83 F.Supp.3d 1311 (CIT 2015), 14-00066, Bell Supply Co., LLC v. United States

Docket Nº:14-00066
Citation:83 F.Supp.3d 1311
Opinion Judge:Claire R. Kelly, Judge:
Party Name:BELL SUPPLY COMPANY, LLC, Plaintiff, v. UNITED STATES, Defendant, and BOOMERANG TUBE LLC, TMK IPSCO TUBULARS, V& M STAR L.P., WHEATLAND TUBE COMPANY, MAVERICK TUBE CORPORATION, and UNITED STATES STEEL CORPORATION, Defendant-Intervenors
Attorney:No. 14-00066 Donald Bertrand Cameron, Morris, Manning & Martin, LLP, of Washington, DC, argued for Plaintiff. With him on the brief were Julie Clark Mendoza, Rudi Will Planert, Brady Warfield Mills, Mary Shannon Hodgins, and Sarah Suzanne Sprinkle. Loren Misha Preheim, Trial Attorney, Commercial ...
Case Date:July 09, 2015
Court:Court of International Trade
 
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Page 1311

83 F.Supp.3d 1311 (CIT 2015)

BELL SUPPLY COMPANY, LLC, Plaintiff,

v.

UNITED STATES, Defendant, and BOOMERANG TUBE LLC, TMK IPSCO TUBULARS, V& M STAR L.P., WHEATLAND TUBE COMPANY, MAVERICK TUBE CORPORATION, and UNITED STATES STEEL CORPORATION, Defendant-Intervenors

No. 14-00066

United States Court of International Trade

July 9, 2015

Donald Bertrand Cameron, Morris, Manning & Martin, LLP, of Washington, DC, argued for Plaintiff. With him on the brief were Julie Clark Mendoza, Rudi Will Planert, Brady Warfield Mills, Mary Shannon Hodgins, and Sarah Suzanne Sprinkle.

Loren Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With him on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Whitney Marie Rolig, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Roger Brian Schagrin, Schagrin Associates, of Washington, DC, argued for Defendant-Intervenors Boomerang Tube LLC, TMK IPSCO Tubulars, V& M Star L.P., and Wheatland Tube Company. With him on the brief was John Winthrop Bohn.

Robert Edward DeFrancesco, III, Wiley Rein, LLP, of Washington, DC, argued for Defendant-Intervenor Maverick Tube Corporation. With him on the brief were Alan Hayden Price and Tessa Victoria Capeloto.

Jeffrey David Gerrish, Skadden Arps Slate Meagher & Flom, LLP, of Washington, DC, argued for Defendant-Intervenor United States Steel Corporation. With him on the brief were Robert E. Lighthizer and Nathaniel B. Bolin.

OPINION AND ORDER

Claire R. Kelly, Judge:

Plaintiff Bell Supply Company, LLC (" Plaintiff" or " Bell Supply" ) brings this action pursuant to 28 U.S.C. § 1581(c) (2012)1 and section 516A of the Tariff Act of 1930, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2012),2 for judicial review of the Final Scope Ruling on Green Tubes Manufactured in the People's Republic of China and Finished in Countries Other than the United States and the People's Republic of China, PD 174-76 at bar codes 3179952-01-03 (Feb 7, 2014) (" Final Scope Ruling" )3 issued by the United States Department of Commerce (" Commerce" or " the Department" ) to interpret the scope language from the antidumping duty order on Certain Oil Country Tubular Goods From the People's Republic of China, 75 Fed.Reg. 28,551 (Dep't Commerce May 21, 2010) (amended final determination of sales at less than fair value and antidumping duty order) (" ADD Order" ), and the countervailing duty order on Certain Oil Country Tubular Goods From the People's Republic of China, 75 Fed.Reg. 3,203 (Dep't Commerce Jan. 20, 2010) (amended final affirmative countervailing duty determination and countervailing duty order) (" CVD Order" ) (collectively " Orders" ).

Plaintiff moves for judgment on the agency record pursuant to USCIT Rule 56.2 on the grounds that the Final Scope Ruling unlawfully expanded the scope of the Orders and unlawfully ignored the statutory circumvention criteria in 19 U.S.C. § 1677j for when Commerce may include merchandise finished in a third country within the scope of an order. Further, Plaintiff claims that Commerce's substantial transformation analysis was not supported by substantial evidence and otherwise not in accordance with law. Br. Pl. Supp. Mot. J. Agency R. 2, 9-11, Sept. 26, 2014, ECF No. 40-1 (" Pl.'s Mot." ). Defendant United States (" Defendant" or " United States" ) argues that Commerce was not required to conduct a circumvention inquiry pursuant to § 1677j here because that statute " simply provide[s] an additional means for Commerce to administer and enforce its orders." Def.'s Resp. Pl.'s Rule 56.2 Mot. J. Agency R. 9, Jan. 14, 2015, ECF No. 51 (" Def.'s Resp." ). Instead, Defendant argues that because the scope ruling required a country of origin determination, Commerce merely " filled a statutory gap by applying its substantial transformation analysis" in its determination that certain oil country tubular goods (" OCTG" ) from the People's Republic of China (" PRC" or " China" ) finished in Indonesia were still subject to the Orders. Id. at 9. Defendant also contends that its extra-statutory use of substantial transformation analysis was supported by substantial evidence. Id. at 10. The court finds Commerce failed to interpret the scope of the Orders and improperly expanded the scope language when it used a substantial transformation analysis to include OCTG finished in third countries without analyzing the language of the relevant Orders.

