Nexteel Co. v. United States
| Decision Date | 06 December 2022 |
| Docket Number | Slip Op. 22-135,Consol. Court No. 20-03898 |
| Citation | 601 F.Supp.3d 1373 |
| 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 |
J. David Park, Arnold & Porter Kaye Scholer LLP, of Washington, D.C., for plaintiff NEXTEEL Co., Ltd. Also on the brief were, Daniel R. Wilson, Henry D. Almond and Kang Woo Lee.
Jeffrey M. Winton, Winton & Chapman PLLC, of Washington, D.C., for consolidated plaintiff SeAH Steel Corporation. Also on the brief were Amrietha Nellan, Jooyoun Jeong, and Ruby Rodriguez.
Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, D.C., for consolidated plaintiff and plaintiff-intervenor Hyundai Steel Company. Also on the brief was Robert G. Gosselink.
Brady W. Mills, Morris, Manning, & Mart.in, LLP, of Washington, D.C., for plaintiff-intervenor Husteel Co., Ltd. Also on the brief were Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Mary S. Hodgins, and Eugene Degnan.
Robert R. Kiepura, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, D.C., for defendant United States. Also on the brief were Brian M. Boynton, Principal Assistant Deputy Attorney General, Patricia McCarthy, Director, and Franklin E. White Jr., Assistant Director. Of counsel was Benjamin Juvelier, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, of Washington D.C.
Timothy C. Brightbill, Wiley Rein, LLP, of Washington, D.C., for defendant-intervenors American Cast Iron Pipe Company and Stupp Corporation. Also on the brief were Laura El-Sabaawi and Elizabeth Lee.
Before the court is the U.S. Department of Commerce's ("Commerce") redetermination on remand filed pursuant to the court's order in NEXTEEL Co. v. United States, 569 F. Supp. 3d 1354 (Ct. Int'l Trade 2022) (" NEXTEEL I") in connection with Commerce's 2017–2018 administrative review of the antidumping duty ("ADD") order covering welded line pipe ("WLP") from the Republic of Korea. On remand, Commerce: (1) found that there was insufficient evidence of a particular market situation ("PMS") in the Korean hot-rolled coil steel ("HRC") market; (2) recalculated Plaintiff NEXTEEL Co.’s ("NEXTEEL") costs without making an adjustment for non-prime products; (3) further explained its classification of NEXTEEL's suspended production line costs ("suspension losses"), and (4) revised the non-examined companies’ rate. Final Results of Redetermination Pursuant to Ct. Remand, April 19, 2022, ECF No. 96-1 ("Remand Results").
The court presumes familiarity with the facts of this case as set forth in its previous opinion remanding Commerce's determination for further consideration, and recounts only the facts necessary to consider the Remand Results. Commerce published the final results of its administrative review on November 30, 2020, determining that a PMS existed in the Korean HRC market based on the cumulative effects of subsidies provided by the Government of Korea, imports of low-priced HRC from the People's Republic of China, strategic alliances between Korean HRC suppliers and WLP producers, and government intervention in the electricity market. [WLP] from the Republic of Korea, 85 Fed. Reg. 76,517 (Dep't Commerce Nov. 30, 2020) (final results of [ADD] admin. review; 2017–2018) ("Final Results").
On April 19, 2022, the court sustained Commerce's determination to cap Consolidated Plaintiff SeAH Steel's ("SeAH") freight revenue, but remanded Commerce's PMS determination, application of a PMS adjustment to SeAH's home market sales for the purpose of the sales-below-cost test, denial of a constructed export price offset for SeAH, reallocation of NEXTEEL's suspension losses and non-prime product costs, and separate rate calculations. NEXTEEL I, 569 F. Supp 3d at 1376. On July 18, 2022, Commerce published the final results of its determination on remand. On remand, Commerce found insufficient evidence of a PMS and therefore recalculated SeAH's and NEXTEEL's margins without applying a PMS adjustment, recalculated NEXTEEL's costs without making an adjustment for non-prime products, further explained its classification of NEXTEEL's suspension losses as general and administrative ("G&A") expenses, and revised the rate for non-examined companies. Remand Results at 2.
