Slip Op. 04-147
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: HONORABLE RICHARD W. GOLDBERG, SENIOR JUDGE
UNITED STATES STEEL
CORPORATION and ISPAT INLAND
INC.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
Cons. Ct. No. 00-00151
USINAS SIDERURGICAS DE MINAS
GERAIS S/A, COMPANHIA
SIDERURGICA PAULISTA,
COMPANHIA SIDERURGICA
NACIONAL, THAI COLD ROLLED
STEEL SHEET PUBLIC COMPANY
LIMITED, ISCOR, LTD., NIPPON
STEEL CORPORATION, JFE STEEL
CORPORATION, SUMITOMO METAL
INDUSTRIES, LTD., KOBE STEEL,
LTD., NISSHIN STEEL COMPANY,
LTD., EREGLI DEMIR VE CELIK
FAB. T.A.S., and SHANGHAI
BAOSTEEL GROUP CORPORATION,
Defendant-
Intervenors.
[ITC’s negative injury remand determination sustained.]
Date: November 18, 2004
Skadden, Arps, Slate, Meagher & Flom LLP (John J. Mangan) for
plaintiffs United States Steel Corporation and Ispat Inland Inc.
Cons. Ct. No. 00-00151 Page 2
James M. Lyons, Acting General Counsel, Marc A. Bernstein, Acting
Asst. General Counsel for Litigation, U.S. International Trade
Commission (Michael Diehl), for defendant United States.
Willkie Farr & Gallagher LLP (William H. Barringer, James P.
Durling, Kenneth J. Pierce, Matthew R. Nicely, Christopher A.
Dunn, and Robert E. DeFrancesco) for defendant-intervenors Usinas
Siderurgicas de Minas Gerais S/A, Companhia Siderurgica Paulista,
Companhia Siderurgica Nacional, Thai Cold Rolled Steel Sheet
Public Company Limited, Nippon Steel Corporation, JFE Steel
Corporation, Sumitomo Metal Industries, Ltd., Kobe Steel, Ltd.,
and Nisshin Steel Company, Ltd.
Wilmer Cutler Pickering LLP (Kristin H. Mowry) for defendant-
intervenor Iscor, Ltd.
Law Offices of David L. Simon (David L. Simon) for defendant-
intervenor Eregli Demir ve Celik Fab. T.A.S.
Greenberg Traurig, LLP (Philippe M. Bruno) for defendant-
intervenor Shanghai Baosteel Group Corporation.
OPINION
GOLDBERG, Senior Judge: This case is before the Court following
remand to the United States International Trade Commission
(“ITC”). In Bethlehem Steel Corp. v. United States, 27 CIT __,
294 F. Supp. 2d 1359 (2003) (“Bethlehem I”), familiarity with
which is presumed, the Court remanded the ITC’s determinations
with respect to plaintiffs Bethlehem Steel Corporation, Ispat
Inland Inc., LTV Steel Company, Inc., United States Steel
Corporation, and National Steel Corporation1 in Certain Cold-
Rolled Steel Products From Argentina, Brazil, Japan, Russia,
1
Plaintiffs Bethlehem Steel Corporation and National Steel
Corporation were voluntarily dismissed from this action in an
order entered by the Court on July 7, 2004. Plaintiff LTV Steel
Company, Inc. was voluntarily dismissed from this action in an
order entered by the Court on November 18, 2004.
Cons. Ct. No. 00-00151 Page 3
South Africa, and Thailand, 65 Fed. Reg. 15008 (Mar. 20, 2000),
Certain Cold-Rolled Steel Products From Turkey and Venezuela, 65
Fed. Reg. 31348 (May 17, 2000), and Certain Cold-Rolled Steel
Products From China, Indonesia, Slovakia, and Taiwan, 65 Fed.
Reg. 44076 (July 17, 2000) (collectively “Final Determinations”).
In Bethlehem I, the Court found that the ITC’s
interpretation of the captive production provision, see 19 U.S.C.
