Oman Fasteners, LLC v. United States
| Jurisdiction | United States,Federal |
| Parties | OMAN FASTENERS, LLC, Plaintiff, v. UNITED STATES, Defendant, and MID CONTINENT STEEL & WIRE, INC., Defendant-Intervenor. |
| Decision Date | 05 January 2024 |
| Court | U.S. Court of International Trade |
| Docket Number | 22-00348,Slip Op. 24-1 |
[The court sustains the Department of Commerce's remand redetermination.]
Adam H. Gordon, Jennifer M. Smith, and Benjamin J. Bay, The Bristol Group PLLC of Washington, DC, on the comments for Defendant-Intervenor.
Brian M. Boynton, Principal Deputy Assistant Attorney General Patricia M. McCarthy, Director; Tara K. Hogan, Assistant Director; and Kelly M. Geddes, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, on the comments for Defendant. Of counsel on the comments was Ian A. McInerney, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S Department of Commerce of Washington, DC.
Michael R. Huston, Michael P. House, and Andrew Caridas Perkins Coie LLP of Washington, DC, on the comments for Plaintiff.
Before: M. Miller Baker, Judge
In this return visit following remand, a domestic competitor challenges the Department of Commerce's redetermination of the dumping margin for an Omani producer and importer of steel nails. Finding the decision to be supported by substantial evidence, the court sustains it.
The court's previous opinion provides the factual and procedural backdrop here. See Oman Fasteners, LLC v. United States, Ct. No. 22-00348, Slip Op. 23-17, at 5-10, 2023 WL 2233642, at **2-3 (as amended, CIT Feb. 22, 2023), appeal pending, No. 2023-1661 (Fed. Cir. Mar. 27, 2023). To summarize, Plaintiff Oman Fasteners, LLC, filed one part of a supplemental questionnaire response 16 minutes late, so Commerce rejected the entire response as untimely and struck it from the record. Id. at 5, 7, 2023 WL 2233642, at *2, *3. The Department found that the response's absence meant the record lacked "necessary information," requiring the use of facts otherwise available under 19 U.S.C. § 1677e(a). Id. at 9, 2023 WL 2233642, at *3. Finding that Oman's 16-minute delay represented a failure to cooperate justifying the use of an adverse inference in selecting from among the facts otherwise available, Commerce assigned the company a 154.33 percent rate. Id. at 9-10, 2023 WL 2233642, at *3.
Oman brought this suit and sought a preliminary injunction requiring the government to collect antidumping duty deposits from the company at the preexisting 1.65 percent rate set in the preceding administrative review. Id. at 4, 2023 WL 2233642, at *1. The court conducted an evidentiary hearing, found that "Commerce's challenged actions here are the very definition of abuse of discretion," and granted judgment on the agency record and injunctive relief to Oman. Id. at 4-5, 2023 WL 2233642, at **1-2. The court remanded and directed the Department to place the company's supplemental response on the record and to consider it for purposes of calculating the dumping rate. ECF 91, ¶ 3.
On remand, Oman resubmitted its supplemental response, Appx01000, which Commerce used along with other information to calculate an estimated weighted-average dumping margin of zero. Appx01001-01002. One result of that outcome is that the private litigants have traded places. Mid Continent, notionally a defendant-intervenor, now challenges the Department's redetermination, while Oman, notionally the plaintiff, supports it.
Oman brought this suit under 19 U.S.C. § 1516a(a)(2)(A)(i)(I) and (B)(iii), which allow an interested party who was a party to an antidumping proceeding to contest Commerce's final determination. The court has subject-matter jurisdiction over such actions under 28 U.S.C. § 1581(c).
The standard of review for a remand redetermina-tion is the same as that on previous review. Bethlehem Steel Corp. v. United States, 223 F.Supp.2d 1372, 1375 (CIT 2002). In actions brought under 19 U.S.C. § 1516a(a)(2), "[t]he court shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). That is, the question is not whether the court would have reached the same decision on the same record-rather, it is whether the administrative record as a whole permits Commerce's conclusion.
Substantial evidence has been defined as more than a mere scintilla, as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. To determine if substantial evidence exists, we review the record as a whole, including evidence that supports as well as evidence that fairly detracts from the substantiality of the evidence.
