Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01225/USCOURTS-ca13-14-01225-0/pdf.json

Parties Involved:
DP-Master Manufacturing Co., Ltd.
Appellant
Downhole Pipe & Equipment, L.P.
Appellant
Rotary Drilling Tools
Appellee
TMK IPSCO
Appellee
Texas Steel Conversions
Appellee
United States
Appellee
United States Steel Corporation
Not party
VAM Drilling USA
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit

______________________ 

DOWNHOLE PIPE & EQUIPMENT, L.P., AND 

DP-MASTER MANUFACTURING CO., LTD.,

Plaintiffs-Appellants,

v.

UNITED STATES, VAM DRILLING USA, 

TEXAS STEEL CONVERSIONS, INC., 

ROTARY DRILLING TOOLS, AND TMK IPSCO,

Defendants-Appellees,

AND

UNITED STATES STEEL CORPORATION,

Defendant.

______________________ 

2014-1225

______________________ 

Appeal from the United States Court of International 

Trade in No. 11-00081, Senior Judge Nicholas Tsoucalas.

______________________ 

Decided: January 29, 2015

______________________ 

MARK B. LEHNARDT, Lehnardt & Lehnardt LLC, of 

Liberty, Missouri, argued for plaintiffs-appellants.

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2 DOWNHOLE PIPE & EQUIPMENT v. US

MIKKI COTTET, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department 

of Justice, of Washington, DC, argued for defendantappellee United States. With her on the brief were 

STUART F. DELERY, Assistant Attorney General, JEANNE 

E. DAVIDSON, Director, and CLAUDIA BURKE, Assistant 

Director. Of counsel was MICHAEL THOMAS GAGAIN, Office 

of the Chief Counsel for Import Administration, United 

States Department of Commerce, of Washington, DC.

ROGER B. SCHAGRIN, Schagrin Associates, of Washington, DC, argued for defendants-appellees VAM Drilling 

USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, 

and TMK IPSCO. With him on the brief was JOHN W.

BOHN. 

______________________ 

Before REYNA, LINN, and WALLACH, Circuit Judges.

WALLACH, Circuit Judge. 

Appellants Downhole Pipe & Equipment, LP, and DPMaster Manufacturing Co., Ltd. (collectively, “Downhole 

Pipe”) appeal the decisions of the United States Court of 

International Trade (“CIT”) (1) affirming the United 

States Department of Commerce’s (“Commerce”) scope 

and industry support determinations and (2) sustaining 

Commerce’s Final Results of Redetermination Pursuant 

to Court Remand. See Downhole Pipe & Equip., LP v. 

United States (Downhole Pipe II), 949 F. Supp. 2d 1288 

(Ct. Int’l Trade 2013); Downhole Pipe & Equip. LP v. 

United States (Downhole Pipe I), 887 F. Supp. 2d 1311 

(Ct. Int’l Trade 2012); see also Drill Pipe From the People’s 

Republic of China, A-570-965 (Dep’t of Commerce May 13, 

2013) (final results of redetermination pursuant to court 

remand) (Public Joint Appendix (“P.J.A.”) 2388–406) 

(“Remand Results”); Drill Pipe From the People’s Republic 

of China, 75 Fed. Reg. 4,531 (Dep’t of Commerce Jan. 28, 

2010) (initiation of antidumping duty investigations) 

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DOWNHOLE PIPE & EQUIPMENT v. US 3

(“Initiation”). Because Commerce’s determinations were 

supported by substantial evidence and were not otherwise 

contrary to law, this court affirms.

BACKGROUND

I. Facts

Downhole Pipe is a United States importer of “drill 

pipe” produced by DP-Master Manufacturing Co., Ltd.

(“DP-Master”), a Chinese producer. Drill pipe is a specialized high-strength iron alloy tube, used in oil-drilling 

applications, and is manufactured in three stages: first, 

seamless tubes called “green tube” are produced from raw 

steel; second, the manufacturer uses complex processes to 

“upset” and heat-treat green tube to thicken the ends and 

increase the yield strength to the desired American Petroleum Institute (“API”) grade; third, the manufacturer 

friction-welds a specialized “tool joint” to the ends of the 

heat-treated and upset tube to complete the drill pipe. 

While green tube is the primary input in the production of 

drill pipe, it can also be processed into other “oil country 

tubular goods.” Oil country tubular goods, which consist 

primarily of casing and tubing, are used in connection 

with the transport of oil and gas, while drill pipe is primarily used in drilling. 

II. Proceedings

In 2009, Commerce received a petition from several 

domestic drill pipe producers, including Appellees VAM 

Drilling USA, Texas Steel Conversion, Inc., Rotary Drilling Tools, and TMK IPSCO (collectively, “Petitioners”), 

seeking imposition of antidumping and countervailing 

duties on drill pipe from the People’s Republic of China

(“China”). Drill Pipe From the People’s Republic of China, 

No. A-570-965 (Dep’t of Commerce Dec. 31, 2009) (petition 

for the imposition of antidumping and countervailing 

duties) (P.J.A. 56–230) (“Petition”). Some of the petitioners produce green tube for drill pipe, while others produce 

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4 DOWNHOLE PIPE & EQUIPMENT v. US

finished drill pipe. Prior to Commerce’s initiation of the 

antidumping investigation, Downhole Pipe objected to the 

proposed scope of the investigation, arguing green tube

should not be included within the scope, because it was 

already covered by an ongoing investigation into oil 

country tubular goods, and Commerce should disregard 

green tube production for purposes of calculating domestic 

industry support. 

