Nexteel Co. v. United States

540 F.Supp.3d 1320

NEXTEEL CO., LTD., Plaintiff,

Hyundai Steel Company and SeAH Steel Corporation, Consolidated Plaintiffs,

and

Hyundai Steel Company, Plaintiff-Intervenor,

v.UNITED STATES, Defendant,andWheatland Tube Company and Nucor Tubular Products Inc., Defendant-Intervenors.

Slip Op. 21-132

Consol. Court No. 20-03868

United States Court of International Trade.

September 27, 2021

J. David Park, Henry D. Almond, Daniel R. Wilson, Leslie C. Bailey, and Kang Woo Lee, Arnold & Porter Kaye Scholer LLP, of Washington, D.C., for Plaintiff NEXTEEL Co., Ltd.

Jarrod M. Goldfeder and Robert G. Gosselink, Trade Pacific PLLC, of Washington, D.C., for Consolidated Plaintiff and Plaintiff-Intervenor Hyundai Steel Company.

Jeffrey M. Winton, Michael J. Chapman, Amrietha Nellan, and Vi N. Mai, Winton & Chapman PLLC, of Washington, D.C., for Consolidated Plaintiff SeAH Steel Corporation.

Robert R. Kiepura, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Jonzachary Forbes, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Roger B. Schagrin and Elizabeth J. Drake, Schagrin Associates, of Washington, D.C., for Defendant-Intervenor Wheatland Tube Company.

Alan H. Price, Robert E. DeFrancesco, III, and Cynthia C. Galvez, Wiley Rein LLP, of Washington, D.C., for Defendant-Intervenor Nucor Tubular Products Inc.

OPINION AND ORDER

Choe-Groves, Judge:

Plaintiff NEXTEEL Co., Ltd. ("NEXTEEL"), Plaintiff-Intervenor and Consolidated Plaintiff Hyundai Steel Company ("Hyundai Steel"), and Consolidated Plaintiff SeAH Steel Corporation ("SeAH"), (collectively, "Plaintiffs"), challenge the final results in the 2017–2018 administrative review of the antidumping duty order covering circular welded non-alloy steel pipe ("CWP") from the Republic of Korea ("Korea"). Circular Welded Non-Alloy Steel Pipe from the Republic of Korea ("Final Results"), 85 Fed. Reg. 71,055 (Dep't of Commerce Nov. 6, 2020) (final results of antidumping duty admin. review; 2017–2018), and accompanying Issues & Decisions Mem. for the Final Results of the 2017–2018 Admin. Review of the Antidumping Duty Order on Circular Non-Alloy Steel Pipe from the Republic of Korea, ECF No. 25-5 ("Final IDM"). Before the Court are Plaintiffs’ motions for judgment on the agency record. Mot. Pl. [SeAH] J. Agency R., ECF No. 36; Br. [SeAH] Supp. Rule 56.2 Mot. J. Agency R., ECF No. 36-1 ("SeAH's Br."); Rule 56.2 Mot. J. Agency R. [NEXTEEL], ECF Nos. 37, 38; Mem. Supp. Pl. [NEXTEEL] Rule 56.2 Mot. J. Upon Agency R., ECF Nos. 37-1, 38-1 ("NEXTEEL's Br."); [Hyundai Steel] Rule 56.2 Mot. J. Agency R., ECF No. 39; Mem. Supp. Mot. [Hyundai Steel] J. Agency R., ECF No. 39-1 ("Hyundai Steel's Br.").

Defendant United States ("Defendant") responded. Def.’s Resp. Pls.’ Mots. J. on the Agency R., ECF No. 40 ("Defendant's Response" or "Def.’s Resp."). Defendant-Intervenors Wheatland Tube Company ("Wheatland") and Nucor Tubular Products Inc. (collectively, "Defendant-Intervenors") responded jointly. Resp. Br. [Def.-Intervs.], ECF No. 41 ("Defendant-Intervenors’ Response" or "Def.-Intervs.’ Resp.").

NEXTEEL and Hyundai Steel replied to Defendant's Response and Defendant-Intervenors’ Response. Reply Br. Supp. Pl. [NEXTEEL] Rule 56.2 Mot. for J. upon the Agency R., ECF No. 43; Reply Br. of Consol. Pl. & Pl.-Interv., [Hyundai Steel], ECF No. 44. For the following reasons, the Court remands the Final Results.

