# United States **Court of Appeals**  **for the Federal Circuit**

______________________ BOOMERANG TUBE LLC, TMK IPSCO, ENERGEX TUBE, A DIVISION OF JMC STEEL GROUP, WELDED TUBE USA INC. , UNITED STATES STEEL CORPORATION , Plaintiffs

- Appellants

v.

UNITED STATES, JUBAI L ENERGY SERVICES COMPANY, DUFERCO SA, Defendants

- Appellees

______________________

2016

- 1554, 2016

- 1561

______________________ Appeals from the United States Court of Inter national Trade in No s . 1:14

- cv

- 00196

- TCS, 1:14

- cv

- 00201

- TCS, Chief Judge Timothy C. Stanceu.

______________________

Decided: May 8, 2017

______________________

R OGER B RIAN S CHAGRIN , Schagrin Associates, Was hington, DC, argued for plaintiffs

- appellants Boomerang Tube LLC, TMK IPSCO, Energex Tube, Welded Tube USA Inc. Also represented by J OHN W. B OHN , C HRISTOPHER C LOUTIER , P AUL W RIGHT J AMESON , J ORDAN C HARLES K AHN

.BOOMERANG TUBE LLC v. US 2

J ONATHAN G ORDON C OOPER , Quinn Emanuel U rquhart & Sullivan, LLP, Washington, DC, argued for plaintiff

- appellant United States Steel Corporation. Also represented by D EBBIE L EILANI S HON , J ON D AVID C OREY , K ELSEY R ULE , P HILIP C HARLES S TERNHELL

.

E MMA B OND , Commercial Litigation Branch, Civil D ivision, United States Department of Justice, Washington, DC, argued for defendant

- appellee United States. Also represented by B ENJAMIN C. M IZER , J EANNE E. D AVIDSON , C LAUDIA B URKE ; H EATHER N OEL D OHERTY , United States Department of Commerce, Washington, DC.

N ANCY N OONAN , Arent Fox, LLP, Washington, DC, argued for defendants

- appellees Jubail Energy Ser vices Company, Duferco SA. Also represented by J OHN M. G URLEY , D IANA D IMITRIUC Q UAIA

.

______________________

Before R EYNA , H UGHES , and S TOLL , Circuit Ju dges.

R EYNA , Circuit Judge.
Boomerang Tube LLC and United States Steel Corp oration appeal a decision from the U.S. Court of Intern ational Trade , which affirmed the U.S. Department of Commerce’s final determination in an antidumping investigation. The parties failed to exhaust their arg uments before Commerce, and the Trade Court abused its discretion in waiving the exhaustion requirement in t his case. Therefore, we vacate and remand

. B ACKGROUND A. Investigation and Preliminary Determination
On July 29 , 2013, Commerce initiated an investig ation into whether oil country tubular goods (“OCTGs”) from Saudi Arabia and other countries imported into the United States from July 1, 2012 through June 20, 2013BOOMERANG TUBE LLC v. US 3

were sold for less than fair value

— i.e. , dumped

. 1 OC TGs are a family of seamless rolled steel products consisting of drill pipes, casing, and tubing used in connection with oil and gas production. Commerce selected Duferco SA, the largest of fourteen known Saudi Arabian OCTG s expor ters , to serve as the sole mandatory respondent in the investigation. Duferco is the exporter of record for O CTG s produced by Jubail Energy Services Co mpany (“JESCO”).
In August 2013, the Trade Commission preliminarily deter mined that there is a reasonable indication that a U.S. domestic industry was materially injured by reason of sales in the United States of OCTGs from Saudi Arabia at less than fair value. 2 In February 2014, Com merce issued its preliminary determination that OCTGs from Saudi Arabia were being, or were likely to be, sold in the United States at less than fair value. Commerce prelim inarily calculated an anti

- dumping duty margin of 2.92 percent ad valor em

. 3

In its preliminary determination, in accordance with 19 C.F.R. § 3 5 1.401(f), Commerce sua sponte determined
to treat Duferco SA and three of its affiliates as a single entity ( “Duferco entity” ) because it found a significant potential for manipulation of price or production. After

1 Initiation of Antidumping Duty Investigations , 78 Fed. Reg. 45

, 505 ( Dep’t of Commerce July 29, 2013).

