355 F. Supp. 3d 1336
Ct. Intl. Trade2019Background
- Commerce conducted the 2014–2015 administrative review of the antidumping duty order on oil country tubular goods (OCTG) from Korea; mandatory respondents were NEXTEEL and SeAH. Final results published April 17, 2017.
- Maverick alleged four related "particular market situation" (PMS) distortions affecting hot-rolled coil (subsidies, Chinese imports, strategic supplier alliances, and electricity intervention).
- Commerce initially rejected each PMS allegation individually but in the Final Results reversed course and found a single PMS based on the cumulative effect, increasing margins (e.g., NEXTEEL to 24.92% then 29.76%).
- Multiple parties (NEXTEEL, SeAH, Hyundai, Husteel, AJU Besteel, ILJIN, Maverick) brought consolidated challenges under 19 U.S.C. §1516a; the government sought a voluntary remand but did not defend the PMS finding on the merits.
- The Court sustained some Commerce determinations but held the PMS finding unsupported by substantial evidence and remanded several related issues for redetermination (including PMS-based cost adjustments and all-others rates derived from those adjustments).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. PMS finding under TPEA §504 (19 U.S.C. §1677b(e)) | PMS reserved for extreme distortions; Commerce cannot aggregate unsupported allegations into a single PMS (NEXTEEL et al.) | Commerce has statutory flexibility to use a methodology based on cumulative/totality of market conditions | Court: PMS finding unsupported by substantial evidence; reversal and remand to recalc margins |
| 2. Use of countervailing-duty AFA rate to adjust NEXTEEL input costs | Applying AFA from separate proceeding to NEXTEEL denied procedural safeguards and requisite findings | (Govt sought remand; did not defend on merits) | Court: did not decide on merits because PMS reversal requires recalculation; remanded for further consideration |
| 3. All-others rate derived from NEXTEEL (based on AFA) | Hyundai/Husteel/AJU: unfair to apply AFA-derived rate to non-examined companies without findings | Govt did not defend; sought remand | Court: remanded as tied to PMS/AFA issues; no merit decision now |
| 4. Constructed value (CV) profit source for NEXTEEL | NEXTEEL: SeAH Canadian data improper due to parallel Canada proceedings; suggested other Korean data | Commerce: SeAH Canadian sales passed cost test and were the best available source | Court: Commerce's use of SeAH Canadian data for NEXTEEL CV profit is supported by substantial evidence |
| 5. Affiliation: NEXTEEL with POSCO / POSCO Daewoo | NEXTEEL: prior determination should be reexamined given changed sourcing/sales percentages | Commerce: potential to exercise control based on supplier/customer relationships suffices | Court: affiliation finding supported by substantial evidence |
| 6. Differential pricing (A-to-T) methodology and thresholds | SeAH: Commerce must justify numerical thresholds and statistical methods case-by-case; Cohen's d misuse | Commerce: methodology reasonable; analyzes population (not sample); thresholds and ratio test reasonable per precedent | Court: differential pricing application, Cohen's d use, and ratio thresholds supported by substantial evidence and lawful |
| 7. Classification of SeAH proprietary products (product coding) | SeAH: proprietary grade lacks required heat treatment to qualify as N-80; should be separate code | Commerce/Govt: heat treatment is a process, products share critical physical properties | Court: Commerce failed to address record evidence re heat treatment; classification unsupported; remanded |
| 8. Freight revenue cap on SeAH U.S. sales | SeAH: Commerce lacked authority to deduct separately invoiced freight or cap freight revenue asymmetrically | Commerce: statutory adjustments to EP/CV permitted to create apples-to-apples comparison; cap prevents artificial price inflation | Court: cap and treatment of freight revenue are in accordance with law |
| 9. Adjustment to SeAH third-country (Canada) ocean freight | SeAH: Commerce should have used actual container freight costs, not average bulk rates | Commerce: adjusted to account for significant per-unit differences between container and bulk shipments | Court: adjustment supported by substantial evidence |
| 10. Deduction of PPA general & administrative (G&A) as U.S. selling expenses | SeAH: PPA G&A are company-wide and not wholly selling expenses; Commerce misallocated | Commerce: applied G&A to further-manufactured and resold products as it supported company activities | Court: Commerce failed to explain deducting all PPA G&A for resold products; decision unsupported; remanded |
| 11. Adjustment to SeAH cost of production (hot-rolled coil averaging) | SeAH: averaged costs distorted below-cost test results | Commerce: adjusted because reported coil cost differences unrelated to physical characteristics; averaging ensured product-specific costs reflect physical attributes | Court: Commerce's cost adjustment is lawful and supported by record |
| 12. Application of Adverse Facts Available (AFA) to SeAH | Maverick: Commerce should apply total AFA across multiple reporting areas | Commerce: reviewed each area and declined total AFA; applied partial AFA for affiliated inputs | Court: Commerce reasonably declined total AFA; decision supported by substantial evidence |
| 13. Packing expense adjustments for SeAH | Maverick: packing cost differences across markets warranted adjustments | Commerce: differences explained by product types (threaded & coupled vs plain-end); no distortion found | Court: Commerce's decision not to adjust packing expenses supported by substantial evidence |
| 14. Scrap and by-product offsets (SeAH) | Maverick: data inconsistencies and methodology required adjustment | Commerce: obtained monthly inventory schedules, validated methodology and values against records | Court: Commerce's acceptance of scrap offsets supported by substantial evidence |
Key Cases Cited
- Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (administrative action must be reasonable and explained)
- Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034 (deference for technical economic determinations)
- SKF USA, Inc. v. United States, 254 F.3d 1022 (standards for voluntary remand and agency do-over)
- Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337 (upholding Commerce's differential pricing methodology)
- JBF RAK LLC v. United States, 790 F.3d 1358 (A-to-T methodology in administrative reviews)
- Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333 (limits on adverse inferences when agency can fill record gaps)
- Torrington Co. v. United States, 68 F.3d 1347 (adjustments for apples-to-apples comparisons)
- Florida Citrus Mut. v. United States, 550 F.3d 1105 (purpose of export-price adjustments to ensure fair comparison)
- Downhole Pipe & Equip., L.P. v. United States, 776 F.3d 1369 (court will not reweigh evidence; substantial-evidence standard)
- Am. Silicon Techs. v. United States, 261 F.3d 1371 (accepting or rejecting producer records under COP rules)
- Thai Plastic Bags Indus. Co. v. United States, 746 F.3d 1358 (physical characteristics and cost allocation)