Slip. Op. 02-67 UNITED STATES COURT OF INTERNATIONAL TRADE Before: Judge Judith M. Barzilay

-------------- -------------- -------------- ----------- x FORMER EMP LOYEES OF : MARATHON

ASHLA ND PI PELI

NE, L LC, Plaintiff s, : Court No. 00-04-00171 Public Version v. : ELAI NE CHAO, UNITED STATES SECRETARY O F LA

BOR, Defend ant. :

-------------- -------------- -------------- ----------- x [Plaintiffs ’ motion to c ertify employ ees for trade a djustment a ssistance

denied, a nd case remanded for further considera tion of whether Plaintiffs “produced” an article within the provision s of the sta

tute and w

hether i ncreas ed imports

contribu ted import

antly to their separation.] Decided: July 16, 2002 Katten, Mu chin &

Zavis , (Marianne Rowden, James L. Sawyer ) for Plaintiff. Robert D. McCallum , Jr. , Assistan t Attorne y G eneral , David M. Cohen , Direct or; Lucius B. Lau , Assistant Director; (

Michele D. Lynch , Delfa Casti llo ), Commer cial L itigation Branc

h, Civil Division, D epartme

nt of Justice ; Gary E. Bernstecker , Attorney, Off ice of the Solicitor, Division of Employment & Tr

aining Leg al Service, U.S. Department of L abor.



### O PINION

I. INTRO DUCTION This case is before the court on Plaintiffs’ motion for judgment upon the administrative record pursuant to USCIT Rule 56.1(c) (1). Plaintiffs seek judicial review of the Secretar y of Labor’s ( the “Sec

retary ” or “Labor” ) denial of certification for trade adjustment assistance (TAA) under Section 222 of the Trade Act of 1974, ( the “Act”), as amended and codif ied at 19Court No. 00-04-00171 Page 2

U.S.C. § 2272 (1994). See Notice of Determination Regarding Eligibility to Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment Assistance (“ Determination ”), 64 Fed. Reg. 72690, 72691 (Dep’t of L abor Dec. 2, 1999), reconsideration denied , 65 Fed Reg. 8743 (Dep’t of Labor F eb. 22, 2000). Plaintiffs are former Marathon Ashland Pipeline worke rs who were employ

ed as gaugers, who state

that they perf

ormed the functions, inter alia , of testing and determining the quality of crude oil to be purchased and transported. The Secretary determined that the Plaintiffs did not satisfy the statutory criteria under 19 U.S.C. § 2272(a)(3). The Secretary

then voluntarily asked for remand of her negative dete rmination to acquire additional information regarding the transpor tation of articles produced by the parent company

of Plaintiffs’ employer, Mar athon Ashland Pipe Line L LC (“Marathon Ashland”) . The Secretary ’s Notice of Negative Determination of Reconsideration on Remand (“ Remand Determination ”), 66 Fed. R eg. 52784 (Dep’t of Labor O ct. 17, 2001), again denied plaintiffs’ petition for cer tification. Plaintiffs contend the Secretary ’s initial Determination and Remand Determination are unsupported by substantial evidenc e and not in accordance with law. Plaintiffs initially claimed that the Secretary

failed to investigate: 1) the actual nature of the work performed by

the Plaintiffs; 2) whether Plaintiffs’ separations were cause d by a reduc ed demand for their services from their parent firm, or a firm otherwise re lated, whose workers independently meet the statutory criteri a for ce

rtifica tion under

the Act; a

nd 3) whe ther increased

imports of

crude oi l contributed importantly to Plaintiffs’ separa tions. Following the Secretary ’s Remand Determination, Plaintiffs reassert all original arg uments and additionally claim that the Secr etary failed to request information concerning: 1) Ma rathon Oil Company’s (“Ma rathon Oil”) (Marathon Ashland’s parent company ) importation of foreign oil between 1997 and 1999; 2) theCourt No. 00-04-00171 Page 3

1 The Administrative Record and the Supplemental Administrative Record contain confidential information. Therefore, citations to the confidential informa tion will be bracketed

. extent to which the importation of oil by Marathon Oil caused or contributed to Marathon Ashland’s decrease in domestic oil production and sales; 3) the basis for Marathon Oil’s cessation of purchasing oil from the Illinois Basin Area; and 4) the nexus between Marathon Ashland’s activities and the crude oil purchased or produc ed by its parent or r elated companies. Plaintiffs ask that the Secretary ’s determination be reversed or, in the alterna tive, remanded back to the Department for further investigation. The court has jurisdiction pursuant to 28 U.S.C. § 1581(d)(1) (1994) to review the Department of Labor ’s final determination regarding eligibility of worke

rs for TAA under Section 223 of the Trade Act of 1974, as amended, 19 U.S.C. § 2273 (1994). After r eviewing the admin

istrative record s and the briefs of

the part ies, the c ourt ag ain remands the action to the Secretary for further proceedings in ac cordance with this opinion.