After considering these objections, Commerce revised 

the scope of the investigation in the Initiation, specifying 

“‘[t]he scope does not include . . . unfinished tubes for 

casing or tubing covered by any other antidumping or 

countervailing duty order.’” Downhole Pipe I, 887 F. 

Supp. 2d at 1316 (citation omitted); Initiation, 75 Fed. 

Reg. at 4,535. Commerce also found sufficient domestic 

industry support for the Petition, as calculated using the 

revised scope. Therefore, in 2010, Commerce initiated the 

antidumping investigation of drill pipe from China. 

In its Preliminary Determination, Commerce determined drill pipe from China was, or was likely to be, sold 

in the United States at less-than-fair value. Drill Pipe 

From the People’s Republic of China, 75 Fed. Reg. 51,004 

(Dep’t of Commerce Aug. 18, 2010) (preliminary determination of sales at less than fair value and affirmative 

determination of critical circumstances, and postponement of final determination) (“Preliminary Determination”). While Commerce maintained the scope as defined 

in the Initiation over Downhole Pipe’s objections, in the 

Preliminary Determination it stated, given “concerns 

regarding the imprecision of the definition of ‘green tubes 

suitable for drill pipe’ currently contained in the scope,” it 

would “request additional information regarding characteristics distinguishing green tube for drill pipe from 

green tube for casing and tubing covered under the orders 

on [oil country tubular goods from China].” Id. at 51,006. 

Further,

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DOWNHOLE PIPE & EQUIPMENT v. US 5

[u]nless specific characteristics are provided 

which distinguish between green tube for drill 

pipe and green tube for casing and tubing, all 

green tubes . . . will be removed from the scope of 

the . . . investigations on drill pipe from [China] 

and will instead be considered as covered under 

the existing [orders on oil country tubular goods 

from China].

Id.

Commerce issued its Final Determination on January 

11, 2011, continuing to find drill pipe from China was 

being, or was likely to be, sold in the United States at 

less-than-fair value. Drill Pipe From the People’s Republic of China, 76 Fed. Reg. 1,966 (Dep’t of Commerce Jan. 

11, 2011) (final determination of sales at less-than-fair 

value and critical circumstances) (“Final Determination”), 

and accompanying Issues & Decision Memorandum 

(“Issues & Dec. Mem.”) (P.J.A. 1890–938).

For the Final Determination, Commerce “developed 

characteristics for drill pipe green tubes based on numerous submissions of factual data from parties regarding the 

physical and chemical characteristics of drill pipe and 

drill pipe green tubes.” Issues & Dec. Mem. at 11. Thus, 

“Commerce narrowed the scope by adding three physical 

criteria to the description of subject green tube.” Downhole Pipe I, 887 F. Supp. 2d at 1317. Specifically, Commerce narrowed the scope to green tube: (1) that is 

seamless; (2) that has a certain outer diameter; and (3) 

that contains specific percentages of molybdenum and 

chromium. Issues & Dec. Mem. at 11. Thus, the scope 

specified in the Final Determination reads:

The products covered by the investigation are 

steel drill pipe, and steel drill collars, whether or 

not conforming to [API] or non-API specifications. 

Included are finished drill pipe and drill collars 

without regard to the specific chemistry of the 

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6 DOWNHOLE PIPE & EQUIPMENT v. US

steel (i.e., carbon, stainless steel, or other alloy 

steel), and without regard to length or outer diameter. Also included are unfinished drill collars 

(including all drill collar green tubes) and unfinished drill pipe (including drill pipe green tubes, 

which are tubes meeting the following description: 

seamless tubes with an outer diameter of less than 

or equal to 6 5⁄8 inches (168.28 millimeters), containing between 0.16 and 0.75 percent molybdenum, and containing between 0.75 and 1.45 

percent chromium). The scope does not include . . . 

unfinished tubes for casing or tubing covered by 

any other antidumping or countervailing duty order.

Final Determination, 76 Fed. Reg. at 1,967 (emphasis 

added).

As part of its Final Determination, Commerce also 

calculated a surrogate value for the green tube input as 

one of the factors of production. Two sources were on the 

record to serve as surrogate data: (1) price quotes printed 

in a trade publication called Metal Bulletin Research for 

grades J and K casing and tubing (“J/K 55”) and (2) the 

average transaction prices paid for products imported into 

India under the Harmonized Tariff Schedule of India 

(“IHTS”) subheadings 7304.23 and 7304.29. Commerce 

ultimately determined the best available information was 

the average Indian import prices for sales of merchandise 

under these IHTS subheadings. Using this data, Commerce calculated a surrogate value of $2,511.67 for the 

green tube input.

