Mid Continent Steel & Wire, Inc. v. United States

Decision Date17 October 2019
Docket Number2018-1296
Citation941 F.3d 530
Parties MID CONTINENT STEEL & WIRE, INC., Plaintiff-Appellee v. UNITED STATES, Defendant-Appellee v. Oman Fasteners, LLC, Defendant-Appellant
CourtU.S. Court of Appeals — Federal Circuit

941 F.3d 530

MID CONTINENT STEEL & WIRE, INC., Plaintiff-Appellee
v.
UNITED STATES, Defendant-Appellee
v.
Oman Fasteners, LLC, Defendant-Appellant

2018-1296

United States Court of Appeals, Federal Circuit.

Decided: October 17, 2019


Adam H. Gordon, The Bristol Group PLLC, Washington, DC, argued for plaintiff-appellee. Also represented by Ping Gong.

Mikki Cottet, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Joseph H. Hunt, Jeanne Davidson, Patricia M. McCarthy.

Michael Paul House, Perkins Coie, LLP, Washington, DC, argued for defendant-appellant. Also represented by Andrew Caridas, Shuaiqi Yuan.

Before Dyk, Linn, and Taranto, Circuit Judges.

Taranto, Circuit Judge.

941 F.3d 534

The United States Department of Commerce determined that Oman Fasteners, LLC, a foreign producer and exporter of steel nails, was selling its products into the United States at less than fair value as judged by those nails’ "normal value" in the home country (or, in certain circumstances, a relevant third country) under the controlling statute. Because the company did not sell a significant volume of nails in its home market, Commerce, to assess the normal value, calculated a "constructed value" of the nails through use of one of four methods provided by the governing statute. Oman Fasteners ("OF") challenges several aspects of Commerce’s calculation of constructed value: Commerce’s initial choice of method; Commerce’s selection of certain information as an input into the calculation required by the chosen method; and Commerce’s conclusion that it could not calculate a "cap" limiting the profit component of the constructed value. We reject OF’s challenge to the basic choice of method and the profit-cap ruling. As to Commerce’s information selection when applying the chosen method, we partly reject OF’s challenge, but we remand to secure further explanation from Commerce about one ground of this challenge—Commerce’s refusal to consider the effect of subsidies on whether the information it selected was accurate for the relevant statutory purpose.

I

In June 2014, acting on a petition filed by Mid Continent Steel & Wire, Inc., Commerce initiated an antidumping-duty investigation under 19 U.S.C. §§ 1673 – 1673h into steel nail products from Oman and other countries. See Certain Steel Nails from India, the Republic of Korea, Malaysia, the Sultanate of Oman, Taiwan, the Republic of Turkey, and the Socialist Republic of Vietnam: Initiation of Less-Than-Fair-Value-Investigations , 79 Fed. Reg. 36019 (Dep’t of Commerce June 25, 2014) (Initiation Decision). In July 2014, Commerce separated the Omani investigation into its own proceeding and designated OF a mandatory respondent for investigation. Antidumping Duty Investigation of Certain Steel Nails from the Sultanate of Oman Respondent Selection (issued July 28, 2014) (Selection Mem.); J.A. 770–75. OF is the cross-appellant before us.

The statute directs Commerce to impose an antidumping duty on foreign merchandise if the "merchandise is being, or is likely to be, sold in the United States at less than its fair value." 19 U.S.C. § 1673(1). The statutory language governing this dispute originated in the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809 (1994), which implemented certain aspects of the Uruguay Round of negotiations establishing the World Trade Organization. To determine whether merchandise is being sold at less than fair value, Commerce must determine the difference "between the export price or constructed export price and normal value." 19 U.S.C. § 1677b(a). Normal value is based on the price at which the merchandise is sold in the exporting country (the home-market) or, in the alternative, the price at which the merchandise is sold in a third country that is not the United States. See id ., § 1677b(a)(1)(B). But if the "aggregate quantity" of merchandise sold in either the exporting country or the third country is less than five percent of the quantity sold in the United States, Commerce must instead calculate a "constructed value" of the merchandise.

941 F.3d 535

See id. , § 1677b(a)(1)(B)(ii)(II), (1)(C)(ii), (4).

