279 F.Supp.3d 1349 (CIT. 2017), 16-00238, Hyundai Steel Co. v. United States

Docket Nº:16-00238, Slip Op. 17-173
Citation:279 F.Supp.3d 1349
Opinion Judge:Katzmann, Judge
Party Name:HYUNDAI STEEL COMPANY, Plaintiff, v. UNITED STATES, Defendant, and Steel Dynamics, Inc., et.al., Defendant-Intervenors.
Attorney:No. 16-00238, Slip Op. No. 17-173 J. David Park and Henry D. Almond, Arnold & Porter Kaye Scholer LLP, of Washington, DC, argued for plaintiff. With them on the brief was Daniel R. Wilson and Sylvia Y. Chen. Patricia M. McCarthy, Assistant Director, Civil Division, Commercial Litigation Branch, U...
Case Date:December 27, 2017
Court:United States District Court, Federal Circuit
 
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279 F.Supp.3d 1349 (CIT. 2017)

HYUNDAI STEEL COMPANY, Plaintiff,

v.

UNITED STATES, Defendant,

and

Steel Dynamics, Inc., et.al., Defendant-Intervenors.

No. 16-00238

Slip Op. No. 17-173

United States Court of International Trade

December 27, 2017

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J. David Park and Henry D. Almond, Arnold & Porter Kaye Scholer LLP, of Washington, DC, argued for plaintiff. With them on the brief was Daniel R. Wilson and Sylvia Y. Chen.

Patricia M. McCarthy, Assistant Director, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Renee A. Burbank, Senior Trial Counsel. Of counsel was Lydia Pardini and of counsel on the brief was Christopher Hyner, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Paul C. Rosenthal, Kelley Drye & Warren LLP, of Washington, DC, argued for defendant-intervenor, ArcelorMittal USA LLC. With him on the joint response brief were Roger B. Schagrin and Christopher T. Cloutier, Schagrin & Associates, of Washington, DC, for defendant-intervenor, Steel Dynamics, Inc.; Stephen A. Jones and Daniel L. Schneiderman, King & Spalding, LLP, of Washington, DC, for defendant-intervenor, AK Steel Corporation; Jeffrey D. Gerrish and Luke A. Meisner, Skadden Arps Slate Meager & Flom, LLP, of Washington, DC, for defendant-intervenor, United States Steel Corporation; and Alan H. Price, Timothy C. Brightbill and Chris B. Weld, Wiley Rein LLP, of Washington DC, for defendant-intervenor, Nucor Corporation.

OPINION

Katzmann, Judge

What is the extent of the responsibility of a respondent company to develop the administrative record upon which the United States Department of Commerce (" Commerce" ) bases its final determination in an antidumping duty investigation? What is the extent of Commerce’s authority to apply adverse inferences to a respondent who has not developed the record? May Commerce, in accordance with law, deny a constructed export price offset when such an adjustment had been previously granted to the same company in similar, but not identical, circumstances? These questions are now before the court.

Plaintiff Hyundai Steel Company (" Hyundai" ) challenges the final determination of sales at less-than-fair-value in the antidumping investigation by Commerce in Certain Hot-Rolled Steel Flat Products from the Republic of Korea, 81 Fed.Reg. 53,419 (Dep’t Commerce Aug. 12, 2016) (" Final Results " ). In particular, Hyundai contends that Commerce should not have applied adverse facts available (" AFA" ) in adjusting Hyundai’s reported expenses with respect to its transactions with certain affiliated companies. Hyundai further argues Commerce should have granted a constructed export price offset— in other words, Commerce should have made adjustments commensurate with differences between Hyundai’s selling activities in the Korean and U.S. markets as part of its analysis. The court finds neither of these contentions persuasive, and sustains Commerce’s determination.