Downhole Pipe appealed several of Commerce’s determinations to the CIT, including its inclusion of green 

tube within the scope of the investigation and in the 

industry support calculation, as well as its choice of the 

surrogate data used to value the green tube input. In 

Downhole Pipe I, the CIT rejected Downhole Pipe’s scope 

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DOWNHOLE PIPE & EQUIPMENT v. US 7

arguments, reasoning Commerce had discretion to determine scope and could not reconsider industry support 

after initiation of the investigation. The CIT also remanded the Final Determination to Commerce with 

instructions to reconsider the surrogate values used for

green tube. In particular, the CIT found Commerce had 

failed to address the InfoDrive India (“InfoDrive”) import 

data Appellants had placed on the administrative record 

that called into question Commerce’s finding that green 

tube entered India under IHTS subheadings 7304.23 and 

7304.29. The CIT acknowledged data from the IHTS 

subheadings might be the best available information, but 

it could not affirm the Final Determination on the basis of 

the explanation provided by Commerce. 

On remand, Commerce examined all other potential 

surrogate values for green tube on the record, including: 

(1) import statistics for goods imported into India under 

IHTS categories 7304.23, 7304.29, and 7304.59; (2) Metal 

Bulletin Research price data for J/K 55 and for “P110”; 

(3) adjusted value data for alloy steel billets processed 

into green tube provided by Appellants; and (4) adjusted 

value data for seamless tubes provided by Appellants. 

Commerce found the price data for products entered 

under IHTS 7304.59 (as opposed to IHTS 7304.23 and 

7304.29) was the best available information on the record 

because it was most representative of the green tube used 

for drill pipes, contemporaneous with the period of investigation, duty and tax exclusive, publicly available, and 

represented a broad market average. Commerce also 

confirmed its analysis with a National Import Specialist 

at United States Customs and Border Protection (“Customs”). Although in its draft remand results Commerce 

used data from both IHTS 7304.59.10 and IHTS 

7304.59.20, in its final Remand Results Commerce based 

the surrogate value for green tube on the average unit 

value of entries made under IHTS 7304.59.20 alone. 

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8 DOWNHOLE PIPE & EQUIPMENT v. US

On return to the CIT, Appellants argued the Remand 

Results were unsupported by substantial evidence and 

were otherwise not in accordance with law. Therefore, 

Downhole Pipe asked the CIT to once again remand the 

issue of the surrogate values used to value the green tube. 

In Downhole Pipe II, the CIT sustained the Remand 

Results. 

Downhole Pipe appeals. This court has jurisdiction 

pursuant to 28 U.S.C. § 1295(a)(5) (2012).

DISCUSSION

I. Standard of Review

This court reviews the decisions of the CIT de novo, 

“apply[ing] anew the same standard used by the [CIT].” 

Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 

1375, 1380 (Fed. Cir. 2008) (internal quotation marks and 

citation omitted). Under that standard, this court must 

uphold Commerce’s determinations unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i) (2006). “Although such review 

amounts to repeating the work of the [CIT], we have 

noted that ‘this court will not ignore the informed opinion 

of the [CIT].’” Diamond Sawblades Mfrs. Coal. v. United 

States, 612 F.3d 1348, 1356 (Fed. Cir. 2010) (quoting 

Suramerica de Aleaciones Laminadas, C.A. v. United 

States, 44 F.3d 978, 983 (Fed. Cir. 1994)); see also Cleo 

Inc. v. United States, 501 F.3d 1291, 1296 (Fed. Cir. 2007) 

(“When performing a substantial evidence review, . . . we 

give great weight to the informed opinion of the [CIT]. 

Indeed, it is nearly always the starting point of our analysis.”) (internal quotation marks and citation omitted). 

Substantial evidence is defined as “more than a mere

scintilla,” as well as evidence that a “reasonable mind 

might accept as adequate to support a conclusion.” Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938). 

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DOWNHOLE PIPE & EQUIPMENT v. US 9

This court’s review is limited to the record before Commerce in the particular review proceeding at issue and 

includes all “evidence that supports and detracts” from 

Commerce’s conclusion. Sango Int’l L.P. v. United States, 

567 F.3d 1356, 1362 (Fed. Cir. 2009). An agency finding 

may still be supported by substantial evidence even if two

inconsistent conclusions can be drawn from the evidence. 

Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966).

II. Legal Framework

The United States imposes duties on foreign-produced 

goods sold in the United States at less-than-fair value 

(“antidumping duties”), 19 U.S.C. § 1673(1), or that 

benefit from subsidies provided by foreign governments 

(“countervailing duties”), id. § 1671(a)(1). Commerce is 

responsible for investigating whether there have been, or 

are likely to be, sales at less-than-fair value or whether a 

subsidy has been provided, id. §§ 1673(1), 1671(a)(1), 

while the International Trade Commission determines 

whether imported merchandise materially injures or 

threatens to materially injure the pertinent domestic 

industry, id. §§ 1673d(b)(1), 1671d(b)(1). “If both inquiries are answered in the affirmative, Commerce issues the 

relevant antidumping and countervailing duty orders.” 

Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1089 

(Fed. Cir. 2002). The orders contain a description of the 

merchandise that is covered by the order, called the scope. 

19 U.S.C. §§ 1671e(a)(2), 1673e(a)(2).

Antidumping investigations are typically initiated by 

a petition filed with Commerce by a domestic industry. 

