Docket: Nos. 95-1245, 95-1257, 95-1306 and 95-1307
Court: Court of Appeals for the Federal Circuit; August 29, 1996; Federal Appellate Court
Bethlehem Steel Corporation, Thyssen Stahl AG, and Hoogovens Groep BV appeal two decisions from the Court of International Trade, which upheld findings by the International Trade Commission (ITC) regarding the impact of imports of flat-rolled carbon steel products on the U.S. industry. The ITC concluded that the U.S. industry was (1) not materially injured or threatened by imports of hot-rolled steel, (2) threatened with material injury from cold-rolled steel imports from Germany, and (3) similarly threatened by cold-rolled steel imports from the Netherlands. The appeal stems from a petition filed by U.S. steel companies in 1992 alleging harm from subsidized and unfairly priced imports. Following preliminary findings by the Department of Commerce, the ITC conducted a thorough investigation, categorizing the imports into four product types and collecting extensive data on pricing, volume, and domestic production. Ultimately, the ITC determined that while cold-rolled imports from Germany and the Netherlands posed a threat to the domestic industry, most hot- and cold-rolled imports did not. All parties appealed the adverse findings, but the Court of International Trade affirmed the ITC's determinations, prompting the current review. The jurisdiction for this appeal is established under 28 U.S.C. § 1295(a)(5).
The Court reviews the Commission's factual findings for substantial evidence and legal conclusions de novo, referencing the standard established in Atlantic Sugar, Ltd. v. United States. Substantial evidence is defined as relevant evidence that could support a reasonable conclusion. The review does not involve agreement with the Commission’s decision but assesses the reasonableness of the Commission's complex determinations, which Congress has tasked it with making.
Bethlehem's appeal challenges the Commission's negative material injury determinations on three grounds: (1) Bethlehem argues that two subsidiary findings are incorrect, specifically that domestic steel products are not greatly substitutable with imports and that purchasers are not price sensitive. Bethlehem presents post-investigation evidence of declining imports and rising domestic prices after the imposition of preliminary tariffs, claiming this demonstrates price sensitivity and substitutability. However, the Commission discounted this evidence due to its timing outside the investigation period, asserting the need for comprehensive economic context during their analysis. They maintained discretion in evaluating evidence and determining its weight, supported by a thorough economic data collection process during the investigation.
The Commission's thorough understanding allows it to evaluate evidence contextually, leading to well-supported conclusions that reflect complex economic realities. Fragmentary evidence outside the investigation period is challenging to interpret and can have multiple explanations. In this case, while rising domestic prices and declining imports could relate to higher import prices from preliminary tariffs, asserting a causal relationship based solely on temporal proximity is a logical fallacy (post hoc ergo propter hoc). Alternative explanations exist, such as increased demand in a recovering steel market or shifts in consumer preference from foreign specialty products to domestic commodity products. Without comprehensive economic data, particularly on domestic consumption patterns, the extent of the market effects attributed to preliminary tariffs remains unclear, justifying the Commission's decision to uphold its findings against Bethlehem's arguments.
Regarding the concepts of cumulation and negligibility, 19 U.S.C. § 1677(7)(C)(iv)(I) mandates that the Commission cumulatively assess imports from multiple countries if they compete with domestic products. An exception exists under § 1677(7)(C)(v) if imports are deemed negligible and have no discernable adverse impact on the domestic industry. The Commission evaluates various economic factors to determine negligibility, including import volume, transaction frequency, and market sensitivity to price changes. Bethlehem contends the Commission misapplied the negligibility exception by failing to cumulate imports from certain countries that reportedly had a discernable adverse impact, as evidenced by confirmed lost sales for domestic producers.
Bethlehem asserts that imports from certain countries have led to revenue losses of up to $25 million for domestic producers. However, the interpretation of the relevant statute by Bethlehem is incorrect. The statute mandates the cumulation of imports that have a "discernable adverse impact" on the domestic industry as a whole, not merely on individual domestic producers. While the Commission may consider specific lost sales and revenue declines when assessing negligibility, these factors do not alone trigger the cumulation requirement. Additionally, the statute allows for the possibility that minor import volumes can still be considered negligible, even if they negatively impact certain domestic producers.
