U.S. Steel Group v. United States

Slip Op. 00-156

United States Court of International Trade

U.S. STEEL GROUP, A UNIT OF
USX CORPORATION, ET AL.,

Plaintiffs, Before: Pogue, Judge
v. Court No. 99-08-00523
UNITED STATES,

Defendant.

[Agency action remanded for reconsideration consistent with this
opinion.]

Decided: November 21, 2000

Dewey Ballantine LLP (Alan Wm. Wolff, Michael H. Stein) and
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer,
John J. Mangan) for Plaintiffs.

David W. Ogden, Assistant Attorney General, David M. Cohen,
Director, Lucius B. Lau, Attorney, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice; Myles S. Getlan,
Attorney, Office of the Chief Counsel for Import Administration,
U.S. Department of Commerce, Of Counsel, for Defendant.

OPINION

Pogue, Judge: This matter is before the Court on the motion of

U.S. Steel Group, a Unit of USX Corporation; Bethlehem Steel

Corporation; Ispat Inland, Inc.; LTV Steel Company, Inc.; and

National Steel Corporation (collectively "Plaintiffs"), for
Judgment Upon the Agency Record pursuant to USCIT R. 56.2.

Plaintiffs challenge the determination of the U.S. Department of

Commerce (hereinafter "Commerce" or "the Department") to suspend
Court No. 99-08-00523 Page 2

the antidumping investigation of Russian steel imports pursuant to

a suspension agreement entered into with the Ministry of Trade of

the Russian Federation (hereinafter "MOT"). See Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products From the Russian Federation,

64 Fed. Reg. 38,642 (Dep’t Commerce 1999)(suspension antidumping

duty investig.)("Steel From Russia"). Defendant opposes

Plaintiffs’ motion.1

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)

(1994).

Background

On September 30, 1998, Plaintiffs filed a petition with

Commerce alleging that certain hot-rolled steel products from

Russia were being sold in the United States at less than fair value

("LTFV"). See Petition From Law Firm of Dewey/Skadden/Schagrin to

Sec of Commerce (P.R. Doc. No. 2)(Sept. 30, 1998).2 On October 22,

1998, Commerce initiated an antidumping duty investigation. See
Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From

Brazil, Japan, and the Russian Federation, 63 Fed. Reg. 56,607

(Dep’t Commerce 1998)(initiation antidumping investig.). On

November 25, 1998, the U.S. International Trade Commission ("ITC")

published its preliminary determination, concluding that there was

1
JSC Severstal had intervened in this action on behalf of
Defendant, but withdrew on October 19, 2000.
2
The administrative record contains two lists of documents:
(1) public documents, which will be cited as "P.R. Doc"; (2)
business propriety documents, which will be cited as "B.P. Doc."
Court No. 99-08-00523 Page 3

a reasonable indication that the domestic steel industry was

threatened with material injury by Russian steel imports. See

Certain Hot-Rolled Steel Products From Brazil, Japan, and Russia,

63 Fed. Reg. 65,221 (USITC 1999)(prel. determ.).

On February 22, 1999, Commerce and MOT initialed a proposed

agreement to suspend the antidumping duty investigation of Russian

steel imports. See Pl.’s Mem. Supp. Mot. J. Agency R., at App. 4

("Pl.’s Br."). At Commerce’s invitation, see Letter to Interested

Parties Requesting Comments on Proposed Suspension Agreement (P.R.

Doc. No. 418)(Feb. 23, 1999), Plaintiffs submitted comments on the

proposed agreement, see Letter From Law Firm of

Skadden/Dewey/Shagrin Submitting Comments on Proposed Suspension

Agreement (P.R. Doc. No. 424)(Apr. 5, 1999). After further

negotiations with MOT, Commerce changed the proposed agreement

somewhat, see Pl.’s Br. at 4, and on July 12, 1999, entered into a

suspension agreement pursuant to 19 U.S.C. § 1673c(l). See Steel

From Russia, 64 Fed. Reg. at 38,643 (App. I)(hereinafter
"Agreement").

