Productos Laminados De Monterrey S.A. De C.V. v. United States

581 F.Supp.3d 1349

PRODUCTOS LAMINADOS DE MONTERREY S.A. DE C.V., Plaintiff,

v. UNITED STATES, Defendant,andNucor Tubular Products Inc., Atlas Tube, a Division of Zekelman Industries, and Searing Industries, Defendant-Intervenors.

Slip Op. No. 22-77

Court No. 20-00166

United States Court of International Trade.

July 6, 2022

David E. Bond, White & Case, LLP, of Washington, D.C., for plaintiff Productos Laminados de Monterrey S.A. de C.V. With him on the brief was Allison J. G. Kepkay.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant the United States of America. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Ayat Mujais, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Alan H. Price, Wiley Rein, LLP, of Washington, D.C., for defendant-intervenor Nucor Tubular Products Inc. With him on the brief were Robert E. DeFrancesco, III, Jake R. Frischknecht, and Paul A. Devamithran.

Christopher T. Cloutier, Schagrin Associates, of Washington, D.C., for defendant-intervenors Atlas Tube and Searing Industries. With him on the brief were Roger B. Schagrin, Luke A. Meisner, and Kelsey M. Rule.

Stanceu, Judge:

Plaintiff Productos Laminados de Monterrey S.A. de C.V. ("Prolamsa") is a Mexican producer and exporter of heavy walled rectangular carbon welded steel pipes and tubes. This class or kind of merchandise (referred to herein as "HWR" or "HWRT") is subject to an antidumping duty order issued in 2016.

This litigation arose from the final determination the International Trade Administration, U.S. Department of Commerce ("Commerce" or the "Department") issued to conclude the second periodic administrative review ("second review") of the antidumping duty order (the "Order"), which assigned to Prolamsa a weighted average dumping margin of 7.47%.

Before the court is a "Remand Redetermination" that Commerce submitted in response to the court's Opinion and Order granting plaintiff's motion for judgment on the agency record. The Remand Redetermination determined a revised margin of 0.89% for Prolamsa. Plaintiff supports the Remand Redetermination, and defendant United States requests that the court enter judgment to sustain it. Defendant-intervenor Nucor Tubular Products Inc. ("Nucor") is opposed. Defendant-intervenors Atlas Tube, a Division of Zekelman Industries, and Searing Industries did not submit comments to the court on the Remand Redetermination and, therefore, have raised no objection to this result. The court sustains the Remand Redetermination.

I. BACKGROUND

The contested agency determination (the "Final Results") was published as Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes From Mexico: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments; 2017–2018 , 85 Fed. Reg. 41,962 (Int'l Trade Admin. July 13, 2020) ("Final Results "). In the Order, Commerce described the subject merchandise as "certain heavy walled rectangular welded steel pipes and tubes of rectangular (including square) cross section, having a nominal wall thickness of not less than 4 mm." Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes From the Republic of Korea, Mexico, and the Republic of Turkey: Antidumping Duty Orders , 81 Fed. Reg. 62,865, 62,865 (Int'l Trade Admin. Sept. 13, 2016) ("Order "). These products, which typically are supplied in lengths, commonly from 20 to 42 feet, to manufacturers who further process them, "are used in construction for support and for load-bearing purposes, as well as in transportation, farm, and material handling equipment."

Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from Korea, Mexico, and Turkey , Inv. Nos. 701-TA-539, 731-TA-1280-1282, USITC Pub. 4633, at I-12 (Sept. 2016) (Final).

In response to Prolamsa's claim, the court issued an Opinion and Order remanding the Final Results to Commerce for reconsideration. Productos Laminados de Monterrey S.A. de C.V. v. United States , 45 CIT ––––, ––––, 554 F. Supp. 3d 1355, 1365 (2021) (" Prolamsa I "). Prolamsa I provides background information on this litigation. Id. , 45 CIT at ––––, 554 F. Supp. 3d at 1356–58.

Commerce submitted its decision in response to Prolamsa I on April 7, 2022. Final Results of Redetermination pursuant to Court Remand , ECF No. 61-1 ("Remand Redetermination "). Defendant-Intervenor Nucor Tubular Products, Inc. ("Nucor") commented in opposition on May 9, 2022. Def.-Int. Nucor Tubular Products, Inc.’s Comments on Remand Redetermination, ECF Nos. 64 (conf.), 65 (public) ("Nucor's Comments").¹ Following Prolamsa's submission of comments in support, Comments in Resp. to Comments on Remand Redetermination (May 24, 2022), ECF Nos. 69 (conf.), 70 (public), defendant replied to the comments, advocating that the court sustain the Remand Redetermination. Def.’s Resp. to Comments on Remand Redetermination (May 26, 2022), ECF No. 71.

