                                        Slip Op. 14-23

               UNITED STATES COURT OF INTERNATIONAL TRADE

 DOWNHOLE PIPE & EQUIPMENT, LP,

                       Plaintiff,

                       v.

 UNITED STATES and UNITED STATES
 INTERNATIONAL TRADE COMMISSION,
                                                          Before: Timothy C. Stanceu, Judge
                       Defendants,
                                                          Court No. 11-00080
                       and

 VAM DRILLING USA, TEXAS STEEL
 CONVERSIONS, INC., ROTARY DRILLING
 TOOLS, TMK IPSCO, and UNITED STATES
 STEEL CORPORATION,

                       Defendant-intervenors.



                                    OPINION AND ORDER

[Denying motion of four defendant-intervenors for rehearing of court’s decision remanding an
affirmative threat determination of the U.S. International Trade Commission and for a stay
pending the court’s decision on rehearing]

                                                                 Date: February 25, 2014

       Mark B. Lehnardt, Lehnardt & Lehnardt LLC, of Liberty, MO for plaintiff Downhole
Pipe & Equipment, LP. With him on the brief was Irene H. Chen, Chen Law Group LLC, of
Rockville, MD.

        David A. Goldfine, Attorney-Advisor, U.S. International Trade Commission, of
Washington, DC, for defendants United States International Trade Commission and United
States. With him on the brief were Paul R. Bardos, Assistant General Counsel and Neal J.
Reynolds, Assistant General Counsel.

       Roger B. Schagrin and John W. Bohn, Schagrin Associates, of Washington, DC, for
defendant-intervenors VAM Drilling, Texas Steel Conversions, Inc., Rotary Drilling Tools, and
TMK IPSCO.
Court No. 11-00080                                                                          Page 2

      Stephen P. Vaughn, Robert E. Lighthizer, and James C. Hecht, Skadden, Arps, Slate,
Meagher & Flom LLP, of Washington, DC, for defendant-intervenor United States Steel
Corporation.

       Stanceu, Judge: Four defendant-intervenors in this case, VAM Drilling USA, Texas Steel

Conversions, Inc., Rotary Drilling Tools, and TMK IPSCO, jointly move for rehearing of the

court’s decision remanding an affirmative final threat determination of the United States

International Trade Commission (“ITC” or the “Commission”). Def.-intervenors’ Mot. for

Reh’g (Sept. 18, 2013) ECF No. 87-1 (“Def.-intervenors’ Mot.”) (confidential).

Defendant-intervenors’ motion also seeks a stay of the remand order “pending the resolution of

this motion.” Id. at 2. The court denies this motion.

                                        I. BACKGROUND

       The background of this case is set forth in the court’s August 19, 2013 opinion and is

supplemented herein. Downhole Pipe & Equipment Co. v. United States, 37 CIT __, __, Slip

Op. 13-108 at 1-2, ECF No. 81 (confidential), ECF No. 107 (public) (“Downhole Pipe”).

       Plaintiff challenges a material injury determination reached by the United States

International Trade Commission (“ITC” or the “Commission”) concerning steel drill pipe and

steel drill collars (“subject merchandise”) from the People’s Republic of China (“China” or the

“PRC”). See Drill Pipe & Drill Collars From China, 76 Fed. Reg. 11,812 (Mar. 3, 2011) (“Final

Injury Determination”); Drill Pipe & Drill Collars from China, Inv. Nos. 701-TA-474

and 731-TA-1176 (Final), USITC Pub. 4213 (Feb. 2011) (“ITC Report”), available at

http://www.usitc.gov/publications/701_731/pub4213.pdf (last visited Feb. 25, 2014). The court

held oral argument on July 26, 2012, ECF No. 75, and issued an opinion on August 19, 2013

remanding the Commission’s determination that an industry in the United States, although not

incurring material injury by reason of dumped and subsidized imports of subject merchandise, is
Court No. 11-00080                                                                          Page 3

threatened with material injury by reason of those imports. Downhole Pipe, 37 CIT at __, Slip

Op. 13-108 at 22.

       The four moving defendant-intervenors filed their motion for rehearing and a stay on

September 18, 2013, Def.-intervenors’ Mot. 2, and both the Commission and the fifth

defendant-intervenor, United States Steel Corporation (“U.S. Steel”), expressed support for the

motion on September 27, 2013. Resp. of Def. U.S. Int’l Trade Comm’n in Supp. of Def.-

intervenors’ Mot. for Reh’g & Stay of Comm’n’s Remand Proceeding 1-2, ECF No. 90; Resp. in

Support of Defendant-Intervors’ [sic] Mot. for Rehearing & for a Stay 1, ECF No. 91. Plaintiff

opposes both the rehearing and the requested stay. Pl.’s Resp. in Opp’n to Def.-intervenors’

Mot. for Recons. & Oral Argument (Sept. 27, 2013), ECF No. 92 (confidential).

