BOOMERANG TUBE LLC, et al., Plaintiffs, v. UNITED STATES, Defendant, and Jubail Energy Services Co and Duferco SA, Defendant-Intervenors.
Consol. Court No. 14-00196
United States Court of International Trade.
December 17, 2015
Slip Op. 15-140
III. Conclusion
Having prevailed in the underlying administrative proceeding, plaintiffs are unable to demonstrate that they currently are suffering an injury in fact and thus have not pled facts upon which the court may exercise jurisdiction over this action. The court will enter judgment dismissing this action pursuant to
Jeffrey D. Gerrish, Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, DC, argued for plaintiff United States Steel Corporation. With him on the brief were Robert E. Lighthizer and Luke A. Meisner.
Emma E. Bond, Trial Attorney, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Benjamin C. Mizer, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Shana A. Hofstetter, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.
John M. Gurley, Arent Fox LLP, of Washington, DC, argued for defendant-intervenors Jubail Energy Services Co. and Duferco SA. With him on the brief
OPINION
Stanceu, Chief Judge:
In this consolidated action,1 several plaintiffs contest a negative “less-than-fair-value” (“LTFV”) determination the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) issued to conclude an antidumping duty investigation of certain oil country tubular goods (“OCTG”) from Saudi Arabia. Commerce reached the negative determination, and terminated the investigation, based upon the de minimis dumping margin it calculated for the only investigated respondent, Jubail Energy Services Company (“JESCO”), defendant-intervenor in this action.
Before the court are two motions for judgment on the agency record made under
I. Background
A. The Contested Determination
The determination contested in this consolidated action is Amended Final Determination and Termination of the Investigation of Sales at Less Than Fair Value: Certain Oil Country Tubular Goods From Saudi Arabia, 79 Fed.Reg. 49,051, 49,052 (Aug. 19, 2014) (“Amended Final LTFV Determination”).2
B. The Parties to the Consolidated Action
Plaintiffs Boomerang Tube LLC, TMK IPSCO, Energex Tube, Welded Tube USA Inc. and United States Steel Corporation (“U.S. Steel”) are U.S. producers of steel tube products that participated in the investigation as petitioners. Compl. ¶¶ 3-4 (Aug. 26, 2014), ECF No. 6 (Court No. 14-00201) (U.S. Steel’s complaint); Compl. ¶¶ 5-6 (Aug. 22, 2014), ECF No. 6 (remaining plaintiffs’ complaint). Defendant-intervenor JESCO is an OCTG producer in Saudi Arabia, and defendant-intervenor Duferco SA is an exporter of OCTG from Saudi Arabia. Consent Mot. to Intervene as of Right 2 (Aug. 28, 2014), ECF No. 9.
C. The Motions for Judgment on the Agency Record
One of the two Rule 56.2 motions before the court is submitted by plaintiffs Boomerang Tube LLC, TMK IPSCO, Energex Tube, and Welded Tube USA Inc. Mot. of Consol. Pls. Boomerang Tube, Energex Tube, a Division of JMC Steel Group, TMK IPSCO, and Welded Tube USA Inc. for J. on the Agency R. under Rule 56.2 and Br. in Support (Jan. 15, 2015), ECF No. 28 (“Pls.’ Br.”). The second motion is by plaintiff U.S. Steel. Mot. of Pl. United States Steel Corp. for J. on the Agency R.
Opposing the Rule 56.2 motions are defendant United States and defendant-intervenors JESCO and Duferco SA. Def.’s Response to Pls.’ Rule 56.2 Mots. for J. on the Agency R. 6-7 (Mar. 30, 2014), ECF No. 38 (“Def.’s Opp’n”); Def.-intervenors’ Jubail Energy Services Company and Duferco SA’s Response to Pls.’ Mot. for J. on the Agency R. 6-8, (Mar. 30, 2015), ECF No. 40 (“Def.-intervenors’ Opp’n”).
