Mid Continent Steel & Wire, Inc. v. United States

Slip Op. 17-
UNITED STATES COURT OF INTERNATIONAL TRADE
OPINION
[Defendant-Intervenor’s motion for judgment on the agency record is denied; the final results of
redetermination pursuant to court order of the United States Department of Commerce is
sustained.]
Dated:
Adam H. Gordon, The Bristol Group PLLC, of Washington, D.C., argued for plaintiff.
With him on the brief was Ping Gong.
Mikki Cottet, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., argued for defendant. With her on the brief were
Benjamin C. Mizer, Principle Deputy Assistant Attorney General, Jeanne E. Davidson, Director,
and Patricia M. McCarthy, Assistant Director.
Michael P. House and David J. Townsend, Perkins Coie LLP, of Washington, D.C.,
argued for defendant-intervenor. With them on the brief was David S. Christy, Jr.
Goldberg, Senior Judge: This matter returns to the court following a remand of the final
determination of the U.S. Department of Commerce (“Commerce” or “the Department”) in its
MID CONTINENT STEEL & WIRE, INC.,
Plaintiff,
v.
UNITED STATES,
Defendant,
v.
OMAN FASTENERS, LLC
Defendant-Intervenor.
Before: Richard W. Goldberg, Senior Judge
Consolidated Court No. 15-00214
PUBLIC VERSION
/PWFNCFS 
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antidumping investigation of certain steel nails from the Sultanate of Oman. On May 23, 2017,
Commerce filed its Final Results of Redetermination Pursuant to Court Order, ECF No. 95
(“Remand Redetermination”). The prior opinion of this court more completely sets forth the
facts underlying this matter. See Mid Continent Steel & Wire, Inc. v. United States, 41 CIT __,
203 F. Supp. 3d 1295 (2017) (“Mid Continent I”). The court presumes familiarity with that
opinion and repeats only the facts critical to the disposition of this matter. For the reasons
below, the court sustains the determinations in Commerce’s Remand Redetermination.
BACKGROUND
In June of 2014, Commerce initiated an antidumping duty investigation on steel nails
from the Sultanate of Oman (“Oman”). Certain Steel Nails from India, the Republic of Korea,
Malaysia, the Sultanate of Oman, Taiwan, the Republic of Turkey, and the Socialist Republic of
Vietnam, 79 Fed. Reg. 36,019 (Dep’t Commerce June 25, 2014) (initiation). Commerce selected
Defendant-Intervenor, Oman Fasteners, LLC (“Oman Fasteners”) as the mandatory respondent.
Antidumping Duty Investigation of Certain Nails from the Sultanate of Oman Resp’t Selection,
P.R. 51 (July 28, 2014).
On December 29, 2014, Commerce issued its preliminary determination of sales at less
than fair value. Certain Steel Nails from the Sultanate of Oman, 79 Fed. Reg. 78,034 (Dep’t
Commerce Dec. 29, 2014) (prelim. determ.) and accompanying Issues and Decision
memorandum, P.R. 150 (Dec. 17, 2014).
On May 20, 2015 Commerce issued its final determination. Certain Steel Nails from the
Sultanate of Oman, 80 Fed. Reg. 28,972 (Dep’t Commerce May 20, 2015) (final determ.) (“Final
Determination”) and accompanying Issues and Decision memorandum (“I&D Mem.”), P.R.
218–220 (May 13, 2015). In the Final Determination, among other decisions, Commerce
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determined it could only calculate constructed value (“CV”) profit using the “any other
reasonable method” alternative provided for in 19 U.S.C. § 1677b(e)(2)(B)(iii). See I&D Mem.
14. Applying its chosen method, Commerce declined to use Oman Fastener’s preferred CV
profit rate data, opting instead to use the financial statements of a Thai company, Hitech. Id. at
12. Commerce also determined that the record contained insufficient data with which to
calculate a “profit cap.” Id. at 18–19.
