Downhole Pipe & Equip., LP v. United States
| Decision Date | 04 November 2013 |
| Docket Number | Slip Op. 13–134.,Court No. 11–00081. |
| Citation | 949 F.Supp.2d 1288 |
| Parties | DOWNHOLE PIPE & EQUIPMENT, LP, and DP–Master Manufacturing Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and VAM Drilling USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, TMK IPSCO, and U.S. Steel Corp., Defendant–Intervenors. |
| Court | U.S. Court of International Trade |
OPINION TEXT STARTS HERE
Mark B. Lehnardt, Lehnardt & Lehnardt, LLC, of Liberty, MO, and Irene H. Chen, Chen Law Group LLC, of Rockville, MD, for plaintiffs.
Mikki Cottet, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on the brief was Nathaniel J. Halvorson, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.
Roger B. Schagrin and John W. Bohn, Schagrin Associates, of Washington, DC, for VAM Drilling USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, and TMK IPSCO.
This matter is before the court following remand to the Department of Commerce (“Commerce”) in Downhole Pipe & Equip. LP v. United States, 36 CIT ––––, 887 F.Supp.2d 1311 (2012) (“Downhole I ”). Commerce issued its remand redetermination in May 2013. See Final Results of Redetermination Pursuant to Court Remand (May 13, 2013), ECF No. 94 (“ Remand Results ”). Plaintiffs Downhole Pipe & Equipment, LP, and DP–Master Manufacturing Co., Ltd. (“DP–Master” and, collectively, “Plaintiffs”), contest the Remand Results. For the reasons discussed below, the court sustains the Remand Results.
The relevant facts and procedural history of this case are set forth in Downhole I, 36 CIT at ––––, 887 F.Supp.2d at 1315–18,and are summarized briefly herein. Drill pipes are “specialized high-strength iron alloy tube[s]” used in oil drilling applications alongside other so-called oil country tubular goods (“OCTG”). Id. at ––––, 887 F.Supp.2d at 1315. In the original proceeding, Commerce determined that “drill pipe from the is being, or is likely to be, sold in the United States at [less than fair value (“LTFV”) ]”. Drill Pipe From the PRC: Final Determination of Sales at LTFV and Critical Circumstances, 76 Fed.Reg. 1966, 1966 (Jan. 11, 2011) (“ Final Determination ”).
The Final Determination specifically targeted drill pipe green tubes (“DPGT”), an input for drill pipe defined as “seamless tubes with an outer diameter of less than or equal to 6 5/8 inches[,] ... containing between 0.16 and 0.75 percent molybdenum, and containing between 0.75 and 1.45 percent chromium.” Id. at 1967. Commerce determined the surrogate value for DPGT using import data for Indian Harmonized Tariff Schedule (“IHTS”) categories 7304.23 and 7304.29. See Drill Pipe from the PRC: Issues and Decision Memorandum for the Final Determination at 31–32 (Jan. 3, 2011), A–570–965.
In Downhole I, the Court remanded the Final Determination to Commerce with instructions to reconsider the surrogate values for DPGT and the labor wage rate.1Downhole I, 36 CIT at ––––, 887 F.Supp.2d at 1330. The Court held that Commerce failed to address Infodrive data contradicting its finding that DPGT entered India under IHTS 7304.23 and 7304.29 during the period of investigation. Id. at ––––, 887 F.Supp.2d at 1324–25. The Court acknowledged that the IHTS subheadings may in fact be the best available information, but it could not affirm the Final Determination on the basis of the explanation Commerce provided. Id. at ––––, 887 F.Supp.2d at 1325.
On remand, Commerce examined a number of potential surrogate values for DPGT, including: import data for IHTS 7304.23, 7304.29, and 7304.59; price data on P1110 and J/K 55 tubes from Metal Bulletin Research; and adjusted values for alloy steel billets and seamless tubes. See Draft Results of Redetermination Pursuant to Remand at 4 (Apr. 5, 2013), ECF No. 119–2 (“ Draft Results ”). Commerce initially selected price data for imports under IHTS 7304.59.10 and 7304.59.20, “circular, seamless, alloy” classifications covering “products which are not properly classified as drill pipe, OCTG, or a number of other clearly-delineated types of tubes.” 2Id. at 15. Commerce found that the IHTS 7304.59 data was most representative of DPGT, contemporaneous with the period of investigation, duty and tax exclusive, publicly available, and represented a broad market average. See id. at 15–16. Commerce “confirmed” its analysis with a National Import Specialist at United States Customs and Border Protection (“CBP”). Memorandum from Toni Datch, re: Remand Redetermination in the Investigation of Drill Pipe from the PRC at 1 (Mar. 26, 2013), A–570–965 (“NIS Memo”).