§ 1677(7)(C)(iv), was not in accordance with law. Specifically,
the Court determined that the ITC’s definition of “internal
transfers” was unreasonable. Accordingly, the Court remanded the
Final Determinations to the ITC to define “internal transfers”
consistent with the will of Congress. The Court also instructed
the ITC that, if it found the captive production provision to be
applicable on remand, it would be required to consider primarily
the merchant market in its “material injury” analysis under 19
U.S.C. §§ 1677d(b) and 1673d(b).2
The ITC duly complied with the Court’s order. After
allowing the domestic producers and purchasers to provide
additional data relating to the captive production provision, the
2
The Court also instructed the ITC to clarify on remand how
it complied with the statutory framework of both 19 U.S.C. §
1677e(a) and 19 U.S.C. § 1677m(d) for applying facts otherwise
available. This issue is not presently before the Court since
the ITC afforded the domestic producers and purchasers an
opportunity to provide additional data during the remand
investigations, and the parties no longer dispute whether the ITC
complied with the statutory framework for applying facts
otherwise available.
Cons. Ct. No. 00-00151 Page 4
ITC issued the Views of the Commission on Remand (Apr. 30, 2004)
(“Remand Results”). In the Remand Results, the ITC determined
that the captive production provision was applicable, but further
found that the domestic industry was not materially injured, or
threatened with material injury, by reason of imports of certain
cold-rolled steel products that the United States Department of
Commerce found to be subsidized and/or sold at less than fair
value in the United States.
United States Steel Corporation (“U.S. Steel”) submitted
Comments on the U.S. International Trade Commission’s
Redetermination Pursuant to Court Remand (“Pl.’s Comments”), and
the ITC submitted Reply Comments in Defense of its Remand
Determination (“ITC’s Reply”). Defendant-Intervenors also
submitted a Response to Plaintiffs’ Comments (“Def.-Intvrs.’
Response”).3
The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c).
After due consideration of the parties’ submissions, the
administrative record, and all other papers had herein, and for
the reasons that follow, the Court sustains the Remand Results.
3
The response was submitted on behalf of Nippon Steel
Corporation, JFE Steel Corporation, Sumitomo Metal Industries,
Ltd., Kobe Steel, Ltd., Nisshin Steel Co., Ltd., and Thai Cold
Rolled Steel Sheet Public Co., Ltd.
Court No. 00-00151 Page 5
I. STANDARD OF REVIEW
The Court must sustain the Remand Results unless it is
“unsupported by substantial evidence on the record, or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B).
Substantial evidence means “such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” Pierce v. Underwood, 487 U.S. 552, 565 (1988)
(citation omitted). Moreover, “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. Ltd. v.
United States, 750 F.2d 927, 933 (Fed. Cir. 1984) (citation
omitted).
The reviewing court may not, “even as to matters not
requiring expertise . . . displace the [agency’s] choice between
two fairly conflicting views, even though the court would
justifiably have made a different choice had the matter been
before it de novo.” Universal Camera Corp. v. NLRB, 340 U.S.
474, 488 (1951). In this regard, “the court may not reweigh the
evidence or substitute its judgment for that of the ITC.”
Dastech Int’l, Inc. v. USITC, 21 CIT 469, 470, 963 F. Supp. 1220,
1222 (1997).
Court No. 00-00151 Page 6
II. DISCUSSION
A. The ITC Reasonably Concluded that the Subsidized and/or LTFV
Imports Did Not Affect Domestic Prices.
All parties agree that “[t]he central issue in these
investigations is the role, if any, of subject imports in the
price declines in the domestic market.” Remand Results at 17;
Pl.’s Comments at 4; Def.-Intvrs.’ Response at 2. In evaluating
the price effects of the subject imports, the ITC examines
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).
1. Evidence of Underselling Is Not a Per Se Indication of
Injury.
U.S. Steel points to the pricing data for three specific
items collected by the ITC, which “leaves no doubt that subject
imports almost always undersold the domestic like product[.]”
Pl.’s Comments at 4-5. From 1996 to 1997, the ITC made 268
comparisons and found 211 instances of underselling. Id. at 5.
Similarly, from 1998 to the third quarter of 1999, the ITC made
319 comparisons and found 287 instances of underselling. Id.
According to U.S. Steel, “[t]hese data – which must be considered
by law – compel the conclusion that subject imports had a
Court No. 00-00151 Page 7
significant depressing effect on domestic prices.” Id. (emphasis
added).
To the extent U.S. Steel contends that evidence of
underselling is a per se indication of injury, its argument
fails. Coalition for the Pres. of Am. Brake Drum & Rotor
Aftermarket Manufacturers v. United States, 22 CIT 520, 526, 15
F. Supp. 2d 918, 924 (1998). “Evidence of underselling alone is
legally insufficient to support an affirmative injury
determination.” BIC Corp. v. United States, 21 CIT 448, 458, 964
F. Supp. 391, 401 (1997), aff’d, App. No. 97-1443 (Fed. Cir.
1998). “Rather, the [ITC] has a statutory mandate to consider
not only whether the subject imports have significantly undersold
the domestic like product, but also how the subject imports
effect [sic] the prices of the domestic like product.” Id.
