Nucor Corp. v. United StatesPublic version posted on 03/24/09 , 2009 CIT 16 ( 2009 )

Slip Op. 09-16
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
NUCOR CORPORATION, :
:
Plaintiff, : Public
: Version
and :
:
UNITED STATES STEEL CORPORATION, AK : Consol.
STEEL CORPORATION, : Court No.:
: 07-00454
Plaintiff-Intervenors, :
:
v. :
:
UNITED STATES, :
:
Defendant. :
________________________________________:
Held: Plaintiff and Plaintiff-Intervenors’ motions for judgment
upon the agency record is granted in part and denied in part. The
United States International Trade Commission’s final determination
is remanded for redetermination consistent with this opinion.
Wiley Rein LLP, (Daniel B. Pickard) for Plaintiff, Nucor
Corporation.
Skadden Arps Slate Meagher & Flom, LLP, (James C. Hecht; John
J. Mangan; Robert E. Lighthizer; Stephen P. Vaughn) for Plaintiff-
Intervenor, United States Steel Corporation.
King & Spalding, LLP, (Joseph W. Dorn; Elizabeth E. Duall;
Jeffrey M. Telep) for Plaintiff-Intervenor, AK Steel Corporation.
James M. Lyons, General Counsel; Andrea C. Casson, Assistant
General Counsel, Office of the General Counsel, United States
International Trade Commission (Robin L. Turner), for Defendant,
United States.
Dated: March 9, 2009
Court No. 07-00454 Page 2
OPINION
This matter is before the Court on motions for judgment upon
the agency record brought by plaintiff Nucor Corporation (“Nucor”),
plaintiff-intervenor, AK Steel Corporation (“AKS”), and plaintiff-
intervenor United States Steel Corporation (“USS”) (collectively,
“Plaintiffs” or “Domestic Producers”), pursuant to USCIT Rule 56.2.
Plaintiffs challenge the negative determinations by the United
States International Trade Commission (“Commission” or “ITC”) in
the five-year sunset reviews pursuant to 19 U.S.C. § 1675(c)(1)1 of
the countervailing duty order on hot-rolled steel products from
South Africa and revocation of the antidumping duty orders on hot-
rolled steel products from Kazakhstan, Romania, and South Africa.
JURISDICTION
The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
(2000) and 19 U.S.C. § 1516a(a)(2)(A)(i)(I) and (B)(iii) (2000).
1
19 U.S.C. § 1675(c)(1) provides:
5 years after the date of publication of . . . a
countervailing duty order . . . an antidumping duty
order . . . the Commission shall conduct a review
to determine, in accordance with section 1675a of
this title, whether revocation of the
countervailing or antidumping duty order . . .
would be likely to lead to continuation or
recurrence of dumping or a countervailable subsidy
. . . and of material injury.
Court No. 07-00454 Page 3
BACKGROUND
In August and November 2001, the Commission determined that an
industry in the United States was materially injured by reason of
subsidized imports of hot-rolled steel products from Argentina,
India, Indonesia, South Africa, and Thailand, and by reason of less
than fair value imports from hot-rolled steel products from
Argentina, China, India, Indonesia, Kazakhstan, Netherlands,
Romania, South Africa, Taiwan, Thailand, and Ukraine. See Hot
Rolled Steel Products From Argentina and South Africa, Inv. Nos.
701-TA-404 and 731-TA-898 and 905 (Final), USITC Pub. 3446 (Aug.
2001) (PR 65); Hot Rolled Steel Products From China, India,
Indonesia, Kazakhstan, The Netherlands, Romania, South Africa,
Taiwan, Thailand, and Ukraine, Inv. Nos. 701-TA-405-408 and 731-TA-
899-904 and 906-908 (Final), USITC Pub. 3468 (Nov. 2001) (PR 66)
(collectively, “Original Determinations”).2 During the period
September through December 2001, the United States Department of
Commerce (“Commerce”) published countervailing duty (“CVD”) orders
on Argentina, India, Indonesia, South Africa, and Thailand, and
antidumping duty (“AD”) orders on Argentina, China, India,
Indonesia, Kazakhstan, Netherlands, Romania, South Africa, Taiwan,
Thailand, and Ukraine. See Hot-Rolled Steel Products From
Argentina, China, India, Indonesia, Kazakhstan, Romania, South
2
Hereinafter all documents in the confidential record
will be designated “CR” and all documents in the public record
designated “PR.”
Court No. 07-00454 Page 4
Africa, Taiwan, Thailand, and Ukraine, USITC Pub. 3956, Inv. Nos.
701-TA-404-408 and 731-TA-898-902 and 904-908, at I-2 (review)
(Oct. 2007)(PR 453).
On August 1, 2006, the Commission instituted five-year reviews
of the orders on hot-rolled steel products from Argentina, China,
India, Indonesia, Kazakhstan, Netherlands, Romania, South Africa,
Taiwan, Thailand, and Ukraine (“subject countries”). See 71 Fed.
Reg. 43,521-23 (August 1, 2006) (PR 3).
The final determinations were issued by the Commission on
October 25, 2007 and were published in the Federal Register on
October 31, 2007. See Hot Rolled Steel Products From Argentina,
China, India, Indonesia, Kazakhstan, Romania, South Africa, Taiwan,
Thailand, and Ukraine, 72 Fed. Reg. 61,676 (Oct. 31, 2007) (PR
441). The determinations and views of the Commission are contained
in Hot-Rolled Steel Products From Argentina, China, India,
Indonesia, Kazakhstan, Romania, South Africa, Taiwan, Thailand, and
Ukraine (“Final Determination” or “Views”), USITC Pub. 3956, Inv.
Nos. 701-TA-404-408 and 731-TA-898-902 and 904-908 (review) (Oct.
2007)(PR 453)(CR 427).
In the Final Determination, the Commission determined, inter
alia, that revocation of the orders against China, India,
Indonesia, Taiwan, Thailand, and Ukraine would be likely to lead to
the continuation or recurrence of material injury to the domestic
Court No. 07-00454 Page 5
industry within a reasonably foreseeable time.3 See Views at 3 (PR
453). With respect to the orders against Argentina, Kazakhstan,
Romania, and South Africa, the Commission determined that their
revocation would not be likely to lead to the continuation or
recurrence of material injury to the domestic industry within a
reasonably foreseeable time. See id.In the instant consolidated appeal, each Plaintiff challenges
aspects of the ITC’s negative determinations for Kazakhstan,
Romania, and South Africa.4 See Pl.’s R. 56.2 Mot. Summ. J. Agency
R. (“Nucor’s Mem.”); Mem. Supp. Mot. J. Agency R. AKS (“AKS’s
Mem.”); Mem. Supp. Mot. J. Agency Rule 56.2 USS (“USS’s Mem.”).
The Commission responds that its negative sunset determinations are
supported by substantial evidence and otherwise in accordance with
law, and requests that the Court affirm them. See Mem. Def. ITC
3
In its final results in the five-year review concerning
the AD order on hot-rolled steel from the Netherlands, Commerce
revoked the order effective November 29, 2006. See Certain
Hot–Rolled Carbon Steel Flat Products from the Netherlands; Final
Results of the Sunset Review of Antidumping Duty Order and
Revocation of the Order, 72 Fed. Reg. 35,220 (June 27, 2007).
Accordingly, the Commission terminated its five-year review of
hot-rolled steel from the Netherlands effective June 27, 2007,
and any imports from the Netherlands were considered nonsubject
imports for these determinations. See Hot-Rolled Steel Products
From the Netherlands, 72 Fed. Reg. 40,322 (July 24, 2007).
4
On November 28, 2007, Nucor and U.S. Steel filed
separate appeals to the United States Court of International
Trade (“CIT”), which were assigned case nos. 07-00454 and 07-
00461, respectively. On November 30, 2007, AKS filed its appeal
to the CIT under case no. 07-00463. On March 14, 2008, appeals
brought by U.S. Steel and AKS were consolidated with this action.
Court No. 07-00454 Page 6
Opp’n Pls.’ Mot. J. Agency R. (“ITC Mem.”).
STANDARD OF REVIEW
When reviewing ITC determinations in sunset reviews “[t]he
court shall hold unlawful any determination, finding, or conclusion
found . . . to be unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C. §
1516a(b)(1)(B)(i). “Substantial evidence is more than a mere
scintilla.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).
“Substantial evidence is ‘such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.’” Huaiyin
Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
(Fed. Cir. 2003) (quoting Consol. Edison Co., 305 U.S. at 229). In
determining the existence of substantial evidence, a reviewing
court must consider “the record as a whole, including evidence that
supports as well as evidence that ‘fairly detracts from the
substantiality of the evidence.’” Huaiyin, 322 F.3d at 1374(quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562
(Fed. Cir. 1984)).
DISCUSSION
I. Statutory Framework
The Commission and Commerce are required to conduct sunset
reviews five years after publication of an antidumping duty or
Court No. 07-00454 Page 7
countervailing duty order or a prior sunset review. See 19 U.S.C.
