Bell Supply Co. v. United States

• Decision Date: 22 July 2019
• Docket Number: Slip Op. 19-89,Court No. 14-00066
• Citation: 393 F.Supp.3d 1229
• Parties: BELL SUPPLY COMPANY, LLC, Plaintiff, v. UNITED STATES, Defendant, and Boomerang Tube LLC et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

393 F.Supp.3d 1229

BELL SUPPLY COMPANY, LLC, Plaintiff,

v. UNITED STATES, Defendant,andBoomerang Tube LLC et al., Defendant-Intervenors.

Slip Op. 19-89

Court No. 14-00066

United States Court of International Trade.

July 22, 2019

Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S. Hodgins, Eugene Degnan, Sabahat Chaudhary, and Ragan W. Updegraff, Morris, Manning & Martin, LLP, of Washington, DC, for Plaintiff.

Douglas G. Edelschick, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Paul Keith, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Roger B. Schagrin and Christopher T. Cloutier, Schagrin Associates, of Washington, DC, for defendant-intervenors Boomerang Tube LLC, TMK IPSCO Tubulars, V & M Star L.P., and Wheatland Tube Company.

Gregory J. Spak, Frank J. Schweitzer, Kristina Zissis, and Allison Kepkay, White & Case LLP, of Washington, DC, for defendant-intervenor Maverick Tube Corporation.

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, DC, for defendant-intervenor United States Steel Corporation.

OPINION

Kelly, Judge:

Before the court is the U.S. Department of Commerce's ("Commerce" or "the Department") remand redetermination pursuant to the court's decision in Bell Supply Co., LLC v. United States, 42 CIT ––––, 348 F.Supp.3d 1281 (2018) (" Bell Supply V"). See Final Results of Redetermination Pursuant to Remand, Mar. 29, 2019, ECF No. 216-1 ("Third Remand Results").¹ In Bell Supply V, the court remanded Commerce's application of the substantial transformation test in the final determination of the scope ruling on certain oil country tubular goods ("OCTG") from the People's Republic of China ("PRC" or "China"). Bell Supply V, 42 CIT at ––––, 348 F.Supp.3d at 1296-97. In its scope ruling, Commerce applied a substantial transformation test and determined that seamless unfinished OCTG produced in China and finished in third countries had not undergone a substantial transformation and was thus within the scope of the antidumping duty ("ADD") and countervailing duty ("CVD") orders on OCTG from China.² See Final Scope Ruling on Green Tubes Manufactured in the [PRC] and Finished in Countries Other than the United States and the [PRC] at 24, Feb. 7, 2014, ECF 31-1 ("Final Scope Ruling"); Preliminary Scope Ruling on Green Tubes manufactured in the [PRC] and Finished in Countries Other than the United States and the PRC at 31, AD CD 48 (May 31, 2013) ("Preliminary Scope Ruling");³ see also Certain [OCTG] From the [PRC], 75 Fed. Reg. 28,551 (Dep't Commerce May 21, 2010) (amended final determination of sales at less than fair value and [ADD] order) ("ADD Order"); Certain [OCTG] From the [PRC], 75 Fed. Reg. 3,203 (Dep't Commerce Jan. 20, 2010) (amended final affirmative [CVD] determination and [CVD] order) ("CVD Order") (collectively "Orders"). The court remanded Commerce's application of the substantial transformation test, holding that Commerce's findings with respect to three out of the five factors in its totality-of-the-circumstances determination were unsupported by substantial evidence. See Bell Supply V, 42 CIT at ––––, 348 F.Supp.3d at 1287-89. Specifically, the court held that Commerce failed to ground its conclusions in substantial evidence with respect to the class or kind of merchandise, the nature/sophistication of processing in the country of exportation, and the cost of production/value added. Id., 42 CIT at ––––, 348 F.Supp.3d at 1289-90, 1290-91, 1294-95. On remand, Commerce reexamined these three factors pursuant to its substantial transformation analysis and again concluded, based on the totality of the circumstances, that the seamless unfinished OCTG in question falls within the scope of the Orders. Because Commerce's redetermination complies with the court's opinion in Bell Supply V and is supported by substantial evidence, the court sustains the Third Remand Results.

