Hyundai Steel Co. v. United States , 2023 CIT 87 ( 2023 )

Slip Op. 23-87
UNITED STATES COURT OF INTERNATIONAL TRADE
HYUNDAI STEEL COMPANY,
Plaintiff,
AJU BESTEEL CO., LTD.,
NEXTEEL CO., LTD., and
HUSTEEL CO., LTD.,
Consolidated Plaintiffs,
and
HUSTEEL CO., LTD., NEXTEEL
CO., LTD., and SEAH STEEL
CORPORATION,
Before: Jennifer Choe-Groves, Judge
Plaintiff-Intervenors,
Consol. Court No. 22-00138
v.
UNITED STATES,
Defendant,
and
VALLOUREC STAR, L.P.,
WELDED TUBE USA INC., and
UNITED STATES STEEL
CORPORATION,
Defendant-Intervenors.
Consol. Court No. 22-00138 Page 2
OPINION AND ORDER
[Sustaining in part and remanding in part the final results of the administrative
review by the U.S. Department of Commerce in the countervailing duty
investigation of certain oil country tubular goods from the Republic of Korea.]
Dated: June 9, 2023
Jarrod M. Goldfeder, Trade Pacific PLLC, of Washington, D.C. argued for
Plaintiff Hyundai Steel Company and Consolidated Plaintiff AJU Besteel Co., Ltd.
With him on the brief was Robert G. Gosselink.
Brady W. Mills, Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Mary S.
Hodgins, and Eugene Degnan, Morris, Manning & Martin, LLP, of Washington,
D.C., for Consolidated Plaintiff and Plaintiff-Intervenor Husteel Co., Ltd.
Henry D. Almond, Arnold & Porter Kaye Scholer LLP, of Washington, D.C.,
argued for Consolidated Plaintiff and Plaintiff-Intervenor NEXTEEL Co., Ltd.
With him on the brief were J. David Park, Daniel R. Wilson, and Kang Woo Lee.
Jeffrey M. Winton, Amrietha Nellan, Ruby Rodriguez, Jooyoun Jeong, Michael J.
Chapman, and Vi Mai, Winton & Chapman PLLC, of Washington, D.C., for
Plaintiff-Intervenor SeAH Steel Corporation.
Hardeep K. Josan, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of New York, N.Y., argued for Defendant United
States. With her on the brief were Brian M. Boynton, Principal Deputy Assistant
Attorney General, Patricia M. McCarthy, Director, and Claudia Burke, Assistant
Director. Of counsel on the brief was Mykhaylo Gryzlov, Office of the Chief
Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.
Roger B. Schagrin, Benjamin J. Bay, Christopher T. Cloutier, Elizabeth J. Drake,
Jeffrey D. Gerrish, Joseph A. Laroski, Jr., Kelsey M. Rule, Luke A. Meisner,
Michelle R. Avrutin, Nicholas J. Birch, Saad Y. Chalchal, and William A. Fennell,
Schagrin Associates, of Washington, D.C., for Defendant-Intervenors Vallourec
Star, L.P. and Welded Tube USA Inc.
Consol. Court No. 22-00138 Page 3
James E. Ransdell, IV, Thomas M. Beline, Myles S. Getlan, Nicole Brunda, and
Sarah E. Shulman, Cassidy Levy Kent (USA), LLP, of Washington, D.C., argued
for Defendant-Intervenor United States Steel Corporation.
Choe-Groves, Judge: This action arises from the results of the U.S.
Department of Commerce (“Commerce”) in the antidumping administrative review
of Oil Country Tubular Goods (“OCTG”) from the Republic of Korea (“Korea”)
for September 1, 2019 through August 31, 2020 (“Period of Review”). Summons,
ECF No. 1; Compl., ECF No. 8. Plaintiff Hyundai Steel Company (“Plaintiff” or
“Hyundai Steel”) filed this action pursuant to 19 U.S.C. § 1516a(a)(2)(A)(i)(I) and
(a)(2)(B)(iii) contesting Commerce’s final results in Certain Oil Country Tubular
Goods From the Republic of Korea (“Final Results”), 87 Fed. Reg. 20,815 (Dep’t
of Commerce Apr. 8, 2022) (final results of antidumping duty administrative
review and final determination of no shipments; 2019–2020), and accompanying
Issues and Decisions Memorandum (“Final IDM”), ECF No. 41-5.
Before the Court is Plaintiff’s Rule 56.2 Motion for Judgment on the Agency
Record (“Plaintiff’s Motion”). Pl.’s R. 56.2 Mot. J. Agency R., ECF Nos. 55, 59;
Pl.’s Mem. Supp. R. 56.2 Mot. Pl. J. Agency R. (“Pl.’s Br.”), ECF Nos. 55-2, 59-2.
