Hyundai Steel Co. v. United States

282 F.Supp.3d 1332

HYUNDAI STEEL CO., Plaintiff,

v.UNITED STATES, Defendant,AK Steel Corp., Arcelormittal USA LLC, California Steel Indus., Inc., Nucor Corp., Steel Dynamics, Inc., and United States Steel Corp. Defendant–Intervenors.

Court No. 16–00161

Slip Op. 18–2

United States Court of International Trade.

Dated: January 10, 2018

J. David Park, Arnold & Porter Kaye Scholer LLP, of Washington, DC, argued for plaintiffs. With him on the brief were Andrew Treaster, Daniel Wilson, Henry Almond, and Sylvia Yun Chu Chen.

Elizabeth Speck, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. Of counsel on the brief was James Ahrens II, Office of Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Grace Kim, Joshua Morey, Kathleen Cannon, Paul Rosenthal, and R. Alan Luberda, Kelley Drye & Warren, LLP, of Washington, DC, for defendant-intervenor ArcelorMittal USA LLC.

Roger Schagrin, Christopher Cloutier, John Bohn, and Paul Jameson, Schagrin Associates, of Washington, DC, for defendant-intervenors Steel Dynamics, Inc. and California Steel Industries, Inc.

Stephen Jones, and Daniel Schneiderman, King & Spalding, LLP, of Washington, DC, for defendant-intervenor AK Steel Corporation.

Luke Meisner, Skadden Arps Slate Meagher & Flom, LLP, of Washington, DC, argued for defendant-intervenor United States Steel Corporation. With him on the brief was Jeffrey Gerrish.

Alan Price, Adam Teslik, Christopher Weld, Cynthia Galvez, Derick Holt, Laura El–Sabaawi, Maureen Thorson, Stephanie Bell, Tessa Capeloto, Timothy Brightbill, and Usha Neelakantan, Wiley Rein, LLP, of Washington, DC, for defendant-intervenor Nucor Corporation.

OPINION

Restani, Judge:

In this action challenging a United States Department of Commerce ("Commerce") Antidumping Duty Investigation Determination regarding Corrosion–Resistant Steel Products ("CORE") from Korea, Hyundai Steel Co. ("Hyundai") requests that the court hold the final determination unsupported by substantial record evidence and otherwise not in accordance with the law. Hyundai accordingly requests that Commerce's determination be remanded for correction of error.

BACKGROUND

Based on petitions filed by defendant-intervenors, various domestic steel producers, on June 30, 2015, Commerce initiated an investigation concerning the possible sale of CORE from various countries at less than fair value ("LTFV"). Certain Corrosion–Resistant Steel Products From Italy, India, the People's Republic of China, the Republic of Korea, and Taiwan: Initiation of Less–Than–Fair–Value Investigations, 80 Fed. Reg. 37,228, 37,228 (Dep't Commerce June 30, 2015). Hyundai, a Korean CORE producer and exporter, was selected on July 23, 2015, as one of two mandatory Korean respondents in this investigation. Hyundai accounted for one of the two largest volumes of Korean CORE exports, per U.S. Customs and Border Protection ("CBP") entry data for the period of investigation. Respondent Selection for the Antidumping Duty Investigation of Certain Corrosion–Resistant Steel Products from the Republic of Korea, A–580–878, POI 04/01/2014–03/30/2015, at 8 (July 23, 2015). This action concerns Commerce's treatment, for computation of the United States sale price,¹ of Hyundai's further manufactured products, other than completed automobiles, including skelp, sheets or blanks ("SSBs"), tailor-welded blanks ("TWBs"), and after-market auto parts.² To manufacture the latter two product categories, Hyundai first sold CORE to its U.S. subsidiary, Hyundai Steel America, Inc. ("HSA"), in coil form. HSA then sold the imported CORE: (1) in unaltered form; (2) in slightly further manufactured form, e.g., as SSBs; or (3) as TWBs. HSA sold the foregoing products to both affiliated and unaffiliated vendors that performed additional further processing before selling the ultimate product to an affiliated automobile manufacturer. Hyundai Steel Section A Questionnaire Response, A–580–878, POI 04/01/2014–03/31/2015, at 2–3 (Sept. 4, 2015). In almost every case, the CORE sold through HSA is ultimately consumed in the production of automobiles by Hyundai affiliates. Notice of Difficulty in Responding to Questionnaire and Request for Alternate Calculation Method, A–580–878, POI 04/01/2014–03/31/2015, at 3 (Aug. 17, 2015) ("Notice of Difficulty").

