Seah Steel Corp. v. United States

• Decision Date: 14 April 2021
• Docket Number: Slip Op. 21-43,Consol. Court No. 19-00086
• Citation: 513 F.Supp.3d 1367
• Parties: SEAH STEEL CORPORATION, Plaintiff, Husteel Co., Ltd., NEXTEEL Co., Ltd., AJU Besteel Co., Ltd., and ILJIN Steel Corporation, Consolidated Plaintiffs, and Hyundai Steel Company and ILJIN Steel Corporation, Plaintiff-Intervenors, v. UNITED STATES, Defendant, and United States Steel Corporation, Maverick Tube Corporation, Tenaris Bay City, Inc., IPSCO Tubulars Inc., Vallourec Star, L.P., and Welded Tube USA Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

513 F.Supp.3d 1367

SEAH STEEL CORPORATION, Plaintiff,Husteel Co., Ltd., NEXTEEL Co., Ltd., AJU Besteel Co., Ltd., and ILJIN Steel Corporation, Consolidated Plaintiffs,andHyundai Steel Company and ILJIN Steel Corporation, Plaintiff-Intervenors,

v. UNITED STATES, Defendant,andUnited States Steel Corporation, Maverick Tube Corporation, Tenaris Bay City, Inc., IPSCO Tubulars Inc., Vallourec Star, L.P., and Welded Tube USA Inc., Defendant-Intervenors.

Slip Op. 21-43

Consol. Court No. 19-00086

United States Court of International Trade.

April 14, 2021

Jeffrey M. Winton and Amrietha Nellan, Winton & Chapman PLLC, of Washington, D.C., for Plaintiff SeAH Steel Corporation. With them on the brief was Jordan L. Fleischer, formerly Law Office of Jeffrey M. Winton PLLC, of Washington, D.C.

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

J. David Park, Henry D. Almond, Daniel R. Wilson, Leslie C. Bailey, and Kang Woo Lee, Arnold & Porter Kaye Scholer LLP, of Washington, D.C., for Consolidated Plaintiff NEXTEEL Co., Ltd. and Plaintiff-Intervenor Hyundai Steel Company.

Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, D.C., for Consolidated Plaintiff AJU Besteel Co., Ltd.

Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, D.C., for Consolidated Plaintiff and Plaintiff-Intervenor ILJIN Steel Corporation. With him on the brief were Joel D. Kaufman, Richard O. Cunningham, and Stephanie W. Wang, Steptoe & Johnson LLP, of Washington, D.C.

Hardeep K. Josan, Trial Attorney, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., for Defendant United States. With her on the brief were Joseph H. Hunt, then-Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Mykhaylo Gryzlov, Senior Counsel, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Thomas M. Beline, Myles S. Getlan, and James E. Ransdell, Cassidy Levy Kent (USA) LLP, of Washington, D.C., for Defendant-Intervenor United States Steel Corporation.

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, Tenaris Bay City, Inc., and IPSCO Tubulars Inc.¹

Roger B. Schagrin, Christopher T. Cloutier, Elizabeth J. Drake, Kelsey M. Rule, Luke A. Meisner, Paul W. Jameson, and William A. Fennell, Schagrin Associates, of Washington, D.C., for Defendant-Intervenors Vallourec Star, L.P. and Welded Tube USA Inc.

OPINION AND ORDER

Choe-Groves, Judge:

Plaintiff SeAH Steel Corporation ("SeAH"), Consolidated Plaintiffs Husteel Co., Ltd. ("Husteel"), NEXTEEL Co., Ltd. ("NEXTEEL"), AJU Besteel Co., Ltd. ("AJU"), and ILJIN Steel Corporation ("ILJIN"), and Plaintiff-Intervenors Hyundai Steel Company ("Hyundai") and ILJIN, (collectively, "Plaintiffs"), bring this consolidated action challenging the final results published by the U.S. Department of Commerce ("Commerce") in the 2016–2017 administrative review of the antidumping duty order on oil country tubular goods ("OCTG") from the Republic of Korea ("Korea"). See Certain Oil Country Tubular Goods From the Republic of Korea ("Final Results"), 84 Fed. Reg. 24,085 (Dep't Commerce May 24, 2019) (final results of antidumping duty admin. review; 2016–2017); see also Issues and Decision Mem. for the Final Results of the 2016–2017 Admin. Review of the Antidumping Duty Order on Certain Oil Country Tubular Goods from the Republic of Korea (May 17, 2019), ECF No. 20-5 ("OCTG III Final Issues & Decision Memorandum" or "Final IDM").² Before the court are the Rule 56.2 motions for judgment on the agency record filed by Husteel, SeAH, ILJIN, NEXTEEL, Hyundai, and AJU. Consol. Pl. Husteel Co., Ltd.’s Mot. J. Agency R., ECF No. 59; Mot. Pl. SeAH Steel Corporation J. Agency R., ECF Nos. 60, 61; Consol. Pl/Pl.-Inter. Rule 56.2 Mot. J. Agency R., ECF No. 62; Rule 56.2 Mot. J. Agency R. Consol. Pl. NEXTEEL Co., Ltd., ECF Nos. 63, 66; Rule 56.2 Mot. J. Agency R. Pl.-Inter. Hyundai Steel Company, ECF No. 64; Consol. Pl. AJU Besteel Co., Ltd.’s Rule 56.2 Mot. J. Agency R., ECF No. 65; see also Consol. Pl. Husteel Co., Ltd.’s Br. Supp. Its Mot. J. Agency R., ECF No. 59-2 ("Husteel Br.");³ Br. SeAH Steel Corporation Supp. Its Rule 56.2 Mot. J. Agency R., ECF Nos. 60-1, 61-1 ("SeAH Br."); Br. Consol. Pl./Pl.-Inter. ILJIN Steel Corporation Supp. Its Mot. J. Agency R., ECF No. 62-1 ("ILJIN Br.");⁴ Mem. Supp. Consol. Pl. NEXTEEL Co., Ltd.’s Rule 56.2 Mot. J. Agency R., ECF Nos. 63-2, 66-2 ("NEXTEEL Br."); Mem. Supp. Pl.-Inter. Hyundai Steel Company's Rule 56.2 Mot. J. Agency R., ECF No. 64-2 ("Hyundai Br.");⁵ Mem. Supp. Mot. Consol. Pl., AJU Besteel Co., Ltd., J. Agency R., ECF No. 65-1 ("AJU Br.").⁶ For the following reasons, the court sustains in part and remands in part the Final Results.

