UNITED STATES STEEL CORPORATION, Plaintiff, and Nucor Corporation, Plaintiff-Intervenor, v. UNITED STATES, Defendant, and Union Steel, Pohang Iron & Steel Co., Ltd., Pohang Coated Steel Co., Ltd., and Hyundai Hysco, Defendant-Intervenors.
Court No. 09-00156
United States Court of International Trade
April 25, 2012
Slip Op. 12-55
Jeffrey D. Gerrish, Ellen J. Schneider, and Robert E. Lighthizer, Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, DC, for plaintiff United States Steel Corporation.
Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Daniel J. Calhoun, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.
Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, and Mary S. Hodgins, Morris, Manning & Martin LLP, of Washington, DC, for defendant-intervenor Union Steel.
Jaehong D. Park, Bryce V. Bittner, Jarrod M. Goldfeder, Lisa-Marie W. Ross, and Natalya D. Dobrowolsky, Akin, Gump, Strauss, Hauer & Feld, LLP, of Washington, DC, for defendant-intervenors Pohang Iron & Steel Co., Ltd., Pohang Coated Steel Co., Ltd., and Hyundai Hysco.
OPINION
STANCEU, Judge:
Plaintiff United States Steel Corporation (“U.S. Steel”), a domestic manufacturer of corrosion-resistant carbon steel flat products (“CORE”), contests a published decision that the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) issued in an antidumping duty proceeding. U.S. Steel brought this action under
Before the court is the determination (“Remand Redetermination”) Commerce issued in response to the court‘s order in United States Steel Corporation v. United States, 35 CIT ——, ——, 759 F.Supp.2d 1349, 1360 (2011) (“U.S. Steel Corp.”). Final Results of Redetermination Pursuant to Remand (July 15, 2011), ECF No. 105 (“Remand Redetermination”). Only one issue remains contested in this case. The court affirms the Department‘s decision addressing that issue and the decisions addressing the various other issues raised in this litigation, as stated in the Remand Redetermination.
I. Background
Background on this litigation is set forth in the court‘s prior opinion and order and supplemented herein. U.S. Steel Corp., 35 CIT at ——, 759 F.Supp.2d at 1352.
In U.S. Steel Corp., the court ordered that Commerce: (1) reconsider the decision to disregard as negligible certain potential adjustments to the costs incurred by Union Steel Manufacturing Co., Ltd. (“Union”), a respondent in the administrative review
Commerce filed the Remand Redetermination on July 15, 2011. Remand Redetermination. Union and U.S. Steel filed comments on August 15, 2011, and Nucor filed comments the following day. Def.-Intervenor Union Steel‘s Comments on the U.S. Department of Commerce‘s July 15, 2011 Final Results of Redetermination Pursuant to Ct. Remand (Aug. 15, 2011), ECF No. 109; United States Steel Corp.‘s Comments on the Final Results of Redetermination Pursuant to Remand Issued by the Department of Commerce (Aug. 15, 2011), ECF No. 108; Comments on Final Results of Redetermination Pursuant to Ct. Order (Aug. 16, 2011), ECF No. 117 (“Nucor‘s Comments”). Defendant replied to Nucor‘s comments on September 1, 2011. Def.‘s Resp. to Pl.-Intervenor‘s Comments on the Department of Commerce‘s Remand Results (Sept. 1, 2011), ECF No. 123.
II. Discussion
The court exercises jurisdiction pursuant to
In the Remand Redetermination, Commerce: (1) did not disregard as negligible the adjustments to Union‘s costs for purchases of substrate from affiliated parties, Remand Redetermination 14; (2) applied the major input rule to Union‘s purchases of steel substrate from the POSCO Group; id. at 10–14; (3) applied the major input rule to Union‘s purchases of steel substrate from JFE Steel through a trading company using a methodology differing from that used in the Final Results and provided an explanation for that methodology, id. at 5–10; and (4) determined, as it had in the Final Results, that Union and the POSCO Group should not be “collapsed,” i.e., treated as a single entity for purposes of this administrative review, id. at 15–21. Commerce also stated that, pursuant to the court‘s remand order in Union Steel, it had “recalculated Union‘s margin to account for revising the Department‘s physical characteristics classifica-tions
Only Nucor opposes the Remand Redetermination. Nucor‘s sole claim in this litigation challenges the Department‘s decision not to treat Union and the POSCO Group as a single entity for purposes of conducting the fourteenth administrative review. See Nucor‘s Comments.