II. B ACKGROUND On October 23, 1999, Plaintiffs filed a petition for TAA with the Department of L abor under Section 221(a) of the Act on behalf of Ope rations Technicians at Marathon Ashland. See Administrative Record (“ A.R. ”) at 1. 1 Marathon Ashland is a [“

.”] A.R. at 18

. Prior to the administr

ative re view of Pla

intiffs’ petition, some of Marathon Oil Company’s wor kers had been certified for TAA. Plaintiffs worked at Marathon Ashland’s Bridg eport, Illinois, location and petitioned the Secretar y for TAA after their separation from Mara thon Ashland.Court No. 00-04-00171 Page 4

2 Labor’s investigation is g uided by the Tra

de Act of 1974, as amended 19 U.S.C. § 2272, whic

h reads: (a) The Secretary

shall certify a

group of workers (including wor kers in any a

gricultural firm or subdivision of an agricultural firm) as elig ible to apply for adjustment assistance under this subpa

rt if he de termines

– (1) that a significant number or proportion of the wor kers in such workers’ firm or an appropriate subdivision of the firm have become totally or partially sepa

rated, or are threatened to become totally or partially sepa

rated, (2) that sales or production, or both, of such firm or subdivision have decre ased absolutely, and (3) that increases of imports of articles like or directly competitive with articles produced by suc

h workers’ firm or an appropriate subdivision thereof c ontributed important ly to such tota l or parti al separ

ation, or threat th ereof, and to suc h decline in sales or production. (b) For purposes of subsection (a)(3) of this section– (1) The t erm “co ntributed

important

ly” means a c ause whi ch is impor tant but no t necessarily

more important than any othe r cause. (2)(A) Any

firm, or appropriate subdivision of a firm, that engag es in exploration or drillin g for oi l or natur

al gas shall be c onsidere d to be a f irm produ cing oil or natur al gas. (B) Any

firm, or appropriate subdivision of a firm, that engag es in exploration or drilling for oil or natural gas, or otherwise pr oduces oil or natural gas, shall be considered to be producing articles directly competitive with imports of oil and with imports of natural gas. The Secretary

issued a Notice of Investigation on Novemb er 8, 199 9, to dete rmine if Plaintiffs were eligible for TAA. See 64 Fed. Reg. 69039. L abor had to ascertain if “increase d imports ha

ve contr ibuted importantly

to actua l or threa tened de crease s in employ ment and t

o decreases in sales or production at the petitioning wor kers’ plant.” 2 A.R. at 12. To facilitate the investigation, Labor sent an infor mation request to Marathon Ashland’s Human ResourceCourt No. 00-04-00171 Page 5

3 [ ] A.R. at 18. Theref ore, for statutory purposes , Marathon Ashlan d was a “ subdivisio n” of Mar athon Oil Co mp an y. Representative, Mike Leland, a sking him to furnish specific information regarding Marathon Ashland’s organizational structure, sales, production, employ ment, and imports. In L eland’s response he stated, inter alia, that [

] See A.R. at 16-18. Based on Le land’s response and other inf ormation c ompiled fr

om the inve stigation, the Sec retary determined that Pla

intiffs di d not “prod uce” an article within the

meaning of Sectio n 222(3) a

nd their s eparat

ion was no t “caused importantly

by a reduc ed demand for services from a par ent firm . . . .” 3 A.R. at 24. The Secretary found that because “[t]he Department of L abor has consistently de termined that the performance of services does not c onstitute production of an article, as required by Section 222 of the Trade Act of 1974,” Plaintiffs did not qualify for TAA benefits. Id

. On December 16, 1999, Plaintiffs requested reconside ration of the negative determination. Plaintiffs asserted that their jobs involved more than merely transporting crude oil. Plainti ffs cont

ended tha t their wo rk as ga

ugers c onstituted

“production” of a

n article pursuant to Section 222 of the Act. Plaintiffs argued that as g augers they tested the crude oil and determined if the oil “was of such quality as to be purchased by