Prior to entering into the suspension agreement, on February

25, 1999, Commerce made a preliminary determination that Russian

hot-rolled steel was being, or was likely to be sold in the U.S. at

LTFV. See Hot-Rolled Flat-Rolled Carbon-Quality Steel Products

From the Russian Federation, 64 Fed. Reg. 9,312 (Dep’t Commerce

1999)(prel. determ.). On July 7, 1999, the Plaintiffs requested

that Commerce continue its antidumping duty investigation of

Russian steel. See Letter From Law Firm of Dewey/Skadden/Schagrin
Court No. 99-08-00523 Page 4

to Sec of Commerce (P.R. Doc. No. 375)(July 7, 1999). On July 19,

1999, Commerce published its final determination of sales at less-

than-fair value, see Hot-Rolled Flat-Rolled Carbon-Quality Steel
Products From the Russian Federation, 64 Fed. Reg. 38,626 (Dep’t

Commerce 1999)(final determ.), and also published notice that it

was suspending the investigation in light of the Agreement, see

Steel From Russia, 64 Fed. Reg. at 38,642. On August 27, 1999, the

ITC published its final determination, confirming that the domestic

industry was being materially injured by reason of imports of

Russian steel. See Certain Hot-Rolled Steel Products From Brazil

and Russia, 64 Fed. Reg. 46,951 (USITC 1999)(final determ.).

Plaintiffs allege that Commerce unlawfully entered into the

Agreement because the terms of the Agreement fail to meet two of

the requirements of the governing statute. See Pl.’s Br. at 2.

Pursuant to 19 U.S.C. § 1673c(l), Commerce may enter into a

suspension agreement with a nonmarket economy only if, first, the

agreement is in the public interest and may be effectively
monitored,3 and second, the agreement prevents price suppression or

undercutting. See 19 U.S.C. § 1673c(l)(1) (1994). The notice of

Commerce’s decision to suspend the investigation does not itself

contain an analysis of the statutory requirements or the

evidentiary basis for the agency’s decision. Rather, Commerce

adopted, and incorporated by reference, two "Memoranda": the "Price

Suppression Memorandum" (P.R. Doc. No. 396)(July 12, 1999), and the

3
Commerce’s determination that the Agreement may be
effectively monitored has not been challenged here.
Court No. 99-08-00523 Page 5

"Public Interest Memorandum" (P.R. Doc. No. 426)(July 12, 1999).

It is these memoranda that provide the basis for the agency’s

decision.

Standard of Review

Commerce’s determination to suspend the antidumping duty

investigation at issue here is reviewable pursuant to 19 U.S.C. §

1516a(a)(2)(B)(iv). See 19 U.S.C. § 1516a(a)(2)(B)(iv) (1994).

The court must sustain Commerce’s final determination unless it is

"unsupported by substantial evidence on the record, or otherwise

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

In determining whether Commerce’s interpretation and

application of the antidumping statute is in accordance with the

law, "[f]irst, always, is the question whether Congress has

directly spoken to the precise question at issue. If the intent of

Congress is clear, that is the end of the matter; for the court, as

well as the agency, must give effect to the unambiguously expressed

intent of Congress." Chevron U.S.A. Inc. v. Natural Resources

Defense Council, 467 U.S. 837, 842-43 (1984)(citing several pre-

1984 cases). If the statute is ambiguous, then the court must

consider whether the format in which the interpretation is

expressed is a format that carries the "force of law." See

Christensen v. Harris County, 120 S. Ct. 1655, 1662 (2000). If it

is, then the court asks whether the agency’s interpretation of the

statute is reasonable. See Chevron, 467 U.S. at 842. If the

agency’s interpretation of an ambiguous statute is expressed in a
Court No. 99-08-00523 Page 6

format that does not carry "the force of law," it is "‘entitled to

respect’ . . . but only to the extent that [the] interpretation[]

ha[s] the ‘power to persuade.’" Christensen, 120 S. Ct. at 1663

(quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).4

Substantial evidence is "something less than the weight of the

evidence." Consolo v. Federal Maritime Com., 383 U.S. 607, 620

(1966). Nonetheless, Commerce must present "such relevant evidence

as a reasonable mind might accept as adequate to support a

conclusion." Gold Star Co. v. United States, 12 CIT 707, 709, 692

F. Supp. 1382, 1383-84 (1988)(internal quotation omitted), aff’d

sub nom. Samsung Elec. Co. v. United States, 873 F.2d 1427 (Fed.

