Dongkuk S&C Co. v. United States

• Decision Date: 17 November 2022
• Docket Number: Court No. 20-03686,Slip Op. 22-125
• Citation: 600 F.Supp.3d 1331
• Parties: DONGKUK S&C CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Wind Tower Trade Coalition, Defendant-Intervenor.
• Court: U.S. Court of International Trade

600 F.Supp.3d 1331

DONGKUK S&C CO., LTD., Plaintiff,

v. UNITED STATES, Defendant,andWind Tower Trade Coalition, Defendant-Intervenor.

Court No. 20-03686

Slip Op. 22-125

United States Court of International Trade.

November 17, 2022

Robert G. Gosselink, Jarrod M. Goldfeder, and MacKensie R. Sugama, Trade Pacific PLLC, of Washington, D.C., for Plaintiff Dongkuk S&C Co., Ltd.

Joshua E. Kurland, Senior Trial Counsel, U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Washington, D.C., for Defendant United States. With Mr. Kurland on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Jesus N. Saenz, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, Washington, D.C.

Alan H. Price, Robert E. DeFrancesco III, and Derick G. Holt, Wiley Rein LLP, of Washington, D.C., for Defendant-Intervenor Wind Tower Trade Coalition.

Gordon, Judge:

This action involves the U.S. Department of Commerce's ("Commerce") final affirmative determination in the antidumping ("AD") duty investigation of utility scale wind towers ("wind towers") from the Republic of Korea. See Utility Scale Wind Towers from the Republic of Korea, 85 Fed. Reg. 40,243 (Dep't of Commerce July 6, 2020) ("Final Determination"), and the accompanying Issues and Decision Memorandum, A-580-902, PD¹ 324 (Dep't of Commerce June 29, 2020), https://enforcement.trade.gov/frn/summary/korea-south/2020-14438-1.pdf (last visited this date) ("Decision Memorandum").

Before the court is Commerce's Final Results of Redetermination Pursuant to Court Remand, ECF No. 54-1 ("Remand Results"), filed pursuant to the court's remand order in Dongkuk S&C Co. v. United States, 45 CIT ––––, 548 F. Supp. 3d 1376 (2021) (" Dongkuk I"). See Pl. Dongkuk S&C Co. Ltd.’s ("DKSC") Comments in Opp'n Final Results of Remand Redetermination Pursuant to Ct. Remand, ECF No. 58² ("Pl.’s Cmts."); see also Def.’s Remand Resp. Comments, ECF No. 62 ("Def.’s Resp."); Def.-Intervenor Wind Tower Trade Coalition's Comments on Final Results of Redetermination Pursuant to Ct. Remand, ECF No. 65. Additionally, the court will consider DKSC's challenge to Commerce's selection of surrogate financial data that was reserved in Dongkuk I. See Dongkuk I, 45 CIT at ––––, 548 F. Supp. 3d at 1382. The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2018),³ and 28 U.S.C. § 1581(c). For the reasons that follow, the court sustains the Remand Results, as well as Commerce's selection of surrogate data in its Final Determination.

I. Background

The court presumes familiarity with the procedural history of and the prior decision in this action; however, the court highlights the following background information as an aid to the reader. DKSC is a mandatory respondent in the underlying investigation. See Final Determination, 85 Fed. Reg. at 40,243. Wind towers are large structures designed to support the nacelle and rotor blades of a wind turbine and may vary in height, weight, and other physical characteristics. See Dongkuk I, 45 CIT at ––––, 548 F. Supp. 3d at 1379. Wind towers typically consist of three to five cylindrical or conical sections, with each section consisting of multiple steel plates—the main material input—rolled and welded together to create a steel shell. Id. At the outset of its investigation, Commerce identified the 11 most significant characteristics differentiating the cost between completed wind towers. Id. at ––––, 548 F. Supp. 3d at 1379 n.3 (listing characteristics). When combined, the physical characteristics identified by Commerce define unique products, i.e., CONNUMs,⁴ used for sales comparison purposes. Id. at ––––, 548 F. Supp. 3d at 1379 (citing Decision Memorandum at 21). Commerce then determined that a wind tower's height and weight were the two of the most important physical characteristics of a completed wind tower. Decision Memorandum at 21; see also Dongkuk I, 45 CIT at ––––, 548 F. Supp. 3d at 1380.

