By TIOL News Service

WASHINGTON DC, MAY 22, 2020: IN a major development early this week, the US Department of Commerce (USDOC) excluded Pune-based Ultra Engineers from the ongoing Antidumping (“AD”) and Countervailing duty (“CVD”) investigations of forged fluid end blocks (“FEB”) from India.

The background

On January 8, 2020, the USDOC initiated Antidumping and Countervailing duty investigations of FEBs, whether unfinished, semi-finished, or finished from several countries including India.

The FEBs are typically used in the manufacture or service of hydraulic pumps for drilling or hydraulic fracturing in the oil and gas industry. The pump's "fluid end" produces the pumping process with valves, pistons, and liners, while the "power end" converts the rotation of the drive shaft to the reciprocating motion of the pistons. FEBs are purchased by pump manufacturers such as FTS International, Gardner Denver, Halliburton, and Schlumberger.

As per its established practice, USDOC selected the two largest exporters from India – Ultra Engineers and Bharat Forge – for detailed investigation. Both parties are based in Pune.

Notwithstanding Ultra Engineers vigorous protestations through written and oral arguments and video presentations, that its product – FEB assembly - was different from FEB and was not covered by the scope of the AD / CVD petition, the USDOC nonetheless progressed with its investigation.

However, subsequently, USDOC was persuaded based on some crafty lawyering, summarized below:

• Ultra’s products are not FEBs but finished “FEB assemblies” that are duly autofrettaged, glass beaded, shot-blasted, painted and assembled, and which are fully ready to mount on frac trucks.

• FEB assemblies should be excluded because they require no additional processing for use on a frac truck, whereas a FEB does require additional processing.

• Contrary to Petitioner’s arguments that inclusion of a suction manifold was necessary for a FEB assembly, Ultra’s Counsels established that Ultra’s FEB Assemblies cannot, as a practical matter be attached to suction manifolds at time of importation (and, in fact, do not require any further manufacturing prior to installation after importation), and since multiple FEB Assemblies are used with one suction manifold (which has a longer life than an FEB Assembly), Ultra’s FEB Assemblies should be excluded from these investigations.

• Suction manifolds are reusable, pre-installed on a frac truck, and often last years. In
comparison, a FEB assembly’s useful life is expected to be only months.

• It is not feasible to ship a fluid end block assembly with the suction manifold attached,
largely due to the suction manifold’s size.

Ultra Engineers is represented by Washington DC based reputed law firm Grunfeld Desiderio Lebowitz Silverman & Klestadt LLP. Its Counsel, Dharmendra Choudhary, explains that “we have finally been able to establish a clear bright line distinction between the physical characteristics of finished FEB Assemblies and FEBs. We successfully evidenced that Ultra’s FEB Assemblies are produced by Ultra in machining and assembly facilities which are distinctly different than the forging mills in which FEBs are produced. Creation of FEB Assemblies requires fine machining of forged blocks and the assembly of finished FEB’s with multiple, sophisticated parts and components, which substantially transforms the FEB into a new article of commerce, distinctly different from the FEB from which it was made. Thus, it follows that FEBs and FEB Assemblies ultimately have different end users/customers. Accordingly, Ultra’s FEB Assemblies belong to a separate class or kind of merchandise than FEBs.”

This huge victory ensures that Ultra Engineers is out of an unending cycle of US AD / CVD investigations and can now focus on expanding its business in the US market.