Court Opinion

ID: 819673
Source: CourtListenerOpinion
Date Created: 2013-02-05 07:58:31.627952+00
Date Added: 2024-06-11T09:10:51.324026
License: Public Domain

Slip Op. 99 - 39

           UNITED STATES COURT OF INTERNATIONAL TRADE

___________________________________
                                   :
Rautaruukki Oy,                    :
                                   :
          Plaintiff,               :      Consolidated Court
                                   :      No. 97-05-00864
     v.                            :
                                   :
United States,                     :
                                   :
          Defendant,               :
                                   :
     and                           :
                                   :
Bethlehem Steel Corporation,       :
U.S. Steel Group (a Division       :
of USX Corporation),               :
                                   :
          Defendant-Intervenors.   :
___________________________________:

[Commerce’s Remand Results sustained in part; reversed in part.]

                                      Dated: April 27, 1999

     Holland & Knight LLP, (Frederick P. Waite and Kimberly R.
Young) for plaintiff and defendant-intervenor Rautaruukki Oy.

     David W. Ogden, Acting Assistant Attorney General, David M.
Cohen, Director, A. David Lafer, Senior Trial Counsel, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Michele Lynch), Myles S. Getlan, Office of the Chief
Counsel for Import Administration, United States Department of
Commerce, of counsel, for defendant.

                             OPINION

RESTANI, Judge:

     This matter is before the court following remand to the

United States Department of Commerce (“Commerce”) of the Final
Consol. Court No. 97-05-00864                              Page 2

Results of its second administrative review of the antidumping

determination in Certain Cut-to-Length Carbon Steel from Finland,

62 Fed. Reg. 18,468 (Dep’t Commerce 1997) [hereinafter “Final

Results II”].    Final Results Pursuant to Court Remand, at 1

[hereinafter "Remand Results" or “RR”].     Familiarity with the

court's earlier decision in this case is presumed.    See

Rautaruukki Oy v. United States, No. 97-05-00864, 1998 WL 465219

(Ct. Int’l Trade Aug. 4, 1998).

                   Grade “A” Plate Specifications

                             Background

     Before remand, Commerce stated that in Final Results II it

had considered steel plate classified grade “A” by different

national classification societies as not identical for comparison

purposes because the information offered by Rautaruukki Oy

(“Rautaruukki”) in response to Commerce Department questionnaires

had proved an inadequate basis from which to determine whether

the merchandise was or was not identical.    Rautaruukki, 1998 WL

465219, at *4.    On the basis of some apparently slight

differences in specifications of certain elements’ compositional

ranges, and without evidence of the significance of these

differences, Commerce resorted to what it referred to as its

default position: that without evidence of the insignificance of
Consol. Court No. 97-05-00864                            Page 3

these differences, it would consider them significant.    Id. at

*3.

      At oral argument, Commerce explained that, although it had

not requested the brochures specifically, what it would have

liked to have examined were not Rautaruukki’s comparison charts

displaying information abstracted from the specification

brochures of the national classification societies but the

comprehensive specifications available in the brochures

themselves.   The court acknowledged at that time that the

brochures might provide more detail as to the specifications of

the various national classification societies but questioned

whether Commerce would know any more about the significance of

those differences after examining them.   When the court asked

what evidence Rautaruukki thought it might submit to provide

insight into the commercial significance of any apparent

differences, Rautaruukki suggested, inter alia, the expert

testimony of a metallurgist.

      Because Commerce alleged that a factual question existed,

and because it had not been clear about the information it was

seeking from the respondent, the court remanded the case with the

instruction to Commerce to obtain additional grade “A” plate

information from Rautaruukki and to reconsider its decision as to
Consol. Court No. 97-05-00864                               Page 4

whether to treat U.S. grade “AB A” steel plate and all other

grade “A” plate as identical merchandise.      Id. at *8.