§ 1675(c)(1). In a five-year sunset review of an antidumping duty
or countervailing duty order, the Commission determines “whether
revocation of an order . . . would be likely to lead to
continuation or recurrence of material injury within a reasonably
foreseeable time.” 19 U.S.C. § 1675a(a)(1).
In making its determination, the ITC must “consider the likely
volume, price effect, and impact of imports of the subject
merchandise on the [domestic] industry if the order is revoked.”
Id. Specifically, it must take into account:
(A) its prior injury determinations, including the
volume, price effect, and impact of imports of the
subject merchandise on the industry before the order was
issued . . . ,
(B) whether any improvement in the state of the industry
is related to the order . . . ,
(C) whether the industry is vulnerable to material
injury if the order is revoked . . . , and
(D) in an antidumping proceeding under section 1675(c)
of this title, the findings of the administering
authority regarding duty absorption under section
1675(a)(4) of this title.
Id.
II. Cumulation In Five-Year Reviews
In a sunset review, the Commission has discretion to
cumulatively assess the volume and effect of subject imports from
several countries for purposes of the material injury analysis, so
Court No. 07-00454 Page 8
long as certain threshold requirements are met.5 See 19 U.S.C. §
1675a(a)(7); Statement of Administrative Action (“SAA”)
accompanying H.R. Rep. No. 103-826(II), at 887, reprinted in 1994
U.S.C.C.A.N. 4040, 4212 (noting that the “[n]ew section 752(a)(7)
[1675a(a)(7)] grants the Commission discretion to engage in a
cumulative analysis.”). Those threshold requirements are that:
(1) the five-year reviews commenced under section 1675(c) are
initiated on the same day,6 (2) the subject imports to be cumulated
would be likely to compete with each other and with domestic like
products in the United States market (“reasonable overlap of
competition prong”); and (3) the Commission has not determined that
the subject imports to be cumulated are likely to have no
discernible adverse impact on the domestic industry (“no
5
The Commission’s statutory authority for cumulation in
sunset reviews is set out in 19 U.S.C. § 1675a(a)(7), which
provides that:
[T]he Commission may cumulatively assess the volume and
effect of imports of the subject merchandise from all
countries with respect to which reviews under section
1675(b) or (c) of this title were initiated on the same
day, if such imports would be likely to compete with each
other and with domestic like products in the United
States market. The Commission shall not cumulatively
assess the volume and effects of imports of the subject
merchandise in a case in which it determines that such
imports are likely to have no discernible adverse impact
on the domestic industry.
6
There is no dispute that this statutory requirement is
satisfied here because all reviews were initiated on the same day
– August 1, 2006. See Views at 11 (PR 453).
Court No. 07-00454 Page 9
discernible adverse impact prong”).7 See 19 U.S.C. § 1675a(a)(7);
Allegheny Ludlum Corp. v. United States, 30 CIT 1995, 1998-99, 475
F. Supp. 2d 1370, 1375 (2006).
Pursuant to this statutory authority, the Commission
determined to cumulate subject imports from Kazakhstan, Romania,
and South Africa (“Mittal Countries”) with each other, and to
separately cumulate subject imports from China, India, Indonesia,
Taiwan, Thailand, and Ukraine (“Other Cumulated Countries”) with
each other.8 See Views at 20 (PR 453). In so doing, the
Commission made the following subsidiary findings: (1) the no
discernible adverse impact exception to cumulation does not apply
to the subject countries with the exception of Argentina; (2) there
would likely be a reasonable overlap of competition between subject
imports from each country and the domestic like product as well as
among subject imports from each country;9 and (3) based on the
7
“‘No statutory provision enumerates the factors to be
considered by the ITC in making the discernible adverse impact
determination. In the absence of specific statutory guidance,
the ITC “‘generally considers the likely volume of the subject
imports and the likely impact of those imports on the domestic
industry within a reasonably foreseeable time if the orders are
revoked.’” Cogne Acciai Speciali S.P.A. v. United States, 29 CIT
1168, 1173 (2005) (citation omitted).
8
The Commission also found that subject imports from
Argentina are ineligible for cumulation on the ground that they
were likely to have no discernible adverse impact on the domestic
industry in the event of revocation. See Views at 20 (PR 453).
9
The ITC considers the following four factors to assess
whether subject imports are likely to have a reasonable
(continued...)
Court No. 07-00454 Page 10
existence of unique conditions of competition, subject imports from
the Mittal Countries would not be likely to compete under similar
conditions of competition with the subject imports from the Other
Cumulated Countries. See id.Plaintiffs do not challenge the first two subsidiary findings,
but dispute the third subsidiary finding relating to the
Commission’s conditions of competition analysis. Their challenges
generally fall into the following three categories.10 First, they
contend that the Commission’s conditions of competition analysis is
inconsistent with the purpose of the cumulation provision. Second,
they object to the analytical framework employed by two of the
Commissioners who declined to cumulate subject imports from the
Mittal Countries with subject imports from the Other Cumulated
Countries. Third, Plaintiffs argue that the Commission’s
cumulation determination is not supported by substantial evidence
on the record. For the reasons set forth below, the Court finds
that the Commission’s cumulation decision is supported by
(...continued)
competitive overlap with the domestic like product: “(1) the
degree of fungibility between products; (2) the presence of sales
or offers to sell in the same geographic markets; (3) the
existence of common or similar channels of distribution; and (4)
the simultaneous presence of imports in the market.” Wieland
Werke, AG v. United States, 13 CIT 561, 563, 718 F. Supp. 50, 52
(1989).
10
Where each Plaintiff makes substantially similar
arguments, the Court will not address each Plaintiff’s argument
separately.
Court No. 07-00454 Page 11
substantial evidence and in accordance with law.
A. Conditions of Competition Analysis
1. Plaintiffs’ arguments
Plaintiffs challenge the Commission’s cumulation decision on
the ground that the Commission’s determination to separately
cumulate subject imports from the Mittal Countries from the Other
Cumulated Countries is inconsistent with the purpose of the
cumulation statute. See AKS’s Mem. at 12-18; Nucor’s Mem. at 8-14;
USS’s Mem. at 8-11. Specifically, Plaintiffs complain that even
though the Commission found that the statutory factors for
cumulation were met such that (1) subject imports are not likely to
have no discernible adverse impact on the domestic industry in the
event of revocation of the orders, and (2) these subject imports
are likely to compete with each other and with the domestic like
product, the Commission nevertheless determined to separately
cumulate subject imports from the Mittal Countries from those of
the Other Cumulated Countries. See AKS’s Mem. at 19; Nucor’s Mem.
at 9-10; USS’s Mem. at 8. In so doing, Plaintiffs contend that the
Commission ignored the purpose of the cumulation provision, which
is to prevent the “hammering effect” of unfair imports from
multiple sources. See AKS’s Mem. at 14; Nucor’s Mem. at 13; USS’s
Mem. at 10-11.
Although Plaintiffs acknowledge that the Commission may
exercise discretion in its cumulation decision, they contend that
Court No. 07-00454 Page 12
its decision must be informed by the statutory text and legislative
history. See AKS’s Mem. at 13-14; Nucor’s Mem. at 13; USS’s Mem.
at 11. Because the Commission failed to consider the “hammering
effect” of subject merchandise from the Mittal Countries on the
domestic industry in its conditions of competition analysis,
Plaintiffs argue that the Commission’s cumulation decision is
contrary to law. See AKS’s Mem. at 15-21; Nucor’ Mem. at 13-14;
USS’s Mem. at 11.
2. ITC’s response
The ITC responds that the statute does not direct the
Commission to consider any particular factors when exercising its
discretion to cumulate, and that this Court has recognized the
Commission’s wide latitude in selecting the types of factors to
consider. See ITC’s Mem. at 11-12. The Commission disagrees with
Plaintiffs’ argument that ITC’s cumulation analysis is contrary to
the purpose of cumulation because it fails to account for the
possible “hammering effect.” See id. at 12. While acknowledging
that Plaintiffs correctly state the purpose of cumulation, the
Commission argues that no statutory language or legislative history
mandates the Commission to consider “hammering effect” as an
independent factor to be considered. See id. at 12-13. The
Commission states that its cumulation decision represents a
reasoned exercise of its statutory discretion. See id. at 13-14.
Court No. 07-00454 Page 13
B. Chairman Pearson and Commissioner Okun’s Analytical Framework
In the Views, Chairman Pearson and Commissioner Okun employed
a different analytical framework in their cumulation analysis than
the other Commissioners. These Commissioners state that:
while they consider the same issues discussed in this
section in determining whether to exercise their
discretion to cumulate the subject imports, their
analytical framework begins with whether imports from the
subject countries are likely to face similar conditions
of competition. For those subject imports which are
likely to compete under similar conditions of
competition, they next proceed to consider whether those
imports are likely to compete with each other and with
the domestic like product. Finally, if based on the
analysis they intend to exercise their discretion to
cumulate one or more subject countries, they analyze
whether they are precluded from cumulating such imports
because the imports from one or more subject countries,
assessed individually, are likely to have no discernible
adverse impact on the domestic industry.