4
Counsel for Commerce asks us to give Chevron deference to the
legal interpretations contained in the Price Suppression and Public
Interest Memoranda. See Def.’s Supp. Br. at 1-4. Because of our
conclusion that Commerce’s memoranda are on their face not in
accordance with law, we do not decide here whether Chevron or
Christensen applies.
We note, however, that, as far as is apparent from the record
at hand, the domestic producers had neither notice of nor an
opportunity to comment on the memoranda. The rationale behind
Chevron was to recognize instances in which Congress had implicitly
delegated primary interpretational authority of the statute to the
agency, and thus intended to prevent the judiciary from
substituting its interpretation of the statute for that of the
agency’s. See Chevron, 467 U.S. at 842-44. Where it is clear that
Congress intended to delegate interpretational authorityBthat is,
in the cases of formal adjudication and notice-and-comment
rulemakingBCongress also provided for due process protection as a
counter to the exercise of coercive governmental power. See 5
U.S.C. §§ 553, 554, 556, 557. In the absence of due process
protection, it would appear problematic to infer that Congress
intended the agency to use this format to act with "the force of
law." See E.I. du Pont de Nemours and Company v. United States, 24
CIT __, __, slip op. 00-122, at 8 n.6 (Sept. 20, 2000) (declining,
in dicta, to extend Chevron deference to a Treasury Decision
because there was no evidence of formal rulemaking
procedures)(citing Christensen, 120 S. Ct. at 1662). See also
Luigi Bormioli Corp., Inc. v. United States, 24 CIT __, __, slip
op. 00-134, at 9 (Oct. 19, 2000).
Court No. 99-08-00523 Page 7

Cir. 1989). The possibility of drawing two inconsistent conclusions

from the same evidence does not mean that the agency’s finding is

unsupported by substantial evidence. See Consolo, 383 U.S. at 620.
In other words, Commerce’s determination will not be overturned

merely because the plaintiff "is able to produce evidence . . . in

support of its own contentions and in opposition to the evidence

supporting the agency’s determination." Torrington Co. v. United

States, 14 CIT 507, 514, 745 F. Supp. 718, 723 (1990)(internal

quotation omitted), aff’d 938 F.2d 1276 (Fed. Cir. 1991).

Commerce’s conclusions must, however, be "reached by ‘reasoned

decisionmaking,’ including an examination of the relevant data and

a reasoned explanation supported by a stated connection between the

facts found and the choice made." Electricity Consumers Resource

Council v. Federal Energy Regulatory Com., 747 F.2d 1511, 1513

(D.C. Cir. 1984)(citing Burlington Truck Lines, Inc. v. United

States, 371 U.S. 156, 168 (1962)).

Discussion

Commerce’s statutory authority to terminate or suspend an

antidumping investigation is found in Section 734 of the Tariff Act

of 1930 ("1930 Act").5 See 19 U.S.C. § 1673c. Section 734(l),

5
Section 734(a) gives Commerce the authority to terminate an
investigation upon the withdrawal of the petition, which may occur
pursuant to an agreement restricting the volume of imports into the
United States. See 19 U.S.C. § 1673c(a). Before concluding a
quantitative restriction agreement, Commerce must determine whether
it is in the public interest by taking into account three factors:

(i) whether, based upon the relative impact on consumer
Court No. 99-08-00523 Page 8

which governs the Agreement with MOT, gives Commerce the authority

to suspend an investigation with a nonmarket economy, pursuant to

an agreement restricting the volume of imports into the United

States. See 19 U.S.C. § 1673c(l)(1). Suspension agreements under

subsection (l) must meet the criteria of subsection (d). See 19

U.S.C. § 1673c(l)(1)(A). Subsection (d) allows Commerce to enter

into an agreement only if it is in the public interest and is

capable of being effectively monitored. See 19 U.S.C. § 1673c(d).
A suspension agreement with a nonmarket economy must also prevent

price suppression or undercutting. See 19 U.S.C. § 1673c

(l)(1)(B).

prices and the availability of supplies of merchandise,
the agreement would have a greater adverse impact on
United States consumers than the imposition of
antidumping duties;
(ii) the relative impact on the international economic
interests of the United States; and
(iii) the relative impact on the competitiveness of the
domestic industry producing the like merchandise,
including any such impact on employment and investment in
that industry.

