Saha Thai Steel Pipe Pub. Co. v. United States ( 2020 )

Slip Op. 20-181
UNITED STATES COURT OF INTERNATIONAL TRADE
SAHA THAI STEEL PIPE PUBLIC
COMPANY LIMITED,
Plaintiff,
and
THAI PREMIUM PIPE COMPANY LTD.
and PACIFIC PIPE PUBLIC COMPANY
LIMITED,
Before: Jennifer Choe-Groves, Judge
Consolidated Plaintiffs,
Consol. Court No. 18-00214
v.
UNITED STATES,
Defendant,
and
WHEATLAND TUBE COMPANY,
Defendant-Intervenor.
OPINION AND ORDER
[Remanding the U.S. Department of Commerce’s remand results in the 2016–2017
administrative review of the antidumping duty order covering circular welded carbon steel pipes
and tubes from Thailand.]
Dated: December 21, 2020
Daniel L. Porter, Tung Nguyen, and Kimberly Reynolds, Curtis, Mallet-Prevost, Colt & Mosle
LLP, of Washington, D.C., for Plaintiff Saha Thai Steel Pipe Public Company Limited.
Robert G. Gosselink, Jonathan M. Freed, and Aqmar Rahman, Trade Pacific, PLLC, of
Washington, D.C., for Consolidated Plaintiff Thai Premium Pipe Company Ltd.
Consol. Court No. 18-00214 Page 2
Lizbeth R. Levinson, Ronald M. Wisla, and Brittney R. Powell, Fox Rothschild LLP, of
Washington, D.C., for Consolidated Plaintiff Pacific Pipe Public Company Limited.
Elizabeth A. Speck, Senior Trial Counsel, and L. Misha Preheim, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C.,
for Defendant United States. With them on the brief were Joseph H. Hunt, Assistant Attorney
General, and Jeanne E. Davidson, Director. Of counsel on the brief was Brandon J. Custard,
Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
of Commerce.
Roger B. Schagrin, Elizabeth J. Drake, Christopher T. Cloutier, and Luke A. Meisner, Schagrin
Associates, of Washington, D.C., for Defendant-Intervenor Wheatland Tube Company.
Choe-Groves, Judge: Plaintiff Saha Thai Steel Pipe Public Company Limited
(“Saha Thai”) and Consolidated Plaintiffs Thai Premium Pipe Company Limited (“Thai
Premium”) and Pacific Pipe Public Company Limited (“Pacific Pipe”) (collectively, “Plaintiffs”)
filed this consolidated action challenging the final results published by the U.S. Department of
Commerce (“Commerce”) in the 2016–2017 administrative review of the antidumping duty
order on circular welded carbon steel pipes and tubes (“CWP”) from Thailand. See Circular
Welded Carbon Steel Pipes and Tubes From Thailand (“Final Results”), 83 Fed. Reg. 51,927
(Dep’t Commerce Oct. 15, 2018) (final results of antidumping duty administrative review; 2016–
2017); see also Decision Mem. for the Final Results of Antidumping Duty Admin. Review;
2016–2017, PD 143 (Oct. 4, 2018) (“Final Decision Memorandum” or “Final IDM”). 1 Before
the court are the Final Results of Redetermination Pursuant to Remand, ECF Nos. 62, 63
(“Remand Results”), which the court ordered in Saha Thai Steel Pipe Public Co. v. United States
(“Saha Thai I”), 43 CIT __, 422 F. Supp. 3d 1363 (2019).
Plaintiffs argue that Commerce did not comply with the court’s remand order, which
required Commerce to reconsider its unlawful particular market situation adjustment in
1
Citations to the administrative record reflect the public record (“PD”) document numbers.
