Bethlehem Steel Corp. v. United States , 2004 CIT 13 ( 2004 )

Slip Op. 04-13
UNITED STATES COURT OF INTERNATIONAL TRADE
_______________________________________________
:
BETHLEHEM STEEL CORPORATION, U.S. STEEL
GROUP, A UNIT OF USX CORPORATION, ISPAT :
INLAND INC., LTV STEEL COMPANY, INC. and
NATIONAL STEEL CORPORATION, :
Plaintiffs, :
v. :
UNITED STATES, : Court No. 99-08-00525
Defendant, :
and :
USINAS SIDERÚRGICAS DE MINAS GERAIS S/A, :
COMPANHIA SIDERÚRGICA PAULISTA and
COMPANHIA SIDERÚRGICA NACIONAL, :
Defendant-Intervenors.
_______________________________________________ :
[U.S. Department of Commerce’s Amended Final Remand Determination reaffirming countervailing
duty suspension agreement remanded again for further action consistent with opinion.]
Decided: February 17, 2004
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan, and
Jeffrey D. Gerrish) and Dewey Ballantine LLP (Alan Wm. Wolff and Michael H. Stein), for
Plaintiffs.
Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice (Lucius B. Lau); Linda S. Chang,
Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of
Commerce, Of Counsel; for Defendant.
Court No. 99-08-00525 Page 2
Willkie Farr & Gallagher (Christopher A. Dunn, Matthew R. Nicely, and Robert E.
DeFrancesco), for Defendant-Intervenors.
OPINION
RIDGWAY, Judge:
In the immortal words of Yogi Berra, “It’s deja vu all over again.”1
Bethlehem II – the first opinion in this action – remanded to the U.S. Department of
Commerce (“Commerce”) the July 1999 agreement between that agency and the Government of
Brazil,2 which suspended at the eleventh hour the investigation into alleged countervailable subsidies
received from the Brazilian Government by three Brazilian steel exporters (“Brazilian Exporters”).3
See Bethlehem Steel Corp. v. United States, 25 CIT ____, 159 F. Supp. 2d 730 (2001) (“Bethlehem
II”).4 Familiarity with that opinion is presumed.
1
John Bartlett, Familiar Quotations 754 (Justin Kaplan ed., 16th ed. 1992).
2
See Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel from Brazil, 64 Fed. Reg. 38,797(July 19, 1999) (suspension of countervailing duty investigation and entry of suspension agreement)
(Public Administrative Record Document (“P.R. Doc.”) No.173) (the “Suspension Agreement” or
the “Agreement”).
3
The Brazilian Exporters – Usinas Siderúrgicas de Minas Gerais (“USIMINAS”), Companhia
Siderúrgica Paulista (“COSIPA”), and Companhia Siderúrgica Nacional (“CSN”) – are Defendant-
Intervenors in this action.
4
Bethlehem I issued in a companion case challenging the suspension agreement in the parallel
antidumping duty proceeding. Bethlehem Steel Corp. v. United States, 25 CIT ____, 146 F. Supp.
2d 927 (2001) (“Bethlehem I”). After Bethlehem I remanded that action to Commerce, the Brazilian
steel exporters were determined to be in violation of that suspension agreement. The agreement was
therefore terminated, and the action was dismissed. See Final Results of Antidumping Duty
Administrative Review and Termination of the Suspension Agreement, Certain Hot-Rolled Flat-
Rolled Carbon Quality Steel Products From Brazil, 67 Fed. Reg. 6226 (Feb. 11, 2002). Read
together, Bethlehem I and Bethlehem II provide the backdrop for this opinion.
Court No. 99-08-00525 Page 3
Bethlehem II found that the Suspension Agreement itself rebutted any presumption that the
agency had considered the comments of the plaintiff domestic steel producers (“Domestic
Producers”),5 as required agency by the applicable statute. Specifically, the Agreement not only
failed to incorporate any of the substantive revisions sought in the Domestic Producers’ comments
on the proposed agreement; it also failed to correct the numerous drafting errors and inaccuracies
that their comments identified. Based on “Commerce’s failure to comply with the notice, comment
and consultation requirements of the suspension agreement statute,” the remand was intended to
permit the agency to “reconsider its Suspension Determination, giving due consideration to all of
the petitioners’ comments – the substantive ones as well as those identifying drafting or clerical
errors.” 25 CIT at ____, 159 F. Supp. 2d at 743.