       On October 28, 2013, the Commission filed a motion requesting that the court extend the

time period for the Commission’s filing of its remand redetermination in response to Downhole

Pipe. Defendant U.S. Int’l Trade Comm’n’s Unopposed Mot. to Extend Remand Schedule 2

(Oct. 28, 2013), ECF No. 94. All five defendant-intervenors consented to the motion for an

extension of time. Id. Although the defendant-intervenors’ motion for rehearing and stay was

still pending before the court, the Commission’s consent motion for an extension of time did not

request that the period for filing the remand redetermination be calculated from the date of a

ruling by the court on the motion for rehearing and stay. Instead, the ITC sought, and the court

granted, a definite filing date of December 11, 2013. Id. at 2; Order 1 (Oct. 29, 2013),

ECF No. 95. On that date, the ITC filed its remand redetermination, in which it reconsidered its

previous determination and “determine[d] that an industry in the United States is neither

materially injured nor threatened with material injury by reason of subject imports.” Views of

the Comm’n on Remand & Dissenting Views of Chairman Williamson & Comm’r Pinkert on
Court No. 11-00080                                                                            Page 4

Remand 3, 11 (Dec. 11, 2013), ECF No. 96 (Public), ECF No 97 (Confidential). The proceeding

for the filing of comments on the remand redetermination is ongoing.

                                         II. DISCUSSION

       Defendant-intervenors seek reconsideration of the court’s decision on two grounds. First,

they point to a passage from the court’s opinion that they characterize as “‘fundamental or

significant error’” meriting reconsideration. Mem. in Supp. of Mot. for Reh’g 3 (Sept. 18, 2013),

ECF No. 87 (“Def.-intervenors’ Mem.”) (confidential) (quoting USEC, Inc., v. United States,

25 CIT 229, 230, 138 F. Supp. 2d 1335, 1336-37 (2001)). Second, relying on two decisions of

the Court of Appeals for the Federal Circuit (“Court of Appeals”), defendant-intervenors argue

that the court should have determined “whether substantial evidence supports the Commission’s

overall determination” before ordering a remand. Def.-intervenors’ Mem. 7.

       For the reasons discussed below, the court denies the motion for reconsideration and,

accordingly, the motion for a stay.

A. The Passage from the Court’s Opinion Identified by Defendant-Intervenors Was Dicta Rather
              than a Basis Underlying the Court’s Decision to Order a Remand

       The passage from the court’s opinion in Downhole Pipe on which the movants base their

motion for rehearing reads as follows:

       Defendant’s counsel acknowledged at oral argument that the record lacks
       substantial evidence to support one or more of the ITC’s findings concerning
       purchasing by large customers during the POR. 1 According to defendant’s
       argument, the erroneous finding or findings are not critical to the chain of
       causation, and the court should disregard any error is harmless.

Downhole Pipe, 37 CIT at __, Slip Op. 13-108 at 17. See Def.-intervenors’ Mem. 3-4.

According to the moving defendant-intervenors, the transcript of the oral argument, a portion of


       1
          The reference to “POR” should have read “POI” for “period of investigation.” This
error is not the basis of defendant-intervenors’ motion for reconsideration.
Court No. 11-00080                                                                            Page 5

which is quoted in the motion, shows that “[a]t no point during this discussion did counsel for the

Commission ‘acknowledge’ that the record lacks substantial evidence to support the

Commission’s findings.” Def.-intervenors’ Mem. 3. According to the movants, the question of

harmless error arose “solely in connection” with an error involving a particular purchase and was

not a concession that one or more of the Commission’s findings concerning purchases made by

large customers was unsupported by substantial evidence. Id. at 4.

       Twelve days after the four defendant-intervenors filed their motion, the ITC filed a

redacted transcript of the oral argument. Redacted Oral Tr., ECF No. 93 (Sept. 30, 2013). The

court has reviewed the transcript and its opinion in Downhole Pipe. The transcript reveals that

any concession of error on the part of counsel for the Commission pertained to sales made to a

large purchaser, a purchaser the Commission’s staff report incorrectly characterized as having

purchased subject merchandise during the period of investigation when in fact the purchases in

question were of non-subject imports. Redacted Oral Tr. 40-41. While conceding this error,

counsel for the ITC did not actually concede that any findings reached by the Commission were

unsupported by substantial evidence. Id.