NEXTEEL, SeAH, and Plaintiff-intervenors Husteel and Hyundai Steel all urge the court to affirm Commerce's determination on remand that there was insufficient evidence to show a PMS. See Pl. NEXTEEL's Cmts. on Remand, Aug. 17, 2022, ECF No. 105 ("Pl.’s Cmts."); Cmts. Consol. Pl. SeAH Steel Corp. on Commerce's Determ. on Remand., Aug. 17, 2022, ECF No. 104; Pl.-Int. Husteel's Cmts. on Redetermination, Aug. 17, 2022, ECF No. 103; Cmts. Consol. Pl. and Pl.-Int. Hyundai Steel on Commerce's Remand Redetermination, Aug. 17, 2022, ECF No. 107. Defendant-intervenors American Cast Iron Pipe Company and Stupp Corporation ("Domestic Interested Parties") urge the court to reject the remand results, and find that Commerce supported its PMS finding in the HRC market with substantial evidence. See [Domestic Interested Parties’] Cmts. on Remand Redeterm., Aug. 17, 2022, ECF No. 106 ( ). Defendant asks the court to affirm Commerce's PMS determination. See Def.’s Resp. to Cmts. on Remand Redetermination, Sept. 16, 2022, ECF No. 109 ("Def.’s Br.").
NEXTEEL contests Commerce's decision to continue treating its suspension losses as G&A expenses. See Pl.’s Cmts.; Pl. NEXTEEL's Reply Cmts. on Remand, Sept. 16, 2022, ECF No. 110 ("Pl.’s Br."). Defendant argues that Commerce's remand results with respect to NEXTEEL's suspension losses are supported by substantial evidence, and should be sustained. Def.’s Br. at 9–11. For the following reasons, the court sustains the Remand Results with respect to Commerce's PMS determination, NEXTEEL's non-prime product costs, and the separate rate calculation, and remands Commerce's decision with respect to NEXTEEL's suspension losses for reconsideration or additional explanation consistent with this opinion.
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2018), which grants the court authority to review actions initiated under 19 U.S.C. § 1516a(a)(2)(B)(iii)1 contesting the final determination in an administrative review 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). "The results of a redetermination pursuant to court remand are also reviewed ‘for compliance with the court's remand order.’ " Xinjiamei Furniture Co. v. United States, 968 F. Supp. 2d 1255, 1259 (Ct. Int'l Trade 2014) (citation omitted).
In its remand redetermination, Commerce under respectful protest concludes there was no PMS affecting the costs of production for WLP in Korea during the period of review ("POR"). Remand Results at 16–17. NEXTEEL, SeAH, Husteel Co., and Hyundai Steel Co. support Commerce's determination, and urge the court to sustain the Remand Results with respect to this issue. Domestic Interested Parties urge the court to reject the Remand Results, and find that Commerce's initial PMS determination was supported by substantial evidence. For the following reasons, Commerce's determination is sustained.
As the court explained in NEXTEEL I, a PMS exists when "the cost of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade." 19 U.S.C. § 1677b(e). Neither the statute nor the legislative history defines what constitutes a PMS. The Trade Preferences Extension Act ("TPEA") added the phrase "particular market situation" to 19 U.S.C. § 1677b(e) in 2015, but the phrase existed prior to the TPEA, and appears in 19 U.S.C. § 1677b(a)(1)(B)(ii)(III) and (C)(iii). The Statement of Administrative Action to the Uruguay Round Agreements Act explains that:
The Agreement does not define "particular market situation," but such a situation might exist where a single sale in the home market constitutes five percent of sales to the United States or where there is government control over pricing to such an extent that home market prices cannot be considered to be competitively set. It also may be the case that a particular market situation could arise from differing patterns of demand in the United States and in the foreign market. For example, if significant price changes are closely correlated with holidays which occur at different times of the year in the two markets, the prices in the foreign market may not be suitable for comparison to prices to the United States.
Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103–316, vol. 1, at 822 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4162.
If a PMS exists, Commerce may "use another calculation methodology under this part or any other calculation methodology," so long as the methodology comports with its statutory mandate and provides a reasoned explanation supported by substantial evidence. 19 U.S.C. § 1677b(e) ; see Ceramica Regiomontana, S.A. v. United States, 636 F.Supp. 961, 966 (1986) (). The evidence must be sufficient such that a reasonable mind might accept the evidence as adequate to support its conclusion while considering...
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