Gulf States Tube Div. Of Quanex Corp. v. U.S.

• Decision Date: 29 August 1997
• Docket Number: Slip Op. 97-124.,Court No. 95-09-01125.
• Citation: 981 F.Supp. 630
• Parties: GULF STATES TUBE DIVISION OF QUANEX CORPORATION, Plaintiff, v. The UNITED STATES and the United States Department of Commerce, Defendants, and Dalmine S.p.A, Dalmine USA Inc., and TAD USA, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

981 F.Supp. 630

GULF STATES TUBE DIVISION OF QUANEX CORPORATION, Plaintiff, v. The UNITED STATES and the United States Department of Commerce, Defendants and Dalmine S.p.A, Dalmine USA Inc., and TAD USA, Inc., Defendant-Intervenors.

Slip Op. 97-124.

Court No. 95-09-01125.

United States Court of International Trade.

August 29, 1997.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Schagrin Associates, Roger B. Schagrin, R. Alan Luberda, and John C. Steinberger, Washington, DC, for Plaintiff.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director; Velta A. Melnbrencis, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; Boguslawa B. Thoemmes, Of Counsel, Office of the Chief Counsel for Import Administration, Washington, DC, for Defendant.

Rogers & Wells, William Silverman and Ryan Trainer, Washington, DC, for Defendant-Intervenors.

MEMORANDUM AND ORDER

WALLACH, Judge.

I PRELIMINARY STATEMENT

Plaintiff, Gulf States Tube Division of Quanex Corporation ("Quanex"), and Defendant-Intervenors¹ Dalmine S.p.A., Dalmine USA Inc., and TAD USA, Inc. (collectively "Dalmine"), contest certain aspects of the Department of Commerce, International Trade Administration's ("ITA" or "Commerce") Final Determination in Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from Italy, 60 Fed Reg. 31,981 (June 19, 1995) ("Final Determination"), as unsupported by substantial evidence and contrary to law. This Court has jurisdiction under 19 U.S.C. § 1516a(a)(2) (1988) and 28 U.S.C. § 1581(c) (1988).

Quanex argues that four actions by Commerce were unsupported by substantial evidence on the record and not in accordance with law: (1) the exclusion of certain U.S. sales of subject merchandise from its antidumping calculations; (2) the failure to use best information available ("BIA") to calculate margins for certain unreported U.S. sales; (3) the failure to apply adverse BIA to calculate margins for certain unreported U.S. sales; and (4) the failure to explain its decision to exclude the unreported U.S. sales from the margin calculation.

Dalmine argues that six actions by Commerce were unsupported by substantial evidence on the record and not in accordance with law: (1) the application of adverse BIA as a result of Dalmine's omission of a single sale from its outlier request; (2) the initiation of a below-cost-of-production investigation of Dalmine's home market sales; (3) the calculations of cost of production ("COP") and constructed value ("CV") with respect to Dalmine's galvanized products; (4) the attribution of Instituto per La Riconstruzione Industriale S.p.A.'s ("IRI") interest expenses to Dalmine because IRI is Dalmine's ultimate parent; (5) the reduction of IRI's interest expenses by short-term interest income only; and (6) the rejection as "new" information of certain documents that Dalmine submitted with their Reply Brief during the administrative proceeding.

Dalmine has abandoned its claims that Commerce erred in not reducing Dalmine's general expenses by Dalmine's exchange gains, and that Commerce understated the "CV offset ratio" because it excluded certain categories of accounts receivable from related companies.

For the reasons discussed below, the Court remands to Commerce only on the issue of the calculation of COP and CV with respect to Dalmine's galvanized products. The Court affirms Commerce's actions on all other issues.

II PROCEDURAL BACKGROUND²

On June 23, 1994, Quanex filed a petition with Commerce requesting an antidumping investigation of seamless pipe from Italy. Petition from Schagrin Assoc. to Sec. of Commerce ("Petition"), Administrative Record ("AR") Pub. Doc. 1, Fiche 2-3, Fr. 1. Quanex alleged that seamless pipe was being, or was likely to be, sold in the United States at less than fair value, within the meaning of section 731 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1673 (1988).

The ITA initiated an antidumping investigation on July 13, 1994, published in Federal Register on July 20, 1994.³ Initiation of Antidumping Duty Investigations: Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure Pipe from Argentina, Brazil, Germany and Italy, 59 Fed.Reg. 37,025 ("Initiation Notice").