Consol. Court No. 18-00214 Page 3
accordance with the court’s opinion, noting the absence of a direct instruction from the court for
Commerce to reverse its particular market situation adjustment. [Thai Premium]’s Comments
O’ppn Remand Redetermination at 5–6, ECF Nos. 65, 66 (“Thai Premium Cmts.”); Pl. Saha
Thai’s Comments Commerce’s Redetermination Remand at 2–3, ECF No. 67 (“Saha Thai
Cmts.”); Pl. Pacific Pipe’s Comments Commerce’s Remand Redetermination at 2–3, ECF No. 68
(“Pacific Pipe Cmts.”). Plaintiffs assert that Commerce’s Remand Results set forth an
impermissible new justification for a particular market situation adjustment to the cost of
production that is contrary to the court’s remand order, Commerce’s regulations, the applicable
statute, and procedural fairness. Thai Premium Cmts. at 7, 9; Saha Thai Cmts. at 3; Pacific Pipe
Cmts. at 3.
Thai Premium asserts that normal value for Thai Premium was based on constructed
value in the Final Results and asks the court to address whether Commerce’s particular market
situation adjustments in the Final Results were supported by substantial evidence. Thai Premium
Cmts. at 3–4. In the Constructed Value Profit section of the Remand Results, Commerce noted
Thai Premium’s assertion that in the Final Results “Commerce used [constructed value] as a
basis for normal value for Thai Premium because Thai Premium did not have sales of the foreign
like product in the ordinary course of trade . . . .” Remand Results at 22–23 (citing Thai
Premium’s comments to the draft remand results). On remand, however, the basis for Thai
Premium’s constructed value was not the lack of sales of the foreign like product in the ordinary
course of trade but Commerce’s particular market situation determinations, which the court
discusses below. Id. at 7–9. Because Commerce changed its methodology in the Remand
Results, the issues of (1) whether Thai Premium’s normal value was properly based on
constructed value due to the lack of sales of the foreign like product in the ordinary course of
Consol. Court No. 18-00214 Page 4
trade, and (2) whether Commerce’s subsequent particular market situation adjustments were
supported by substantial evidence in the Final Results are not before the court at this time.
For the following reasons, the court remands the Remand Results.
BACKGROUND
The court presumes familiarity with the facts and procedural history as set forth in its
prior opinion and recounts the facts relevant to the court’s review of the Remand Results. See
Saha Thai I, 43 CIT at __, 422 F. Supp. 3d at 1365–67.
Defendant-Intervenor Wheatland Tube Company (“Wheatland”) submitted factual
information alleging that a particular market situation in Thailand during the period of review
distorted the costs of hot-rolled steel coil. Wheatland Allegation Letter at 1, PD 69–71 (Feb. 5,
2018) (“Wheatland Allegation”). Wheatland alleged the existence of two independent particular
market situations, either one of which was purportedly sufficient on its own to distort the cost of
production of CWP: (1) the Royal Thai Government subsidized Thai producers of hot-rolled coil,
enabling its sale at below-market prices to downstream producers of CWP, and (2) the prices for
imports of hot-rolled coil into Thailand were distorted through dumping, subsidization, and
global overcapacity. Id. at 4–5. Wheatland requested that Commerce “use an alternative
calculation methodology to calculate constructed value under 19 U.S.C. § 1677b(e) in this
proceeding.” Id. at 1. Commerce accepted Wheatland’s submission alleging the existence of a
particular market situation as to cost of production under 19 C.F.R. § 351.301(c)(2)(v) and set a
deadline for submissions to rebut, clarify, or correct the Wheatland Allegation. Commerce
Deadline Mem. at 1–2, PD 81 (Mar. 21, 2018). Saha Thai and Pacific Pipe submitted rebuttal
factual information. Saha Thai Rebuttal, PD 83 (Mar. 28, 2018); Pacific Pipe Rebuttal, PD 84–
85 (Mar. 28, 2018).
Consol. Court No. 18-00214 Page 5
In the Final Results, Commerce determined that a particular market situation distorted the
acquisition cost of hot-rolled coil, a major CWP input, and applied an upward adjustment to the
respondents’ reported cost of production. 2 Final IDM at 8–10. Commerce conducted the sales-
below-cost test and disregarded certain of Saha Thai’s, Pacific Pipe’s, and Thai Premium’s home
market sales made at prices below the cost of production. See Circular Welded Carbon Steel
Pipes and Tubes from Thailand: Decision Mem. for the Prelim. Results of Antidumping Duty
Admin. Review; 2016–2017 at 15–16, PD 87 (Apr. 3, 2018) (“Preliminary Decision
Memorandum” or “Prelim. DM”). Commerce calculated normal value from the remaining
above-cost home market sales and stated expressly that “[it] calculated [normal value] based on
the price Pacific Pipe, Saha Thai, and Thai Premium reported for home market sales . . . .” Id. at
16. “Where [Commerce] w[as] unable to determine [normal value] based on home market sale
prices of comparable merchandise, . . . [Commerce] based [normal value] on constructed value
(CV).” Id. Commerce did not state in the Preliminary Decision Memorandum or the Final
Decision Memorandum that normal value for Thai Premium was based on constructed value.
