[Federal Register Volume 68, Number 97 (Tuesday, May 20, 2003)]
[Notices]
[Pages 27593-27595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12566]


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DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-41,185]


Pittsburgh Logistics Systems, A Subsidiary of Quadrivius, Inc. on 
Location at LTV Steel Corp.; Independence, Ohio; Notice of Negative 
Determination of Reconsideration on Remand

    The United States Court of International Trade (USCIT) remanded for 
further investigation of the Secretary of Labor's negative 
determination in Former Employees of Pittsburgh Logistics Systems v. 
U.S. Secretary of Labor (02-00387).
    The petition listed Pittsburgh Logistics Systems (PLS) in 
Rochester, Pennsylvania and PLS in Independence, Ohio as the workers' 
firm and relevant subdivision. Administrative Record (AR), 3. 
Therefore, Department of Labor (DOL) investigated both facilities for 
possible certification. AR, 15. DOL's initial denial of the petition 
for certification of both worker groups was issued March 29, 2002 and 
published in the Federal Register on April 17, 2002 (67 FR 18923). DOL 
determined neither facility fulfilled the requirements because, in 
short, the workers' firm did not produce an article as required by 
section 222(a)(3) of the Act. AR 17-19.
    The PLS Independence, Ohio worker group requested administrative 
reconsideration on April 29, 2002 as they felt ``that Department of 
Labor's decision is in error because: Our jobs were eliminated due to 
lack of work caused by LTV Steel Co., Inc., shutdown due to imports.'' 
AR 25. DOL denied the request, finding that LTV's closure ``is not 
relevant'' because the ``subject workers may be certified only if their 
separation was caused importantly by a reduced demand for their 
services from a parent firm, a firm otherwise related to the subject 
firm by ownership, or a firm otherwise related to the subject firm by 
control.'' AR 28. DOL's denial was issued on May 30, 2002 and published 
in the Federal Register on June 12, 2002 (67 FR 40341).
    Mr. Robert Weintzetl, on behalf of the other petitioners, appealed 
to the CIT on May 29, 2002, and, on September 5, 2002, attorneys at 
King & Spalding representing the petitioners pro bono filed an amended 
complaint. On February 28, 2003, the CIT issued an Order remanding the 
case to DOL ``for redetermination consistent with this Opinion of 
whether the plaintiffs were eligible for TAA benefits, either as 
`production' workers or `service' workers.'
    On the point of whether the employees should be certified as 
production workers, the CIT ordered DOL to clarify on remand why the 
work of ``manag[ing] warehousing and distribution'' and ``managing 
traffic and processing of freight invoices'' makes a petitioner 
ineligible for certification as a production worker. Former Employees 
of Pittsburgh Logistics Systems v. United States Secretary of Labor, 
Slip Op. 03-21, February 28, 2003, pg. 13. Regarding whether the 
employees should be certified as service workers, the CIT found that 
DOL had failed to fully investigate and articulate the ``corporate 
control'' issue that is part of DOL's service worker analysis.
    Section 222(a)(3) of the Trade Act establishes that DOL must not 
certify a group unless ``increases of imports of articles like or 
directly competitive with articles produced by such workers' firm or an 
appropriate subdivision thereof contributed importantly to such total 
or partial separation, or threat thereof, and to such decline in sales 
or production.'' The phrase of particular importance in this case is 
``articles produced by such workers' firm or an appropriate subdivision 
thereof.'' Under this requirement, DOL must deny certification to a 
worker group unless the workers' firm or an appropriate subdivision of 
the workers' firm produced an import-impacted article.
    DOL's interpretation of the phrase ``appropriate subdivision 
thereof'' is limited to related or affiliated firms; cannot be expanded 
to encompass two unaffiliated firms. This interpretation of the phrase 
``appropriate subdivision'' is consistent with section 222(a)(1) which 
requires DOL to consider whether a significant number of workers have 
been separated from ``the workers' firm or appropriate subdivision of 
the firm.'' Because the Act clearly limits ``appropriate subdivision'' 
to just ``the'' workers' firm in the first requirement, DOL understands 
Congress to have intended to similarly limit ``appropriate 
subdivision'' in the immediately following requirements.
    This limitation is reflected in the regulations. The regulatory 
definition of ``firm'' states, ``[a] firm, together with any 
predecessor or successor-in-interest, or together with any affiliated 
firm controlled or substantially beneficially owned by substantially 
the same persons, may be considered a single firm.'' 29 CFR 90.2. This 
language allows the phrase ``workers' firm'' to include more than one 
entity, but only to the extent that those multiple entities are 
``controlled or substantially beneficially owned by substantially the 
same persons.'' Section 90.2 of the regulations defines ``appropriate 
subdivision'' as one of three types of subdivisions, none of which 
permit the inclusion of a worker group employed by one firm to be 
included as within the ``appropriate subdivision'' of another, 
unaffiliated firm. The first two types of ``appropriate subdivisions'' 
are expressly limited to one ``firm'': either ``an establishment in a 
multi-establishment firm'' or ``a distinct part or section of an 
establishment (whether or not the firm has more than one establishment) 
where the articles are produced.'' ``One definition of establishment * 
* * is `a permanent organization,' and would encompass any subdivision 
up to the size of the entire corporation.'' (Emphasis added.) 
International Union, UAW v. Marshall, 584 F.2d 390 (D.C. Cir. 1978).
    The third type of ``appropriate subdivision'' encompasses 
``auxiliary facilities operated in conjunction with (whether or not 
physically separate from) production facilities.'' This broadens the 
term ``appropriate subdivision'' to include a facility that does not 
produce an article. However, this definition ``has connotations that a