Marathon Oil Company and transported into the pipe line maintained by Marathon Ashland Pipe Line L LC.” A.R. at 33.Court No. 00-04-00171 Page 6

4 Responses to the Secretary ’s investigation on remand were provided by company official, [ ], at Marathon Ashland. Supplemental A.R. at 3-4. Labor reviewe d the application and determined: 1) the workers provided a service that was not covered by

the Act; 2) although some Marathon Oil workers re ceived TAA certification, Marathon Ashland did not serve the locations under existing certification; and 3) the Plaintiffs were terminated because of the sa le of their firm’s assets to another company

. Notice of Negative Determination Regarding Application for Reconsideration (“ Determination Reconsideration ”), 65 Fed. R eg. 874 3. Citing t

o the 1988 Omnibus Tr

ade and Competitive

ness Act a

mendment s to the Trade Act of 1974, L abor explained that the amendments “extended coverage to service workers engage d in exploration and drilling for crude oil and natural gas.” Id . Labor concluded that “[t]he same consideration cannot be given to those workers eng aged in employ ment related to the transmission of crude oil or natural gas after dr illing.” Id. Therefore, L abor denied Plaintiffs’ request for administrative review. On January 24, 2001, Plaintiffs filed their Motion for Judgment on the Administrative Record with this court. On August 7, 2001, La bor sought a voluntary

remand of its investigation. Noting that it had failed to conduct a complete investigation, Labor again contacted L eland for additional information regarding whethe r the gaugers supported c rude oil production by Maratho n Oil. 4 Supplemental A.R. at 5. The investigation on remand revealed tha t in 1997, 1998 and through March of 1999, Marathon Ashland Pipe L ine did not transport via pipeline any articles produced by

the parent company , Marathon Oil Company, I nc. See Supplemental A.R. at 6. The Secretary ’s investigation found that in 1997, the parent company purchased crude oil atCourt No. 00-04-00171 Page 7

5 The Illinois Basin is one of Marathon Oil’s domestic sour ces for crude oil. A.R. at 1. the I llinois Ba sin 5 that was transported by Marathon Pipe Line Company

. Id. “In 1998, Maratho n Ashland

Petroleu m LL C was for

med and it

purchas ed crude

from the B asin whic

h it transported via the pipeline.” Id. In 19 99, Mara thon Ashla

nd Petrole

um LL C did not pur

chase from the lease (Illinois Ba sin). See id. On these findings, the Secretary affirmed her original notice of negative determination of elig ibility to apply for TAA benefits for the former worke rs of Mara thon Ashla

nd Pipe Line, L

LC.

III. STANDARD OF REVIEW Cases contesting the denial of trade adjustment assistance f iled under 28 U.S.C. § 1581(d) must be upheld if the Department of La bor’s determination is supported by substantial e vidence and is otherwise in accordance with law. See 19 U.S.C. § 2 395(b); Woodrum v. Donovan, 5 C IT 191, 193, 564 F. Supp. 826, 828 (1983), aff’d , 737 F.2d 1575 (Fed. Cir. 1984). The factual findings of the Secretary

must be accepted if supported by “substantial evidence.” “Substantial evidenc e has bee

n held to be

more tha n a ‘mer e scintill a,’ but sufficien

t enoug h to reas onably support a conclusion.” Former Employees of Swiss Industrial Abrasives v. United States , 17 CIT 945, 9 47, 83 0 F. Su pp. 63 7, 639 -40 (1 993) ( citi ng Ceramica Regiomontana, S.A. v. United States , 10 CIT 399, 405, 636 F. Supp. 961, 966 (1986), aff’d , 810 F.2d 1137 (Fed. Cir. 1987)). “Additionally, ‘the ruling s made on the basis of those findings [must] be in accordance with the statute and not be arbitrary and capricious, and for this purpose the law require s a showing of reasoned analy sis.’” Former Employees of General Electric Corp. v. U.S. Dep’t of Labor , 14 CIT 608, 610-1 1 (199 0) (qu otin g Internat ional Union

v. Marsha ll , 584 F.2d

390, 396 n. 26 (D.C.Court No. 00-04-00171 Page 8

Cir. 1978). Furthermore, this court has noted that “‘beca use of the ex parte

nature of the certification
process , and the r

emedial p urpose of the [trade

adjustmen

t assistan ce] prog ram, the Secreta ry is obliged to conduct his investigation with the utmost regard for the interests of the petitioning workers.’” Abbott v. Donovan , 7 CIT 323, 327-28, 588 F. Supp. 1438, 1442 (1984) (quoting Local 167, Internat

