Dongbu Steel Co. v. United States, Slip Op. 15–43.

• Decision Date: 05 May 2015
• Docket Number: Slip Op. 15–43.,Court No. 14–00098.
• Citation: 61 F.Supp.3d 1377
• Parties: DONGBU STEEL CO., LTD., Plaintiff, and Union Steel Manufacturing Co., Ltd., Consolidated Plaintiff, v. UNITED STATES, Defendant, and Nucor Corporation, Defendant–Intervenor.
• Court: U.S. Court of International Trade

61 F.Supp.3d 1377

DONGBU STEEL CO., LTD., Plaintiff

and

Union Steel Manufacturing Co., Ltd., Consolidated Plaintiff

v.UNITED STATES, DefendantandNucor Corporation, Defendant–Intervenor.

Slip Op. 15–43.

Court No. 14–00098.

United States Court of International Trade.

May 5, 2015.

Brady Warfield Mills, Donald Bertrand Cameron, Julie Clark Mendoza, Rudi Will Planert, Mary Shannon Hodgins, and Sarah Suzanne Sprinkle, Morris, Manning & Martin, LLP, of Washington, D.C., for Plaintiff Dongbu Steel Co., Ltd. and Consolidated Plaintiff Union Steel Manufacturing Co., Ltd.

Loren Misha Preheim, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant. With

him on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Michael Thomas Gagain, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.

Timothy C. Brightbill, and Alan Hayden Price, Wiley Rein LLP, of Washington, D.C., for Defendant–Intervenor.

OPINION AND ORDER

KELLY, Judge:

Plaintiff Dongbu Steel Co., Ltd. (“Dongbu”) and Consolidated Plaintiff Union Steel Manufacturing Co., Ltd. (“Union Steel”) (collectively “Plaintiffs”) bring this action pursuant to 28 U.S.C. § 1581(c) (2012)¹ to challenge the United States Department of Commerce's (“Commerce” or “Defendant”) final determination in Corrosion–Resistant Carbon Steel Flat Products From the Republic of Korea, 79 Fed.Reg. 17,503 (Dep't Commerce Mar. 28, 2014) (final results of antidumping duty administrative review; 2011–2012) (“Final Results ”) and accompanying Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review: Certain Corrosion–Resistant Carbon Steel Flat Products from the Republic of Korea; 2011–2012, A–580–816, (Mar. 24, 2014), available at http://enforcement.trade. gov/frn/summary/korea–south/2014–06995–1.pdf (last visited Mar. 30, 2015) (“IDM”). Plaintiffs move, pursuant to USCIT Rule 56.2, for judgment on the agency record on their claim that Commerce's decision to disregard certain sales made below the cost of production was unsupported by substantial evidence and based on a legally erroneous interpretation of the cost recovery test in 19 U.S.C. § 1677b(b)(2)(D) (2012).² Moreover, Plaintiffs argue that Commerce's use of costs incurred outside the period of review (“POR”) was unlawful because Commerce does not have authority under the statute to use such costs. Defendant argues that Commerce's interpretation of 19 U.S.C. § 1677b(b)(2)(D) was reasonable in light of the unusual circumstance of the review, and that Commerce reasonably used cost data for the five and a half months after the POR to calculate the cost of production under 19 U.S.C. § 1677b(b)(1). The court finds that Commerce's interpretation of the cost recovery test was contrary to law. Further, while the statute grants Commerce the discretion to calculate the cost of production for the below cost sales test using cost data outside the POR, Commerce has not adequately explained why its resort to such data in this case was reasonable. Therefore the court grants Plaintiffs' motions for judgment on the agency record.

BACKGROUND

This dispute arises from the operation of two distinct administrative proceedings performed in connection with the same antidumping and countervailing duty orders—an administrative review and a sunset review. Upon request, Commerce will conduct an administrative review at least once every 12 months. See 19 U.S.C. § 1675(a)(1)(A)-(B). Annual administrative reviews must be initiated by the last day of the month following the month in which the order was published (called the anniversary month), see 19 C.F.R. §§ 351.221(b)(1), (c)(1)(i), and normally have a POR that covers “entries, exports, or sales of the subject merchandise during the 12 months immediately preceding the most recent anniversary month.” 19 C.F.R. § 351.213(e)(1)(i).

Commerce also conducts sunset reviews once every five years to determine whether revoking the order would lead to continued dumping (or subsidization) and material injury. 19 U.S.C. § 1675(c). Sunset reviews are separate proceedings, distinct from the annual administrative reviews. If either Commerce or the International Trade Commission (“ITC”) determines that an order should be revoked, then Commerce publishes notice of the revocation in the Federal Register. See 19 C.F.R. § 351.222(f)(2). However, the effective date for revocation is five years from the date of the order at issue if it is the first sunset review and five years from the date of any continuation order if it is a subsequent sunset review. See 19 C.F.R. § 351.222(i)(2).

