Nexteel Co. v. United States

392 F.Supp.3d 1276

NEXTEEL CO., LTD., Plaintiff,andSeAH Steel Corporation, Consolidated Plaintiff,

v. UNITED STATES, Defendant,andUnited States Steel Corporation, Maverick Tube Corporation, and TenarisBayCity, Defendant-Intervenors.

Slip Op. 19-73

Consol. Court No. 18-00083

United States Court of International Trade.

Dated: June 17, 2019

J. David Park and Henry D. Almond, Arnold & Porter Kaye Scholer LLP, of Washington, D.C., argued for Plaintiff NEXTEEL Co., Ltd. With him on the brief were Daniel R. Wilson, Leslie C. Bailey, and Kang W. Lee.

Jeffrey M. Winton, Law Office of Jeffrey M. Winton PLLC, of Washington, D.C., argued for Consolidated Plaintiff SeAH Steel Corporation. With him on the brief was Amrietha Nellan.

Hardeep K. Josan, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., argued for Defendant United States. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel was Mykhaylo Gryzlov, Senior Counsel, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Thomas M. Beline, Cassidy Levy Kent (USA) LLP, of Washington, D.C., argued for Defendant-Intervenor United States Steel Corporation. With him on the brief were Myles S. Getlan, Sarah E. Shulman, and James E. Ransdell.

Frank J. Schweitzer and Kristina Zissis, White & Case, LLP, of Washington, D.C., argued for Defendant-Intervenors Maverick Tube Corporation and TenarisBayCity. With them on the brief was Gregory J. Spak.

OPINION AND ORDER

Choe-Groves, Judge:

This case involves the second application of the statute permitting the U.S. Department of Commerce ("Department" or "Commerce") to find the existence of a particular market situation under the Trade Preferences Extension Act of 2015 ("TPEA"). Plaintiff NEXTEEL Co., Ltd. ("NEXTEEL") and Consolidated Plaintiff SeAH Steel Corporation ("SeAH") bring this consolidated action contesting Commerce's final results in the 2015–2016 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, 83 Fed. Reg. 17,146 (Dep't Commerce Apr. 18, 2018) (final results of antidumping administrative review and final determination of no shipments; 2015–2016) ("Final Results"); see also Issues and Decision Memorandum for the Final Results of the 2015–2016 Administrative Review of the Antidumping Duty Order on Certain Oil Country Tubular Goods from the Republic of Korea, PD 368, bar code 3694005-01 (April 11, 2018) ("Final IDM"). Before the court are two Rule 56.2 motions for judgment on the agency record filed by NEXTEEL and SeAH. 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 application of total facts available with an adverse inference ("total adverse facts available" or "total AFA") to NEXTEEL is unsupported by substantial evidence and contrary to the law;

2. Whether Commerce's particular market situation analysis is unsupported by substantial evidence and contrary to the law;

3. Whether Commerce's calculation of SeAH's constructed value profit rate is supported by substantial evidence and contrary to the law;

4. Whether Commerce's decision to reject portions of NEXTEEL's rebuttal brief from the administrative record is contrary to the law; 5. Whether Commerce's classification of proprietary SeAH products is supported by substantial evidence;

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

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

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

BACKGROUND

Commerce initiated an administrative review of the antidumping duty order of oil country tubular goods from Korea on November 9, 2016, based on timely requests from multiple companies. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 81 Fed. Reg. 78,778 (Nov. 9, 2016) (initiation notice). The period of review was September 1, 2015, through August 31, 2016. See id. at 78,781. Commerce selected NEXTEEL and SeAH as mandatory respondents for individual examination because they were the two exporters or producers accounting for the largest volume of subject merchandise during the period of review. See Mem. Selection of Respondents for the 2015–2016 Administrative Review of the Antidumping Duty Order on Oil Country Tubular Goods from the Republic of Korea, PD 28, bar code 3535941-01 (Jan. 12, 2017).