ional Mold

ers and All

ied W orkers’ Union v. M

arshall , 643 F.2d 26, 31 (1 st Cir. 1981 ). The court may

remand a case and order fur ther investigation if the court finds that the Secreta ry ’s investi gation w as “so ma rred tha t [the Secr

etary ’s] finding

was arb itrary

, or that it was not based upon substantial evidence.” Finkel v. Donovan , 9 CIT 374, 381, 614 F. Supp. 1245, 1251 (1985). Thus, in the event that the Secretary fails to reach a substantiated conclusion, a remand is warranted because the Secretary

failed to conduct an adequate investigation. See Former Employees of Linden Apparel Corp. v. United States , 13 CIT 467, 469, 715 F. Supp 378, 381 (1989). However, in evaluating the evide nce underly

ing the Secretary ’s conclusions, the court may conside

r only the administrative re cord before it. See 28 U.S.C. § 2640(c) (1994); International Union v. Reich , 22 CIT 712, 716, 20 F. Supp. 2d 1288, 1292 (1998).

IV. D ISCU SSI ON Pursuant to 19 U.S.C. § 2272 (1994) for workers to be certified for trade adjustment assistance the Secretary

of Labor must determine: (1) that a significant number or proportion of the workers in such workers’ firm or an appropriate subdivision of the firm have become totally or partially sepa

rated, or are threatened to become totally or partially sepa

rated,Court No. 00-04-00171 Page 9

(2) that the sales or production, or both, of such firm or subdivision have decrea sed absolutely, and (3) that increases of imports of articles like or directly competitive with articles produced by s uch work ers’ fir m or an ap

propria te subdivi sion ther

eof cont ributed im

portantly to such total or partial separation, or threat thereof, a nd to such decline in sales or production. 19 U.S.C. § 2272(a). To rece ive trad

e adjustme

nt assista nce ben efits, Pla

intiffs mu st satisfy

all three eligibil ity requirements of the statute. See Former Employees of Keinerts, Inc. v. Herman, 23 CIT 647, 648, 74 F. Supp. 2d 128 0, 1282 (1 999); Former Employees of Bass Enter. Prod. Co. v. United States, 13 CIT

68, 70, 706

F. Supp. 8 97, 900 (1 989); Abbott v. Donovan , 8 CIT 237, 239, 596 F. Supp. 472, 474 (1984) (stating that a court must deny certification if any

one of the three statutory conditions does not exist). At issue in this case is whether there is substantial evidence in the administrative rec ord to support

the Secr etary ’s deter

mination th at the wor

kers of M arathon

Ashland Pi

pe Li ne LL C, in Bridgeport, I llinois, are ineligible to apply f or adjustment assistance benefits. The Secretary issued a negative determination asserting that Marathon Ashland workers failed to satisfy the two requirements within 19 U.S.C. § 2272(a)(3): first, the section requires that Plaintiffs must be workers of a firm or an appropriate subdivision of a f irm that “produce[s]” articles; second, that in order for Plain tiffs to be eligible for trad e adjustme

nt assista nce ben efits, “i

ncreas es of impo rts of articles like or directly competitive with the articles produced by [Plaintiffs’] firm or . . .
appropr iate subd ivision . . . contribu

ted import

antly to [their] tot

al or par tial sepa ration . . . and to [their firm’s or appropriate subdivision’s] decline in sales or production.” Thus, it follows that the section’s certification requirements are sa tisfied if it is established that a group of workersCourt No. 00-04-00171 Page 10

6 Citing information provided by Leland: [“
.”] Def.’s Resp. to Remand at 12; A.R. at 17. produce s an “ar

ticle” within the me aning o f the stat ute, and a n imported

article like or dir

ectly competiti ve with the

article produce d by

the work ers’ fir m or subdivision cont

ributes im

portantly to the loss o f such wo rkers’ jobs. A. The Secretary Failed to Adequately Investigate W hether Plaintiffs Are Workers of a Firm or an Appropriate Subdivision of a Firm That “Produce[s] ” Articles