Now before the Court is Commerce’s Amended Final Redetermination Pursuant to Court
Remand (“Amended Final Remand Results” or “Amended Remand Determination”). Commerce
has there steadfastly reaffirmed its defense of the Suspension Agreement and, indeed, asserts boldly
that “the only changes made . . . should be the corrections of the [specified] clerical errors.” Id. at
8. See also id. at 38.
The Brazilian Exporters join Defendant, the United States (“the Government”) in urging
dismissal of this action, arguing that the Amended Final Remand Results are supported by
substantial evidence and otherwise in accordance with law. See Defendant’s Response in Opposition
5
The Domestic Producers are Bethlehem Steel Corporation; U.S. Steel Group, a unit of USX
Corporation; Ispat Inland Inc.; LTV Steel Company, Inc.; and National Steel Corporation. As
discussed in greater detail below, they constitute roughly half of the industry overall, and well over
half of the industry that participated in the underlying investigation. See Bethlehem II, 25 CIT at
____ n.3, 159 F. Supp. 2d at 731 n.3.
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to Plaintiffs’ Comments on the Department of Commerce’s Amended Final Remand Results (“Def.’s
Brief”) at 1-2; Defendant-Intervenors’ Comments on the Department of Commerce’s Amended Final
Remand Determination (“Def.-Ints.’ Brief”) at 1.
In contrast, the Domestic Producers contend that “[d]espite being given not one, but two
opportunities on remand, [Commerce] still has failed to meet any of the stringent requirements set
forth in the [suspension agreement] statute . . . .” Plaintiffs’ Comments on the Department of
Commerce’s Amended Final Remand Results (“Pls.’ Brief”) at 1-2. As such, the Domestic
Producers assert that Commerce’s Amended Final Remand Results, as well as its underlying
suspension determination, are not supported by substantial evidence on the record and are otherwise
not in accordance with law.
For the reasons set forth below, this action must be remanded yet again to the Department
of Commerce.
I. Background
In late September 1998, the Domestic Producers, among others, petitioned Commerce and
the International Trade Commission (“ITC”), seeking the imposition of countervailing duties on
certain steel products from Brazil. In keeping with the tight statutory deadlines established by the
countervailing duty laws, the ITC issued its preliminary material injury determination one month
later. Commerce’s preliminary determination issued in mid-February 1999, finding that
countervailable subsidies were indeed being provided to the Brazilian Exporters.
On June 6, 1999, barely one month prior to the deadline for its final determination,
Commerce and the Brazilian Government initialed a proposed agreement to suspend the
Court No. 99-08-00525 Page 5
countervailing duty investigation. Because the relevant statute requires that a suspension agreement
be completed no later than the date of Commerce’s final determination, and because the statute
requires Commerce to notify and consult with petitioners at least 30 days in advance, June 6, 1999,
was the last possible day on which Commerce could announce its intention to suspend the
investigation. Commerce provided a copy of the proposed agreement to the Domestic Producers,
and required that any comments be submitted by June 28, 1999.
The Domestic Producers filed a timely, and lengthy submission detailing numerous
substantive objections to the proposed suspension agreement. Nevertheless, a few days later, on July
6, 1999 – the deadline for issuance of Commerce’s final determination in the countervailing duty
investigation – the agency and the Brazilian Government executed the Suspension Agreement.
Commerce’s final affirmative determination in the underlying investigation – issued that same day
– found net subsidy rates for the Brazilian Exporters ranging between 6.35% and 9.67%.6 However,
as a result of the Suspension Agreement, no countervailing duty order has ever issued.
This challenge to the Suspension Agreement ensued, resulting in Bethlehem II and a remand
to Commerce, “to enable [the agency] to comply with the notice, comment and consultation
requirements of the suspension agreement statute; to allow it to articulate its interpretation of the
monitoring provisions of the statute; to afford it the opportunity to articulate its interpretation of
6
The following month, the I TC issued its final determination on material injury, confirming
its affirmative preliminary finding.
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certain provisions of the ‘extraordinary circumstances’ requirement of the statute . . .; to allow it to
articulate its interpretation of the public interest requirement; and to permit it to reconsider the
Suspension Agreement and its underlying Suspension Determination in that light.” See Bethlehem
II, 159 F. Supp. 2d at 762.
In lieu of filing the remand results in accordance with the timetable established in the order
accompanying Bethlehem II, Commerce sought and was granted an extension of time of more than
60 days to, inter alia, “solicit and consider comments from the interested parties.” See Defendant’s
Consent Motion for Extension of Time in which Commerce may File its Remand Results (Sept. 10,
2001) at 2. Commerce nevertheless did not release its draft remand results to the Domestic
Producers until 6:00 p.m. on November 13, 2001 – under cover of a letter requiring that any
comments be filed no later than close of business two days thereafter, and emphasizing that “no
extensions can be granted.” See Letter from Commerce to Skadden, Arps (Nov. 13, 2001), P.R. Doc.
No. 265. Thus, more than 100 days elapsed before Commerce released its draft remand results.
Moreover, during that period, the agency consulted with other entities, but engaged in no
consultations with the Domestic Producers.7 Yet, once it released its draft remand results,
Commerce accorded the Domestic Producers less than 48 hours to analyze the draft results, research
and draft comments, and file those comments.
When the Domestic Producers objected strenuously to Commerce’s procedure, the agency
filed its “final remand results” with the Court but sought, and was granted, a second remand to solicit
7
See, e.g., Commerce Memorandum to File Regarding Consultations with Consuming
Industries, Producers, and Workers (Nov. 2, 2001), P.R. Doc. No. 261 (documenting Commerce
consultations with other entities).