In the absence of opposition from any party, the court affirms the Department‘s decisions (1) adjusting Union‘s costs for purchasing steel substrate from affiliates, (2) applying the major input rule to Union‘s purchases of substrate from the POSCO Group, and (3) applying the major input rule to Union‘s purchases of steel substrate from a supplier through a trading company using a revised methodology. On the remaining contested issue in this litigation, the court upholds the Department‘s decision not to collapse Union and the POSCO Group in conducting the fourteenth review, for the reasons discussed in this opinion. However, the court will defer the entry of judgment affirming the 7.45% weighted-average dumping margin the Remand Redetermination assigned to Union until the completion of proceedings in another case involving the fourteenth administrative review, Union Steel v. United States, Court No. 09-00130, as a result of which proceedings the determination of a weighted-average dumping margin for Union remains an open issue.
Under its regulations, Commerce “will treat two or more affiliated producers as a single entity” when two conditions are met.
(i) The level of common ownership;
(ii) The extent to which managerial employees or board members of one firm sit on the board of directors of an affiliated firm; and
(iii) Whether operations are intertwined, such as through the sharing of sales information, involvement in production and pricing decisions, the sharing of facilities or employees, or significant transactions between the affiliated producers.
In the Issues and Decision Memorandum Commerce incorporated into the Final Results (“Decision Memorandum”), Commerce decided that neither condition for “collapsing” Union and the POSCO Group was satisfied, stating first that “the POSCO Group and Union did not fit the criteria of
In U.S. Steel Corp., the court concluded (and defendant conceded) that Commerce erred in finding Union‘s purchases of steel substrate from the POSCO Group to be an insignificant percentage of Union‘s total steel substrate purchases. 35 CIT at ——, 759 F.Supp.2d at 1359 (noting that defendant characterized the Department‘s finding as “inadvertent error”). The court ordered Commerce to reconsider the decision not to collapse the two companies, also questioning the Department‘s finding that Union and the POSCO Group lacked production facilities for manufacturing subject merchandise that would not require substantial retooling to restructure manufacturing priorities. Id. at ——, 759 F.Supp.2d at 1359. The court was unable to find substantial record evidence to support the latter finding, which appeared inconsistent with a pre-decisional memorandum Commerce had prepared. Id. at ——, 759 F.Supp.2d at 1358 (citing Mem. to Dir., AD/CVD Operations, Office 3, at 4 (Sept. 2, 2008) (Admin.R.Doc. No. 4732)).
In the Remand Redetermination, Commerce acknowledges that the first condition under
On the first of the three factors in
Regarding the third factor, Commerce acknowledges that it was “inaccurate when it explained in the Final Results that the POSCO Group accounted for an insignificant portion of Union‘s material purchases,” referring to purchases by Union of substrate from the POSCO Group. Id. at 18. Commerce, however, does not consider these purchases sufficient to cause it to alter its previous decision not to collapse the two entities, stating that “in considering the POSCO Group as an affiliated party with Union, we note that the acquisition of ownership interests took place in
With respect to the two conditions
On the third factor, the record supports the Department‘s finding that the business operations of Union and the POSCO Group were not intertwined. Commerce finds significant transactions between the affiliates but also finds, based on other evidence as discussed above (including evidence that the acquisition did not alter the substrate purchasing practices in question), that these transactions, considered alone, do not establish a significant potential for the manipulation of price or production. Commerce views the transactions to represent “nothing more than a continuation of a prior commercial relationship rather than a vehicle for manipulation in regards to dumping.” Id. at 21. The record evidence in support of the Department‘s finding includes statements by both Union and the POSCO Group that the commercial relationship between the two entities remained unchanged after the share purchases. Letter from Union to the Sec‘y of Commerce 1 (Apr. 19, 2011) (Admin.R.Doc. No. 5785) (“POSCO‘s pricing policies with respect to Union did not change in any way as a result of its purchase of Union‘s shares.”); Letter from the POSCO Group to the Sec‘y of Commerce 1 (Apr. 19, 2011) (Admin.R.Doc. No. 5783) (“All transactions between POSCO and Union are commercial and at arm‘s-length.”). Additionally, the Department‘s analysis showed that the POSCO Group‘s sales to Union both before and after the two companies became affiliated were, on average, at prices significantly above
The court concludes that the record supports the Department‘s findings addressing the three factors of
In commenting on a draft version of the Remand Redetermination, Nucor argued that Commerce acted unlawfully in deciding not to collapse Union and the POSCO Group by failing to consider “several key factors weighing against its conclusion that there is no evidence indicating any intertwining of business operations.” Letter from Nucor to the Sec‘y of Commerce 5 (June 22, 2011) (Admin.R.Doc. No. 5855) (internal quotation omitted); Remand Redetermination 20. Nucor makes essentially the same argument before the court, arguing that the decision not to collapse the two entities “is flawed and not supported by substantial record evidence.” Nucor‘s Comments 3. According to Nucor, “the Department rejected compelling evidence on the record indicating a significant potential for price and/or production manipulation without providing a sound basis for doing so.” Id. at 4.
