Histeel Co. v. United States
| Decision Date | 23 September 2021 |
| Docket Number | Slip Op. 21-126,Court No. 20-00146 |
| Citation | 547 F.Supp.3d 1233 |
| Parties | HISTEEL CO., LTD., and Kukje Steel Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and Nucor Tubular Products Inc., and Atlas Tube and Searing Industries, Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Michael J. Chapman, Winton & Chapman PLLP, of Washington, D.C., argued for Plaintiffs HiSteel Co., Ltd. and Kukje Steel Co., Ltd. With him on the briefs were Jeffrey Winton, Amrietha Nellan, and Vi N. Mai.
Kara Marie Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke, Assistant Director. Of counsel on the brief was Vania Wang, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.
Robert DeFrancesco, III, Wiley Rein, LLP, of Washington, D.C., argued for Defendant-Intervenor, Nucor Tubular Products, Inc. With him on the brief were Enbar Toledano and Jake R. Frischknecht.
Elizabeth J. Drake, Schagrin Associates, of Washington, D.C., argued for Defendant-Intervenor, Atlas Tube, a division of Zekelman Industries, and Searing Industries. With her on the brief were Roger B. Schagrin, Christopher T. Cloutier, and Luke A. Meisner.
This case involves a challenge to the Department of Commerce's ("Commerce") determination that Korean producers of heavy walled rectangular welded carbon steel pipes and tubes ("HWR") sold HWR into the United States at prices below fair value. The challenge raises three primary questions. First, does the Trade Preferences Extension Act of 2015 ("TPEA") give Commerce statutory authority to make a contested adjustment to the cost of production in an antidumping ("AD") proceeding? Second, may Commerce employ a "totality of the circumstances" approach to demonstrate that a particular market situation ("PMS") existed during the period of review ("POR")? Finally, are Commerce's identification of a PMS in this case and resultant PMS adjustment to the cost of production supported by substantial evidence?
In its final results of antidumping duty administrative review, published July 10, 2020, Commerce determined that Korean HWR producers were properly subject to AD duties and accordingly imposed duties of 53.80% for Dong-A Steel, 26.20% for HiSteel, 35.11% for Kukje Steel, and 29.07% for all non-selected respondents. Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Korea: Final Results of Antidumping Duty Administrative Review, 85 Fed. Reg. 41,538, 41,539 (Dep't Commerce July 10, 2020), P.R. 402 ("Final Results"). On August 7, 2020, Plaintiffs HiSteel Co., Ltd. ("HiSteel") and Kukje Steel Co. Ltd., ("Kukje") (collectively, "Plaintiffs") initiated this suit against the United States ("Government" or "Defendant") to challenge the Final Results. Summons, ECF No. 1. Plaintiffs specifically contest Commerce's application of a PMS adjustment to the costs of hot-rolled steel coils ("HRC"), an input to HWR, before conducting a sales-below-cost test to determine the normal value of HWR. Pls.’ Mot. for J. on the Agency R. 2, Jan. 4, 2021, ECF No. 33 ( ). Plaintiffs argue that (1) Commerce does not have the authority to apply a PMS adjustment to cost of production when conducting a sales-below-cost test; (2) a PMS does not exist in the Korean market for HRC; and (3) Commerce's PMS adjustment is not supported by substantial evidence. Pls.’ Br. at 2–4. The court grants Plaintiffs’ motion for judgment on the agency record and remands Commerce's determination that a PMS affected the price of hot-rolled steel coils during the POR and resultant application of an upward adjustment to the price of HRC prior to conducting a sales-below-cost test.
Under the Tariff Act of 1930, Commerce is authorized to investigate potential dumping activity and, if dumping is found, levy AD duties on the unfairly priced goods. Sioux Honey Ass'n v. Hartford Fire Ins., 672 F.3d 1041, 1046 (Fed. Cir. 2012). Dumping occurs when a foreign company sells a product in the United States for less than its fair value. 19 U.S.C. § 1677b(a). Accordingly, to impose AD duties, Commerce must first determine whether a good is being sold at less than its fair value. Id.; 19 U.S.C. § 1673. In so determining, Commerce compares the product's export price or constructed export price (export price adjusted for various additional expenses pursuant to 19 U.S.C. § 1677a(c) – (d) ) with the product's normal value. 19 U.S.C. § 1677b(a). Next, the International Trade Commission ("ITC") must determine whether the domestic industry that produces the product under investigation is materially injured, is threatened with material injury, or if the establishment of a domestic industry is materially retarded by the sale of the dumped product. Id. If dumping has occurred, and has been found to injure, threaten, or retard domestic industry, Commerce may impose AD duties on the dumped product. Id. The duty imposed should be equal to the "dumping margin," which is the calculated difference between the export price or constructed export price and the normal value of the merchandise. Id.