19 U.S.C. § 1673c(a)(2)(B).
Section 734(b) gives Commerce the authority to suspend an
investigation pursuant to an agreement with foreign producers
stating either that they will cease dumping, or that they will
cease exporting to the United States. See 19 U.S.C. § 1673c(b).
Section 734(c) provides Commerce the authority to suspend an
investigation pursuant to an agreement with foreign producers
stating that they will "eliminate completely the injurious effect"
of their exports to the United States. See 19 U.S.C. § 1673c(c).
Given that a 734(c) agreement does not require foreign producers to
either cease dumping or cease exporting, Congress has instructed
Commerce to enter into such an agreement only when there are
"extraordinary circumstances." See 19 U.S.C. § 1673c(c)(1).
"Extraordinary circumstances" are those in which the investigation
is complex, and the suspension would be more beneficial to the
domestic industry than the continuation of the investigation. See
19 U.S.C. § 1673c(c)(2)(A).
Court No. 99-08-00523 Page 9

I. Commerce’s "Public Interest" Determination

Under the first prong of the statute, Commerce may enter into

a suspension agreement only if it is in the public interest. See

19 U.S.C. § 1673c(l)(1)(A). In evaluating Commerce’s determination

that the Agreement is in the public interest, the court would, in

a normal case, first decide whether Commerce’s interpretation of

the statute is in accordance with law. Here, however, Commerce has

not articulated an interpretation of the statute in the Public

Interest Memorandum itself. Only in subsequent briefing does

Commerce interpret the public interest standard; a post hoc

rationalization for agency action may not, however, be accepted by

this court. See, e.g., Allegheny Ludlum Corp. v. United States, 24
CIT __, __, slip op. 00-109, at 43 n.41 (Aug. 28, 2000)("[T]he

court declines to let Defendant's counsel read into the Final

Determination a rationale not advanced by the commissioners

themselves."); see also Burlington Truck Lines, 371 U.S. 156, 168-

69 ("The courts may not accept . . . counsel's post hoc

rationalizations for agency action; [SEC v. Chenery Corp., 332 U.S.

194, 196 (1947),] requires that an agency's discretionary order be

upheld, if at all, on the same basis articulated in the order by

the agency itself.").

Rather than articulate a legal standard in the Public Interest

Memorandum, Commerce makes a finding of fact, see Def.’s Supp. Br.

at 10, that, following entry into the Agreement, "[t]he resultant

increase in market certainty will benefit traders and consumers of

Hot-Rolled Flat-Rolled Carbon-Quality Steel Products." Public
Court No. 99-08-00523 Page 10

Interest Mem. at 2. From this, Commerce concludes that it is in

the public interest to enter into the Agreement. Without more

explanation, however, this conclusion is not reviewable, because

Commerce has not provided a legal standard for what is "in the

public interest," or otherwise articulated how its factual finding

is related to the statutory standard.

The court must "satisfy itself that the agency exercised a

reasoned discretion, with reasons that do not deviate from or

ignore the ascertainable legislative intent." See Greater Boston

Television Corp. v. FCC, 444 F.2d 841, 850 (D.C.

Cir.)(1971)(emphasis added). Here, given the agency’s failure to

explain its public interest determination, this Court cannot

determine that Commerce connected its "market certainty" finding to

its conclusion that the Agreement is in the public interest in a

reasoned way that is in accordance with the statute. Accordingly,

the court is not satisfied that Commerce exercised reasoned

discretion. Commerce’s public interest determination is remanded

so that Commerce may articulate a legal standard for making its

public interest determination, or otherwise explain the connection

between the facts found and the choice made pursuant to the

statute.6

6
We decline to undertake a "substantial evidence" review of
Commerce’s factual finding regarding market certainty pending
Commerce’s redetermination on remand.
Court No. 99-08-00523 Page 11

II. Commerce’s Determination that the Agreement Will Prevent Price
Suppression or Undercutting

Under the second prong of the statute, Commerce may enter into

a suspension agreement only if it "will prevent the suppression or

undercutting of price levels of domestic products by imports of the

merchandise under investigation." 19 U.S.C. § 1673c(l)(1)(B). In

its Price Suppression Memorandum, Commerce articulates a sort of

legal standard; it is, however, a standard that, on its face, is

not in accordance with the law.

Commerce argues that neither the statute, Commerce

regulations, nor the legislative history contain a definition of

"price suppression or undercutting," and that therefore Commerce

"has broad discretion to apply reasonable interpretations of the

antidumping law." Price Suppression Mem. at 1-2. Commerce

interprets the statute to mean that subsection (l) agreements with

nonmarket economies "allow for some amount of price affect [sic] on

domestic price levels." Id. at 3. Consequently, Commerce reasons

that it may enter legally into an agreement that involves a

fungible commodity, such as the steel at issue in this case, "the

introduction of even a small quantity of [which] should, under

basic supply and demand theory, have some tendency to affect

prices." Id. In its brief, Commerce attempts to refine this

proposed standard by arguing that the court should "import" the

"significant degree" standard from the statute governing the ITC’s

price analysis for purposes of making its material injury
Court No. 99-08-00523 Page 12

determination.7 Def.’s Mem. Opp. to Pl.’s Mot. J. Agency R. at 31-

36 ("Def.’s Br."). Commerce thereby suggests that a subsection (l)

agreement must prevent not all price suppression, but rather all

significant price suppression; put another way, "a subsection (l)

agreement may properly permit minor or inconsequential injury

through minor or inconsequential price suppression." Def.’s Br. at

34.

