S LIP O P
. 03-56
UNITED STATES COURT OF INTERNATI ONAL TRADE
B EFORE : R ICHA RD K. E ATON , J UDGE

__________________________________________ : C OMMITTEE FOR F AIR C OKE T RADE AND U NITED : S TEELWO RKERS OF A MERICA , AFL -CIO /CLC, :

: P LAINTIFFS , : : V
. : C OURT N O
. 01-00826 : U NITED S TAT ES OF A MERI CA AND T HE U NITED : S TAT ES I

NTER NAT IONAL T RADE C OMMIS SI ON , : : D EFE NDANTS , : : AND : : CITIC T RADI NG C OMPANY , L TD ., M INMETA LS : T OWNLORD T ECHNOLO GY , L TD ., D UFERCO , SA, : M ITSU BISHI C HEMICA L C ORPORATI ON , AND : M ITSU I M INI

NG C OMPANY , L TD ., : : D EFENDANT -I

NTERVENO RS
. : __________________________________________:
[United States International Trade Commission’s nega tive preliminary injury

determination remanded for further procee dings in conformity with this opinion.]

Dated: May 20, 2003

Gardner, Carton &

Douglas, LLC

( W.N. Harrell Smith, IV

; Walla ce C. Solb erg ; Peter C. Koch ), f or P lai nt iff

s C om mi tt ee f

or F air Co ke T rad e an d Un it ed S tee lwo rke rs o f Am eri ca, AFLCIO/C LC. Lyn M. Schlitt , Gener

al Counse l, United St

ates I nternat ional Tra de Commissio

n; James M. Lyons , Deputy Gene

ral Counsel, United States International Tra de Commission (Karen Veninga D

riscoll ), for De fendant

.C OURT N O
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1 The Committee for Fair Coke Trade is a trade a ssociation whose members are producers of blast furnace coke in the U nited States. Compl. ¶ 3. Members of the Committee for Fair Coke Trade are: Acme Stee l Co.; DTE Energy Services, Inc.; Koppers Industries, I nc.; and Shenango, Inc. Id.

2 Citations are to the public versions of the Preliminary Determination, the accompany

ing staff report, see Staff Report, Blast Furnace Coke Fr om China and Japan, Inv. Nos. 731-TA-951–952 (Prelim.), USITC Pub. 3444 (Aug . 2001), Pub. R. List 1, Doc. 59 (“Staff Report”), and briefs submitted by Plaintiffs, see Pls.’ Mem. Supp. Mot. J. Agency R. (“Pls.’ Mem.”), and the ITC, see Def.’s Mem. Opp’n Pls.’ Mot. J. Agency R. (“Def.’s Resp.”). Where the court discusses the postconference brief s submitted to the ITC on behalf of Duferc o, SA, see Duferco, SA’s Postconference B r., Pub. R. List 1, Doc. 35 (“Duferco B rief”), and on behalf of Mitsubishi Chemical Corporation and Mitsui Mining Company, L td., see Mitsubishi Chem. Corp.’s and Mitsui Mining Co., Ltd.’s Postconference B r., Pub. R. List 1, Doc. 38 (“Joint Japanese Brief” ), the co

urt limits its

discussio n to the non

confide ntial port ions of tho se brief

s. Manatt, Phelps & Phillips, LLP ( Jeffrey S. Neeley ), f

or D efe nda nt -Int erv eno rs C ITIC Trading Company , Ltd. and Minmetals Townlord Technolog y, L td. White & Case, LLP ( Walter J. Spak ; Adams C. Lee ; Frank H. Morgan ), for De fendant

Intervenor Dufe

rco, SA. Cleary, Gottlieb, Steen &Hamilton ( Donald L. Morgan ), for Defendant-I ntervenor Mitsubishi Chemical Corporation. Bingham McCutchen, LLP ( Roger L. Se lfe ), for Defendant-I ntervenor Mitsui Mining Company, L

td.

O PINI ON AND O RDER EATON , Judge : This matter is before the court on the motion for judgment upon the ag ency record, pursuant to USCIT R. 56.2, of the Committee for F air Coke Trade 1 and United Steelworkers of America, AFL -CIO/CLC (“Plaintiffs”) contesting the negative pre liminary injury determination of the United States Interna tional Trade Commission (“ITC” or “Commission”) contained in Blast Furnace Coke Fr om China and Japan, Inv. Nos. 731-TA-951–952 (Prelim.), USITC Pub. 3444 (Aug. 2001), Pub. R. L ist 1, Doc. 59 (“Preliminary D etermination”). 2 The ITCC OURT N O
. 01-00826 P AGE 3

3 The scope of the ITC investig ations covered “[b]last furnace coke made from c oal or mostly coal and other ca rbon mate

rials, wi th a major

ity o f individual piece s less than 100 MM (4 inche s) of a ki

nd capa ble of be ing used

in blast fu

rnace o peratio ns, wheth er or not

mixed with coke breeze.” Certa in Bla st Fur nace Co ke Pro ds. Fr om th e P.R .C. an d Jap an, 66 Fed. R eg. 39,009 (Dep’t Commerce July 26, 2001) (notice of initiation of antidumping investigations). “[C]oke bre eze is the f

ine scre enings f

rom crus hed coke

used pre dominantly

as a fue l source

in the process of agglomera

ting iron.” Staff Report at I -5 n.10. opposes this motion and urges the court to sustain its Preliminary D etermination. The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(a)(1)(C). For the

reasons set forth below, th e court r

emands th

is matter to the I TC for fu

rther pr oceedin gs in accordance with this opinion.

B ACKGROUND On June 29, 2001, Plaintiffs filed a petition alleging that an industry in the United States
was mate rially injured or threa

tened wit h materia l injury by r eason of less than fair va lue import s of blast furnace coke from the People’s Republic of China and Japan (“Subject Imports”). 3 See Certain B last Fur

nace Cok e Prods. F rom the P.R. C. and Japa n, 66 Fed . Reg. a

t 39,009; B last Furnace Coke From China and Japan, 66 Fed. Reg . 35,669 (ITC July 6, 2001) (institution of antidumping investigations). The I TC conducted preliminary antidumping duty investiga tions and issued the Preliminary De termination, finding that there was no reasonable indica tion that an industry in the United States was materia lly injured or threate

ned with material injury within the meaning of 19 U.S.C. § 1673b(a) by reason of the Subject Imports. See Blast Furnace Coke From China and Japa

n, 66 Fed . Reg. 45 ,692 (ITC Aug. 2 9, 2001) ( prelim. de

terminat ion). This negative preliminary

determination terminated the investigations. See 19 U.S.C. § 1673b(a)(1) (“I f the Commis sion finds that impor

ts of the su

bject mer chandise are neg ligible or otherw

iseC OURT N O
. 01-00826 P AGE 4

makes a negative determination under this para graph, the investigation shall be terminated.”)

.