. Labor contends that the petitioning e mployees fail to satisfy

the criteria set forth in 19 U.S.C. § 2272(a) because they [“ .”] Def.’s R esp. to Pls .’ First Am . Reply to Def.’s Notice of Negative Determination of Reconsideration on Remand ( “ Def.’s R esp. to Remand ”) at 11. Defendant asserts that this conclusion was aff irmed and then re-affirmed by information gathered during the Sec retary ’s initial investigation and the investigation upon remand. Defendant states that this finding is made clea r through statements in the administrative record, 6 and thus, t

he Secre tary ’s deter

mination is

supporte d by

substantia

l evidenc e and is in accordance with law. The court finds that the Secretary ’s negative determination is not supported by substantial evidence, because the Secreta ry made the unsubstantiate d conclusion that the petitioning employee s did not “produce” an article within the meaning of Section 2272. “When Labor is prese

nted with a

petition f or trade adjustmen

t assistan ce, it ha s an aff

irmative duty to investigate whether petitioners are member s of a group which Congress intended to bene fit fromCourt No. 00-04-00171 Page 11

the legislation.” Former Employees of Hawkins Oil and Gas, Inc. v. U.S. Secretary of Labor, 17 CIT 126, 129, 814 F. Supp. 1111, 1114 (1993) (citations omitted). At best, the administrative record provides limited information discussing whether the Plaintiffs’ duties as g augers place them within the group of eligible import-impacted employ ees Congress intended to benefit from TAA. As su

ch, this c ourt can

not concl ude that L

abor has satisfie d its requ

irement o f reaso nable inquiry, especia

lly when viewed in lig

ht of the remedial purpose of the statute. It is true that the court must gra nt deference to the Secretary of Labor’s deter

mination. See Woodrum , 564 F. Su

pp. at 828 (citatio ns omitted) . The cou rt reco gnizes, however , the well establish ed princ iple that “ [n]o defer ence is d ue to dete rmination s based on

inadequa te investigations.” Former Employees of Hawkins Oil and Gas, Inc. , 814 F. Supp. at 1115 (citations omitted). Thus, if the court finds that the Secretary ’s investigation is so marred that it could not be based on substantial evidence, then it is within the court’s power to remand the inve stigation for further evidence and inquiry

. Id. Labor’s investigation fa

lls below the threshold requirement of reasonable inquiry by failing to offer any

explanation of the analysis used to deter mine that Plaintiffs’ work as gaugers did not constitute “producing” an article within the meaning of Section 2272. See id. at 1114 (stating that L abor had

a duty to provide

an explana

tion of the

criteri on used to s

upport its concl usio n) (ci ting Former Employees of Hawkins Oil and Gas, Inc. v. U.S. Secretary of Labor , 15 CIT 653, 656 (1991)). I n the context of TAA cases, this court has held that “conclusory assertions alone are not sufficient for L abor to make an accurate dete rmination.” Bennett v. U.S. Secretary of Labor, 18 CIT 10 63, 10 67 (19 94); ( citi ng Former Em ployees of Gener al Electr ic Corp. , 14 CIT at 612-613).Court No. 00-04-00171 Page 12

7 Upon remand Labor a sked Marathon Ashland: 1. Did Marathon Pipe Line L LC, transport via pipeline any of the articles produced by t he pa re nt co mp an y, M ar at ho n O il Co mp an y, i n 1 99 7, 19 98 , o r i n t he Ja nu ar y through March months of 1998 and 1999? 2. If t he ab ov e a ns we r i s ye s, wh at pe rc en ta ge of you r s al es wa s r ep re se nt ed by transporting crude oil or petroleum products for Mar athon Oil Company in 1997, 1998, and the January throug h March months of 1998 and 1999? 3. If t he an sw er to qu es ti on 1 i s ye s, wh er e d id th e M ar at ho n O il Co mp an y pr odu ct ion orig ina te ? Supplemental A.R. at 1. Here, the Secretary

based and affirmed her neg ative determination on conclusory assertions provided by c ompany officia ls at Marathon Ashland. In doing so, the Secretary incorrectly

omitted the requisite reasoned analy sis, and instead substituted unsubstantiated statements. During Labor ’s initial investigation, Leland stated that the subject wor ker group [“ .”] A.R. at 23

. During Labor’ s further investigation, 7 the company off icial stated that during the time period in question, 1997-1999, the workers [“ .”] Supplemental A.R. at 3. Rely ing on the se responses, the Secreta ry conclude d that the

gaug ers did no t partici

pate in production. Indeed, as Def

endant notes, “‘unverified statements from company officials in a position to know ab out their c ompany ’s produc ts and busi

ness dec isions ca

n be reli ed upon when there is no other evidence in the record to contradict or cast doubt upon those statements.’” Former Employees of Alcatel Telecommunications Cable v. Herman , 134 F. Supp. 2d 445, 449 (2001) (quot ing International Union , 20 F. Supp. 2d at 1297 n.15 (citations omitted)). In the prese nt case, however, evidenc e prese nted by the petiti oning workers sta ting tha t they were involved inCourt No. 00-04-00171 Page 13

more tha n the mer e transp ortation o f crude

oil, direc tly c ontradicts the comp any officia ls’ conclusions. The subject workers specifically indicate in their petition that they worke d with [“ .”] A.R. at 1

