De Mexico v. United States

• Decision Date: 29 May 2014
• Docket Number: No. 2013–1391.,2013–1391.
• Citation: 753 F.3d 1227
• Parties: MUELLER COMERCIAL DE MEXICO, S. DE R.L. DE C.V. and Southland Pipe Nipples Co., Inc., Plaintiffs–Appellants, v. UNITED STATES, Defendant–Appellee, and TMK IPSCO Tubulars and Allied Tube and Conduit, Defendants–Appellees, and United States Steel Corporation, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

753 F.3d 1227

MUELLER COMERCIAL DE MEXICO, S. DE R.L. DE C.V. and Southland Pipe Nipples Co., Inc., Plaintiffs–Appellants,

v. UNITED STATES, Defendant–Appellee,andTMK IPSCO Tubulars and Allied Tube and Conduit, Defendants–Appellees,andUnited States Steel Corporation, Defendant–Appellee.

No. 2013–1391.

United States Court of Appeals, Federal Circuit.

May 29, 2014.

Yohai Baisburd, White & Case LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief were David E. Bond, Jay C. Campbell and Tingting Kao.

Douglas G. Edelschick, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel was Nathaniel J. Halvorson, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Roger B. Schagrin, Schagrin Associates, of Washington, DC, argued for defendants-appellees TMK IPSCO Tubulars, et al. With him on the brief was John W. Bohn.

Ellen J. Schneider, Skadden Arps, Slate, Meagher & Flom LLP, of Washington, DC, argued for defendant-appellee United States Steel Corporation. With her on the brief were Robert Lighthizer and Jeffrey D. Gerrish. Of counsel were James C. Hecht and Luke A. Meisner.

Before NEWMAN, DYK, and TARANTO, Circuit Judges.

DYK, Circuit Judge.

Plaintiffs Mueller Comercial de Mexico, S. de R.L. de C.V., and Southland Pipe Nipples Company, Inc.¹ (collectively, “Mueller”) appeal from a decision of the Court of International Trade sustaining the United States Department of Commerce's (“Commerce”) antidumping determination. We vacate and remand.

Background

The Tariff Act of 1930 (the “Act”), as amended, permits Commerce to levy antidumping duties on goods “sold in the United States at less than ... fair value.” 19 U.S.C. § 1673. Antidumping duty orders are issued for imported merchandise that is sold in the United States below its fair value and materially injures or threatens to injure a domestic industry. Id. An antidumping duty reflects the amount by which the “normal value” of a product (typically, the home market price—the price of the merchandise when sold for consumption in the exporting country), 19 U.S.C. § 1677b(1), exceeds the “export price” of the merchandise. 19 U.S.C. §§ 1673, 1677(35)(A). This difference is called the dumping margin. The imposition of the antidumping duty, equal to the dumping margin, is intended to ensure that merchandise is not sold in the United States below its fair value.

Commerce periodically reviews and reassesses antidumping duties imposed in earlier proceedings. 19 U.S.C. § 1675(a). On November 2, 1992, Commerce published an antidumping duty order on certain circular welded non-alloy steel pipe from Mexico. On November 2, 2009, Commerce published a notice of opportunity to request an administrative review of the antidumping duty order. Commerce received requests for administrative review from appellant Mueller; Tuberia Nacional, S.A. de C.V. (“TUNA”); and Ternium Mexico, S.A. de C.V. (“Ternium”), and from defendant-appellees Allied Tube and Conduit Corporation and TMK IPSCO Tubulars.

On December 23, 2009, Commerce initiated an antidumping administrative review concerning the period spanning from November 1, 2008, to October 31, 2009, issuing questionnaires to three mandatory respondents: (1) Mueller, an exporter, which purchased the majority of its subject merchandise from TUNA and Ternium, (2) TUNA and (3) Ternium, both producers of subject merchandise. TUNA's review was rescinded (because there were no direct shipments), and Ternium opted not to participate in its own margin calculation. As a result, Commerce drew an adverse inference against Ternium pursuant to 19 U.S.C. § 1677e(b), assigning an adverse facts available (“AFA”) dumping margin of 48.33 percent, “which is the highest calculated transaction-specific margin from the most recently-completed administrative review of this antidumping duty order in which a rate was calculated.” J.A. 63 (Preliminary Results). Ternium's dumping margin is not at issue in this appeal.