S TAN DARD OF R EVIEW When considering an IT C preliminary deter mination in the context of an antidumping review, “[t]he court shall hold unlawful any determination, finding, or conclusion found . . . to be arbitrary , capricious, an abuse of discretion, or otherwise not in ac cordance with law . . . .” 19 U.S.C. § 1516a(b)(1)(A). The court, in reviewing the ITC’s decision, must “ascerta in whether there was a rational basis for the determination.” Ranchers-Cattlemen Action Legal Found. v. United States , 23 C IT 861, 8 78, 74 F. Sup p. 2d 1 353, 1 369 (1 999) ( citi ng Torrington Co. v. United States , 16 CI T 220, 223, 790 F. Sup p. 1161, 11 67 (1992) ); see also id. (quot ing Conn. Steel Corp. v. United States , 18 CIT 313, 315, 852 F. Supp. 1061, 1064 (1994)) (“The Court may only reverse the ITC’s determination if there is a ‘clear error’ of judg

ment and where there is ‘no rational nexus between the facts found and the choices made .’”). Nonetheless, the I TC’s

co nc lu si on s m us t b e b as ed on ev id en ce , n ot co nj ec tu re , a nd in no ev en t m ay t he co ur t “ su pp ly a reasoned basis for the agenc y’s action that the a

gency itself has not given . . . .” Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc. , 419 U .S. 2 81, 28 5–86 ( 1974) (citi ng SEC v. Che nery Corp. , 332 U.S. 1 94, 196 (1 947)); see also Altx, Inc. v. United States , 26 CIT __, __, Slip Op. 02- 154 at 4 (Dec. 31, 2002) (“The court ca n only review the r

easoning that the Commission expresses.”).

In the course of its revie

w, the court must examine “whether the [ITC] has articulated the requisite rational connection between the facts found and the choice[s] made” in light of theC OURT N O
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4 Pursuant to subsection 1673b(a), the ITC shall make a preliminary dete

rmination based on the information available to it at the time of the determination, whether there is a reasonable indication that— (A) an industry in the U

nited States— (continued...) reasonable indication standard set forth in 19 U.S.C. § 1673b(a). See Calab rian Corp. v . USITC , 16 C IT 34 2, 3 44– 45, 794 F. S upp . 37 7, 3 81 ( 199 2) ( app lyin g 19 U.S .C . § 1 673 b(a ) (1 988 )). In making i ts prelimin

ary determination, “[t]h e IT C . . . must de cide whe ther the re is a re asonable indication for finding ‘(1) the record a s a whole contains clear and convincing e vidence that there is no material injury or threa t of such injury; and (2) no likelihood exists that contrary evidence will arise in a final investigation.’” Ranchers-Cattlemen , 23 CIT at 877, 74 F. Supp. 2d at 1368 (quot ing Am. Lamb Co. v. United States , 785 F.2d 994, 1001 (

Fed. Cir . 1986)); Am. Lamb , 785 F.2d at 1001 (“[The] ITC has consistently viewed the statutory ‘ reasonable indication’ standard

as one re quiring

that it issue a neg ative determinat ion . . . only

when (1) the rec ord as a w

hole

co nt ai ns cl ea r a nd co nv in ci ng ev id en ce th at th er e i s n o m at er ia l i nj ur y or th re at of su ch in ju ry; and (2) no likelihood exists that contrary evide nce will arise in a final investigation.”).

D IS CUSS ION I. The ITC’s Findings In an antidumping duty

investigation, the ITC must preliminarily determine, based on the informat ion avail able to it a

t the time, whether

there is a reasona ble indic ation tha

t an indust

ry in the United States is materially injured or thr eatened with material injury by reason of

imports of the subject merchandise. 19 U.S.C. § 1673b(a)(1)(A)(i) –(ii). 4 In de

termining whether there is aC OURT N O
. 01-00826 P AGE 6

4 (...continued) (i) is materially injured, or

(ii) is threatened with material injury

. . . by reason of

imports of the subject merchandise and that imports of the subject merchandise are not neg ligible. 19 U.S.C. § 1673b(a)(1)(A)(i)–(ii).

5 By statute the I

TC considers the following factors, “among other relevant economic factors”:

(I ) [factor pertainin g to c ounte

rvai lable subsi dies] , (II ) any existing u

nused pro duction c apacity or imminen

t, substantial increase in production capacity in the exporting country indicating the likelihood of substantially incr eased imports of the subject merchandise into the United States, taking into account the availability of other e

xport markets to absorb any additional exports, (III) a significa

nt rate of increase of the volume or marke t penetration of imports of the subject merchandise indicating the likelihood of substantially increased imports, (IV) whether

imports of the subject merchandise are entering at prices that are likely

to have a significant depressing or suppressing effect on domestic prices, and are likely to increase demand for further imports, (continued...) reasonable indication of material injury, the I TC shall consider the imports’: (1) volume, (2) effect on prices for the domestic like product, a nd (3) impact on the domestic industry. 19 U.S.C. § 1677(7)(B)(i)(I)–(II I). Further, the

ITC “may

consider such other economic factors as are relevant” to its material injury determination. 19 U.S.C. § 1677(7)(B)(ii). I n addition, the ITC shall examine whether there is a r easonable indication of threat of material injury , taking into consideration the relevant factors set forth in 19 U.S.C. § 1677(7)(F) (i). 5 The presence orC OURT N O
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5 (...continued) (V) inventories of the subject merchandise, (VI) the potential for pr

oduct-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, (VII) [fac tor pe

rtai ning to ag ricu ltura l prod ucts] , (VII I) the actual and pote

ntial negative effects on the existing de ve lo pm en t a nd pr od uc ti on ef fo rt s o f t he do me st ic in du st ry, including efforts to develop a derivative or more advanced version of the domestic like product, and (IX) any other demonstrable adverse trends that indicate the probability that there is likely to be material injury by

reason of imports (or sale for importa tion) of the subjec t mercha ndise (whether or not it is actually being imported at the time). 19 U.S.C. § 1677(7)(F)(i)(I )–(IX). I n the Preliminary Dete

rmination, the ITC considered fac tors I and VI I inapplicable to this antidumping investigation. Prelim. Dete rmination at 22 n.156. absence of any

statutory factor

“shall not necessarily

give decisive guidance with re spect to the determination”; however, the I TC’s threat determination “may not be made on the basis of mere conjecture or supposition.” 19 U.S.C. § 1677(7)(F)(ii).

By its Preliminary

Determi nation the ITC c oncluded

that ther e was no r

easonab le indication of material injury to the domestic bla st furnace coke industry by reason of

the importation of blast furnace coke. See Prelim. De terminat ion at 3. I

n reach ing this determination, the ITC found that competition between the Subject Imports and the domestic like product was “attenuated,” and thus insufficient to serve as a basis for finding material injury

. Id

. at 9 (finding that “there [was] a reasonable ove rlap of competition sufficient for cumulation, while at the same time recognizing the attenuate d competition between subject imports andC OURT N O
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domes tical ly produc ed bla st fur nace co ke.”). In light of tha t find ing, an d oth er fin dings concerning conditions of competition, the I TC further concluded that the volume, effect on domestic prices, and impact of the Subject I mports were not significant. Id . at 18– 19, 21. In addition, the ITC determined that there wa s no reasonable indication that the domestic coke industry was threa

tened with material injury due to the importation of blast furnace coke. Id . at 26.