BACKGROUND

The Orders cover certain OCTG from the PRC. CVD Order, 75 Fed.Reg. at 3,203; ADD Order, 75 Fed.Reg. at 28,551. The scope of the Orders define the subject merchandise as

certain oil country tubular goods (" OCTG" ), which are hollow steel products of circular cross-section, including oil well casing and tubing, of iron (other than cast iron) or steel (both carbon and alloy), whether seamless or welded, regardless of end finish (e.g., whether or not plain end, threaded, or threaded and coupled) whether or not conforming to American Petroleum Institute (" API" ) or non-API specifications, whether finished (including limited service OCTG products) or unfinished (including green tubes and limited service OCTG products), whether or not thread protectors are attached. The scope of the order also covers OCTG coupling stock. Excluded from the scope of the order are: casing or tubing containing 10.5 percent or more by weight of chromium; drill pipe; unattached couplings; and unattached thread protectors.

CVD Order, 75 Fed.Reg. at 3,203-04; ADD Order, 75 Fed.Reg. at 28,553. As Plaintiff claims that Commerce has acted contrary to law and that Commerce's statements regarding its analysis sometimes differ, the court's discussion of the administrative proceedings below is extensive.

Request for Scope Ruling

Defendant-Intervenors United States Steel Corporation, TMK IPSCO, Wheatland Tube Company, Boomerang Tube LLC, and V& M Star L.P. (" Defendant-Intervenors" or " Petitioners" ), Petitioners below, requested the scope ruling at issue to determine " whether unfinished [OCTG] (including green tubes) produced in the PRC, regardless of where the finishing of such OCTG takes place, are expressly included in the scope of the antidumping and countervailing duty Orders on OCTG from the PRC." Preliminary Scope Ruling on Green Tubes Manufactured in the People's Republic of China (PRC) and Finished in Countries Other than the United States and the PRC at 1, CD 48 at bar codes 3138529-01 (May 31, 2013) (" Preliminary Scope Ruling" ). Petitioners requested the ruling after U.S. Customs and Border Protection (" CBP" ) determined that the country of origin for " green tube and unfinished seamless steel pipe made in India, China or Russia" subsequently heat treated in certain third countries was a product of that third country. Petitioner's Application for Scope Ruling at Ex. 2, PD 1-3 at bar code 3065185-01 (Mar. 26, 2012) (CBP Ruling N118180: The country of origin of steel tubing processed in Korea or Japan from green tubes originating in India, China or Russia) (" Petition" ).

On March 26, 2012, Petitioners sought an expedited ruling from Commerce. Id. at 6, 20. Petitioners asserted " CBP's determination that unfinished OCTG from China that is finished in third countries through heat treatment is substantially transformed into products of those third countries directly conflicts with the scope of the . . . [O]rders on OCTG from China . . . ." Id. at 5. Petitioners feared " that the CBP ruling [was] likely to create confusion" and " lead to the improper designation of the country of origin of Chinese OCTG that is finished in any third country." Id.

Petitioners claimed that under the factors enumerated pursuant to 19 C.F.R. § 351.225(k)(1) (2013),4 " the plain language of the . . . [O]rders expressly covers unfinished OCTG produced in China, regardless of where such OCTG is finished." 5 Id. at 6. Petitioners argued that " [t]he language of the . . . antidumping or countervailing duty order is the cornerstone of the analysis of the order's scope," and that the plain language of the Orders must therefore govern whether the merchandise is covered by the scope. Id. at 6-7. Petitioners also maintained that the scope of an order " is defined by the type of merchandise and by the country of origin," and that Commerce uses its substantial transformation test to determine the country of origin. Id. at 7. Petitioners argued that the substantial transformation analysis further bolstered the conclusion that OCTG finished in third countries is within the scope. See id. at 11-12, 20. Petitioners also claimed that the plain language of the Orders was clear, and, therefore, Commerce did not need to do an analysis using the § 351.225(k)(2) factors.6 See id. at 10. Nonetheless, Petitioners argued even if Commerce reached the (k)(2) factors, they would show OCTG heat treated and finished in third countries is within the scope of the Orders. Id. at 10, 20-23.

Petitioners further claimed that " where the scope covers both finished and unfinished merchandise, it is the Department's practice to treat such merchandise as in the scope of the order regardless of whether it is finished in third countries prior to importation into the United States, so long as substantial transformation does not take place in the third country." Preliminary Scope Ruling at 7; see also Petitioner's Response to Comments on Scope Inquiry at 17-18, PD 18 at bar code 3079599-01 (June 5, 2012). Petitioners asserted that " the well-established rule at the time of the filing of the petitions was that heat treatment of OCTG...

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