Plaintiffs disagree with Commerce’s legal analysis, asserting

that the statute states plainly on its face that no price

suppression or depression is allowed under subsection (l)

agreements. See Pl.’s Br. at 8, 17-19. Plaintiffs further

disagree with Commerce’s presumption that the introduction of any

amount of a fungible commodity tends to affect prices: "subject

imports, priced at a high enough level, would not suppress or

depress prices . . . ." Id. at 19.

Plaintiffs’ contention that the meaning of the statute is

clear on its face does not persuade us. One could understand the

word "prevent" to mean "preclude." See The American Heritage

7
Section 771(7)(C) of the 1930 Act provides:

In evaluating the effect of imports of [subject]
merchandise on prices, the [ITC] shall consider whether
(I) there has been significant price underselling by the
imported merchandise as compared with the price of 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)(I)-(II) (emphasis added).
Court No. 99-08-00523 Page 13

Dictionary 1436 (3d ed. 1992). In this sense, "prevent price

suppression" would mean that Commerce could enter into a suspension

agreement only if it excluded the possibility of price suppression.

But "avert" and "impede" are also synonyms of "prevent." See id.

"Avert" means "to ward off," see id. at 128, and "impede" means "to

retard or obstruct the progress of," see id. at 905. This second

sense of the word implies more flexibility; Commerce could enter

into a suspension agreement so long as the agreement counteracted

price suppression. The language itself has two different meanings,

and thus the statute is by definition ambiguous. The rules of

statutory construction may present a clear choice on remand between

differing interpretations of an ambiguous provision; these rules do

not, however, advance the argument asserted by Plaintiffs that the

statute is clear on its face. See Pl.’s Reply Br. at 3-6.
We do not accept Commerce’s interpretation of the statute,

however, because the interpretation set forth in the Price

Suppression Memorandum itself is, on its face, not in accordance

with the law. FCC v. RCA Communications, Inc., 346 U.S. 86, 90

(1953), made clear that "Congress did not purport to transfer its

legislative power to the unbounded discretion of the regulatory

body." Commerce’s proposed standardB"allow[s] for some amount of

price affect [sic] on domestic price levels"Bplaces no limit on

Commerce’s discretion to determine that an agreement prevents price

suppression or undercutting. While we recognize that Commerce has

substantial discretion to negotiate suspension agreements with
Court No. 99-08-00523 Page 14

nonmarket economies, Commerce has here adopted a standard that

allows it, contrary to law, to exercise "unbounded" discretion.8

In short, given the agency’s failure to articulate a proper

legal standard to guide its price suppression determination, the

Court is not satisfied that Commerce exercised reasoned discretion

in arriving at the conclusion that the Agreement prevents price

suppression or undercutting. Therefore, Commerce’s price

suppression determination is remanded so that Commerce may

articulate an appropriate legal standard for making its price

suppression determination, or otherwise explain the connection

between the facts found and the choice made pursuant to the

statute.9

8
The "significant degree" standard forwarded in Commerce’s
brief must be disregarded here because, once again, it is plainly
a post hoc rationalization. See Allegheny Ludlum, 24 CIT at __,
slip op. 00-109, at 43 n.41; Burlington Truck Lines, 371 U.S. at
168-69. Although Commerce mentions the "significant degree"
standard used by the ITC in the Price Suppression Memorandum, see
Price Suppression Mem. at 3, it is not clear that Commerce’s "some
amount" means "a significant degree."
9
We decline to undertake a "substantial evidence" review of
Commerce’s factual findings regarding price suppression or
undercutting pending Commerce’s redetermination on remand.
 Conclusion

Commerce shall reconsider its determination in a manner

consistent with this opinion, pursuant to 19 U.S.C. § 1516a(c)(3).

Commerce shall file its remand determination with the Court within

90 days. Plaintiffs are granted 30 days to file comments on the

remand determination. Commerce may respond to any comments filed

within 20 days.

_________________________

Donald C. Pogue
Judge

Decided: November 21, 2000
New York, New York