Oman Fasteners and Plaintiff, Mid Continent Steel & Wire, Inc., separately challenged
certain determinations in the Final Determination and each moved for judgment on the agency
record under USCIT Rule 56.2. Br. of Oman Fasteners, LLC in Supp. of Mot. for J. upon the
Agency R., ECF No. 30 (“Oman Fast. 56.2 Br.”); Br. In Supp. of Rule 56.2 Mot. for J. upon the
Agency R. of Mid Continent Steel & Wire, Inc. 19–20, ECF No. 26-1. Specifically, Oman
Fasteners argued that Commerce erred when it (i) refused to use Oman Fastener’s own home-
market sales of steel nails to calculate the CV profit of the steel nails, (ii) relied on third-country
profit data of comparable products instead of home-market profit data to calculate CV profit, (iii)
rejected the partially translated financial statement of L.S. Industry Co Ltd. (“LSI”), a Thai
producer of steel nails, and refused to allow Oman Fasteners to supplement the record with the
fully translated LSI statement, and (iv) refused to apply a profit cap to the CV profit rate. Oman
Fast. 56.2 Br. 9–11.
The court remanded issues (ii) and (iv) to Commerce. Mid Continent I, 41 CIT __, 203
F. Supp. 3d at 1308–11, 1314–17. Specifically, the court found that Commerce did “not
adequately explain why third-country data of comparable merchandise better represents Omani
sales of steel nails than home-market sales data from Omani steel producers.” Id. at 1310. The
court therefore ordered Commerce to either change its selection of profit data or provide a more
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thorough explanation of its reliance on third-country profit data. In addition, the court found that
Commerce failed to adequately explain why it could “not make use of ‘facts otherwise available’
in order to” calculate a profit cap. Id. at 1316. Thus, the court further ordered that, unless the
issue were rendered moot on remand, Commerce must provide a more thorough explanation for
any determinations concerning a profit cap. Id. The court sustained the remainder of the
contested determinations of Commerce. Id.
In its Remand Redetermination, Commerce continues to use third-country data to
calculate a CV profit rate. Remand Redetermination 4–11. And Commerce continues to
maintain that there is insufficient data with which to calculate a profit cap. Remand
Redetermination 11–14. Oman Fasteners challenges these decisions, insisting that “Commerce’s
redetermination fails to implement this Court’s instructions on remand and remains unsupported
by substantial evidence and contrary to law.” Comments of Oman Fasteners LLC in Opp. to the
Commerce Dep’t Remand Redetermination 1, ECF No. 100 (“Oman Fast. Cmts.”). However, as
explained below, Commerce provided reasonable, and more robust, explanations for these
decisions. Therefore, the court sustains the challenged determinations in Commerce’s Remand
Redetermination.
DISCUSSION
I. 	The Court Sustains Commerce’s Decision to Use the Hitech Financial
Statements to Calculate CV Profit Rate
Ideally, when selecting data to calculate CV profit under 19 U.S.C. § 1677b(e)(2)(B)(iii),
Commerce would use data that reflects all of the factors of the Pure Magnesium/CTVs from
Malaysia tests: similar business and products, sales in the respondent’s home market,
contemporaneity, and similar customer base. See Remand Redetermination 22 (citing Notice of
Final Determination of Sales at Less than Fair Value: Pure Magnesium from Israel, 66 Fed.
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Reg. 49,349 (Dep’t Commerce Sept. 27, 2001) (final determ.) and accompanying Issues and
Decision Memorandum cmt. 8; Notice of Final Determination of Sales at Not Less than Fair
Value: Certain Color Television Receivers from Malaysia, 69 Fed. Reg. 20,592 (Dep’t
Commerce Apr. 16, 2004) (final determ.) and accompanying Issues and Decision Memorandum
cmt. 26). However, the record does not always contain ideal surrogate data. Such is the case
here. In the Final Determination, Commerce stated that, in choosing from the financial
statements available on the record, “we first considered which of the proposed companies
produces products that are in the same general category of products as the subject
merchandise . . . .” I&D Mem. 15. As a result, Commerce eliminated certain financial
statements from companies with sales in Oman. However, Commerce did not explain why it
started with, and seemingly prioritized, financial statements reflecting the same general category
of products as the subject merchandise over those reflecting sales in the home market, albeit of
unrelated products.