D. Procedural History of the Less-than-Fair-Value Investigation and this Action
On July 29, 2013, Commerce initiated an investigation of sales at less than fair value of certain OCTG from India, the Republic of Korea, the Republic of the Philippines, Saudi Arabia, Taiwan, Thailand, the Republic of Turkey, Ukraine, and the Socialist Republic of Vietnam. Certain Oil Country Tubular Goods from India, the Republic of Korea, the Republic of the Philippines, Saudi Arabia, Taiwan, Thailand, the Republic of Turkey, Ukraine, and the Socialist Republic of Vietnam: Initiation of Antidumping Duty Investigations, 78 Fed.Reg. 45,505, 45,506 (Int’l Trade Admin. July 29, 2013). In investigating OCTG from Saudi Arabia, Commerce selected Duferco SA, the largest known Saudi Arabian exporter of OCTG, as the sole mandatory respondent. Antidumping Duty Investigation of Certain Oil Country Tubular Goods from the Kingdom of Saudi Arabia: Respondent Selection 3-4 (Aug. 29, 2013) (Admin.R.Doc. No. 51). JESCO, an affiliate of Duferco SA, manufactured the OCTG that Duferco SA exported to the United States from Saudi Arabia. Id. at 1-2.
Treating Duferco SA and JESCO as a single entity for purposes of the investigation, Commerce issued an affirmative preliminary less-than-fair-value determination on February 25, 2014, determining a preliminary dumping margin of 2.92% for the combined entity. Certain Oil Country Tubular Goods From Saudi Arabia: Prelim. Determination of Sales at Less Than Fair Value, and Postponement of Final Determination, 79 Fed.Reg. 10,489, 10,490 (Int’l Trade Admin. Feb. 25, 2014) (“Prelim. LTFV Determination”); Issues & Decision Mem. for the Prelim. Determination in the Antidumping Duty Investigation of Oil Country Tubular Goods from Saudi Arabia, A-517-804, at 2, 6-7 (Feb. 14, 2014) (Admin.R.Doc. No. 151), available at http://enforcement.trade.gov/frn/summary/saudi-arabia/2014-04102-1.pdf (last visited Dec. 14, 2015) (“Prelim. Decision Mem.”). Commerce also determined that Duferco SA/JESCO’s home market sales made to an affiliate were not at arm’s length and should not be used to calculate normal value. Prelim. Decision Mem. at 7-8. Determining that Duferco SA/JESCO’s remaining home market sales were made below cost, were therefore outside the ordinary course of trade, and accordingly could not serve as the basis for determining normal value, Commerce decided to determine normal value on the basis of constructed value (“CV”). See id. at 7-11.
Commerce published a final less-than-fair-value determination on July 18, 2014. Certain Oil Country Tubular Goods From Saudi Arabia: Final Determination of Sales at Less Than Fair Value, 79 Fed. Reg. 41,986, 41,986 (Int’l Trade Admin. July 18, 2014) (“Final LTFV Determination”). Commerce again calculated normal value on a CV basis and maintained its decision to treat Duferco SA and JESCO as a single entity. See id. Commerce determined constructed value profit according to profits realized by the Duferco SA/JESCO entity on certain of the sales that this combined entity made to Colom-
II. Discussion
A. Jurisdiction and Standard of Review
The court exercises jurisdiction under section 201 of the Customs Courts Act of 1980,
A. Plaintiffs’ Claims and Responses of Defendant and Defendant-Intervenor
All plaintiffs claim that Commerce, in calculating normal value according to the CV method, failed to determine constructed value profit according to a “reasonable method” as required by
B. Plaintiffs Did Not Fail to Exhaust their Administrative Remedies
Defendant argues that plaintiffs are not entitled to relief on their claims because they failed to exhaust their administrative remedies. See Def.’s Opp’n 6, 15-18, 22-25 (“Plaintiffs never argued to Commerce that that [sic] the Colombia sales were made outside of the ordinary course of trade — Plaintiffs also failed to exhaust their current argument that JESCO’s Colombia sales are intra-company sales that cannot be used as the basis for the constructed value profit.”). Defendant-intervenor argues, similarly, that “[a]s an initial
Section 301 of the Customs Courts Act of 1980 provides that, in actions such as this one, “the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies.”