Plaintiffs challenge the I TC’s attenuated competition finding and the I TC’s negative determinations with respect to volume, price effect, impact, a nd threat. Plaintiffs claim that “the majority’s attenuated c ompetition conclusion has no rational basis in fact,” in particular taking issue with

the I TC’s findi

ngs concerning

mode of tr

ansporta tion and pr

oduct qua lity . Pls.’ Mem

. at 25. Plai

ntiffs fu rther c ontend tha

t the alle gedly

errone ous atten

uated competition f

inding is
centra l to the ITC’s dete

rmination s with res

pect to ma

terial in jury and thre at, and that “[w]hen it fails, little is left of the rest of the Majority O pinion.” Id . at 26. Th e IT C respond s that its attenuated competition finding, “which it relied upon both in its material injury and threat of material injury dete

rminations, is supported by clear and convincing evidence.” De f.’s Resp. at
16.

A. Attenuated Competition In the Preliminary

Determination the ITC found that competition betwee n the Subject Imports and the domestic like product was “ attenuated” for two reasons. First, “a sig nificantC OURT N O
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6 By “ove

r water” the I TC appears to mean by oceangoing vessel and possibly by “Panamax” vessel. “‘Panamax’ refers to the maximum dimensions allowable to permit the vessel to go throu gh the Pa nama Canal . . . .” 2Thomas J. Sch oenbaum, Admiralty

& Mariti me Law § 10–4, at 29 n.4 (3d ed. 2001). amount of subject imports [was] transported over water 6 and sold directly to steel make rs at steel plants with port facilities,” and, thus, the Subject Imports were restricted to delivery

at limited locations and were more economical for the pur chaser to receive; and second, “ blast furnace coke transported over water result[ed] in less product deterioration than blast furna ce coke transported over lan d.” Preli m. Deter mination a

t 9–10. As a

result, the IT C conclud

ed that, f or the mos t part, the Subject Imports did not compete directly with domestically produced bla st furnace coke.

This finding of attenuated competition was an important factor in the I TC’s determinations with respect to the Subject Imports’ e ffect on domestic prices and threat of material injury. I

n support of its position with respect to price effect, the I TC stated that the “nature of the conditions of competition for this industry ” confirmed “[t]he lack of significant adverse price effects by

the subject imports . . . .” Prelim. Determination at 19. Further, the I TC concluded that “[t]here is no evidence on this record that the prices of these imports, that to a great extent do not compete with domestically produced blast furnace coke , and whic h constitu te the over whelming percen t of the su bject imports, have

had a sig nifican t effect on domest

ic prices.” Id . ( em ph as is ad de d) . In su pp or t o f i ts po si ti on wi th re sp ec t t o t hr ea t o f m at er ia l i nj ur y, the I TC stated t

hat the vast majority of subject imports during the period of investigation were destined for [certain domestic steel produc ers]. As stated earlier , these . . . steel pr oducers do not ge nerally purchas e domestic ally

produce d blast fu

rnace c oke for u se at the irC OURT N O
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7 The court notes that it is applying a different standard of review in the pr esent case from that in Steel Wire Rope . In Steel Wire Rope , the court reviewed the I TC’s final determination to ascertain whether it was “unsupported by substantial evidence on the record, or otherwise not in accordance with law . . . .” 19 U.S.C. § 1 516a(b) (1)(B) (1994); see Stee l Wire Rope , 26 CIT at __, 201 F. Supp. 2d at 1291 (citing 19 U.S.C. § 1516a(b) (1)(B) (1994)). Here, the court applies the arbitrary and capricious standard, which requires that “the agency . . . examine the relevant data and articulate a satisfactory explanation for it s acti on in cludi ng a ‘rational connection between the facts found a nd the choice made.’” Mot. Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines, Inc. v. United States , 371 U.S. 1 56, 168 (1 962)) (e mphasis a dded); Candle Corp . of Am. v. USITC , 27 CIT __, S lip O p. 03- 40 at 1 2–13 ( Apr. 8 , 2003 ) (quo ting Mot. Vehicle Mfrs. Ass’n , 463 U.S. at 43); but see Fujian Mach. &Equip. Imp. &Exp. Corp. v. United States , 25 CIT __, __, 1 78 F. Supp . 2d 13 05, 13 14 (20 01) (q uoti ng Bangor Hydro-Elec. Co. v. FERC, 78 F.3d 659, 663 n.3 (D.C. Cir. 1996) (bracketing in original)) (“[S]ubstantial evidence and arbitrary and capricious ‘connote[] the same substantive standard of review’” in their application to fac tual issues). steel production facilities with port facilities, reportedly due to the economic advantages of wate r transport which reduces degradation . . . . Id . at 23.

Case law provides some guidance as to how this court should view the I TC’s attenuated competition methodology. I n Committee

of Domest

ic Steel W ire Rope &

Specialt y Cable Manufacturers v. United States , 26 CIT __, 201 F. Supp. 2d 1287 (2002), the court re viewed the ITC’s final determination that an industry in the United States was neither materially injured nor threatened with material injury by reason of

imports of steel wire rope. 7 The ITC had found that although a reasonable overlap of competition existed for purposes of cumulation, competition was nevertheless “attenuated” for purposes of injury “due

to quality and product mix issues.” Steel Wire Rope From China and India, I nv. Nos. 731-TA-868–869 (Final), USI TC Pub. 3406C OURT N O
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8 The court in Steel Wire Rope recog nized that t

he I TC may

find a re asonable overlap of competition for cumulation while also finding attenuated c ompetition between the imports and the domestic like product for its injury a nalysis, as these two inquiries ser ve different purposes. See Steel Wire Rope , 26 C IT at __, 201 F. Supp . 2d at 1297 ( citi ng BIC Corp. v. United States , 21 CIT 448, 964 F. Supp. 391 (1997)) (“[T]wo distinct ‘competition’ findings ar e logica l and leg ally

permissib le.”); see also BIC , 21 CIT at 455, 964 F. Supp. at 399 (“[L ]ike product, cumulation, and causation are functionally different inquiries because they serve different statutory

purposes.” (citation omitted)). Generally , for purposes of cumulation the ITC considers four factors in assessing whethe r the imports compete with each other and with the domestic like product: “(1) the degree of fungibility betwee

n products; (2) the presence of sales or offers to sell in the same geogr aphic; (3) the existence of common or similar channels of distribution; and (4) the simultaneous presence of imports in the market.” Wieland W erke, AG v. United States , 13 CI T 561, 563, 718 F. Sup p. 50, 52 ( 1989); see also Steel Wire Rope , 26 CIT at __, 201 F. Supp. 2d at 1292 n.4. Here, as in Steel Wire Rope , the ITC found a reasona ble overlap of competition sufficient for cumulation while recognizing that compe tition was attenuated for purposes of causa tion. Prel im. Deter

mination a

t 9. No par

ty d isputes the

ITC’ s decisio n to cumulate the Subjec

t Imports.