In remanding this issue to Commerce, the court noted that “[t]he goal in calculating CV
profit is to approximate the home market profit experience of the respondents.” Mid Continent I,
41 CIT at __, 203 F. Supp. 3d at 1310 (quoting Husteel Co., Ltd., v. United States, 39 CIT __,
__, 98 F. Supp. 3d 1315, 1349 (2015)). The court also highlighted a handful of proceedings in
which Commerce appeared to have prioritized home market data over third-country data to
calculate CV profit. Id. In light of Commerce’s thin explanation for its choice of the Hitech
statements and in light of Commerce’s apparent practice in prior proceedings, the court
remanded for Commerce to select different financial statements or to provide a more thorough
explanation of its decision. Commerce elected for the latter option.
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In its Remand Redetermination, Commerce explains that two companies that produce
comparable products will share a number of similarities in their respective production
experiences. Remand Redetermination 4. For example, two companies producing similar
products can be expected to “consume the same or similar raw material inputs.” Id. And those
raw materials “would be subject to the same supply and demand conditions in the global
marketplace . . . .” Id. These two hypothetical companies, Commerce further explains, would
also likely use similar “plant facilities, machinery, and equipment,” subjecting the companies to
“similar levels of capital expenditures.” Id. at 5. Commerce noted a number of additional
expected commonalities shared by companies producing similar products. Id.
Commerce then applied its reasoning to Oman Fasteners, Hitech, and the companies with
sales in Oman. And in each case, Commerce persuasively demonstrated that Hitech is the
superior surrogate, despite the fact that it has no sales in Oman. For example, Commerce
explained that Oman Fasteners and Hitech would both be purchasing “drawn wire,” the raw
material input for Oman Fastener’s nails and Hitech’s screws, “in the same global marketplace,
subject to the same market conditions and the same pricing fluctuations.” Id. In contrast, the
companies with sales in Oman, whose financial statements Oman Fasteners prefers, would not
consume drawn wire as a raw material input, and would therefore likely be subject to different
global market fluctuations in the purchase of their raw material inputs. Thus, Commerce
reasonably concluded that “neither Al Jazeera nor Larsen & Toubro” would be comparable to
Oman Fasteners “in terms of inputs for the production process, company cost structure, use of
the produced product, and industry in which the produced product is sold . . . .” Id. at 16.
Importantly, Commerce also distinguished prior proceedings in which it has selected
home-market data over third-country data to calculate CV profit. Id. at 8–10. In those prior
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proceedings, Commerce did not prioritize home-market data per se. Rather, it prioritized the
data on the record that best reflected the respondent’s production experience. In many prior
proceedings, the best data happened to also reflect respondent’s home market. As Commerce
has now adequately explained, here, the best data is third-country data. In other words, data
reflecting home-market sales may ultimately fail to best “approximate the home market profit
experience of the respondents.” In such cases, selection of third-country data may constitute a
“reasonable method” of calculating CV profit under § 1677b(e)(2)(B)(iii).
Oman Fasteners makes a number of arguments in support of its position that Commerce’s
continued selection of the Hitech statements is unlawful. Oman Fast. Cmts. 6–26. The court
will address those arguments in turn.
First, Oman Fasteners argues that Commerce again ignored the statutory preference for
home market data and that Commerce is wrong in asserting that the statute places equal
importance on product comparability and home market sales. Specifically, Oman Fasteners
argues that “all three statutory alternatives [in 19 U.S.C. § 1677b(e)(2)(B)] explicitly ground the
measure of CV sources to the home market, while permitting the use of sources that do not
narrowly reflect the particular merchandise under investigation.” Oman Fast. Cmts. 8. In fact,
while the first two alternatives call for home market data, the third alternative does not require
that the selected data actually reflect home market sales. It only requires a “reasonable method”
of calculation, subject to a home market-based profit cap. 19 U.S.C. § 1677b(e)(2)(B)(iii). Of
course, when reliable data reflecting home market sales of a comparable product are available on
the record, selection of third-country data is less likely to constitute a “reasonable method.”
However, in light of the data available on the record of this proceeding, Commerce’s selection of
third-country data was not contrary to the statute.