Views at 10, n. 36 (PR 453).
1. Plaintiffs’ argument
Plaintiffs contend that using their analytical framework,
Chairman Pearson and Commissioner Okun did not consider the
statutory factors because they, in the first step, reached the
decision that subject imports from the Mittal Countries were not
likely to face similar conditions of competition as the subject
imports from the Other Cumulated Countries. See AKS’s Mem. at 28-
30; Nucor’s Mem. at 15-16; USS’s Mem. at 11-13. These
Commissioners’ analysis, Plaintiffs argue, contravenes the statute
Court No. 07-00454 Page 14
which requires the Commission to conduct a no discernible adverse
impact analysis and to consider whether subject imports are likely
to compete with each other and with the domestic like product. See
id.
2. ITC’s response
The ITC responds that these Commissioners considered all
statutory factors, but considered them in a different order from
the other Commissioners. See ITC’s Mem. at 14. In support, the
ITC points to its Views, in which it states that Commissioners
Pearson and Okun both “consider[ed] the same issues discussed in
this section in determining whether to exercise their discretion to
cumulate the subject imports.” Views at 10 n.36 (PR 453). Noting
that the statute does not mandate a particular order for the ITC to
consider the statutory factors, the Commission contends its
cumulation analysis is consistent with the statute. See ITC’s Mem.
at 14-15.
C. Substantial Evidence
1. Plaintiffs’ arguments
Plaintiffs challenge the Commission’s cumulation decision on
an alternative ground that it is unsupported by record evidence.
See AKS’s Mem. at 21-28; Nucor’s Mem. at 17-21; USS’s Mem. at 13-
19. They note that the Commission primarily relies on one main
fact, the corporate affiliation amongst Mittal USA, Mittal
Temirtau, Mittal Galati, and Mittal SA, in concluding that the
Court No. 07-00454 Page 15
ArcelorMittal Group companies will likely compete in the U.S. hot-
rolled steel market in a different manner than the industries in
any of the other subject countries. See AKS’s Mem. at 21-22;
Nucor’s Mem. at 17; USS’s Mem. at 13-14.
Specifically, Plaintiffs point to the Commission’s reliance on
the testimony of an ArcelorMittal executive who stated that the
marketing or commercial organization in the United States has to
consent to imports from foreign affiliates. See AKS’s Mem. at 21-
22; Nucor’s Mem. at 17-18; USS’s Mem. at 16. Plaintiffs argue that
the testimony upon which the Commission relies and the remaining
record evidence do not demonstrate that Mittal USA would have any
incentive or authority to withhold such consent in order to protect
the domestic manufacturing interests at the cost of the company as
a whole. See AKS’s Mem. at 22; Nucor’s Mem. at 18; USS’s Mem. at
16. Thus, USS notes that Mittal USA’s veto power, even if true,
“does not show that [imports from the Mittal Countries] will not
contribute to the combined hammering effect of subject imports.”
USS’s Mem. at 16.
Indeed, Plaintiffs contend that the Commission ignored the
fact that ArcelorMittal’s aim is to maximize its total profits and
the rate of return of its shareholders, not necessarily those of
each individual facility or in each individual country. See AKS’s
Mem. at 22; Nucor’s Mem. at 18-19; USS’s Mem. at 16-17. As such,
Plaintiffs argue that if ArcelorMittal can produce and sell steel
Court No. 07-00454 Page 16
more profitably in Kazakhstan, Romania, or South Africa than in the
United States, it will do so. See Nucor’s Mem. at 18-19; USS’s
Mem. at 17. Plaintiffs also complain that the Commission ignored
the fact that subject imports from the Mittal Countries will likely
harm the U.S. industry as a whole even if ArcelorMittal may not
intend to harm its own U.S. operations. See AKS’s Mem. at 22-23;
Nucor’s Mem. at 20.
2. ITC’s responses
Defendant contends that Plaintiffs’ arguments are flawed
because they focus on the ultimate inquiry of whether subject
imports will harm the domestic industry and not the discretionary
cumulation decision. See ITC’s Mem. at 16. The ITC retorts that
Plaintiffs ignore the most pertinent factual finding at issue – the
fact that Mittal USA’s relationship with affiliated producers in
the Mittal Countries did not exist for producers in any of the
other subject countries. See id. at 16-17.
The Commission elaborates that it relied upon the corporate
affiliation of the ArcelorMittal companies, evidence that
ArcelorMittal operates a unified sales network to manage sales in
territories where the Group is not a producer, and the testimony of
an ArcelorMittal executive regarding Mittal USA’s veto power over
whether imports from a sister foreign facility enter the U.S.
market. See id. at 17-19. In addition, the Commission cites to
several CIT cases wherein the Court affirmed the Commission’s
Court No. 07-00454 Page 17
determination to not cumulate based on corporate affiliation. See
id. at 19-20.
D. Analysis
1. The ITC’s conditions of competition analysis is supported
by substantial evidence and is not contrary to law
As previously noted, the Commission’s no discernible adverse
impact or reasonable overlap of competition findings are not
challenged here. At issue is whether the Commission’s
determination to separately cumulate subject imports from the
Mittal Countries based on its “conditions of competition” analysis
is supported by substantial evidence and in accordance with law.
The cumulation provision is unambiguous. Cumulation in sunset
reviews is discretionary. The cumulation provision does not
require the Commission to consider any particular factors, see 19
U.S.C. 1675a(a)(7), and the Commission “has wide latitude in
selecting the types of factors it considers relevant” in its
cumulation analysis, Allegheny, 30 CIT at 2005, 475 F. Supp. 2d at
1380. Indeed, even before the enactment of the Trade and Tariff
Act of 1984, which introduced the statutory basis for cumulation,
the Commission had substantial discretion in determining whether to
cumulate volume and effects of imports. See Lone Star Steel Co. v.
United States, 10 CIT 731, 734, 650 F. Supp. 183, 186 (1986). The
prior law permitted cumulation “‘where the conditions of trade so
warrant[ed].’” Wieland-Werke AG v. United States, 31 CIT __, __,
525 F. Supp. 2d 1353, 1363-64 (2007)(quoting USX Corp. v. United
Court No. 07-00454 Page 18
States, 11 CIT 82, 87, 655 F. Supp. 487, 491 (1987).
“[D]iscretionary cumulation does not preclude the Commission
from considering any factor it considers relevant.” Allegheny, 30
CIT at 2007, 475 F. Supp. 2d at 1378. Based on the statutory
directive to the ITC to consider whether subject goods would
compete with each other upon revocation of the order, this “Court
has repeatedly allowed the ITC to consider many factors related to
difference in the likely post-revocation conditions of
competition.” U.S. Steel Corp. v. United States, Slip Op. 08-82 at
7 (Aug. 5, 2008).
Nevertheless, the Commission’s discretion is not unfettered
and the Commission’s “exercise of discretion [must] be predicated
upon a judgment anchored in the language and spirit of the relevant
statutes and regulations.” Allegheny, 30 CIT at 1999, 475 F. Supp.
2d at 1376 (quoting Freeport Minerals Co. v. United States, 776
F.2d 1029, 1032 (Fed. Cir. 1985)). The purpose of cumulation is to
stem “competition from unfairly traded imports from several
countries simultaneously [which] often has a hammering effect on
the domestic industry . . . [that] may not be adequately addressed
if the impact of the imports are [sic] analyzed separately on the
basis of their country of origin.” H.R. Rep. No. 100-40, part 1,
at 130 (1987).
In its cumulation analysis, the Commission did not find that
hot-rolled steel from the subject countries, with the exception of
Court No. 07-00454 Page 19
Argentina, is likely to have no discernible adverse impact on the
domestic industry. In addition, the Commission found likelihood of
a reasonable overlap of competition between imports of hot-rolled
steel from each subject country and the domestic like product, and
among subject hot-rolled steel imports from each subject country.
Nevertheless, based on its “conditions of competition” analysis,
the Commission concluded that subject imports from the Mittal
Countries “will likely result in the ArcelorMittal Group companies
competing in the U.S. hot-rolled steel market in a different manner
than the industries in any of the other subject countries.”11 Views
at 18 (PR 453).
Plaintiffs contend that the Commission’s conditions of
competition analysis is contrary to law because it ignores the
purpose of the cumulation provision. When analyzing a non-
statutory factor, such as the conditions of competition, Plaintiffs
contend that the Commission must consider the “hammering effect” of
unfair imports from the subject countries. The Court disagrees.