BACKGROUND

The court assumes familiarity with the facts of this case as set out in the previous opinions and now recounts the facts relevant to the court's review of Commerce's redetermination. See Bell Supply Co., LLC v. United States, 39 CIT ––––, 83 F. Supp. 3d 1311 (2015) (" Bell Supply I"); Bell Supply Co., LLC v. United States, 40 CIT ––––, 179 F. Supp. 3d 1082 (2016) (" Bell Supply II"); Bell Supply Co., LLC v. United States, 40 CIT ––––, 190 F. Supp. 3d 1244 (2016) (" Bell Supply III"); Bell Supply Co., LLC v. United States, 888 F.3d 1222 (Fed. Cir. 2018) (" Bell Supply IV"); Bell Supply V, 42 CIT ––––, 348 F.Supp.3d 1281. On January 20, 2010 and May 21, 2010, respectively, Commerce published the CVD and ADD orders on OCTG from the PRC. See CVD Order, 75 Fed. Reg. 3,203 ; ADD Order, 75 Fed. Reg. 28,551. The Orders define the subject merchandise as:

certain [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. On June 20, 2012, pursuant to a request from domestic steel companies United States Steel Corporation, TMK IPSCO Wheatland Tube Company, Boomerang Tube LLC, and V & M Star L.P, Commerce initiated a scope inquiry regarding Plaintiff's merchandise. See Initiation of Scope Inquiry, AD PD 25, bar code 3082712-01 (June 20, 2012); see also 19 C.F.R. § 351.225(e) (2013).⁴ Specifically, these domestic companies sought clarification on whether the Orders covered OCTG finished in third countries but made from unfinished OCTG (including green tubes) produced in the PRC.⁵ Initiation of Scope Inquiry at 1, AD PD 25, bar code 3082712-01 (June 20, 2012). On February 7, 2014, Commerce issued a final scope ruling determining that unfinished OCTG manufactured in China and processed into finished OCTG in third countries is subject to the Orders because the merchandise is not substantially transformed during the finishing process. See Final Scope Ruling at 2, 16–23.

Plaintiff, Bell Supply Company, LLC ("Bell Supply"), challenged Commerce's Final Scope Ruling in this court, arguing, inter alia, that Commerce's determination unlawfully expanded the scope of the Orders and relied on a substantial transformation analysis unsupported by substantial evidence and otherwise not in accordance with law. Compl. ¶¶ 21, 25, Apr. 4, 2014, ECF No. 8; see Bell Supply I, 39 CIT at ––––, 83 F. Supp. 3d at 1313–14. This court held that Commerce erred by applying the substantial transformation test, and that Commerce failed to follow the interpretive framework established in its regulations and, in doing so, unlawfully expanded the scope of the Orders to include Plaintiff's merchandise. See Bell Supply I, 39 CIT at ––––, 83 F. Supp. 3d at 1328–30. This court remanded Commerce's scope determination with instructions to "identify actual language from the scope of the Orders that could be reasonably interpreted to include OCTG finished in third countries in order to find that the merchandise is covered by the scope of the Orders." Id. at 1329.

On remand, Commerce found that the Orders cover unfinished OCTG produced in the PRC, even where the merchandise is finished in third countries. Final Results of Redetermination Pursuant to Remand at 2, Nov. 9, 2015, ECF No. 88-1 ("First Remand Results"). Under protest,⁶ Commerce abandoned its substantial transformation analysis, instead invoking the plain language of the Orders. See First Remand Results at 2, 15, 20. This court determined that Commerce's First Remand Results did not comply with the court's remand order in Bell Supply I, and that the results were not supported by substantial evidence and not in accordance with law. Bell Supply II, 40 CIT at ––––, 179 F. Supp. 3d at 1090. Although Commerce identified language in the Orders that Commerce believed covered green tubes manufactured in China and finished in third countries, this court held that the language was insufficient to permit such a conclusion. See Bell Supply II, 40 CIT at ––––, 179 F. Supp. 3d at 1091, 1094–95. The court remanded Commerce's First Remand Results for further consideration and instructed that Commerce interpret the Orders pursuant to the regulatory framework enumerated by 19 C.F.R. § 351.225(k)(1) and 19 C.F.R. § 351.225(k)(2) or, alternatively, conduct a circumvention analysis pursuant to 19 U.S.C. § 1677j(b) and 19 C.F.R. § 351.225(h). Id. at 1098–99, 1105.

In its second remand redetermination, Commerce determined that (1) the language of the Orders does not cover unfinished OCTG manufactured in the PRC and finished in third countries, and (2) that imports of finished OCTG from Indonesia processed from unfinished green tubes from China do not circumvent the Orders pursuant to 19 U.S.C. § 1677j(b). See Final Results of Second Redetermination Pursuant to Remand at 1, 5, 19–20, 33–35, Aug. 11, 2016, ECF No. 132-1 ("Second Remand Results"). Per this court's instruction, Commerce utilized the 19 C.F.R. § 351.225(k)(1) and (2) factors in its analysis regarding...