9 In the Steel Wire Rope Final Deter mination the ITC cited differenc es in product quality and product mix which led to the conclusion that substitutability between imports of steel wire rope and the domestic like product was limited. See Steel Wire Rope Final Determination at 10–12. In re aching

its decisi on, the I

TC found that one of

the rea sons the pr

oducts we re not in direct c ompetition

was that t

hey could not b e used for the same purposes . The I TC stated: Many purcha sers and distributors state that only domestic produc t is used for so-called “critical” applications: those in which fa ilure of th e r op e c ou ld re su lt in da ma ge , i nj ur y, o r d ea th . S im il ar ly, various s teel wir

e rope di stributor s expresse d conce rn over l iability arising out of any

failure by imported ste el wire rope they might sell, particularly imports from China. Id. at 13–14. (Mar. 2001) (“Steel Wire Rope Final Determination”) a t 10. 8 The cour

t upheld th

is determination, noting that the ITC had “ detailed the reasons why the competition between the subject im

ports and the domes tic like pr

oduct wa s ‘attenu

ated,’” i.e., tha t differ ences in quality

an d p ro du ct mi x l im it ed su bs ti tu ta bi li ty. 9 Steel Wire Rope , 26 CIT at __, 201 F. Supp. 2d at 1299. In other words, the court f ound that although an examination of the four cumulationC OURT N O
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10 In the Preliminary Determination, the ITC combined its mode of transporta tion and product quality finding s, often in the same sentence. For example, in full, this sentence states: “ Accord ing to one of the Chinese res

pondents, it is far more econ omical for purcha sers to receive blast furnace coke by vessel than by

rail or truck because receiving the coke by water reduce s the amou

nt of hand

ling of t he coke , which in

turn, re duces de grada

tion.” Pre lim. Determination at 14. For purposes of clarity , the court will analyze these two factors separately

.
11 On July 20, 2001, the I TC held a public conference and hea rd testimony from Mr. Malashevich, an economist appearing for the Japanese respondents, among others. See Blast Furnace Coke From China and Japan, 66 Fed. Reg . at 35,669. factors supported a cumulation finding, i.e., a rea sonable overlap of competition, other factors justified a finding of attenuated competition. See Steel Wire Rope , 26 CIT at __, 201 F. Supp. 2d
at 1292–9 3; see also i

d . at 1292 n.4 (quoting Steel Wire Rope Final Determination at 15).

1. Mode of Transportation The I TC found that, durin g the pe riod of in vestiga tion, most sa

les of the Subject I mports were to U.S. steel producers with blast furnace f acilities equipped to receive the imports by water. Prelim. Determination at 11, 12. In lig ht of this finding, the ITC observed: “[I ]t is far more economical for purchasers to re ceive blast furnace coke by vessel than by ra

il or truck . . . .” Id

. at 14 & nn.95–96 (citing Duferco B r. at 6–7, 18–19; Duferco Br., Ex. 3, Palmer Aff. (“Palmer Affidavit”) at 1–2). 10 The I TC also sta ted that “ imported c oke was a viable op tion only

to U.S.
customers with rea

dy a ccess to port fac ilities due

to the sig nificance of fr

eight c osts. . . . [M]os t U.S. merchant producers of coke wer e located inland, and so were limited to sales to nearby steel mills.” Id . & n.97 (citing Conference Tr anscript, Pub. R. List 1, Doc. 26 (“Tr.”) a t 85 (Test. of Mr. Bruce Malashevich) 11 ). Thus, the ITC found that due to the g reater cost of land transport used by the domestic produc ers and the scarcity of plants with adequate port facilitiesC OURT N O
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12 In the Preliminary Determination and in Defendant’s Response, the I TC cited, as evidence, certain page

ranges in the Duferco B rief and the Joint Japanese Brief without identifying the spe cific passages that it found persuasive. Thus, as the e xact language on which the ITC r elied is un speci fied, where t he cou rt quo tes th ese Bri efs, i t focu ses on the la nguage (continued...) competition between the foreign and domestic products was limited.

Plaintiff s argue that the a ttenuate d competi

tion findin

g base d on mode o f transp ortation i s “factu ally incorre ct.” Pls.’ Mem. at 5. Plaintiff s maintain

that “the prepond erance of coke i s delivered in modes of transportation identical to those used [to ship] U.S.-produced coke . . . .” Id . According to Plaintiffs, “[o]nly one blast fur nace . . . receives subject imports by ocean going vessel on the coas t,” and c ertain f

oreign produce rs’ shipme

nts of the Subject I mports involve transporting such imports by land as well as by water. Id . at 11. Plaintiffs argue that the percentage of Subject I

mports delivered solely by waterborne vessel declined during the period of investigation and that this “necessarily indicates that subject imports delivered not by Panamax vessel, but by comparable modes of transport (barge/rail or both) to that used by the domestic industry sharply increased during the [period of investigation].” Id . Thus, Plaintiffs urge the court to find that the I TC’s attenuated competition finding based on mode of transportation “has no rational basis in fact . . . .” Id . at 25.

In support of its findings with respect to mode of transportation the ITC claimed three sources: (1) the testimony of Mr. Bruce Malashevich; (2) the Dufe rco Brief; and (3) the Palmer Affidavit. Prelim. De

terminat ion at 14 nn .95–97; see also id. at 12 n.74 (citing Joint Japanes e Br. at 33 n.23). 12 Mr. Mala shevich s tated, in releva nt part:C OURT N O
. 01-00826 P AGE 14

12 (...continued) which seems to support the ITC’s position. Furthermore , the ITC cited the confidential version of the Joint Japanese Brief as support for the proposition that waterborne transporta tion resulted in lower costs than land transportation. See Prelim. De terminat ion at 12 &

n.74; see also Joint Japanese Br., Con fidentia

l R. Lis t 2, Doc. 1 3 at 33 n.2 3. The co urt has examined the

specific footnote in the Brief and finds that the confidential sources c ited therein make substantially the same point as is made in publicly available sources elsewhere.

13 While the statements might appear to support the ITC’s c onclusions with respect to water borne tr ansport, they

are so la cking in specific ity a s to any

compari son of fr

eight c osts among the various modes of transportation that they fail to provide a “rational nexus between the facts found and the choices made.” See Ranchers-Cattlemen , 23 CIT at 878, 74 F. Supp. 2d at 1369 (internal quotation omitted).