Consolidated Plaintiff and Plaintiff-Intervenor Husteel Co., Ltd. (“Husteel”) filed
Husteel’s Motion for Judgment on the Agency Record and Brief in Support of its
Motion for Judgment on the Agency Record incorporating and supporting the
arguments raised in Plaintiff’s Motion. Husteel’s Mot. J. Agency R., ECF No. 54;
Consol. Court No. 22-00138 Page 4
Husteel’s Br. Supp. Mot. J. Agency R. (“Husteel’s Br.”), ECF No. 54-2. Plaintiff-
Intervenor SeAH Steel Corporation (“SeAH”), Consolidated Plaintiff and Plaintiff-
Intervenor NEXTEEL Co., Ltd. (“NEXTEEL”), and Consolidated Plaintiff AJU
Besteel Co., Ltd. (“AJU Besteel”) filed SeAH’s Motion for Judgment on the
Agency Record, NEXTEEL’s Rule 56.2 Motion for Judgment Upon the Agency
Record, and AJU Besteel’s Rule 56.2 Motion for Judgment Upon the Agency
Record, each incorporating and expanding upon arguments raised in Plaintiff’s
Motion. SeAH’s Mot. J. Agency Record, ECF No. 56; SeAH’s Br. Supp. Rule
56.2 Mot. J. Agency R. (“SeAH’s Br.”), ECF No. 56-1; NEXTEEL’s Mot. J.
Agency R., ECF No. 57; NEXTEEL’s Mem. Supp. NEXTEEL’s R. 56.2 Mot. J.
Agency R. (“NEXTEEL’s Br.”), ECF No. 57-2; AJU Besteel’s R. 56.2 Mot. J.
Agency R., ECF No. 58; AJU Besteel’s Mem. Supp. R. 56.2 Mot. J. Agency R.
(“AJU Besteel’s Br.”), ECF No. 58-2.
Defendant United States (“Defendant”) filed Defendant’s Response in
Opposition to Motions for Judgment Upon the Administrative Record. Def.’s
Resp. Opp’n Mot. J. Admin. R. (“Def.’s Resp.”), ECF No. 60. Defendant-
Intervenors United States Steel Corporation, Vallourec Star, L.P., and Welded
Tube USA, Inc. (collectively, “Defendant-Intervenors”) filed Response Brief of
Defendant-Intervenors in Opposition to Rule 56.2 Motions for Judgment on the
Agency Record. Def.-Intervs.’ Resp. Br. Opp’n R. 56.2 Mots. J. Agency R.
Consol. Court No. 22-00138 Page 5
(“Def.-Intervs.’ Resp.”), ECF No. 61. Plaintiff, Husteel, AJU Besteel, and
NEXTEEL filed replies. Husteel’s Reply Br. Supp. Mot. J. Agency R. (“Husteel’s
Reply”), ECF No. 62; Pl.’s Reply Def.’s Def.-Intervs.’ Resp. Br. Opp’n Pl.’s R.
56.2 Mot. J. Agency R. (“Pl.’s Reply”), ECF Nos. 63, 64; AJU Besteel’s Reply Br.
Supp. R. 56.2 Mot. J. Agency R. (“AJU Besteel’s Reply”), ECF No. 65;
NEXTEEL’s Reply Br. Supp. R. 56.2 Mot. J. Agency R. (“NEXTEEL’s Reply”),
ECF No. 66.
For the following reasons, the Court sustains in part and remands in part
Commerce’s Final Results.
ISSUES PRESENTED
The Court reviews the following issues:
1. Whether Commerce’s use of SeAH’s business proprietary information was
in accordance with law;
2. Whether Commerce’s calculations of constructed value, constructed value
profit cap, and constructed export price were supported by substantial
evidence;
3. Whether Commerce’s adjustments to Hyundai Steel USA’s general and
administrative expense ratio were supported by substantial evidence;
Consol. Court No. 22-00138 Page 6
4. Whether Commerce’s use of neutral facts available and adjustment to
Plaintiff’s reported further manufacturing yield loss were supported by
substantial evidence;
5. Whether the weighted-average dumping margin for non-examined
respondents should be remanded to allow for recalculation consistent with
potential changes to SeAH’s weighted-average dumping margin; and
6. Whether NEXTEEL is barred from relief in this action because NEXTEEL
failed to raise its arguments before the administrative agency.
BACKGROUND
Commerce published an antidumping duty order covering OCTG from
Korea on September 10, 2014. Certain Oil Country Tubular Goods From India,
the Republic of Korea, Taiwan, the Republic of Turkey, and the Socialist Republic
of Vietnam, 79 Fed. Reg. 53,691 (Dep’t of Commerce Sept. 10, 2014)
(antidumping duty orders; and certain oil country tubular goods from the Socialist
Republic of Vietnam: amended final determination of sales at less than fair value).
Commerce invited interested parties to request an administrative review for the
period of September 1, 2019 through August 31, 2020. Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to
Request Administrative Review, 85 Fed. Reg. 54,349 (Dep’t of Commerce Sept. 1,
2020). United States Steel Corporation, Maverick Tube Corporation, Tenaris Bay
Consol. Court No. 22-00138 Page 7
City, Inc., and IPSCO Tubulars Inc. requested review of 33 producers and
exporters of the subject goods. See Commerce’s Decision Mem. Prelim. Results
2019–2020 Admin. Rev. Antidumping Duty Order on Certain Oil Country Tubular
Goods from the Republic of Korea (“Prelim. DM”) at 1–2, PR 248.1 Hyundai
Steel, SeAH, NEXTEEL, Husteel, AJU Besteel, and ILJIN Steel Corporation
requested examinations of themselves. Id. at 2; NEXTEEL’s Request Admin.