Commerce issued a preliminary negative determination on January 27, 1995. Notice of Preliminary Determination of Sales at Not Less Than Fair Value: Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from Italy, 60 Fed.Reg. 5358 ("Preliminary Determination"). In the Final Determination, however, Commerce determined that Dalmine's weighted-average dumping margin was 1.84 percent. 60 Fed.Reg. at 31,992. Dalmine and Quanex challenge certain aspects of Commerce's Final Determination.

III DISCUSSION

A Standard of Review

In reviewing a final ITA determination, this Court will "hold unlawful any determination finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B). "Substantial evidence `is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent the administrative agency's finding from being supported by substantial evidence.'" Matsushita Elec. Indus. Co. v. United States, 3 Fed. Cir. (T) 44, 51, 750 F.2d 927, 933 (1984) (quoting Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 619-20, 86 S.Ct. 1018, 1026-27, 16 L.Ed.2d 131 (1966)).

In reviewing an agency's construction of the statute that the agency administers, the Court's initial inquiry is to determine "whether Congress has directly spoken to the precise question at issue." Chevron U.S.A. Inc. v. Nat. Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). "If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation." Id. at 843-44, 104 S.Ct. at 2782. Consequently, "[t]he court will defer to the agency's construction of the statute as a permissible construction if it `reflects a plausible construction of the plain language of the statute[s] and does not otherwise conflict with Congress' express intent.'" Torrington Co. v. United States, 82 F.3d 1039, 1044 (Fed.Cir.1996) (citations omitted).

B ITA Made A Reasonable Decision To Exclude From Its Antidumping Calculations Certain U.S. Sales of ASTM A-335 Pipe Made During The Period Of Investigation ("POI") Because The Scope Description Provided by ITA Was Ambiguous

During verification, Commerce discovered that Dalmine failed to report certain U.S. sales of ASTM A-335 pipe used in boiler applications. Commerce determined that the ambiguous scope description contained in the Notice of Initiation and Preliminary Determination caused Dalmine to believe that this merchandise was not included in the investigation, and thus these sales did not need to be reported. Commerce decided to exclude these sales from the calculation of the dumping margin. Quanex contends that Commerce erred in not including these sales and argues that the scope description clearly encompassed this merchandise. For the reasons that follow, Quanex's argument fails.

Background

As proposed by Quanex, "[t]he scope of this petition includes all subject seamless pipe produced to the ASTM A-106, ASTM A-335, ASTM A-53 and API 5L specifications, regardless of application". Petition at 5. The scope also included all products not meeting the ASTM A-106, A-335, A-53 or API 5L standards, but used in the covered applications. Id. A footnote to the sentence preceding this description stated:

In addition, A-106 pipe may be used in some boiler applications. However, this petition is not intended to cover boiler tubing unless such tubing is being used as a substitute in applications covered by this petition.

Id. at n. 3.

In defining the scope of the investigation as follows, the ITA slightly modified Quanex's Petition and, in addition to listing ASTM A-106, ASTM A-53, ASTM A-335, and API 5L as covered specifications, stated:

The following information further defines the scope of these investigations ... A-106 pipe may be used in some boiler applications. The scope of these investigations includes all multiple-stenciled seamless pipe meeting the physical parameters described above and produced to one of the specifications listed above, whether or not also certified to a non-covered specification. Standard, line and pressure applications are defining characteristics of the scope of these investigations. Therefore, seamless pipes meeting the physical description above, but not produced to the A-106, A-53, or API 5L standards shall be covered if used in an A-106, A-335, A-53 or API 5L application.... Specifically excluded from these investigations are boiler tubing, mechanical tubing and oil country tubular goods except when used in a standard, line or pressure pipe application.

Initiation Notice, 59 Fed.Reg. at 37,026. The scope description contained in the Preliminary Determination was identical to the one contained in the Initiation Notice. 60 Fed. Reg. 5358.

In the Final Determination, Commerce determined that the scope of the investigation included the disputed alloy pipe made to ASTM A-335 specification. 60 Fed.Reg. at 31,981-83. Commerce stated:

The scope of this investigation includes seamless pipes produced to the ASTM A-335, ASTM A-106, ASTM A-53 and API 5L specifications and meeting the physical parameters described below, regardless of application. The scope of this investigation also includes all products used in standard, line, or pressure applications and meeting the physical parameters below, regardless of specification.

* * * * * *

Specifically excluded from this investigation are boiler tubing and mechanical tubing, if such products are...