[A]nother condition of competition very pertinent is that furnac e coke has a low ratio of value to weight. Diff erences in freight costs thus weigh h eavily

in sourci ng dec isions. 13 As a practical matter, imported coke is a viable option only to U.S. customers with ready a

ccess to port facilities. Most U.S. merchant producers of coke, however, are locate d inland and so are limited to sales for consumpti on by

nearby steel mills

. Trade so urces te ll me that f

or the la st ten y

ears one of the la rgest purchasers of subject imports . . . also has been the larg est seller of U.S. produced coke on the merchant market. Diff erences in freight costs presumably lie behind this pattern.
Tr. at 85: 14–25 to 86 :1. The re asons for rely ing so he avily

on this test

imony are unc lear. Whil e tending to support the conclusion that waterborne coke c an be landed only at particular sites, Mr. Malashe vich’s te stimony

does not pr

ovide any detail wi th respe ct to the c laimed dif ferenc es in freig ht costs for the tra

nsportat ion of dome stic coke

in compar

ison with imp orted co ke. Thus, this testimony f

ails to provide a ba sis for the ITC’ s conclus ion that the differe nces in su ch costs were “significant.” Moreove r, Mr. Malashevich offered testimony based on what “[t]rade

sources [told] [him]” and conclud ed that “ presuma bly” freig ht costs we

re the r eason tha t a certain domestic steel producer decided to purc hase Subject Imports rather tha n rely on otherC OURT N O
. 01-00826 P AGE 15

domestic sources of blast furnace coke. Give n the importance placed on the “significanc e of freight costs” in the I TC’s finding of attenuated competition, this testimony simply provides insufficient support for this conclusion.

Next, the I

TC cited the Dufer

co Brie f for the

proposition that it is “ far more economic al” to receive imports by water than by la nd. Prelim. Determination at 14 n.95. Indeed, the I TC seemingly bor

rowed the “far more economica l” language, which appe ars in the Preliminary Determination, from the Duferco Brief : Impor ted Chines e or Japanese fur nace coke [is] import

ed almost exclusively to U.S. integrateds that a re located at sites that [are] accessible to waterway

transport. For example, [one steel producer’s] plant . . . is located on the water and is set up to rece ive materia ls by vessel [wh

ich] is far more economic al than to receive materia ls by truck or rail. . . . Any

site that c annot be e asily accessed by

waterway

becomes economically

prohibited for imports because of the additional overland transportation costs by truck or rail that are usually more expensive than waterway freight costs . . . . Duferco Br. at 6 (emphasis added)

. An examination of the sources cited in the Duferco Brie f for these statements, however, reveals that they fail to substantiate the conclusions reached in the Brief. For instance, Mr. Andre w Aloe’s testimony, cited in the Duf erco Brief as the basis for the proposition that “[t]he ability to receive materials by water is superior [to] overland transport,”

see id. , does not, in fact, indicate any economic benefits accruing to purc hasers of the Subject Impor ts resulti ng from waterborne tra

nsport, bu

t rather address es the de grada

tion that r esults from handling blast furnace coke:

[T]raditionally

what hap pens is tha

t when we

produce our coke it goes directly

from a screening station into a rail car dir ectly to theC OURT N O
. 01-00826 P AGE 16

14 The Dufe

rco Br ief also c ites cer

tain state ments made

by M r. Palmer in his Affidavit and during his testimony at the public conference, which are similar in substance. The court addresses such statements below.

customer; [there is a] minimum amount of breakage because . . . when . . . blast furnace coke and foundry coke [are] transported [they] will break. Every

time you move it, every

time it drops from one belt to another belt, there’s going to be breakage. We don’t wa

nt to move [th e coke] a

t all, so wh en we ha

ve to put it on the ground and inventory it we normally would put it into a truck. There’s one drop. Then the truck take s it out to where you’re going to inventory it. He dr ops it again on the ground, and then because y

ou have a pile of coke . . . y ou use up a vast amount of area if y ou just star

t lay ing cok e down one

truck at a time, so you need a h igh lift o perator who then i s going

to jam his shovel . . . into that pile and start building it up . . . . Every time he doe s that he’s running over it. He’s putting that heavy piec e of equipment into it and you’re breaking it up, or you’re putting

it into a conveyor that then take s it up to a varying height a nd it drops , and then

again, it’s brea

king. Just p

utting it down you have br

eakage.
Tr. at 74:1–23. 14 No other source c ited in the

Duferc o Brief

can be sa id to demon strate that it is “far mo re econ

omical” t o recei ve coke by waterbor

ne trans port than by o ther mea

ns. Thus, because the evidence cited in the B rief does not address any cost advantages resulting from waterborne tra

nsport, th e IT C’s relia

nce on the

Duferc o Brief

for its conclusions

with resp ect to these matters is not justified.

Finally , the I TC cited the Palmer Affidav it as conf irmation o f its findi

ng that f reight costs play ed a major role in t

he U.S. ste el produc ers’ pr efere nce for the Subjec

t Imports. This Affidav it states: Several key

factors are considered by [the domestic steelC OURT N O
. 01-00826 P AGE 17 producers] in selecting [their] outside suppliers of blast furnace coke. I believe that these factors are still considered by integrateds and serve to limit the volume of Chinese imports. First, transportation costs. [Some steel companies] considered the transportation costs for delivering furnace coke from the supplier of their f urnace s. [One co mpany ’s blast f urnace steel fa cility ] is located on the water . . . and thus has a bias towards global sourcing. [This facility] is config ured to receive large qua

ntities of raw materials more economically by water tha

n by rail or truck. Water way tran spor t fro m [ano ther

] coke makin g fa cilit y t o [a waterside facility

] is not feasible because of the distance and complicated logistics required. The same logistics concerns also limit the locations to which imports ca

n be deliv ered. O cean ve ssels usua lly t ranspor t coke in 40,000–50,000 metric ton increments, whereas lake vessels ca n hold only 18,000 metric tons. I t is my understanding that . . . [conf iden tial i nfor mation omit

ted]. Palmer Aff. at 1–2. As with Mr. Malashevich’s testimony , the Palmer Affidavit contains qualifying la

nguage such as “I

believe” and “I

t is my understanding”

when discussing the motivation for the domestic steel producers to choose a source for blast furnace coke from outside of the United States. See id . While the Palmer Affidavit does suggest that delivery of coke at one specific steel facility could be achieved “more economically by water,”

this statement cannot support the general conclusion that wate rborne transport is “far more economica l” than delivery by

land. The clear purpose and import of the Palmer Aff idavit, and for that matter, Mr. Malashe vich’s te stimony , is that foreign shipments c an be off -loaded at limited s ites. The ir statements, however, do not demonstrate that the domestic producers’ me ans of delivery are somehow limited, nor are they authoritative with respect to cost. No meaningful comparison between the freight costs associated w ith domestic deliveries and foreign deliveries is provided by t he Palmer

Affidav it. Thus, ta

ken as a w

hole, the sources cited by the I TC as support for itsC OURT N O
. 01-00826 P AGE 18