Commerce rejected DKSC's reported specific steel plate costs for each individual wind tower during the period of investigation ("POI"), finding that those costs "were significantly different between [CONNUMs] sold in the Japanese comparison market and those sold in the U.S. market." Decision Memorandum at 19. To determine the cause of price differences in each of those markets, Commerce analyzed DKSC's reported costs "[u]sing physical characteristics as [its] guidepost" and "grouping CONNUMs by the related height and weight physical characteristics, and the steel plate cost differences between steel grades and dimensions (i.e., thickness, width, or height) within the same time period." Id. at 22. As a result, Commerce concluded that the "overwhelming factor" causing the variation in those costs was the timing of the steel plate input purchase, not the physical characteristics of the subject merchandise. Id. at 22. Commerce then adjusted the steel plate costs to address distortions not attributable to the physical characteristics of the wind tower by weight averaging "the reported steel plate costs for all reported CONNUMs." Id. at 21.

In this action, DKSC challenged Commerce's decision to adjust DKSC's reported steel plate costs under 19 U.S.C. § 1677b(f)(1)(A), as well as the agency's selection of surrogate financial data to calculate DKSC's constructed value profit and selling expenses under 19 U.S.C. § 1677b(e)(2)(B)(iii). See Mem. in Supp. of Mot. for J. upon the Agency R. of Dongkuk S&C Co., Ltd. at 3–11, 17–26, ECF No. 22 ("Pl.’s Br."). After observing that there did not appear to be anything in the record "that supports a conclusion that Commerce did in fact group CONNUMs by any of the 11 physical characteristics or otherwise use those characteristics as a ‘guidepost,’ " the court remanded Commerce's steel plate cost adjustment for reconsideration or additional explanation. Dongkuk I, 45 CIT ––––, 548 F. Supp. 3d at 1381. As noted above, the court also reserved decision on DKSC's challenge to Commerce's selection of surrogate financial data.

II. Standard of Review

The court sustains Commerce's "determinations, findings, or conclusions" unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350–51 (Fed. Cir. 2006) ; see also Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951) ("The substantiality of evidence must also take into account whatever in the record fairly detracts from its weight."). Substantial evidence has been described as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). Substantial evidence has also been described as "something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966).

Fundamentally, though, "substantial evidence" is best understood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr. Administrative Law and Practice § 9.24[1] (3d ed. 2022). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action "was reasonable given the circumstances presented by the whole record." 8A West's Fed. Forms, National Courts § 3.6 (5th ed. 2022).

III. Discussion

A. Steel Plate Cost Adjustment

In an antidumping duty investigation where Commerce is to determine whether sales of the foreign like product were made at less than the cost of production of the subject merchandise, Commerce normally calculates costs based on the company's records. These records are used "if such records are kept in accordance with the generally accepted accounting principles of the exporting country ... and reasonably reflect the costs associated with the production and sale of the merchandise." 19 U.S.C. § 1677b(f)(1)(A). In applying this provision, Commerce determined that it will "adjust costs to address distortions when it encounters cost differences that are attributable to factors beyond differences in the products’ physical characteristics." See Remand Results at 4 (citing Thai Plastic Bags Indus. Co. v. United States, 746 F.3d 1358 (Fed. Cir. 2014) and NEXTEEL Co. v. United States, 43 CIT ––––, ––––, 355 F. Supp. 3d 1336, 1361–62 (2019) ). Here, Commerce identified all purchases of steel plate of varying dimensions that occurred within the POI that were used to produce two different CONNUMs. See id. at 5. Commerce then performed a "like for like" comparison by examining the purchases made in the same month of different dimensions and grades of steel plate that were used to produce those two CONNUMs. Id. Commerce found virtually no cost difference on a per-unit weight basis for the different grades and dimensions of steel plate used. Id. Commerce explained that "if the cost of the steel plate varied significantly, it would have been due to grade and dimensional differences in the steel plate used to produce the different types of wind towers, which would have explained the significant steel plate cost differences between CONNUMs of differing weights and heights." Id. Commerce, however, found "that, after neutralizing...