11
“Mittal USA, was created from the
acquisition/consolidation of the assets of various former steel
companies, including Acme Steel, LTV, Bethlehem Steel, Ispat
Inland, and Weirton Steel. Mittal Steel Co., NV was formed in
2005, as the result of a merger between Ispat International and
LMN Holdings. In 2006, Mittal Steel Co. NV announced its merger
with Arcelor SA, creating a new entity ArcelorMittal; the legal
completion of the merger between Mittal and Arcelor is expected
by the end of 2007.” Views at 17, n.88 (PR 453) (citation to
CR/PR omitted). The Court will refer to this newly formed entity
as Mittal Steel Co., NV, Arcelor S.A., and ArcelorMittal
interchangeably.
Court No. 07-00454 Page 20
Nothing in the statutory language requires the Commission to
specifically consider the “hammering effect” of unfairly-traded
imports from multiple sources on the domestic industry in its
cumulation analysis as a separate factor. If Congress had intended
the Commission to consider “hammering effect” as an independent
factor in its discretionary cumulation analysis, it would have done
so. It did not as evidenced by the statutory language and the
legislative history. Although there is no doubt that the purpose
of the cumulation provision is to prevent the “hammering effect,”
Congress gave the Commission wide discretion in the types of
factors to consider. Therefore, the fact that the Commission did
not separately consider the “hammering effect” does not invalidate
its conditions of competition analysis. In addition, Plaintiffs
have not demonstrated that the Commission’s conditions of
competition analysis is contrary to the purpose of cumulation such
that it fails to account for the “hammering effect.”12
Moreover, the Commission’s cumulation determination, including
its conditions of competition analysis, is supported by substantial
evidence. The Commission relied on the testimony of an executive
12
Plaintiffs AKS and USS seem to rely on the record
evidence regarding likely volume of imports from the Mittal
Countries as conclusive evidence of the “hammering effect.” See
AKS’s Mem. at 15-18; USS’s Mem. at 16-19. However, basing the
cumulation decision solely on the likely volume of imports
without further justification may constitute an impermissible
circular analysis that relies on the same factors for refusal to
cumulate as for an ultimate negative injury determination. See
Allegheny, 30 CIT at 2002-03, 475 F. Supp. 2d at 1378-79.
Court No. 07-00454 Page 21
of ArcelorMittal as to the way it operates a unified sales network
to “manage[] sales in territories where the Group is not a
producer” meaning that Mittal USA essentially has a “veto power”
over whether imports from a sister foreign facility enter the U.S.
market. Views at 17-18 (PR 453); see Transcript of Commission
Hearing on Hot-Rolled Steel Products, Inv. Nos. 701-TA-404-408 and
731-TA-898-908 (review)(July 31, 2007 and August 1, 2007)(“Tr.”),
at 218-19 (PR 253) (stating that the marketing or commercial
organization in the United States has to consent to imports from
foreign affiliates). The Commission further supported its
cumulation decision with evidence that Mittal Temirtau, Mittal
Galati, and Mittal Steel SA, respectively, account for virtually
all production of subject merchandise in Kazakhstan, Romania, and
South Africa. See Views at 17 (PR 453). In addition, the
Commission considered that Mittal USA is the largest domestic
producer of hot-rolled steel with six hot-rolled steel facilities
that account for a substantial share of domestic hot-rolled steel
production in 2006.13
13
The Court does not address whether corporate
affiliation should not be the sole basis upon which to determine
whether to cumulatively assess subject countries because that is
not what the Commission has done here. As discussed, the
Commission adequately supported its cumulation decision and its
conditions of competition analysis with other compelling facts
that support its theory that the subject imports from the Mittal
Countries will likely compete in a different manner than the
producers from the Other Cumulated Countries. Cf. Nucor Corp. v.
United States, Slip Op. 08-74 at 15, n.5 (July 9, 2008)
(continued...)
Court No. 07-00454 Page 22
Based on the evidence, the Commission reasonably concluded
that there is no similar relationship between any combination of
U.S. producers and subject producers that control all or virtually
all production in any of the remaining subject countries, and that
subject hot-rolled steel industries in Kazakhstan, Romania, and
South Africa will likely result in the ArcelorMittal Group
companies competing in the domestic market in a different manner
than the industries in any of the other subject countries.
Although Plaintiffs complain that the testimony of the
ArcelorMittal executive upon which the Commission relied is self-
serving, it is within the purview of the Commission to determine
the weight to be assigned to the evidence it evaluates. See U.S.
Steel Group v. United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996).
So long as the Commission’s choice of evidentiary weight has
adequate basis, the Court must defer to the Commission. See Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1359 (2006). Here,
the Commission chose to give weight to the testimony of an
ArcelorMittal executive as to ArcelorMittal’s own operation of its
sales network and Mittal USA’s veto power, and reasonably concluded
that subject imports from the Mittal Countries would compete under
(...continued)
(cumulation decision based on corporate affiliation, different
trend in capacity data, and tariff barriers in third-country
markets); U.S. Steel Corp., Slip Op. 08-82 at 7, n.6 (cumulation
decision based on corporation affiliation as well as the
differences in the product mixes and the relative importance of
home market sales).
Court No. 07-00454 Page 23
different conditions of competition than those from the Other
Cumulated Countries.14
2. Chairman Pearson and Commissioner Okun’s analytical
framework is not contrary to law
The Court finds no merit to Plaintiffs’ argument that Chairman
Pearson and Commissioner Okun’s analytical framework is contrary to
law. Plaintiffs contend that Chairman Pearson and Commissioner
Okun did not consider the statutory factors because they, in the
first step, reached the decision that subject imports from the
Mittal Countries were not likely to face similar conditions of
competition as the subject imports from the Other Cumulated
Countries. Plaintiffs argue that “the statute requires the
Commissioners to consider whether imports compete with one another
and the domestic like product, and further requires them to
determine whether imports from individual countries are likely to
have no discernible adverse impact on the domestic industry.”
USS’s Mem. at 12.
14
Plaintiffs also argue that: (1) ArcelorMittal’s aim is
to maximize its total profits rather than those of each
individual facility or country and that if ArcelorMittal can
produce and sell steel more profitably in Kazakhstan, Romania, or
South Africa than in the United States, it will do so; and (2)
the Commission ignored the fact that subject imports from the
Mittal Countries will likely harm the U.S. industry as a whole
even if ArcelorMittal may not intend to harm its own U.S.
operations. The Court finds that these arguments are
substantively related to the Commission’s volume determination
rather than the cumulation decision as discussed in further
detail in section III below.
Court No. 07-00454 Page 24
At the outset, the Court notes that the identical analytical
framework has been previously met with approval by the Court of
International Trade. See, e.g., Nucor Corp. v. United States
(“Nucor-CoRe Steel”), Slip Op. 08-141 (Dec. 23, 2008); U.S. Steel,
Slip Op. 08-82 at 5-6, n.4. Certain plaintiffs in Nucor-CoRe Steel
raised substantially similar challenges as Plaintiffs do in the
instant matter.15 The court in that case found that “[s]tripped
bare, [plaintiffs] argument is that Chairman Pearson and
Commissioner Okun chose to conduct their cumulation analysis in a
different order than [the other Commissioners].” Nucor-CoRe Steel,
Slip Op. 08-141 at 40. Likewise, the Court disagrees with
Plaintiffs’ reading of Chairman Pearson and Commissioner Okun’s
cumulation analysis in the instant matter. The Commission’s Views
unequivocally state that “Chairman Pearson and Commissioner Okun .
. . consider[ed] the same issues discussed in this section,” which
15
In support of its argument, Plaintiffs USS and Nucor
cite Angus Chemical Co. v. United States, 140 F.3d 1478, 1485
(Fed. Cir. 1998), wherein the United States Court of Appeals for
the Federal Circuit held that the Commission must consider all
the statutory factors of volume, price, and impact in its injury
test. See Nucor’s Mem. at 15-16; USS’s Mem. at 12-13. AKS cites
to Massachusetts v. EPA, 549 U.S. 497 (2007), for the proposition
that an agency must exercise its discretion in conformance with
the authorizing statute. Both cases were cited for the same
proposition in the Nucor-CoRe Steel case, and the Court rejected
plaintiffs’ arguments. The Nucor-CoRe Steel court distinguished
Angus on the ground that it involved a different statutory
provision with different statutory language. Massachusetts was
rejected on the ground that the statute at issue, the Clean Air
Act, does not accord the same wide discretion with which Congress
imbued the Commission. This Court similarly rejects both
authorities on the same grounds.
Court No. 07-00454 Page 25
includes the analysis of both statutory factors. Views at 10 n.36
(PR 453).
Individual Commissioners “are not required to apply identical
analytical methodologies.” See Nucor-CoRe Steel, Slip Op. 08-141
at 42 (citing U.S. Steel, 96 F.3d at 1362 (stating that “[s]o long
as the Commission’s analysis does not violate any statute and is
not otherwise arbitrary and capricious, the Commission may perform
its duties in the way it believes most suitable.”)). Moreover,
nothing in the statute requires the Commission to consider the
factors in any particular order. See Nucor-CoRe Steel, Slip Op.