15 Mo re ov er , t he ITC fo un d t he fo ll ow in g w it h r es pe ct to pr od uc t q ua li ty: Blast furnace coke crumbles whe never it is being transported or handled, creating particles of c oke called coke breeze. Opera tors do not want this breeze in their furnaces because it ca n plug up the blast fur naces. A higher percen tage of breeze i n a shipme

nt, caused, for examp le, by

the coke being o n the gr

ound, ca n result in a decreased price for the

shipment, either because the purchaser discounts the shipment or because the breeze is screened out. Ther efor e, bl ast f urna ce c oke p roducers

seek to min imize crumbling or degradation of the bla st furnace coke prior to use, by minimizing handling, moving or transporting the coke. Prelim. De

terminat ion at 14 &

nn.90–93 ( citing T

r. at 46–4 7; 74–75; 48 –49; 51–52 , 76); see also Def.’s R

esp. at 12(citing

Tr. at 75 ( Test. of M

r. Richar d Boltuc k)) (“Coke brea

ks very easily if it is not handled properly . . . .”) ; Pls.’ Mem. at 4 (“[H]andling, and not mode of transportation, causes degradation.”). conclusion that it is “far more economical” to rece ive waterborne Subject I mports than to receive domestic coke by land tr

ansport do not rise to the level of “clear and convincing” evidence required by

case law. See Ranchers-Cattlemen , 23 CIT at 877, 74 F. Supp. 2d at 1368 (quoting Am. Lamb , 785 F.2d at 1001) (“The I TC . . . must decide whether there is a reasonable indica tion for finding ‘(1) the record a s a whole contains clear and convincing e vidence that there is no materia l injury or threa t of such i njury ; and (2)no likeliho od exists tha t contra ry evidenc e will arise in a final investigation.’”).

2. Product Quality In the Preliminary

Determination, the ITC found that the Subject I mports, which were transpor ted and de livered

by water to U .S. steel producer s’ port fa cilities, deterio rated le ss in transit than domestic blast furnace coke. 15 Prelim. Determination at 9–10. The ITC noted that “purchasing the subject imports through a port f acility results in lower degradation of the bla stC OURT N O
. 01-00826 P AGE 19

furnace coke” and that hig her product quality is maintained “ [by transporting the Subject Imports] over water rather than over land.” Id. at 12 & n.74 (citing Duferco B r. at 6–7; Joint Japanese Br. at 3 3 n.23) (e

mphasis a dded); see also Def.’s R

esp. at 12(“[T]he re cord re flects [that] market participants consider water transport easier on blast furna ce coke.”). The ITC further observed that “receiving the coke by water reduces the amount of handling of the coke, which in turn, reduces degrada tion.” Prelim. Determination at 14 & nn.95–96 (citing Duferco Br. at 6–7, 18–19; Palmer Aff. at 1–2). With these findings as its predicate , the ITC determined that the Subject Imports did not directly compete with the domestic like product on the basis of quality. See generally id. at 9–10.

Plaintiffs contend that the record fails to support the I TC’s finding that the Subject Imports are less phy

sically deg

raded when transported and delivered by water. First, Plaintiffs argue that “there is no evidence of record of greate

r or lesser degradation within transit by mode (Panamax vessel, barge, rail).” Pls.’ Mem. at 12. Rather, Plaintiffs cla im that frequency

of handling is the determinative factor in coke deg radation. Plaintiffs cite an exhibit attached to the Joint Japanese Brief, which purports to compare the price for c oke that has been handled several times with a hypothetically constructed price of coke that has never been handled. See Joint Japanese Br. at 1 9a, Ex. 11A

(“Japane se Exhibit” ). Plaintif fs arg ue that th e Japanes e Exhibit “is based on the (correct) premise that it is valid to show the effe ct of handling on product degradation, but that mode of transport does not determine the de gree of degra dation.” Pls.’ Mem. at 13. Second, with respect to the impact of degra dation on the price of blast furnace coke, Plaintiffs claim that “product difference[s] can account for pr ice differences of up to but not moreC OURT N O
. 01-00826 P AGE 20

16 Mr. Bachman testified: I think first and foremost it must be recog nized that coke consumed in this country is fungible or c onsidered the same, whether it’s domestically produce d or imported. These cokes can be blended or used alternatively

. . . and once the coke is qualified at a user’s facility these mate

rials are considered interchang eable. Any differ

ences between coke sources c an [be] and are adjusted at the user levels through operational mechanisms that var y from user to user, whether they ’re outlined in specific contracts or not. Pricing adjustmen

ts can al so be used . In o

ur experi ence, these adjustments are minor, I would say in the range of three, four, f ive dollars a ton, and are therefore not suffic ient to impact the widespread price differential betwe en domestic and imported cokes.
Tr. at 27:23–25 to 28:1–11. than $3 to $5 per metric ton.” Id . at 13 (discussing testimony of Mr . Drew Bachman). 16 Fi na ll y, Plaintiffs argue the evidence shows that, in any event, “[p]roduct degradation is only one element of product quality” a

nd that other factors, such as “chemistry, ash content, and physic al condition,” also determine product quality

. Id . (citing Staff Rep ort at I

I-4 t o -8); id . at 25. Therefore, Plaintiffs contend that an opportunity should be provided for the distribution of [p]urchase

r questio nnaires

request ing purc haser sp ecifica

tions blast furnac e opera

tional re quireme

nts and coke qualit

y to leranc es, would per

mit a judg

ment on the

degre e to which

product q

uality differentiates product usability , geographic cover age, and may

or may not mitigate pric e underselling and to what degre e . . . . Id . at 25. Th

us, it is Plai

ntiffs’ c ontention

that a like lihood exists

that cont rary evidenc e would arise in a final investigation. Id . at 7.

The I TC counte

rs that “t here is r ecord e vidence that wate r transp ort is eas ier on bla stC OURT N O
. 01-00826 P AGE 21

17 Indeed, the Preliminary Determination itself states “blast furnace coke produc ers seek to minimize crumbling or degradation of the blast furna ce coke prior to use, by

minimizing handling, moving or transporting the coke.” Prelim. Determination at 14 (emphasis added). This general statement would seem to apply equally to domestically

produced coke and the Subject I mports. furnace coke than overland tra nsportation.” Def.’s Resp. at 10. With respect to the effect of degradation on the price of a shipment, the I TC argues that “a high perc entage of breeze in a coke shipment can result in a discounted price.” Id . at 14. In addition, the I TC argues that the Japanese Exhibit does

not suppor

t Plaintiff s’ claim b ecause

it “uses the number

of times bl ast furnace coke is handled as a mea sure of degradation, but never state s that all modes of transporting coke cause equivalent leve ls of degradation.” Id . at 12. Thus, it is the ITC’s contenti on that “c lear an

d convinc ing evid

ence” s upports its

attenua ted compe

tition find ing with respect to product quality

. Id . at 15–16.