Rev., PR 1; Pl.’s Request Admin. Rev., PR 4; AJU Besteel’s Request Admin. Rev.,
PR 5. Commerce initiated an administrative review on October 30, 2020.
Initiation of Antidumping and Countervailing Duty Administrative Reviews, 85
Fed. Reg. 68,840 (Dep’t of Commerce Oct. 30, 2020); Prelim. DM at 1–2.
Commerce selected Hyundai Steel and SeAH as mandatory respondents for
individual examination. Commerce’s Resp. Selection Mem. (Dec. 18, 2020), PR
30.
Commerce released preliminary results of the administrative review on
September 29, 2021. Certain Oil Country Tubular Goods From the Republic of
Korea (“Preliminary Results”), 86 Fed. Reg. 54,928 (Dep’t of Commerce Oct. 5,
2021) (preliminary results of antidumping duty administrative review and
preliminary determination of no shipments; 2019–2020); Prelim. DM. Commerce
1
Citations to the administrative record reflect the public record (“PR”) numbers
filed in this case, ECF No. 68.
Consol. Court No. 22-00138 Page 8
determined preliminary weighted-average dumping margins of 19.38 percent for
Plaintiff, 3.85 percent for SeAH, and 11.62 percent for non-examined companies.
Preliminary Results, 86 Fed. Reg. at 54,929. In the Preliminary Results,
Commerce calculated Plaintiff’s constructed value profit and selling expenses
using the business proprietary information of SeAH regarding SeAH’s third-
country sales of OCTG to Kuwait. Prelim. DM. at 30–31. Commerce published
the Final Results on April 8, 2022, in which Commerce calculated weighted-
average dumping margins of 19.54 percent for Plaintiff, 3.85 percent for SeAH,
and 11.70 percent for non-examined companies. Final Results, 87 Fed. Reg. at
20,816. Commerce continued to calculate Plaintiff’s constructed value profit and
selling expenses using SeAH’s combined constructed value profit and selling
expenses for third-country market sales in Kuwait. Final IDM at 37. Commerce
also used SeAH’s third-country sales data to calculate constructed export price
profit. Id. at 44–47.
Plaintiff and Consolidated Plaintiffs initiated four separate actions against
Defendant challenging aspects of the Final Results. Compl.; Summons; AJU
Besteel Co., Ltd. v. United States, Court No. 22-00139; Nexteel Co., Ltd. v. United
States, Court No. 22-00140; Husteel Co., Ltd. v. United States, Court No. 22-
00143. The Court consolidated the four cases into to this action. Order (June 28,
Consol. Court No. 22-00138 Page 9
2022), ECF No. 43. The Court held oral argument on the pending motions for
judgment on the agency record on March 22, 2023. Docket Entry, ECF No. 72.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28
U.S.C. § 1581(c), which grant the Court authority to review actions contesting the
final results of an administrative review of an antidumping duty order. The Court
will hold unlawful any determination found to be unsupported by substantial
record evidence or otherwise not in accordance with law. 19 U.S.C.
§ 1516a(b)(1)(B)(i).
STATUTORY FRAMEWORK
Commerce imposes antidumping duties on foreign goods if “(1) it
determines that the merchandise ‘is being, or is likely to be, sold in the United
States at less than its fair value,’ and (2) the International Trade Commission
determines that the sale of the merchandise at less than fair value materially
injures, threatens, or impedes the establishment of an industry in the United
States.” Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304, 1306
(Fed. Cir. 2017) (quoting 19 U.S.C. § 1673(1)). Antidumping duties are calculated
as the difference between the normal value of subject merchandise and the export
price or the constructed export price of the subject merchandise. See 19 U.S.C.
§ 1673.
Consol. Court No. 22-00138 Page 10
Normal value is ordinarily determined using the sales price of the subject
merchandise in the seller’s home market. 19 U.S.C. § 1677b(a)(1)(B)(i). If
Commerce determines that normal value cannot be calculated reliably using home
market or third-country sales, Commerce may use the subject merchandise’s
constructed value as an alternative to normal value. Id. § 1677b(a)(4). The
method for calculating constructed value is defined by statute. Id. § 1677b(e).
When calculating constructed value, Commerce must utilize the respondent’s
actual selling, general, and administrative expenses, and profits in the respondent’s
home market or a third-country market. Id. § 1677b(e)(2)(A). If Commerce
cannot rely on those data, it may look to:
(i) the actual amounts incurred and realized by the specific exporter or
producer being examined in the investigation or review for selling,
general, and administrative expenses, and for profits, in connection
with the production and sale, for consumption in the foreign country,
of merchandise that is in the same general category of products as the
subject merchandise,
(ii) the weighted average of the actual amounts incurred and realized
by exporters or producers that are subject to the investigation or review
(other than the exporter or producer described in clause (i)) for selling,
general, and administrative expenses, and for profits, in connection
with the production and sale of a foreign like product, in the ordinary
course of trade, for consumption in the foreign country, or
(iii) the amounts incurred and realized for selling, general, and
administrative expenses, and for profits, based on any other reasonable
method, except that the amount allowed for profit may not exceed the
amount normally realized by exporters or producers (other than the
exporter or producer described in clause (i)) in connection with the sale,
Consol. Court No. 22-00138 Page 11
for consumption in the foreign country, of merchandise that is in the
same general category of products as the subject merchandise.