Commerce found the existence of a single particular market situation in the previous administrative review.¹ 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). Maverick alleged the continued existence of the particular market situation during the instant period of review. See Maverick Letter Re: Other Factual Information Submission for Valuing the Particular Market Situation in Korea, PD 95, bar code 3569192-01 (May 4, 2017). Maverick contended that the following conditions existed to create a single particular market situation: (1) subsidies were provided by the Government of Korea to producers of hot-rolled coil; (2) the flood of Chinese hot-rolled flat products caused resulting pressure on Korean domestic hot-rolled coil prices; (3) strategic alliances existed between Korean hot-rolled coil suppliers and Korean oil country tubular good producers; and (4) the Government of Korea influenced the cost of electricity. See id. Commerce accepted comments and supporting documentation from all interested parties on this matter. See Decision Memorandum for the Preliminary Results of the Antidumping Duty Administrative Review at 14, PD 298, bar code 3625402-01 (Oct. 2, 2017) ("Prelim. IDM").

Commerce issued its preliminary results on October 10, 2017. See Certain Oil Country Tubular Goods from the Republic of Korea, 82 Fed. Reg. 46,963 (Dep't Commerce Oct. 10, 2017) (preliminary results of antidumping duty administrative review; 2015–2016) ("Preliminary Results"). Commerce preliminarily assigned a weighted-average dumping margin of 46.37% to NEXTEEL, 6.66% to SeAH, and 19.68% to all non-examined companies. See Preliminary Results, 82 Fed. Reg. at 46,964.

Commerce issued its final results on April 18, 2018. See Certain Oil Country Tubular Goods from the Republic of Korea, 83 Fed. Reg. 17,146 (Dep't Commerce Apr. 18, 2018) (final results of the antidumping duty administrative review; 2015–2016) ("Final Results"); see also Issues and Decision Memorandum for the Final Results of the 2015–2016 Administrative Review of the Antidumping Duty Order on Certain Oil Country Tubular Goods from the Republic of Korea, PD 368, bar code 3694005-01 (Apr. 12, 2018) ("Final IDM"). The Department discovered that NEXTEEL's financial statements contained a mistranslation after briefing concluded and was not able to inquire further about this mistranslation through the issuance of supplemental questionnaires. See Final IDM at 44. Commerce found "that the nature of the loans recorded in the line item in question call into question the accuracy of information submitted by NEXTEEL during the instant review." Id. As a result, Commerce determined that NEXTEEL withheld information and "significantly impeded the proceeding," and applied total AFA to NEXTEEL. See id. at 44–49. Commerce assigned a weighted-average dumping margin of 75.81% to NEXTEEL and 6.75% to SeAH. Final Results, 83 Fed. Reg. at 17,147. Commerce assigned a weighted-average dumping margin of 6.75% to all non-examined companies based on SeAH's rate because it was the only calculated rate that was not zero, de minimis , or determined entirely on the basis of facts available, consistent with the agency's practice. Id.

NEXTEEL and SeAH initiated separate proceedings in this Court, which the court consolidated. See Order, July 31, 2018, ECF No. 29. NEXTEEL and SeAH both filed Rule 56.2 motions for judgment on the agency record. See Rule 56.2 Mot. J. Agency R. Pl. NEXTEEL Co., Ltd., Oct. 8, 2018, ECF No. 36; Mem. Supp. Pl. NEXTEEL Co., Ltd.'s Rule 56.2 Mot. J. Agency R., Oct. 8, 2018, ECF No. 36-1 ("NEXTEEL's Br."); Mot. Pl. SeAH Steel Corporation J. Agency R., Oct. 5, 2019, ECF No. 33; Br. SeAH Steel Corporation Supp. Rule 56.2 Mot. J. Agency R., Oct. 5, 2019, ECF No. 35 ("SeAH's Br."). The court held oral argument on April 9, 2019. See Closed Oral Argument, Apr. 9, 2019, ECF No. 64.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i) (2012)² and 28 U.S.C. § 1581(c), which grant the court the authority to review actions contesting the final results of an administrative review of an antidumping duty order. The court will uphold Commerce's determinations, findings, or conclusions unless they are unsupported by substantial evidence on the record, or otherwise not in accordance with the law. 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence "means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." A.L. Patterson, Inc. v. United States, 585 Fed. Appx. 778, 781–82 (Fed. Cir. 2014) (quoting Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ).

ANALYSIS

I. Application of Total AFA to NEXTEEL

Section 776 of the Tariff Act provides that if "necessary information is not available on the record" or if a respondent "fails to provide such information by the deadlines for submission of the information or in the form and manner requested,"...