764 F.Supp.2d 1322 (CIT 2011), 09-00248, SeAH Steel Corp. v. United States

Docket Nº:Court 09-00248.
Citation:764 F.Supp.2d 1322
Opinion Judge:CARMAN, Judge:
Party Name:SEAH STEEL CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and Bristol Metals, Defendant-Intervenor. Slip Op. 11-33.
Attorney:Troutman Sanders LLP (Donald B. Cameron; Julie C. Mendoza; R. Will Planert; Brady W. Mills; Mary S. Hodgins), Washington, DC, for Plaintiff. Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy; Assistant Director, Commercial Litigation Branch, Civil Division,...
Case Date:March 29, 2011
Court:Court of International Trade
 
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764 F.Supp.2d 1322 (CIT 2011)

SEAH STEEL CORPORATION, Plaintiff,

v.

UNITED STATES, Defendant,

and

Bristol Metals, Defendant-Intervenor.

Slip Op. 11-33.

Court No. 09-00248.

United States Court of International Trade.

March 29, 2011

Page 1323

Troutman Sanders LLP (Donald B. Cameron; Julie C. Mendoza; R. Will Planert; Brady W. Mills; Mary S. Hodgins), Washington, DC, for Plaintiff.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy; Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Claudia Burke); Scott D. McBride, Office of the Chief Counsel for Import Administration, United States Department of Commerce, Washington, DC; for Defendant.

Schagrin Associates (Roger B. Schagrin; Michael J. Brown), Washington, DC, for Defendant-Intervenor.

OPINION & ORDER

CARMAN, Judge:

This case disputes the results of a Court-ordered remand of the Final Results of the 2006-2007 administrative review of the antidumping duty order covering certain steel products manufactured by SeAH, and now reviews Commerce's Final Results of Redetermination Pursuant to Court Remand (" Remand Redetermination " ). The results of the initial administrative review were published as Certain Welded Stainless Steel Pipes from the Republic of Korea: Final Results of Antidumping Duty Administrative Review, 74 Fed.Reg. 31,242 (June 30, 2009) (" Final Results " ), and incorporated by reference an accompanying Issues and Decision Memorandum (PR 1 74, " IDM " ), setting

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forth the Department's analysis in detail. The Court remanded in part and affirmed in part the Final Results in a Slip Opinion on Plaintiff's USCIT R. 56.2 Motion challenging the Final Results. SeAH Steel Corp. v. United States, 34 CIT ----, 704 F.Supp.2d 1353 (2010). In that opinion, the Court granted Commerce's request for a voluntary remand so that the agency could reconsider the use of steel specification as well as grade when conducting its major input analysis for SeAH Steel Corporation (" Plaintiff" or " SeAH" ). The Court also remanded to Commerce for more complete data and explanation regarding the methodology by which Commerce conducted the cost recovery test set out in section 773(b)(2) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1677b(b)(2).2 The Court directed Commerce to provide additional data regarding the effect of its cost recovery methodology on the computation of Plaintiff's normal value, to explain its methodology more clearly, and to reconsider whether the methodology employed was consistent with the cost recovery section of the antidumping statute.

In the Remand Redetermination, Commerce determined, based on additional information provided by Plaintiff, to consider steel specification as well as steel grade in applying the major input analysis, and as a result decreased the dumping margin calculated for SeAH from 9.05 percent to 7.92 percent. ( Id. at 1.) As for the cost recovery methodology, Commerce complied with the Court's requirement to provide a clear analysis of its methodology and additional data showing how it implemented that methodology. Commerce, upon reconsideration, determined that its methodology was consistent with the cost recovery statute and therefore continued to employ it.

The Court affirms the portion of the Remand Redetermination in which Commerce decided to consider both steel grade and steel specification in its major input analysis. However, the Court holds that the cost recovery methodology employed by Commerce violates requirements imposed by the statute, and therefore exceeds Commerce's authority. The case is remanded for Commerce to employ a cost recovery methodology consistent with the statute, as discussed in detail below.