[[Page 27594]]

subdivision can never be larger than a single `establishment.' The 
definition's limited use of `auxiliary facilities' implies that any 
physically separate operation may be part of a subdivision only if it 
is merely auxiliary and used in conjunction with the main production 
unit.'' Lloyd v. U.S. Dep't of Labor, 637 F.2d 1267, 1274 (9th Cir. 
1980). In Lloyd, the CIT stated that the word ``auxiliary'' implies 
that a facility will only be deemed an appropriate subdivision if it is 
a subsidiary part of a firm that is producing an article. In addition, 
the phrase ```[o]perated in conjunction with' implies that the 
auxiliary facility must be run by the same firm as the production 
facility or facilities.'' Id.

Production Worker Analysis

    When a worker group applies for assistance, the fundamental test 
DOL applies is whether the workers' firm or an appropriate subdivision 
of the workers' firm produced an import-impacted article during the 
relevant period. If the worker group produces such an article, then 
they are deemed ``production workers.''
    Because an ``appropriate subdivision'' is limited to the ``workers' 
firm'' and Section 90.2 of the regulations permits the inclusion of 
multiple entities within the term ``firm'' only if they are affiliated 
entities, on remand DOL conducted additional investigation of the 
relationship between PLS and LTV. The investigation indicates that 
substantially the same persons do not control PLS and LTV. Supplemental 
Administrative Record (SAR) 43. No corporate official of one company is 
also a board member or officer of the other (or of Quadrivius). SAR 42. 
Substantially the same persons do not own PLS and LTV. LTV was a 
publicly owned company. PLS is a wholly owned subsidiary of Quadrivius. 
SAR 36. Quadrivius is a privately owned company. SAR 39. After LTV's 
bankruptcy, PLS continued business. AR 25. The contract between LTV and 
PLS indicates that they are separate corporations. SAR 108. Therefore, 
DOL finds that LTV and PLS are not ``controlled or substantially 
beneficially owned by substantially the same persons.'' 29 CFR 90.2. 
They are independent business entities and as the word ``firm'' is 
defined by section 90.2, ``workers' firm'' cannot mean both LTV and 
PLS.
    DOL has considered which factors of employment exercised by a firm 
establish that it is ``the'' workers' firm. DOL has consistently 
determined that the critical employment factor is which firm was 
obligated to pay the employee during the relevant period. Because PLS 
was so obligated, DOL has determined that PLS is ``the'' workers' firm. 
SAR 40. Furthermore, the contract establishes that ``PLS shall hire and 
use its own employees to provide the services described in this 
contract'' (SAR 108) and ``PLS is supplying its own employees, which is 
(sic) controls and directs for employment purposes.'' SAR 111. PLS 
``hired and fired'' the relevant worker group. SAR 40. Therefore, DOL 
finds that the petitioners are employees of PLS and cannot be certified 
as an appropriate subdivision (or as part of an appropriate 
subdivision) of LTV.
    The CIT Opinion ordered DOL ``to explain to petitioners how their 
work was unrelated to production, not merely state that it was.'' This 
suggests that the CIT wants DOL to change the test of whether one 
qualifies as a production worker to whether the workers' tasks are 
``related'' to production. Such a change would violate section 
222(a)(3) which, as stated earlier, requires actual production by the 
workers' firm or an appropriate subdivision of the workers' firm. In 
addition, this change conflicts with previous CIT decisions that 
support DOL's determination that the test for production must involve 
the transformation of a thing into something ``new and different.'' 
Nagy v. Donovan, 6 CIT 141, 145, 571 F.Supp. 1261, 1264 (1983).
    DOL thoroughly investigated and could not find any evidence that 
any employees of PLS or Quadrivius actually produced any articles. AR 
4, AR 11, AR 13, SAR 39. The workers' job descriptions indicate that 
from their workstations in LTV's Independence, Ohio facility, they 
managed the transportation of items to and from LTV's production 
facility in Cleveland, Ohio. SAR 20-28. Because there is no evidence 
that the petitioners transformed anything into something ``new and 
different,'' they are not eligible for certification as production 
workers.

