NEXTEEL Co., Ltd. v. United States

28 F.4th 1226

NEXTEEL CO., LTD., Plaintiff-Appellee

Seah Steel Corp., Plaintiff-Cross-Appellant

v.UNITED STATES, Maverick Tube Corporation, Tenaris Bay City, Inc., Defendants-Appellees

United States Steel Corporation, Defendant-Appellant

2021-1334, 2021-1430

United States Court of Appeals, Federal Circuit.

Decided: March 11, 2022

Henry David Almond, Arnold & Porter Kaye Scholer LLP, Washington, DC, argued for plaintiff-appellee. Also represented by Leslie Bailey, Christine Choi, Kang Woo Lee, J. David Park, Daniel Wilson.

Jeffrey M. Winton, Winton & Chapman PLLC, Washington, DC, argued for plaintiff-cross-appellant. Also represented by Michael John Chapman, Jooyoun Jeong, Vi Mai.

Hardeep Kaur Josan, International Trade Field Office, United States Department of Justice, New York, NY, argued for defendant-appellee United States. Also represented by Brian M. Boynton, Claudia Burke, Jeanne Davidson; Mykhaylo Gryzlov, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Gregory J. Spak, White & Case LLP, Washington, DC, for defendants-appellees Maverick Tube Corporation, Tenaris Bay City, Inc. Also represented by Frank John Schweitzer, Matthew Wolf Solomon, Kristina Zissis.

Thomas M. Beline, Cassidy Levy Kent (USA) LLP, Washington, DC, argued for defendant-appellant. Also represented by Myles Samuel Getlan, James Edward Ransdell, IV, Sarah E. Shulman.

Before O'Malley, Bryson, and Hughes, Circuit Judges.

Hughes, Circuit Judge.

This appeal arises out of the United States Department of Commerce's administrative review of its antidumping order on oil country tubular goods from the Republic of Korea.

Calculating constructed value, Commerce found five circumstances that created a "particular market situation" affecting inputs to oil country tubular goods. The Court of International Trade determined that this finding was not supported by substantial evidence and "direct[ed] Commerce to reverse its finding of a particular market situation." NEXTEEL Co. v. United States , 450 F. Supp. 3d 1333, 1343 (Ct. Int'l Trade 2020). We find that three of the five circumstances Commerce relied on to show a particular market situation are not supported by substantial evidence. Thus, with modified reasoning, we affirm the trial court's conclusion that substantial evidence does not support Commerce's finding. But because the Court of International Trade lacks authority to reverse Commerce, we vacate the trial court's opinion to the extent that it directs Commerce to reach a certain outcome.

Comparing normal value to export price, Commerce relied on its "differential pricing analysis" methodology. In Stupp Corp. v. United States , 5 F.4th 1341 (Fed. Cir. 2021), we vacated aspects of Commerce's differential pricing analysis over concerns about Commerce's use of statistical methodologies when certain preconditions for their use are not met. Id. at 1360. Commerce's analysis here raises identical concerns, so we vacate the trial court's decision upholding the methodology and remand for reconsideration in view of Stupp.

Seeing no error in the other methodologies that Cross-Appellant challenges, we otherwise affirm.

BACKGROUND

In 2016, the Department of Commerce initiated its second administrative review of the antidumping order on oil country tubular goods (OCTG) from the Republic of Korea (Korea). Certain Oil Country Tubular Goods from the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review; 2015-2016, 82 Fed. Reg. 46,963, 46,963 (Oct. 10, 2017) ( Preliminary Results ). The review covered the period from September 1, 2015 through August 31, 2016. Id. Commerce selected for individual examination the two companies that accounted for the largest volume of subject merchandise during the period of review, NEXTEEL Co., Ltd. and SeAH Steel Corporation. Decision Memorandum for Preliminary Results, at 2, 82 ITADOC 46,963 (Oct. 2, 2017) (Preliminary Results Memo ).

In an antidumping review, Commerce generally compares the price at which the subject merchandise is sold in the United States to the "normal value," which is the price of like products in the exporting country or a third country. 19 U.S.C. §§ 1677(35), 1677a(a), 1677b(a). Calculating normal value, Commerce determined that "neither respondent had a viable home market or third-country market during the [period of review]." Preliminary Results Memo at 11. Commerce therefore based its calculation of the normal value on constructed value pursuant to 19 U.S.C. § 1677b(a)(4). Preliminary Results Memo at 11. Constructed value is based on the costs of producing and selling the merchandise, with an allowance for profits. 19 U.S.C. § 1677b(e).