2 Certain Oil Country Tubular Goods from India, Korea, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine, and Vietnam: Determinations , 78 Fed. Reg. 52

, 213 ( Dep’t of Commerce Aug. 22, 2013).

3 Certain Oil Country Tubular Goods from Saudi Arabia: Preliminary Determinations of Sales at Less Than Fair Value, and Postponement of Final Determination , 79 Fed. Reg. 10

, 489, 10

, 490 ( Dep’t of Commerce Feb. 24, 2014).BOOMERANG TUBE LLC v. US 4

collapsing the Duferco affiliates into a single entity, Commerce furt her determined that Duferco is affiliated with JESCO, the producer of the subject OCTGs imported into the United State s. This affiliation was based on the fact that the Duferco entity owns ten percent of JESCO. JESCO was not included in the Duferco entit y, nor were several other Duferco SA affiliates. J.A. 6628−29 & n.26.
JESCO participated in the antidumping duty invest igation as a voluntary respondent . Early in the investig ation, Commerce asked JESCO to submit data regarding its third

- country sales of OCTG s for p otential use in calculating normal value. JESCO responded by providing data of sales made in Col o mbia to an unaffiliated custo mer and an affiliated distributor.
In calculating normal value , Commerce concluded that JESCO had no viable home ma rket sales, because its home market sales either failed the arm’s length test or were made below cost of production. Commerce dete rmined to construct normal value under 19 U.S.C. § 1677b(e)(2)(B) (iii), which provides for using “an y other reasonable method .” Commerce calculated a profit value for JESCO’s constructed value (“CV”) using the profit figures in the public 2012 audited financial statements of Saudi Steel Pipes Company (“Saudi Steel”) . J.A. 6630−33, 6640−41.
B. Party Briefing to Commerce

Foll owing Commerce’s preliminary determination, i nterested parties submitted briefs on , among other issues, the profit value used in CV for JESCO. Boomerang

, JESCO, and Duferco submitted case and rebut tal briefs. U.S. Steel did not.
Boomerang’s case brief challenged Commerce’s rel iance on the financial statements of Saudi Steel, arguing that the data were unreliable because the company is

more of a pipe line producer than an OCTG s producer.BOOMERANG TUBE LLC v. US 5

Boomerang suggested that Commerce use profit data from Tenaris S.A., a multinational corporation that produces OCTG s in several countries, or profit data of the U.S. producers of OCTG s . Data for e ach of those options w ere added to the record after Commerce’s preliminary dete rmination.

Duferco ’s and JESCO’s case bri efs contended that Commerce should continue using the financial s tatements of Saudi Steel, or, alternately, the financi al s tatements of Arabian Pipes Company, a Saudi entity. As another option, Duferco and JESCO suggested that Commerce use profit data fro m JESCO’s sales to its affiliated Colombia n distributor. These data were placed in the investigation record prior to the preliminary determination.
Boomerang submitted a rebuttal brief that argued against using JESCO’s Colombia sales: “[JESCO] su ggests that the Department can use the profits on JESCO’s sales to Colombia for CV profit. Again, this is sort of a mini

- alternative (i) scenario, and there is no basis in the statute to use such a method to calculate CV profit.” J.A. 7033 (redactions omi tted)

. Significantly, Boomerang did not argue that the affiliated Colombian distributor was a member of the Duferco entity, or that the Colomb ian sales were intra

- company sales.