ISSUES PRESENTED

The Court reviews the following issues:

1. Whether Commerce's particular market situation adjustment to the cost of production when conducting a sales-below-cost test is in accordance with the law; and

2. Whether Commerce's particular market situation determination is in accordance with the law.

BACKGROUND

Commerce initiated this administrative review and selected NEXTEEL and Husteel Co., Ltd. ("Husteel") as mandatory respondents. Decision Mem. for the Prelim. Results of Antidumping Duty Admin. Review: Circular Welded Non-Alloy Steel Pipe from the Republic of Korea: 2017–2018 (Jan. 9, 2020) ("Prelim. DM") at 1, PR 203.¹ Wheatland submitted a particular market situation allegation ("Petition"). Id. at 9. Commerce calculated preliminary dumping margins of 31.64% for NEXTEEL, 5.11% for Husteel, and an all-others rate of 23.74%, which applied to Hyundai Steel and SeAH. Circular Welded Non-Alloy Steel Pipe from the Republic of Korea ("Preliminary Results"), 85 Fed. Reg. 2719 (Dep't of Commerce Jan. 16, 2020) (prelim. results of antidumping duty admin. review; 2017–2018).

Commerce determined that a particular market situation existed in Korea that distorted the cost of production of CWP, and applied an upward adjustment to the cost of production based on a regression analysis submitted by Wheatland in the Petition ("regression analysis"). Prelim. DM at 12–13. The regression analysis was submitted with the Petition and "quantifie[d] the impact of global steel excess capacity on the price of [hot-rolled steel coil] in Korea, and derive[d] a corresponding percentage adjustment factor that ... account[ed] for the distortions inherent to an overcapacity-driven [particular market situation]." Id. at 10. Commerce conducted a sales-below-cost test and disregarded certain sales made at prices below the cost of production. Id. at 17–18. Commerce calculated normal value from the remaining above-cost home market sales for mandatory respondents NEXTEEL and Husteel. Id. at 18.

In the Final Results, Commerce used the methodology applied in the Preliminary Results but corrected the amount of the particular market situation adjustment to the cost of production for costs related only to hot-rolled steel coil instead of "all direct material costs." Final IDM at 3.

Commerce assigned weighted-average dumping margins of 27.28% for NEXTEEL, 4.92% for Husteel, and an all-others rate of 21.01%, which applied to Hyundai Steel and SeAH. Final Results, 85 Fed. Reg. at 71,056.

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c), which grant the Court authority to review actions contesting the final results of an administrative review of an antidumping duty order. The Court shall hold unlawful any determination found to be unsupported by substantial record evidence or otherwise not in accordance with the law. 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Particular Market Situation

A. Governing Law

Commerce determines antidumping duties by calculating the amount by which the normal value of subject merchandise exceeds the export price or the constructed export price for the merchandise. 19 U.S.C. § 1673. When reviewing antidumping duties in an administrative review, Commerce must determine: (1) the normal value and export price or constructed export price of each entry of the subject merchandise, and (2) the dumping margin for each such entry. Id. § 1675(a)(1)(B), (a)(2)(A). The statute dictates the steps by which Commerce may calculate normal value "to achieve a fair comparison" with export price or constructed export price. Id. § 1677b(a).

First, the statute specifies the methodology for Commerce to determine which sales should be considered and disregarded in calculating normal value. Normal value is "the price at which the foreign like product is first sold ... in the exporting country ... in the ordinary course of trade." Id. § 1677b(a)(1)(B)(i). Sales outside the ordinary course of trade are excluded from normal value. "Ordinary course of trade" is defined in Section 1677(15) as excluding: (1) sales made at less than the cost of production, and (2) sales that cannot be compared properly with the export price or constructed export price due to a particular market situation. Id. § 1677(15)(A), (C). To determine whether "sales ... have been made at prices that represent less than the cost of production," the statute directs Commerce to conduct the sales-below-cost test. Id. § 1677b(b)(1). The cost of production is defined by statute to include the cost of materials and processing, amounts for selling, general, and administrative expenses, and the cost of all containers and expenses incidental for shipment. Id. § 1677b(b)(3). Sales that Commerce determines, by application of the sales-below-cost test, were made at prices below the cost of production or that Commerce determines were made in a particular market situation, are outside the ordinary course of trade and are disregarded from the calculation of normal value. See id. § 1677b(b)(1), (a)(1)(B)(i). "Whenever such sales are disregarded, normal value shall be based on the remaining sales of the foreign like product in the ordinary course of trade." Id. § 1677b(b)(1).

Second, when using market prices to determine normal value, Commerce may make certain adjustments to the remaining home market prices. The statute lists authorized adjustments for incidental shipping, delivery expenses, and direct taxes, and for differences between the subject merchandise and foreign like products in quantity, circumstances of sale, or level of trade. Id. § 1677b(a)(6), (7).

Third, when using home market sales for normal value, if Commerce cannot determine the normal value of the subject merchandise based on home market sales, then Commerce may use qualifying third-country sales or a constructed value as a basis for normal value. Id. § 1677b(a)(4), (a)(1)(B)(ii), (b)(1). Constructed value represents: (1) the cost of materials and fabrication or other processing of any kind used in producing the merchandise; (2) the actual amounts incurred and realized for selling, general, and administrative expenses, and for profits, in connection with the production and sales of a foreign like product, in the ordinary course of...