In claiming that Commerce “rejected compelling evidence,” Nucor points to the common ownership and to the aforementioned purchases by Union of substrate from the POSCO Group. Nucor‘s Comments 4–6. It also points to a “Memorandum of Understanding” (“MOU”) between DSM and the POSCO Group addressing DSM‘s acquisition of a share in POCOS and the POSCO Group‘s acquisition of a share in Union, Letter from Union to the Sec‘y of Commerce exhibit A–36 (July 16, 2008) (Admin.R.Doc. No. 4675) (“Union‘s July 16, 2006 Questionnaire Resp.”), and to press releases and news reports discussing the MOU, Letter from U.S. Steel to the Sec‘y of Commerce exhibits A–B (vol. II) (Mar. 18, 2008) (Admin.R.Doc. No. 4579) (“MOU Media Reports”). Nucor‘s Comments 4–6.
The court‘s review of the record causes it to reject Nucor‘s argument. The record evidence to which Nucor directs the court‘s attention, when considered according to the criteria and factors in the Department‘s regulation,
With respect to the first factor, Nucor takes issue with the Department‘s charac-terization
Nucor does not address the second factor (i.e., the extent to which managerial employees or board members of one firm sit on the board of directors of an affiliated firm). On the third factor, intertwined operations, Nucor‘s reliance on the substrate purchases to support its position is also unavailing. The substrate purchases are not very probative on the question of a significant potential for the manipulation of price or production when considered in the context of other record evidence. As Commerce found, and the record supported, the purchasing pattern was not altered by the acquisition. In connection with its argument, Nucor mentions the fact that Commerce acknowledges its erroneous finding that the purchases accounted for an insignificant portion of Union‘s material purchases. Nucor‘s Comments 5. That erroneous finding was made in the Final Results and corrected in the Remand Redetermination; on remand Commerce fully considered the implications of the purchases in making its decision regarding collapsing.
Nucor argues that the MOU “suggest[s] current and future sharing of sales, production, pricing, and technological information and the potential for one entity to shift production to the other in order to avoid a high antidumping duty rate.” Id. at 4–5. The Remand Redetermination concludes, to the contrary, that the MOU and the media reports do not establish a significant potential for manipulation of price or production because they “articulate only very general goals consistent with” a share acquisition transaction. Remand Redetermination 21. Commerce characterized as “merely speculative” Nucor‘s reliance on the MOU “to extrapolate a potential risk that the POSCO Group and Union could, sometime in the future, manipulate price and production.” Id.
The court has examined the MOU, the text of which is proprietary. As Commerce did, the court concludes that Nucor‘s argument directed to the MOU is based on speculation, not probative evidence. See Union‘s July 16, 2008 Questionnaire Resp. exhibit A–36. On the subject of the press releases and press reports about the parties to the MOU, Nucor argues that “[p]ublic releases and reports noted that ‘the exchange is aimed at strengthening their long-time cooperation in the cold-rolled steel business;’ that ‘[t]his alliance is intended to strengthen the price competitiveness of the coated sheet products;’ and that the firms ‘will cooperate in technology and operation knowhow and joint marketing in China and [the] American market.’” Nucor‘s Comments 5 (quoting MOU Media Reports) (alterations in original). Both media reports cited by Nucor identify a rationale for the MOU other than price or production manipulation: protection from hostile merger and acquisition attempts. MOU Media Reports exhibit A (“Posco Builds Takeover Defense with Share Swaps”); id. exhibit B (“[B]oth firms will cooperate in . . . protection from Arcelor Mittal‘s hostile M & A.”). Nucor is unconvincing in ascribing to the MOU a potential for a production shift to avoid a high antidumping duty rate.
Nucor argues, further, that the Department‘s analysis under
Although Nucor correctly describes the analysis required by
III. Conclusion
Upon review of the Remand Redetermination, Nucor‘s comments thereon, and all other papers and proceedings, the court concludes that the decision in the Remand Redetermination not to collapse the POSCO Group and Union is in accordance with law. The remaining decisions set forth in the Remand Redetermination are affirmed as uncontested between the parties. The court affirms the Remand Redetermination except with respect to the 7.45% redetermined weighted-average dumping margin for Union. The exact margin amount is an open issue as a result of the remand on the zeroing issue in Union Steel v. United States, Court No. 09-00130.