Considering costs, Commerce found "a particular market situation" under 19 U.S.C. § 1677b(e), affecting two inputs to OCTG: hot-rolled coil (HRC) and electricity. Decision Memorandum for Final Results, at 16–17, 83 ITADOC 17,146 (Apr. 11, 2018) (Final Results Memo ). Commerce found a particular market situation "based on the collective impact of Korean HRC subsidies, Korean imports of HRC from China, strategic alliances, and government involvement in the Korean electricity market." Id. at 17. Having found a particular market situation, Commerce adjusted the cost of HRC in its calculation based on the countervailing duty rate determined for POSCO, a Korean HRC producer, in Hot-Rolled Steel Flat Products from Korea. Final Results Memo at 29;¹ Appx7560 (SeAH Preliminary Results Analysis Memorandum).

Commerce calculated the profit component of constructed value under § 1677b(e)(2)(B)(iii), which allows Commerce to calculate profits using "any other reasonable method, except that the amount allowed for profit may not exceed the amount normally realized by exporters or producers (other than [the specific exporter or producer examined])." The agency calculated profit based on SeAH's Canadian sales of OCTG. Final Results Memo at 55. Turning to the profit cap, Commerce again relied on SeAH's Canadian sales as "facts available." Id. at 60. Commerce reasoned that these sales were the best choice for a profit cap because they are "specific to OCTG and represent[ ] the production experience of a Korean OCTG producer in Korea." Id.

When calculating export price, Commerce adjusted for freight expenses pursuant to 19 U.S.C. § 1677a(c)(2)(A). Final Results Memo at 87–88. Following its "normal practice," Commerce capped the amount of freight revenue in its calculation at the amount of freight charges incurred. Id. at 87; Appx7554–55 (SeAH Preliminary Results Analysis Memorandum).

Finally, Commerce compared export price and normal value. Employing its "differential pricing analysis" methodology based on a statistic called "Cohen's d ," Commerce found a pattern of U.S. prices that "differ significantly among purchasers, regions, or periods of time" under 19 U.S.C. § 1677f-1(d)(1)(B)(i). Based on this analysis, Commerce used an "average-to-transaction" comparison method, Preliminary Results Memo at 10–11; Final Results Memo at 76, comparing averaged normal value prices to non-averaged export prices of individual transactions, 19 U.S.C. § 1677f-1(d)(1)(B).

NEXTEEL and SeAH appealed the Final Results to the Court of International Trade, arguing that Commerce's particular market situation, profit cap, freight revenue cap, and differential pricing analyses were unsupported by substantial evidence or not in accordance with law. NEXTEEL Co. v. United States , 392 F. Supp. 3d 1276, 1282–83 (Ct. Int'l Trade 2019) ( NEXTEEL I ). The court concluded that Commerce's particular market situation finding was unsupported by substantial evidence. Id. at 1288. It remanded for further proceedings on that issue. Id. The court affirmed Commerce's profit cap, freight revenue cap, and differential pricing analyses. Id. at 1290, 1293, 1295–97.

On remand, Commerce continued to find a particular market situation, relying on a fifth factor, "steel industry restructuring effort by the Korean government," along with the previous four. Final Results of Redetermination Pursuant to Ct. Remand at 20, NEXTEEL I , 392 F. Supp. 3d 1276, ECF No. 81-1 (First Remand Results ).

Reviewing Commerce's first remand results, the Court of International Trade rejected Commerce's finding of a particular market situation as unsupported by substantial evidence, "both when viewing the five factors individually and collectively." NEXTEEL Co. v. United States , 450 F. Supp. 3d 1333, 1343 (Ct. Int'l Trade 2020) ( NEXTEEL II ). The court remanded the issue to Commerce a second time, this time "direct[ing] Commerce to reverse its finding of a particular market situation." Id.

Under protest, Commerce reversed its finding of a particular market situation and recalculated the dumping margins accordingly. Final Results of Redetermination Pursuant to Ct. Remand at 4–5, NEXTEEL II , 450 F. Supp. 3d 1333, ECF No. 96-1 (Second Remand Results ). The Court of International Trade affirmed Commerce's second remand results. NEXTEEL Co. v. United States , 475 F. Supp. 3d 1378, 1380 (Ct. Int'l Trade 2020).

United States Steel appeals, challenging the trial court's ruling that Commerce's finding of a particular market situation is unsupported by substantial evidence, as well as the trial court's direction to Commerce to reach a particular outcome on its second remand. SeAH cross appeals, challenging the trial court's affirmance of Commerce's differential pricing analysis, its freight revenue cap, and its use of SeAH's own data as a profit cap.

ANALYSIS

I. Standard of Review

"We review a decision of the Court of International Trade evaluating an antidumping determination by Commerce by reapplying the statutory standard of review that the Court of International Trade applied in reviewing the administrative record." Peer Bearing Co.-Changshan v. United States , 766 F.3d 1396, 1399 (Fed. Cir. 2014). Thus, "[w]e will uphold Commerce's determination unless it is unsupported by...