Downhole Pipe & Equip., LP v. United States

2013 CIT 134
United States Court of International Trade·Decided November 4, 2013·No. 11-00081·Published

Opinion

Slip Op. 13-

UNITED STATES COURT OF INTERNATIONAL TRADE

DOWNHOLE PIPE & EQUIPMENT, LP, : and DP-MASTER MANUFACTURING : CO., LTD., :

:

Plaintiffs, :

: Before: Nicholas Tsoucalas, v. : Senior Judge :

UNITED STATES, : Court No.: 11-00081 :

Defendant, :

:

and :

:

VAM DRILLING USA, TEXAS STEEL : CONVERSION, INC., ROTARY : DRILLING TOOLS, TMK IPSCO, and : U.S. STEEL CORP., :

:

Defendant-Intervenors. :

:

OPINION

[The Department of Commerce’s remand determination is sustained]

Dated:

Mark B. Lehnardt, Lehnardt & Lehnardt, LLC, of Liberty, MO, and Irene H. Chen, Chen Law Group LLC, of Rockville, MD, for plaintiffs.

Mikki Cottet, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on the brief was Nathaniel J. Halvorson, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Roger B. Schagrin and John W. Bohn, Schagrin Associates, of Washington, DC, for VAM Drilling USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, and TMK IPSCO.

TSOUCALAS, Senior Judge: This matter is before the court

following remand to the Department of Commerce (“Commerce”) in Downhole Pipe & Equip. LP v. United States, 36 CIT __, 887 F. Supp. 2d 1311 (2012) (“Downhole I”). Commerce issued its remand redetermination in May 2013. See Final Results of Redetermination Pursuant to Court Remand (May 13, 2013), ECF No. 94 (“Remand Results”). Plaintiffs Downhole Pipe & Equipment, LP, and DP-Master Manufacturing Co., Ltd. (“DP-Master” and, collectively, “Plaintiffs”), contest the Remand Results. For the reasons discussed below, the court sustains the Remand Results.

BACKGROUND

The relevant facts and procedural history of this case are set forth in Downhole I, 36 CIT at __, 887 F. Supp. 2d at 1315–18, and are summarized briefly herein. Drill pipes are “specialized high-strength iron alloy tube[s]” used in oil drilling applications alongside other so-called oil country tubular goods (“OCTG”). Id. at __, 887 F. Supp. 2d at 1315. In the original proceeding, Commerce determined that “drill pipe from the [People’s Republic of China (“PRC”)] is being, or is likely to be, sold in the United States at [less than fair value (“LTFV”)]”. Drill Pipe From the PRC: Final Determination of Sales at LTFV and Critical Circumstances, 76 Fed. Reg. 1966, 1966 (Jan. 11, 2011) (“Final Determination”).

The Final Determination specifically targeted drill pipe green tubes (“DPGT”), an input for drill pipe defined as “seamless

Court No. 11-00081 Page 3

tubes with an outer diameter of less than or equal to 6 5/8 inches[,] . . . containing between 0.16 and 0.75 percent molybdenum, and containing between 0.75 and 1.45 percent chromium.” Id. at 1967. Commerce determined the surrogate value for DPGT using import data for Indian Harmonized Tariff Schedule (“IHTS”) categories 7304.23 and 7304.29. See Drill Pipe from the PRC: Issues and Decision Memorandum for the Final Determination at 31–32 (Jan. 3, 2011), A-570-965.

In Downhole I, the Court remanded the Final Determination to Commerce with instructions to reconsider the surrogate values for DPGT and the labor wage rate.1 Downhole I, 36 CIT at __, 887 F. Supp. 2d at 1330. The Court held that Commerce failed to address Infodrive data contradicting its finding that DPGT entered India under IHTS 7304.23 and 7304.29 during the period of investigation. Id. at __, 887 F. Supp. 2d at 1324–25. The Court acknowledged that the IHTS subheadings may in fact be the best available information, but it could not affirm the Final Determination on the basis of the explanation Commerce provided. Id. at __, 887 F. Supp. 2d at 1325.

On remand, Commerce examined a number of potential

1 On remand, Commerce selected data from “Chapter 6A: Labor Cost in Manufacturing” in the ILO Yearbook for India as the surrogate value for the labor wage rate. Remand Results at 18. Plaintiffs do not allege error in their submission to the court. See Pls.’ Comments on Remand Redetermination (“Pls.’ Cmts.”).

surrogate values for DPGT, including: import data for IHTS 7304.23, 7304.29, and 7304.59; price data on P1110 and J/K 55 tubes from Metal Bulletin Research; and adjusted values for alloy steel billets and seamless tubes. See Draft Results of Redetermination Pursuant to Remand at 4 (Apr. 5, 2013), ECF No. 119-2 (“Draft Results”). Commerce initially selected price data for imports under IHTS 7304.59.10 and 7304.59.20, “circular, seamless, alloy” classifications covering “products which are not properly classified as drill pipe, OCTG, or a number of other clearly- delineated types of tubes.”2 Id. at 15. Commerce found that the IHTS 7304.59 data was most representative of DPGT, contemporaneous with the period of investigation, duty and tax exclusive, publicly available, and represented a broad market average. See id. at 15–16. Commerce “confirmed” its analysis with a National Import Specialist at United States Customs and Border Protection (“CPB”). Memorandum from Toni Datch, re: Remand Redetermination in the Investigation of Drill Pipe from the PRC at 1 (Mar. 26, 2013), A-570-965 (“NIS Memo”).

For the final results, Commerce selected import data from IHTS 7304.59.20 alone to value DPGT. See Remand Results at 14–18. Commerce concluded that Infodrive data Plaintiffs placed on the

2 IHTS 7304.59.10 and 7304.59.20 differ only in terms of the size of the tubes they cover: IHTS 7304.59.10 covers tubes with diameters up to 114.3 mm, while IHTS 7304.59.20 covers tubes with diameters between 114.3 mm and 219.1 mm. Remand Results at 5.

record conclusively demonstrated that DPGT did not enter India under IHTS 7304.59.10, but did not foreclose the possibility that DPGT entered under IHTS 7304.59.20. Id. at 14. Commerce continued to find that import data for IHTS 7304.59.20 best met its preferences for surrogate values. Id.

Plaintiffs filed comments alleging that the Remand Results were unsupported by substantial evidence and otherwise not in accordance with law. See Pls.’ Cmts. at 7–23. Plaintiffs ask the court to remand again with guidance on an acceptable range of surrogate values for DPGT. See id. at 23–25.

JURISDICTION and STANDARD OF REVIEW The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and section 516A(a)(2)(B)(i) of the Tariff Act of 1930,3 as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006).

The court will uphold Commerce’s remand redetermination unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). “‘Substantial evidence . . . means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’” Goldlink Indus. Co. v. United States, 30 CIT 616, 618, 431 F. Supp. 2d 1323, 1326 (2006) (quoting Universal

3 All further citations to the Tariff Act of 1930 are to the relevant provisions of Title 19 of the United States Code, 2006 edition, and all applicable supplements thereto.

Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951)). Under this standard, “an agency ‘must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.’” Gerber Food (Yunnan) Co. v. United States, 31 CIT 921, 926, 491 F. Supp. 2d 1326, 1333 (2007) (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983)). Nevertheless, “the possibility of drawing two inconsistent conclusions from the evidence does not invalidate Commerce’s conclusion as long as it remains supported by substantial evidence.” Zhaoqing New Zhongya Aluminum Co. v. United States, 36 CIT __, __, 887 F. Supp. 2d 1301, 1305 (2012) (citing Universal Camera, 340 U.S. at 488).

DISCUSSION

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