IPSCO, Inc. v. U.S.
| Decision Date | 03 June 1992 |
| Docket Number | 91-1257,Nos. 91-1236,s. 91-1236 |
| Citation | 965 F.2d 1056 |
| Parties | IPSCO, INC. and Ipsco Steel, Inc., Plaintiffs/Cross-Appellants, and The Algoma Steel Corporation, Ltd. and Sonco Steel Tube Div., Ferrum, Inc., Plaintiffs, v. The UNITED STATES, Defendant-Appellee, v. LONE STAR STEEL COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Federal Circuit |
Rufus E. Jarman, Jr., Barnes, Richardson & Colburn, New York City, argued for plaintiffs/cross-appellants. With him on the brief was Alan Goggins.
Valerie A. Slater, Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., argued for defendant-appellant.
Jeanne E. Davidson, Atty., Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for defendant-appellee. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen. and David M. Cohen, Director. Also on the brief was Thomas G. Ehr, Atty.-Advisor, Office of the Chief Counsel for Import Admin., Dept. of Commerce, of counsel.
Before RICH, Circuit Judge, SMITH, Senior Circuit Judge, and RADER, Circuit Judge.
In a case challenging an antidumping investigation, the Lone Star Steel Company appealed a May 18, 1989, order of the United States Court of International Trade. IPSCO, Inc. v. United States, 714 F.Supp. 1211 (Ct. Int'l Trade 1989) (IPSCO II ). This order rejected the United States Department of Commerce International Trade Administration's (ITA) method of calculating the value of oil country tubular goods (OCTG). Because ITA reasonably interpreted 19 U.S.C. § 1677b(e) (1988), this court reverses the trial court's order and upholds ITA's original calculation method.
Cross-appellants, IPSCO, Inc., and IPSCO Steel, Inc. (IPSCO), appealed an October 30, 1990, order of the trial court. IPSCO, Inc. v. United States, 749 F.Supp. 1147 (Ct. Int'l Trade 1990) (IPSCO IV ). This order sustained ITA's decision to base the value of a particular grade of OCTG on three, rather than six, months of tonnage data. Because IPSCO did not timely object, this court affirms the trial court's order.
OCTG--steel pipe for oil and gas wells--comes in two grades: prime and limited-service. After production of a manufacturing lot, the producer categorizes the pipe into two OCTG grades. Pipe that meets the standards of the American Petroleum Institute (API) becomes prime OCTG. Pipe Producers sell prime OCTG under a warranty and at a higher price than limited-service OCTG. Limited-service OCTG sells without a warranty and at prices below prime OCTG. Other than quality and market value, there are no differences between prime and limited-service OCTG. The same materials, processes, labor, and overhead go into the manufacturing lot which yields both grades of OCTG. Moreover buyers purchase the separate grades for the same purpose--"down hole" use in oil and gas wells.
beneath API standards becomes limited-service OCTG. The API standards rate pipe based on stress and serviceability tests
In July 1985, Lone Star Steel, a domestic producer of OCTG, filed an antidumping petition against Canadian OCTG producers. In 1986, the ITA determined that Canadian producers had sold pipe in the United States at less than fair value. Antidumping; Oil Country Tubular Goods from Canada; Final Determination of Sales at Less than Fair Value, 51 Fed.Reg. 15029 (Apr. 22, 1986), as amended, 51 Fed.Reg. 29579 (Aug. 19, 1986). ITA's determination extended to both prime and limited-service OCTG. Id. at 15,036.
ITA later issued an antidumping duty order. Antidumping Duty Order; Oil Country Tubular Goods (OCTG) from Canada, 51 Fed.Reg. 21782 (June 16, 1986), as amended, 51 Fed.Reg. 29579 (Aug. 19, 1986). Canadian pipe producers, including IPSCO, appealed ITA's final determination to the Court of International Trade. IPSCO, Inc. v. United States, 687 F.Supp. 633 (Ct. Int'l Trade 1988) (IPSCO I ). IPSCO challenged ITA's method for assigning costs to limited-service OCTG. In particular, IPSCO challenged ITA's equal allocation of production costs between the prime and limited-service pipe. Because produced simultaneously, limited-service and prime pipe in fact had identical production costs. ITA treated limited-service pipe as a co-product of prime pipe.
IPSCO argued that ITA should instead treat limited-service OCTG as a by-product. When calculating values under 19 U.S.C. § 1677b(e), the ITA generally deducts the value of by-products from the combined cost of producing the prime product. By-products, however, are secondary products not subject to investigation. IPSCO II, 714 F.Supp. at 1213 n. 2.