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Oman Fasteners also argues that, even if the statute gives equal weight to product
comparability and home market sales, Commerce’s methodology in its Remand Redetermination
in fact reflects an unlawful preference for product comparability over home market sales. In
support, Oman Fasteners points out that in the Remand Redetermination, as in the Final
Determination, Commerce explained that it “first consider[ed] whether each of the proposed
companies produces products that are in the same general category of products as the subject
merchandise . . . .” Oman Fast. Cmts. 10 (quoting Remand Redetermination 4).
However, in light of Commerce’s explanation concerning the specific data available to it
on the record, the issue of prioritization is academic. The data from Omani companies appears to
have little to no relationship to the subject merchandise. Regardless of the order of factors
applied, the Hitech statements could emerge as the best available data on the record. 1
Ultimately, Commerce marshalled substantial evidence and a reasoned explanation for its
determination that the Hitech statements are the best among imperfect choices on the record for
the purpose of calculating CV profit. Accordingly, the court sustains Commerce’s
determination.
1 	Oman Fasteners also insists that Commerce gave insufficient weight to the possibility
that the Hitech data is tainted by subsidies. Oman Fast. Cmts. 18–19. However, Commerce
thoroughly and reasonably explained that its use of the Hitech statements here (i) in fact accounts
for, and offsets, any countervailing subsidies and (ii) is in accordance with well-established past
practice. See Def.’s Resp. to Comments on the Remand Redetermination 23, ECF No. 101.
Additionally, the court does not agree with Oman Fasteners that Commerce’s selection of
data was made pursuant to a new methodology. See Oman Fast. Cmts. 23–26. Although
Commerce previously failed to fully explain the methodology applied here, the Remand
Redetermination makes clear that there is ultimately nothing novel about Commerce’s selection
of the Hitech statements. Therefore, the court does not find that Oman Fasteners is entitled to a
remand to supplement the record.
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II. 	The Court Sustains Commerce’s Decision Not to Calculate a Profit Cap
As explained above, Commerce calculated the CV profit under 19 U.S.C. §
1677b(e)(2)(B)(iii), which allows Commerce to calculate CV profit using “any other reasonable
method.” However, this provision specifies that “the amount allowed for profit may not exceed
the amount normally realized by exporters or producers (other than [Oman Fasteners]) in
connection with the sale, for consumption in the foreign country, of merchandise that is in the
same general category of products as the subject merchandise . . . .” 19 U.S.C. §
1677b(e)(2)(B)(iii). This profit cap “serves to prevent the various possible calculation methods
from yielding anomalous results that stray beyond the amount normally realized from sales of
merchandise in the same general category.” Atar S.R.L. v. United States, 730 F.3d 1320, 1327
(Fed. Cir. 2013) (citation and internal quotation marks omitted).
In the Final Determination, Commerce declined to calculate and apply a profit cap,
explaining that:
[T]he SAA makes clear that the Department may calculate CV profit without a
profit cap, particularly, as is the case here, where there is no viable domestic market
in the exporting country for merchandise that is in the same general category of
products as the subject merchandise.
I&D Mem. 18.
The court remanded, explaining that, while Commerce “may decline to calculate a profit
cap, it may do so only when it offers a thorough explanation as to why the available data
prevents such a calculation.” Mid Continent I, 41 CIT at __, 203 F. Supp. 3d at 1315 (citing
Husteel Co., 39 CIT at __, 98 F. Supp. 3d at 1348). Specifically, Commerce had failed to
explain why it did not at least attempt to make use of “facts otherwise available” to calculate a
profit cap. Mid Continent I, 41 CIT at __, 203 F. Supp. 3d at 1316 (citation omitted).
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In its Remand Redetermination, Commerce explains that, in accordance with the court’s
direction, it “further examined the evidence presented by all parties to determine whether there is
any source on the record of this proceeding to serve as a suitable facts available profit cap.”
Remand Redetermination 11. Like CV profit, an ideal profit cap reflects home market sales “of
merchandise that is in the same general category of products as the subject merchandise.” 19
U.S.C. § 1667b(e)(2)(B)(iii). For essentially the same reasons that Commerce selected the
Hitech financial statements to calculate CV profit, Commerce continues to find no suitable data
on the record to “cap” the Hitech profit rate.
