Downhole Pipe & Equip., L.P. v. United States
| Decision Date | 29 January 2015 |
| Docket Number | No. 2014–1225.,2014–1225. |
| Citation | 776 F.3d 1369 |
| Parties | DOWNHOLE PIPE & EQUIPMENT, L.P., and DP–Master Manufacturing Co., Ltd., Plaintiffs–Appellants, v. UNITED STATES, VAM Drilling USA, Texas Steel Conversions, Inc., Rotary Drilling Tools, and TMK IPSCO, Defendants–Appellees, and United States Steel Corporation, Defendant. |
| Court | U.S. Court of Appeals — Federal Circuit |
Mark B. Lehnardt, Lehnardt & Lehnardt LLC, of Liberty, Missouri, argued for plaintiffs-appellants.
Mikki Cottet, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel was Michael Thomas Gagain, 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 VAM Drilling USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, and TMK IPSCO. With him on the brief was John W. Bohn.
Before REYNA, LINN, and WALLACH, Circuit Judges.
Appellants Downhole Pipe & Equipment, LP, and DP–Master Manufacturing Co., Ltd. (collectively, “Downhole Pipe”) appeal the decisions of the United States Court of International Trade (“CIT”) (1) affirming the United States Department of Commerce's (“Commerce”) scope and industry support determinations and (2) sustaining Commerce's Final Results of Redetermination Pursuant to Court Remand. See Downhole Pipe & Equip., LP v. United States (Downhole Pipe II ), 949 F.Supp.2d 1288 (Ct.Int'l Trade 2013) ; Downhole Pipe & Equip. LP v. United States (Downhole Pipe I ), 887 F.Supp.2d 1311 (Ct.Int'l Trade 2012) ; see also Drill Pipe From the People's Republic of China, A–570–965 (Dep't of Commerce May 13, 2013) (final results of redetermination pursuant to court remand) (“Remand Results ”); Drill Pipe From the People's Republic of China, 75 Fed.Reg. 4,531 (Dep't of Commerce Jan. 28, 2010) (initiation of antidumping duty investigations) (“Initiation ”). Because Commerce's determinations were supported by substantial evidence and were not otherwise contrary to law, this court affirms.
Downhole Pipe is a United States importer of “drill pipe” produced by DP–Master Manufacturing Co., Ltd. (“DP–Master”), a Chinese producer. Drill pipe is a specialized high-strength iron alloy tube, used in oil-drilling applications, and is manufactured in three stages: first, seamless tubes called “green tube” are produced from raw steel; second, the manufacturer uses complex processes to “upset” and heat-treat green tube to thicken the ends and increase the yield strength to the desired American Petroleum Institute (“API”) grade; third, the manufacturer friction-welds a specialized “tool joint” to the ends of the heat-treated and upset tube to complete the drill pipe. While green tube is the primary input in the production of drill pipe, it can also be processed into other “oil country tubular goods.” Oil country tubular goods, which consist primarily of casing and tubing, are used in connection with the transport of oil and gas, while drill pipe is primarily used in drilling.
In 2009, Commerce received a petition from several domestic drill pipe producers, including Appellees VAM Drilling USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, and TMK IPSCO (collectively, “Petitioners”), seeking imposition of antidumping and countervailing duties on drill pipe from the People's Republic of China (“China”). Drill Pipe From the People's Republic of China, No. A–570–965 (Dep't of Commerce Dec. 31, 2009) (petition for the imposition of antidumping and countervailing duties) (P.J.A. 56–230) (“Petition ”). Some of the petitioners produce green tube for drill pipe, while others produce finished drill pipe. Prior to Commerce's initiation of the antidumping investigation, Downhole Pipe objected to the proposed scope of the investigation, arguing green tube should not be included within the scope, because it was already covered by an ongoing investigation into oil country tubular goods, and Commerce should disregard green tube production for purposes of calculating domestic industry support.
After considering these objections, Commerce revised the scope of the investigation in the Initiation, specifying “ ‘[t]he scope does not include ... unfinished tubes for casing or tubing covered by any other antidumping or countervailing duty order.’ ” Downhole Pipe I, 887 F.Supp.2d at 1316 (citation omitted); Initiation, 75 Fed.Reg. at 4,535. Commerce also found sufficient domestic industry support for the Petition, as calculated using the revised scope. Therefore, in 2010, Commerce initiated the antidumping investigation of drill pipe from China.