       It is apparent from the opinion in Downhole Pipe that the passage identified by the

movants is dicta, for it formed no part of the court’s reasoning on why certain findings reached

by the Commission were unsupported by substantial record evidence. Moreover, this passage

was not the basis of the court’s decision to remand the affirmative threat determination to the

Commission. This passage follows the court’s conclusion that a remand was required and

appears in the context of the court’s rebutting an argument that any erroneous finding or findings

the Commission may have made constituted harmless error, an argument that counsel for the ITC

did not in fact make. See Downhole Pipe, 37 CIT at __, Slip Op. 13-108 at 17. This passage

appears in the Downhole Pipe opinion after the court, on the previous page of the slip opinion,
Court No. 11-00080                                                                           Page 6

summarized the erroneous findings and conclusions. Id., 37 CIT at __, Slip Op. 13-108 at 16.

As the court stated on that previous page, “[i]n summary, from its review of the record evidence

in this case, and particularly its review of the evidence contained in the responses to the ITC’s

purchasers’ questionnaire submitted by the domestic purchasers that the ITC considered ‘large,’

the court concludes that substantial evidence does not support two findings made by the

Commission and two general conclusions the ITC reached on the basis of those two findings.”

Id. at 16 (emphasis added).

       It is the findings that the court held to be unsupported by record evidence, together with

conclusions drawn therefrom, and not any concession by the Commission’s counsel, that led the

court to conclude that a remand was required. As the opinion states, “[b]ecause of the

importance the ITC placed on the two erroneous findings and unwarranted conclusions discussed

previously in this Opinion, the court directs the ITC to reconsider its affirmative threat

determination on the whole, absent those findings and conclusions, and issue a redetermination

upon remand that is supported by substantial evidence on the record considered as a whole.”

Downhole Pipe, 37 CIT at __, Slip Op. 13-108 at 22. As the court also stated in its opinion, “[a]

court must review an agency determination on the reasoning the agency puts forth.” Id., 37 CIT

at __, Slip Op. 13-108 at 17 (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). No

plausible reading of the court’s opinion in Downhole Pipe supports a conclusion that the court in

any way based its holding on a concession made by counsel for the ITC or counsel for any other

party appearing before the court.

       In summary, in rebutting a “harmless error” argument, the court mistakenly attributed

that argument to the Commission’s counsel, who did not in fact make the concession the court

mentioned. Because the court’s opinion demonstrates conclusively that neither the “concession”

nor the mistaken attribution played any part in the court’s reasoning on why a remand was
Court No. 11-00080                                                                            Page 7

required, the court is unable to agree with the movants that a “‘fundamental or significant

error,’” Def.-intervenors’ Mem. 3 (citation omitted), requires reconsideration of the court’s

decision in Downhole Pipe.

B. The Appellate Decisions Cited in the Motion for Rehearing Do Not Require Reconsideration
                         of the Court’s Decision in Downhole Pipe

       The four moving defendant-intervenors argue that their motion for rehearing is supported

by two decisions by the Court of Appeals, Nippon Steel Corp. v. United States, 458 F.3d 1345

(Fed. Cir. 2006) (“Nippon Steel”) and NSK Corp. v. U.S. Int’l Trade Comm’n, 716 F.3d 1352

(Fed. Cir. 2013) (“NSK”).

       The moving parties argue that Nippon Steel required the court to consider whether

substantial evidence supports the remainder of the Commission’s determination even if the court

were to conclude that certain findings were not lawful. Def.-intervenors’ Mem. 5-7.

Defendant-intervenor U.S. Steel already raised this argument before the court, and in Downhole

Pipe the court explained how this case is distinguishable from Nippon Steel. Downhole Pipe, 37

CIT at __, Slip Op. 13-108 at 18-19. As the court noted, in Nippon Steel the Court of Appeals

upheld the Commission’s affirmative injury determination that had been set aside by the trade

court even though the Court of Appeals concluded that the trade court correctly determined that

the Commission had made an “obvious error” when ascertaining the way in which subject

merchandise undersold the domestic like product. Nippon Steel, 458 F.3d at 1353-54, 1358-59;

Downhole Pipe, 37 CIT at __, Slip Op. 13-108 at 18-19. The Downhole Pipe opinion explained

that in Nippon Steel the Court of Appeals concluded that “the affirmative injury determination,

despite the error, was supported by an ‘adequate basis in support of the Commission’s choice of

evidentiary weight’ that required deference to the Commission under the substantial evidence

standard.” Downhole Pipe, 37 CIT at __, Slip Op. 13-108 at 18-19 (citing Nippon Steel,
Court No. 11-00080                                                                            Page 8

458 F.3d at 1358-59). In distinguishing this case from Nippon Steel, the Downhole Pipe opinion

described that “[i]n this case, the Commission’s own presentation of its affirmative threat

determination causes the court to conclude that the ITC gave significant weight to the factual

findings, and the associated conclusions, that the court views as erroneous.” Id., 37 CIT at __,

Slip Op. 13-108 at 18.