     On remand, Commerce requested from Rautaruukki national

specification brochures for each national classification society

rating grade “A” shipbuilding steel sold in the United States and

Finland.   RR, at 1.    Rautaruukki provided Commerce both the

current national specifications and those in effect during the

period of review.1     Id.   Commerce prepared draft remand results

on which Rautaruukki submitted comments, along with affidavits of

Dr. A.J. DeArdo, the William Kepler Whiteford Professor of

Materials and Engineering and Director of the Basic Metals

Processing Research Institute at the University of Pittsburgh,

and of Mr. Gerrit Johan van Dissel, a practicing Naval Architect

and Marine Engineer.     Id.   The affidavits addressed the

commercial significance of the specification differences to grade

“A” shipbuilding plate, and both concluded that the differences

lacked commercial significance.      van Dissel Affidavit, at 4-5; De

Ardo Affidavit, at 3-5.

1
     Commerce makes an unsubstantiated argument that changes in
the specifications during different periods reflect the
commercial significance of the specification differences. The
court cannot regard this as substantial evidence for the alleged
significance of the differences without some evidence (e.g.
comments by the societies relating their intent in making the
changes). There is no dispute that the specifications relevant
to this remand are those in effect during the period of review.
Consol. Court No. 97-05-00864                           Page 5

     In its Remand Results, Commerce considered steel classified

grade “A” by different national classification societies as non-

identical merchandise.   RR, at 8.   In response to the court’s

instruction on remand to explain the significance of the observed

specification differences, and in contrast to its earlier

position that the significance of the specification differences

was material although unproven, Commerce stated,

     It is our position that any difference in plate
     specification, whether large or small, renders
     merchandise produced to these different specifications
     as “non-identical” merchandise. This is a common
     Department policy in steel plate cases and is based on
     industry purchasing practices. Customers purchase
     material that meets a certain specification. This
     decision is based on the customer’s knowledge of the
     minimum requirements that the product is guaranteed to
     meet under certain conditions. For this reason, the
     Department uses plate specification, and not actual
     product characteristics, as its major matching
     criterion.

RR, at 7 (emphasis supplied).

                            Discussion

     Because the purpose of the remand in this case was to afford

Rautaruukki the opportunity to provide Commerce with the

information it alleged it was seeking, the court will address the

evidence.   The only evidence in the record regarding actual

consumer conduct bearing on the significance of the

specifications are the two affidavits submitted by Rautaruukki.
Consol. Court No. 97-05-00864                          Page 6

Commerce dismisses this expert testimony as “subjective” and

therefore not the kind of “nonsubjective” evidence to which it

claims the court referred in its opinion ordering remand.     When

the court referred to the absence of “nonsubjective” evidence of

consumer conduct,2 the record contained only Rautaruukki’s claims

in its narrative responses to Commerce’s questionnaires

addressing the commercial significance of the carbon range

differences.   Unsupported claims by interested parties and

testimony of a materials scientist and a naval engineer, both

experts familiar with the materials and the market, are not of

equivalent status.   Commerce was not entitled to disregard this

testimony.   This error is particularly grievous, given that there

is no other evidence in the record to the contrary and that

Commerce counters the experts’ report of insignificance with only

its own unsubstantiated assertions to the contrary.

2
     The court wrote,

     Commerce did not request, and respondent did not
     furnish independently, any nonsubjective evidence from
     which Commerce could determine the significance of
     those differences. Rautaruukki provided only its own
     assurance that the difference was not commercially
     significant. While this is evidence, Commerce is not
     required to accept it. But neither must the court
     regard as substantial evidence seemingly nominal
     differences in chemical composition, the significance
     of which Commerce has not explained.

Rautaruukki, 1998 WL 465219, at *3.
Consol. Court No. 97-05-00864                           Page 7

     Commerce claims it did not disregard the expert testimony.

The agency, however, apparently observed the evidence only to the

extent necessary to conclude that it was “subjective” and did not

need to be considered.   This was not a fair treatment of the

material submitted.   Accordingly, the court finds that Commerce

abused its discretion in failing to consider the only material

evidence before it.

     Commerce further claims its treatment of grade “A” steel

from different national classification societies as most similar,

rather than identical, merchandise in Rautaruukki’s Second

Administrative Review reflects its standard practice of

distinguishing identical from most similar merchandise and its

standard policy of treating different merchandise differently.