See Prelim. DM; Final IDM. Commerce calculated Plaintiffs’ weighted-average antidumping
margins as 28% for Saha Thai, 30.61% for Pacific Pipe, and 30.98% for Thai Premium. Final
Results, 83 Fed. Reg. at 51,928. The court concluded in Saha Thai I that Commerce’s cost-based
particular market situation adjustment was unlawful and remanded to Commerce “for further
consideration consistent with this opinion.” 43 CIT at __, 422 F. Supp. 3d at 1371.
Commerce filed the Remand Results under respectful protest and stated that it disagreed
with the court in Saha Thai I. Remand Results at 1, 6. Rather than reverse its particular market
2
Saha Thai, Pacific Pipe, and Thai Premium were the only three producer-exporters covered by
this administrative review. Final IDM at 2. All three were individually examined as mandatory
respondents. Remand Results at 3.
Consol. Court No. 18-00214 Page 6
situation determination, Commerce maintained its determination that a particular market
situation distorted the cost of production. Id. at 7–8. Commerce declined to conduct the sales-
below-cost test because it explained that the sales-below-cost test would not be “meaningful”
without an adjustment to the cost of production to account for the particular market situation. Id.
Commerce instead made a particular market situation determination under 19 U.S.C.
§ 1677(15)(C), stating that the distorted cost of production prevented a proper comparison
between home market sales and export prices, and disregarding all home market sales. Id. at 8.
Commerce based normal value on constructed value for each respondent on remand. Id. at 1–2,
8–9. Commerce made a particular market situation determination under 19 U.S.C. § 1677b(e) as
to cost of production and calculated constructed value with an adjustment to the cost of
production as an alternative calculation methodology. Id. at 8–9. Commerce calculated
constructed value profit for each respondent by the alternative method of using Saha Thai’s
home market selling expense ratios and profit rate from the 2015–2016 administrative review.
Id. at 9–11.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c),
which grant the court authority to review actions contesting the final results of an administrative
review of an antidumping duty order. The court will uphold Commerce’s determinations unless
they are unsupported by substantial evidence on the record or otherwise not in accordance with
the law. 19 U.S.C. § 1516a(b)(1)(B)(i). The court also reviews determinations made on remand
for compliance with the court’s remand order. Ad Hoc Shrimp Trade Action Comm. v. United
States, 38 CIT __, __, 992 F. Supp. 2d 1285, 1290 (2014), aff’d, 802 F.3d 1339 (Fed. Cir. 2015).
Consol. Court No. 18-00214 Page 7
DISCUSSION
I. Governing Law
Commerce determines antidumping duties by calculating the amount by which the
normal value of subject merchandise exceeds the export price or the constructed export price for
the merchandise. 19 U.S.C. § 1673. When reviewing antidumping duties in an administrative
review, Commerce must determine: (1) the normal value and export price or constructed export
price of each entry of the subject merchandise, and (2) the dumping margin for each such entry.
Id. § 1675(a)(1)(B), (a)(2)(A). The statute dictates the steps by which Commerce may calculate
normal value “to achieve a fair comparison” with export price or constructed export price. Id.
§ 1677b(a).
First, the statute specifies the methodology for Commerce to determine which sales
should be considered and disregarded in calculating normal value. Normal value is “the price at
which the foreign like product is first sold . . . in the exporting country . . . in the ordinary course
of trade.” Id. § 1677b(a)(1)(B)(i). Sales outside the ordinary course of trade are excluded from
normal value. “Ordinary course of trade” is defined in Section 1677(15) as excluding: (1) sales
made at less than the cost of production, and (2) sales that cannot be compared properly with the
export price or constructed export price due to a particular market situation. Id. § 1677(15)(A),
(C). To determine whether “sales . . . have been made at prices that represent less than the cost
of production,” the statute directs Commerce to conduct the sales-below-cost test. Id.