For the final results, Commerce selected import data from IHTS 7304.59.20 alone to value DPGT. See Remand Results at 14–18. Commerce concluded that Infodrive data Plaintiffs placed on the record conclusively demonstrated that DPGT did not enter India under IHTS 7304.59.10, but did not foreclose the possibility that DPGT entered under IHTS 7304.59.20. Id. at 14. Commerce continued to find that import data for IHTS 7304.59.20 best met its preferences for surrogate values. Id.
Plaintiffs filed comments alleging that the Remand Results were unsupported by substantial evidence and otherwise not in accordance with law. See Pls.' Cmts. at 7–23. Plaintiffs ask the court to remand again with guidance on an acceptable range of surrogate values for DPGT. See id. at 23–25.
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and section 516A(a)(2)(B)(i) of the Tariff Act of 1930,3 as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006).
The court will uphold Commerce's remand redetermination unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). “ ‘Substantial evidence ... means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ ” Goldlink Indus. Co. v. United States, 30 CIT 616, 618, 431 F.Supp.2d 1323, 1326 (2006) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951)). Under this standard, “an agency ‘must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.’ ” Gerber Food (Yunnan) Co. v. United States, 31 CIT 921, 926, 491 F.Supp.2d 1326, 1333 (2007) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). Nevertheless, “the possibility of drawing two inconsistent conclusions from the evidence does not invalidate Commerce's conclusion as long as it remains supported by substantial evidence.” Zhaoqing New Zhongya Aluminum Co. v. United States, 36 CIT ––––, ––––, 887 F.Supp.2d 1301, 1305 (2012) (citing Universal Camera, 340 U.S. at 488, 71 S.Ct. 456).
Commerce determines the normal value of subject merchandise produced in a non-market economy (“NME”) “on the basis of the value of the factors of production utilized in producing the merchandise” in a comparable market economy. 19 U.S.C. § 1677b(c)(1). In selecting these surrogate values, Commerce must use the “best available information.” Id. Commerce “normally will use publicly available information” from a single country, 19 C.F.R. § 351.408(c)(1), (2) (2013), and it “prefers data that reflects a broad market average, is ... contemporaneous with the period of review, specific to the input in question, and exclusive of taxes on exports.” Fuwei Films (Shandong) Co. v. United States, 36 CIT ––––, ––––, 837 F.Supp.2d 1347, 1350–51 (2012).
“[T]he process of constructing foreign market value for a producer in a [NME] country is difficult and necessarily imprecise.” Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed.Cir.1999) (internal quotation marks omitted). Commerce has “broad discretion to determine the best available information,” Goldlink, 30 CIT at 619, 431 F.Supp.2d at 1327 (internal quotation marks omitted), and “[i]f Commerce's determination of what constitutes the best available information is reasonable, then the Court must defer to Commerce.” Id., 431 F.Supp.2d at 1327.
Plaintiffs argue that Commerce erroneously determined that IHTS 7304.59.20 was the best available information because IHTS 7304.59.20 is not representative of DPGT and Commerce did not provide adequate justification for rejecting non-IHTS alternative values on the record. See Pls.' Cmts. at 8–23.
Plaintiffs argue that Commerce erred in finding that IHTS 7304.59.20 was representative of DPGT because: (1) Commerce's analysis of Indian tariff classifications was inadequate; (2) Commerce failed to address Infodrive data indicating that IHTS 7304.59.20 was not representative of DPGT or DP–Master's merchandise; (3) Commerce ignored evidence indicating that the average unit value (“AUV”) of entries under IHTS 7304.59.20 was “aberrantly high;” and (4) Commerce improperly relied on the NIS Memo. See Pls.' Cmts. at 8–21.
Plaintiffs argue that “Commerce's legal analysis of tariff classifications was inadequate” because Commerce dismissed alternative IHTS subheadings without considering “legal principles” such as General Rule of Interpretation 2(a).4 Pls.' Cmts. at 13. Plaintiffs insist further analysis was necessary given Commerce's change in position from the Final Determination and record evidence indicating that petitioners classified DPGT under subheadings other than 7304.59. Id. at 13–15.
Plaintiffs fail to demonstrate that Commerce's IHTS analysis was inadequate. First, Plaintiffs do not cite...
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