Hyundai Steel Co. v. United States

319 F.Supp.3d 1327

HYUNDAI STEEL COMPANY, Plaintiff,

v. UNITED STATES, Defendant,andAK Steel Corporation, Steel Dynamics, Inc., ArcelorMittal USA LLC, Nucor Corporation, United States Steel Corporation, Defendant–lntervenors.

Slip–Op. 18–80

Court No. 16–00228

United States Court of International Trade.

June 28, 2018

Henry D. Almond and Daniel R. Wilson, Arnold & Porter Kaye Scholer LLP, of Washington, DC, argued for Plaintiff. With them on the brief were J. David Park and Sylvia Y. Chen.

Renée A. Burbank, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were Chad A. Readier, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Nanda Srikantaiah, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Grace W. Kim, Kelley Drye & Warren LLP, of Washington, DC, argued for Defendant–Intervenor ArcelorMittal LLC. With her on the brief were Paul C. Rosenthal, R. Alan Luberda, Kathleen W. Cannon, and Joshua R. Morey.

Stephen A. Jones and Daniel L. Schneiderman, King & Spalding, LLP, of Washington, DC, for Defendant–lntervenor AK Steel Corporation.

Roger B. Schagrin and Christopher T. Cloutier, Schagrin Associates, of Washington, DC, for Defendant–lntervenor Steel Dynamics, Inc.

Alan H. Price, Timothy C. Brightbill, and Chris B. Weld, Wiley Rein LLP, of Washington, DC, for Defendant–lntervenor Nucor Corporation.

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, DC, for Defendant–lntervenor United States Steel Corporation. With them on the brief were Jeffrey D. Gerrish, Nathaniel B. Bolin, and Luke A. Meisner, Skadden Arps Slate Meagher & Flom, LLP, of Washington, DC.

OPINION AND ORDER

Barnett, Judge:

Plaintiff Hyundai Steel Company ("Plaintiff" or "Hyundai Steel") moves, pursuant to United States Court of International Trade ("USCIT") Rule 56.2, for judgment on the agency record, challenging the final determination of the U.S. Department of Commerce ("Commerce" or the "agency") in its antidumping duty investigation of certain cold-rolled steel flat products ("cold-rolled steel") from the Republic of Korea ("Korea"). See Certain Cold–Rolled Steel Flat Products From the Republic of Korea, 81 Fed. Reg. 49,953 (Dep't Commerce July 29, 2016) (final determination of sales at less than fair value) (" Final Determination "), ECF No. 39–3, and the accompanying Issues and Decision Mem., A–580–881 (July 20, 2016) ("l & D Mem."), ECF No. 39–2.¹

Plaintiff, a Korean producer and exporter of cold-rolled-steel, challenges Commerce's determination to: (1) use the facts available with an adverse inference (referred to as "adverse facts available" or "AFA") in adjusting Hyundai Steel's reported expenses concerning freight and warehousing transactions with affiliated companies; (2) use AFA in connection with some of Hyundai Steel's reported control number ("CONNUM") data; and (3) deny Hyundai Steel a constructed export price ("CEP") offset. Confidential Mem. in Supp. of PI. Hyundai Steel Co.'s Rule 56.2 Mot. for J. on the Agency R. ("Pl.'s Br.") at 1, ECF No. 47. Defendant United States ("Defendant" or the "Government") and Defendant Intervenors—AK Steel Corporation, ArcelorMittal USA LLC, Nucor Corporation, Steel Dynamics, Inc., and United States Steel Corporation—support the Final Determination. See generally Confidential Def.'s Resp. to Pl.'s Mot. for J. Upon the Agency R. ("Gov.'s Resp."), ECF No. 50; Confidential Def.–Ints.' Joint Resp. in Opp'n to Pl.'s Mot. for J. on the Agency R. ("Def.–lnts.' Resp."), ECF No. 53. For the reasons discussed below, the court grants, in part, Plaintiff's motion.