For Commerce to calculate Mueller's antidumping rate, it was required to determine the difference between the “normal value” of Mueller's goods (typically “home market” price) and the “export price” at which Mueller's goods were sold in the United States. 19 U.S.C. §§ 1677(35)(A), 1677b(a). The “normal value” is ordinarily the price at which the goods were first sold for consumption in the exporting country—in this case, in Mexico. Id. § 1677b(a)(1)(B)(i). Here, Mueller had sufficient volume of home market sales such that they could be used to calculate “normal value.” See id. § 1677b(a)(1)(B)(ii)(II). However, where an exporter's home market price is less than the cost of production for the goods it sells, Commerce “may” disregard the below cost sales to calculate “normal value.” Id. § 1677b(b)(1). Therefore, Commerce must determine the cost of production of the subject merchandise. Id. § 1677b(b)(3). Such production costs are normally “calculated based on the records of the exporter or producer of the merchandise, if such records are kept in accordance with the generally accepted accounting principles of the exporting country ... and reasonably reflect the costs associated with the production and sale of the merchandise.” Id. § 1677b(f)(1)(A). If the cost of production is greater than the home market price, home market sales below production cost may be disregarded in calculating the normal value.²Id. §§ 1677b(b)(1)(A); 1677b(b)(2)(C).

Although Mueller fully cooperated with Commerce's review, Mueller did not possess all of the production cost information necessary to calculate its antidumping margin. See19 U.S.C. § 1677b(b)(3). To calculate cost of production, Commerce requested data directly from Mueller's two principal suppliers, TUNA and Ternium.

TUNA fully cooperated with the data requests, reporting cost of production on a product-specific basis. However, Ternium did not “provide detailed product-specific calculations that allocate[d] costs based on product dimensions.” J.A. 47 (Memorandum from Mark Flessner, Case Analyst, Dep't of Commerce, to Richard Weible, Office Director, Dep't of Commerce, Certain Circular Welded Non–Alloy Steel Pipe from Mexico: Use of [AFA] for Final Results 2 (June 13, 2011)) (“AFA Mem.”) (internal quotation marks omitted). Ternium stated that it did not provide the data because it was not “readily available.” As a result, Commerce did not have the data necessary to calculate margins that took into account cost differences associated with the different physical characteristics of the goods.

For its preliminary analysis, Commerce simply relied on the submitted data and calculated a weighted-average dumping margin of 4.81 percent for Mueller. But because Ternium did not submit necessary cost data before the time for a final determination, in making the final calculations, Commerce used “facts otherwise available” to calculate Mueller's margin under 19 U.S.C. § 1677e(a) of the statute. Specifically, Commerce concluded that the production costs of the goods Mueller acquired from Ternium (data that was unavailable) were related to acquisition costs (data that was available). Commerce identified the three sales transactions between TUNA and Mueller made at the greatest discount to Mueller—where Mueller's acquisition cost was the furthest below TUNA's production cost. Commerce then inferred that all of Ternium's pipe that was sold to Mueller involved this discount for acquisition cost. This enabled Commerce to calculate Ternium's cost of production from Mueller's cost of acquisition from Ternium. Although there were other sales transactions between TUNA and Mueller that were not discounted as significantly, Commerce chose not to use that data. In its Final Results, Commerce used data from the three transactions to calculate a new weighted-average dumping rate for Mueller of 19.81 percent.

On August 22, 2011, Mueller filed suit in the Court of International Trade (“Trade Court”) seeking to overturn Commerce's Final Results, noting that Mueller had fullycooperated and alleging that Commerce's application of “Ternium's AFA to its calculation of the margin for Mueller,” despite Mueller's full cooperation with Commerce's requests, was improper. J.A. 197. Mueller argued that, instead, Commerce should have calculated production costs using the entire TUNA data set.³ The Trade Court found that Commerce's application of facts available was reasonable, and sustained the Final Results. Mueller appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

I

As discussed, Mueller's antidumping rate was based on the difference between the “normal value” of the subject merchandise (typically, the “home market” price) and the “export price” of the goods sold in the United States. See19 U.S.C. § 1677(35)(A). But Mueller's data alone could not be used to determine whether its home market sales were below the cost of production for the goods. Commerce requested data from Mueller's two primary suppliers, TUNA and Ternium, to calculate the cost of production for the subject merchandise. See19 U.S.C. § 1677b(b)(3). Ternium did not provide product-specific cost data that would enable Commerce to calculate Ternium's cost of production for each product, failing to account for different costs based on nominal pipe size and pipe wall thickness. Therefore, Commerce did not have sufficient information to calculate Mueller's antidumping rate.

When Commerce is missing necessary data, the statute provides two options to secure data that can be used as a substitute for the missing information. See19 U.S.C. § 1677e. The first is “facts otherwise available.” The statute provides:

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