Pursuant to 19 U.S.C. § 1677b, there are three possible ways to calculate normal value when the exporting country is a market economy.1 First, Commerce may average the product's prices in the home market ("the home market methodology"). 19 U.S.C. § 1677b(a)(1)(B)(i). If Commerce believes that some sales in the home market were made at prices below the cost of production, Commerce may conduct a sales-below-cost test, wherein Commerce determines that sales in the home market were made at prices below the cost of production and disregards those sales when calculating normal value. 19 U.S.C. § 1677b(b). Second, where the product or an identical product is not offered for sale in the home market, Commerce can average the product's prices in a third country. 19 U.S.C. § 1677b(a)(1)(B)(ii). Third, if the product or an identical product is not offered for sale in the home market, and notwithstanding the availability of third country sales data, Commerce may determine the product's normal value by calculating its constructed value. 19 U.S.C. § 1677b(a)(4). Constructed value is calculated by summing the costs of production and processing of the product, and costs incurred by the exporter under investigation (or other representative exporters under investigation) in the course of the export and sale of the product. 19 U.S.C. § 1677b(e).
Broadly, a PMS exists when the market under investigation possesses a unique set of circumstances that "prevents a proper comparison" between a product's normal value and its export price or constructed export price. See 19 U.S.C. § 1677b(a)(1)(B)(ii)(III). While the Tariff Act historically omitted explicit guidelines for the identification of a PMS, this changed with the passage of the Trade Preferences Extension Act of 2015 ("TPEA"), which amended the existing AD and countervailing duty statutes. See Tariff Act, Pub. L. 103-465, § 773 (1994) (amended 2015); Trade Preferences Extension Act of 2015 § 504, 19 U.S.C. §§ 1677(15), 1677b(e). Section 504 of the TPEA in particular provided greater color to the meaning and scope of particular market situations and clarified the circumstances under which Commerce may apply adjustments on the basis of a PMS determination. Section 504(a) further incorporated PMS determinations as a circumstance existing outside of a country's ordinary course of trade. See 19 U.S.C. § 1677(15)(C). Finally, section 504(c) of the TPEA amended the calculation of constructed value to allow for PMS-specific adjustments. See 19 U.S.C. § 1677b(e). Section 504(c) expressly stipulates that a PMS exists when "the costs of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade," impeding Commerce's ability to accurately estimate a product's constructed value. See 19 U.S.C. § 1677b(e)(3). Once Commerce determines that a PMS exists, the TPEA authorizes Commerce to use "any other calculation methodology" to determine the cost of production in the exporting country for the purposes of calculating constructed value. Id.
On November 15, 2018, the Department of Commerce initiated a review on an AD order on HWR from Korea. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 83 Fed. Reg. 57,411 (Dep't Commerce Nov. 15, 2018), P.R. 5. Commerce selected HiSteel and Dong-A Steel Co., Ltd. (later replaced by Kukje) for individual examination as mandatory respondents.2 Second Respondent Selection Memo (Dep't Commerce Dec. 18, 2018), P.R. 17.
On April 2, 2019, Nucor Tubular Products, Inc. ("Nucor") -- then operating as Independence Tube Corporation and Southland Tube, Incorporated (together, "Petitioners") -- submitted to Commerce a cost-based PMS allegation for the price of HRC as an input for HWR. Pet'rs’ April 2, 2019, PMS Allegation (Apr. 2, 2019), P.R. 51–236, C.R. 36–122. Petitioners’ PMS allegation was based on four factors, including (1) the distortive effect of unfairly traded steel from China; (2) the subsidization of Korean hot-rolled steel production by the Korean government; (3) distortive government control over electricity prices in Korea; and (4) strategic alliances between Korean HRC suppliers and Korean HWR producers. Id. at 27–30. Additionally, Petitioners proposed a regression model to capture the distortive effect of the steel overcapacity on the Korean market, which Petitioners alleged...
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Histeel Co. v. United States
...Department of Commerce ("Commerce")’s remand results filed pursuant to this court's order in HiSteel Co. v. United States, 45 CIT ––––, ––––, 547 F. Supp. 3d 1233, –––– (2021) (" HiSteel I") in connection with Commerce's final determination in the 2017-2018 administrative review of the anti......