BACKGROUND

I. Legal Background

Pursuant to United States antidumping law, Commerce must impose antidumping

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duties on subject merchandise that " is being, or is likely to be, sold in the United States at less than fair value" and that causes material injury or threat of material injury to a domestic industry. 19 U.S.C. § 1673 (2012).1 " Sales at less than fair value are those sales for which the ‘normal value’ (the price a producer charges in its home market) exceeds the ‘export price’ (the price of the product in the United States)." Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1322, 1326 (Fed. Cir. 2017). Normal value is defined as " the price at which the foreign like product is first sold ... in the exporting country [i.e., the home market]." 19 U.S.C. § 1677b(a)(1)(B)(i). Here, " normal value" refers to the price of Hyundai’s hot-rolled steel sold in Korea. Export price, or constructed export price (" CEP" ), means the price at which the subject merchandise is first sold to an unaffiliated purchaser in the United States. 19 U.S.C. § 1677a(a)-(b). Commerce uses CEP when a seller affiliated[2] with the producer makes the first sale to an unaffiliated purchaser in the United States. 19 U.S.C. § 1677a(b).

When making a comparison between export price, or CEP, and normal value, Commerce seeks to ensure that a producer’s costs are reflective of the market value of those goods or services, and may adjust both values. See 19 U.S.C. § 1677b(a), (b). Companies sometimes use affiliated companies to provide services like shipping, insurance, and other similar services for both home market sales and

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United States sales. Because of the companies’ affiliation, the costs may be distorted and not reflect the true market price of those services. Therefore, when a party sells its goods by using services from an affiliated company, Commerce must determine whether the transactions with the affiliated company were made at arm’s-length, or comparable to transactions conducted with an unaffiliated party. For home market sales, if a party cannot establish that a transaction with the affiliated party was made at arm’s-length, Commerce may make an " arm’s-length adjustment." See 19 U.S.C. § 1677b(b) (permitting Commerce to determine whether home market sales are distorted); 19 U.S.C. § 1677b(f)(2) (" A transaction directly or indirectly between affiliated persons may be disregarded if ... the amount representing that element does not fairly reflect the amount usually reflected in sales of merchandise under consideration in the market under consideration." ); 19 C.F.R. § 351.402(e) (2015).3

Information that producer respondents submit to Commerce during an investigation is subject to verification. See 19 U.S.C. § 1677m(i)(1).4

A. Adverse Facts Available

When either necessary information is not available on the record, or a respondent (1) withholds information that has been requested by Commerce, (2) fails to provide such information by Commerce’s deadlines for submission of the information or in the form and manner requested, (3) significantly impedes an antidumping proceeding, or (4) provides information that cannot be verified, then Commerce shall " use the facts otherwise available in reaching the applicable determination." 19 U.S.C. § 1677e(a). This subsection thus provides Commerce with a methodology to fill informational gaps when necessary or requested information is missing from the administrative record. See

Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003).

Commerce " may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available" (" AFA" ), if it " finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information[.]" Id. § 1677e(b)(1)(A). A respondent’s failure to cooperate to " the best of its ability" is " determined by assessing whether [it] has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries." Nippon Steel, 337 F.3d at 1382.

When applying an adverse inference, Commerce may rely on information from the petition, a final determination in the investigation, a previous administrative review, or any other information placed on the record. 19 U.S.C. § 1677e(b)(2); 19 C.F.R. § 351.308(c)(1)(2). If Commerce

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uses an adverse inference under § 1677e(b)(1)(A) in selecting among facts otherwise available, Commerce is not required to demonstrate that the dumping margin used " reflects an alleged commercial reality of the interested party." 19 U.S.C. § 1677e(d)(3).

Commerce has explained the rationale behind its AFA policy: [Commerce’s] practice when selecting an adverse rate from among the possible sources of information is to ensure that the result is sufficiently adverse " as to effectuate the statutory purposes of the AFA rule to induce respondents to provide the Department with complete and accurate information in a timely manner."

Ozdemir Boru San. ve Tic. Ltd. Sti. v. United States, 41 C.I.T. __, __, 273 F.Supp.3d 1225, 1233, 2017 WL 4651903, at *5 (Ct. Intl Trade 2017) (citations omitted). Commerce maintains that its practice also ensures " that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully." Id. (quoting Statement of Administrative Action, accompanying the Uruguay Round Agreements Act, H.R. No. 103-316, vol. 1, at 870 (1994), reprinted in 1994...

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