. Plaintiff s’ letter requesting administrative reconsidera tion and detailing the specific duties they performed also conf licts with c ompany

officia ls’ state ments. Suc

h evidenc e moves th

is court to find that i

t is unclear whether the gaug ers were involved in the production of oil. Thus, on these facts, the court cannot affirm La

bor’s negative determination or find that L abor fulfilled its affirmative duty to conduct its investigation with the utmost reg ard for the petitioning workers. See Former Employees of Hawkins Oil and Gas, Inc., 814 F. Supp. at 1114 (citations omitted). By fa iling to give a reasoned analy sis for its determination that the gaugers did not participate in production, Labor ne glected its duty to inter pret the meaning of “production” under Section 2272. If allowed to stand, the Secre tary’s neg ative determination would provide a definition of “production” that excludes those duties performed by gaugers. This definition, however, essentially

would be an interpretation of the statute by Marathon Ashland’s company officials, and not, as the law requires, by the Secretary . Whether Plaintiffs provided a service and did not par

ticipate in the “pr

oduction” of an “a rticle” within the

provision s of Secti on 2272 is a determination that the Secretary must make based on evidence in the record by discussing the duties pe rformed by t he gau gers a nd how the ir respo nsibilities fit into the

oil produc

tion sche me of their parent company , Marathon Oil. Even if th e Secre

tary makes a r

easoned determination tha

t the ga ugers d o not part icipate in the “production” of an “article,” then the Sec retary must investigate whether they may beCourt No. 00-04-00171 Page 14

8 When Labor voluntarily remanded its investigation to further investigate whe ther the gaugers supported crude

oil production of the parent company , Labor focused on whe ther Maratho n Ashland

transpor ted artic les already produce d by Maratho n Oil durin

g the time periods in question. See supra n.7. The court notes that this inquiry is too limited, and points out that the causal nexus test extends to the general “production” of import-impacted “articles” by the parent company

. eligible for certification as “servic e” workers. The court ag rees that service workers may be certifi ed for TA

A benef its “[on] a f

inding th at the petitioning worker s were e

mploy ed by a ‘firm’ which produced, or had an ‘appropriate subdivision’ which produced, the import-impacted article.” Woodrum, 564 F. Supp. at 833. Here, the petitioning gaug ers may be eligible for TAA benefits if there exists an “important causal nexus” between increa sed imports and the loss of their jobs . Lab or has de emed this nexus to exist if “at lea st 25% of the servic e worke rs’ acti vity [is] expended in service to the subdivision which produces the import-impacted article.’” Former Em

ployees of Stanley

Smith , Inc. v. U.S. Secretary of Labor, 20 CIT 201, 204, 967 F. Supp . 512, 516 (1 996) ( citi ng Abbott , 570 F. Supp. at 49). As the Secretary stated, such service

wo rk er s m ay b e c er ti fi ed if th ei r s ep ar at io n f

ro m e mp lo yme nt wa s c au se d i mp or ta nt ly b y a reduced demand for their service s from a production facility of the parent firm, i.e. one other wise related to the subject firm by ownership or related by

control, whose workers independently meet the statutory criter

ia for certification. See A.R. at 37; see also Nagy v. Donovan , 6 CIT 141, 144, 571 F. Supp. 1261, 1263 (1983). While L abor acknowledg es this “c ausal nexus” test, Labor nev erthele ss fails to investig ate the r

elevant facts: th e nature

of the wo rk perf

ormed by Maratho n Ashland

gaug ers in relation to produc tion of an

article by M arathon

Oil. 8 See Pem berton v. Marshall , 639 F.2d 798, 801-2 (D.C. Cir.1981) (stating that the facts that are “importa nt . . . are the nature of the workCourt No. 00-04-00171 Page 15