In its Preliminary Determination, Commerce determined drill pipe from China was, or was likely to be, sold in the United States at less-than-fair value. Drill Pipe From the People's Republic of China, 75 Fed.Reg. 51,004 (Dep't of Commerce Aug. 18, 2010) (preliminary determination of sales at less than fair value and affirmative determination of critical circumstances, and postponement of final determination) (“Preliminary Determination ”). While Commerce maintained the scope as defined in the Initiation over Downhole Pipe's objections, in the Preliminary
Commerce issued its Final Determination on January 11, 2011, continuing to find drill pipe from China was being, or was likely to be, sold in the United States at less-than-fair value. Drill Pipe From the People's Republic of China, 76 Fed.Reg. 1,966 (Dep't of Commerce Jan. 11, 2011) (final determination of sales at less-than-fair value and critical circumstances) (“Final Determination ”), and accompanying Issues & Decision Memorandum (“Issues & Dec. Mem. ”) (P.J.A. 1890–938).
For the Final Determination, Commerce “developed characteristics for drill pipe green tubes based on numerous submissions of factual data from parties regarding the physical and chemical characteristics of drill pipe and drill pipe green tubes.” Issues & Dec. Mem. at 11. Thus, “Commerce narrowed the scope by adding three physical criteria to the description of subject green tube.” Downhole Pipe I, 887 F.Supp.2d at 1317. Specifically, Commerce narrowed the scope to green tube: (1) that is seamless; (2) that has a certain outer diameter; and (3) that contains specific percentages of molybdenum and chromium. Issues & Dec. Mem. at 11. Thus, the scope specified in the Final Determination reads:
The products covered by the investigation are steel drill pipe, and steel drill collars, whether or not conforming to [API] or non-API specifications. Included are finished drill pipe and drill collars without regard to the specific chemistry of the steel (i.e., carbon, stainless steel, or other alloy steel), and without regard to length or outer diameter. Also included are unfinished drill collars (including all drill collar green tubes) and unfinished drill pipe (including drill pipe green tubes, which are tubes meeting the following description: seamless tubes with an outer diameter of less than or equal to 6 ? inches (168.28 millimeters), containing between 0.16 and 0.75 percent molybdenum, and containing between 0.75 and 1.45 percent chromium). The scope does not include ... unfinished tubes for casing or tubing covered by any other antidumping or countervailing duty order.
Final Determination, 76 Fed.Reg. at 1,967 (emphasis added).
As part of its Final Determination, Commerce also calculated a surrogate value for the green tube input as one of the factors of production. Two sources were on the record to serve as surrogate data: (1) price quotes printed in a trade publication called Metal Bulletin Research for grades J and K casing and tubing (“J/K 55”) and (2) the average transaction prices paid for products imported into India under the Harmonized Tariff Schedule of India (“IHTS”) subheadings 7304.23 and 7304.29. Commerce ultimately determined the best available information was the average Indian import prices for sales of merchandise under these IHTS subheadings. Using this data, Commerce calculated a surrogate value of $2,511.67 for the green tube input.
Downhole Pipe appealed several of Commerce's determinations to the CIT, including its inclusion of green tube within the scope of the investigation and in the industry support calculation, as well as its choice of the surrogate data used to value the green tube input. In Downhole Pipe I, the CIT rejected Downhole Pipe's scope arguments, reasoning Commerce had discretion to determine scope and could not reconsider industry support after initiation of the investigation. The CIT also remanded the Final Determination to Commerce with instructions to reconsider the surrogate values used for green tube. In particular, the CIT found Commerce had failed to address the InfoDrive India (“InfoDrive ”) import data Appellants had placed on the administrative record that called into question Commerce's finding that green tube entered India under IHTS...
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...constitutes the best available information" because the term is not statutorily defined. Downhole Pipe & Equip., L.P. v. United States, 776 F.3d 1369, 1375 (Fed. Cir. 2015). The agency generally relies on "surrogate values that are publicly available, are product-specific, reflect a broad m......