Courts have declined to apply the exhaustion requirement in situations where “the agency change[s] its position ... after [a] party’s case brief [has been filed].” Corus Staal BV v. United States, 502 F.3d 1370, 1381 (Fed.Cir.2007) (“Corus Staal”); see also Qingdao Taifa Group Co. v. United States, 33 C.I.T. 1090, 1092-93, 637 F.Supp.2d 1231, 1236-37 (2009) (“A party ... may seek judicial review of an issue that it did not raise in a case brief if Commerce did not address the issue until its final decision, because in such a circumstance the party would not have had a full and fair opportunity to raise the issue at the administrative level.”) (citing LTV Steel Co. v. United States, 985 F.Supp. 95, 120 (CIT 1997)). The court has discretion in deciding whether or not to apply the exhaustion doctrine. See
In the Preliminary Determination, Commerce relied on the financial statements of a Saudi Arabian producer, Saudi Steel Pipe Company, in calculating CV profit. See Prelim. Decision Mem. at 11. Case briefs were due May 23, 2014, and rebuttal briefs were due May 30, 2014. See Prelim. LTFV Determination, 79 Fed.Reg. at 10,490. It was not until the following July that Commerce first indicated it might use Duferco SA/JESCO’s sales to Colombia to calculate CV profit, and this indication came when Commerce issued its final decision. See Final Decision Mem. at 16-23; Duferco SA—Final LTFV Determination Analysis Mem. 6-7 (July 10, 2014) (Admin.R.Doc. No. 209). Defendant and defendant-intervenors argue, nevertheless, that petitioners were on notice that Commerce might rely on Duferco SA/JESCO’s sales to Colombia to calculate CV profit because JESCO proposed in its case brief that Commerce use the Colombia sales to determine CV profit. Def.’s Opp’n 17, 23-24; Def.-intervenors’ Opp’n 20-21.
Denying relief on exhaustion grounds would require the court to conclude that plaintiffs should have predicted that Commerce might accept JESCO’s proposal to use sales by Duferco SA/JESCO to Colombia to calculate CV profit and should have raised, in their case briefs, potential arguments against that possibility. The court declines to require such speculation. The court concludes, instead, that petitioners did not have a full and fair opportunity during the investigation to
C. The Court Rejects Plaintiffs’ Challenges to the Department’s CV Profit Determination
Constructed value is calculated based on the sum of the cost of materials and fabrication employed in producing the subject merchandise, plus amounts for selling, general, and administrative expenses and for profit and U.S. packing costs. Section 773(e) of the Tariff Act,
Because Commerce determined that the exporter made no home market sales in the ordinary course of trade, Commerce could not use what it terms the “preferred method” of calculating CV profit, which is provided in section 773(e)(2)(A) of the Tariff Act,4 and instead turned to the three alternatives set forth in section 773(e)(2)(B) of the Tariff Act,
The record contained six potential sources of data from which to determine CV profit under
Choosing from among the various options, Commerce determined CV profit according to the profit realized on certain sales that Duferco SA/JESCO made to a third-country market, Colombia. In choosing these sales as the basis for CV profit, Commerce reasoned that “[t]he Colombian sales of JESCO are sales of OCTG products, a significant portion of which are identical to the products sold by JESCO in the home market and the United States, and the related costs have been verified by the Department.” Final Decision Mem. 22. Commerce further reasoned that “[t]hese sales meet all the requirements for CV profit set out under the preferred method except for the fact that they were not sold in the foreign country,” pointing out that “[t]hey are sales of the foreign like product and were produced by the respondent in the foreign country.” Id.