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comments and to consult with the parties. See Order (Dec. 10, 2001) (granting Defendant’s Consent
Motion for Remand). Even after that second remand, however, Commerce did not initiate
consultations with the Domestic Producers.
The Domestic Producers submitted comments on Commerce’s final remand results on
January 11, 2002. See Plaintiffs’ Comments on the Department of Commerce’s Amended Final
Remand Results, P.R. Doc. No. 279 at 5. Still, Commerce did not meet with the Domestic Producers
until February 19, 2002 – more than a month after the Domestic Producers had filed their comments
on the “final remand results,” three months after those “final remand results” were filed with the
Court, more than three months after Commerce’s draft remand results were released, more than six
months after Bethlehem II remanded the case to the agency, and more than two and a half years after
Commerce signed the Suspension Agreement.
In any event, as discussed below, the Domestic Producers contend that Commerce’s February
2002 consultations were perfunctory and pro forma, at best. The Final Amended Remand Results
here at issue were filed approximately two weeks thereafter.
II. Analysis
As Bethlehem II explained, there are essentially two distinct types of suspension agreements
in countervailing duty cases – so-called “subsection (b) agreements” and “subsection (c)
agreements.” See generally Bethlehem II, 25 CIT at ____, 159 F. Supp. 2d at 734-35. Subsection
(b) agreements eliminate or offset completely a countervailable subsidy, or cease exports of the
Court No. 99-08-00525 Page 8
subject merchandise. 19 U.S.C. § 1671c(b). In contrast, subsection (c) agreements – like the
Suspension Agreement at issue here – do not cease exports; nor do they completely eliminate or
offset countervailable subsidies. Rather, they eliminate only the exports’ injurious effect. 19 U.S.C.
§ 1671c(c).
Prior to accepting either a subsection (b) or (c) agreement, Commerce must find both that
“suspension of the investigation is in the public interest,” and that “effective monitoring of the
agreement by the United States is practicable.” 19 U.S.C. § 1671c(d). Commerce also is required
to notify petitioners of, and consult with them concerning, its intention to suspend the investigation.
In addition, Commerce must provide petitioners with a copy of the proposed agreement, and accord
them an opportunity to comment. 19 U.S.C. § 1671c(e).
But there are additional requirements for subsection (c) agreements. Because such
agreements, by definition, allow some subsidy practices to continue, Congress restricted subsection
(c) agreements to cases involving “extraordinary circumstances” – cases where the suspension of the
investigation is more beneficial to the domestic industry than its continuation, and where the
investigation is “complex.” See S. Rep. No. 96-249 at 51 (discussing the extraordinary
circumstances requirement set out in 19 U.S.C. § 1671c(c)(4)).
Moreover, while all subsection (c) agreements require findings of “extraordinary
circumstances” and “complexity” (as discussed above), there are unique requirements for those
subsection (c) agreements which are – like the Agreement at issue here – quantitative restriction
Court No. 99-08-00525 Page 9
agreements.8 Specifically, the statute mandates that, in evaluating the public interest vis-à-vis such
an agreement, Commerce must both (i) consult with potentially affected consuming industries, as
well as potentially affected producers and workers in the domestic industry, and (ii) take into account
the impact of such an agreement on U.S. consumers, the international economic interests of the
United States, and the competitiveness of the domestic industry (in addition to any other necessary
or appropriate factors). 19 U.S.C. § 1671c(d)(1).
As Congress intended, Commerce has invoked the suspension provisions of the trade laws
only infrequently in both countervailing duty and antidumping investigations. Notably, prior to the
suspensions of both the countervailing duty investigation at issue and the parallel antidumping
investigation, Commerce had accepted only four other subsection (c) agreements, including both
antidumping and countervailing duty cases. Significantly, in each of those four prior cases,
Commerce sought – and obtained – the consent of the petitioners. See Bethlehem II, 25 CIT at ____,
159 F. Supp. 2d at 735.
Attacking the Amended Final Remand Results, the Domestic Producers continue to challenge
virtually every aspect of the suspension here at issue, arguing (a) that Commerce still has not
complied with the notice, comment and consultation requirements of the suspension agreement
8
A quantitative restriction agreement is an agreement by a foreign government to limit the
volume of imports of the merchandise at issue into the United States – that is, an agreement
establishing a quota. See 19 U.S.C. § 1671c(c)(3).
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statute; (b) that there are no “extraordinary circumstances” in this case (i.e., that, inter alia, the
Agreement is not more beneficial to the domestic industry than a countervailing duty order); (c) that
effective monitoring of the Agreement is not practicable; and (d) that the Agreement does not serve
the public interest.
A. Notice, Comment and Consultation
The notice, comment and consultation requirements of the suspension agreement statute
mandate that, before entering into a suspension agreement, Commerce must:
(1) notify the petitioner of, and consult with the petitioner concerning, its intention
to suspend the investigation . . . not less than 30 days before the date on which it
suspends the investigation,
(2) provide a copy of the proposed agreement to the petitioner . . . together with an
explanation of how the agreement will be carried out and enforced (including any
action required of foreign governments), and of how the agreement will meet the
requirements of subsections (b) and (d) or (c) and (d) of [the statute], and
(3) permit all interested parties . . . to submit comments and information for the
record before the date on which notice of suspension of the investigation is published
....