9 The 1988 Omnibus Trade and Competitiveness Act amendments to the Trade Act of 1974 state in pertine

nt part: (b) For purposes of subsection (a)(3) of this section– (2)(A) Any

firm, or appropriate subdivision of a firm, that engag es in exploration or drilling for oil or natural gas shall be consider ed to be a firm producing oil or natural gas. (B) Any firm, or appropriate subdivision of a firm, that engag es in exploration or drilling for oil or natural gas, or otherwise pr oduces oil or natural gas, shall be considered to be producing articles dire ctly competitive with imports of oil and with impor

ts of natu ral ga s. done at the facility a

nd its relation to the production of an article.”) I nstead, Labor arg

ues that the gaugers did not provide a ser vice that is covered within the provisions of the Act. See Def.’s Mem. in O

pp’n to Pls .’ Mot. fo r J. Upon t he Admini

strative R ecord

(“ Def.’s Mem. ”) at 15-16. Following the Secretary ’s voluntarily remande d investigation, Labor adds that be cause Marathon Oil only purchased c

rude oil at the Illinois Basin and Mara thon Oil did not produce oil there, there was “no evidence linking plaintiffs to production of crude oil by the pa rent company.” Def.’s Resp. to Remand at 12 . Fin ally, La bor c ontends th at while [ ], Marathon Ashland did not serve these currently certified producers of import-impacted oil. Id. at 15-16. Labor relies on the leg

islative history of the Omnibus Trade a nd Competitiveness Act of 1988 to support its assertion that gaugers provide service s falling outside of the provisions of the Act. 9 Labor argu

es that the

1988 amen

dments “li

mited the ‘ worker s eligib le for be nefits to t hose engaged in exploration and drilling for oil, and not more generally to any worker

s in related industries who may be adve rsely aff ected in some way

by oil imports.’” Def.’s Mem. at 15 (citing
to Former Employees of Parallel Petroleum Corp. v. U.S. Secretary of Labor , 14 CIT 114, 120,Court No. 00-04-00171 Page 16

10 Labor relies on Former Employees of Permian Corp. v. United States , 13 CIT 673, 718 F. Supp. 1549 (1989), for its position. In Permian , this court denied assistance to employees of a firm which transported and marketed crude oil purc hased from unaffiliated companies. See Former Employees of Permian Corp. , 718 F. Supp. at 1550. Here, the parent corpora tion of Marathon Ashland did, in fact, engag e in production and some of its employe es were certified for TAA on that basis. 731 F. Sup

p. 524, 528 (1990) ( citations omitted)) . While the c ourt conc edes tha t Congre ss did not intend for TAA benefits to compensate all displaced employ ees, this court noted in Former Employees of Parallel Petroleum Corp. , that “[l]imiting benefits to a narrow class of workers engaged only

in drilling and exploration would contravene the express languag e of the statute. . . .” Former Employees of Parallel Petroleum Corp., 731 F. Supp. at 527.
In Parallel , this cour

t stated: Both § 2272(b)(2)(A) and (B) refer to the “production” of oil and ga s as a function that qualifies a firm as “producing an ar ticle” within the meaning of § 2272(a)(3). This being so, Congress could hardly have intended to limit the availability of bene fits under the amendment to firms engaged only in explora

tion or dr illing, w hen the st atute expr essly references “production” a s a defining term for invoking the benef its of the trade adjustment assistance legislation. Former Employees of Parallel Petroleum Corp., 731 F. Supp. at 527. Given this expansive
treatme nt and the express la

nguag e of the s tatute ind

icating that firm s “other

wise prod uc[ing] oil or natural gas” may

be eligible for TAA benefits, the court que stions Labor’s conclusion that the statute was amended to cover only service workers exclusively engaged in exploration or drilling for crude. 10
Moreove r, while t he court does not qu

estion L abor’s f

actual f indings i ndicate d above, its finding s are not

determinative of

the issue s at hand. First, th e fact that Mara thon Oil onl

y purchas ed crude

oil from th e Ill inois Bas in does not preclud e La bor from making a n adequa te investig ation into w

hether a t least 25%

of the g augers’ activi

ty w as expende d in servi ce toCourt No. 00-04-00171 Page 17

producti on of an a

rticle by Maratho n Oil, incl

uding pr oduction o ccurri

ng outsid e of the I llinois Basin area. Second, reg ardless of the fact that Marathon Ashland did not serve Mar athon Oil’s currently c ertified facilities, Marathon Ashland still may have served its parent company ’s other producti on facil ities whos e worke rs indepe ndently meet the s tatutory

criteri a. I

nvestig ation into this issue is critical to determining whether Plaintiffs may be eligible for TAA certification, eve n if they are det ermined to be ser vice wor kers. Witho

