United Steel & Fasteners, Inc. v. United States

• Decision Date: 26 August 2020
• Docket Number: Court No. 15-00113,Slip Op. 20-124
• Parties: UNITED STEEL AND FASTENERS, INC., Plaintiff, v. UNITED STATES, Defendant, and Shakeproof Assembly Components Division of Illinois Tool Works Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

469 F.Supp.3d 1390

UNITED STEEL AND FASTENERS, INC., Plaintiff,

v.UNITED STATES, Defendant,andShakeproof Assembly Components Division of Illinois Tool Works Inc., Defendant-Intervenor.

Slip Op. 20-124

Court No. 15-00113

United States Court of International Trade.

August 26, 2020

Dharmendra Choudhary, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of Washington, DC, argued for plaintiff. With him on the brief and supplemental brief were Francis J. Sailer, Mark E. Pardo, Brandon M. Petelin, and Ned H. Marshak.

Eric J. Singley, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke, Assistant Director, Renee Gerber and on the supplemental brief was Joseph H. Hunt, Assistant Attorney General. Of Counsel were W. Mitch Purdy and Nanda Srikantaiah, Attorney-International, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Raymond P. Paretzky and David J. Levine, McDermott, Will & Emery, LLC, of Washington, DC, for defendant-intervenor.

OPINION

Katzmann, Judge:

This case involves a challenge to the U.S. Department of Commerce's ("Commerce") selection of surrogate values to determine antidumping ("AD") duties for exports from a non-market economy ("NME"). Plaintiff United Steel and Fasteners, Inc. ("US&F") challenges Commerce's decision to use Thai Harmonized Tariff Schedule ("HTS") 7228.20 as a surrogate value for the primary input -- hot-rolled circular silico-manganese steel bar ("Bar") -- into the helical spring lock washers ("HSLWs"), which were the subject of Commerce's AD review. See Helical Spring Lock Washers From the People's Republic of China: Final Results of Antidumping Duty Administrative Review; 2012–2013, 80 Fed. Reg. 13,833, 13,833 (Dep't Commerce Mar. 17, 2015), P.R. 126, ECF No. 81 ("Final Results"); Mem. from C. Marsh to R. Lorentzen, re: Issues and Decision Mem. for the Final Results of Antidumping Duty Administrative Review: Helical Spring Lock Washers from the People's Republic of China; 2012–2013 at 4–8 (Dep't Commerce Mar. 9, 2015), P.R. 121, ECF No. 81 ("IDM"); Pl.’s Suppl. Br. Pursuant to the Ct.’s Order of Apr. 20, 2020 at 1, 17, May 18, 2020, ECF No. 79 ("Pl.’s Suppl. Br."). US&F specifically claims Commerce's choice of surrogate value was unsupported by substantial evidence and otherwise not in accordance with the law because the value chosen did not represent the "best available information," as 19 U.S.C. § 1677b(c)(1) (2012)¹ requires. Pl.’s Suppl. Br. at 1, 7. The court sustains Commerce's use of the surrogate value in its Final Results and denies US&F's Rule 56.2 motion. See Pl.’s Mot. for J. on the Agency R. at 17–35, Nov. 13, 2015, ECF No. 24 ("Pl.’s Br.").

BACKGROUND

I. Legal and Regulatory Framework for Surrogate Value Selections

The Tariff Act of 1930 empowers Commerce to investigate and impose remedial duties on imported products that are being dumped -- sold at less than a "fair value" or a lower price than in the home market. Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046–47 (Fed. Cir. 2012). In addition to other statutes and regulations, the Act creates a framework for determining whether a product is being dumped in the United States, determining the extent to which it is being dumped, and calculating the AD duty to offset the dumping. See id. at 1047. A domestic producer or other interested party that believes a foreign company is dumping products in the United States may request that Commerce initiate an administrative review. 19 U.S.C. § 1673a(b)(1) ; 19 C.F.R. § 351.213(b) ; see, e.g., N. M. Garlic Growers Coal. v. United States, 953 F.3d 1358, 1362 (Fed. Cir. 2020).

In an antidumping investigation and any subsequent review of an order, Commerce determines whether the export prices of the subject merchandise are lower than the "normal value" of the same merchandise when it is sold in the exporting country. 19 U.S.C. § 1677b(a)(1)(B)(i). If the exporting country is an NME that provides insufficient information to determine the normal value, Commerce may use surrogate values from market economy countries for "the factors of production utilized in producing the merchandise and ... for general expenses and profit plus the cost of containers, coverings, and other expenses." 19 U.S.C. § 1677b(c)(1). Section 1677b(c)(3)(A)–(D) lists the factors of production as including, but not limited to: (A) labor hours required; (B) quantities of raw materials used; (C) energy and other utilities consumed in production; and (D) capital costs and depreciation. Commerce thus uses these market economy surrogates for actual production costs to calculate a surrogate value -- used in place of a home-market value -- for comparison to the export price.