19 U.S.C. § 1671c(e).9 The legislative history of the statute highlights the importance of those
provisions, emphasizing that “the requirement that the petitioner be consulted will not be met by pro
forma communications. Complete disclosure and discussion is required.” S. Rep. No. 96-249 at 54.
9
In addition to the consultation requirements of 19 U.S.C. § 1671c(e), which govern all
suspension agreements under both subsections (b) and (c), there are additional consultation
requirements which apply to quantitative restriction agreements such as the Suspension Agreement
at issue here. See 19 U.S.C. § 1671c(d)(1).
Court No. 99-08-00525 Page 11
From the beginning of this case, the Government has maintained that Commerce has
complied fully with all applicable notice, comment and consultation requirements. However, as
Bethlehem II noted, apart from several conclusory statements, the administrative record initially was
utterly devoid of affirmative evidence “to indicate that Commerce even reviewed – much less
considered or responded to – the petitioners’ written comments” on the proposed suspension
agreement. 25 CIT at ____, 159 F. Supp. 2d at 740. Similarly, Bethlehem II observed that, although
the Government’s brief stated that Commerce “met several times” with petitioners “‘regarding its
intention to suspend the investigation’ . . . the only record evidence cited to support that assertion
[was] the Suspension Determination, which state[d] simply that the petitioners were ‘consulted.’”
25 CIT at ____ n.21, 159 F. Supp. 2d at 740 n.21 (citations omitted). And, according to the
Domestic Producers, while “the Department did inform the Petitioners several times that it was
determined to suspend the investigation regardless of whether Petitioners objected,” Commerce
“never consulted with the Petitioners regarding the details of the Agreement, as opposed to the
concept of suspending the investigation.” Id. (citations omitted). Indeed, at oral argument, counsel
for the Government candidly conceded that the press of time had prevented Commerce from
responding to the petitioners’ comments in its Suspension Determination or engaging in greater
consultation. Bethlehem II, 25 CIT at ___ n.24, 159 F. Supp. 2d at 742 n.24 (citation omitted).10
10
As summarized in section I above and detailed in Bethlehem II, Commerce notified
petitioners here of the proposed suspension agreement on the last possible day under the suspension
agreement statute, given the imminent deadline for issuance of the agency’s final countervailing duty
determination. 25 CIT at ____, 159 F. Supp. 2d at 735-36. Commerce’s timing thus truly came
“down to the wire,” placing tremendous pressure on the agency and all parties. As Bethlehem II
noted, there can be no doubt that “the tandem tasks of both finalizing the [agency’s] Final
Determination and determining whether to suspend the investigation in fact did tax Commerce
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As discussed above, Bethlehem II concluded that the Suspension Agreement itself rebutted
any presumption that the agency had considered all evidence of record in reaching its determination.
Specifically, Bethlehem II reasoned that “Commerce’s failure . . . to correct in the final Suspension
Agreement even the drafting and clerical errors identified by the petitioners [was] compelling
evidence that Commerce failed to give appropriate consideration to the petitioners’ written
comments.” 25 CIT at ____, 159 F. Supp. 2d at 743. Based on “Commerce’s failure to comply with
the notice, comment and consultation requirements of the suspension agreement statute,” the case
was remanded to the agency, to permit it to “reconsider its Suspension Determination, giving due
consideration to all of the petitioners’ comments – the substantive ones as well as those identifying
drafting or clerical errors” and to permit it to “undertake any further consultation that may be
appropriate.” Id.The Amended Final Remand Results acknowledge that the Agreement includes “minor
clerical errors,” and indicate that Commerce has reached an agreement with the Brazilian
Government to correct those errors. Amended Final Remand Results at 35. But the Domestic
Producers charge that Commerce nevertheless remains in default on its notice, comment and
consultation obligations under the statute. See generally Pls.’ Brief at 2-12.
personnel to the limit.” In fact, Commerce had revised its regulations in 1997 to significantly
advance the deadlines for initialing and signing suspension agreements to avoid precisely the
dilemma presented here – the “enormous burden on the parties and on the Department” inherent in
the simultaneous consideration of a suspension agreement and preparation of a final determination.
It is unclear why that regulatory timeline was ignored in this case. 25 CIT at ____ n.24, 159 F. Supp.
2d at 742 n.24.