C. Commerce’s Final Determination
Commerce published its final determination in July 2014, again concluding that Saudi OCTGs were being dumped in the U.S. and recalculating the antidumping duty margin of 2.69 percent ad valor em

. 4 With respect to CV p rofit, Commerce determined that JESCO’s sales to

4 Certain Oil Country Tubular Goods from Saudi Arabia: Final Determination of Sales at Less Than Fair Value , 79 Fed. Reg. 41

, 986 ( Dep’t of Commerce July 18, 2014) (final determination)

.BOOMERANG TUBE LLC v. US 6

Colombia were “ the best available option ” and explained why the Colombian transactions were preferable

. J.A. 7140−46.
Following issuance of the final determination, JESCO identified a ministerial error in Commerce’s calculation of CV profit ; s pecifically, Commerce failed to deduct certain movement expenses

. Correcting this error lowered JESCO’s CV profit , significantly reducing the dumping margin for JESCO from 2.69 percent to the de minim is value of 1.37 percent

. Commerce issued an amended negative final determination that impos ed no antidum ping dut ies on imports of OCTG s from Saudi Arabia and terminated its investigation. 5
D. Appeal to the U.S. Court of International Trade
Boomerang and U.S. Steel appealed Comm erce’s final determination to the Trade Court . The sole issue raised on appeal was whether Commerce erred in its use of JESCO’s sales to the affiliated Colombia n distributor to calculate CV profit. P laintiffs argued that JESCO’s sales to the Colombian di stributor were intra

- company tran sfers within the Duferco entity and were, therefore, not an appropriate basis to construct CV profit. Duferco and JESCO countered that plaintiffs failed to exhaust their administrative remedies with respect to this argumen t because it was not made during the dumping investig ation and was raised for the first time o n appeal before the Trade Court.

The Trade Court affirmed Commerce’s determination and found that Boomerang and U.S. Steel did not fail to

5 Amended Final Determination and Termination of the Investigation of Sales at Less Than Fair Value: Ce rtain Oil Country Tubular Goods from Saudi Arab ia , 79 Fed. Reg. 49

, 051 ( Dep’t of Commerce Aug. 19, 2014).BOOMERANG TUBE LLC v. US 7

exhaust their administ rative remedies

. 6 The Trade Court reasoned that applying the exhaustion requirement would be unwarranted in this case because the parties did not have any indication that Commerce was considering using the Colombian sales until it issued the final d etermin ation

. The Trade Court rejected the argument that U .S. Steel and Boomerang were on notice that Commerce might use the Colombian transactions because this arg ument was made in JESCO’s ca se brief. According to the Trade Court

, adopting that argument would require parties to predict among proposed substitutes in an opposing brief, and preemptively defend against it:
Denying relief on exhaustion grounds would r equire the court to conclude that plaintiffs should have predicted that Commerce might accep t JESCO’s proposal to use sales by Duferco SA/JESCO to Colombia to calculate CV profit and should have raised, in their case briefs, potential arguments against that possibility. The court d eclines to require such speculation. The court co ncludes, instead, that petitioners did not have a full and fair opportunity during the investigation to challenge the Department’s method of determi ning CV profit. Therefore, the court adjudicates on the merits the claims of all plaintiffs in this litig ation.

J.A. 10.

The Trade Court further decided that substantial ev idence supports Commerce’s treatment of the Colombian distributor as a separate entity. The Trade Court characterized Commerce’s decision as an implicit determination that the Colombian distributor is not part of the Duferco

6 Boomerang Tube LLC v. United States

, 125 F. Supp . 3d 1357 ( Ct. Int’l Trade 2015).BOOMERANG TUBE LLC v. US 8

entity , a determination supported by substantial ev idence. J.A. 14−18. As a result of the Trade Court’s decision, the de minim i s dumping margin remained in effect.
Boomerang and U.S. Steel appeal. This court has j urisdiction pursuant to 28 U.S.C. § 1295(a)(5).

S TANDARD OF R EVIEW

This court reviews decisions of the Trade Court de novo, applying the same standard of review applied by the Trade Court in reviewing the administrative record before Commerce. Union Steel v. United States , 713 F.3d 1101, 1106 (Fed. Cir. 2013)

. Thus, this court will uphold Co mmerce’s determination unless it is unsupported by su bstantial evidence in the record or otherwise not in accordance with law. Id.