Duferco Steel, 296 F.3d at 1089. The petition defines the 

initial scope of the investigation. Id. After a petition is 

received, several statutory criteria must be met before 

Commerce may initiate an investigation, including determining whether the petition was filed on behalf of the 

domestic industry, 19 U.S.C. § 1673a(c)(1)(A)(ii), (c)(2), 

and whether there is domestic industry support for the 

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10 DOWNHOLE PIPE & EQUIPMENT v. US

petition, id. § 1673a(c)(4). To determine whether there is 

industry support, Commerce must determine whether 

domestic producers or workers who support the petition 

“account for at least 25 percent of the total production of 

the domestic like product.” Id. § 1673a(c)(4)(A)(i). If 

Commerce determines the petition lacks industry support, 

it “shall dismiss the petition [and] terminate the proceeding.” Id. § 1673a(c)(3). If, however, Commerce “makes a 

determination with respect to initiating an investigation, 

the determination regarding industry support shall not be 

reconsidered.” Id. § 1673a(c)(4)(E) (emphasis added).

Once an antidumping investigation has been initiated, to determine whether foreign goods are being sold or 

are likely to be sold in the United States at less-than-fair 

value, id. § 1673, Commerce compares the export price (or 

constructed export price) of a foreign producer’s sales with 

“normal value” (the price in the foreign market), id.

§ 1677b(a). If the price of an item in the foreign market 

(normal value) is higher than the price for the same item 

in the United States (export price), dumping has occurred. 

Id. § 1677(35)(A) (The antidumping duty margin is “the 

amount by which the normal value exceeds the export 

price or constructed export price of the subject merchandise.”). 

Further, if Commerce considers the exporting country 

a “nonmarket economy country,”1 it determines normal 

1 A “nonmarket economy country” is “any foreign 

country that [Commerce] determines does not operate on 

market principles of cost or pricing structures, so that 

sales of merchandise in such country do not reflect the 

fair value of the merchandise.” 19 U.S.C. § 1677(18)(A). 

“Because it deems China to be a nonmarket economy 

country, Commerce generally considers information on 

sales in China and financial information obtained from 

Chinese producers to be unreliable for determining, under 

 

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DOWNHOLE PIPE & EQUIPMENT v. US 11

value by valuing the “factors of production” used in producing the merchandise in a comparable market economy2 to come up with “surrogate values.” See id.

§ 1677b(c)(1)(B). In doing so, Commerce “attempt[s] to 

construct a hypothetical market value of that product” in 

the nonmarket economy. Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1375 (Fed. Cir. 1999). Thus, 

Commerce must value the factors of production “to the 

extent possible . . . in one or more market economy countries that are—(A) at a level of economic development 

comparable to that of the nonmarket economy country, 

and (B) significant producers of comparable merchandise.” 

19 U.S.C. § 1677b(c)(4)(A)–(B). 

The statute also directs Commerce to value the factors 

of production “based on the best available information

regarding the values of such factors in a market economy 

country.” Id. § 1677b(c)(1)(B) (emphasis added). Commerce has discretion to determine what constitutes the 

best available information, as this term is not defined by 

statute. QVD Food Co. v. United States, 658 F.3d 1318, 

1323 (Fed. Cir. 2011). However, “Commerce generally 

selects, to the extent practicable, surrogate values that 

are publicly available, are product-specific, reflect a broad 

market average, and are contemporaneous with the 

period of review.” Qingdao Sea-Line Trading Co. v. 

United States, 766 F.3d 1378, 1386 (Fed. Cir. 2014).

19 U.S.C. § 1677b(a), the normal value of the subject 

merchandise.” Shanghai Foreign Trade Enters. Co. v. 

United States, 318 F. Supp. 2d 1339, 1341 (Ct. Int’l Trade 

2004).

2 Here, “Commerce selected India as the primary 

surrogate country, and used Indian data to calculate 

surrogate values for two key drill pipe inputs relevant to 

this case.” Downhole Pipe I, 887 F. Supp. 2d at 1316.

 

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III. Commerce Properly Included Green Tube in the Scope 

of the Investigation and in the Calculation of Industry 

Support

Appellants challenge the lawfulness of including 

green tube within the scope of the investigation, and 

consequently of including green tube in the industry 

support calculation. In Downhole Pipe I, the CIT rejected 

Downhole Pipe’s scope arguments, reasoning (1) Commerce has discretion to define the scope of the investigation, and (2) Commerce is barred by statute from 

reconsidering industry support after the initiation of an 

investigation. Downhole Pipe I, 887 F. Supp. 2d at 1319 

(Downhole Pipe’s “sole argument—that some green tube 

used to produce [oil country tubular goods] meet the 

technical specifications of the Final Determination and 

are thus subject to two antidumping orders—has little 

bearing on Commerce’s decision to initiate the investigation.”). In support of its conclusions, the CIT pointed to 

three prior International Trade Commission determinations, which describe “why technical specifications and 

customer expectations led it to treat green tube for drill 

pipe as a ‘distinct like product’ from green tube for [oil 

country tubular goods].” Id. at 1320 (citation omitted). 