ut support

ing fac ts and re asoned a

naly sis in the Secretary ’s determination concerning the work of the employees her

e, the court cannot affirm the Secretary ’s finding that Marathon Ashland was only a “service” company

and was not linked to produc tion by

its paren t company

, Marathon Oil. Therefore, this case must be remanded to L abor for further examination into whether the petitioning employee s “produce” an “article” within the mea ning of the Act, and whether a ca usal nexus exists between service provided by Ma rathon Ashland Pipe Line, L LC and production of an import- impacted

article by M arathon

Oil. B. The Secretary Failed to Adequately Investigate W hether Imports Contributed Importantly to Plaintiffs’ Separation. Labor addition

ally argue s that ther

e was no need to inv estiga te whethe r imports contributed importantly to the petitioners’ sepa ration, because Marathon Oil only purchased and did not produce oil at the sites that Marathon Ashland served and there wa s an insufficient relationship between the two companies. L abor maintains that the need for further investiga tion of the company’ s imports is unnecessary be cause information in the record revea ls that the petit ionin g em ploy ees’ sepa rati on wa s in fa

ct du e to [ ]. See A.R. at 16

. Labor points ou t that L eland corrobora

ted this findi ng by indic ating

that [ ] and [Court No. 00-04-00171 Page 18

.] See id. at 19. While Plaint

iffs ack nowledg e this [ ], the y be lieve tha

t [“

. ”] Pls.’ First Am. Reply to Def.’s Notice of Negative Determination on Remand (“ Pls.’ Reply to Remand

”) at 8; A.R. at 1

. Plaintiffs argue that La bor’s further investigation was inadequate because it considered only whether Marathon Ashland transported product for Maratho n Oil betw een 1997 -1999. Pla intiffs challeng e La

bor’s methodolog

y, s tating that: [i]f the Dep artment o f La

bor had in

quired with Marat

hon Ashla

nd about th e overa

ll operations of Marathon Ashland’s parent companies within the ec onomic climate of the oil industr

y a nd its eff ect on the demand f

or Mara thon Ashla

nd’s ser vices, th ese facts would demonstrate that Plaintiffs were terminated from their jobs as g augers because of the economic affects [sic] of imported oil by Marathon Oil. Pls.’ Reply to Remand at 8-9. The court finds Plaintiffs’ argument persuasive, a nd notes that while “this court will defer to [Labor’s] choice of reasonable methodologies, Labor must base its deter mination upon sufficient evidence for a rea sonable mind to concur in the result.” Bennett , 18 CIT at 1068. Here, on the facts at odds in the record, L abor could not have conclusively determined that imports did

not contr ibute to the

petitionin

g worke rs’ sepa ration. Pl aintiffs

do not dispu

te evidence showi ng th at co mpan

y a ssets were sold t o [ ]; however, Plaintiffs submit that these assets were sold because [“

.”] A.R. at 1 . In its nega tive dete rmination , Lab or ignor

ed the iss ue of whe ther Mar athon Oil’ s decisio ns toCourt No. 00-04-00171 Page 19

purchase crude oil imported from Mexico and Canada resulted in the sa le of company a ssets. Such information is crucial in ascertaining the impact of imports on the loss of Plaintiffs’ jobs. An adequ ate inve stigation by

Labor would ha

ve addre ssed Plain

tiffs’ c laim that im

ports from Mexico and Canada prompted the sale of Marathon Oil’s assets, and a s a result, caused the loss of the petitioning employee s’ jobs. See Moto r Vehicle Mfrs. Ass’

n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983) (stating that an administrative determination is arbitrary and
cap ric io us i f th e ag enc y has “en ti rel y fai led to con si der an i mp ort ant asp ect of t he p rob lem ”). In order to fulfill its duty to conduct an investig ation with the utmost regard for the petitioning workers, Labor should conduc t a thorough investigation to fully assess both Leland’s information and Plaintiffs’ claims. The failure to do so would render the Secre tary’s investig ation cursory a t best. V. CONCLUS ION Because the court finds that the Secre tary inadequa

tely investigate d the petitioning employ ees’ job s as gau

gers, i t cannot a gree w ith the De fendant

that “the re [is] no re ason to investigate the parent company regarding other issues which mig ht relate to the statute’s third criterion.” Def.’s Resp. to Remand at 12. Therefore, this case must be remande d for further investigation into Marathon Oil’s imports and the reasons behind the sale of the compa ny’s
assets.

Dated:

___________________ ___________________________ New York, NY Judith M. Barzilay Judge