Downhole Pipe & Equipment LP v. United States
2012 WL 5873434
Ct. Intl. Trade2012Background
- Downhole and DP-Master move for judgment on the agency record challenging Commerce's Final Determination in Drill Pipe from the PRC, 76 Fed. Reg. 1,966 (Jan. 11, 2011).
- Commerce narrowed scope to include drill pipe green tube under three physical criteria and calculated surrogate values for green tube, tool joints, and labor; adjustments followed verification and I&D Memorandum.
- DP-Master argued over breadth of scope, surrogate value selections, and adverse facts available; Commerce applied an adverse inference regarding toller data and refused to remand on scope based on initiation-stage industry support.
- The court remands solely on surrogate values for drill pipe green tube and labor wage rate, affirming the rest of the Final Determination as supported by substantial evidence and law, with limited carve-outs.
- Public Law 112-99 later clarified that countervailing duties may be imposed concurrently with nonmarket economy methodologies; DP challenges were addressed with remand reserved for constitutional questions, which remain unresolved pending remand results.
- The remand is due within 90 days, with briefing deadlines set for responses, comments, and rebuttals after the remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope validity for green tube inclusion | DP-Master argues record lacks substantial evidence for scope criteria overlapping OCTG. | Commerce correctly used end-use distinctions and initiation scope; cannot be reevaluated mid-investigation. | Affirmed scope findings; remand denied for scope. |
| Surrogate financial ratio selection | DP-Master contends using only Oil Country Tubular as surrogate is inappropriate given DP-Master's characteristics. | Commerce properly chose OCTL over Jindal Saw as more comparable in vertical integration and data quality. | Affirmed surrogate financial ratio choice; remand denied. |
| Surrogate value for drill pipe green tube | IHTS-based values distort green tube; Infodrive data show issues; MBR data more representative. | IHTS data sufficiently capture green tube and are product-specific; Infodrive supports use. | Remanded to reconsider green-tube surrogate value; reasoned explanation required. |
| Surrogate value for purchased tool joints | Petitioners’ data from U.S. market is the best indicator; in-house data undervalue, and public data should be used. | Public Indian-data-based surrogate from IHTS is preferable owing to nonmarket context and product specificity. | Affirmed use of India-based surrogate with SG&A, overhead, and profit; remand denied. |
| Surrogate labor wage rate | DP-Master challenges averaging across many producers, including low-volume countries; seeks reconsideration per Shandong Rongxin. | Commerce should continue using broad, representative labor data; substantial evidence supports current value. | Remanded to reconsider labor wage rate. |
Key Cases Cited
- GPX Int’l Tire Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011) (simultaneous nonmarket economy and countervailing duty methodologies under Tariff Act invalidated)
- Nation Ford Chemical Co. v. United States, 166 F.3d 1373 (Fed. Cir. 1999) (best available information standard for surrogate values)
- Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (constructing foreign market value is difficult and imprecise)
- Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333 (Fed. Cir. 2011) (broad discretion to determine best available information in surrogate valuation)
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir. 2003) (cooperation and verification standards for adverse inference)
- Dorbest Ltd. v. United States, 604 F.3d 1363 (Fed. Cir. 2010) (importance of explaining product- and data-related surrogate selections)