Upon initial consideration, the trial court remanded the case to ITA for a fuller explanation of its method for calculating value. IPSCO I, 687 F.Supp. at 638. On September 2, 1988, ITA restated the reasons for treating limited-service OCTG as a co-product. ITA relied heavily on IPSCO's treatment of limited-service OCTG as a co-product in some financial statements.
IPSCO again challenged ITA's decision. IPSCO, Inc. v. United States, 714 F.Supp. 1211 (Ct. Int'l Trade 1989) (IPSCO II ). In IPSCO II, IPSCO again argued that limited service OCTG is a by-product. IPSCO also argued that ITA should set a lower home market value for limited-service OCTG imported into the United States. Id. at 1213.
The trial court rejected IPSCO's by-product argument. Id. at 1213-14. The court, however, did not embrace ITA's valuation method. Treating limited-service OCTG as a co-product, ITA had split the production costs equally between prime and limited-service OCTG. The court reasoned that ITA's method did not account for differences in value between prime and limited-service OCTG. Id. at 1215. Thus, the trial court remanded to ITA a second time. On remand, the court instructed ITA to account for these value differences. Id.
ITA issued a second remand determination on November 8, 1989. This time ITA allocated the cost of production between prime and limited-service OCTG based on their proportionate market value. Under this revised method, the allocated production cost for limited-service OCTG was less than its actual production cost. These reductions in production cost also reduced the overall foreign market value for limited-service OCTG.
This new value-based cost allocation, however, had the opposite effect on prime pipe's foreign market value. With less of the costs of producing a lot of OCTG allocated to limited-service product, the prime At this point, IPSCO challenged another aspect of ITA's cost assessment. IPSCO argued that ITA had erroneously based its value calculation for a particular grade of OCTG on only three months of tonnage data. ITA had used six months of data for other grades of OCTG. IPSCO argued that ITA should have corrected this ministerial error. See 19 U.S.C. § 1673d(e) (1988). The trial court remanded to ITA to determine whether IPSCO raised the alleged error "within a reasonable time" after ITA's original final determination, as required by section 1673d(e). IPSCO, Inc. v. United States, No. 90-37, 1990 WL 51968 (Ct. Int'l Trade Apr. 16, 1990) (IPSCO III ).
product received a higher cost allocation. A higher production cost meant that prime pipe had a higher foreign market value. Thus, ITA's new method shifted costs from limited-service to prime pipe
On May 22, 1990, ITA issued a third remand determination reconfirming its second remand determination. ITA was unable to determine if any error had actually occurred. However, ITA concluded that IPSCO could have discovered with due diligence any erroneous calculations and data. IPSCO appealed ITA's third remand determination. IPSCO IV, 749 F.Supp. at 1147. The court ruled against IPSCO. Id. at 1150.
Lone Star Steel appeals the court's IPSCO II decision to reverse and remand ITA's method of assigning costs to limited-service pipe. IPSCO cross-appeals the court's IPSCO IV decision to sustain ITA's refusal to recalculate values for a particular grade of pipe.
When ITA determines that a foreign entity has sold merchandise in the United States at less than fair value, and the International Trade Commission finds the domestic industry injured by the importation of that merchandise, Title 19 imposes an antidumping duty. 19 U.S.C. § 1673 (1988). The duty is the amount by which the merchandise's foreign market value exceeds its United States price. Id. Foreign market value is the price of the merchandise in the producer's home market or its export price to countries other than the United States. 19 U.S.C. § 1677b(a)(1). In setting forth the computation for foreign market value, however, section 1677b disregards, under specified circumstances, home or export market sales at less than the cost of production. 19 U.S.C. § 1677b(b). If home or export market sales do not yield a reliable measure of foreign market value, the statute directs computation of a constructed value in lieu of the foreign market value. Id.
The statute gives a specific formula for assessing constructed value:
(e) Constructed value
For the purposes of this subtitle, the constructed value of imported merchandise shall be the sum of--
(A) the cost of materials (exclusive of any internal tax ...) and of fabrication or other processing of any kind employed in producing such or similar merchandise ...
(B) an amount for general expenses and profit ...
....
(C) the cost of all containers and coverings of whatever nature....
19 U.S.C. § 1677b(e). This section defines constructed value as the combined cost of materials, fabrication or other processing of any kind, general expenses and profit, and other incidental shipping expenses. The cost of materials encompasses the cost of raw components in the manufacturing process. The cost of fabrication or other processing of any kind encompasses capital and labor costs. The cost of general expenses encompasses overhead. The statute also includes profit within constructed value. The statute provides...
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