it nearly impossible for U.S. producers in any investigation to provide information

sufficient to result in a ‘substantiated’ claim, due to the specificity of the information that the

agency requires before it will investigate.” Plaintiff’s Memo at 32 n.15.36

This argument is unpersuasive for two reasons. First, the record suggests that Plaintiff’s

conduct impeded investigation into its own allegations of lost revenues and sales. See Views at

40 n.190 (implying that Plaintiff acted inconsistently); Staff Report at [[ a certain page (The staff

36
Plaintiff continues: “In particular, the agency requires a firm making a lost revenue or sales allegation to
identify the specific product, the exact date upon which a rejected price quote was first made, the exact quantity of
product subject to that quote, the rejected U.S. price, any subsequently accepted lower U.S. price, the exact amount
of the subject producer’s quote, and the country of origin.” Plaintiff’s Motion at 32 n.15.

30
report describes Plaintiff’s conduct during the investigation) ]]; Plaintiff’s Motion at 33 n.15

(suggesting that Plaintiff chose not “to present formal lost sales allegations”). Second, the record

shows that ITC pursued nine allegations made by other producers and found that the majority

were disputed by the pertinent purchasers. See Views at 40 n.190; Staff Report at V-24-27. In

short, Plaintiff has not demonstrated that ITC’s assessment of lost revenues and sales involved

any abuse of the “broad discretion” to which the agency is entitled. Diamond Sawblades Mfrs.

Coal. v. United States, Slip Op. 2008-18, 2008 Ct. Intl. Trade LEXIS 25 at *29 (February 6,

2008) (applying the substantial evidence standard).

V
CONCLUSION

For the reasons stated above, this matter is REMANDED to ITC for action consistent

with this opinion.

__/s/ Evan J. Wallach____
Evan J. Wallach, Judge
Dated: August 11, 2011
New York, New York

31