§ 1677b(b)(1). The cost of production is defined by statute to include the cost of materials and
processing, amounts for selling, general, and administrative expenses, and the cost of all
containers and expenses incidental for shipment. Id. § 1677b(b)(3). Sales that Commerce
determines, by application of the sales-below-cost test, were made at prices below the cost of
Consol. Court No. 18-00214 Page 8
production, or that Commerce determines were made in a particular market situation, are outside
the ordinary course of trade and are disregarded from the calculation of normal value. See id.
§ 1677b(b)(1), (a)(1)(B)(i). “Whenever such sales are disregarded, normal value shall be based
on the remaining sales of the foreign like product in the ordinary course of trade.” See id.
§§ 1677b(a)(1)(B)(i), (b)(1); 1677(15)(A), (C).
Second, when using market prices to determine normal value, Commerce may make
certain adjustments to the remaining home market prices. The statute lists authorized
adjustments for incidental shipping and delivery expenses, direct taxes, and differences between
the subject merchandise and foreign like products in quantity, circumstances of sale, or level of
trade. Id. § 1677b(a)(6), (7).
Third, if Commerce cannot determine the normal value of the subject merchandise based
on home market sales, then Commerce may use qualifying third-country sales or constructed
value as a basis for normal value. Id. § 1677b(a)(4), (a)(1)(B)(ii), (b)(1). Constructed value
represents: (1) the cost of materials and fabrication or other processing of any kind used in
producing the merchandise; (2) the actual amounts incurred and realized for selling, general, and
administrative expenses, and for profits, in connection with the production and sales of a foreign
like product, in the ordinary course of trade, for consumption in the foreign country; and (3) the
cost of packing the subject merchandise. Id. § 1677b(e). When calculating constructed value, if
Commerce determines that a particular market situation exists “such that the cost of materials
and fabrication or other processing of any kind does not accurately reflect the cost of production
in the ordinary course of trade, [then] [Commerce] may use . . . any other calculation
methodology.” Id.
Consol. Court No. 18-00214 Page 9
II. Particular Market Situation Allegation
Plaintiffs argue that Commerce made an impermissible “sales-based” particular market
situation determination on remand, when no “sales-based” particular market situation allegation
was submitted before the time period expired and interested parties were not permitted to submit
rebuttal factual information. Thai Premium Cmts. at 8–9; Saha Thai Cmts. at 7–10; Pacific Pipe
Cmts. at 3–5. Commerce asserted that it relied on remand on the same cost-based particular
market situation determination it made in the Final Results. Remand Results at 15–16; see also
Def.-Intervenor [Wheatland]’s Comments Commerce’s Redetermination Remand at 4–5, ECF
No. 69 (“Wheatland Cmts.”).
The statute recognizes two types of particular market situations. The first is a particular
market situation that prevents a proper comparison between home market sales and the export
price or constructed export price under Section 1677(15)(C). 19 U.S.C. § 1677(15)(C). The
second is a particular market situation that prevents “the cost of materials and fabrication or
other processing of any kind” from “accurately reflect[ing] the cost of production in the ordinary
course of trade . . . .” Id. § 1677b(e).
The applicable regulation provides that “allegations regarding market viability or the
exceptions in paragraph (c)(2) of this section, must be filed, with all supporting factual
information, in accordance with § 351.301(d)(1).” 19 C.F.R. § 351.404(d). One exception
provided in paragraph (c)(2) specifies that “[t]he Secretary may decline to calculate normal value
in a particular market . . . [if] a particular market situation exists that does not permit a proper
comparison with the export price or constructed export price . . . .” Id. § 351.404(c)(2)(i).