As discussed previously, the Amended Final Determination reached a revised final weighted-average dumping margin that was de minimis. See Amended Final LTFV Determination, 79 Fed.Reg. at 49,052;
Plaintiffs assert two grounds upon which they claim that the Department’s use of JESCO’s Colombia sales to calculate CV profit was not a “reasonable method” as required by
1. Commerce Was Not Required to Find that the Distributor in Colombia Was Part of the Duferco SA/JESCO “Combined Entity”
In its regulations, Commerce has provided itself authority to “collapse,” i.e., treat as a single entity, affiliated producers where two conditions are met. The conditions are (1) “where those producers have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities and” (2) “the Secretary concludes that there is a significant potential for the manipulation of price or production.”
After determining that JESCO and Duferco SA were “affiliated” within the meaning of section 771(33)(E) of the Tariff Act,
Along with Duferco SA and JESCO, Commerce also “collapsed,” into the entity to which it referred as “the Duferco single entity,” three other affiliated companies: Duferco Shipping, Duferco Steel Inc., and Duferco Saudi Arabia. Id. at 6-7. Upon a finding that that these five companies coordinated orders from customers, coordinated shipping and other logistics, and supplied JESCO with inputs for the production of OCTG, Commerce further
To qualify for a remedy under the applicable standard of review, plaintiffs must show that Commerce reached a determination that either was unsupported by substantial evidence on the record or otherwise was not in accordance with law. On the former, plaintiffs do not challenge any specific factual finding associated with the challenged determination as unsupported by record evidence. Their claim, instead, is essentially that Commerce acted contrary to law in not finding that the Colombian distributor was part of the “Duferco single entity” for purposes of
Under
Plaintiffs point to the fact that the Colombian distributor is an indirect subsidiary of Duferco SA’s parent company. See Pls.’ Br. 11-12; U.S. Steel’s Br. 9-11. But this affiliation does not compel the conclusion that there was a significant potential for the manipulation of price. Plaintiffs also cite evidence that the Colombian entity purchases and distributes OCTG that JESCO transferred to Duferco SA. See Pls.’ Br. 11-13; U.S. Steel’s Br. 10-11. From this evidence, U.S. Steel argues that the Colombian entity “is involved in the production and sale of OCTG.” U.S. Steel’s Br. 11. However, plaintiffs point to no actual evidence demonstrating a significant risk of manipulation of price. Significantly, plaintiffs point to no evidence of common managerial employees or board members or intertwined operations, such as the sharing of sales information or other involvement in production and pricing deci-
Moreover, other record evidence is contrary to a finding of a significant risk of price manipulation. Commerce found that the transactions it used to calculate CV profit, i.e., the not-below-cost sales that were made to the Colombian distributor, were made at arm’s length. Final Decision Mem. 22-23. For this finding, Commerce relied upon record evidence, consisting of prices at which Duferco SA/JESCO sold OCTG to one or more unaffiliated customers in Colombia, showing that the sales it used to calculate CV profit were made at prices comparable to the market price of OCTG in Colombia. See Duferco SA—Final LTFV Determination Analysis Mem. 6-7. A finding that a sale was made at arm’s length may be supported by record evidence that the sale price is comparable to the price at which the exporter or producer sold the foreign like product to a party who is not affiliated with the seller. See
U.S. Steel cites record evidence showing common ownership between JESCO and the Colombian distributor and the similarity of the Colombia transactions to U.S. transactions between JESCO and the single Duferco entity. U.S. Steel’s Br. 10-11. This evidence does not establish a significant risk of price manipulation. U.S. Steel also argues that “it is of no moment” that the sales in Colombia used to determine CV profit “passed the arm’s length test,” on the ground that “Commerce’s well-established practice is to disregard intra-company transfers between companies that are part of the same collapsed entity regardless of whether they pass any of Commerce’s tests for transactions between affiliated companies, including the arm’s length test.” Id. at 11 (citation omitted). The court disagrees. This argument presumes a Commerce decision to collapse the entities in question, which did not occur here. In any event, it is illogical to consider a company’s selling to an affiliate at arm’s length prices to be irrelevant to a “collapsing” analysis conducted under