I. Major Input Analysis

A. Background

The issue in this case regarding major input analysis stems from SeAH's purchase of stainless steel hot-rolled coils, an input in the production of stainless steel pipe, from affiliate POSCO. ( Remand Redetermination at 25.) The amount paid to an affiliate for purchases of a major input, the market price of those inputs, and the affiliate's cost of producing major inputs are all relevant to the statutory and regulatory analysis conducted by Commerce. ( Id. at 26.) SeAH thus reported these values to Commerce on the basis of both steel grade and, within each grade, steel specification. The specifications included " STS" (for steel coil meeting the Japanese Industrial Standards and Korean Industrial Standards, which are effectively identical) and " ASTM" (for steel meeting the American Society of Testing Materials standards). ( Id. ) In the Final Results, Commerce " considered differences among the steel grades reported by SeAH," but " aggregated price and cost data for the ASTM and STS specifications." ( Id. at 27.) SeAH argued in the brief accompanying its USCIT R. 56.2 motion that disregarding specification was unlawful and improper, and Commerce requested a voluntary remand to gather further information and reexamine

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the question. ( Id. ) The Court granted the voluntary remand request. 704 F.Supp.2d at 1378-79.

B. Remand Results

On remand, Commerce gathered additional data from SeAH regarding its steel specifications and accepted argument from Defendant-Intervenor and SeAH as to whether specification distinctions should affect Commerce's major input analysis. ( Remand Redetermination at 27.)

The new record data demonstrated " physical and chemical differences" between the ASTM and STS specifications within each grade of steel coil purchased by SeAH from POSCO. ( Id. at 28.) Steel within a single grade was more expensive when produced to STS standards than when produced to ASTM standards due to these differences, especially the requirement that STS steel contain one percent more nickel, " a very expensive raw material." ( Id. ) Noting that production of STS-specified steel was more costly than production of ASTM-specified steel of the same grade, and that record evidence showed that sales of steel in each specification were correspondingly priced, the Department revised its major input calculations to take specification into account and recalculated SeAH's dumping margin. ( Id. at 29.)

Defendant-Intervenor did not comment on the Department's draft of the Remand Redetermination ( id. at 29-30), but has opposed the Department's consideration of specification in comments to this Court ( Comments of Defendant Intervenor Bristol Metals to the Commerce Final Results of Redetermination Pursuant to Court Remand (" Bristol Comments " ) 8-15.) SeAH supports the Department's revised major inputs analysis and urges the Court to affirm that part of the Remand Redetermination. ( Pl. SeAH Steel Corp.'s Comments on the U.S. Dep't of Comm's Sept. 17, 2010 Final Results of Redetermination Pursuant to Court Remand (" SeAH Comments" ) at 1. ) In its response to the comments of the parties, Commerce argues that the Court should disregard Defendant-Intervenor's objections to the major inputs analysis because Defendant-Intervenor failed to comment on the draft Remand Redetermination and thus failed to exhaust its administrative remedies. ( Def.'s Response to Comments Regarding the Remand Determination (" Commerce Response " ) at 2, 11-12.)

C. Analysis

Plaintiff and Defendant agree that the Remand Redetermination should be upheld on the issue of the major input analysis. The only party that contests this issue is Defendant-Intervenor Bristol Metals (" Bristol" ). However, as Commerce points out, this Court takes a strict view of the administrative exhaustion doctrine. See Jiaxing Brother Fastener Co., Ltd. v. United States, 751 F.Supp.2d 1345, 1355-1357 (2010). This is not from caprice or blind adherence to custom, but rather due to statutory mandate. See 28 U.S.C. § 2637(d) (requiring that the Court of International Trade, " where appropriate, require the exhaustion of administrative remedies" in trade cases).

Strict construal of this statute conforms with guidance from the Court of Appeals for the Federal Circuit. Jiaxing, 751 F.Supp.2d at 1355-56 ( quoting Corus Staal BV v. United States, 502 F.3d 1370, 1379 (Fed.Cir.2007)). Certain exceptions to the exhaustion requirement apply: where exhaustion would be " a useless formality," intervening legal authority " might have materially affected the agency's actions," the issue involves " a pure question of law not requiring further factual development," where " clearly applicable precedent" should have bound the agency, or

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where the party " had no opportunity" to raise the issue before the agency. Jiaxing, 751 F.Supp.2d at 1355-56 (citing cases). None of these exceptions applies here, however, and the Court therefore will not consider Bristol's opposition to the major input analysis in the Remand Redetermination.

There being no cognizable objections on this issue, and Commerce's approach being supported on its face by substantial evidence upon the record, the Remand Redetermination is affirmed as to the major input analysis.

II. Commerce's Implementation of the Cost Recovery Test

The central issue in dispute here is the method by which Commerce conducted the cost recovery test, a process set forth in the antidumping statute which describes the particular sales that Commerce is to include when it calculates the " Normal Value" (" NV" ) of the subject merchandise in the home market. The Court's role here is to " 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). Because the Court determines that the Department's methodology...

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