Section 351.301 does not have a subsection (d), but subsection (c) provides that “[a]llegations
regarding market viability in an antidumping investigation or administrative review, including
Consol. Court No. 18-00214 Page 10
the exceptions in § 351.404(c)(2), are due, with all supporting factual information, 10 days after
the respondent interested party files the response to the relevant section of the questionnaire,
unless the Secretary alters this time limit.” Id. § 351.301(c)(2)(i); see Final IDM at 5
(recognizing that subsection (c) sets the deadline for allegations as to market viability, including
the exceptions in Section 351.404(c)(2)). No deadline is specified for the submission of “factual
information in support of other allegations not specified in paragraphs (c)(2)(i)–(iv) of this
section,” but if Commerce accepts such factual submission, Commerce must “issue a schedule
providing deadlines for submission of factual information to rebut, clarify or correct the factual
information.” 19 C.F.R. § 351.301(c)(2)(v).
Here, Commerce properly accepted the Wheatland Allegation and afforded interested
parties the opportunity to submit information to rebut, clarify, or correct the allegation.
Wheatland alleged the existence of a particular market situation that distorted the cost of hot-
rolled steel coil. Wheatland Allegation at 1, 4–5. The Wheatland Allegation did not pertain to
market viability or a particular market situation that did not permit a proper comparison with the
export price or constructed export price, which would have fallen under 19 C.F.R. § 351.404(d)
as one of the exceptions identified in 19 C.F.R. § 351.404(c)(2). The deadline for factual
submissions under 19 C.F.R. § 351.404(d) did not apply to the Wheatland Allegation. Instead,
the Wheatland Allegation fell under 19 C.F.R. § 351.301(c)(2)(v) for “Other allegations,” for
which there was no specified time limit. See Wheatland Allegation at 1, 4–5; Remand Results at
15. The type of particular market situation alleged in the Wheatland Allegation and the
applicable submission deadline were not altered by Commerce’s subsequent actions. The court
concludes that Commerce’s actions in accepting the Wheatland Allegation under 19 C.F.R.
§ 351.301(c)(2)(v) and setting a deadline for interested parties to submit information to rebut,
Consol. Court No. 18-00214 Page 11
clarify, or correct the Wheatland Allegation were consistent with its regulations, and the
Wheatland Allegation regarding a particular market situation distorting the cost of hot-rolled
steel coil was not time-barred as argued by Plaintiffs.
III. Unauthorized Particular Market Situation Determinations
Plaintiffs assert that Commerce based normal value on constructed value without
disregarding home market sales as outside the ordinary course of trade by any of the statutorily
mandated methods. Thai Premium Cmts. at 9–12; Saha Thai Cmts. at 3–13; Pacific Pipe Cmts.
at 5–7. Plaintiffs argue also that Commerce must show that a particular market situation
prevented a proper comparison with the export price or constructed export price before it may
disregard home market sales as being outside the ordinary course of trade under 19 U.S.C.
§ 1677(15)(C). Thai Premium Cmts. at 9–11; Saha Thai Cmts. at 12–13; see Pacific Pipe Cmts.
at 6–7. Saha Thai contends that Commerce did not follow the applicable statutory requirement
of 19 U.S.C. § 1677b(b)(1), which requires Commerce to first show that home market sales were
made at prices below the cost of production by conducting the sales-below-cost test to determine
which sales should be disregarded as outside the ordinary course of trade. Saha Thai Cmts. at
11–12.
In the Final Results, Commerce determined that a particular market situation existed that
distorted the cost of production and conducted the sales-below-cost test with an adjustment to the
cost of production. Final IDM at 9–10. Commerce disregarded the below-cost home market
sales and based normal value on the remaining home market sales. Prelim. DM at 16. The court
concluded in Saha Thai I that Commerce was not permitted to “apply a cost-based particular
market situation adjustment in the context of a sales-based comparison.” 43 CIT at __, 422 F.
Supp. 3d at 1371.
Consol. Court No. 18-00214 Page 12
Commerce maintained the same particular market situation determination on remand that
it made in the Final Results. Remand Results at 16. “Commerce relied on the cost-based
[particular market situation] finding made in the Final Results in the Draft Results of Remand
Redetermination, with no change to [its] determination that a cost-based [particular market
situation] existed during the period of review.” Id. Commerce asserted that a particular market
situation in Thailand distorted the acquisition cost of hot-rolled steel coil, a major input for the
subject merchandise, such that the respondents’ cost of production of the subject merchandise
did not reflect accurately the cost of production of the subject merchandise in the ordinary course
of trade. Id. at 19–20.