Therefore, the CIT concluded, “[g]iven the end-use exception and the extensive evidence showing a distinction in 

channels of distribution, customer expectations, and 

technical specifications, it would not be appropriate for 

this court to usurp Commerce’s exercise of discretion in 

defining the scope of the Initiation.” Id.

Nonetheless, on appeal, Downhole Pipe continues to 

argue that Commerce may not include products within 

the scope of an investigation that are already covered by

the scope of another investigation or order. As to the 

three criteria identified by Commerce as distinguishing 

green tube for drill pipe from green tube for oil country 

tubular goods—i.e., that green tube for drill pipe (1) is 

seamless, (2) has an outside diameter of 6 5/8 inches or 

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DOWNHOLE PIPE & EQUIPMENT v. US 13

less, and (3) has 0.16%–0.75% molybdenum and 0.75%–

1.45% Chromium—Downhole Pipe argues the record lacks 

substantial evidence to support these three criteria. 

Further, Appellants argue, “[b]ecause these three criteria 

do not distinguish drill-pipe green tube from [oil country 

tubular goods] green tube, the same green tube is impermissibly covered by two antidumping duty orders.” 

Appellants’ Br. 30.

In support, Appellants rely on record evidence that 

purportedly establishes that each of these three criteria 

may apply to green tube used to produce oil country 

tubular goods. Specifically, as to the first criterion, Appellants argue that while all green tube used for drill pipe 

must be seamless, some green tube used to produce oil 

country tubular goods is also seamless. As to the second 

criterion, Appellants note some oil country tubular goods 

use green tube with an outside diameter of less than or 

equal to 6 5/8 inches. Finally, regarding chemistry, 

Appellants contend there are no API specifications for 

“minimum alloy requirements for casing, tubing, and drill 

pipe.” Id. at 31.

In addition, Appellants argue that without the inclusion of green tube production volume in its industry 

support calculation, the Petition lacks the requisite industry support. Appellants’ Br. 32 (“A cursory review of the 

industry support calculation after removing green tube 

producers indicates that petitioners would not satisfy the 

required 25% industry-support threshold.”). Therefore, 

Appellants insist the industry support calculation must be 

remanded. As to the statutory bar against revising this 

calculation post-initiation, Appellants contend it “properly 

raised this scope/industry support issue prior to the 

Initiation.” Id. at 34.

These arguments are unavailing because Commerce 

reasonably included green tube within the scope of the 

investigation. First, substantial evidence supports ComCase: 14-1225 Document: 67-2 Page: 13 Filed: 01/29/2015
14 DOWNHOLE PIPE & EQUIPMENT v. US

merce’s identification of three physical characteristics 

that distinguish green tube for drill pipe from that intended for oil country tubular goods. As Commerce explained, the first criterion (that green tube for drill pipe 

must be seamless) was “based on Petitioners’ comments 

and submission of technical specifications.” Issues & Dec. 

Mem. at 11. As to the second criterion, that the drill pipe 

green tube must have a certain outer diameter, Commerce explained this was “based on DP-Master Group’s 

submission of [API] specifications for drill pipe.” Id. As to 

the final criterion regarding the green tube’s chemical 

composition, this was “based on Petitioners’ submission of 

declarations from experienced drill pipe engineers who 

direct the purchase of green tubes for drill pipe based on 

specific physical and chemical requirements.” Id. While 

Appellants invite this court to reweigh this evidence, this 

court may not do so. See Trent Tube Div., Crucible Materials Corp. v. Avesta Sandvik Tube AB, 975 F.2d 807, 815 

(Fed. Cir. 1992) (“It is not for this court on appeal to 

reweigh the evidence or to reconsider questions of fact 

anew.”).

It is important to note that Appellants have failed to 

identify any green tube intended for oil country tubular 

goods that satisfies all three of these criteria. As the 

Government points out, “[i]n order to be covered by the 

Order here, the green tube must satisfy all three of the 

requirements established by Commerce.” United States’ 

Br. 19. Appellants have not called into question Commerce’s conclusion that, “[w]hile the DP-Master Group 

has provided specifications for certain [oil country tubular 

goods] that overlap in some characteristics with drill pipe, 

no specifications for [oil country tubular goods] have been 

placed on the record that meet all of the criteria for drill 

pipe green tube.” Issues & Dec. Mem. at 11. Even if 

Downhole Pipe had been able to do so, moreover, Commerce added an explicit exception to exclude any such 

overlapping goods: “The scope does not include . . . unfinCase: 14-1225 Document: 67-2 Page: 14 Filed: 01/29/2015
DOWNHOLE PIPE & EQUIPMENT v. US 15

ished tubes for casing or tubing covered by any other 

antidumping or countervailing duty order.” Final Determination, 76 Fed. Reg. at 1,967. As the CIT pointed out, 

Downhole Pipe did “not analyze the purported overlap in 

light of this potentially remedial exception,” Downhole 

Pipe I, 887 F. Supp. 2d at 1319, and makes no attempt to 

do so before this court.

As to Downhole Pipe’s insistence that industry support must be recalculated using a revised scope, Appellants have not overcome the statutory obstacle to doing 

so. That is, while 19 U.S.C. § 1673a(c)(4)(E) provides that 

any potential interested party may submit comments or 

information on the issue of industry support prior to the 

initiation of an investigation, it explicitly states “[a]fter 

[Commerce] makes a determination with respect to initiating an investigation, the determination regarding 

industry support shall not be reconsidered.” 19 U.S.C. 