Id. § 1677b(e)(2)(B).
Commerce must also calculate export price or constructed export price.
Export price is:
the price at which the subject merchandise is first sold (or agreed to be
sold) before the date of importation by the producer or exporter of the
subject merchandise outside of the United States to an unaffiliated
purchaser in the United States or to an unaffiliated purchaser for
exportation to the United States, [subject to certain adjustments].
Id. § 1677a(a). Constructed export price is:
the price at which the subject merchandise is first sold (or agreed to be
sold) in the United States before or after the date of importation by or
for the account of the producer or exporter of such merchandise or by a
seller affiliated with the producer or exporter, to a purchaser not
affiliated with the producer or exporter, [subject to certain
adjustments].
Id. § 1677a(b). The price used to calculate export price and constructed export
price is reduced by commissions, selling expenses, further manufacturing
expenses, and the profit allocated to these expenses. Id. § 1677a(d).
DISCUSSION
I. Business Proprietary Information
In calculating Plaintiff’s dumping margin, Commerce used SeAH’s business
proprietary information concerning third-country sales. Final IDM at 37. Plaintiff
contends that Commerce’s reliance on SeAH’s business proprietary information
Consol. Court No. 22-00138 Page 12
prevented Hyundai Steel from presenting effective arguments during the
administrative proceedings because Plaintiff’s business representatives were
unable to review the proprietary data considered by Commerce. Pl.’s Br. at 18–20.
Plaintiff concedes that its counsel had access to SeAH’s business proprietary
information under an administrative protective order, but argues that Plaintiff’s
business executives, not its counsel, were best situated to confirm “that the data
being used to calculate the [constructed value] profit and selling expense ratios
were complete, accurate, reasonable, representative, or reliable.” Id. at 19.
Plaintiff asserts that “the margin calculation methodologies used by Commerce in
any proceeding should not differ or be dependent on whether a respondent is
represented by counsel.” Id.
Defendant argues that Commerce is not prohibited by statute or regulation
from considering business proprietary information. Def.’s Resp. at 17. Defendant
also contends that the administrative protective order system provides parties to an
administrative proceeding with an opportunity to access protected information
through counsel and experts while protecting the interests of the business
proprietary information’s owners. Id.
Commerce’s regulations provide for documents to be filed in both “business
proprietary” and “public” versions. 19 C.F.R. §§ 351.303(b), 351.304. Business
proprietary information may be made available only to individuals authorized to
Consol. Court No. 22-00138 Page 13
review submissions under an administrative protective order, such as counsel and
experts. Id. §§ 351.303(b)(4), 351.304(a)–(b). The public version includes
redactions of information designated as business proprietary. Id.
§§ 351.303(b)(4)(iv), 351.304(c). This system allows a party access to another
party’s business proprietary information while limiting the risk of unnecessary
disclosure to a business competitor.
During the administrative proceeding, SeAH’s business proprietary
information was subject to an administrative protective order. See Final IDM at
37. Plaintiff argues that the public versions of Commerce’s preliminary
constructed value profit memorandum and preliminary analysis memorandum for
SeAH did not provide sufficient detail for Plaintiff’s review. Pl.’s Br. at 18–19.
Plaintiff’s counsel and consultants received access to SeAH’s business proprietary
information through the administrative protective order. Final IDM at 37; Admin.
Protective Order Service List at 6, PR 321; see also Pl.’s Br. at 19. There exists no
statutory or regulatory requirement that Commerce allow a party access to business
proprietary information other than through counsel or that Commerce limit its use
of business proprietary information to only information reviewed by opposing
parties. Imposing such a requirement would negate the purpose of the
administrative protective order system and would hinder the ability of Commerce
to perform its statutory directive while protecting proprietary information from
Consol. Court No. 22-00138 Page 14
business competitors. Plaintiff was not impaired in its ability to present its
arguments before the administrative agency by its internal business representatives
not having access to the business proprietary information because Plaintiff’s
counsel and consultants were able to review and use the relevant information.
Therefore, Commerce’s use of SeAH’s business proprietary information was not
arbitrary and was in accordance with law.
II. Third-Country Sales Data
In the Final Results, Commerce used SeAH’s third-country market sales data
of OCTG to Kuwait during the Period of Review to calculate Plaintiff’s
constructed value profit and selling expenses and constructed export price profits.
Final IDM at 39–40, 47. Commerce also used SeAH’s third-country sales data as
the “facts available” profit cap. Id. at 42–43.
