Husteel Co. v. United States

• Decision Date: 03 January 2020
• Docket Number: Consol. Court No. 18-00169,Slip Op. 20-2
• Citation: 426 F.Supp.3d 1376
• Parties: HUSTEEL CO., LTD. et al., Plaintiff and Consolidated Plaintiffs, v. UNITED STATES, Defendant, and California Steel Industries et al., Defendant-Intervenors and Consolidated Defendant-Intervenors.
• Court: U.S. Court of International Trade

426 F.Supp.3d 1376

HUSTEEL CO., LTD. et al., Plaintiff and Consolidated Plaintiffs,

v. UNITED STATES, Defendant,andCalifornia Steel Industries et al., Defendant-Intervenors and Consolidated Defendant-Intervenors.

Slip Op. 20-2

Consol. Court No. 18-00169

United States Court of International Trade.

Dated: January 3, 2020

R. Will Planert and Donald B. Cameron, Morris, Manning & Martin LLP, of Washington, DC, argued for plaintiff Husteel Co., Ltd. With them on the briefs were Julie C. Mendoza, Brady W. Mills, Mary S. Hodgins, Eugene Degnan, Sabahat Chaudhary, and Ragan W. Updegraff.

Henry D. Almond and Kang W. Lee, Arnold & Porter Kaye Scholer LLP, of Washington, DC, argued for consolidated plaintiffs Hyundai Steel Company and NEXTEEL Co., Ltd. With them on the briefs were J. David Park and Daniel R. Wilson.

Jeffrey M. Winton, Law Office of Jeffrey M. Winton PLLC, of Washington, DC, argued for consolidated plaintiff SeAH Steel Corporation. With him on the brief was Amrietha Nellan.

Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the briefs were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of Counsel was Reza Karamloo, Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Elizabeth J. Drake, Schagrin Associates, of Washington, DC, argued for defendant-intervenors California Steel Industries, TMK IPSCO, and Welspun Tubular LLC USA. With her on the brief was Roger B. Schagrin, Christopher T. Cloutier, and Luke A. Meisner.

Frank J. Schweitzer, White & Case LLP, of Washington, DC, argued for defendant-intervenor Maverick Tube Corporation. With him on the brief was Gregory J. Spak, Kristina Zissis, and Matthew W. Solomon.

OPINION AND ORDER

Kelly, Judge:

This consolidated action is before the court on motions for judgment on the agency record filed respectively by SeAH Steel Corporation ("SeAH"), Hyundai Steel Company ("Hyundai"), NEXTEEL Co., Ltd. ("NEXTEEL"), and Husteel Co., Ltd. ("Husteel"). See Pl. [SeAH]'s Mot. J. Agency R., Feb. 1, 2019, ECF No. 37; Consol. Pl. [Hyundai]'s 56.2 Mot. J. Agency R., Feb. 1, 2019, ECF No. 39; Consol. Pl. [NEXTEEL]'s 56.2 Mot. J. Agency R., Feb. 1, 2019, ECF No. 41; Pl. [Husteel]'s Mot. J. Agency R., Feb. 1, 2019, ECF No. 42. These parties challenge various aspects of the final results of the U.S. Department of Commerce's ("Department" or "Commerce") first administrative review of the antidumping duty ("ADD") order covering welded line pipe from the Republic of Korea ("Korea"). See [SeAH]'s Br. Supp. 56.2 Mot. J. Agency R. Confidential Version, Feb. 1, 2019, ECF No. 37-1 ("SeAH's Br."); Consol. Pl. [Hyundai]'s Memo. Supp. 56.2 Mot. J. Agency R. Confidential Version, February 1, 2019, ECF No. 39-1 ("Hyundai's Br."); Consol. Pl. [NEXTEEL]'s Memo. Supp. 56.2 Mot. J. Agency R., Feb. 1, 2019, ECF No. 41-1 ("NEXTEEL's Br."); Pl. [Husteel]'s Br. Supp. Mot. J. Agency R., Feb. 1, 2019, ECF No. 42-1 ("Husteel's Br."); see also Welded Line Pipe from the Republic of Korea, 83 Fed. Reg. 33,919 (Dep't Commerce July 18, 2018) (final results of [ADD] admin. review; 2015–2016) ("Final Results") as amended by Welded Line Pipe from the Republic of Korea, 83 Fed. Reg. 39,682 (Dep't Commerce Aug. 10, 2018) (amended final results of [ADD] admin. review; 2015–2016) ("Amended Final Results") and accompanying Issues and Decisions Memo. for the Final Results of the 2015–2016 Admin. Review of the [ADD] Order on Welded Line Pipe from Korea, A-580-876, (July 11, 2018), ECF No. 25-5 ("Final Decision Memo.").

SeAH challenges as contrary to law and unsupported by substantial evidence Commerce's decision to reject third country sales and use constructed value to calculate its margins. SeAH's Br. at 11–19. Plaintiffs challenge as contrary to law and unsupported by substantial evidence Commerce's particular market situation ("PMS") finding and subsequent adjustments. See SeAH's Br. at 19–27; Hyundai's Br. at 17–29; Husteel's Br. at 11–19; see generally NEXTEEL's Br. Husteel challenges Commerce's statutory authority to adjust reported costs of production to account for a PMS in Korea. See Husteel's Br. at 18–19. Husteel also challenges Commerce's calculation of the non-examined companies' rate. See Husteel's Br. at 19–23.