§ 1673a(c)(4)(E). Given this court’s finding that Downhole 

Pipe has failed to demonstrate Commerce erred in including green tube within the scope, this statutory bar means 

the contention that Commerce must redetermine whether 

there is sufficient industry support necessarily fails. This 

is not to say a party may not challenge whether its goods 

properly fall within the scope,3 but only that the industry 

support calculation is not reviewable under these circumstances.

Accordingly, Commerce’s inclusion of green tube in 

the scope of the investigation and in the calculation of 

3 Indeed, pursuant to 19 C.F.R. § 351.225 (2012), a 

party can request a scope determination to determine 

whether its merchandise falls within the scope of an 

order. Here, as the CIT observed, “DP-Master does not 

export green tube to the U.S., and neither it nor any party 

below have requested a scope determination.” Downhole 

Pipe I, 887 F. Supp. 2d at 1318.

 

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industry support was supported by substantial evidence 

and was not contrary to law.

IV. Substantial Evidence Supports Commerce’s Selection 

of the Surrogate Value for Green Tube

Appellants also challenge the lawfulness of Commerce’s selection of a surrogate value for valuing green 

tube, as redetermined following the remand by the CIT. 

In Downhole Pipe I, the CIT ordered a remand because 

“Commerce’s rebuttal of each of [Downhole Pipe’s] four 

alternative surrogates . . . d[id] not cure its inadequate 

explanation of its reliance upon the IHTS data,” and “its 

failure here to explain evidence apparently contrary to a 

finding central to its determination leaves the court 

without the means necessary to affirm it as supported by 

the record.” Downhole Pipe I, 887 F. Supp. 2d at 1325

(internal citations omitted). The CIT noted on remand, 

“Commerce [was] not barred from selecting the IHTS 

data,” but it was required to “explain why such data is 

more representative of the price for drill pipe green tube 

than other potential surrogate values in light of InfoDrive

data that appears to demonstrate that [IHTS] 7309.23 

and 7309.29 do not actually ‘capture’ green tube and are 

highly distorted by expensive, finished tubular goods.” Id. 

As noted, on remand Commerce examined four potential data sources for valuing green tube: (1) import statistics for goods imported into India under IHTS categories 

7304.23, 7304.29, and 7304.59; (2) Metal Bulletin Research price data for J/K 55 and P110; (3) adjusted value 

data for alloy steel billets processed into green tube; and 

(4) adjusted value data for seamless tubes. Commerce 

then determined it had incorrectly found that IHTS 

7304.23 and 7304.29 were the proper IHTS subheadings 

for green tube, and instead determined that IHTS 

7304.59.20 was the proper subheading.

In Downhole Pipe II, the CIT affirmed the Remand 

Results, holding “[a]lthough IHTS 7304.59.20 does not 

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DOWNHOLE PIPE & EQUIPMENT v. US 17

perfectly cover [Downhole Pipe’s] [drill pipe green tubes], 

Commerce’s decision was reasonable nonetheless given 

the record support for IHTS 7304.59.20 and the relative 

weakness of the alternative values.” Downhole Pipe II, 

949 F. Supp. 2d at 1295. Specifically, the CIT held, 

“Commerce reasonably determined that IHTS 7304.59.20 

import data satisfied more of its selection criteria than 

the flawed alternatives on the record,” id. at 1297, and, in 

contrast to the alternate surrogate values on the record, 

“Commerce found that the IHTS 7304.59.20 data is ‘contemporaneous with the [period of investigation], represent[s] a broad market average, [is] tax and duty 

exclusive, and [is] publicly available, thus comporting 

with [Commerce’s] selection criteria.’” Id. (citations 

omitted). For these reasons, the CIT held Commerce 

reasonably determined that data from IHTS 7304.59.20 

was the best available information on the record and 

Commerce “reasonably rejected” the alternative surrogate 

values. Id. at 1296–97 (citations omitted).

On appeal, Downhole Pipe challenges Commerce’s selection of the surrogate value for green tube on three 

grounds. First, Appellants contend Commerce improperly 

rejected the alternative surrogate values on the record, 

and that its legal analysis in support of selecting IHTS 

7304.59.20 was insufficient. Specifically, Appellants 

characterize “Commerce’s legal analysis to support selecting IHTS 7304.59.20” as “a one-sentence assertion regarding classification under IHTS, which Commerce supported 

with a two-sentence memo reporting some sort of confirmation from [Customs].” Appellants’ Br. 43. They therefore claim that when analyzing the competing IHTS 

subheadings on the record, Commerce improperly “ignore[d] basic legal principles—such as [General Rule of 

Interpretation] 2(a)—which require some analysis before 

dismissal.” Id. In so arguing, Appellants concede “the 

process of selecting [surrogate values] is necessarily 

imprecise,” but nonetheless argue that “Commerce must 

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18 DOWNHOLE PIPE & EQUIPMENT v. US

strive for accuracy in value to comply with its obligation 

to calculate margins as accurately as possible.” Id. at 24–

25.