Furthermore, Bethlehem challenges the method by which the Commission, particularly Commissioners Brunsdale and Crawford, assesses whether U.S. industries face material injury due to subsidized or less-than-fair-value (LTFV) imports. According to relevant statutes, countervailing or antidumping duties can only be imposed if the Commission finds that a U.S. industry is either materially injured or threatened with material injury due to these imports. "Material injury" is defined as harm that is not minor or insignificant. The Commission's determinations are based on the collective votes of six commissioners who evaluate the causal effects of imports using various statutory tests. These tests require consideration of the volume of imports, their pricing effects, and their impact on domestic producers, while allowing for the inclusion of other relevant economic factors.
The statute outlines three refined tests for assessing the impact of imports on the domestic industry. The Commission must evaluate the volume of imports to determine if it is significant, comparing absolute volumes and trends relative to U.S. production or consumption (19 U.S.C. 1677(7)(C)(i)). Regarding pricing, the Commission assesses whether there has been significant price underselling by imports versus U.S. products and whether imports depress prices or prevent price increases significantly. When analyzing the effects of less-than-fair-value (LTFV) or subsidized imports, the Commission must consider various economic factors affecting the domestic industry, such as declines in output, sales, market share, and profitability, as well as the impacts on cash flow, employment, and investment. These evaluations should take into account the business cycle and industry competition conditions.
Commissioners have discretion to exclude imports from negligible countries in their material injury analysis. The methodologies applied by the commissioners vary, primarily categorized into 'one-step' and 'two-step' analyses. The one-step analysis considers the current state of the industry and its injury from imports in a single assessment. In contrast, the two-step analysis first determines if the industry is materially injured and then assesses whether the imports contribute to that injury in a non-de minimis manner. Commissioners Brunsdale and Crawford employed the one-step analysis in this case, which Bethlehem contests as statutorily impermissible, arguing that the two-step analysis should be the exclusive method for material injury determinations.
Bethlehem asserts that statutes necessitate a determination of material injury whenever imports have a non-de minimis impact on domestic industries. They argue for a two-step analysis as the sole permissible method for assessing material injury, contending that a one-step method imposes a higher burden of proof regarding the impact of imports. Bethlehem believes that if the two-step test were applied by Commissioners Brunsdale and Crawford, the evaluation of material injury might differ, potentially altering the case's outcome, especially if additional votes were cast in favor of Bethlehem.
The Court of International Trade rejected Bethlehem's argument, stating that the two analysis methods do not signify fundamentally different interpretations of the statute, but rather are alternative approaches that comply with the statutory requirements. Judge Restani highlighted that while the two-step method offers decision-making efficiencies, the statute does not mandate it as the exclusive approach; the language supports a one-step analysis as well. Bethlehem seeks a ruling for a uniform methodology across all commissioners to assess injury from subsidized and/or LTFV imports, but the court found that the statute does not compel such uniformity.
The statute allows commissioners to weigh the various statutory tests differently and reach divergent factual conclusions based on the same evidence. The court emphasized that it lacks the authority to dictate the Commission's operational methods and can only require adherence to statutory mandates.
The Commission has the discretion to perform its duties provided its actions comply with statutory requirements and are not arbitrary. The Court affirmed the decision regarding Bethlehem's appeal, rejecting its claims of legal error related to causation standards used by Commissioners Brunsdale and Crawford.
In Thyssen's appeal, the Commission determined that German cold-rolled imports pose a threat of material injury to the domestic industry, with a 4-2 vote. Commissioners Watson and Rohr provided a joint explanation, while others issued separate opinions. Thyssen challenged the findings of these Commissioners as lacking substantial evidence, focusing on two key points: the potential shift of production from corrosion-resistant to cold-rolled steel to evade tariffs, and the significant decline in German import prices during the investigation.
