Rail Coupler Importers Contest ITC's Second Injury Finding, Say Agencies Aren't Kings

Importers Wabtec Corp. and Strato filed a scathing motion for judgment on Aug. 19 contesting the International Trade Commission's affirmative injury determination on freight rail couplers from China. The companies contested the commission's decision to rule on the issue at all, seeing as the proceeding was brought just weeks after the commission found that freight rail couplers from China didn't injure the U.S. market (Wabtec Corp. v. United States, CIT # 23-00157).

After rejecting the first petition, the ITC decided to treat the second petition "as an ordinarily filed case" -- a decision that allegedly "spawned all kinds of errors," the brief said. Many of these errors come from a "fundamental conceit: that the Commission was at liberty to deny any connection between the cases for some purposes, while relying on the effects of FRC I for other purposes, all without harmonizing or explaining the disparate treatment of the investigations," the brief said.

"What may be true of kings is not true of administrative agencies," the brief said.

Wabtec and Strato railed against the ITC's justification of its decision to open the second investigation, which merely said that the commission isn't bound by its past decision. The commission can't use the "fact-specific nature of investigations as cover for arbitrary decision-making," the brief said. The ITC must give a reason beyond the "mere fact there is a new proceeding and a new record to justify revisiting" past injury decisions.

The importers laid out five total claims against the injury proceeding, the first of which said that the ITC should never have reached the merits of the case due to its prior ruling. The second claim is that the ITC improperly defined the domestic industry by turning the related-party provision of Section 771(4)(B) of the Tariff Act of 1930 "on its head." After the ITC excluded an unnamed company from the domestic industry as a related party in the first proceeding, the ITC included it in the second "in a way that masked the lack of injury to rest of the industry," the brief said.

This practice saw the ITC use the related-party exclusion in a "classic tails-I-win-heads-you-lose manner: The provision applies, or does not apply, based on whether it improves the injury story for petitioners."

The third claim said the ITC violated Section 771(7)(G)(ii)(II) of the Tariff Act by cumulating imports that were subject to the initial negative injury determination. The fourth cause of action levied a host of factual claims against the ITC's decision, arguing that the analysis is "riddled with internal contradictions and discrepancies" with the first proceeding. For instance, the ITC embraced a "new theory of injury" in the second proceeding, which used a "two-part maneuver designed to engineer indicia of 'injury.'"

The first step was to disregard improvements the U.S. industry made in 2022 as being attributable to "provisional duties levied on Chinese imports" during the first proceeding. The second step was to disregard the U.S. industry's market-share gains in a segment of the market the commission previously found the U.S. industry to be less concentrated in, the brief said.

Lastly, Wabtec and Strato highlighted its conflict-of-interest claim, which importer Amsted Rail Co. levied against its former lawyer: Buchanan Ingersoll partner Daniel Pickard. ARC alleged that Pickard represented the company then used its information against it in filing the second petition on freight rail couplers (see 2311210077).