Section 1677b(c)(1) requires that Commerce value the factors of production "based on the best available information regarding the values of such factors in a market economy country." In determining which data are the best available, Commerce has "broad discretion" because "best available information" is not defined by statute. QVD Food Co. v. United States, 658 F.3d 1318, 1323 (Fed. Cir. 2011) (citing Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed. Cir. 1999) ); see also Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994). However, Commerce's discretion to select surrogate values is "curtailed by the purpose of the statute, i.e., to construct the product's normal value as it would have been if the NME country were a market country." Rhodia, Inc. v. United States, 25 CIT 1278, 1286, 185 F. Supp. 2d 1343, 1351 (2001) (citing Nation Ford Chem. Co., 166 F.3d at 1375 ). As with all of its decisions in AD reviews, Commerce must establish AD margins as accurately as possible. Shakeproof Assembly Components Div. of Ill. Tool Works v. United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001).

In choosing "one or more market economy countries" to provide surrogate factor values, 19 U.S.C. § 1677b(c)(4) requires that Commerce "utilize, to the extent possible" costs of factors of production from market economy countries that are "at a level of economic development comparable to that of the nonmarket economy country, and ... significant producers of comparable merchandise." Although Commerce "normally will value all factors in a single surrogate country," 19 C.F.R. § 351.408(c)(2), Commerce may also "mix and match" surrogate country values with values available in the exporting NME country if the NME values are more accurate, Lasko Metal Prods. v. United States, 16 CIT 1079, 1082, 810 F. Supp. 314, 317 (1992), aff'd, 43 F.3d 1442 (Fed. Cir. 1994). If more than one market economy country meets the requirements to provide surrogate values, Commerce may choose a primary surrogate country based on whether the factor of production ("FOP") data are (1) publicly available; (2) contemporaneous with the period of review ("POR"); (3) a broad market average covering a range of prices; (4) from an approved surrogate country; (5) specific to the input in question; and (6) tax exclusive. See Policy Bulletin 04.1: Non-Market Economy Surrogate Country Selection Process (Mar. 1, 2004), available at: http://enforcement.trade.gov/policy/bull04-1.html (last accessed Aug. 13, 2020) ("Policy Bulletin 04.1"); see also, e.g., Jiaxing Bro. Fastener Co. v. United States, 822 F.3d 1289, 1302 (Fed. Cir. 2016) (finding "no error in Commerce's ... preference to appraise surrogate values from a single surrogate country" with statistics that were "specific, contemporaneous, and represented broad market averages").

Upon review of Commerce's choice of certain surrogate values as the best available information, the court will not determine whether the data used were actually the best available, but "whether a reasonable mind could conclude that Commerce chose the best available information." Jiaxing Bro. Fastener, 822 F.3d at 1301 (citing Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1341 (Fed. Cir. 2011) ); see also Maverick Tube Corp. v. United States, 857 F.3d 1353, 1359 (Fed. Cir. 2017) (citation omitted).

II. Factual and Procedural History of the Antidumping Order and Surrogate Value Selection

In 1993, Commerce issued an AD order on HSLW from the People's Republic of China ("PRC"). Antidumping Duty Order: Certain Helical Spring Lock Washers from the People's Republic of China, 58 Fed. Reg. 53,914 (Dep't Commerce Oct. 19, 1993) ; see also Amended Final Determination and Amended Antidumping Duty Order: Certain Helical Spring Lock Washers from the People's Republic of China, 58 Fed. Reg. 61,859 (Dep't Commerce Nov. 23, 1993). On December 3, 2013, Commerce initiated the administrative review of this AD order for the period between October 1, 2012, and September 30, 2013, in response to petitions from US&F and Defendant-Intervenor Shakeproof Assembly Components Division of Illinois Tool Works, Inc. ("Shakeproof"). See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 78 Fed. Reg. 72,630 (Dep't Commerce Dec. 3, 2013).

Because the investigated companies’ home market is the PRC, an NME, Commerce undertook an analysis of an appropriate surrogate country for calculating normal value. Mem. from S. Balbontin to The File, re: Prelim. Results of the Eighteenth Administrative Review of Helical Spring Lock Washers from the People's Republic of China: Surrogate Value Memorandum at 2 (Dep't Commerce Oct. 31, 2014), P.R. 8, ECF No. 33. US&F and Shakeproof provided comments on the appropriate surrogate. Id. US&F claimed that record evidence supported using Indonesia as the surrogate country because it had the most specific data for hot-rolled circular silico-manganese steel bar, the primary input into HSLWs. Letter from US&F to ...