This court declines Appellants’ invitation to reweigh 

the evidence in order to reject Commerce’s conclusions, 

which were well-supported and fully explained. See id. at 

44–49 (challenging each of Commerce’s conclusions regarding the alternative surrogate values on the record 

and offering Appellants’ own interpretations). Regarding 

Downhole Pipe’s argument that Commerce’s “legal analysis” of the competing tariff headings was insufficient 

because Commerce failed to employ the General Rules of 

Interpretation of the Harmonized Tariff Schedule as part 

of its evidentiary determination, this is not a customs 

classification case. Commerce was not required to engage 

in a classification analysis to determine which IHTS 

subheading contained entries of drill pipe green tube; 

rather, it was required to determine which of the competing subheadings constituted the best available information for valuing the green tube input. In addition, as 

the CIT pointed out, Appellants “do not cite any legal 

authority demonstrating that Commerce must conduct a 

full classification analysis when considering import data 

from a particular foreign tariff heading as a surrogate 

value,” and Appellants “provide virtually no legal analysis 

contravening Commerce’s selection.” Downhole Pipe II, 

949 F. Supp. 2d at 1293.

As to its selection process, in the Remand Results

Commerce explained it used “a process of elimination” to 

select IHTS subheadings 7304.59.10 and 7304.59.20 

because “[c]ategorization of products under the HTS is a 

process of elimination.” Remand Results at 5. Using this 

process, Commerce explained it rejected IHTS 7304.23 

and 7304.29 because the former captures processed semifinished drill pipe and the latter captures semi-finished 

casing and tubing, which are not inputs for drill pipe. 

Therefore, these headings were “no longer the best availCase: 14-1225 Document: 67-2 Page: 18 Filed: 01/29/2015
DOWNHOLE PIPE & EQUIPMENT v. US 19

able information on the record.” Id. at 7. Commerce 

further explained, “after examining all possible subcategories under IHTS heading 7304, the process of eliminating the other items entering under these headings 

demonstrates that categories 7304.59.10 and 7304.59.20 

cover drill pipe green tube as defined in the scope of the 

Order.” Id. at 5. Of these two subheadings, Commerce 

found the latter better represented green tube because

further classification under these subheadings was based 

on tube diameters, and 7304.59.20 better reflected the 

diameter of the green tube covered by the Order. Id.

To the extent Downhole Pipe requests this court to 

reweigh Commerce’s findings with regard to each heading, this court may not do so. “This court’s duty is ‘not to 

evaluate whether the information Commerce used was 

the best available, but rather whether a reasonable mind 

could conclude that Commerce chose the best available 

information.’” Zhejiang DunAn Hetian Metal Co. v. 

United States, 652 F.3d 1333, 1341 (Fed. Cir. 2011) (quoting Goldlink Indus. Co. v. United States, 431 F. Supp. 2d 

1323, 1327 (Ct. Int’l Trade 2006)). In light of Commerce’s 

well-reasoned explanation of its selection process, this 

court finds Commerce’s selection of data from IHTS 

7304.59.20 was supported by substantial evidence.

As to Appellants’ argument that Commerce unreasonably rejected the alternative surrogate values on the 

record, Commerce appropriately evaluated each of the 

alternatives on the record and provided an ample explanation as to why it should be rejected. With regard to the 

price data for J/K 55 from the Metal Bulletin Research, 

Commerce explained this data was not the best available 

information on the record because: (1) “it is not contemporaneous;” (2) “it represents only a single month of price 

data;” (3) “J/K 55 cannot be used to produce drill pipe;” 

and (4) J/K 55 “is at best comparable [to green tube], 

differing in alloying element content and production 

methods.” Remand Results at 8. Moreover, the J/K 55 

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20 DOWNHOLE PIPE & EQUIPMENT v. US

data did not reflect actual sales prices, but rather offer 

prices. Id. at 5–6. Commerce reasonably concluded the 

J/K 55 data did not satisfy its selection criteria. See

Qingdao Sea-Line, 766 F.3d at 1386 (“Commerce generally selects, to the extent practicable, surrogate values that 

are publicly available, are product-specific, reflect a broad 

market average, and are contemporaneous with the 

period of review.”).

Commerce rejected the P110 price data from the Metal Bulletin Research for similar reasons, finding P110 is 

not representative of green tube because it is a finished 

oil country tubular good product that cannot be used as 

an input for drill pipe. Remand Results at 9. Additionally, the P110 data was based on offer prices and only 

contained one month of pricing information. Id. As 

compared to the data from IHTS 7304.59.20, Commerce 

reasonably found these alternatives were not the best 

available information for valuing the green tube input. 

Similarly, Commerce reasonably explained why the 

adjusted value data offered by Downhole Pipe for alloy 

steel billets processed into green tube and for seamless 

tubes were not the best available information as compared to the data from IHTS 7304.59.20. Specifically, 

Commerce found the record lacked sufficient information 

to adjust the values for the required alloying costs and 

that calculating such adjustments required proprietary 

information. Id. at 9–11. Because Commerce’s regulations direct it to use “publicly available information,” 19 

C.F.R. § 351.408(c)(1), Commerce rejected these adjusted 

values. Thus, Commerce supported with substantial 

evidence its determinations that it had selected the best 

available information and reasonably rejected the alternatives proposed by Downhole Pipe. 