Plaintiff asserts multiple challenges to the use of SeAH’s third-country
market data. Specifically, Plaintiff argues that in adopting SeAH’s third-country
sales data for calculating constructed value, Commerce incorrectly read into the
applicable statute a preference that constructed value profit should reflect
production and sales of “foreign like products” and unreasonably used data that did
not represent Plaintiff’s actual experience during the Period of Review. Pl.’s Br. at
8, 11–17. Plaintiff argues that Commerce’s use of SeAH’s data “as a reasonable
profit cap on a facts available basis” was inconsistent with the statutory objective
Consol. Court No. 22-00138 Page 15
to identify a profit cap that best reflects a respondent’s profit on sales in the foreign
country. Id. at 20–29 (quoting Final IDM at 43). Plaintiff also challenges the use
of SeAH’s third-country data in Commerce’s calculation of constructed export
price profit as inconsistent with applicable statutory requirements and based on a
misunderstanding of record evidence. Id. at 29–35.
Defendant requests that the Court remand the issue of constructed export
price profit to allow Commerce an opportunity to reexamine the administrative
record. Def.’s Resp. at 32–34.
The Court has considerable discretion in deciding whether to grant a request
for remand by the Government. See SKF USA Inc. v. United States, 254 F.3d
1022, 1029 (Fed. Cir. 2001); Home Prods. Int’l, Inc. v. United States, 633 F.3d
1369, 1378 (Fed. Cir. 2011). If the agency’s concern is substantial and legitimate,
a remand may be appropriate. SKF USA Inc., 254 F.3d at 1029. This Court has
concluded that an agency’s concerns are substantial and legitimate if: (1) the
agency has provided a compelling justification for its remand request, (2) the need
for finality does not outweigh the agency’s justification, and (3) the scope of the
remand request is appropriate. See, e.g., Sea Shepherd N.Z. v. United States, 44
CIT __, __, 469 F. Supp. 3d 1330, 1335–36 (2020) (internal quotations omitted)
(citing Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United
States, 29 CIT 1516, 1522–26, 412 F. Supp. 2d 1330, 1336–39 (2005)).
Consol. Court No. 22-00138 Page 16
Defendant requests remand to resolve what it characterizes as “a substantial
and legitimate concern in reaching an accurate determination.” Def.’s Resp. at 34.
Remand of Commerce’s determination regarding the calculation of constructed
export price will allow Commerce to reassess its use of SeAH’s third-country data
in the context of constructed value and the profit cap. Commerce has an obligation
to calculate dumping margins as accurately as possible. See Rhone Poulenc, Inc.
v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990). The Court concludes that
Defendant has provided a compelling justification for its remand request, the need
for finality does not outweigh the agency’s justification, and the scope of
Defendant’s remand request is appropriate. The Court remands the calculations of
constructed value, constructed value profit cap, and constructed export price to
allow Commerce an opportunity to reconsider the issues and reexamine the
administrative record.
III. General and Administrative Expense Ratio
In the Final Results, Commerce adjusted Hyundai Steel’s reported general
and administrative expenses for Hyundai Steel’s affiliate Hyundai Steel USA to
account for the cost of rejected pipe sold to unaffiliated customers. Final IDM at
52–55; see also Commerce’s Final Antidumping Analysis Hyundai Steel Mem. at
Att. 1, PR 306. Plaintiff argues that Commerce’s general and administrative
expense ratio adjustment was unsupported by record evidence, which demonstrated
Consol. Court No. 22-00138 Page 17
that the rejected pipes related to Hyundai Steel USA’s production operations as a
type of non-subject product and that Plaintiff calculated its proposed general and
administrative expense ratio in accordance with Hyundai Steel USA’s normal
accounting practices. Pl.’s Br. at 35–37. Defendant contends that Commerce’s
adjustment was reasonable. Def.’s Resp. at 27–30.
In calculating costs as part of constructed value, “Commerce must include
selling, general, and administrative expenses.” Mid Continent Steel & Wire, Inc.
v. United States, 41 CIT __, __, 273 F. Supp. 3d 1161, 1166 (2017) (citing 19
U.S.C. § 1677b(e)(2)). General and administrative expenses are not defined in the
statute, but “are generally understood to mean expenses which relate to the
activities of the company as a whole rather than to the production process.” Id.
(internal quotations and citation omitted). “[T]he numerator of the [general and
administrative] expense ratio is the respondent’s expenses attributable to general
operations of the company and the denominator is the respondent’s company-wide
[cost of goods sold].” Id. Commerce is afforded “significant deference” in the
calculation of general and administrative expenses because “it is a determination
‘involv[ing] complex economic and accounting decisions of a technical nature.’”
Id. (quoting Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1039 (Fed. Cir.
1996)).
Consol. Court No. 22-00138 Page 18
In the Final Results, Commerce adjusted Hyundai Steel’s reported general
and administrative expense ratio for Hyundai Steel USA by increasing the
numerator and decreasing the denominator to account for the cost of pipes rejected
by Hyundai Steel USA and sold to a non-affiliated company for processing into
scrap. Final IDM at 52; Commerce’s Final Antidumping Analysis Hyundai Steel
Mem. at Att. 1. Commerce determined that the scrap material was “a type of non-
subject product that [Hyundai Steel USA] produced from imported OCTG and sold
during the [Period of Review].” Final IDM at 52. The scrap entered the United
States as prime merchandise but was rejected because of damage identified during
inspections performed before or after processing. Id.; see Pl.’s Section E Resp.