Early in the investigation, Hyundai unsuccessfully requested Commerce to apply the "special rule"³ in valuing Hyundai's sales of further manufactured products for the purpose of calculating Constructed Export Price.⁴ Instead, Commerce determined that Hyundai must submit a "Section E" response with cost and sales data for such products. Commerce published its preliminary determination on January 4, 2016, with a preliminary antidumping duty of 3.51 percent for Hyundai. Certain Corrosion–Resistant Steel Products From the Republic of Korea: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 Fed. Reg. 78, 79 (Dep't Commerce Jan. 4, 2016) ("Preliminary Determination").⁵ Between January and March of 2016, Commerce conducted verifications of Hyundai's reported home market sales, U.S. sales, and cost of production data. Over Hyundai's objections, however, Commerce, finding Hyundai's submissions deficient, declined to verify data associated with Hyundai's affiliates' U.S. manufacturing operations, or the sales associated with such products. Cancellation of Hyundai Steel Company's Constructed Export Price (CEP) Verification of Further Manufactured Sales, A–580–878, POI 04/01/2014–03/31/2015, at 1–2 (Dep't Commerce, Mar. 8, 2016) ("Verification Cancellation Letter").

After having issued three supplemental questionnaires regarding Hyundai's further manufactured product cost and sales data in November 2015, December 2015, and February 2016, Commerce ultimately issued a final determination and order which applied an adverse inference to the facts available ("AFA") in calculating a final dumping margin of 47.8 percent for Hyundai. Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances, 81 Fed. Reg. 35,303, 35,304 (Dep't Commerce June 2, 2016) ("Final Determination"); as amended by Certain Corrosion–Resistant Steel Products From India, Italy, the People's Republic of China, the Republic of Korea and Taiwan: Amended Final Affirmative Antidumping Determination for India and Taiwan, and Antidumping Duty Orders, 81 Fed. Reg. 48,390, 48,393 (Dep't Commerce July 25, 2016) ("Antidumping Duty Order"). In the memorandum appended to its Final Determination, Commerce noted myriad problems with Hyundai's responses to Commerce's information requests. Issues and Decision Memorandum for the Final Affirmative Determination in the Antidumping Duty Investigation of Certain Corrosion–Resistant Steel Products from the Republic of Korea, A–580–878, POI 04/01/2014–03/31/2015, at 7–14, 31–33 (Dep't Commerce May 24, 2016) ("Final Det. I & D Memo").

Hyundai timely filed a summons to commence this action on August 23, 2016, and filed a complaint on September 6, 2016. Docket Nos. 1, 7. See 19 U.S.C. § 1516a(a)(2)(A) (2006) ; 28 U.S.C. § 2636(c) (1993). Hyundai moved for judgment on the agency record on March 20, 2016. Docket No. 51. This opinion follows briefing and oral argument by the parties and certain defendant-intervenors.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2016). Commerce's final results in an administrative review of an antidumping duty order are upheld unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

Hyundai alleges Commerce's Final Determination is deficient in two respects. First, it argues Commerce unreasonably failed to apply the "special rule" applicable to merchandise with value added after importation to Hyundai's TWBs and auto parts. Second, Hyundai argues Commerce erred in applying AFA with respect to Hyundai's further manufactured TWBs, auto parts, and SSBs.

I. Commerce's decision not to apply the "special rule" applicable to merchandise with value added after importation was reasonable.

Hyundai first argues Commerce unreasonably declined to apply the "special rule" applicable to merchandise with value added after importation to its TWBs and auto parts. Pl. Br. at 33–41. Under 19 U.S.C. § 1677a(e) (1994), where the value added to an imported product in the United States "is likely to exceed substantially" the value of the product upon importation, Commerce "shall determine the constructed export price" using the price of either identical or other subject merchandise sold by the producer to an unaffiliated entity. Under the applicable regulations, a substantial excess in value requires an "estimate[d]" excess of "at least 65 percent of the price charged to the first unaffiliated purchaser ... in the United States." 19 C.F.R. § 351.402(c)(2) (2013). Though Commerce "normally will determine" the prerequisite satisfied in such circumstances, id., even where this threshold is met, application of the "special rule" is left to Commerce's reasonable exercise of discretion. RHP Bearings Ltd. v. United States, 288 F.3d 1334, 1344–46 (Fed. Cir. 2002).

On August 15, 2015, Hyundai submitted a letter requesting that Commerce apply the "special rule" to its further manufactured products sold to unaffiliated purchasers in the United States. Notice of Difficulty at 2. In response, regarding Hyundai's sales of TWBs and auto parts, Commerce requested that Hyundai "provide a calculation of the percentage of the value added to the imported merchandise under consideration after importation and prior to sale to the unaffiliated vendor." Additional Guidance on information required to substantiate Hyundai Steel Corporation's Request for Alternative Calculation Method, A–580–878, POI 04/01...