NEXTEEL Co., Ltd. v. United States

• Decision Date: 19 April 2022
• Docket Number: Slip Op. 22-37,Consol. Court No. 20-03898
• Citation: 569 F.Supp.3d 1354
• Parties: NEXTEEL CO., LTD. et al., Plaintiff and Consolidated Plaintiffs, and Husteel Co., Ltd. and Hyundai Steel Company, Plaintiff-Intervenors, v. UNITED STATES, Defendant, and California Steel Industries, Inc. et al., Defendant-Intervenors and Consolidated Defendant-Intervenors.
• Court: U.S. Court of International Trade

569 F.Supp.3d 1354

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

and

Husteel Co., Ltd. and Hyundai Steel Company, Plaintiff-Intervenors,

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

Slip Op. 22-37

Consol. Court No. 20-03898

United States Court of International Trade.

April 19, 2022

Henry D. Almond and Leslie C. Bailey, Arnold & Porter Kaye Scholer LLP, of Washington, D.C. argued on behalf of plaintiff NEXTEEL Co., Ltd. Also on the brief were J. David Park, Daniel R. Wilson, and Kang Woo Lee.

Jeffrey M. Winton, Amrietha Nellan, and Jooyoun Jeong, Winton & Chapman PLLC, of Washington, D.C. argued on behalf of consolidated plaintiff SeAH Steel Corporation. Also on the brief were Michael J. Chapman and Vi N. Mai.

Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, D.C. argued on behalf of consolidated plaintiff and plaintiff-intervenor Hyundai Steel Company. Also on the brief was Robert G. Gosselink.

Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S. Hodgins, and Eugene Degnan, Morris, Manning, & Martin, LLP, of Washington, D.C. for plaintiff-intervenor Husteel Co., Ltd.

Robert R. Kiepura, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, D.C. argued for defendant United States. Also on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director and Franklin E. White Jr., Assistant Director. Of counsel was Reza Karamloo, Senior Counsel, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, of Washington D.C.

Elizabeth J. Drake, Schagrin Associates, of Washington, D.C. argued on behalf of defendant-intervenors California Steel Industries, Inc. and Welspun Tubular LLC USA. Also on the brief was Roger R. Schagrin.

Timothy C. Brightbill, Wiley Rein, LLP, of Washington, D.C. argued on behalf of defendant-intervenors American Cast Iron Pipe Company and Stupp Corporation, a Division of Stupp Bros., Inc. Also on the brief was Laura El-Sabaawi.

Gregory J. Spak, Frank J. Schweitzer, Kristina Zissis, and Matthew W. Solomon, White & Case LLP, of Washington, D.C. for defendant-intervenors Maverick Tube Corporation and IPSCO Tubulars Inc.

OPINION AND ORDER

Kelly, Judge:

Before the court are four Rule 56.2 motions for judgment on the agency record challenging various aspects of the U.S. Department of Commerce's ("Commerce") final determination in its 2017–2018 administrative review of the antidumping duty ("ADD") order covering welded line pipe ("WLP") from the Republic of Korea ("Korea") ("WLP from Korea"). Pl. Husteel Co., Ltd.’s Mot. J. Agency R., May 24, 2021, ECF No. 58 ("Husteel's Rule 56.2 Mot.") and accompanying Pl.-Intervenor Husteel Co., Ltd.’s Br. in Supp. Mot. for J. Agency R., May 24, 2021, ECF No. 58-2 ("Husteel's Br."); R. 56.2. Mot. J. Agency R. of Pl. and Consol. Pl. NEXTEEL Co., Ltd., May 24, 2021, ECF Nos. 59, 60 ("NEXTEEL's R. 56.2 Mot.") and accompanying Memo. in Supp. of [NEXTEEL's R. 56.2 Mot.], May 24, 2021, ECF Nos. 59-2, 60-2 ("NEXTEEL's Br."); Mot. of Pl. SeAH Steel Corporation for J. Agency R., May 24, 2021, ECF Nos. 61, 62 ("SeAH's R. 56.2 Mot.") and accompanying Br. of SeAH Steel Corporation in Supp. of R. 56.2 Mot. for J. Agency R., May 24, 2021, ECF Nos. 61-1, 62-1 ("SeAH's Br."); Consol. Pl. and Pl.-Intervenor Hyundai Steel Company's R. 56.2 Mot. J. Agency R., May 24, 2021, ECF No. 63 ("Hyundai's R. 56.2 Mot.") and accompanying Memo. in Supp. of [Hyundai's R. 56.2 Mot.], May 24, 2021, ECF No. 63-1 ("Hyundai's Br."); see generally [WLP from Korea] 85 Fed. Reg. 76,517 (Dep't Commerce Nov. 30, 2020) (final results of [ADD] admin. review; 2017–2018) ("Final Results") and accompanying Issues and Decision Memo., A-580-876, Nov. 20, 2020, ECF No. 52-4 ("Final Decision Memo."); Order on Consent Mot. to Consol. Cases, Jan. 21, 2021, ECF No. 50 (consolidating Ct. Nos. 20-03898, 20-03935, and 20-03940).

Plaintiff, consolidated plaintiffs and plaintiff-intervenors (collectively, "Plaintiffs") challenge Commerce's determination of a particular market situation ("PMS"), SeAH's Br. at 8–21; NEXTEEL's Br. at 21–31; Hyundai's Br. at 6–9;¹ Husteel's Br. at 7–13, Commerce's application of a PMS adjustment to the sales-below-cost test, SeAH's Br. at 8–11; NEXTEEL's Br. at 18–21; Hyundai's Br. at 7–8; Husteel's Br. at 15–18,² and Commerce's PMS adjustment methodology, SeAH's Br. at 21–28; NEXTEEL's Br. at 34–42; Hyundai's Br. at 8–9, as unsupported by substantial evidence and contrary to law. Additionally, NEXTEEL Co., Ltd. ("NEXTEEL") challenges Commerce's non-prime cost calculation and Commerce's classification of NEXTEEL's suspension loss costs as unsupported by substantial evidence and contrary to law. NEXTEEL's Br. at 42–48. SeAH Steel Corporation ("SeAH") challenges two additional aspects of the Final Results; Commerce's denial of a constructed export price ("CEP") offset for SeAH's U.S. sales and its decision to cap adjustments for freight revenue when calculating SeAH's constructed export price. SeAH's Br. at 29–35. Hyundai and Husteel challenge Commerce's separate rate calculation as unsupported by substantial evidence, reasoning that any errors made when calculating NEXTEEL's and SeAH's dumping margins impact the separate rate because the separate rate is calculated by averaging the final weighted-average dumping margins of the mandatory respondents. Hyundai's Br. at 9–11; Husteel's Br. at 18. For the following reasons, the Final Results are remanded for reconsideration or additional explanation consistent with this opinion.

BACKGROUND

In March 2019, Commerce initiated an administrative review of its ADD order for WLP from Korea covering the period of December 1, 2017, to November 30, 2018. Initiation of [ADD] and Countervailing Duty Administrative Reviews, 84 Fed. Reg. 9,297 (Dep't Commerce Mar. 14, 2019). Commerce selected NEXTEEL and SeAH as mandatory respondents. Resp't Selection Memo. at 4–5, PD 20 bar code 3812218-01 (Mar. 28, 2019).³ On June 24, 2019, California Steel Industries ("California Steel"), TMK IPSCO, and Welspun Tubular LLC USA ("Welspun") (collectively, "Domestic Interested Parties") alleged that a PMS existed in the Korean hot-rolled coil steel ("HRC") market, distorting the price of HRC. Ltr. Re: [PMS] Allegation and Supporting Factual Information, PD 95–690 CD 110–339 (June 24, 2019) ("PMS Allegation"). The Domestic Interested Parties provided a regression model for Commerce to use to quantify any adjustment to the price of HRC, should Commerce determine that a PMS in Korea distorted the price of HRC during the period of review. PMS Allegation at Ex. 62. On July 8, 2020, Commerce supplemented the record with steel reports and information from a statistical analysis textbook and invited interested parties to submit comments and rebuttal evidence in response. Memo. Re: New Factual Information, PDs 841-842 bar codes 3998238-01, -02 (July 8, 2020); see also Final Decision Memo. at 2–3, 35.

