NEXTEEL Co. v. United States

355 F.Supp.3d 1336

NEXTEEL CO., LTD., Plaintiff,

Hyundai Steel Company, Husteel Co., Ltd., AJU Besteel Co., Ltd., Maverick Tube Corporation, and SeAH Steel Corporation, Consolidated Plaintiffs,

and

ILJIN Steel Corporation, Plaintiff-Intervenor,

v.UNITED STATES, Defendant,andTMK IPSCO, Vallourec Star, L.P., Welded Tube USA Inc., and United States Steel Corporation, Defendant-Intervenors.

Slip Op. 19-1

Consol. Court No. 17-00091

United States Court of International Trade.

Dated: January 2, 2019

Henry D. Almond and Michael T. Shor, Arnold & Porter Kaye Scholer LLP, of Washington, D.C., argued for Plaintiff NEXTEEL Co., Ltd. and Consolidated Plaintiff Hyundai Steel Company. With them on the brief were Jaehong D. Park, Daniel R. Wilson, Kang W. Lee, and Sylvia Y.C. Chen. Leslie C. Bailey also appeared.

Donald B. Cameron and Eugene Degnan, Morris, Manning & Martin, LLP, of Washington, D.C., argued for Consolidated Plaintiff Husteel Co., Ltd. With them on the brief were Brady W. Mills, Julie C. Mendoza, Mary S. Hodgins, and Rudi W. Planert.

Robert E. DeFrancesco, III and Joshua Turner, Wiley Rein, LLP, of Washington, D.C., argued for Consolidated Plaintiff and Defendant-Intervenor Maverick Tube Corporation. With them on the brief were Alan H. Price, Cynthia C. Galvez, Jeffrey O. Frank, John Lin, and Maureen E. Thorson.

Hardeep K. Josan, Attorney, U.S. Department of Justice, of New York, N.Y., argued for Defendant United States. Of counsel on the brief was Mykhaylo A. Gryzlov, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement and Compliance, of Washington, D.C.

Jeffrey M. Winton and Amrietha Nellan, Law Office of Jeffrey M. Winton PLLC, of Washington, D.C., argued for Consolidated Plaintiff SeAH Steel Corporation.

Jarrod M. Goldfeder and Robert G. Gosselink, Trade Pacific, PLLC, of Washington, D.C., appeared for Consolidated Plaintiff AJU Besteel Co., Ltd.

Joel D. Kaufman and Richard O. Cunningham, Steptoe & Johnson LLP, of Washington, D.C., appeared for Plaintiff Intervenor ILJIN Steel Corporation.

Roger B. Schagrin, Christopher T. Cloutier, Elizabeth J. Drake, John W. Bohn, and Paul W. Jameson, Schagrin Associates, of Washington, D.C., appeared for Defendant-Intervenor TMK IPSCO, Vallourec Star, L.P., and Welded Tube USA Inc.

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, D.C., appeared for Defendant-Intervenor United States Steel Corporation. Formerly on the brief were Jeffrey D. Gerrish and Luke A. Meisner, Skadden Arps Slate Meagher & Flom, LLP, of Washington, D.C.

Before: Jennifer Choe-Groves, Judge

OPINION AND ORDER

Choe-Groves, Judge:

This is a case of first impression, involving the first time that the U.S. Department of Commerce ("Department" or "Commerce") found the existence of a particular market situation in an administrative review under The Trade Preferences Extension Act of 2015 ("TPEA"). Plaintiff NEXTEEL Co., Ltd. ("NEXTEEL"), Consolidated Plaintiffs Husteel Co., Ltd. ("Husteel"), Hyundai Steel Company ("Hyundai"), SeAH Steel Corporation ("SeAH"), AJU Besteel Co., Ltd. ("AJU Besteel"), and Maverick Tube Corporation ("Maverick") (collectively, "Consolidated Plaintiffs"), and Plaintiff-Intervenor ILJIN Steel Corporation ("ILJIN") bring this consolidated action contesting Commerce's final results in the 2014–2015 administrative review of the antidumping duty order on oil country tubular goods from the Republic of Korea ("Korea"). See Certain Oil Country Tubular Goods from the Republic of Korea, 82 Fed. Reg. 18,105 (Dep't Commerce Apr. 17, 2017) (final results of antidumping duty administrative review; 2014–2015), as amended, 82 Fed. Reg. 31,750 (Dep't Commerce July 10, 2017) (amended final results of antidumping duty administrative review; 2014–2015) (collectively, "Final Results"); see also Issues and Decision Memorandum for the Final Results of the 2014–2015 Administrative Review of the Antidumping Duty Order on Certain Oil Country Tubular Goods from the Republic of Korea, A-580-870, (Apr. 10, 2017), available at https://enforcement.trade.gov/frn/summary/korea-south/2017-07684-1.pdf (last visited Dec. 19, 2018) ("Final IDM"). Before the court are seven Rule 56.2 motions for judgment on the agency record filed by the Parties. For the reasons discussed below, the court sustains in part and remands in part Commerce's Final Results.