In response to Commerce’s initial questionnaire, OF noted that its volume of sales in Oman, as well as in each third country that it operated in, was less than five percent of its U.S. sales and could not be the basis for the normal value calculation. Certain Steel Nails from Oman; AD Investigation; Section A Response (sent Aug. 26, 2014) (Questionnaire Response); J.A. 954. Accordingly, Commerce’s task in this matter was to calculate the constructed value to establish the normal value.

The statute identifies four methods for calculating constructed value: one preferred method and three alternative methods among which there is no hierarchy of preference. SKF USA Inc. v. United States , 263 F.3d 1369, 1374 (Fed. Cir. 2001). All four methods require Commerce to look at the company’s costs of producing and packaging the merchandise. 19 U.S.C. § 1677b(e)(1), (3). The preferred method directs Commerce to look at the company’s "actual amounts" of profits, and selling, general, and administrative (SG&A) expenses, "in connection with the production and sale of a foreign like product, in the ordinary course of trade, for consumption in" the company’s home market. Id ., § 1677b(e)(2)(A). But if "actual data are not available with respect to the[se] amounts," Commerce can select one of the three alternative methods. Id ., § 1677b(e)(2)(B).

Each of the three alternative methods, like the preferred method, calls for consideration of profits and SG&A expenses—though each method specifies a different source for that data. The first alternative method focuses on the data associated with the respondent company’s other products "in the same general category of products as the subject merchandise." Id. , § 1677b(e)(2)(B)(i). The second focuses on the data of other respondents to the investigation. Id. , § 1677b(e)(2)(B)(ii). The third allows Commerce to use "any other reasonable method," subject to what the parties here call a "profit cap":

the amount allowed for profit may not exceed the amount normally realized by exporters or producers (other than the [specific respondent at issue] in connection with the sale, for consumption in [the specific respondent’s home market], of merchandise that is in the same general category of products as the subject merchandise.

Id. , § 1677b(e)(2)(B)(iii); see SKF USA , 263 F.3d at 1372–74.

In this matter, Commerce determined that there was insufficient data to support use of the preferred method because OF did not have "viable home or third country markets." Antidumping Duty Investigation of Certain Steel Nails from Oman: Request for Constructed Value Profit and Selling Expenses Comments and Information (issued Oct. 17, 2014) (Request for Comments and Info.); J.A. 1532. Two weeks before the Preliminary Determination, Commerce asked OF and Mid Continent to submit, by October 31, 2014, data relevant to use of the alternative methods. Id . OF submitted the financial statements of several Omani companies that sold steel products for various industries: civil construction, power transmission, mining, oil and gas, and packaging. OF also provided, to corroborate the profit rates reflected in its primary submissions, a partially translated financial statement of L.S. Industry Co., Ltd. (LSI), a Thai producer of steel nails. Mid Continent, for its part, submitted the partially translated financial statement of an Indian producer of steel nails, the partially translated statements of two Taiwanese producers of steel nails, and the fully translated statement of Hitech Fastener

941 F.3d 536

Manufacture (Thailand) Co., Ltd. (Hitech), a Thai producer of steel screws.

In its Preliminary Determination, Commerce confirmed its earlier decision not to use the preferred method, selected Hitech’s financial statement for use in the third alternative method, and found that OF had been dumping steel nails during the Period of Investigation. Certain Steel Nails From the Sultanate of Oman: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination , 79 Fed. Reg. at 78,035 (Dep’t of Commerce Dec. 29, 2014) (Preliminary Determination); Decision Memorandum for the Preliminary Determination in the Antidumping Duty Investigation: Certain Steel Nails from the Sultanate of Oman , 79 ITADOC 78,034 (issued Dec. 17, 2014) (Preliminary Determination Mem.). Commerce also determined that there was insufficient data to quantify a profit cap under 19 U.S.C. § 1677b(e)(2)(B)(iii). Commerce then conducted its full investigation and analysis, including verification of key factual submissions.

While its investigation was under way, Commerce corresponded with OF to clarify certain aspects of the constructed value calculation. Shortly after the Preliminary Determination, OF filed a motion contending that Commerce had erred in refusing to consider the partially translated LSI statement. OF’s primary contention was that Commerce had accepted the LSI statement in concurrent proceedings dealing with steel nails from China (China Nails) and thus was bound...

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