The Commission also found that German corrosion-resistant steel imports caused material injury to the domestic industry, leading to recommended tariffs. The potential for German producers to shift production was based on various factual assertions, including the interrelation of production between cold-rolled and corrosion-resistant steel. However, it was later conceded that most corrosion-resistant steel produced in Germany from 1990 to 1992 was not sold in the U.S. market. Consequently, the argument that German producers would significantly divert production to cold-rolled steel was not sufficiently supported by evidence, leading to agreement with Thyssen's position on this subsidiary finding. For the Commissioners’ conclusion to hold, a significant amount of German corrosion-resistant steel would need to be intended for the U.S. market, which was not adequately established.
The Commissioners inaccurately asserted that the rise in German production of corrosion-resistant products from 1990 to 1992 was primarily due to increased sales in the U.S. market, a claim now acknowledged to lack substantial evidence. Consequently, this assertion is excluded from the evaluation of substantial evidence related to the ultimate threat determination. Thyssen argues that the Commissioners incorrectly interpreted declining German Average Unit Values (AUVs) as indicative of a likelihood of future imports at prices that would depress U.S. prices. Thyssen contends that the decline in AUVs was not a result of lower prices but rather a shift in demand from higher-priced to lower-priced German steel products, with the actual decrease in unit values being only 1.8%, contrary to the Commission's reported 14%. The use of averages, while valuable for data interpretation, can obscure individual data attributes; thus, it is essential to analyze the data components separately to understand the underlying factors influencing AUV changes. Though the Commission's reliance on AUV trends is generally acceptable, it is vulnerable to challenge when demand shifts affect the averages. In this instance, Thyssen provided evidence that the AUV decline was largely unrelated to pricing, prompting a need for the Commissioners to reassess the significance of these AUVs in their affirmative threat determination. Therefore, the analysis relying on AUV declines is given little weight in evaluating substantial evidence for the ultimate decision.
Commissioners Watson and Rohr determined that German cold-rolled steel imports threaten to suppress domestic prices, supported by evidence of significant underselling (71 instances) compared to overselling (64 instances) of domestic products. They noted that German imports primarily consist of fungible commodity products, which intensifies competition with domestic production. Furthermore, the Commissioners highlighted Germany's increasing steel inventories and unused production capacity, combined with declining domestic and international markets, suggesting that German producers might shift excess steel to the U.S. market. This analysis led to the conclusion that these imports pose a threat of material injury to the U.S. cold-rolled industry.
The document also addresses Hoogovens' appeal concerning Dutch cold-rolled steel imports, where the Commission's 3-3 vote indicated a threat of material injury. Hoogovens contested the sufficiency of evidence, particularly criticizing the limited sample size (less than 4% of total imports) used to demonstrate underselling by Dutch imports. Although Hoogovens initially claimed the small sample was inadequate, they later focused their argument on its lack of representativeness for the overall pricing of Dutch cold-rolled steel, which they asserted primarily consists of high-quality specialty products that command a price premium in the U.S. market. The dispute continues regarding responsibility for the unrepresentative data collected by the Commission.
The Commission highlights its challenges in conducting investigations and stresses the importance of cooperation from all involved parties in obtaining accurate data. Hoogovens contends that the Commission failed to address concerns about the sampled data in a timely manner, placing the responsibility for the investigation's adequacy on the Commission. However, the Commission asserts that Hoogovens has not demonstrated that the sample data was unrepresentative. It acknowledges the inherent risks of sampling but believes it undertakes necessary precautions to mitigate these risks. Hoogovens' general claims about the non-homogeneity of the cold-rolled steel market and the inadequacy of small samples do not fulfill the burden to prove the data's unrepresentativeness. The anecdotal evidence provided by Hoogovens, in the form of customer affidavits, lacks the quantitative detail required to contest the Commission's findings. Additionally, Hoogovens argues against the reliance on average unit values (AUVs) as indicators of price trends due to the diversity of products in the cold-rolled industry. However, the Commission maintains that it can rely on AUV trends as evidence of corresponding price trends unless Hoogovens presents concrete evidence to the contrary. Thus, the burden remains on Hoogovens to provide substantial evidence that the observed decline in AUVs does not reflect a decrease in import prices or is influenced by other factors.