(Feb. 25, 2021) at E-9, PR 82; Pl.’s Supp. Section E Resp. (Sept. 3, 2021) at SE-2,
PR 237. The rejected pipes were collected by Hyundai Steel USA over several
months and were sold only as scrap. Final IDM at 52; see Pl.’s Supp. Section E
Resp. at SE-2; Pl.’s Admin. Rebuttal Br. (Nov. 22, 2021) at 27, PR 291.
Commerce determined that the scrap derived from rejected OCTG pipes was
not sold as a distinct product and “that [Hyundai Steel USA’s] classification of the
scrap as a type of non-subject product [did] not reasonably reflect the production
costs of the merchandise under consideration or the other products included within
[cost of goods sold].” Final IDM at 52–53. Commerce also determined that:
Consol. Court No. 22-00138 Page 19
The costs associated with the rejected pipes were necessarily covered
by [Hyundai Steel USA] generally; that is, by all the other products
[Hyundai Steel USA] further manufactured and sold. Therefore,
consistent with the Preliminary Results, we have continued to revise
[Hyundai Steel USA’s general and administrative] [e]xpense ratio
calculation to include in the numerator the [cost of goods sold] of
rejected pipes sold to an unaffiliated customer for complete processing
into scrap metal ([“Scrap cost of goods sold”]) and exclude from the
denominator the “Scrap [cost of goods sold]” amount. However, we
have reduced the “Scrap [cost of goods sold]” amount by the scrap
sales revenue and the cost of pipes rejected during further
manufacturing for these final results.
Id. at 53.
Plaintiff argues that Commerce’s methodology is unsupported because it
ignores that Hyundai Steel USA is a manufacturing entity, despite using other
parties to perform all actual manufacturing. Pl.’s Br. at 37. Plaintiff asserts that as
a manufacturing entity, Hyundai Steel USA generated scrap that was a production
cost of merchandise included in Hyundai Steel USA’s cost of goods sold and not a
general cost. Id. It is Plaintiff’s position that because of the specialized nature of
prime OCTG, once a defect was identified and the pipe was no longer suitable for
its specialized purpose, the rejected pipe ceased to be OCTG and was transformed
into non-subject merchandise. Pl.’s Reply at 16; see Pl.’s Section D Resp. (Feb.
22, 2021) at D-26–D-27, PR 81. Plaintiff contends that though the rejected pipe
was not suitable as prime OCTG, it was theoretically usable in other applications
as non-prime merchandise. Pl.’s Reply at 17. Plaintiff argues that the decision of
Consol. Court No. 22-00138 Page 20
the purchaser to use the rejected pipe as scrap should not impact how Hyundai
Steel considered the materials in its internal records. Id.; see Pl.’s Supp. Section E
Resp. at SE-3.
The Court observes that the record supports Commerce’s determination that
Hyundai Steel USA did not sell the rejected pipe as anything other than scrap. See
Pl.’s Section E Resp. at E-9; Pl.’s Supp. Section E Resp. at SE-2; Pl.’s Admin.
Rebuttal Br. at 27. Commerce determined that Hyundai Steel USA functioned as a
selling entity for OCTG during the Period of Review and contracted with the
unaffiliated processors to perform certain processing on imported OCTG before
the goods were sold to customers. Final IDM at 53. The rejected pipes entered the
United States as prime OCTG, but because of discovered defects, were instead sold
as scrap. Id. at 52. As Commerce noted, the record evidence reflects only that the
rejected pipes were sold for processing into scrap metal and does not demonstrate
that Plaintiff sold any rejected pipes as non-subject merchandise. Id. at 52–53; see
Pl.’s Supp. Section E Resp. at SE-2; Pl.’s Admin. Rebuttal Br. at 27–28. The
Court concludes that Commerce’s determinations that the rejected pipe was not a
distinct non-subject product and that the cost associated with the rejected pipe was
covered generally by Hyundai Steel USA were reasonable and supported by
substantial evidence. The Court sustains Commerce’s adjustment to the general
and administrative expense ratio.
Consol. Court No. 22-00138 Page 21
IV. Further Manufacturing Yield Loss
Pursuant to 19 U.S.C. § 1677e(a)(1), Commerce applied a neutral facts
otherwise available adjustment to Hyundai Steel USA’s reported further
manufacturing costs to account for Hyundai Steel USA’s yield loss based on the
costs of rejected pipes. Final IDM at 65–66. Plaintiff argues that Commerce’s use
of facts otherwise available is contradicted by record evidence demonstrating that
Plaintiff reported pre-unit manufacturing costs based on manufacturing fees
divided by theoretical weight. Pl.’s Br. at 38. Plaintiff contends further that
because yield costs were already reflected in its reported data, Commerce’s
adjustment distorted the actual costs of production. Id. at 40–41. Defendant
argues that Commerce did not err in applying an adjustment for further
manufacturing yield loss because Plaintiff’s reported values did not account for the
value of scrap materials. Def.’s Resp. at 30–32.
Commerce summarized Plaintiff’s explanation of yield loss during
Plaintiff’s further manufacturing process as:
In its [Section E Questionnaire Response], regarding yield loss,
Hyundai Steel explained that [Hyundai Steel USA] pays processors to
heat-treat, upset, and/or thread imported OCTG, which is the only
processing performed on the imported OCTG in the United States prior
to sale to the first unaffiliated customer. Thus, Hyundai Steel stated
that [Hyundai Steel USA] does not incur actual costs for yield loss, and
it is not claiming a scrap offset.