08-141 at 40. As such, the Court rejects Plaintiffs’ challenge to
these Commissioners’ analytical framework.
III. Likely Volume, Price Effect, And Impact On The Industry
A. Volume
1. Statutory framework
Pursuant to 19 U.S.C. § 1675a(a)(1), the Commission must
evaluate “the likely volume, price effect, and impact of imports of
the subject merchandise on the industry if the order is revoked.”
In addition, 19 U.S.C. § 1675a(a)(2) provides:
In evaluating the likely volume of imports of
the subject merchandise if the order is
revoked . . . the Commission shall consider
whether the likely volume of imports of the
subject merchandise would be significant if
the order is revoked . . . either in absolute
terms or relative to production or consumption
Court No. 07-00454 Page 26
in the United States. In so doing, the
Commission shall consider all relevant
economic factors, including –
(A) any likely increase in production
capacity or existing unused production
capacity in the exporting country,
(B) existing inventories of the subject
merchandise, or likely increases in
inventories,
(C) the existence of barriers to the
importation of such merchandise into
countries other than the United States,
and
(D) the potential for product-shifting if
production facilities in the foreign
country, which can be used to produce the
subject merchandise, are currently being
used to produce other products.
Put simply, the Commission must determine whether, considering
the four economic factors set forth in subsections (A) through (D)
of the statute, it is “likely” that the volume of imports will be
“significant” if the unfair trade orders are revoked. See id.
“Thus, in accordance with the statute, in order to find sufficient
volume for there to be injury, the [Commission] must identify
substantial evidence from the record demonstrating that, should the
orders be revoked, it is likely that the volume of the subject
imports entering the U.S. market will be significant.” Nippon
Steel Corp. v. United States, 29 CIT 695, 712, 391 F. Supp. 2d
1258, 1275 (2005) (citing 19 U.S.C. § 1675a(a)(2)).
In its Views, the Commission concluded that the volume of
imports from the Mittal Countries would not likely be significant
in the event of revocation of the orders. See Views at 46 (PR
Court No. 07-00454 Page 27
453). Plaintiffs contend that the Commission’s volume analysis is
flawed because the Commission: (1) relied on the notion that the
producers from the Mittal Countries will restrain imports based on
their corporate affiliation with Mittal USA; (2) made statements
with regard to capacity and capacity utilization that are
unsupported by record evidence; and (3) failed to adequately
address the potential for market-shifting, export orientation of
the producers from the Mittal Countries, and third-country markets.
2. ArcelorMittal’s strategy
The Commission stated that:
ArcelorMittal Group’s strategy for its subsidiaries and
trading group is to supply home and regional markets, and
not to serve export markets where the Group is a
producer, and that this global marketing strategy limits
the motivation of the subject producers in Kazakhstan,
Romania, and South Africa to significantly increase
shipments to the U.S. market . . . Mittal USA’s control
over the products that enter the U.S. market makes it
unlikely that any of the affiliated subject producers in
Kazakhstan, Romania, or South Africa will move
aggressively to capture U.S. market share or sell its
products in a manner that would have a negative effect on
prices that Mittal USA receives.
Views at 44-45 (PR 453).
a) Nucor’s arguments
Nucor objects to the Commission’s volume finding based on the
Commission’s past reviews. See Nucor’s Mem. at 22-24. It argues
that in past reviews that the ITC found that an ArcelorMittal
presence in subject countries would not inhibit significant volumes
of subject merchandise from re-entering the U.S. market. See id.
Court No. 07-00454 Page 28
at 23. As such, Nucor contends the Commission made arbitrary and
inconsistent determinations regarding general market dynamics
without an adequate explanation. See id. at 23-24.
Reiterating its profit maximization theory discussed in detail
with respect to cumulation, Nucor next argues that there is no
rational economic reason why the Mittal Countries’ producers will
not ship significant quantities of subject merchandise upon
revocation of the orders. See id. at 24. Nucor contends that they
will do so to maximize total global profits.
b) Plaintiff USS’s arguments
USS makes five separate arguments against the Commission’s
volume determination focusing on ArcelorMittal’s business strategy.
See USS’s Mem. at 24-31. First, USS argues that the Commission’s
Views do not address the argument that imports from the Mittal
Countries would harm other domestic producers without harming
Mittal USA. See id. at 24-26.
Second, USS disputes the Commission’s statement that “the
nature of the U.S. hot-rolled steel market, in which producers and
importers compete in nearly all geographic markets, makes
significant imports in any region of the country likely to have a
disruptive impact on the overall U.S. market; thus, it is a course
that Mittal USA is unlikely to pursue.” Views at 45 (PR 453). USS
contends that the data upon which the Commission relies do not
support the Commission’s finding that significant imports in any
Court No. 07-00454 Page 29
region of the country are likely to have a disruptive impact on the
overall U.S. market. See USS’s Mem. at 26-27.
Third, USS contends that even if it is true that Mittal USA
would suffer by reason of imports from the Mittal Countries, the
Commission failed to consider whether the harm to Mittal USA would
be outweighed by the benefit to ArcelorMittal’s overall
operations.16 See id. at 27-28. In addition, USS describes two
possible scenarios under which ArcelorMittal could increase its
overall profits in the U.S. even if doing so caused the U.S. prices
to fall.17 USS argues that the Commission’s failure to address
16
In support, USS cites to the separate dissenting
opinion of Commissioners Lane and Pinkerton, who stated that:
At the hearing, Mr. Schorsch, the Chief Executive Officer
of Flat Carbon-Americas for Arcelor Mittal, testified
that “the marketing or commercial organization” in the
United States would have to consent to imports from
sister companies. We note that both Mr. Schorsch and
Mittal USA failed to identify the Arcelor Mittal entity
or entities that exercise influence over this “marketing
or commercial organization.” It is entirely possible –
indeed likely given the interests of the Arcelor Mittal
Group as a whole – that the decision to export to the
United States would be based upon a balancing of costs to
Mittal USA against benefits to the exporting entity.
Dissenting Views at 52.
17
Scenario 1: A multinational company does not engage in
unfair trade, and brings no imports into this market. It sells 3
million NT of hot-rolled steel produced at its U.S. operations
for a price of $550/NT. It makes a profit of $150/NT, or $450
million (3 million NT x $150/NT = $450 million).
Scenario 2: The same company sells 500,000 NT of hot-
rolled steel at a dumped or subsidized price, causing the average
(continued...)
Court No. 07-00454 Page 30
these points constitutes an error.
Fourth, USS points to the behavior of the Ispat organization,
the predecessor of ArcelorMittal, during the original investigation
as a basis for its position that the volume of subject imports from
the Mittal Countries is not likely to decline. See id. at 28-30.
USS explains that although Ispat owned a U.S. producer, Ispat
Inland, Inc., and also owned the sole hot-rolled steel producer in
Kazakhstan, Ispat Karmet (which is now Mittal Temirtau), U.S.
imports from Kazakhstan increased 47.7 percent during the original
period of investigation. See id. at 29. As such, Plaintiffs argue
that upon revocation of the order, ArcelorMittal will similarly
increase the volume of hot-rolled steel to the United States from
its affiliates as Ispat did from Kazahkstan.
Fifth, USS points out that the Commission’s likely volume
analysis contradicts the Staff Report stating that the Mittal
Countries would respond with “relatively large changes in the
quantity shipped to the U.S. market.” See id. at 30; see Views at
(...continued)
U.S. price to fall from $550/NT to $520/NT. Because the
unfairly-traded goods carry a lower cost, the profit on these
imports is $220/NT, or $110 million (500,000 NT x $220/NT = $110
million). The company also sells 3 million NT of hot-rolled
steel from its domestic operations at $520/NT. On these sales,
it makes a profit of $120/NT, or $360 million (3 million x
$120/NT = $360 million). Under this scenario, therefore, the
company’s total profits in the U.S. market are $470 million ($110
million + $360 million = $470 million) – $20 million higher than
its profits under Scenario 1 – even though prices have fallen in
a manner that harms other U.S. producers.
Court No. 07-00454 Page 31
II-11, 11-12 (PR 453). USS contends the Commission impermissibly
ignored these facts even though they were raised. See id. at 31.
c) Plaintiff AKS’s arguments
AKS also challenges the Commission’s finding on the ground
that, as of 2007, Mittal USA was exporting hot-rolled steel to
Western Europe notwithstanding the fact that ArcelorMittal has many
production facilities in Western Europe.18 See AKS’s Mem. at 27-28.
AKS notes that some of those exports went to Belgium where
ArcelorMittal is the largest producer of flat-rolled products like
hot-rolled steel. Based on these facts, AKS states that domestic
producers argued before the Commission that ArcelorMittal would not
hesitate to export to the United States from the Mittal Countries.