For the reasons that follow, this court remands Commerce's adjustment of the reported costs of production for welded line pipe for purposes of the sales below costs test when calculating normal value; Commerce's determination that distortions in the Korean market give rise to a particular market situation; Commerce's decision to resort to constructed value when calculating SeAH's margins; and accordingly, Commerce's calculation of the all-others rate for non-examined respondents.

BACKGROUND

On February 13, 2017, in response to timely requests by interested parties, Commerce initiated an administrative review of various ADD and countervailing duty ("CVD") orders and findings, including an ADD order covering welded line pipe ("WLP") from Korea.¹ See Initiation of Antidumping and Countervailing Duty Admin. Reviews, 80 Fed. Reg. 10,457 (Dep't Commerce Feb. 13, 2017) ; see also Welded Line Pipe from the Republic of Korea, 82 Fed. Reg. 75,056 (Dep't Commerce Dec. 1, 2015) ( [ADD] orders). On March 7, 2017, Commerce selected Hyundai and SeAH as mandatory respondents. See Selection of Resp't for Individual Review at 2–4, PD 22, bar code 3549464-01 (Mar. 7, 2017).

Commerce published its preliminary results on January 9, 2018. See Welded Line Pipe from Korea, 83 Fed. Reg. 1,023 (Dep't Commerce Jan. 9, 2018) (prelim. results of [ADD] admin. review; 2015–2016) ("Prelim. Results") and accompanying Decisions Memo. for the [Prelim. Results ], A-580-876, PD 259, bar code 3657712-01 (Jan. 2, 2018) ("Prelim. Decision Memo."). Commerce calculated SeAH's margin by using Canada as the comparator market because the aggregate volume of SeAH's home market sales were insufficient to permit a proper comparison with United States sales. See Prelim Decision Memo. at 15–16 (citing to section 773(a)(1)(C)(ii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1677b(a)(1)(C)(ii) (2012) )² . On September 22, 2017, Defendant-Intervenor Maverick Tube Corporation ("Maverick") sent to Commerce a letter alleging that a PMS in Korea distorted the cost of production ("COP") of WLP. See generally Letter from [Maverick] Pertaining to PMS Allegation and Factual Info., CD 230–297, bar codes 3622608-01–68 (Sept. 22, 2017). Namely, Maverick alleged that the PMS in Korea distorted the cost of hot-rolled coil ("HRC"), an input in the production of WLP. See generally id. To account for the PMS, Commerce made an upward adjustment to Hyundai's and SeAH's reported costs for the HRC input when calculating normal value. See generally Prelim. Decision Memo. Commerce preliminarily calculated weighted-average dumping margins of 19.42 percent for Hyundai, 2.30 percent for SeAH, and 10.86 percent for non-selected respondents. Prelim. Results 83 Fed. Reg. at 1,024.

On June 25, 2018, Commerce placed on the record the Canadian International Trade Tribunal's ("CITT")³ final determination that SeAH's sales of steel line pipe into Canada were dumped and permitted interested parties to comment. See Memo. from Commerce Pertaining to Canadian [ADD] Final Determination on [WLP], PD 303, bar code 3722970-01 (June 25, 2018) ("CITT Final Determination"); see also id. Attachment at 2. On August 10, 2018, Commerce published its Amended Final Results, and recalculated the weighted-average dumping margins. See generally, Amended Final Results and Final Decision Memo.⁴ Commerce continued to apply the upward adjustment to Hyundai and SeAH's reported HRC costs. Final Decision Memo. at 12–17. Relying on the CITT's dumping determination, Commerce calculated SeAH's margin using the constructed value methodology. Final Decision Memo. at 45–47. After correcting for ministerial errors, see Final Decision Memo. at 3, Commerce assigned rates of 18.77 percent for Hyundai, 14.39 percent for SeAH, and 16.58 percent for non-selected respondents. See Amended Final Results, 83 Fed. Reg. at 39,682.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c) (2012), which grant the court authority to review actions contesting the final determination in an investigation of an [ADD] order. The court will uphold Commerce's determination 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).

DISCUSSION

I. The Statute Precludes Commerce's PMS Adjustment

A. Exhaustion and Waiver

As a threshold matter, Defendant argues Husteel failed to exhaust its argument that Commerce lacked authority to make a PMS adjustment to COP for purposes of determining below cost sales before the agency. Defendants also argue that Husteel waived its claim with respect to this argument before this court. Because the question before the court concerns a pure question of law, the court will not require exhaustion before the agency. Moreover, Husteel sufficiently pled and briefed its claim that Commerce acted contrary to law before this court.

Parties are required to exhaust administrative remedies before the agency by raising all issues in their initial case briefs before Commerce. Dorbest Ltd. v. United States, 604 F.3d 1363, 1375 (Fed. Cir. 2010) (citing to 19 C.F.R. § 351.309(c)(2), (d)(2) ; Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383 (Fed. Cir. 2008) ). However, the court has discretion not to require exhaustion of administrative remedies where a pure legal question arises. 19 U.S.C. § 2637(d); see also Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024, 1029–30 (Fed. Cir. 2007).⁵ The court is not...