Service Worker Analysis

    On the issue of whether the petitioners should be certified as 
service workers, the petitioners argued that they should be certified 
because: they performed their job inside an LTV facility, they were 
supervised by LTV employees, and they were employees of LTV prior to 
their employment with PLS. (LTV's employees at the Independence, Ohio 
facility did not produce any articles. AR 16, SAR 37, SAR 48, SAR 50, 
SAR 68. They were certified as a third type of appropriate subdivision 
because they provided services to LTV's Cleveland, Ohio production 
facility. SAR 57.)
    As stated earlier, when a worker group applies for assistance, the 
fundamental test called for by section 222 of the Trade Act is whether 
the workers' firm or an appropriate subdivision of the workers' firm 
produced an import-impacted article during the relevant period. If 
there is no evidence that the worker group applying for certification 
produced an import-impacted article, it may only be certified if: (1) 
The workers' separations were caused importantly by a reduced demand 
for their services from a parent firm, a firm otherwise related to the 
subject firm by ownership, or a firm related by control; (2) the 
reduction in the demand for their services originated at a production 
facility whose workers independently met the statutory criteria for 
certification; and (3) the reduction directly related to the product 
impacted by imports. Abbott v. Donovan, 6 CIT 92, 100-101, 570 F.Supp. 
41, 49 (1983). This ``elaborated'' analysis is necessary to determine 
whether a worker group has met the regulatory requirements of a type 
three appropriate subdivision: that the worker groups' facility is 
``auxiliary'' and ``operates in conjunction with a production 
facility.'' This analysis is customarily called the ``support service'' 
analysis, but it is actually not much different than the fundamental 
test that DOL applies to every application for certification.
    The first requirement (``the workers' separation were caused 
importantly by a reduced demand for their services from a parent firm, 
a firm otherwise related to the subject firm by ownership, or a firm 
related by control'') focuses on the definition of ``firm'' as it is 
used in the fundamental test. For multiple entities to be considered a 
single workers' firm, such entities must be ``controlled or 
substantially beneficially owned by substantially the same persons.'' 
29 CFR 90.2. As discussed earlier, PLS and LTV are not controlled or 
substantially beneficially owned by substantially the same persons. The 
regulations establish that DOL cannot certify the petitioners as 
service workers because their firm is unaffiliated with a firm that 
produces or produced an import-impacted article.

Conclusion

    Whether the performance of services by the petitioners is related 
or unrelated to production is not relevant to determining their 
eligibility for certification. Under section 222 of the Act, what is 
relevant is whether the workers' firm or an appropriate subdivision of 
the workers' firm

[[Page 27595]]

produces an article. The workers' firm in this case is PLS. As 
acknowledged in the Court's Opinion, the relevant petitioners in this 
remand action ``were employed by Pittsburgh Logistics Systems, Inc. 
(PLS) and worked on-site at LTV's facilities in Independence, Ohio.'' 
Slip Op. 2. PLS is a subsidiary of Quadrivius. SAR 36. Neither PLS not 
Quadrivius are affiliated with LTV. SAR 43. The evidence clearly 
establishes that PLS and Quadrivius do not produce, directly or through 
an appropriate subdivision, an import-impacted article. ``Once DOL 
concludes that the workers'' employer was not a firm that produced an 
import-impacted article, it may conclude that the workers are not 
eligible for assistance without further analysis.'' Stanley Smith v. 
U.S. Sec'y of Labor, 20 CIT 201, 204, 967 F.Supp.512, 515 (1996). 
Because the petitioners are employees of a firm or subdivision that 
does not produce a trade-impacted article, they are not eligible for 
certification.
    After reconsideration on remand, I affirm the original notice of 
negative determination of eligibility to apply for adjustment 
assistance for the former workers of PLS.

    Signed at Washington, DC, this 5th day of May, 2003.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. 03-12566 Filed 5-19-03; 8:45 am]
BILLING CODE 4510-30-P