Commerce published the Final Results on November 30, 2020, determining that a PMS existed in the Korean HRC market based on the cumulative effects of subsidies provided to the HRC market by the Government of Korea ("GOK"), imports of low-priced HRC from the People's Republic of China ("China"), strategic alliances between Korean HRC suppliers and WLP producers, and GOK intervention in the electricity market. Final Decision Memo. at 17; Final Results. Finding sufficient record evidence existed to quantify the impact of the PMS on production costs, Commerce calculated the amount of the upward adjustment using the beta coefficient for uneconomic capacity from an ordinary least squares fixed-effects regression model originally submitted by the Domestic Interested Parties as part of the PMS Allegation with certain modifications by Commerce. Final Decision Memo. at 32–44; PMS Allegation at Exs. 56, 62.

Commerce determined the normal value of NEXTEEL's subject merchandise using constructed value, based on data submitted by NEXTEEL, with adjustments to NEXTEEL's reported costs for HRC to account for the PMS, non-prime WLP products, costs of goods sold ("COGS"), and general and administrative expenses. [WLP from Korea ] 85 Fed. Reg. 7,269 (Dep't Commerce Feb. 7, 2020) (prelim. admin. review) and accompanying Issues and Decision Memo. at 19–20. Issues and Decision Memo. at 19–20, A-580-876, Jan. 31, 2020 ("Prelim. Decision Memo."); Final Decision Memo. at 3; NEXTEEL's Prelim. Calculation Memo., CD 459 bar code 3938526-01 (Jan. 31, 2020); NEXTEEL's Final Calculation Memo., CD 480 bar code 4056576-01 (Nov. 20, 2020). Commerce determined the normal value of SeAH's subject merchandise using SeAH's home market sales, with adjustments to SeAH's reported HRC cost to account for the PMS for the purpose of the sales-below-cost test; and constructed value where there were no identical home market sales in the ordinary course of trade, with an adjustment to SeAH's reported cost for HRC to account for the PMS. Prelim. Decision Memo. at 21–22; Final Decision Memo. at 3; SeAH's Prelim. Calculation Memo., CD 461 bar code 3938891-01 (Jan. 31, 2020) ("SeAH's Prelim. Calc."); SeAH's Final Calculation Memo., CD 484 bar code 4056688-01 (Nov. 20, 2020).

Between September 22, 2021, and October 20, 2021, parties fully briefed the issues. Def.’s Resp. Pls.’ Mots. J. Agency R., Sept. 22, 2021, ECF No. 69 ("Def. Br."); Resp. Br. Def.-Intervenors Maverick Tube Corporation and IPSCO Tubulars Inc., Sept. 22, 2021, ECF No. 70 ("Maverick's and IPSCO's Br."); Def.-Intervenors’ Resp. Br., Sept. 22, 2021, ECF No. 71 ("Def.-Intervenors’ Br."); Pl.-Intervenor [Husteel]’s Reply Br. Supp. Mot. J. Agency R., Oct. 20, 2021, ECF No. 74; Reply Br. [SeAH], Oct. 20, 2021, ECF No. 75; Reply Br. Supp. [NEXTEEL]’s Mot. for J. Agency R., Oct. 20, 2021, ECF No. 76; Reply Br. of Consol. Pl. and...