The Commission, however, did not address this issue in the Views.
d) ITC’s responses
The Commission maintains that its volume finding is supported
by substantial evidence. See ITC’s Mem. at 25-36. In addition to
considering all of the record evidence relating to production
capacity, unused capacity, inventories, domestic and export
18
AKS makes many of the same arguments that USS puts
forth against the ITC’s finding that ArcelorMittal would limit
imports to the United States. See AKS’s Mem. at 21-28. Although
AKS’s arguments are directed to the Commission’s cumulation
decision rather than its volume determination, the Court finds
they relate to likely volume of subject imports and are
appropriately discussed in this section. Since they are similar
to USS’s arguments, the Court will not recount them, but they
were thoroughly considered with respect to both the Commission’s
cumulation and volume determinations.
Court No. 07-00454 Page 32
shipment patterns, barriers to importation, and potential for
product shifting, see id. at 25-32, the Commission states it relied
on the testimony of a Mittal USA executive that Mittal USA has veto
power over imports of hot-rolled steel products from the
subsidiaries, see id. at 32.
In response to Plaintiffs’ arguments, the ITC retorts that
record evidence does not support Plaintiffs’ speculative theories
that the ArcelorMittal group would maximize it profits at the
expense of its U.S. operations. See id. at 32-34. Based on record
evidence, the Commission states that it reasonably found that
ArcelorMittal would not likely disrupt Mittal USA and the U.S.
market. Based on Mittal USA’s own interest in maintaining a
profitable U.S. market, the Commission states that it is unlikely
that volume of imports from the Mittal Countries would enter in
significant volumes.
In further support, the Commission states that hot-rolled
steel is a price sensitive product that is sold nationally. See
id. at 34. Therefore, the Commission contends that any pricing
practices that would negatively impact Mittal USA’s competitors are
likely to also impact Mittal USA. Moreover, the ITC dismisses
Plaintiffs’ argument that Mittal USA will cause injury to other
domestic producers while not disrupting its own business as an
unsupported speculation. See id. at 35.
The ITC disputes USS’s argument relating to Mittal USA’s
Court No. 07-00454 Page 33
predecessor, Ispat Inland, Inc., on the ground that there are
substantial differences in facts. See id. at 35-36. Specifically,
the Commission states that the current corporate relationship
involves substantially more domestic and subject production than
the single country relationships that existed in the original
investigations. The Commission states that Ispat Inland, then
accounted for a much smaller portion of domestic production, and
was related to a hot-rolled steel producer in only one country,
Ispat Karmet, in Kazakhstan. In contrast, Mittal USA accounts for
a much larger portion of domestic production than Ispat Inland did,
and is related to producers in Romania and South Africa.
3. Production capacity and capacity utilization
With respect to production capacity and capacity utilization,
the Commission stated that:
The production capacity for Kazakhstan, Romania, and
South Africa on a cumulated basis is relatively modest
and has remained relatively flat over the period of
reviews, fluctuating slightly between 12 million and 13
million short tons. Capacity utilization on a cumulated
basis has remained relatively stable, ranging from about
78 percent to 86 percent between 2001 and 2006.
Views at 43 (PR 453).
a) Plaintiffs’ argument
Plaintiffs contend that the Commission’s volume analysis
ignored the [ ]. See Nucor’s Mem. at 25-
26; USS’s Mem. at 21-22. USS points to [ ]
unused capacity during 2006. See USS’s Mem. at 21. In comparison
Court No. 07-00454 Page 34
to the total volume of subject imports from all ten countries in
2000, which was then 3,683,069 NT, USS argues that producers in the
Mittal Countries could ship a volume of imports equal to [ ]
percent of the total imports during 2000 by merely drawing upon
their unused capacity. See id. at 21-22; AKS’s Mem. 16-17.
b) ITC’s response
The Commission maintains that the production capacity for the
Mittal Countries on a cumulated basis of 12 to 13 million short
tons is relatively flat in fluctuation and that this production
capacity is relatively modest in comparison with the 2006 U.S.
production capacity of over 80 million short tons, and the
production capacity of the Other Cumulated Countries of 90 to 134
million short tons (which varies depending on the source of data).
See ITC’s Mem. at 26. The Commission also notes that cumulated
production capacity for the Mittal Countries had only slightly
increased from the 11.8 million short tons reported in the original
investigations whereas production capacity of the Other Cumulated
Countries had almost tripled. With respect to capacity
utilization, the ITC maintains that excess capacity remained at a
level similar to that during the original investigations and it
remained at a relatively constant level throughout the period of
review (“POR”).
Court No. 07-00454 Page 35
4. Market shifting, export orientation and third-country
markets
The Commission stated:
Domestic shipments of hot-rolled steel (combined internal
consumption and home market) on a cumulated basis
accounted for a majority of total shipments in each of
the subject countries, with the share remaining at a
relatively constant level (approximately two-thirds of
total shipments) over the period of review. Thus,
exports as a share of total shipments and the volume of
total exports have remained relatively stable. The
volume of shipment exported has increasingly been focused
on customers located in markets considered regional to
each of these subject countries.
Views at 43 (PR 453).
a) Plaintiff USS’s argument
USS contends that in the above discussion the Commission
failed to account for the fact that the U.S. market is particularly
attractive to foreign producers despite making that finding with
respect to imports from the Other Cumulated Countries.19 See USS’s
Mem. at 22-23. USS thus argues that the Commission’s analysis is
19
Specifically, Plaintiffs point to the Commission’s
statement with respect to China, India, Indonesia, Taiwan,
Thailand, and Ukraine that:
Other considerations are the attractiveness of the
relatively open U.S. market and its higher prices that
will serve as an incentive for producers in these subject
countries to direct exports currently shipped to other
markets to the U.S. market if the orders are revoked.
Prices for hot-rolled steel in the United States
generally are appreciably higher than those in most other
markets, except those in the European Union.
Views at 34 (PR 453).
Court No. 07-00454 Page 36
seriously undermined, and the Commission has failed to adequately
address this issue in its market-shifting analysis.
Moreover, USS contends that [ ] of exports from
the Mittal Countries were shipped to [
]. See id. at
23.
b) Plaintiff Nucor’s arguments
Nucor contends that the Commission failed to discuss the fact
that subject producers from the Mittal Countries exported [
] of total shipments than [
] and that they are and still remain net
exporters. See Nucor’s Mem. at 26-27.
Moreover, Nucor argues that “capacity increases in alternative
export markets will deprive subject producers of many of their
current export destinations, making it likely that they will shift
subject exports to the United States upon revocation of the
orders.” See id. at 28.
In particular, Nucor contends that the Commission ignored the
shrinking third-country export markets of subject producers from
the Mittal Countries, including the potential impact of China’s
shift from a net-importer to a net-exporter of hot-rolled steel
products on subject producers from the Mittal Countries. See id.
Court No. 07-00454 Page 37
In addition, Nucor argues that the effect of China’s shift to net-
exporter status will be further exacerbated by growing capacity in
other alternative export markets, which will make it more likely
that subject producers from the Mittal Countries will shift exports
to the United States upon revocation. See id. at 29-30.
c) ITC’s responses
The Commission responds that it considered the record evidence
regarding domestic and export shipment patterns and found that
domestic shipments of hot-rolled steel on a cumulated basis
accounted for a majority of total shipments in each of the subject
countries. See ITC’s Mem. at 27. In addition, it considered the
export markets for each of the Mittal Countries and found that
those countries increasingly focused on regional customers. See
id. With respect to Nucor’s argument regarding China and the
impact of increases in Chinese production, the Commission responds
that it found that there was no reason to discuss China. See id.
at 31-32. According to the Commission, China had not been a
principal let alone a major market for the subject industries, and
decreases in such exports had occurred by 2005 and 2006.
5. Analysis
The Commission’s volume determination cannot be sustained on
the grounds upon which it relies.20 Central to the Commission’s
20
The Court considered Nucor’s argument that in past
reviews the ITC found that an ArcelorMittal presence in subject
(continued...)
Court No. 07-00454 Page 38
volume determination is its finding that Mittal USA will exercise
its veto power in limiting subject imports from the Mittal
Countries. In support, the Commission relies on the corporate
affiliation of the ArcelorMittal companies, the investment
ArcelorMittal made in acquiring Mittal USA, and the fact that the
hot-rolled steel market is nationwide and sensitive to small price
changes.
The evidence upon which the Commission relies may support the
theory that ArcelorMittal will seek to protect its own U.S.
interest, but it does not logically result in the conclusion that
Mittal USA will limit subject imports from the Mittal Countries.
Indeed, evidence overwhelmingly supports the conclusion that: (1)
ArcelorMittal affiliates will do what is good for the company as a
whole; (2) ArcelorMittal’s overall operations would benefit from
increased imports from the Mittal Countries; and, therefore; (3)
Mittal USA has no incentive to exercise its veto power over imports
from the Mittal Countries.