Although Hitech’s profit rate does not reflect sales in Oman Fasteners’ home market,
Commerce explains that there is no reason to believe that the home market data on the record
would fulfil the purpose of the statutory profit cap. For its part, Oman Fastener’s argues that
Commerce should have used profit rates from (1) the Steel Nails from China proceedings, (2) Al
Jazeera and Larsen & Toubro, or (3) Oman Fasteners’ home market sales of steel nails, to
calculate a profit cap. Oman Fast. Cmts. 27. As discussed above, supra Section I, and in the
court’s previous opinion, Mid Continent I, 41 CIT at __, 203 F. Supp. 3d at 1307–11,
deficiencies rendered these data unreliable as a source of CV profit. As Commerce has now
adequately explained, these same deficiencies also render these data unsuitable as “facts
otherwise available” for the purpose of calculating a profit cap.
To begin, the profit rate used in the administrative reviews of Steel Nails from China was
sourced, at least in part, from the financial statements of LSI. See, e.g., Certain Steel Nails from
the People's Republic of China, 79 Fed. Reg. 19,316 (Dep’t Commerce Apr. 8, 2014) (final
results)). Throughout this proceeding, Oman Fasteners has argued that Commerce’s rejection of
the LSI statements is unlawful and contrary to prior practice. See Oman Fast. 56.2 Br. 33; Oman
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Fast. Cmts. 27. However, as Commerce correctly notes, the court has already sustained
Commerce’s determination that the LSI’s financial statements are unreliable. See Remand
Redetermination 17 (citing Mid Continent I, 41 CIT at __, 203 F. Supp. 3d at 1311). This same
reasoning, by Commerce and the court, applies here with regard to the use of the LSI financial
statements and, by extension, the profit rate from Steel Nails from China, for the calculation of a
profit cap.
Nor is it unlawful for Commerce to reject data from Al Jazeera and Larsen & Toubro. As
Commerce explained in the context of CV profit, Al Jazeera and Larsen & Toubro’s respective
profit rates are unlikely to approximate the profit normally realized by producers in Oman
Fasteners’ line of business. See Remand Redetermination 12. The profit rates of Al Jazeera and
Larsen & Toubro may be subject to certain market conditions shared by all companies doing
business in Oman, and therefore may fluctuate in tandem with that of Oman Fasteners. But it
does not necessarily follow that these three companies will realize similar profit rates in an
absolute sense. In light of Commerce’s thorough explanation of Al Jazeera and Larsen &
Toubro’s respective production experiences, as compared to that of Oman Fasteners, Commerce
reasonably concluded that neither of these companies is a suitable source for a profit cap.
Finally, the court has already sustained Commerce’s determination that Oman Fasteners’
own home market sales are too small to be deemed reliable for the purposes of CV profit. See
Mid Continent I, 41 CIT at __, 203 F. Supp. 3d at 1307. The court agrees with Commerce that
the determinations underlying CV profit and the profit cap “largely track the same analysis.”
Remand Redetermination 35. On this basis, we sustain Commerce’s decision not to use Oman
Fastener’s own sales to calculate a profit cap.
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Oman Fasteners insists that a profit cap is required to ensure that CV profit is
representative of Oman Fasteners’ sales experience. Oman Fast. Cmts. 27. However, while the
record allows this inference, it does not require it. Oman Fasteners focuses on the disparity
between the CV profit rate sourced from the Hitech data and a handful of other profit rates on the
record. Id. at 30. But each of Oman Fastener’s comparators—LSI, Al Jazeera and Larsen &
Toubro, its own sales—has been reasonably discarded as unrepresentative or unreliable in this
proceeding. Consequently, the court can draw no inferences from the mere difference in profit
rates.
In sum, under certain circumstances, Commerce can decline to calculate a profit cap. See
Husteel Co., 39 CIT at __, 98 F. Supp. 3d at 1348. Here, Commerce reasonably explained, with
the support of substantial evidence, that “none of the other possible profit cap sources fulfill the
statute any better than no cap.” Remand Redetermination 14 (citation and internal quotation
marks omitted). The court therefore sustains Commerce’s decision to calculate no profit cap.
CONCLUSION
For the foregoing reasons, the court sustains Commerce’s final results of redetermination
pursuant to court order. Judgment will be entered accordingly.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated:
New York, New York
/PWFNCFS 
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