The ITC has considerable discretion in interpreting the
evidence and determining the overall significance of any
particular factor in its analysis. Coalition, 22 CIT at 527, 15
F. Supp. 2d at 925. “The significance of the various factors
affecting an industry will depend upon the facts of each
particular case. Neither the presence nor the absence of any
factor listed in the bill can necessarily give decisive guidance
with respect to whether an industry is materially injured, and
the significance to be assigned to a particular factor is for the
ITC to decide.” S. Rep. No. 249 at 88 (1979), reprinted in 12979
Court No. 00-00151 Page 8
U.S.C.C.A.N. 381, 474.
Here, the ITC did not neglect the evidence of underselling,
but found that competition between subject imports and the
domestic like product was “attenuated by differences between the
two in various non-price factors[.]” Remand Results at 16-17
(“While underselling has existed throughout the period, we find
that the persistent price gap between subject imports and
domestic prices is largely due to various differences between the
domestic and imported products . . . .”).
2. The ITC’s Finding that Underselling Did Not Have a
Significant Effect on Domestic Price Levels Is
Supported by Substantial Evidence and Otherwise in
Accordance with Law.
First, the ITC found that “[a]ccording to purchasers,
quality, availability, and delivery are the most important non-
price factors when choosing a supplier . . . .” Remand Results
at 17-18. U.S. Steel argues that the ITC never found a
significant difference in quality between the domestic product
and the subject imports. Pl.’s Comments at 6. This argument is
irrelevant, as the ITC explicitly noted that “purchasers
overwhelmingly listed quality as the most important factor in
purchasing decisions.” Remand Results at 18 n.72. Moreover,
price was listed as the most important factor by only three of
the thirty purchasers. Id.
Second, the ITC found that “when purchasers find a reliable
supplier, they rarely change.” Id. at 18. On a related note,
Court No. 00-00151 Page 9
the ITC found that “[t]he stablility of supplier-purchaser
relationships . . ., even in the face of price fluctuations, can
be seen in the prevalence of the honoring of contracts . . . .”
Id. U.S. Steel contends that, in fact, supplier-purchaser
relationships were not stable. Pl.’s Comments at 7. U.S. Steel
points out that the domestic industry lost significant sales to
subject imports, and furthermore that U.S. producers were forced
to renegotiate nearly one-fifth of their contract sales. Pl.’s
Comments at 7-8. U.S. Steel’s argument ignores the fact that the
domestic industry consciously decided to captively consume more
cold-rolled steel to produce more lucrative downstream products,
like galvanized steel. Joint Respondents’ Pre-hearing Brief at
57-58, P.R. 420. Regarding the stability of contracts, the ITC
found that more than four-fifths of domestic producers’ contract
sales were honored, despite severe price declines in the cold-
rolled steel market. Remand Results at 18.
Third, the ITC found that “subject import prices have
generally continued to decline in 1999, while domestic prices
have recovered in certain important segments.” Id. at 19. U.S.
Steel counters that there was no “recovery” in domestic prices
and cites to evidence showing that “while domestic prices . . .
improved slightly from Q2 1999 to Q3 1999, those prices remained
well below prices for Q3 1998.” Pl.’s Comments at 8. What is
clear, however, is that domestic prices actually increased during
Court No. 00-00151 Page 10
the period when underselling was at its greatest. See Def.-
Intvrs.’ Response at 10.
Fourth, the ITC found that “purchasers generally regard
domestic producers as being the price leaders in the market . . .
.” Remand Results at 19. U.S. Steel argues that, because only
16 of 41 purchasers reported being able to identify a price
leader, it is plainly not correct that purchasers “generally”
regard domestic producers as the price leader. Pl.’s Comments at
9. The Court finds as the ITC pointed out, that no purchaser
mentioned any subject importer or subject producer as a price
leader. Remand Results at 19.
Accordingly, the Court holds that the ITC’s finding that
underselling did not have a significant effect on domestic price
levels is supported by substantial evidence and otherwise in
accordance with law.
B. The ITC’s Finding that the Persistent Price Gap Between
Subject Imports and the Domestic Like Product Was Due to
Factors Other than Underselling Is Supported by Substantial
Evidence and Otherwise in Accordance with Law.