Consol. Court No. 22-00138 Page 22
Further, Hyundai Steel explained that the calculation of [Hyundai Steel
USA’s] reported processing cost per [metric ton] was based on the
product-specific amounts for: (1) the total fees paid to the processors
that related to sales of the processed product during the [Period of
Review]; and (2) the total quantities actually invoiced to unaffiliated
customers for sales of the processed product during the [Period of
Review]. According to Hyundai Steel, the allocation of the total fees
paid by [Hyundai Steel USA] for the processed products that were sold
during the [Period of Review] over the total actual quantity of sales of
processed products during the period automatically captures all of the
“yield losses” that might arise from differences between the quantities
that the processor reported processing and the quantities that [Hyundai
Steel USA] actually delivered to customers.
Final IDM at 65–66. In the Supplemental Section E Questionnaire, Commerce
directed Plaintiff to provide an explanation for how any yield loss that was
incurred on entered pipe was accounted for as part of further manufacturing
expenses or any other variable. See Pl.’s Supp. Section E Resp. at SE-4. Plaintiff
responded:
Hyundai Steel did not account for yield loss for [U.S. further
manufacturing expenses] given the nature of the processing and
accounting. In the ordinary course of business, [Hyundai Steel USA]
does not manage the actual length and actual quantity of subject
merchandise when it is imported into the United States. Also, the
outside processors do not provide information regarding actual lengths
and actual quantities before processing. In any event, the costs
incurred, recorded, and reported to the Department are yielded costs
since the costs incurred were based on the theoretical sizes.
Id. at SE-4–SE-5. Commerce determined that Plaintiff “did not fully explain
whether the scrap generated during the further manufacturing processes is kept by
the processors or returned to [Hyundai Steel USA]; nor did it explain how the
Consol. Court No. 22-00138 Page 23
value of the generated scrap is reflected in the invoices received from its
processors.” Final IDM at 66. Because this information was not on the record,
Commerce applied neutral facts available to adjust Plaintiff’s reported further
manufacturing costs to account for yield loss based on the cost of rejected pipes as
a percentage of the total Period of Review further manufacturing costs. Id.
When Commerce determines that necessary information is missing from the
administrative record, it must rely on facts otherwise available to fill in the gap in
the record. 19 U.S.C. § 1677e(a). Commerce may apply facts available in two
circumstances. First, Commerce may apply neutral facts available when
information is absent from the administrative record, regardless of the reason for
the absence. Id. § 1677e(a)(1). Second, Commerce may apply adverse facts
available when a party’s act or omission negatively impacts the administrative
record or impedes the proceeding. Id. § 1677e(a)(2). In this case, Commerce
determined that the information missing from the record did not necessarily result
from Plaintiff’s inadequate record-keeping or failure to cooperate to the best of its
ability. Final IDM at 66.
Plaintiff argues that Commerce’s determination to use neutral facts available
was contradicted by evidence on the record that demonstrated that Plaintiff
accounted for further manufacturing yield loss. Pl.’s Br. at 38–39. Plaintiff
contends that because it reported theoretical weight for products at the time of
Consol. Court No. 22-00138 Page 24
importation prior to further manufacturing, theoretical weights and further
manufacturing costs were not affected by subsequent yield losses during the further
manufacturing process. Id. at 39–40. Plaintiff also argues that in making an
adjustment to Plaintiff’s reported further manufacturing yield loss, Commerce
introduced inaccuracy and added a processing fee that was not actually incurred.
Id. at 40.
The Court agrees with Commerce’s determination that Plaintiff’s argument
does not address Commerce’s reason for using neutral facts available and adjusting
the reported further manufacturing yield loss. Commerce cited evidence showing
that Hyundai Steel USA contracted with third-parties to perform further processing
on imported pipes. Final IDM at 65; Pl.’s Section E Resp. at E-6. Commerce
determined that the record did not explain how scrap generated through this further
processing impacted the fees related to the further manufacturing process. Final
IDM at 66. Commerce determined that Plaintiff’s use of theoretical weights at the
time of import did not eliminate the need for Plaintiff to account for the value of
pipe lost during further processing. Id. The Court concludes that Commerce’s use
of neutral facts available was reasonable and supported by the record. The Court
sustains Commerce’s adjustment to Plaintiff’s reported further manufacturing yield
loss.
Consol. Court No. 22-00138 Page 25
V. Separate Rate for Non-Examined Companies
Consolidated Plaintiff AJU Besteel argues that if the weighted-average
dumping margin for Plaintiff is recalculated, the Court should also require
Commerce to revise the separate weighted-average dumping margin assigned to
respondents that were non-examined companies. AJU Besteel’s Br. at 7–8. The
separate rate is “the weighted average of the estimated weighted average dumping
margins established for exporters and producers individually investigated,
excluding any zero and de minimis margins, and any margins determined entirely
under [19 U.S.C. § 1677e].” 19 U.S.C. § 1673d(c)(5)(A). Because the separate
rate is based on the rates calculated for Plaintiff and SeAH, any change to
Plaintiff’s individual weighted-average dumping margin on remand will impact the
rate assigned to non-examined companies. The Court remands the separate rate
calculation for further consideration, if needed, depending on Commerce’s
determination regarding Plaintiff’s weighted-average dumping margin calculation
on remand.