In this case, Plaintiffs are foreign respondents that participated in the antidumping duty administrative review that led to the Final Results at issue. See Final Results at 17,503. The review was initiated on September 26, 2012, with a POR from August 1, 2011 through July 31, 2012.³ See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 77 Fed.Reg. 59,168 (Dep't Commerce Sept. 26, 2012) ; IDM at cmt. 1. Separately, on March 11, 2013, the ITC published its final determination in the third sunset review on corrosion-resistant carbon steel flat products from Korea, revoking the antidumping and countervailing duty orders with an effective date of February 14, 2012. Corrosion–Resistant Carbon Steel Flat Products From Germany and the Republic of Korea, 78 Fed.Reg. 16,832, 16,833 (Dep't Commerce Mar. 19, 2013) (revocation of antidumping and countervailing duty orders) (“Revocation Notice ”). See also Corrosion–Resistant Carbon Steel Flat Products From Germany and Korea, 78 Fed.Reg. 15,376 (Int'l Trade Comm'n Mar. 11, 2013) (determinations).

On March 19, 2013, Commerce published notice that the antidumping order (“ADD Order”) in this case would be revoked, but that Commerce would “complete any pending or requested administrative reviews of these orders covering entries prior to February 14, 2012.” Revocation Notice at 16,833. In the Preliminary Results, issued on September 9, 2013, Commerce shortened the POR for the ongoing administrative review to reflect the effective date of revocation, resulting in a new POR from August 1, 2011 through February 14, 2012. See Corrosion–Resistant Carbon Steel Flat Products from the Republic of Korea, 78 Fed.Reg. 55,057, 55,058 (Dep't Commerce Sept. 9, 2013) (preliminary results of antidumping duty administrative review; 2011–2012) (“Preliminary Results ”).

In its normal value⁴ determination for the review at issue here, Commerce only considered sales made during the revised POR from August 1, 2011 to February 14, 2012. See, e.g., Dongbu's CM Log Database, CD 109 (Sept. 4, 2013); Dongbu's Margin Log Database, CD 111 (Sept. 4, 2013). In conducting its cost of production analysis, Commerce continued to use the costs provided by respondents for the original POR, which reflected costs of production incurred from August 1, 2011 to July 31, 2012. See IDM at cmt. 1. Therefore, the sales considered were limited to those within the shortened POR, but the cost database included costs of production incurred after the POR. See Commerce's Antidumping Duty Questionnaire Sections A–E at section D, PD 24 (Nov. 19, 2012) (asking respondents to report the “actual costs incurred by your company during the period of review” for the original POR prior to revocation). In their case briefs below, submitted on November 8, 2013, Plaintiffs argued Commerce had violated the cost recovery test in 19 U.S.C. § 1677b(b)(2)(D) by testing Dongbu's home market sales for the revised POR against the weighted average cost of production for the original POR. Dongbu's Case Br. at 2, 7, PD 129 (Nov. 8, 2013); Union Steel's Case Br. at 2–3, PD 130 (Nov. 8, 2013). See also Mot. Pl. Dongbu Supp. Mot. J. 7, Oct. 2, 2014, ECF No. 27–1 (“Pl.'s Mot.”); Br. Pl. Union Steel Supp. Mot. J. Agency R. 7, Oct. 2, 2014, ECF No. 28–1.⁵ Plaintiffs also argued that Commerce unlawfully used costs beyond the POR and those costs do not reasonably reflect the actual costs during the POR. Dongbu's Case Br. at 8–9. See also Pl.'s Mot 18. Plaintiffs argued Commerce should have requested new cost data for the revised POR and should recalculate the dumping margin. Dongbu's Case Br. at 7; Union Steel's Case Br. at 2–3. See also Pl.'s Mot. 7. In the Final Results, Commerce dismissed Plaintiffs' arguments, finding instead that “the use of the 12–month average cost data [wa]s reasonable and appropriate in this situation.” IDM at cmt. 1.

Plaintiffs now challenge Commerce's determination to use the 12–month cost of production data instead of using cost data that reflects the shortened POR. Plaintiffs argue the language of the cost recovery test in 19 U.S.C. § 1677b(b)(2)(D) is mandatory and requires Commerce to measure the prices of the below cost sales against the weighted average cost of production for the POR. Moreover, Plaintiffs argue that Commerce was statutorily obligated “to compare home market sales for the POR to costs for that same POR in its sales below cost test.” Pl.'s Mot. 21.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c), and 19 U.S.C. § 1516a(a). “The court shall 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)(i).

DISCUSSION

Cost Recovery

Plaintiffs argue Commerce's cost recovery determination violated the plain language of 19 U.S.C. § 1677b(b)(2)(D) because Commerce used a weighted average cost of production based on costs incurred outside the revised POR ending on February 14, 2012. Defendant argues that despite the language of § 1677b(b)(2)(D), Commerce's interpretation...