TMK IPSCO v. United States, Slip Op. 17–54

• Decision Date: 03 May 2017
• Docket Number: Slip Op. 17–54,Consol. Court No. 10–00055
• Citation: 222 F.Supp.3d 1306
• Parties: TMK IPSCO, et al., Plaintiffs and Consolidated Plaintiffs, and Maverick Tube Corporation, et al., Plaintiff–Intervenors and Consolidated Plaintiff–Intervenors, v. UNITED STATES, Defendant, and Tianjin Pipe (Group) Corp. and Tianjin Pipe International Economic & Trading Corp., Defendant–Intervenors and Consolidated Defendant–Intervenors.
• Court: U.S. Court of International Trade

222 F.Supp.3d 1306

TMK IPSCO, et al., Plaintiffs and Consolidated Plaintiffs,

and

Maverick Tube Corporation, et al., Plaintiff–Intervenors and Consolidated Plaintiff–Intervenors,

v.UNITED STATES, Defendant,andTianjin Pipe (Group) Corp. and Tianjin Pipe International Economic & Trading Corp., Defendant–Intervenors and Consolidated Defendant–Intervenors.

Slip Op. 17–54

Consol. Court No. 10–00055

United States Court of International Trade.

May 3, 2017

Roger Brian Schagrin , Christopher Todd Cloutier , John Winthrop Bohn , Jordan Charles Kahn , and Paul Wright Jameson , Schagrin Associates, of Washington, DC, for plaintiffs and consolidated plaintiff-intervenors TMK IPSCO, V & M Star L.P., Wheatland Tube Corp., Evraz Rocky Mountain Steel, and United Steelworkers.

Alan Hayden Price and Robert Edward DeFrancesco, III , Wiley Rein, LLP, of Washington, DC, for consolidated plaintiff and consolidated plaintiff-intervenor Maverick Tube Corporation.

Debbie Leilani Shon , Jon David Corey , Jonathan Gordon Cooper , and Kelsey Marie Rule , Quinn Emanuel Urquhart & Sullivan, LLP, of Washington, DC, for consolidated plaintiff and consolidated plaintiff-intervenor United States Steel Corporation.

Loren Misha Preheim , Assistant Director, U.S. Department of Justice, Civil Division, Commercial Litigation Branch, of Washington, DC. for defendant. With him on the brief were Chad A. Readler , Acting Assistant Attorney General, Jeanne E. Davidson , Director, and Claudia Burke , Assistant Director. Of counsel on the brief was Shelby Mitchell Anderson , Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement & Compliance, of Washington, DC.

Daniel Lewis Porter , William Henry Barringer , and Matthew Paul McCullough , Curtis Mallet–Prevost, Colt & Mosle LLP, of Washington, DC, for defendant-intervenors and consolidated defendant-intervenors.

OPINION

Kelly, Judge:

Before the court for review is the U.S. Department of Commerce's ("Department" or "Commerce") Final Results of Redetermination Pursuant to Court Remand filed pursuant to the court's decision in TMK IPSCO v. United States , 40 CIT ––––, ––––, 179 F.Supp.3d 1328 (2016). See Final Results of Redetermination Pursuant to Court Remand, Dec. 21, 2016, ECF No. 171 ("Remand Results "). The court remanded Commerce's final determination in its countervailing duty ("CVD") investigation of certain oil country tubular goods ("OCTG") from the People's Republic of China ("China") to explain or reconsider its determinations: (1) to use China's World Trade Organization ("WTO") accession date as a cut-off for identifying and measuring countervailable subsidies; (2) to include two disparate freight rates in Commerce's benchmark price for the benefit conferred by the provision of steel rounds for less than adequate remuneration ("LTAR") as representative of what an importer would pay; (3) to attribute subsidies received by Changbao Precision Steel Tube Co., Ltd. ("Precision") to its parent company Jiangsu Changbao Steel Tube Co., Ltd. ("Changbao") and to all of Changbao's other subsidiaries; (4) to attribute subsidies received by four subsidiaries of Tianjin Pipe (Group) Corp. ("TPCO") to sales of other subsidiaries of TPCO; (5) that the provision of steel rounds and billets at LTAR is tied to sales of seamless steel pipe; and (6) to include the Steel Business Briefing ("SBB") "East Asia" benchmark data for billets in the benchmark calculation for the provision of steel rounds and billets. See TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1335 ; see generally Certain Oil Country Tubular Goods From the People's Republic of China , 74 Fed. Reg. 64,045 (Dep't Commerce Dec. 7, 2009) (final affirmative countervailing duty determination, final negative critical circumstances determination) ("Final Results ") and accompanying Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Oil Country Tubular Goods ("OCTG") from the People's Republic of China, PD 318 (Nov. 23, 2009) ("Final Decision Memo").¹ Commerce's Remand Results adequately address the concerns raised in the court's prior decision, and Commerce's revised results are supported by substantial evidence. Therefore, the Remand Results are sustained.