ISSUES PRESENTED

The court reviews the following issues:

1. Whether Commerce's decision to apply a particular market situation adjustment to NEXTEEL's reported costs of production is supported by substantial evidence and in accordance with the law;

2. Whether Commerce's decision to adjust NEXTEEL's input costs based on a separate proceeding is supported by substantial evidence and in accordance with the law;

3. Whether Commerce's dumping margin calculation for non-examined companies is supported by substantial evidence and in accordance with the law;

4. Whether Commerce's constructed value profit rate calculations is supported by substantial evidence and in accordance with the law;

5. Whether Commerce's determination that NEXTEEL is affiliated with POSCO and POSCO Daewoo is supported by substantial evidence;

6. Whether Commerce's use of the differential pricing analysis is supported by substantial evidence and in accordance with the law;

7. Whether Commerce's classification of proprietary SeAH products is supported by substantial evidence;

8. Whether Commerce's decision to cap the adjustment for freight revenue on SeAH's U.S. sales is in accordance with the law;

9. Whether Commerce's decision to not make an adjustment for SeAH's ocean freight costs incurred on third-country sales is supported by substantial evidence;

10. Whether Commerce's deduction of general and administrative expenses as U.S. selling expenses is supported by substantial evidence;

11. Whether Commerce's adjustment to SeAH's reported costs when calculating cost of production is in accordance with the law;

12. Whether Commerce's decision to not apply adverse facts available ("AFA") to SeAH is supported by substantial evidence;

13. Whether Commerce's decision to not adjust SeAH's packing expenses is supported by substantial evidence; and

14. Whether Commerce's decision to not adjust SeAH's reported scrap and by-product data is supported by substantial evidence.

BACKGROUND

Commerce published an antidumping duty order covering oil country tubular goods from Korea on September 10, 2014. See Certain Oil Country Tubular Goods From India, the Republic of Korea, Taiwan, the Republic of Turkey, and the Socialist Republic of Vietnam: Antidumping Duty Orders; and Certain Oil Country Tubular Goods From the Socialist Republic of Vietnam: Amended Final Determination of Sales at Less Than Fair Value, 79 Fed. Reg. 53,691 (Dep't Commerce Sept. 10, 2014). Commerce issued an order allowing for administrative review requests of the antidumping duty order on September 1, 2015. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 80 Fed. Reg. 52,741 (Dep't Commerce Sept. 1, 2015) ; see also Decision Memorandum for the Preliminary Results of the Antidumping Duty Administrative Review: Certain Oil Country Tubular Goods from the Republic of Korea at 1, A-580-870, (Oct. 5, 2016), available at https://enforcement.trade.gov/frn/summary/korea-south/2016-24800-1.pdf (last visited Dec. 19, 2018) ("Prelim. IDM"). ILJIN, Hyundai, NEXTEEL, SeAH, Husteel, and AJU Besteel requested an administrative review of the antidumping duty order. See Prelim. IDM at 1–2. Maverick Tube Corporation ("Maverick"), Energex Tube, a division of JMC Steel Group, TMK IPSCO, Vallourec Star L.P., Welded Tube USA Inc., and United States Steel Corporation submitted a petition for a review of various companies on September 29, 2015. See id. at 2. Commerce initiated an administrative review for the period covering July 18, 2014 through August 31, 2015. See id. at 1; see also Initiation of Antidumping and Countervailing Duty Administrative Reviews, 80 Fed. Reg. 69,193 (Nov. 9, 2015). Commerce selected the two exporters or producers accounting for the largest volume of oil country tubular goods from Korea during the period of review, which were NEXTEEL and SeAH. See Prelim. IDM at 2.

Commerce released the preliminary results on October 14, 2016. See Certain Oil Country Tubular Goods From the Republic of Korea, 81 Fed. Reg. 71,074 (Dep't Commerce Oct. 14, 2016) (preliminary results of the antidumping duty administrative review; 2014–2015) ("Preliminary Results"). Commerce calculated a preliminary weighted-average dumping margin of 8.04 percent for NEXTEEL, 3.80 percent for SeAH, and 5.92 percent for non-examined companies. See id. at 71,075.

Maverick alleged that four¹ particular market situations existed in Korea with respect to hot-rolled coil, which is the largest input used to produce oil country tubular goods. Maverick asserted the following:

(1) The costs and prices of Korean hot-rolled coil were distorted due to subsidies provided by the Government of Korea. Maverick pointed to the final determination in the countervailing duty investigation of Korean hot-rolled steel flat products to support its allegation. See Department's Memorandum Pertaining to Maverick's Particular Market Situation Allegations at 2, PD 531, bar code 3545522-01 (Feb. 22, 2017) ("Particular Market Situation Mem.").

(2) The Korean market has been flooded with imports of cheaper, unfairly-traded Chinese hot-rolled flat products over the last three years, placing downward pressure on Korean domestic hot-rolled coil prices and causing price distortions. See id.

(3) There existed "strategic alliances" between selected oil country tubular goods producers and two major hot-rolled coil suppliers in Korea, POSCO and Hyundai, in that POSCO and Hyundai allegedly provided favorable hot-rolled coil prices to certain oil country tubular goods producers while charging market prices to others not part of

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