The ITC found that the decline in domestic prices was a
result of other competitive conditions, specifically: (1) growing
competition within the domestic industry; (2) the decline in hot-
rolled steel prices; and (3) a strike at General Motors
Corporation (“GM”).
First, the ITC determined that “the large and growing number
of domestic participants in [the cold-rolled steel] market has
Court No. 00-00151 Page 11
increased competition within the domestic industry . . . .”
Remand Results at 20. U.S. Steel contends that the increase in
domestic producers was minimal. Pl.’s Comments at 10-11. The
ITC based its finding on “the competitive advantages accruing to
minimills and the decline in scrap prices during the period under
investigation.” Remand Results at 20. The Court finds that the
ITC reasonably determined that cold-rolled steel produced by
minimills exerted downward pressure on domestic prices, despite
their small number and size, because of their different
production inputs.4 See id. None of the other arguments
presented by U.S. Steel undercuts the substantial evidence
supporting the ITC’s finding.
Second, the ITC found that a “decline in hot-rolled prices
likely put downward pressure on the domestic industry’s cold-
rolled prices. This downward pressure is likely [in part]
because of the historic relationship between hot-rolled costs and
prices and cold-rolled prices . . . .” Id. The ITC further
noted that “[f]alling hot-rolled prices have been particularly
beneficial to re-rollers, who purchase, rather than produce, hot-
rolled steel for cold-rolling.” Id. U.S. Steel argues that
4
Minimills use scrap, as opposed to slab, as the primary
input for hot-rolled steel. Def.-Intvrs.’ Response at 12. Hot-
rolled steel, in turn, is the primary input for cold-rolled
steel. Id. Thus, the decline in scrap prices noted by the ITC
enabled minimills to reduce their prices for cold-rolled steel.
Id.
Court No. 00-00151 Page 12
there is “no evidence that hot-rolled prices caused the decline
in cold-rolled prices.” Pl.’s Comments at 13. Furthermore, U.S.
Steel disputes the notion that re-rollers, rather than imports,
drove down domestic prices, pointing out that re-rollers only
accounted for a very small percentage of domestic production in
1998, and that imports frequently undersold re-roller shipments
in 1998 and interim 1999. Id. at 12. To support its finding,
the ITC cited the testimony of Jim Bouchard, a witness for U.S.
Steel, who stated:
If you look at hot roll versus cold roll, specifically,
if you question over the past 20 years the relation
between pricing has rotated between $95 a ton from hot
roll, cold roll being $95 to about $110 a ton. The
relationship has stayed intact the past 20 years and
right now is running between $100 to $110.
Remand Results at 21 n.89. The Court finds that this historical
relationship has not been rebutted by evidence in the record.
Nor can it be established that this historical relationship is
not present in this case. Moreover, the ITC reasonably
determined that cold-rolled steel produced by re-rollers exerted
downward pressure on domestic prices, despite the low percentage
of total production that they constitute. Id. at 20.
Third, the ITC identified a strike at GM lasting from June 5
to July 30, 1998, as yet another factor contributing to the
decline in domestic prices. Id. at 21. Approximately 80 percent
of overall GM purchases of flat-rolled steel products are of
cold-rolled and corrosion-resistant steel. Id. As a result of
Court No. 00-00151 Page 13
the strike, GM estimated that 685,000 tons of flat-rolled steel
products (550,000 tons of which were cold-rolled steel) were not
purchased by GM or its suppliers. Id. U.S. Steel contends that
subject imports had a greater impact on cold-rolled domestic
prices than the GM strike. Pl.’s Comments at 14. It is
undisputed, however, that the fall in domestic shipments as a
result of the GM strike was greater than the rise in subject
imports in 1998. See id. at 14-15; Def.-Intvrs.’ Response at 17-
18. Furthermore, the ITC noted that the majority of domestic
producers and importers reported that the strike “had a
significant effect on the market in 1998, temporarily reducing
demand and causing an oversupply of cold-rolled steel products.”
Remand Results at 21.
Accordingly, the Court holds that the ITC’s finding that the
price gap between domestic cold-rolled steel and subject imports
was due to growing competition within the domestic industry, a
decline in hot-rolled steel prices, and a strike at GM is
supported by substantial evidence and otherwise in accordance
with law.
Court No. 00-00151 Page 14
III. CONCLUSION
For the foregoing reasons, the Court sustains the ITC’s
Remand Results. Judgment will be entered accordingly.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Date: November 18, 2004
New York, New York