RR at 5-7.   In Rautaruukki’s First Administrative Review,

however, Commerce assigned one value to all grade “A” steel

plate.   See Rautaruukki, 1998 WL 465219, at *2.   Thus, it did not

consider this “standard practice” to apply during the First

Administrative Review.   Commerce may view the same facts

differently or change its methodologies, but to be in accordance

with law, the agency is required to articulate its reasons for

the change and accompany these by substantial evidence.     Cultivos

Miramonte S.A. v. United States, 980 F. Supp. 1268, 1274 (Ct.
Consol. Court No. 97-05-00864                            Page 8

Int’l Trade 1997).

     Commerce’s general defense of its division of subject

merchandise into “identical” and “nearly identical” categories,

RR, at 10-11, does not support its choice to draw that line

anyplace in particular, much less specifically between “AB A”

steel and other grade “A” steel.    Likewise, Commerce’s contention

that it may look at specifications rather than actual product

characteristics is inapposite, because no one contests this.      At

issue is whether Commerce has made a reasonable distinction among

specifications.

     Commerce continues to state that it cannot discern whether

the reported seemingly minor differences are commercially

significant3 and claims that it may therefore presume that they

are significant.   RR, at 8.    Nevertheless, Commerce makes its own

wholly unsubstantited and inconsistent claims about significance

3
      The agency allows that it is

     because the Department cannot determine which
     particular specification requirements may influence a
     purchasing decision, [that] the Department deems the
     differences in specifications to be significant for
     model-matching purposes. Therefore, the Department
     maintains its position that differences in plate
     specifications are significant and that plate produced
     to different specifications constitutes non-identical
     merchandise.

RR, at 8.
Consol. Court No. 97-05-00864                           Page 9

based on unsupported conclusions about consumer conduct.

Commerce refers to its own hypotheses about the market as

evidence of “purchasing practices.”   RR, at 8.   The agency

postulates that

     Grade A carbon steel shipbuilding plate is guaranteed
     by the manufacturer based on the specification that it
     meets. Unless a product is sold as “multi-spec”
     merchandise, meaning that it meets the specifications
     of various classification societies, it is only
     guaranteed for the exact specification for which it was
     sold. A commercial guarantee provides the customer
     with the known minimum performance requirements for a
     given product. As mentioned above, not all
     classification societies have the same mechanical or
     chemical requirements, and therefore cannot guarantee
     the product based on the testing requirements of
     another classification society. For this reason, not
     all specifications of Grade A shipbuilding steel can be
     sold interchangeably as Rautaruukki suggest.

Id., at 7-8.

     Defendant argues that carbon range differences can be

significant and can affect strength and “weldability” of steel.

Id., at 7.   Broadly stated, this must be correct, but this

argument as such does not address whether the differences between

the carbon ranges of different classification societies’ grade

“A” steel plate are of a magnitude that could render those

effects relevant to consumer selection among steel classified by

different societies.

     Although Commerce claims that “not all specifications of
Consol. Court No. 97-05-00864                            Page 10

Grade A shipbuilding steel can be sold interchangeably,” RR, at

8, the agency also avers that “Commerce was aware during the

course of the second administrative review that products

manufactured to different specifications are interchangeable,”

Id., at 12-13.   Commerce maintains that this latter awareness is

not dispositive because “the Department’s definition of

‘identical’ is not synonymous with commercial

interchangeability.”   Id., at 12.

     Commerce claims that it is not necessarily commercial

interchangeability that matters but rather that any difference

whatsoever justifies its treatment of subject merchandise as non-

identical.4   RR, at 12-13.   This position seems inconsistent with

other aspects of the Remand Results and perhaps with the agency’s

prior precedent as to steel model match methodologies.    See,

e.g., AK Steel Corp. v. United States, No. 96-05-01312, 1997 WL

728284, at *13 (Ct. Int’l Trade Nov. 14 1997) (agency treatment

of missing product characteristics rested on their commercial

insignificance).