In the Prelimina

ry Determi nation the ITC c ited the f

ollowing evidenc e to suppor

t its findings with respect to product quality : (1) the Duferco Brief; (2) the Palmer Affidavit; and (3) the Joint Japanese Brief. First, in the Duferco Brief, c ounsel asserted: “The ability to receive materials by wa

ter is superior than [sic] overland transport because it reduces the amount of handling of the furnace coke, which in turn, reduc es the amount of degradation that results from each handling. . . . [O]verland transportation . . . require[s] more handling and r esult[s] in greater degra dation.” Duferc o Br. at

6 & nn.9– 10 (citing

Tr. at 74; Tr. at 104 ) (empha sis added ). It is worth noting that this statement supports Plaintiffs’ position that handling, not mode of transportation, is the significant factor in coke deg radation. 17 Further, the evidence cited in the Duferco Brief, e.g ., the testimony of Mr. Aloe, also dea ls with the deteriorating effects ofC OURT N O
. 01-00826 P AGE 22

repeated handling on blast furnace coke and tends to undermine the I TC’s finding that transporting blast furnace coke by water results in less degradation and less coke breeze than transporting it by land. Mr . Aloe’s testimony indicates that in the moving , lifting, loading, and unloading of blast f urnace coke bre akage

occurs, and that more, not l ess, bre akage would re sult from oce angoin

g trans port or de livery : [I]t’s not an easy

thing to offload those [oceangoing] vessels. It goes into a barg e, and then that barge is taken up to some dock. It’s taken off the dock, a

nd then it’s moved from that dock either by t ruck or r ail . . . to the ultimate

consumer . You’d th

ink with al l that moving around that [the respondents would] have a substantial disadvantage in the marketplace be cause their ultimate product that they’re delivering is broken up. Tr. 80:18–25 to 81:1. In fact, this evidence doe s not discuss the effect of waterborne transpor t on the Subject Imports, only delivery. The

Duferco Brief also cites the testimony of Mr. Palmer given se parate from his affidavit . This test imony merely supports t

he propo sition that

it is difficult to transport imports inland, and that “[t]he need for accessible location precludes a ny significant volume of imports from being delivered to any land-locked locations.” Tr. at 104:11–13. Again, the effect of water borne transport on the quality of the Subject Imports is not mentioned. As the ITC itself concede s that “[c]oke breaks very easily if it is not handled properly,”

Def.’s Resp. at 12, it is difficult to see how Mr. Palmer’s testimony provides muc h support for the proposition that the Subject Imports are of a higher quality

than domestic coke based on mo de of t ransp ortat ion. Thus, this evide nce do es not suppo rt the ITC’s fi ndin g.

Second, although it addresses the question of product quality, the court does not find thatC OURT N O
. 01-00826 P AGE 23

the Palmer Affidavit serves as adequate evide ntiary support with respec t to the ITC’s product quality finding. Mr. Palmer stated that “[o]cean and river transport is more advantag eous than overland transport because it requires less handling , which causes degradation of the c oke.” Palmer Aff. at 2. Mr. Palmer further stated:

To deliver coke to [a domestic steel producer’s blast furnac e steel facility] by

water, the coke can be transporte d directly from the ocean vessel and placed at the stocky ard located right before the blast furnace. In c ontrast, to deliver coke to [that facility] by land, the coke is handled many more times and suffers a much higher degradation rate. I

t is my understanding that . . . [confidential infor mation omit

ted]. Id . The utility of the Palmer Affida vit, however, is limited because: (1) there is no indication that his views are based on firsthand knowledge; (2) the statements that the ITC found convincing with respect to the reasons certain purchase rs chose imported coke contain the qualify ing langua ge “I t is my understa nding” ; and (3)his statements tend equally to support

Plaintiff s’ position that it is the frequency with which c oke is handled, not necessarily mode of transportation, that leads to product degradation.

Finally , contra ry to the ar gument made by

the I TC in its Resp onse, the evidenc e cited in the Joint Japanese Brief does not tend to prove the assertion that water transport is “g entler” on blast furnace coke than land transport. See Def.’s Resp. at 11. The Brief cites the testimony of Mr. Ryu Haseg awa who stated that Mitsui and Mitsubishi have “specialized equipment to load blast furnace coke onto Panamax vessels with minimal breakage .” Tr. at 99:14–15. However, Mr. Hasegawa’s testimony deals with loading, not transport or delivery . Moreover, neither the Brief n or the ev idence c ited in the

Brief makes any

meaning ful compa

rison bet ween domesticC OURT N O
. 01-00826 P AGE 24

18 There is

record evidenc e that pr

ice is an important , though

not nece ssarily determinative, c onsidera

tion: Price is an important factor in the sale of blast furnace coke, however other factors such as quality , availability, and reliability of supply are sig

nificant factors in purchase decisions. Suppliers generally compete on price only

if their product has been tested and deemed as consumable by the end user. Staff Report at II -4. and foreign methods of loading blast furna ce coke “gently .”

Notably absent fr

om the record is any

real evidence that directly supports the ITC’s finding that the Subject Imports are superior in quality to the domestic like product. On the contrary , there is at least some evidence provided in the Staff Report that the domestic like product i s superior in qualit y to the Subjec

t Imports. Acc ording t

o the Staf f Report: U.S. producers and importers were asked if ther e are any differences other than price be tween U.S.-produced blast furnace coke and blast furnace coke produc ed in China and Japan that are significant factors in their sales of blast furnac e coke. According to U.S. pro ducers, the domes tic blast f urnace coke is su

perior to impo rted b last f

urnace coke i n term s of qu alit y, but whe n forei gn prices are far below domestic price s, blast furnace operators are reportedly w

illing to sacrifice some quality for the cheaper imports. Responding importers stated that domestic and imported coke characteristics are differ

ent; however the integrated steel make rs reportedly ne ed to import blast furnace coke because their demand for blast furnace coke has consistently been much greater than the av ai la bl e d om es ti c s up pl y. Staff Report at II -4. Also, with respect to substitutability, the Staff Report indicates that “ [t]he degree of substitution between U.S.-produced a nd imported blast furnace coke depends upon such factors as relative price, quality , and availability.” 18 Id

. Taking these fa ctors intoC OURT N O
. 01-00826 P AGE 25

19 In its analysis of the fungibility of domestic a nd imported blast furnace coke, the ITC found “a sufficient leve l of physical intercha ngeability be

tween domestically pr

oduced and imported b last furnace cok e from Chi

na and Japa

n” for pu rposes of cumulation. Prelim. Determination at 10. This court has held that fungibility plays an important role in the I TC’s causation analy sis. BIC , 21 C IT at 456 , 964 F . Sup p. at 4 00 (ci ting Gen. Mot . Corp. v. U