2. The Department’s Finding that JESCO’s Sales to Colombia Were Made in the Ordinary Course of Trade Is Supported by Substantial Record Evidence
U.S. Steel contends that “Commerce’s calculation of CV profit based on JESCO’s sales of OCTG to Colombia should also be overturned because it violated the statute’s general preference to avoid basing CV profit on sales that are made outside the ordinary course of trade.” U.S. Steel’s Br. 13. According to U.S. Steel, “[a]s the Federal Circuit has recognized, where, as here, home market sales are not available for use and CV profit must be calculated pursuant to
U.S. Steel’s argument is unpersuasive. Section 773(e)(2)(B)(iii) of the Tariff Act,
Commerce mentioned “ordinary course of trade” in reaching its decision to use the Colombia sales, but the reference is only in the context of determining whether the sales were below cost: “[i]n using these third country sales we consider it appropriate to perform a sales-below cost test to ensure that they were made in the ordinary course of trade, consistent with the preferred method.” Final Decision Mem. 22-23 (footnote omitted). Commerce acted within its discretion in deciding to exclude below-cost sales from its CV profit calculation. Merely by using the term “ordinary course of trade” in explaining its decision to do so, Commerce did not narrow its own discretion on the question of whether those sales otherwise were suitable for use in determining constructed value profit. The question presented, therefore, is not whether the sales Commerce used to determine CV profit were, in respects other than cost recovery, outside the ordinary course of trade for purposes of the statutory definition, which does not apply to
U.S. Steel alleges that the Colombia sales Commerce used were made under “unusual circumstances,” pointing to record evidence concerning the circumstances under which the merchandise on the sales was shipped to Colombia and reiterating its argument that the sales were in fact
The record evidence U.S. Steel cites is not sufficient to support a conclusion that Commerce acted contrary to law in using the Colombia sales to determine CV profit. The circumstances of shipping, the sales quantities, and the profit rate on the sales do not establish that it was unreasonable for Commerce to use these sales for the limited purpose of determining profit for the constructed value calculation. In deciding to use these sales to determine CV profit, Commerce compared the suitability of the data from these sales with other record information that it might have used instead, acknowledging that it was “faced with several imperfect options.” Final Decision Mem. 17. Mentioning that the Colombia sales meet two of the three requirements of the “preferred method,” i.e.,
The court also rejects U.S. Steel’s argument that a remand is required because of the aforementioned finding as to identical merchandise. The actual finding is stated in the Final Decision Memorandum as follows: “[t]he Colombian sales of JESCO are sales of OCTG products, a significant portion of which are identical to the products sold by JESCO in the home market and the United States. . . .” Final Decision Mem. 22. The Final Decision Memorandum pertained to the Final Results, not the Amended Final Results, the analysis memorandum for which set forth the final choice of Colombian sales for the CV profit calculation, i.e., the sales that were not made below cost. Duferco SA—Amended Final LTFV Determination Analysis Mem. 3. As defendant points out, Commerce did not reach a finding that the specific sales Commerce used to calculate CV profit were identical to the products JESCO sold in the home market or the United States. Def.’s Opp’n 12. U.S. Steel does not contest that the sales in question were of OCTG.
III. Conclusion
For the reasons discussed above, plaintiffs are not entitled to relief on their claims. The Department’s finding that JESCO’s sales to Colombia were actual sales rather than intra-company transfers was supported by substantial evidence on the record. Plaintiffs’ various arguments to the contrary, including U.S. Steel’s ar-
Timothy C. Stanceu
Chief Judge