E8-5227. Liberty Fibers Corporation, Lowland, TN; Notice of Negative Determination on Reconsideration

On December 11, 2007, the Department of Labor (Department) issued an Affirmative Determination Regarding Application for Reconsideration for workers and former workers of Liberty Fibers Corporation, Lowland, Tennessee (the subject firm). The Department's Notice of affirmative determination was published in the Federal Register on December 19, 2007 (72 FR 71962).

A certification for Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) applicable to workers at the subject firm was issued on October 21, 2005 and remained valid until October 21, 2007 (TA-W-58,039). The certification was based on the Department's finding that the subject workers produced rayon staple fiber and that increased imports of articles like or directly competitive with those produced by the subject firm contributed importantly to subject firm sales or production declines and to workers' separations.

On August 24, 2007, a TAA/ATAA petition (TA-W-62,049) was filed by a company official on behalf of workers and former workers of the subject firm. The petition was withdrawn on August 29, 2007. The Department issued a Notice of Termination of Investigation on September 4, 2007.

On October 22, 2007, a TAA/ATAA petition was filed by a company official on behalf of workers and former workers of the subject firm (TA-W-62,333). The petition stated that the subject firm produced rayon staple fiber, the subject firm closed on September 26, 2005, and that “Five (5) employees remain in the employment of the company to assist the bankruptcy trustee. The remaining employees will be laid off in the next 6-9 months.”

The initial determination, issued on November 13, 2007, stated that the workers performed maintenance of a closed fiber production facility, that the workers no longer support a firm or appropriate subdivision that produces an article domestically, and, thus, the subject worker group cannot be considered import impacted or affected by a shift in production of an article.

The request for reconsideration stated that the subject firm ceased operations in September 2005, that a Chapter 7 bankruptcy (dissolution) trustee was appointed in November 2005, and that the trustee retained the service of several employees to assist in the settlement of the corporation's estate. The request also stated that, with regards to petition TA-W-58,039, the Department “accurately designated the loss of those permanent jobs to be the result of increased imports activity” and asserts that workers covered by petition TA-W-62,333 should be eligible to apply for TAA and ATAA on the same basis (increased imports).

In order to be certified as eligible to apply for adjustment assistance under section 223 of the Trade Act of 1974, the petitioning group must work for a firm or appropriate subdivision that produces an article domestically, and there must be a relationship between the workers' work and the article produced by the workers' firm or appropriate subdivision.

Under section 223(a) of the Trade Act of 1974, as amended, TAA certification may be made if the following criteria are met:

Section (a)(2)(A)—

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. The sales or production, or both, of such firm or subdivision have decreased absolutely; and

C. Increased imports of articles like or directly competitive with articles produced by such firm or subdivision have contributed importantly to such workers' separation or threat of separation and to the decline in sales or production of such firm or subdivision; or

Section (a)(2)(B)—

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. There has been a shift in production by such workers' firm or subdivision to a foreign country of articles like or directly competitive with articles which are produced by such firm or subdivision; and

C. One of the following must be satisfied:

1. the country to which the workers' firm has shifted production of the articles is a party to a free trade agreement with the United States; or

2. the country to which the workers' firm has shifted production of the articles is a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act; or

3. there has been or is likely to be an increase in imports of articles that are like or directly competitive with articles which are or were produced by such firm or subdivision.

Because the request for reconsideration asserts that the workers covered by TA-W-62,333 should be certified for TAA and ATAA for the same reason that the workers covered by TA-W-58,039 were certified (increased imports), the Department investigated whether the criteria set forth in section (a)(2)(A) were met.

The Section (a)(2)(A) requires that “imports of articles like or directly competitive with articles produced by such firm or subdivision have increased” and increased imports must have “contributed importantly to such workers' separation or threat of separation and to the decline in sales or production of such firm or subdivision.”

To be certified based on increased imports, the Department must find that increased imports is a cause that contributed importantly to a two-part effect: the workers' separation or threat of separation, and the decline in subject firm sales or production. Because the cause must precede the effect, it follows that increased imports must occur before or coincide with the subject firm's sales or production decline, and, that without that effect, causality cannot be established.

“Increased imports,” defined at 29 CFR 97.2, means “that imports have increased either absolutely or relative to domestic production compared to a representative base period. The representative base period shall be one year consisting of the four quarters immediately preceding the date which is twelve months prior to the date of the petition.”

Because the date of the petition is October 22, 2007, the relevant period (the twelve months prior to the petition date) is October 2006 through September 2007 and the representative base period is October 2005 through September 2006. Therefore, for there to be increased imports, imports during October 2006 through September 2007 would have to increase compared to the period of October 2005 through September 2006.

During the reconsideration investigation, the Department confirmed that the subject firm ceased operation and closed permanently in September 2005, that the subject firm filed for Chapter 11 bankruptcy (reorganization) on September 29, 2005, and that the case was converted to Chapter 7 bankruptcy (dissolution) on November 21, 2005.

Because there were no subject firm sales or production since September 2005, the Department finds that there could not have been any decline in sales or production at the subject firm during the relevant period. Consequently, increased imports could not have “contributed importantly to * * * the decline in sales or production of” the subject firm. Accordingly, the subject workers cannot be certified under section 222(a)(2)(A).

Further, the Department finds that because the subject firm permanently closed in September 2005, there was not production that could have shifted to a foreign country. Accordingly, the subject workers cannot be certified under section 222(a)(2)(B).

Although the request for reconsideration did not allege that the subject workers were adversely affected as secondary workers (workers of a firm that supply component parts to a TAA-certified company or finished or assembled for a TAA-certified company), the Department expanded the investigation to determine whether they would be eligible to apply for TAA on this basis. Such a certification, under section 223(b)(2), must be based in the certification of a primary firm.

Prior to the closure in September 2005, the subject firm produced a final article (rayon staple fiber) and, therefore, neither supplied component parts to other companies nor finished or assembled an article for other companies. Even if the subject firm did engage in such activity, the activity occurred prior to September 2005, and, therefore, occurred prior to the relevant period and cannot be a basis for certification. Accordingly, the subject workers cannot be certified under section 223(b)(2).

In order for the Department to issue a certification of eligibility to apply for Alternative Trade Adjustment Assistance (ATAA), the subject worker group must be certified eligible to apply for TAA. Since the petitioning worker group is denied eligibility to apply for TAA, the subject workers cannot be certified eligible for ATAA.

Conclusion

After careful reconsideration, I affirm the original notice of negative determination of eligibility to apply for worker adjustment assistance for workers and former workers of Liberty Fibers Corporation, Lowland, Tennessee.

Signed at Washington, DC, this 7th day of March 2008.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.