SITC , 17 CIT 697, 711–12, 827 F. Supp. 774, 787–88 (1993)) (“[T]he more fung ible two products are the more likely underselling by one w ill affect the price of the other.”). While the fac tors which th e IT C c on si de re d i n d ec id in g w he th er to cu mu la te th e S ub je ct Imp or ts , i .e ., fu ng ib il it y, geographic overla

p, simultaneous presence in the market, and channels of distribution, are not determinative of the attenuated competition finding, here they would appea

r to be relevant. consideration, the Staff Report concluded that “there is a hig h degree of substitution between domestic and imported blast furnace coke.” Id. ; cf

. Steel Wire Rope , 26 CIT at __, 201 F. Supp. 2d at 1300 (“The Commission’s ‘attenuated’ competition finding was critical to the mate rial injury determination bec ause the difference in product quality and mix, coupled with the low substitutability of the sub ject impor

ts with the

domestic l ike produ

ct showe d that the

domestic industry was not injured by the subject imports.” (emphasis added)). I n addition, as noted by the dissenting Commissioners, and as evidence on the record suggests, it would appear that the interchangeability

between the Subject Imports and the dome stic like product is a critical factor in the mate

rial injur y a nd threa t evalua tions. 19 See Diss entin g Views of Com miss ioner s Bragg and Miller , Prelim. D etermina tion at 27 n .1 (“Giv en that th e recor d indicat es that su bject imports and the domestic like product are interchang eable and recognizing an important issue ra ised regarding the nature

of competition between subject imports and the domestic like product, i.e., whether transportation costs limit U.S. merchant producers’ sales to near by purchase

rs, we believe that negative determinations at this preliminary stage would be premature. The re cord does not, at this time, present information sufficient to support dispositive distinctions regarding the industry’s perf

ormance, as reflected in the lack of purchaser input regarding the nature ofC OURT N O
. 01-00826 P AGE 26

competiti on betwe en the domestic pro duct and i mported product, p articula rly in the sizab le merchant segment.”).

Althoug h the scop e of judic ial revie w of an I TC prelimi

nary injury determination is a narrow one, the IT C must nonetheless explain the reasons behind its determination. See Bowman Transp. , 419 U.S. a

t 285–86; Mot. Vehicle Mfrs. Ass’n , 463 U.S. a t 43 (“[T]he

agenc y mu st examine the relevant data and articulate a satisfac tory explanation for its action . . . .”). Here, unlike in Steel Wire Rope , the ITC has not “detailed the re asons why the compe tition between the subject imports and the domestic like product was ‘attenuated.’” Steel Wire Rope , 26 CIT at __,
201 F. Supp . 2d at 1299. Moreo ver, co ntrar y to the ITC’ s clai m, th e “clea r and co nvin cing” standard, which the ITC has long applied as the measure of evidence re quired before it may issue a negative determination, see Am. Lamb , 785 F.2d at 1001, is not met based on the evidence cited in the Pre liminary

Determi nation. Th

us, the ITC has fa

iled to de monstrate that ther e is a reasonable indication that the record on the whole c ontains “clear and convincing evidenc e that th er e i s n o m at er ia l i nj ur y or th re at of su ch in ju ry” to th e d om es ti c b la st fu rn ac e c ok e i nd us tr y, and that “no likelihood exists that contrary evidenc e will arise in a final investigation.” See id

.

Where an agency

has not articulated a rational connection between the facts found and the choices made, remand is appropriate. See Burlington Truck Lines , 371 U.S. at 168; Altx, Inc. v. United States , 25 C IT __, __ , 167 F . Sup p. 2d 1 353, 1 367–6 8 (200 1) (qu otin g Bando Chem. Indus., Ltd. v. United States , 16 CIT 133, 136, 787 F. Supp. 224, 227 (1992)). The I TC has not adequately

articulated its reasons for finding that competition between the Subject Imports andC OURT N O
. 01-00826 P AGE 27

the domestic like product is attenuated—indeed, it is not clear from the Preliminary Determination at what point competition becomes “attenuated”—nor does the evidence cited by the I TC, with re spect to it s mode of t ranspor tation an d deliver y a nd product quality

finding s, demonstrate that, in fact, direct competition does not exist. See Bowman Transp. , 419 U.S. at
285

– 86 (court may not “ supply a rea soned basis for the agency ’s action that the agency itself has not given.”); Altx , 26 CIT at __, Slip Op. 02-154 at 4 (“The court c an only review the reasoning that the Co mmission expr esses.” ). Thus, a s there is no “rati onal connection be tween the facts found and the choice[s] made,” the court must remand this matter to the I TC so that it may explain this finding. Burlington Truck Lines , 371 U.S. at 168.

Accord ingly , on rema

nd the I TC shall re

visit its Pre liminary

Determi nation, a nd, should

it conclude that a ne gative

determination con

tinues to b e warra

nted, re visit its co nclusions

with respect to its attenuated competition finding and: (1) explain the methodology and standards employ ed in rea ching th e conclu sion that “

to a gre at extent [Sub

ject I mports] do no t compete with domes tically

produce d blast fu

rnace c oke,” Pr

elim. Det erminati on at 19; ( 2) state w ith specific ity t

he fact ors under lyin g its find ing of a ttenuate d competi

tion; (3) s tate whe

ther U.S. purchasers of Subject I

mports comprise a separate market and cite the r ecord evidence to support such conclusion, if any; ( 4) state with specificity a

ny recor d evidence demonstrating that lower costs resulting from waterborne transport of the Subject Imports created a separate market for the Subject Imports; (5) state with specificity any rec ord evidence demonstrating that it is “far more economic al” for

Subject I mports to be

deliver ed by waterbo rne tra nsport wh en compa

red with modes of transportation available to the domestic like product; (6) quantify the cost differencesC OURT N O
. 01-00826 P AGE 28

resulting from waterborne transport and de livery of the Subject I mports when compared with the cost of tr ansport o f the dome stic like product; ( 7) state t he perc entage

of Subject Imports unloaded directly f

rom Panamax vessels and other oceangoing ships direc tly for use in the United States; (8 ) state with specif icity any record evidenc e demonst

rating that the su

perior q uality resulting from waterborne transport or de livery of the Subject I mports created a separate marke t for the Subject Imports; (9) examine the signific ance of the manner and freque ncy of handling

of the Subject Imports in its product quality analysis; (10) state with spec ificity any record evidence demonstrating that the Subject Imports ar e superior in quality to the domestic like produc t and specify in wha

t way the Subject I

mports are superior; (11) state with specificity any rec ord evidence demonstrating a prefe rence on behalf of U.S. blast furnace coke consumers for the Subject Imports based on product quality ; and (12) state with specificity any rec ord evidence that the Subject Imports and the domestic like product ar e not fungible.

C ONCLUS ION For the reasons set forth above, the cour t remands this matter to the ITC for further proceedings in accordanc e with this opinion. Such remand results are due within ninety days of the date of this opin

ion, comme

nts are d ue thirty day s therea

fter, a nd replie s to such c omments eleven days from their fili ng.

______________________________ Richard K. Eaton Dated: May 20, 2003 New York, New York