ISSUES PRESENTED

The court reviews the following issues:

1. Whether Commerce's application of its differential pricing analysis in calculating SeAH's dumping margin is in accordance with the law;

2. Whether Commerce's determination that a particular market situation existed in Korea is supported by substantial evidence;

3. Whether Commerce's calculation of constructed value profit is supported by substantial evidence;

4. Whether Commerce's reallocation of NEXTEEL's reported costs for non-prime products is supported by substantial evidence;

5. Whether Commerce's adjustment to NEXTEEL's production line suspension costs is supported by substantial evidence;

6. Whether Commerce's exclusion of freight revenue profit in calculating SeAH's constructed export price is in accordance with the law;

7. Whether Commerce's application of SeAH's affiliated seller's general and administrative expense ratio to both further manufactured and non-further manufactured products is in accordance with the law;

8. Whether Commerce's inclusion of a penalty in SeAH's general and administrative expense ratio is supported by substantial evidence; and

9. Whether Commerce's inclusion of SeAH's inventory valuation losses in its general and administrative expense ratio is supported by substantial evidence.

BACKGROUND

Commerce initiated this third administrative review ("OCTG III") of the antidumping duty order on OCTG from Korea for the period covering September 1, 2016 through August 31, 2017. Initiation of Antidumping and Countervailing Duty Admin. Reviews, 82 Fed. Reg. 52,268, 52,271 (Dep't Commerce Nov. 13, 2017) (initiation notice). Commerce selected NEXTEEL and SeAH as mandatory respondents for individual examination. Certain Oil Country Tubular Goods From the Republic of Korea, 83 Fed. Reg. 51,442, 51,442 (Dep't Commerce Oct. 11, 2018) (prelim. results of the antidumping duty admin. review; 2016–2017).

In the Final Results, Commerce assigned weighted-average dumping margins of 32.24% for NEXTEEL, 16.73% for SeAH, and 24.49% for non-examined companies. Final Results, 84 Fed. Reg. at 24,086 ; see Final IDM at 5–6. Commerce based normal value on constructed value for NEXTEEL and SeAH because neither mandatory respondent had a viable home market or third-country market during the period of review. Final IDM at 49.

Commerce applied a differential pricing analysis and calculated SeAH's weighted-average duty margin by the alternative average-to-transaction method. Id. at 60–71. Commerce determined that a particular market situation existed in Korea based on a totality-of-the-circumstances assessment of the same four conditions that were alleged in the first administrative review covering 2014–2015 ("OCTG I") and the second administrative review covering 2015–2016 ("OCTG II"), namely: (1) subsidies from the Government of Korea to producers of hot-rolled coil; (2) the deluge of Chinese hot-rolled products exerting downward pressure on Korean domestic hot-rolled coil prices; (3) strategic alliances between Korean hot-rolled coil suppliers and Korean OCTG producers; and (4) the Government of Korea's influence over the cost of electricity. See id. at 10. Commerce adjusted for the particular market situation determination by increasing the reported hot-rolled coil costs by the revised AFA-based subsidy rate of 41.57% assigned to POSCO. See id. at 41–42 (citing POSCO v. United States, 43 CIT ––––, 378 F. Supp. 3d 1348 (2019), subsequently vacated and remanded, Appeal No. 19-2095 (Fed. Cir. Mar. 4, 2021) (order issued as a mandate vacating and remanding for further proceedings consistent with POSCO v. United States, 977 F.3d 1369 (Fed. Cir. 2020) (vacating and remanding for further proceedings regarding the final affirmative determination in the countervailing duty investigation of certain cold-rolled steel flat products from Korea))); see also Certain Hot-Rolled Steel Flat Products From the Republic of Korea, 81 Fed. Reg. 53,439 (Dep't Commerce Aug. 12, 2016) (countervailing duty investigation final affirmative determination), amended by 81 Fed. Reg. 67,960, 67,961 (Dep't Commerce Oct. 3, 2016) (countervailing duty investigation amended final affirmative determination), amended by 84 Fed. Reg. 23,019 (Dep't Commerce May 21, 2019) (notice of court decision not in harmony with amended final determination of the countervailing duty investigation) (reducing POSCO's total AFA subsidy rate from 58.68% to 41.57%); SeAH Final Calculations Mem. at 2, PD 358 (May 17, 2019); NEXTEEL Final Calculations Mem. at 4, PD 356 (May 17, 2019). Commerce applied the constructed value profit and selling expense ratios calculated for SeAH in OCTG I to determine SeAH's constructed value profit and selling expenses here in OCTG III. Final IDM at 48–49. Commerce adjusted NEXTEEL's reported costs for non-prime products, id. at 91–93; calculated as general and...