First and foremost, ArcelorMittal’s affiliate companies
(...continued)
countries would not inhibit significant volumes of subject
merchandise from re-entering the U.S. market citing Steel
Concrete Reinforcing Bar from Belarus, China, Indonesia, Korea,
Latvia, Moldova, Poland, and Ukraine, Invs. Nos. 731-TA-873-875,
877-880, and 882 (Review), USITC Pub. No. 3933 (July 2007)(“Rebar
Sunset Review”). See Nucor’s Mem. at 23. This argument does not
merit a lengthy discussion. It suffices to say, the Commission’s
evidentiary and logical bases for its volume finding in the Rebar
Sunset Review are distinguishable from those of the subject
review.
Court No. 07-00454 Page 39
evaluate their business decisions based on what is in the best
interest of ArcelorMittal’s overall operations, not that of each
affiliated entity. See Views at 65-66 n.251 (CR 427)(“[
].’” (emphasis
added)).
Secondly, the two scenarios described by USS provide a
theoretical model by which ArcelorMittal could increase its overall
profits in the United States even if doing so caused U.S. prices to
fall. The Commission’s own Staff Report concluded that the mills
in the Mittal Countries would respond to changes in demand in the
United States with “relatively large changes in the quantity
shipped to the U.S. market.”21 Views at II-11 to II-12 (PR 453).
ArcelorMittal would apparently benefit from maximizing production
in its low-cost facilities in Kazakhstan. See Tr. at 222, 268-269
(PR 253).
21
The Commission did not address this critical
information in their Final Determination even though it was
raised by interested parties. The Commission “may not through
its silence simply ignore a Staff Report analysis that
contradicts the Commission’s own conclusions where an interested
party has specifically brought the possibly conflicting evidence
to the agency’s attention.” Altx, Inc. v. United States, 25 CIT
1100, 1103, 167 F. Supp. 2d 1353, 1359-60 (2001). If the
Commission believes the information contained in the Staff Report
is not contradictory to its volume determination as it asserts,
see ITC’s Mem. at 30, it ought to provide a cogent explanation
for its belief.
Court No. 07-00454 Page 40
In addition, by drawing upon their unused capacity, producers
in the Mittal Countries are capable of shipping a volume of imports
equal to [ ] percent of the total volume of subject imports
during 2000. Even “Mittal USA acknowledged that it may allow
imports from its sister facilities in these subject countries to
enter the U.S. market.”22 Views at 44 (PR 453). Thus, clearly, if
harm to Mittal USA by way of subject imports from its affiliates
would be outweighed by the benefit to ArcelorMittal’s overall
operations, then Mittal USA would have no incentive to exercise its
veto power over imports from the Mittal Countries.23
The Commission’s volume finding is also flawed with respect to
its finding that “significant imports in any region of the country
[are] likely to have a disruptive impact on the overall U.S.
market” suggesting that any pricing practice that would negatively
impact Mittal USA’s competitors is likely to also impact Mittal
22
The Commission responds that it considered this
argument, but relied upon the testimony that such imports from
Mittal USA’s sister facilities would be “‘managed in such a way
and controlled . . . by the domestic marketing organization,
which obviously has the interest of protecting . . . that
production base in that domestic market.’” ITC’s Mem. at 33.
This testimony merely states that Mittal USA would protect its
own domestic production base. It, however, does not provide a
reasoned basis for the Commission’s belief that Mittal USA would
not disrupt the U.S. market or harm the other domestic producers.
23
Indeed, in 2006, ArcelorMittal’s affiliates
collectively imported a total of [ ] of reported total U.S.
imports. See Final Staff Report at Table I-16 (CR 376). One of
those affiliates was [ ] importer of steel into the
U.S. See id.Court No. 07-00454 Page 41
USA. Views at 45 (PR 453). The only data upon which the
Commission cites to support its findings is a chart listing
producers and importers by region. See Views at Table II-1 (PR
453). This data, however, do not provide an adequate basis for the
Commission’s finding that regional surges in subject imports are
likely to have a national effect or lead to the conclusion that any
negative price impact on Mittal USA’s competitors would also
negatively impact Mittal USA.24 The Commission’s finding even
contradicts the admission of an executive of ArcelorMittal that its
imports “may affect competitors in this market who are in different
geographies or serve different market segments, and so on.” Tr. at
219 (PR 253). Indeed, ArcelorMittal’s U.S. mills are located in
the East and Midwest, which would enable ArcelorMittal to steer
imports away from direct competition with Mittal USA. See Views at
Table I-14 (PR 453). Accordingly, the Court cannot sustain the
Commission’s findings without a reasoned basis for its belief that
significant imports in any region of the country are likely to have
a disruptive impact on the overall U.S. market.
The Commission’s volume determination also cannot be sustained
based on its inadequate explanation of the behavior of
24
The Court disagrees with the Commission’s contention
that “the nationwide effect on domestic prices of additional
supplies of hot-rolled steel [] was a theory proposed by Domestic
Producers.” ITC’s Mem. at 23. The testimony upon which the
Commission relies simply does not support the Commission’s
position. See Tr. at 267-268 (PR 253).
Court No. 07-00454 Page 42
ArcelorMittal and its predecessor. Evidence reflects that U.S.
imports from Kazakhstan increased from 130,329 short tons in 1998
to 192,470 short tons in 2000, an increase of 47.7 percent, while
Ispat organization, the predecessor of ArcelorMittal, owned a U.S.
producer, Ispat Inland, Inc., and the sole hot-rolled steel
producer in Kazakhstan, Ispat Karmet.25 See Views at I-8 (PR
453). As Plaintiffs point out, this fact supports the theory that
upon revocation of the order, ArcelorMittal will similarly increase
the volume of hot-rolled steel to the United States from its
affiliates as Ispat did from Kazahkstan. Moreover, as of 2007,
Mittal USA was exporting hot-rolled steel to Western Europe
notwithstanding the fact that ArcelorMittal has many production
facilities in Western Europe. See Post-Hearing Brief of USS at 12
(PR 328). The record further reflects that some of those exports
went to Belgium where ArcelorMittal is the largest producer of
flat-rolled products like hot-rolled steel.
The Commission responds that ArcelorMittal’s multinational
operations involve substantially more domestic and subject
production than those single country relationships that were in
place in the original investigations. This explanation is woefully
inadequate. Views at 45 (PR 453). The fact that ArcelorMittal is
related to steel producers in more than one country and accounts
for a larger portion of domestic production as compared to Ispat
25
Ispat Karmet is now Mittal Temirtau.
Court No. 07-00454 Page 43
Inland does not sufficiently explain why ArcelorMittal would be
compelled to restrain its volume of imports from the Mittal
Countries especially in light of ArcelorMittal and its
predecessor’s apparent business practices.
The Commission’s volume determination is also flawed to the
extent it failed to address certain key evidence on the record.
“‘[A] reviewing court is not barred from setting aside [an agency]
decision when it cannot conscientiously find that the evidence
supporting that decision is substantial, when viewed in the light
that the record in its entirety furnishes, including the body of
evidence opposed to the [agency’s] view.’” Timkin Co. v. United
States, 27 CIT 605, 621, 264 F. Supp. 2d 1264, 1278 (2003) (quoting
Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)).
Specifically, the Commission failed to discuss evidence
opposed to the ITC’s volume determination, including [
] and export orientation of the Mittal Countries’
producers, attractiveness of the U.S. market, and capacity
increases in alternative export markets.
The Commission’s analysis of production capacity fails to
account for the fact that in 2006, the Mittal Countries, on a
cumulated basis, had [ ] short tons of [ ],
which accounts for nearly [ ] the amount that sufficed for
material injury in the original investigation. See Final Staff
Report at Tables IV-31, IV-35, IV-40 (CR 376). This fact is
Court No. 07-00454 Page 44
significant since it means that producers in the Mittal Countries
could, by drawing upon their unused capacity, ship a volume of
imports equal to a large portion of the total imports during 2000.
With respect to the export orientation of the subject
producers of the Mittal Countries, the Commission did not address
the fact that: (1) from 2000 to 2006, Romanian exports [ ] from
[ ] percent to [ ] percent, see Final Staff Report at Table
IV-34 (CR 376); (2) in 2006, Romania produced [ ] short
tons of hot-rolled steel for sale on the open market26 and exported
[ ] short tons, meaning that it exported [ ] percent of
commercial shipments, see id. at Table IV-35; (3) during the POR,
South African exports as a share of total shipments ranged from
[ ], and in 2006, its volume of total
exports was [ ] short tons, see id. at Table IV-40; (4) in
2006, Kazakhstan produced [ ] short tons of hot-rolled
steel for sale on the open market27 and exported [ ] short
tons, meaning that it exported [ ] percent of commercial
shipments, see id. at Table IV-31; and (5) during the POR, Kazakh
exports as a share of total shipments ranged from [
], see id. at Table IV-31. Thus, the record indicates
that subject producers in the Mittal Countries exported [
26
This figure equals the quantity of production less the
quantity of internal consumption for Romania.