Appellants also argue Commerce’s choice of a surrogate value for green tube is “aberrantly high” and therefore outside the bounds of commercial reality. Appellants’ 

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DOWNHOLE PIPE & EQUIPMENT v. US 21

Br. 41. Specifically, Downhole Pipe claims Commerce’s 

choice of the average price for goods entered under IHTS 

7304.59.20 resulted in a surrogate value of $4,978.11 for 

green tube, which is “aberrantly high” because it is almost 

double the value of the $2,511.67 figure Commerce used 

in the Final Determination based on goods entered under 

IHTS 7304.23.90. Appellants point out IHTS 7304.59.20 

is a basket category for alloy seamless tubes, while the 

previously-selected IHTS 7304.23.90 includes both finished and unfinished drill pipe. Therefore, Appellants 

argue, “[u]nder the basic principle that an input should 

not be valued more than the finished product, Commerce 

failed to select an accurate [surrogate value],” and

“[e]xacerbating Commerce’s error is uncontroverted 

industry expert testimony establishing the value of green 

tube at approximately 30% of the value of finished drill 

pipe.” Id. at 25. In support, Downhole Pipe points to the 

InfoDrive data for entries made under IHTS 7304.59.10 

and 7304.59.20 that Appellants argue “conclusively 

demonstrated that there were no entries of drill-pipe 

green tube under IHTS 7304.59.10, and no entries of 

d[r]ill pipe green tube in at least 60% of entries under 

IHTS 7304.59.20.” Id. at 46.

As the Government notes, “[a]lthough Downhole succeeds in creating a stark comparison, Downhole fails to do 

so using substantiated reference points.” United States’ 

Br. 41. In particular, while Downhole Pipe argues the 

value of a finished drill pipe should not exceed the value 

of an individual input, like green tube, its comparison 

relies on the incorrect assumption that IHTS 7304.59.20 

covers green tube exclusively and IHTS 7304.23.90 covers 

semi-finished or finished drill pipe exclusively. Appellants fail to provide any evidence in support of this proposition. For example, Appellants state “IHTS 7304.59.20 

most likely also lacked entries of drill-pipe green tube,” 

citing for support its own comments submitted in response to the draft remand results and the InfoDrive

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22 DOWNHOLE PIPE & EQUIPMENT v. US

data. Appellants’ Br. 45 (citing P.J.A. 2289–91, 2305–26) 

(emphasis added). As noted above, Commerce provided 

substantial evidence to support its finding that the data 

from IHTS 7304.59.20 was the best available information 

on the record.

Finally, Downhole Pipe argues Commerce erred in relying on a memo from the National Import Specialist to 

confirm its selection of IHTS 7304.59 as the appropriate 

heading for drill pipe green tube. Specifically, Appellants 

claim they “expose[] six significant flaws, that cannot be 

filled in by Commerce’s four post hoc attempts in the 

Remand to bolster the quality of the [National Import 

Specialist’s] Memo.” Id. at 49. These alleged flaws include (1) that Appellants cannot determine whether 

Commerce contacted the National Import Specialist by 

“email, letter, fax, telephone, over coffee, or through a 

friend”; (2) there is no indication that Commerce supplied 

the scope language to the National Import Specialist for 

her consideration; (3) there is no indication that a discussion of the scope language occurred, and therefore there is 

no record evidence establishing what the National Import 

Specialist considered prior to confirming Commerce’s 

selection; (4) “there is no indication that the [National 

Import Specialist] has any training regarding how to 

classify imports under IHTS categories—or whether the 

[National Import Specialist] had any relevant training at 

all”; (5) the memo does not indicate whether Customs 

evaluated other IHTS categories or considered legal 

principles regarding how to classify drill pipe green tube; 

and (6) there is no indication of how Customs “confirmed” 

Commerce’s IHTS classification decision. Id. at 49–52.

Given Commerce’s well-reasoned explanation why data from IHTS 7304.59.20 constituted the best available 

information for valuing green tube, this court need not 

entertain this argument. As the CIT correctly noted: first, 

“Commerce did not rely solely on the [National Import 

Specialist] Memo in its analysis . . . [and] explained that 

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DOWNHOLE PIPE & EQUIPMENT v. US 23

it ‘confirmed’ [its] analysis with the [Customs] official,” 

and second, this “argument is entirely conjectural. [Appellants] insist that the [National Import Specialist] 

Memo contains several possible flaws, but fail to identify 

any evidence in the record supporting their assertions.” 

Downhole Pipe II, 949 F. Supp. 2d at 1296; see also Petitioners’ Br. 31 (“The bulk of Downhole’s argument consists of totally unsupported speculation that when 

contacted by Commerce, . . . a senior [Customs] official, 

incompetently rendered an informal opinion without 

reviewing any of the necessary documents or understanding any of the legal principles involved. A presumption of 

correctness surrounds agency proceedings.”). Substantial 

evidence supports Commerce’s selection of the surrogate 

value for green tube. 

CONCLUSION

For the foregoing reasons, the decision of the United 

States Court of International Trade is

AFFIRMED

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