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The Domestic Producers assert that, in contravention of the directive in Bethlehem II,
Commerce failed on remand to fundamentally reconsider the Suspension Agreement and the
underlying suspension determination. Pls.’ Brief at 8-12. The purpose of the remand was, in fact,
to permit Commerce to “reconsider its Suspension Determination.” Bethlehem II, 25 CIT at ____,
159 F. Supp. 2d at 743 (emphasis added). Moreover, as the Domestic Producers emphasize,
Bethlehem II expressly disavowed any assumptions as to “the outcome on remand,” opining that
“[w]hile it is possible that, upon reconsideration, Commerce will once again conclude that
suspension is justified and that the Suspension Agreement should remain unchanged, it is also
conceivable that Commerce will determine that – while suspension is justified – some of the terms
of the Agreement must be altered, or that Commerce will abandon the concept of a suspension
agreement entirely.” Pls.’ Brief at 8-9 (quoting Bethlehem II, 25 CIT at ____ n.8, 159 F. Supp. 2d
at 732 n.8).
As evidence that Commerce failed to comply with the mandate to reconsider the Suspension
Agreement, the Domestic Producers point first to the failure of the Amended Final Remand Results
to address a number of their comments, which they submitted initially in late June 1999 (on the then
proposed Suspension Agreement), and later resubmitted (in response to Commerce’s initial remand
results). According to the Domestic Producers, Commerce “ignored” their suggestions in its Final
Amended Remand Results, even though their comments on the initial remand results specifically
noted that the agency had not previously addressed certain specific points. Pls.’ Brief at 9-10.
However, Commerce is not required to respond to all comments; rather, its obligation is to
give meaningful consideration to them. The Domestic Producers have cited no authority to support
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their intimation to the contrary. See generally Bethlehem II, 25 CIT at ____ n.23, 159 F. Supp. 2d
at 740 n.23 (discussing Commerce’s past practice on responding to comments on draft suspension
agreements, in context of Domestic Producers’ criticism of Commerce’s failure to respond to
comments). Moreover, absent some showing to the contrary, Commerce is presumed to have
considered not only all comments, but all evidence of record, in reaching its determinations. 25 CIT
at ____, 159 F. Supp. 2d at 741 (citing, inter alia, Hoogovens Staal BV v. United States, 24 CIT 242,
247, 93 F. Supp. 2d 1303, 1307 (2000) ). Indeed, in this case, the Amended Final Remand Results
affirmatively state that Commerce “did, in fact, consider all of plaintiffs’ other comments, and
determined that none of these other proposed substantive changes were required.” Amended Final
Remand Results at 40.11
Similarly unpersuasive is the Domestic Producers’ complaint that, of their comments that
Commerce specifically addressed, the agency “flatly rejected every single one.” Pls.’ Brief at 10-11.
The fact that Commerce does not agree with and adopt a party’s comments does not ipso facto prove
that the agency failed to give them meaningful consideration.
The Domestic Producers’ claim that Commerce failed to “give any meaningful consideration
to terminating or abandoning the Agreement” is nevertheless a matter of grave concern. See Pls.’
Brief at 11-12. The Amended Final Remand Results state simply that “Commerce has not only
considered the possibility of termination, but has also discussed this possibility with the
11
In its brief, the Government provides summary responses to the substance of each of the
comments that the Domestic Producers assert were ignored. Compare Def.’s Brief at 51-53 with
Pls.’ Brief at 9-10. However, those responses are not based on the record and, as such, constitute
post hoc rationalization by litigation counsel.
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[Government of Brazil]” and “[c]ontrary to the assertion of plaintiffs, Commerce did in fact consider
the various options posed by the Court, including whether or not to alter or to abandon the
Agreement.” Amended Final Remand Results at 8, 38. The administrative record is devoid of any
real explanation, reasoning or analysis by the agency. And, indeed, the Amended Final Remand
Results and the record on remand themselves suggest that Commerce considered termination only
to the extent that it raised the matter with the Government of Brazil – and, even then, in the context
of the termination of the companion antidumping suspension agreement. Amended Final Remand
Results at 6-7 (discussing Commerce’s consultations with the Brazilian Government as to whether
it wished to terminate the Agreement); P.R. Doc. Nos. 281, 285, 286.12 Here, Commerce has failed
to compile a record sufficient to enable a court to “satisfy itself that the agency exercised a reasoned
discretion” in determining not to terminate – or revise – the Suspension Agreement. See Greater
Boston Television Corp. v. Federal Communications Comm., 444 F.2d 841, 850 (D.C. Cir. 1971).
The Domestic Producers further contend that Commerce failed to engage in “meaningful
consultations” with them, as required by the suspension agreement statute. See Pls.’ Brief at 6-8.
The Government retorts that it “sought remand expressly to allow Bethlehem a full opportunity to
provide its comments.” Def.’s Brief at 50. As Bethlehem II explained, however, the consultation
requirements imposed by the statute are separate and distinct from its notice and comment
12
See Appendices 11-13 to Defendant’s Appendix for Defendant’s Response in Opposition
to Plaintiffs’ Comments on the Department of Commerce’s Amended Final Remand Results.
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requirements. 25 CIT at ____ n.26, 159 F. Supp. 2d at 743 n.26. Thus, Commerce’s solicitation and
consideration of written comments from the Domestic Producers could not fulfill the agency’s
independent obligation to consult with them.