       Citing NSK, the four moving defendant-intervenors argue that “‘[a]n intervening change

in controlling law,’ issued between the time of oral argument and the Court’s decision, further

clarifies what the Nippon Steel case stands for.” Def.-intervenors’ Mem. 5. According to the

moving defendant-intervenors, “[t]he NSK decision makes it clear that Nippon Steel cannot be

distinguished on the grounds that the Commission’s own determination gave weight to factual

findings, even if those findings turned out to be erroneous, as long as the record as a whole

supports the Commission’s conclusions.” Id. at 7. The motion adds that “defendant-intervenors

believe that the record as a whole does support the Commission’s conclusions, but that

discussion is beyond the scope of the motion for rehearing.” Id.

       The court disagrees that NSK effected an intervening change in controlling law according

to which the court, in adjudicating plaintiff’s claim in Downhole Pipe, was required to sustain

the affirmative threat determination on the basis of the evidentiary record considered as a whole.

As the core of their argument, the moving defendant-intervenors quote a passage from NSK that

quotes language from Nippon Steel although that passage does not support the argument they

advance. Id. at 6. This passage reads as follows:

       “Under the substantial evidence standard, when adequate evidence exists on both
       sides of an issue, assigning evidentiary weight falls exclusively within the
       authority of the Commission.” Nippon Steel Corp. v. United States,
       458 F.3d 1345, 1358 (Fed. Cir. 2006). “‘It is the Commission’s task to evaluate
       the evidence it collects during its investigation,’” and decisions “‘such as the
       weight to be assigned to a particular piece of evidence, lie at the core of that
Court No. 11-00080                                                                           Page 9

       evaluative process.’” Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350
       (quoting U.S. Steel Grp. v. United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996)).

NSK, 716 F.3d at 1366. The moving defendant-intervenors quote this passage for the basic

principle that when adequate evidence exists on both sides of an issue it is exclusively the task of

the ITC to evaluate and assign evidentiary weight to individual pieces of evidence.

Def.-intervenors’ Mem. 6. Nothing in this quoted passage, and nothing elsewhere in the NSK or

Nippon Steel opinions, establishes a precedent according to which the court erred in remanding

the affirmative threat determination in the circumstances presented by this case. In Downhole

Pipe, the court did not assign weight to the various pieces of evidence supporting an affirmative

threat determination or to the various other pieces of evidence detracting from such a

determination. The court appropriately left that task to the ITC on remand. See Downhole Pipe,

37 CIT at __, Slip Op. 13-108 at 22.

       As it was required to do in adjudicating plaintiff’s claim under the substantial evidence

standard of review, the court in Downhole Pipe decided the much narrower question of whether

substantial evidence existed on the record to support certain individual, and related, factual

findings that were significant to the Commission’s ultimate determination of threat. Id. Because

the court found two related findings of fact to be unsupported by substantial evidence, the court

appropriately left it to the Commission to reconsider the ultimate affirmative threat determination

and issue a remand redetermination that does not rest on those two impermissible findings. Id.

Were the court to do what defendant-intervenors suggest, i.e., sustain the Commission’s

affirmative threat determination on the basis of the Commission’s remaining findings, it would

be doing so, implicitly and inescapably, on the basis of the record evidence underlying those

remaining findings. In that event, the court in effect would be making a determination on the

ultimate issue of threat to the domestic industry that is appropriately left to the ITC.
Court No. 11-00080                                                                       Page 10

                            C. The Court Denies the Motion for a Stay

       Because the court finds no basis for rehearing of the court’s decision in Downhole Pipe,

the court also denies the request of the four defendant-intervenors for a stay. See

Def.-intervenors’ Mot. 1.

                                 III. CONCLUSION AND ORDER

       For the reasons discussed in the foregoing, upon consideration of the motion of

defendant-intervenors VAM Drilling USA, Texas Steel Conversions, Inc., Rotary Drilling Tools,

and TMK IPSCO for rehearing and a stay, the responses of plaintiff, defendant, and defendant-

intervenor U.S. Steel thereto, upon consideration of all papers and proceedings had herein, and

upon due deliberation, it is hereby

       ORDERED that the motion for rehearing and stay be, and hereby is, denied.


                                                             /s/ Timothy C. Stanceu
                                                             Timothy C. Stanceu
                                                             Judge

Dated: February 25, 2014
       New York, New York