Hoogovens' general claims regarding the extensive range of products in the cold-rolled category do not sufficiently support their argument against the reliance on average unit values (AUVs). Consequently, Commissioner Newquist's determination is upheld. Hoogovens failed to address additional evidence the Commission used, which included findings that the domestic cold-rolled industry was vulnerable, that imports from the cumulated countries increased during the investigation, and that domestic production decreased. Commissioner Rohr based his findings on low Dutch utilization rates, low home market shipments, and a steady decline in third-country shipments. Similarly, Commissioner Nuzum noted a significant rise in imports from the cumulated countries between 1991 and 1992 and highlighted their substantial unused production capacity. Even if Hoogovens' arguments regarding sample pricing and AUVs were accepted, it is uncertain whether the Commission's conclusions would still lack substantial evidence. The court's role is to determine whether reasonable decision-makers could conclude that German and Dutch cold-rolled imports pose a material injury threat, while other imports do not. The court affirms the Commission's decision. Two types of imports are referenced: subsidized imports, which receive foreign subsidies, leading to countervailing duties, and less than fair value (LTFV) imports, which are sold below market value, leading to antidumping duties. Conditions for imposing these duties are outlined in the U.S. Code, requiring a determination of injury to U.S. industry from these imports. The petition included allegations of subsidized imports from multiple countries.
LTFV imports have been alleged from multiple countries, including Argentina, Australia, Austria, Belgium, Brazil, Canada, Finland, France, Germany, Italy, Japan, Korea, Mexico, the Netherlands, Poland, Romania, Spain, Sweden, and the UK. The determination of material injury to a U.S. industry from these imports requires the Commission to first identify the relevant domestic industry, defined as all domestic producers of a "like product," according to 19 U.S.C. 1677(4)(A). A "like product" is characterized as one that is similar in characteristics and uses to the imported article, per 19 U.S.C. 1677(10). The Commission categorizes imported products into classes of "like products" and evaluates if these imports have caused material injury to the domestic industry.
In its final determination, the Commission identified two classes of corrosion-resistant products: those other than clad plate and corrosion-resistant clad plate. Bethlehem contends that the evidence on record largely contradicts the Commission's findings, yet acknowledges the substantial evidence test's deference to agency decisions. Under 19 U.S.C. 1671b(d)(2) and 1673b(d)(2), if the Department of Commerce's preliminary determination is affirmative, it mandates a cash deposit or bond for each entry of the merchandise, equivalent to the estimated countervailing or antidumping duty.
Bethlehem disputes the exclusion of cold-rolled steel imports from certain countries and the exclusion of hot-rolled steel from others, arguing the Commission's negligibility determinations should follow a burdens analysis established in Creswell Trading Co. v. United States. The court disagrees, noting that the Creswell analysis was specific to situations where the Department of Commerce required information from exporting countries that it could not independently obtain. In Creswell, the Department bore the burden of proving that certain imports were subsidized by the Indian government.
Commerce established a legal presumption that requires the Indian government to prove that certain imports were not subsidized if Commerce presents a modest initial showing. If the Indian government rebuts this presumption, the burden shifts back to Commerce. The document distinguishes this case from the Cresweil subsidy determination, asserting that negligibility determinations rely on evidence readily accessible to the Commission. The review of these findings must consider all evidence collectively to verify substantial support for the conclusions reached.
Thyssen challenges the Commission's findings, arguing that a unanimous negative material injury finding precludes a threat of material injury without evidence of imminent changes in trade patterns. This argument is dismissed as both unsupported by cited cases and logically flawed. The Commission may recognize a threat of material injury even when immediate material injury has not yet occurred, depending on specific case facts.
The document notes that a three to three vote by the Commission signifies a threat of material injury determination. Hoogovens claims that its largest specialty product's average unit value (AUV) exceeds that of domestic counterparts but fails to provide supporting evidence or present this claim to the Court of International Trade. Additionally, generalized affidavits from Hoogovens’ purchasers do not substantiate its claims regarding pricing data.
Commissioner Newquist utilized statutory discretion to cumulatively assess import effects from multiple countries for threat determinations, while Commissioner Nuzum similarly aggregated imports from various nations in her assessments.