Commerce’s reliance on its face-to-face meeting with the Domestic Producers’ counsel is
similarly problematic. See Def.’s Brief at 50. As discussed above, the legislative history of the
suspension agreement statute makes it clear that “the requirement that the petitioner be consulted
will not be met by pro forma communications.” S. Rep. No. 96-249 at 54. Congress imposed the
consultation requirement on Commerce to ensure that petitioners have a meaningful opportunity to
present their views. But, as reflected in the Commerce Department’s own memo summarizing its
meeting with the Domestic Producers, “the Department briefed Petitioners on the Department’s . .
. consultations with the Brazilians and their request to maintain the CVD suspension agreement.
[Petitioners’ counsel] stated that Petitioners are opposed to maintaining the CVD suspension
agreement.” Commerce Memorandum on Consultations with Plaintiffs, P.R. Doc. No. 280.
Commerce’s own words paint a picture of “consultations” that can only be described as perfunctory
and pro forma, in patent contravention of the statute – an impression that is further reinforced by
the timing of the meeting, which Commerce held a full three months after it had filed its final
remand results (defending the Agreement to the very letter).
In light of Commerce’s failure to consult meaningfully with the Domestic Producers before
signing the Suspension Agreement, the agency’s belated “consultation” on remand simply adds insult
Court No. 99-08-00525 Page 17
to injury. The agency’s record of “consultation” – both initially, and on remand – also tends to belie
a sincere interest in seeking to ascertain and (if possible) accommodate legitimate concerns of
petitioners, and to suggest instead a desire to “go through the motions” of conferring and then to
“paper over” any objections.
Commerce’s failure in this case to consult meaningfully with the petitioners and its failure
to give meaningful consideration to terminating or abandoning the Agreement are, in fact, both mere
symptoms of a much greater, underlying problem – the unique circumstances surrounding the
execution of this Agreement. Due to its own failure to allow itself sufficient time to consult
meaningfully with the Domestic Producers before entering into the Suspension Agreement,
Commerce may well now feel trapped between a rock and a hard place. Although it has sought
(however belatedly) to consult with the Domestic Producers, it (at least arguably) cannot repudiate
the Agreement, or even revise it without the consent of the Brazilian Government. Under these
circumstances, it is perhaps not surprising that Commerce’s general tenor throughout these
proceedings has been to minimize or dismiss the Domestic Producers’ comments and concerns.
One can only speculate what the Suspension Agreement would have looked like had
Commerce allowed itself sufficient time to confer in advance with the Domestic Producers in order
to ascertain their concerns, and then to negotiate with the Brazilian Government in an effort to
resolve them. Maybe timely consultations and negotiations would have yielded a suspension
agreement acceptable to the Domestic Producers (as such consultations and negotiations have in all
Court No. 99-08-00525 Page 18
other cases);13 maybe there would have been no agreement at all. In any event, it is highly unlikely
that – had Commerce consulted with the Domestic Producers in a timely fashion (as the statute
requires) – any resulting agreement would have been identical in every respect to the Agreement now
in place.
Further, due to the unique posture of this case, Commerce now necessarily views the
Domestic Producers’ comments through the prism of an executed Agreement by which it is bound,
and rejects their concerns because (according to Commerce) they do not reflect either a violation of
the statute, or a violation of the Agreement (which would justify its termination). See, e.g., Amended
Final Remand Results at 8. There can be little doubt that this is a very different – and much more
rigorous – standard for comments than that which Commerce has applied in other cases, where it has
consulted petitioners in advance. In this sense, Commerce’s violation in this case of its procedural
obligation under the statute to consult with petitioners before concluding the Agreement has
potentially far-reaching and fundamental substantive implications for the case.
It is, of course, impossible to turn the clock back to a time before the Suspension Agreement
was signed. It is thus now impossible for Commerce to fulfill – literally – the statutory requirement
that the agency engage in meaningful consultations with petitioners “not less than 30 days” before
13
As noted above, Commerce sought – and obtained – the consent of the petitioners to each
of the four subsection (c) suspension agreements that predated the suspension agreements in this case
and in the companion antidumping proceeding. None of those other cases involved the exigencies
present in this case, and in the companion case; thus, there was presumably the opportunity for
greater consultation and negotiation between Commerce and the domestic interests on the one hand,
and between Commerce and the foreign interests on the other hand. Of course, as Bethlehem II
explained, Commerce has no one but itself to blame for the exigency surrounding the Agreements
both in this case and in the companion case. 25 CIT at ____ n.24, 159 F. Supp. 2d at 742 n.24.
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the date of suspension. See 19 U.S.C. §1671c(e)(1). Given the fact of the executed Suspension
Agreement, Commerce’s willingness (and perhaps its ability) to give meaningful consideration to
terminating or abandoning that Agreement is similarly constrained. In short, it is clear that the
Domestic Producers have been deprived of certain procedural rights accorded them by the statute.
What is entirely unclear is whether those deprivations can be effectively remedied.