Commerce did not conduct the sales-below-cost test on remand. Id. at 7–8. Commerce
declared that conducting the sales-below-cost test would not be “meaningful” without an
adjustment to the cost of production—which the court prohibited in Saha Thai I—to account for
the particular market situation and to compare “home market sale prices to a cost of production
that does not accurately reflect production costs in the ordinary course of trade fails to
accomplish the intent of the sales-below-cost test, which is to determine whether the
respondents’ home market sales were made in the ordinary course of trade.” Id.; see also id. at
19; Wheatland Cmts. at 2. Commerce noted that “without being able to make a [particular
market situation] adjustment in calculating the respondents’ cost of production and perform an
accurate sales-below-cost test, . . . the [particular market situation] in Thailand which distorted
the acquisition cost of [hot-rolled coil] has resulted in each respondent’s home market sales
being outside of the ordinary course of trade.” Remand Results at 15.
Commerce’s exclusion of home market sales due to distortions in the cost of production
is not authorized by the statute. Congress provided specifically in Section 1677(15)(A) for
Consol. Court No. 18-00214 Page 13
Commerce to consider sales outside the ordinary course of trade when sales are below the cost of
production. The path specified by Congress to determine that sales are below the cost of
production is for Commerce to first conduct the sales-below-cost test set forth in Section
1677b(b)(1) to affirmatively confirm that sales are made below the cost of production as
calculated according to Section 1677b(b)(3). Section 1677b(b)(1) provides:
Whenever the administering authority has reasonable grounds to believe or suspect
that sales of the foreign like product under consideration for the determination of
normal value have been made at prices which represent less than the cost of
production of that product, the administering authority shall determine whether, in
fact, such sales were made at less than the cost of production. If the administering
authority determines that sales made at less than the cost of production—
(A) have been made within an extended period of time in substantial
quantities, and
(B) were not at prices which permit recovery of all costs within a reasonable
period of time,
such sales may be disregarded in the determination of normal value. Whenever
such sales are disregarded, normal value shall be based on the remaining sales of
the foreign like product in the ordinary course of trade. If no sales made in the
ordinary course of trade remain, the normal value shall be based on the constructed
value of the merchandise.
19 U.S.C. § 1677b(b)(1). The statute directs Commerce to compare the reported home market
sales prices to the cost of production calculated by adding the component costs and expenses
listed in Section 1677b(b)(3). Id. § 1677b(b)(1), (3); see also Prelim. DM at 15. After
conducting the sales-below-cost test, Commerce shall disregard those reported home market
sales prices that are less than the calculated cost of production as outside the ordinary course of
trade. 19 U.S.C. § 1677(15)–(15)(A).
Here, Commerce did not follow the specified method when it disregarded as outside the
ordinary course of trade sales made purportedly at prices below the cost of production, without
confirming that the sales were in fact made below the cost of production by conducting the sales-
Consol. Court No. 18-00214 Page 14
below-cost test. The statute requires Commerce to conduct the sales-below-cost test set forth in
Section 1677b(b)(1) before disregarding below-cost sales as outside the ordinary course of trade
under Section 1677(15)(A). Nothing in the statute grants Commerce authority to bypass the
sales-below-cost test, and the specificity of the sales-below-cost test leaves no ambiguity. See
Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992) (“[C]ourts must presume that a
legislature says in a statute what it means and means in a statute what it says there.”). The court
concludes that Commerce’s exclusion of home market sales due to distortions in the cost of
production without conducting the sales-below-cost test to determine whether those sales were in
fact outside the ordinary course of trade is contrary to law.