     Further, this position, which Commerce newly espouses, is

4
     In support, Commerce cites Koyo Seiko Co. v. United States,
66 F.3d 1204, 1210 (Fed. Cir. 1995), in which the Federal Circuit
upheld Commerce’s treatment of non-commercially substitutable
merchandise as identical. The court fails to see how this
permission includes the converse: the treatment of commercially
substitutable merchandise as non-identical.
Consol. Court No. 97-05-00864                            Page 11

inconsistent with that asserted before remand.   The agency’s new

view is that, in cases where Commerce matches by specification as

opposed to physical characteristics, any difference in

specifications of any type means the merchandise is non-

identical.   Because the court relied on Commerce’s pre-remand

position in ordering remand, the court cannot accept this new

explanation for purposes of this review.

     Before remand, Commerce took the position that specification

differences might or might not be significant but that the agency

lacked the evidence to determine whether they were.   The court

accepted the agency’s theory that some specification differences

may be important while some may not.   Recognizing that Commerce

had not clearly requested of Rautaruukki the information upon

which such a determination could be made, the court remanded with

the instruction to Commerce to request that information from

Rautaruukki.   See Rautaruukki, 1998 WL 465219, *4.   On remand,

Commerce did request the information it had reported needing.      In

its Remand Results, however, the agency failed to address the

evidence submitted or to cite other evidence in the record upon

which it could determine whether the reported specification

differences were or were not significant.

     After remand, Commerce presents its new theory that all
Consol. Court No. 97-05-00864                            Page 12

specification differences are significant.   In principle an

agency may change its methodology (or reach different conclusions

based on different fact patterns).   The court does not address

whether the new methodology articulated in the Remand Results

might be permissible in future reviews.    Commerce has introduced

the new method too late for this review.   The introduction of a

new methodology is impermissible when it comes only after a

court-ordered remand to apply the methodology professed by the

agency before remand.   See, e.g., Royal Thai Gov’t v. United

States, 18 CIT 277, 285-86, 850 F. Supp. 44, 50-51 (1994) (new

justification advanced only following limited remand

impermissible).

     Normally, despite the fact that thus far the evidence

supports only Rautaruukki’s position and despite Commerce’s

inconsistency and half-hearted attempt to comply with the court’s

remand order, the court might permit Commerce to reconsider this

matter again and make some reasoned judgments under the rationale

set forth before remand, but this appears unnecessary and likely

futile in this case.

     First, Commerce does not want to consider the significance

of the compositional ranges of certain elements, and to do so

likely would entail significant administrative effort.    Second,
Consol. Court No. 97-05-00864                             Page 13

the only information presented to the court as to the practical

significance of Commerce’s treatment of steel classified grade

“A” by different classification societies as non-identical

merchandise comes in a footnote to the Remand Results, in which

Commerce states that “treating grade A shipbuilding plates

produced to different specifications as identical merchandise

would not have affected the calculated dumping margin in this

case.”   RR, at 8 n.4.

     The court will take Commerce at its word.    As Rautaruukki

apparently is entitled, on the record developed to date, to have

the merchandise treated as identical; as Commerce recognized this

as at least one permissible methodology based on essentially the

same facts in the first review; and as Commerce alleges no

downside, for purposes of this review, Commerce shall treat all

grade “A” steel plate as identical merchandise.    This will not

entail a great deal of effort and will avoid an apparently

useless and time consuming exercise.

                         Facts Available Margin

     In its decision ordering remand, the court directed

Commerce to use for total facts available for wide flats and

beveled plate products the revised weighted-average duty rate of

40.46 ad valorem.   Rautaruukki, 1998 WL 465219, at *8.    Commerce
Consol. Court No. 97-05-00864                            Page 14

indicates that it has done so.    RR, at 13-14.   As the parties do

not contest this portion of the Remand Results, the court

sustains this re-calculation.

                                 ________________________________

                                           Jane A. Restani
                                                Judge

Dated:    New York, New York
          This    day of April, 1999
                             ERRATA

Rautaruukki Oy v. United States, Consolidated Court No. 97-05-
00864, Slip Op. 99-39, dated April 27, 1999.

On p. 8, ln. 15:   change “unsubstantited” to “unsubstantiated”

On p. 9, ln. 19:   change “suggest” to “suggests”

April 28, 1999