This matter thus must be remanded to afford Commerce one final opportunity to engage in
further consultations with the Domestic Producers (if appropriate), and – in any event – to make the
case that its consultations have, indeed, been meaningful. At the same time, Commerce must give
meaningful consideration to terminating, abandoning or revising the Agreement, in light of the
Domestic Producers’ comments and the agency’s consultations; and that consideration must be
sufficiently documented in the administrative record to enable a court to review the agency’s action
and satisfy itself that the agency’s consideration of options was, indeed, meaningful.
Because the matter is being remanded to enable Commerce to demonstrate compliance with
the notice, comment and consultation requirements of the suspension agreement statute, a
“substantial evidence” review of the agency’s factual findings would be premature. See generally
Bethlehem II, 25 CIT at ____, 159 F. Supp. 2d at 743. Even as to legal issues, considerations of
judicial economy and deference to agency autonomy and expertise counsel restraint – with the
exception of one major, overarching legal issue, addressed below.
B. Extraordinary Circumstances/“Beneficiality”
As summarized in section II above, subsection (c) agreements (like the Suspension
Agreement here) are limited to cases involving “extraordinary circumstances” – that is,
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circumstances in which, inter alia, “suspension of an investigation will be more beneficial to the
domestic industry than continuation of the investigation.” 19 U.S.C. §§ 1671c(c)(1), 1671c(c)(4)(A)
(emphasis added). The parties here have spilt much ink on this so-called “beneficiality” requirement
and, in particular, on the Domestic Producers’ contention that it implicitly requires petitioners’
consent for a subsection (c) agreement; or, stated differently, that the petitioning domestic industry
wields “veto power” over suspension agreements of the type at issue here. See generally Bethlehem
II, 25 CIT at ____, 159 F. Supp. 2d at 747-50; Pls.’ Brief at 14-24; Def.’s Brief at 25-30; Def.-Ints.’
Brief at 9-12.
As Bethlehem II pointed out, “On its face, the language of the suspension agreement statute
“entrust[s] the ‘more beneficial’ determination to Commerce, and . . . [does] not expressly accord
the domestic industry a veto power.’” 25 CIT at ____, 159 F. Supp. 2d at 748 (quoting Bethlehem
I, 25 CIT at ____, 146 F. Supp. 2d at 947-48). However, Bethlehem II did not rule on the Domestic
Producers’ contention that the “beneficiality” requirement implicitly requires their consent; instead,
it stated that, “[o]n remand, Commerce will have the opportunity at the administrative level to
explain its interpretation of the ‘more beneficial’ requirement, in light of the legislative history and
Commerce’s own prior practice.” Bethlehem II, 25 CIT at ____, 159 F. Supp. 2d at 753.
In its Amended Final Remand Results, Commerce roundly rejects the Domestic Producers’
readings of both the legislative history of the suspension agreement statute and agency past practice.
See generally Amended Final Remand Results at 47-51.
The Domestic Producers have continued to rely heavily on a statement by Senator Heinz that
he “would find it very difficult to believe a judgment that the domestic industry would benefit more
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from a suspension agreement than a completed investigation if that industry had expressed its
opposition to such an action.” Pls.’ Brief at 15-16 (quoting 125 Cong. Rec. 20,168 (1979)). On
remand, Commerce minimized the significance of that statement, concluding that – viewed in
context – it was reflective of the Senator’s personal opposition to suspension agreements in
principle. See Def.’s Brief at 27-28 (citing Amended Final Remand Results at 47-48).
The Domestic Producers quarrel with Commerce’s characterization of the Heinz statement
as “personal,” and argue that – as a sponsor of the bill – statements by the Senator are properly
treated as authoritative legislative history pursuant to applicable rules of statutory construction. See
Pls.’ Brief at 16-19. However, as Commerce pointed out, Senator Heinz also commented that “the
domestic industry would be expected to have some input into the question of whether it would
benefit by an assurance.” Amended Final Remand Results at 48 (quoting 125 Cong. Rec. 20,168
(emphasis added)). As the Amended Final Remand Results correctly note, “[t]he fact that even the
strongest proponent of limitations on suspension agreements and ‘assurances’ did not find it
generally obvious that the domestic industry would have more than ‘some input’ belies the
suggestion that such input was generally assumed by the Congress to reach the level of a veto.”
Amended Final Remand Results at 48.
The Domestic Producers seek to buttress the authority of the Heinz statement on which they
rely by noting that Commerce has given the statement great weight in the past. In particular, the
Domestic Producers point to a 1992 memo (the “Powell Memo”) prepared by Commerce’s then-
Chief Counsel for Import Administration, which advised – relying on the Heinz statement – that the
“beneficiality” requirement presented a “serious obstacle” to concluding an elimination-of-injury
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agreement such as the Suspension Agreement here, because “[t]he legislative history of this
provision indicates that Congress arguably intended it to require that the domestic industry consent
to this type of agreement.” See Pls.’ Brief at 19-21 (citation omitted). The Executive Summary of
the Powell Memo was to the same effect, stating that “most options carry procedural requirements.
These include: securing the agreement of the domestic petitioner . . . .” See id. at 20.