Commerce’s exclusion of below-cost sales is not redeemed by invoking Section
1677(15)(C) with a determination that the distorted cost of production created a particular market
situation preventing a proper comparison between reported home market sales prices and export
price. Section 504 of the Trade Preferences Extension Act of 2015 (“TPEA”), Pub. L. No. 114-
27, 129 Stat. 362, added a particular market situation provision to the list of sales and
transactions outside the ordinary course of trade. The amended provision provides:
(15) Ordinary course of trade. The term “ordinary course of trade” means the
conditions and practices which, for a reasonable time prior to the exportation of the
subject merchandise, have been normal in the trade under consideration with
respect to merchandise of the same class or kind. The administering authority shall
consider the following sales and transactions, among others, to be outside the
ordinary course of trade:
(A) Sales disregarded under section 773(b)(1) [19 USCS § 1677b(b)(1)].
...
(C) Situations in which the administering authority determines that the
particular market situation prevents a proper comparison with the
export price or constructed export price.
19 U.S.C. § 1677(15). The statute defines “situations” narrowly as “sales and transactions” by
directing Commerce to consider “sales and transactions . . . to be outside the ordinary course of
Consol. Court No. 18-00214 Page 15
trade [including] . . . [s]ituations in which [Commerce] determines that the particular market
situation prevents a proper comparison with the export price or constructed export price.” See
id.
Commerce did not explain how a particular market situation affecting sales and
transactions in the home market prevented a proper comparison between reported home market
sales prices and export prices. In fact, Commerce conceded in the Remand Results that “[it]
ha[d] not considered whether a [particular market situation] existed in the home market for the
sale of the foreign like product such that home market sales cannot be used as the basis for
normal value.” Remand Results at 15. No allegation that a particular market situation affecting
sales and transactions in the home market and preventing a proper comparison between reported
home market sales prices and export prices was submitted.
Commerce determined instead “that the [particular market situation] with respect to the
cost of production of circular pipes and tubes prevent[ed] a proper comparison of normal value
based on the respondents’ home market sale prices with the respondents’ export prices or
constructed export prices.” Id. at 8, 19–20; see also Def.’s Resp. Comments Remand
Redetermination at 12–13, ECF No. 70 (“Def. Resp.”). Commerce did not explain how a
particular market situation affecting the cost of production prevented a comparison between the
reported home market sales prices and the export prices. Commerce merely repeated its
conclusory determination that the particular market situation as to cost of production prevented a
proper comparison:
[S]ection [1677](15)(C) of the Act states that Commerce shall consider situations
in which we determine that a particular market situation prevents a proper
comparison of normal value with the export price or constructed export price, to be
outside the ordinary course of trade. On this basis, we find that the existence of the
[particular market situation] concerning the cost of production of circular pipes and
Consol. Court No. 18-00214 Page 16
tubes in Thailand precludes a proper comparison of normal value with U.S. price,
pursuant to section [1677](15)(C) of the Act.
Remand Results at 19–20.
The statute cannot be read to authorize Commerce to make a particular market situation
determination under Section 1677(15)(C) on the basis of distorted cost of production. Congress
provided a separate mechanism under Section 1677(15)(A) for Commerce to consider sales and
transactions outside the ordinary course of trade when the cost of production of that merchandise
is implicated. Because Congress specified in Sections 1677(15)(A) and 1677b(b) the method by
which Commerce may disregard below-cost sales, Congress obviated consideration of a
particular market situation affecting the cost of production from Section 1677(15)(C). An
alternative reading would render impermissibly superfluous Sections 1677(15)(A) and 1677b(b).
Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 576 U.S. 519, 538 (2015)
(citing Gustafson v. Alloyd Co., 513 U.S. 561, 574 (1995) (“[T]he Court will avoid a reading
which renders some words altogether redundant.”)). The distinction between exclusions of sales
as below the cost of production under Section 1677(15)(A) and exclusions of sales due to a
particular market situation preventing proper comparison under Section 1677(15)(C) “makes a
great deal of sense.” See Husteel Co. v. United States, 44 CIT __, __, 426 F. Supp. 3d 1376,
1388 (2020). A particular market situation that affects the cost of production would presumably
affect prices for domestic sales and export sales alike and thus would have no preclusive effect
on the comparison between the two. See id. The court concludes that Commerce’s cost-based
particular market situation determination to disregard sales as outside the ordinary course of
trade under Section 1677(15)(C) is contrary to law.