27
This figure equals the quantity of production less the
quantity of internal consumption for Kazakhstan.
Court No. 07-00454 Page 45
] of total shipments than [
], which suggests that significant
volumes of imports could enter the U.S. market. See Views at 20,
n. 69 (CR 427).
The Commission also makes no mention of the attractiveness of
the U.S. market to the industries in the Mittal Countries despite
finding it an important factor with respect to the imports from the
Other Cumulated Countries. The fact that the U.S. market is
particularly attractive to foreign producers due to the relatively
open U.S. market and its higher prices serves as an incentive for
the producers of the Mittal Countries as well as those of the Other
Cumulated Countries to direct shipments to the U.S. market if the
orders are revoked. See id. at 2-23. If the Commission believes
that is not the case, it should provide an adequate basis for its
belief.
In addition, the Commission ignores capacity increases in
alternative export markets, which will deprive subject producers of
their current export destinations making it likely that they will
shift subject exports to the United States upon revocation of the
orders. Specifically, the Commission did not address the potential
impact of China’s shift from a net-importer to a net-exporter of
hot-rolled steel products on subject producers from Mittal
Countries. The Commission’s response that there was no reason to
discuss China is a post hoc rationalization. See ITC’s Mem. at 31.
Court No. 07-00454 Page 46
The Commission relied upon the “China effect” to support its
affirmative determination for the Other Cumulated Countries. At
minimum, the Commission should explain why China is irrelevant with
respect to the Mittal Countries.
The Commission’s volume determination and its subsidiary
findings, in view of the record as a whole, are not substantially
supported or explained, especially in light of the Commission’s
reliance of its flawed belief that Mittal USA would exercise its
veto power to limit imports from the Mittal Countries. See Usinor
v. United States, 26 CIT 767, 784 (July 19, 2002) (“‘When
considered individually, every discrepancy discussed here might not
rise to the level of requiring reconsideration of the overall
disposition, but taken as a whole, the court finds that the ITC
decision is not substantially supported and explained.’”).
Moreover, “[w]hile the ITC need not address every argument and
piece of evidence . . . it must address significant arguments and
evidence which seriously undermine its reasoning and conclusions.”
Altx, 25 CIT at 1117-18, 167 F. Supp. 2d at 1374.
Accordingly, on remand, the Commission must: (1) reevaluate
its flawed reasoning for the finding that ArcelorMittal companies
and/or Mittal USA would limit subject imports from the Mittal
Countries; (2) reassess and further explain the basis for its
findings that significant imports in any region of the country are
likely to have a disruptive impact on the overall U.S. market, and
Court No. 07-00454 Page 47
that any pricing practices that would negatively impact Mittal
USA’s competitors is likely to also impact Mittal USA; (3) reassess
and further explain the behavior of ArcelorMittal and its
predecessor, the Ispat organization, with respect to their business
practices in exporting to countries in which they maintain
production facilities; and (4) reassess and further explain
evidence opposed to the ITC’s volume determination, including
[ ], export orientation of the Mittal Countries’
producers, attractiveness of the U.S. market, and capacity
increases in alternative export markets.
B. Price Effects
The Commission found that revocation of the orders would not
be likely to lead to significant underselling or significant price
depression or suppression within a reasonably foreseeable time.
See Views at 46 (PR 453). In so doing, the Commission relied on
its volume determination.
1. Plaintiff USS’s argument
USS argues that subject producers from the Mittal Countries
will engage in significant underselling. See USS’s Mem. at 31-33.
Relying on the record from the original investigations, USS states
that Kazakh imports undersold the domestic like product in 6 of 6
pricing comparisons, Romanian imports undersold the domestic like
product in 37 of 43 comparisons, and South African imports
Court No. 07-00454 Page 48
undersold the domestic like product in 10 of 19 instances.28 In
addition, USS points to the Commission’s finding with respect to
subject imports from the Other Cumulated Countries that low-priced
imports will generally force domestic hot-rolled steel producers to
either lower prices or lose sale, and argues that low-priced
imports from the Mittal Countries would have the same effect.
2. Plaintiff Nucor’s arguments
Nucor argues that the Commission’s price effects finding is
unsupported by substantial evidence because it relies on faulty
volume and conditions of competition analysis. See Nucor’s Mem. at
30-32. Nucor’s other arguments are substantially similar to USS’s
arguments, and the Court will not recount them in detail.
3. ITC’s responses
The ITC responds that the Commission considered the fact that
in the original investigations imports from the Mittal Countries
undersold the domestic like product in a majority of price
comparisons and considered the limited pricing data in these
reviews. See ITC’s Mem. at 36-38. The Commission states it did
not rely on the data from the original investigation due to the
substantial changes in conditions of competition including Mittal
USA’s increased role in the U.S. market as compared to its
28
In these reviews, the pricing data were limited. The
most recent price comparison available were for 2003, which
included no price comparisons for Kazakhstan, 13 comparisons for
Romania and 8 comparisons for South Africa. See Views at 46, n.
269 (PR 453).
Court No. 07-00454 Page 49
predecessor and its affiliation with producers in the Mittal
Countries. With respect to the pricing comparison data from these
reviews, the Commission states that it was reasonable not to rely
on such limited data. In sum, the ITC responds that it rejected
domestic producers’ theories and reasonably found from the record
evidence that Mittal USA has no incentive to allow subject imports
from the Mittal Countries to be priced aggressively so as to move
large volumes of hot-rolled steel at low prices into the U.S.
market.
4. Analysis
Having found that the Commission’s volume determination is
unsupported by substantial evidence, the Court finds that the
Commission’s conclusion that revocation of the orders would not
lead to adverse price effects is similarly unsupported by
substantial evidence. On remand, the Commission must reassess the
potential price effects in accordance with its revised volume
determination.
C. Likely Impact
In its Views, the Commission did not find the domestic
industry vulnerable. Considering its volume finding, price effects
and conditions of competition, the Commission concluded that
revocation of the orders on imports from the Mittal Countries is
not likely to lead to a significant adverse impact on the domestic
Court No. 07-00454 Page 50
industry within a reasonably foreseeable time. See Views at 47 (PR
453).
1. Plaintiff USS’s argument
USS argues that the Commission’s impact finding is not
supported by substantial evidence to the extent it rests on the
Commission’s volume and price effects findings. See USS’s Mem. at
33-34. Moreover, it contends that the Commission’s likely impact
finding cannot rely solely on its finding that domestic industry is
not vulnerable to material injury.
2. Plaintiff Nucor’s argument
Similarly, Nucor argues that the Commission’s impact finding
cannot be sustained because it is premised on faulty volume, price
effects and conditions of competition analysis. See Nucor’s Mem.
at 32-35. Specifically, Nucor states that the Commission, in its
affirmative impact determination for imports from the Other
Cumulated Countries, also found that the domestic industry is not
vulnerable to material injury. See id. at 33. Nevertheless, the
Commission, taking note that the domestic industry performed poorly
in the latter portion of the POR, stated that this performance
would further deteriorate if subject imports re-entered the U.S.
market exacerbating the declines in production, shipments, market
share, and financial performance. See id. at 34.
Nucor argues that the likely volume and price effects of
imports from the Mittal Countries will also exacerbate declines in
Court No. 07-00454 Page 51
the domestic industry’s production and financial performance
because imports from the Mittal Countries will likely be diverted
to the United States upon revocation of the orders. See id. at 34-
35. Thus, according to Nucor, the poor financial performance of
the domestic industry in the latter portion of the POR applies
equally to an analysis of subject imports from the Mittal Countries
as it does to imports from the Other Cumulated Countries.
3. ITC’s response
The Commission states that Plaintiffs primarily rely on the
Commission’s volume and price effects findings in their attacks on
the Commission’s impact finding. See ITC’s Mem. at 38. Because
the Commission’s volume and price effects findings are supported by
substantial evidence, it contends that the impact finding should be
affirmed.
4. Analysis
Having found that the Commission’s volume and price effects
determinations are unsupported by substantial evidence, the Court
finds that the Commission’s likely impact analysis is similarly
unsupported by substantial evidence to the extent it relies on the
faulty volume finding. On remand, the Commission must reassess its
likely impact analysis in accordance with its revised volume and
price effects determinations. In addition, the Commission must
account for and explain the poor performance of the domestic
industry in the latter portion of the POR.
Court No. 07-00454 Page 52
CONCLUSION
In accordance with the foregoing, the Court remands the ITC’s
final determination. Plaintiffs’ motion for judgment upon the
agency record is granted in part and denied in part.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: March 9, 2009
New York, New York
ERRATUM
Nucor Corp. v. United States, Consol. Court No. 07-00454, Slip
Op. 09-16, dated March 9, 2009.
Page 29, footnote 16, Line 2: “Pinkerton” should read “Pinkert”
March 24, 2009