In its Amended Final Remand Results, Commerce embarks on linguistic analysis in an effort
to establish that the sentence in the Powell Memo concerning the legislative history of the statute was
nothing more than an attempt to identify hypothetical arguments that might be made by litigants
challenging a subsection (c) agreement. See Amended Final Remand Results at 49. Commerce
similarly seeks to explain away the statement quoted from the Powell Memo’s Executive Summary.
Id. at 49-50. But, as the Domestic Producers observe, Commerce’s efforts are more than strained.
See Pls.’ Brief at 21-22.
The Domestic Producers may well be right that “the inescapable conclusion that must be
drawn from the Powell Memorandum is that the Department itself has previously determined that
it is required to secure the consent of petitioners for an elimination-of-injury suspension agreement
like that entered into in this case.” See id. at 22. But that is not necessarily the end of the matter.
Commerce may change its views. See McClatchy Newspapers, Inc. v. N.L.R.B., 131 F.3d 1026(D.C. Cir. 1997) (holding that agencies are entitled to deviate from reasoning used in prior
decisions). Thus, “there is no rule of administrative stare decisis. Agency practice, once established,
is not frozen in perpetuity. Agencies frequently adopt one interpretation of a statute and then, years
later, adopt a different view. As long as the new interpretation is consistent with congressional
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intent, an agency may make a ‘course correction.’” Toyota Motor Sales, U.S.A., Inc. v. United
States, 7 CIT 178, 192-93, 585 F. Supp. 649, 661 (1984) (citations omitted); cf., Santa Fe Pac. R.R.
Co. v. United States, 294 F.3d 1336 (Fed. Cir. 2002) (holding that an agency may change its position
if it believes that the previous position was based on a mistaken legal interpretation).
As a general principle, of course, an agency is required to provide an adequate explanation
for departing from prior practice. See Hussey Copper, Ltd. v. United States, 17 CIT 993, 834 F.
Supp. 413, 418 (1993). Under the circumstances of this case, it is unclear whether Commerce’s prior
approach to suspension agreements – including the Powell Memo – amounts to a prior practice. See
generally Bethlehem II, 25 CIT at ____ n.23, ____ n.37, 159 F. Supp. 2d at 740 n.23, 749 n.37
(reserving judgment as to existence of established agency practice concerning suspension
agreements, and summarizing case law on requirements for departure from such practices). In any
event, to the extent that it can be said that Commerce has an established practice of interpreting the
legislative history discussed above to require petitioners’ consent to a subsection (c) agreement, the
agency’s analysis of the suspension agreement statute and its legislative history in the Amended
Final Remand Results adequately justifies its departure from such practice.
To say that the statute does not require petitioners’ consent to a subsection (c) agreement,
however, is not to say that their opposition is irrelevant. Even if petitioners’ consent is not per se
required, the extent of the domestic industry’s consent – or opposition – logically must bear on (and,
arguably, itself constitutes evidence as to) whether or not a suspension agreement is, in the words
of the statute, “more beneficial to the domestic industry.” When Commerce elects to enter into a
subsection (c) agreement over the objections of a majority of the industry, it does so at its peril –
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particularly where, as here, it cannot point to “early settlement” as a benefit. Commerce is being far
too cavalier here. It cannot dismiss the fact that a majority of the industry affirmatively and
vehemently opposes the Suspension Agreement, and no one – not a single domestic producer or
consumer – affirmatively supports it.
Some aspects of a “more beneficial” judgment are inherently subjective, just as some are
necessarily predictive. It is therefore the height of hubris to presume to tell a majority of the industry
what is in its best interests. While it is true that the statute requires – as a precondition to a
subsection (c) agreement – that Commerce make a determination as to whether the agreement is
more beneficial to the domestic industry, it strains credulity to suggest that Congress intended that
Commerce substitute its judgment for a majority of those in the trade, who live and breathe the
industry every day, and whose futures and fortunes are inextricably tied to it.
Reviewing this administrative record as a whole, one is left with a distinctly uneasy sense that
there is more here than meets the eye – that not all the cards are on the table. On remand, Commerce
will have the opportunity to directly address the extent of the opposition of the domestic industry,
and to articulate precisely why its judgment as to the best interests of the industry should be credited
over that of the industry itself.
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III. Conclusion
For the reasons set forth above, this case is remanded yet again to the Department of
Commerce, to afford it one final opportunity to comply with the notice, comment and consultation
requirements of the suspension agreement statute, and to make the case that its consultations have
been meaningful; to allow Commerce to give meaningful consideration to terminating, abandoning,
or revising the Suspension Agreement, in light of the Domestic Producers’ comments and the
agency’s consultations (and to document that consideration in the administrative record so that it can
be subjected to judicial review); and to permit Commerce to directly address the extent of the
opposition of the domestic industry, and to articulate precisely why – under the circumstances of this
case – its judgment as to the best interests of the industry should be credited over that of the industry
itself.
A separate order will enter accordingly.
/s/ Delissa A. Ridgway
Judge
Decided: February 17, 2004
New York, New York