BACKGROUND

I. Legal Framework

A. Basic Antidumping Principles

Commerce imposes an antidumping duty on foreign merchandise that "is being, or is likely to be, sold in the United States at less than its fair value," and results in material injury or threat of material injury to a U.S. domestic industry. 19 U.S.C. § 1673 (2012).² The antidumping duty imposed is "an amount equal to the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise." Id. Accordingly, antidumping analysis requires Commerce to compare the export price or constructed export price of the subject merchandise with the normal value of the foreign like product. Id. § 1677b(a) (Commerce must make "a fair comparison ... between the export price or constructed export price and normal value" of the subject merchandise); see also 19C.F.R. § 351.401(a). Normal value typically is "the price at which the foreign like product is first sold ... for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the export price or constructed export price." 19 U.S.C. § 1677b(a)(1)(B)(i). In this case, "normal value" refers to the price of cold-rolled steel sold in Korea. Constructed export price is "the price at which the subject merchandise is first sold ... in the United States ... by or for the account of the producer or exporter ... or by a seller affiliated with the producer or exporter," to an unaffiliated purchaser. 19 U.S.C. § 1677a(b).

To achieve a fair comparison between the export price (or constructed export price) and normal value, "Commerce seeks to ensure that a producer's costs are reflective of the market value of those goods or services, and may adjust both values." Hyundai Steel Co. v. United States, 41 CIT ––––, 279 F.Supp.3d 1349, 1354 (2017). When companies use affiliated providers for certain services, the prices paid to the affiliated providers may not reflect the market price for those services. See id. at 1354–55. Therefore, Commerce "determine[s] whether the transactions with the affiliated company were made at arm's-length, or comparable to transactions conducted with an unaffiliated party." Id. at 1355.

B. Facts Available and Adverse Facts Available

When "necessary information is not available on the record," or an interested party "withholds information" requested by Commerce," "fails to provide" requested information by the submission deadlines, "significantly impedes a proceeding," or provides information that cannot be verified pursuant to 19 U.S.C. § 1677m(i), Commerce "shall ... use the facts otherwise available." 19 U.S.C. § 1677e(a).³ Additionally, if Commerce determines that the party "has failed to cooperate by not acting to the best of its ability to comply with a request for information," it "may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available." Id. § 1677e(b). "Compliance with the ‘best of its ability’ standard is determined by assessing whether a respondent has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an investigation." Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003).⁴ Before using adverse facts available, Commerce "must make an objective showing that a reasonable and responsible importer would have known that the requested information was required to be kept and maintained under the applicable statutes, rules, and regulations." Id. at 1382. Next, Commerce

must [ ] make a subjective showing that the respondent['s] ... failure to fully respond is the result of the respondent's lack of cooperation in either: (a) failing to keep and maintain all required records, or (b) failing to put forth its maximum efforts to investigate and obtain the requested information from its records.

Id. at 1382–83. "An adverse inference may not be drawn merely from a failure to respond." Id. at 1383. Rather, Commerce may apply an adverse inference "under circumstances in which it is reasonable for Commerce to expect that more forthcoming responses should have been made." Id.

When applying an adverse inference, Commerce may rely on information derived from the petition, a final determination in the investigation, a previous administrative review, or any other information placed on the record. 19 U.S.C. § 1677e(b)(2) ; 19 A.F.R. § 351.308(c)(2015). When Commerce "relies on secondary information rather than on information obtained in the course of an investigation or review, [Commerce] ... shall, to the extent practicable, corroborate that information from independent sources that are reasonably at [its] disposal." 19 U.S.C. § 1677e(c)(1). Pursuant to agency regulations, corroboration means that Commerce "will examine whether the secondary information to be used has probative value." 19C.F.R. § 351.308(d). However, if it is not practicable to do so, Commerce may still "apply[ ] an adverse inference as appropriate and us[e] the secondary information in question." Id. When Commerce uses primary information (obtained in the course of the investigation or review), rather than secondary information, to select from among the adverse facts available, the statute does not require corroboration. See Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1348–49 (Fed. Cir. 2016).

C. CEP Offset

Commerce must establish normal value "to the extent practicable, at the same level of trade as the export price or constructed export price." 19 U.S.C. § 1677b(a)(1)(B)(i). The Federal Circuit has construed the term "same level of trade" to mean "comparable marketing stages in the home and United States markets." Micron Tech., Inc. v. United States, 243 F.3d 1301, 1305 (Fed. Cir. 2001). When Commerce is unable to find sales in the foreign market at the same level of trade as the sales in the U.S. market, it will compare sales in those markets at different levels of trade and account for that difference by, depending on the circumstances, making a level of trade adjustment or granting a CEP offset. See id.

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