BACKGROUND

The court presumes familiarity with the facts as discussed in TMK IPSCO . Nevertheless, the court briefly summarizes facts relevant to the discussion here for ease of reference. First, in its final determination, Commerce declined to identify and measure non-recurring subsidies alleged in the petition to have predated China's accession to the WTO on December 11, 2001 because Commerce concluded that it could not identify and measure subsidies prior to that date. See Final Decision Memo at 53. The court held that Commerce did not articulate a relationship between China's WTO accession date and the implementation of reforms that would enable Commerce to identify and measure countervailable subsidies. TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1343. Therefore, the court held that Commerce failed to countervail all identifiable and measurable subsidies, as the statute requires it to do. See id. ; see generally Section 701(f) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1671(f)(1)–(2) (2012).² The court remanded to Commerce to

investigate each subsidy program and allocate subsidies beginning on the first date it could identify and measure the subsidy considering the particular program in question and the impact of relevant economic reforms on that program.

TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1344.

Second, Commerce included ocean freight quotes from both Maersk and an unaffiliated freight forwarder used by mandatory respondent Zhejiang Jianli Enterprise Co., Ltd. ("Jianli") to generate an average price for ocean freight in calculating its world market price benchmark to measure the adequacy of remuneration for steel rounds provided to Jianli in its final determination. See Final Decision Memo at 84. The court remanded the issue to Commerce to reconsider or further explain its decision to use an average of these two freight quotes because Commerce had inadequately explained how both quotes could be representative given the significant disparity between them. See TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1350–51.

Third, Commerce included monthly export pricing data for billets from SBB "East Asia" among the data included in its benchmark calculation for determining the adequacy of remuneration of the provision of steel rounds and billets in its final determination. See Final Decision Memo at 77. The court granted Commerce's request for a remand to allow it to reconsider its determination to include the SBB "East Asia" series pricing data in its benchmark calculation. See TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1347.

Fourth, Commerce attributed subsidies received by Precision to Changbao, Precision's parent company, and to all of Changbao's other subsidiaries. See Final Decision Memo at 8. Commerce likewise attributed or cumulated subsidies received by four of TPCO's subsidiaries to the consolidated sales of TPCO and all of its subsidiaries. See Final Decision Memo at 9 (citing Certain Oil Country Tubular Goods From the People's Republic of China , 74 Fed. Reg. 47,210, 47,215 (Dep't Commerce Sept. 15, 2009) (preliminary affirmative countervailing duty determination, preliminary negative critical circumstances determination) ("Prelim. Results "). The court held that 19 C.F.R. § 351.525(b)(6)(iii) (2009)³ does not give Commerce authority to attribute subsidies received by a subsidiary to the consolidated sales of the parent company's other subsidiaries. TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1357. The court remanded to Commerce to explain what other authority allows it to attribute subsidies received by certain subsidiaries of Changbao and TPCO to the consolidated sales of all subsidiaries of each respective company or reconsider its determination. Id. , 40 CIT at ––––, 179 F.Supp.3d at 1358.

Lastly, in its final determination, Commerce attributed the provision of steel rounds to TPCO's consolidated sales of all merchandise, not just to its sales of seamless steel pipe products. See Final Decision Memo 128–29. The court held that Commerce's attribution decision is not supported by substantial evidence because the court could not "discern whether Commerce determined that the provision of steel rounds at LTAR is tied to sales of seamless pipe." TMK IPSCO , 40 CIT at ––––, 179 F.Supp.3d at 1359. The court remanded Commerce's determination to determine whether its tying regulation applies to TPCO and support its determination with record evidence. See id.

In its remand determination Commerce makes the following determinations. Under protest, Commerce no longer adopts China's WTO accession date as a uniform date when subsidy programs were identifiable and measurable in China.⁴ See Remand Results 11. Instead, Commerce identified four categories of programs alleged in the petition to assess when "a sufficiently developed legal framework relevant" to each existed such that Commerce could appropriately evaluate whether a subsidy had been bestowed. See Remand Results 11, 13–19. Commerce applies the benefit conferred on the earliest date when the government bestowal was identifiable or measurable. See id. at 31–35. Commerce continues to use the ocean freight quotes provided by Maersk and by Jianli's freight forwarder. See id. at 42. Commerce reverses its prior conclusion regarding the attribution of subsidies received by TPCO's and Changbao's subsidiaries. See id. at 38–39. Commerce maintains its determination to attribute steel rounds and billets provided at LTAR program to TPCO's applicable total sales and not solely to sales of seamless steel pipe. See id. at 46. Finally, Commerce excludes the SBB East Asia pricing data from its benchmark calculation for steel rounds. See id. at 48.

Commerce's changes in...