Nippon Steel Corp. v. United States, 337 F.3d 1373, 1379 (Fed. Cir. 2003) (cleaned up).
Mid Continent's challenge to the remand redeter-mination raises three issues: (1) whether Commerce should have rejected Oman's supplemental questionnaire response and assigned the company a 154.33 percent dumping margin based on the use of facts otherwise available with an adverse inference, see ECF 116, at 1-6-an argument that the court rejected in its earlier opinion and is pending on appeal;[1] (2) whether the Department erred by using quarterly costs, instead of annual costs, to calculate Oman's margin, see ECF 116, at 6-10; and (3) whether Commerce erred by not deducting Section 232 duties from the U.S. sales prices for all of Oman's entries rather than just three entries, id. at 10-13. The court addresses the latter two questions.
In analyzing whether "there are reasonable grounds to believe or suspect that sales of the foreign like product have been made at prices that are less than" the cost of production, Appx01022-01023, Commerce stated that its "normal practice is to calculate an annual weighted-average cost" for the period of review. Appx01023. It explained, however, that sometimes it deviates from this practice based on "two primary criteria":
(1) the change in the cost of manufacturing recognized by the respondent during the [period of review] must be deemed significant; and (2) the record evidence must indicate that the sales prices during the shorter cost averaging periods could be reasonably linked with the [cost of production] or [constructed value] during the same shorter cost-averaging periods.
Id. (defined term omitted).
The Department found that Oman's cost data here met both criteria. First, "record evidence shows that Oman Fasteners experienced significant cost changes (i.e., changes that exceeded 25 percent) between the high and low quarterly" cost of manufacturing during the relevant period. Appx01024. Second, because the cost changes were significant, the Department examined whether there was "evidence of a linkage" between the cost changes and sales prices during the relevant period and found that there was a "reasonable correlation" between them sufficient to find a "linkage." Id. Because the data satisfied both criteria, Commerce based its cost-averaging analysis on quarterly, rather than annual, data. Appx01024-01025.
Mid Continent now argues that the Department erred in so departing from its normal practice of relying on annual data. ECF 116, at 7. The company asserts that there are "two significant issues with the agency's position." Id.
First, Mid Continent contests Commerce's finding that the "majority of Oman Fasteners' top [control numbers][2] sold to the United States pass our test for significant changes in direct material costs and pass our test for correlation between cost of manufacturing and U.S. price." ECF 116, at 7-8 (quoting Appx01035). But Mid Continent acknowledges that the majority of Oman's control numbers experienced significant changes in material costs. See ECF 117, at 8.[3] It appears that the former's theory is that not enough of the latter's control numbers satisfied the test for a "significant change," but it is silent about what percentage it believes would be enough. The Department's finding that a majority of Oman's control numbers experienced significant changes in material costs is supported by substantial evidence, as Mid Continent has effectively admitted that fact.
Mid Continent's second line of attack is that Oman did not provide "direct material costs on a quarterly basis," ECF 116, at 8, thereby undermining the Department's finding that Oman experienced significant changes in material costs. Mid Continent asserts that Oman's data comes from a worksheet that "sets out an adjustment factor that was only calculated on an annual basis," id. at 10, and further contends that although Oman's worksheet includes quarterly adjustment factors, "no data, formulas, or calculations for how those values were derived were given." Id.
Mid Continent, however, acknowledges that Oman relied on these quarterly adjustment factors to calculate its costs and that Commerce in turn used these factors. Id. at 9-10. Mid Continent's real complaint is that Oman did not provide the underlying calculations, but it's the Department's job-not the court's- to determine the weight to accord to Oman's data. Accordingly, substantial evidence supports Commerce's decision to base its cost-averaging analysis on Oman's quarterly, rather than annual, data.
The last issue Mid Continent raises is whether Commerce should have deducted Section 232 duties from Oman's U.S. sales prices in calculating the antidumping margin. (The lower the U.S. sales price of an imported product, the more likely that either a duty will be imposed or that any such duty will be higher.) Mid Continent acknowledges that an injunction in a different case exempted Oman from paying such duties at the time of importation but argues that...
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