VI. NEXTEEL’s Ability to Receive Relief
Defendant-Intervenors argue that NEXTEEL should not be allowed to obtain
relief through this case because NEXTEEL failed to raise its arguments before
Commerce. Def.-Intervs.’ Resp. at 18–20. NEXTEEL counters that it is not
precluded from seeking relief in this case because the issues on appeal were raised
Consol. Court No. 22-00138 Page 26
before Commerce by other parties and that it is entitled to relief as a party with
standing. NEXTEEL’s Reply at 1–7.
A party is generally prohibited from raising arguments with the Court that
were not first raised with the administrative agency. See Rhone Poulenc, Inc., 899
F.2d at 1191; Dillinger France S.A. v. United States, 42 CIT __, __, 350 F. Supp.
3d 1349, 1371–72 (2018); see also 28 U.S.C. § 2637(d) (“In any civil action not
specified in this section, the Court of International Trade shall, where appropriate,
require the exhaustion of administrative remedies.”). Commerce’s regulations
specifically require that a party raise all arguments in a timely manner before the
agency. Corus Staal BV v. United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007)
(citing 19 C.F.R. § 351.309(c)(2)). “[G]eneral policies underlying the exhaustion
requirement—protecting administrative agency authority and promoting judicial
efficiency”—would be vitiated if the court were to consider arguments raised for
the first time in judicial proceedings. See id. (internal quotation and citation
omitted); see also Icdas Celik Enerji Tersane ve Ulasim Sanayi, A.S. v. United
States, 41 CIT __, __, 277 F. Supp. 3d 1346, 1353 (2017). The Court has
recognized limited exceptions to the exhaustion requirement. See Luoyang
Bearing Factory v. United States, 26 CIT 1156, 1186 n.26, 240 F. Supp. 2d 1268,
1297 n.26 (2002) (listing common exceptions and citing authorities). The Court
has previously excused a party’s failure to raise an argument before the agency
Consol. Court No. 22-00138 Page 27
when “the issue was raised by another party, or if it is clear that the agency had an
opportunity to consider it.” Holmes Prod. Corp. v. United States, 16 CIT 1101,
1104 (1992); see also Natural Res. Def. Council, Inc. v. U.S.E.P.A., 824 F.2d
1146, 1151 (D.C. Cir. 1987) (“[C]ourts have waived exhaustion if the agency has
had an opportunity to consider the identical issues presented to the court . . . but
which were raised by other parties, or if the agency’s decision, or a dissenting
opinion, indicates that the agency had the opportunity to consider the very
argument pressed by the petitioner on judicial review.” (internal quotations and
citations omitted)).
During the administrative proceeding, NEXTEEL submitted a letter in
support of and incorporating by reference the arguments of Plaintiff and SeAH.
NEXTEEL’s Letter Supp. Respondents’ Rebuttal Br. at 3, PR 289. The arguments
against Commerce’s calculation of constructed value, profit cap, and constructed
export price raised before this Court were raised by Plaintiff in the administrative
proceeding. See Pl.’s Admin. Case Br., PR 281. NEXTEEL is not precluded from
receiving relief in this case because Commerce was on notice of the arguments
raised in this appeal during the administrative proceeding, NEXTEEL participated
Consol. Court No. 22-00138 Page 28
in the administrative proceedings as a non-mandatory respondent, and NEXTEEL
expressed its position with regard to the arguments raised by Plaintiff and SeAH.2
CONCLUSION
In summary, the Court remands Commerce’s constructed value, constructed
value profit cap, and constructed export price profit calculations and Commerce’s
calculation of the weighted-average dumping margin applicable to non-examined
companies. The Court sustains Commerce’s adjustment to Hyundai Steel USA’s
general and administrative expense ratio, adjustment to Hyundai Steel’s reported
further manufacturing yield loss, and use of SeAH’s business proprietary
information. The Court concludes that NEXTEEL is not precluded from pursuing
its claims for relief in this case.
Accordingly, it is hereby
ORDERED that the Final Results are remanded to Commerce for further
proceedings consistent with this opinion; and it is further
ORDERED that this action shall proceed according to the following
schedule:
2
Even though the Court concludes that NEXTEEL’s attempt to incorporate the
arguments of other parties was sufficient to satisfy the exhaustion requirement in
this case, the Court cautions the Parties to articulate their administrative arguments
clearly in order to avoid similar disputes in the future.
Consol. Court No. 22-00138 Page 29
1. Commerce shall file the remand determination on or before August 15,
2023;
2. Commerce shall file the remand administrative record index on or before
August 29, 2023;
3. Comments in opposition to the remand determination shall be filed on or
before September 12, 2023;
4. Comments in support of the remand determination shall be filed on or
before September 26, 2023;
5. The joint appendix shall be filed on or before October 10, 2023.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: June 9, 2023
New York, New York