TMK IPSCO v. United States
2016 WL 3693714
Ct. Intl. Trade2016Background
- Commerce initiated a countervailing duty (CVD) investigation of certain oil country tubular goods (OCTG) from the PRC covering Jan 1–Dec 31, 2008; four mandatory respondents were selected and final net CVD rates were set and later amended.
- Domestic producers (TMK, Maverick, U.S. Steel, et al.) challenged multiple aspects of Commerce’s Final Determination under 19 U.S.C. § 1516a; foreign respondents and PRC Ministry-intervenor also participated.
- Key contested topics included (a) Commerce’s handling of new subsidy allegations raised during the investigation; (b) the temporal cut-off for identifying/measuring subsidies (Commerce used China’s WTO accession date); (c) benchmark construction for steel rounds/billets (LME and SBB data, freight adjustments, quality/comparability); (d) attribution of subsidies among parents and subsidiaries; and (e) use of adverse facts available (AFA) for Jianli.
- The court upheld many of Commerce’s determinations (deferment of certain new subsidy investigations, refusal to investigate export restraints and some Changbao allegations, inclusion of LME data, no quality premium adjustment, exclusion of a flat-rack surcharge, and denial of AFA for Jianli).
- The court remanded several discrete matters to Commerce: (1) justification for using China’s WTO accession date as a uniform cut-off for identifying/measuring subsidies; (2) attribution methodology for subsidies received by certain subsidiaries (Precision and four TPCO subsidiaries); (3) inclusion of Jianli’s freight quote in the benchmark freight adjustment; and (4) whether the LTAR provision of steel rounds to TPCO is tied only to seamless pipe sales. Commerce was also ordered to recalculate the benchmark excluding SBB East Asia data on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Deferment of investigation of timely new subsidy allegations | Plaintiffs: regulations/statute require Commerce to investigate timely allegations; deferral unlawful | Commerce: discretionary under 19 C.F.R. § 351.311(b)/(c) where insufficient time; complexity and workload justified deferral | Upheld — Commerce reasonably found insufficient time and did not abuse discretion |
| 2) Refusal to investigate alleged export restraints (steel rounds/billets) | Plaintiffs: export tax created indirect subsidy; Commerce should have initiated investigation | Commerce: petitioners failed to show required long-term causal correlation; practice requires historical evidence for indirect subsidies | Upheld — Commerce reasonably declined given insufficient long-term evidence |
| 3) Cut-off date for identifying/measuring subsidies (China WTO accession) | Plaintiffs: statutory requirement to identify/measure subsidies when possible; WTO accession date arbitrary | Commerce/Def: selected accession date as practical cut-off tied to economic reforms and accession obligations | Remanded — Commerce failed to explain why accession date was first date subsidies could be identified/measured; must examine program-specific first-identifiable dates |
| 4) Benchmark construction for steel rounds/billets (inclusion of LME and SBB East Asia; quality adjustments) | Plaintiffs: exclude LME/SBB or adjust for OCTG-quality premium; freight adjustments flawed | Commerce: LME commercially available and respondents reported broad billet purchases; SBB East Asia inclusion disputed; freight averaged from Maersk and Jianli quote; excluded flat-rack surcharge | Mixed: inclusion of LME and refusal to apply quality premium sustained; SBB East Asia exclusion remand granted at Commerce's request; freight averaging remanded — Commerce must explain representativeness of divergent freight quotes; exclusion of flat-rack surcharge sustained |
| 5) Attribution of subsidies (parent vs. subsidiary; tying to product sales) | Plaintiffs: subsidies received by subsidiaries should not be attributed across entire corporate group; where subsidy is tied to a product it must be attributed only to that product | Commerce: attributed subsidies received by parents to consolidated sales per 19 C.F.R. § 351.525(b)(6)(iii); used combined attribution rules to reach group-wide allocation | Mixed: attributing parent-received subsidies to consolidated sales upheld; but Commerce lacked regulatory basis to attribute subsidies received by subsidiaries (Precision and four TPCO subsidiaries) to other subsidiaries — remanded; Commerce also failed to determine whether LTAR steel was tied to seamless pipe sales — remanded |
| 6) Use of AFA for Jianli’s unreported purchases | Maverick: Jianli omitted purchases — AFA appropriate | Commerce: verification showed purchases traceable and explanation credible; no failure to cooperate to justify AFA | Upheld — Commerce reasonably declined to apply AFA |
Key Cases Cited
- Torrington Co. v. United States, 68 F.3d 1347 (Fed. Cir.) (agency resource allocation and deference)
- AK Steel Corp. v. United States, 192 F.3d 1367 (Fed. Cir.) (indirect subsidy requires causal nexus)
- SKF USA Inc. v. United States, 254 F.3d 1022 (Fed. Cir.) (standard for voluntary remand to agency)
- Parkdale Int’l v. United States, 475 F.3d 1375 (Fed. Cir.) (remand and correction of agency calculations)
- Save Domestic Oil, Inc. v. United States, 357 F.3d 1278 (Fed. Cir.) (agency may reasonably explain departures from past practice)
- RZBC Group Shareholding Co. v. United States, 100 F. Supp. 3d 1288 (Ct. Int’l Trade) (benchmarks and inclusion of freight surcharges)
- Allegheny Ludlum Corp. v. United States, 112 F. Supp. 2d 1141 (Ct. Int’l Trade) (discussion of subsidy benefit universe and attribution)