II. DISCUSSION

A. Jurisdiction and Standard of Review

The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c),² pursuant to which the court reviews actions commenced under section 516A of the Tariff Act of 1930 ("Tariff Act"), 19 U.S.C. § 1516a, including an action contesting a final determination Commerce issued to conclude an administrative review of an antidumping duty order.

In reviewing an agency decision such as the Remand Redetermination, the court "shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence refers to "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." SKF USA, Inc. v. United States , 537 F.3d 1373, 1378 (Fed. Cir. 2008) (quoting Consol. Edison Co. v. NLRB , 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ).

B. Prolamsa's Claim that the Final Results Were Contrary to Law

In contesting the Final Results, Prolamsa claimed that Commerce unlawfully denied its request for a "level-of-trade" ("LOT") adjustment under section 773(a)(7) of the Tariff Act, 19 U.S.C. § 1677b(a)(7), that would apply to certain of its sales of the foreign like product in its home market of Mexico.

Plaintiff described its home market ("HM") sales during the period of review ("POR"), September 1, 2017 to August 31, 2018, as having been made through four channels of distribution, three of which it described as "commercial" sales and one of which (the "HM Channel 4" sales) it described as "industrial" sales. As the court stated in Prolamsa I :

Prolamsa contrasted its HM Channel 4 sales, to which it referred as its "industrial" sales, with those sold through its other three channels of distribution, to which it referred as its "commercial" sales of HWR pipes and tubes, and which it described as follows: direct sales to unaffiliated customers from inventory stored at its plants ("HM Channel 1"); direct sales to unaffiliated customers from inventory stored at its warehouses ("HM Channel 2"); and sales to unaffiliated resellers, which products subsequently were resold to unaffiliated home market customers ("HM Channel 3").

Prolamsa I , 45 CIT at ––––, 554 F. Supp. 3d at 1360 (citation omitted). Prolamsa described its Channel 4 sales as "sales of custom-designed parts that were made from HWR pipes and tubes and that were produced for, and sold to, original equipment manufacturers (‘OEMs’)." Id. (citation omitted).

As the court recounted, "Prolamsa argued that all of its U.S. sales were more similar, in terms of characteristics and selling functions, to its HM Channels 1, 2, and 3 sales, i.e., its ‘commercial’ sales, than they were to its ‘industrial’ sales of HM Channel 4." Id. (citation omitted). "Prolamsa contended that its U.S. sales should be compared to HM Channels 1–3, and that HM Channel 4 sales should not be used for comparison purposes unless sales in HM Channels 1–3 are unavailable, and that in such an instance Commerce should make a level-of trade adjustment." Id. , 45 CIT at ––––, 554 F. Supp. 3d at 1361 (citation omitted). In reaching the preliminary results of the second review ("Preliminary Results"), Commerce agreed, finding that Prolamsa had sold the foreign like product at two levels of trade in the home market. Id. (citation omitted). "Commerce used Prolamsa's HM Channel 4 sales for price comparisons with U.S. sales only when no HM Channel 1, 2, or 3 sales were available for comparison with U.S. sales, and when it used an HM Channel 4 sale for that purpose, it made an adjustment, i.e., a reduction, in normal value to account for the difference in level of trade." Id. In the Preliminary Results, Commerce calculated for Prolamsa a preliminary weighted average dumping margin of 0.8%. Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from Mexico: Preliminary Results of Antidumping Duty Administrative Review and Preliminary Determination of No Shipments; 2017–2018 , 84 Fed. Reg. 63,610, 63,610 (Int'l Trade Admin.) ("Preliminary Results "). For the Final Results, Commerce changed its position and treated all home market sales of the foreign like product as having been made at a single level of trade, which change (along with other changes not contested in this litigation) resulted in the final weighted average dumping margin of 7.47%. Final Results , 85 Fed. Reg. at 41,963.

C. The Court's Decision in Prolamsa I

The court identified two shortcomings in the Department's level-of-trade analysis for the Final Results, both of which involved a finding or conclusion not supported by substantial evidence on the administrative record of the second review.

First, the court rejected as unsupported by the record evidence the...