We review a decision of the Trade C ourt on whether to require exhaustion in a particular case for abuse of discr etion. See Corus Staal BV v. United States , 502 F.3d 1370, 1381 (Fed. Cir. 2007). Thus, we will reverse only if the Trade Court erred in interpreting the law, exercised its judg ment on clearly erroneous findings of material fact, or made an irrational judgment in weighing the relevant factors. See Int’l Custom Prods., Inc. v. United States , 843 F.3d 1355, 1358 (Fed. Cir. 2016).

D ISCUSSION On appeal, Boomerang and U.S. Steel argue that Commerce erred when it failed to collapse the affiliated Colombian distributor into t he Duferco entity

. The go vernment, JESCO , and Duferco respond that Boomerang and U.S. Steel failed to exhaust their adminis trative remedies because they did not argue before Commerce that the Colombian distributor should be collapsed into the Duferco entity. Boomerang and U.S. Steel argue that the Trade Court acted within its discretion in finding that the exhaustion requirem ent did not apply in this case.BOOMERANG TUBE LLC v. US 9

By statute, the Trade Court “shall, where appropriate, require the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d). We have explained that this statutory mandate “indicates a congressional intent that, absent a strong contrary reason, the court should insist that pa rties exhaust their remedies before the pertinent admini str a tive agencies.” Corus Staal , 502 F.3d at 1379; see also Kingdomware Techs

. , Inc. v. United States , 136 S. Ct. 1969, 1977 (2016) (“Unlike th e word ‘may,’ which implies discretion, the word ‘shall’ usually connotes a requir ement.”).
Here, the Trade Court found that Boomerang and U.S. Steel exhausted their administrative remedies because they were not required to speculate from pos itions advanc ed in briefs which position Commerce would adopt, thereby depriving them of a full and fair opportun ity to present their argument . According to the Trade Court

, Boomerang and U.S. Steel did not have notice that Commerce might use data relating to JESCO’s third party transaction with the affiliated Colombian distribu tor to calculate CV profit. We disagree

. The Trade Court’s decision constitutes an abuse of discretion for two reasons. First, the decision is legally

erroneous to the extent it stands for the proposition that Commerce must expressly notify interested parties any time it intends to change its methodology between its preliminary and final de terminations

, despite the incl usion of the relevant data in the record and the advanc ement of arguments re lated to that data before Commerce

. There is no support for such a requirement

. Second, the decision is based on a clearly erroneous finding of material fact that the parties did not have an opportunity to raise their single entity objection to using the Colombian transactional data before Commerce

. It is undisputed that the data regarding JESCO’s transactions with the affiliated distributor were in the record prior toBOOMERANG TUBE LLC v. US 10

Commerce’s preliminary determination. At that point, U.S. Steel and Boomerang either knew or should have known that Commerce may consider those data during its calculations , especially given that the basis of CV profit was at issue

. It is also undisputed that, in its case brief, JESCO suggest ed using th ose data to calculate CV before Commerce . At that point, Boomerang and U.S. Steel had notice of the potential that Commerce might use the Colombian data to calculate JESCO ’s CV profit

. Indeed, Boomerang’ s rebuttal brief to Commerce reveals tha t it recognized JESCO’s suggestion to use the Colombian data for CV profit and that Boomerang objected to that a pproach. Unfortunately for Boomerang, its re buttal brief made no mention of its current argument that the affilia ted Colombian entity should be collapsed into the Duferco entity. As such, the argument was not exhausted before Commerce and should not have been considered by the Trade Court

. C ONCLUSION Because Boomerang and U.S. Steel failed to exhaust administrative remedies before Commerce, the Trade Court should have dismissed this appeal without reaching the merits. Its failure to do so was an abuse of discretion. Accordingly, we vacate the Trade Court’s decision and remand for proceedings in accordance with this opinion

. VACATED AND REMANDED

C OSTS

Each party to bear its own costs.