In response to Pacific Pipe’s and Saha Thai’s argument that Commerce cannot exclude
home market sales based on a cost-based particular market situation determination, Defendant
Consol. Court No. 18-00214 Page 17
asserts:
Because the term “ordinary course of trade” is contained in 19 U.S.C. § 1677b(e),
Commerce acted in accordance with the statute when it “found that a cost-based
[particular market situation] existed in Thailand which distorted the acquisition cost
of [hot-rolled coil], the primary input used in the production of circular pipes and
tubes, [and, as a result] . . . that the respondents’ cost of materials and fabrication
or other processing do not accurately reflect the cost of production of circular pipes
and tubes in the ordinary course of trade.
Def. Resp. at 9–10 (alterations in original). Defendant also argues that “Commerce’s
determination that it could not use the respondent’s [sic] home market sales as the basis for
normal value because they are outside of the ordinary course of trade” was lawful. Id. at 12.
Defendant apparently argues that Commerce can disregard sales as outside the ordinary course of
trade due to distortions in the cost of production based on Section 1677b(e)’s reference to the
ordinary course of trade.
Commerce cannot invoke Section 1677b(e) as its authority to exclude home market sales
and base normal value on constructed value. Section 504 of the TPEA amended the statutory
provisions governing constructed value. The amendment provided for Commerce to determine
whether a particular market situation distorted the cost of production when computing
constructed value. The amended language provides:
[F]or purposes of paragraph (1) [in reference to calculating constructed value] if a
particular market situation exists such that the cost of materials and fabrication or
other processing of any kind does not accurately reflect the cost of production in
the ordinary course of trade, the administering authority [Commerce] may use
another calculation methodology under this subtitle or any other calculation
methodology.
19 U.S.C. § 1677b(e). Section 1677b(e) only applies if the precondition “for purposes of
paragraph (1)” is met. Id. Paragraph (1) lists the costs to be added to calculate constructed
value. Id. § 1677b(e)(1). Commerce must meet the precondition of calculating constructed
value before it can rely on Section 1677b(e) to make a cost-based particular market situation
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determination. Here, Commerce had not met the precondition of calculating constructed value
when it made a particular market situation determination based on distorted cost of production.
Contrary to Defendant’s assertion, Commerce was not authorized to make a cost-based particular
market situation determination under Section 1677b(e), when the precondition of calculating
constructed value was not yet satisfied.
Defendant’s argument conflates the language in Section 1677(15) (“the following sales
and transactions, among others, to be outside the ordinary course of trade”) with the language in
Section 1677b(e) (“the cost of production in the ordinary course of trade”) based on the common
phrase “ordinary course of trade.” See id. §§ 1677b(e); 1677(15). The statutory framework sets
forth a sequence of steps, as explained above, that Commerce must follow in determining
antidumping duties. Sections 1677b(a)(1)(B)(i) and 1677(15) provide that the home market sales
price excludes sales and transactions made outside the ordinary course of trade. Id.
§§ 1677b(a)(1)(B)(i); 1677(15). If the conditions to base normal value on constructed value are
met, Section 1677b(e) provides that Commerce may consider whether the cost of production is
reflected accurately in the ordinary course of trade. Id. § 1677b(e). The fact that the phrase
“ordinary course of trade” is found in Section 1677b(e) does not insert “distorted cost of
production” into Section 1677(15)’s list of sales and transactions outside the ordinary course of
trade. Defendant’s interpretation is “untenable in light of [the statute] as a whole.” Dep’t of
Revenue of Or. v. ACF Indus., 510 U.S. 332, 343 (1994) (citing United Sav. Assn. of Tex. v.
Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988) (“A provision that may seem
ambiguous in isolation is often clarified by the remainder of the statutory scheme . . . because
only one of the permissible meanings produces a substantive effect that is compatible with the
rest of the law . . . .”)).
Consol. Court No. 18-00214 Page 19
Commerce did not follow the statutory framework in this case. Commerce’s
determination that the cost of production is not reflected accurately in the ordinary course of
trade is not interchangeable with a determination that sales are outside the ordinary course of
trade.
The court concludes that Commerce’s exclusion of home market sales is not in
accordance with the law because Commerce unlawfully excluded purported below-cost sales
without conducting the sales-below-cost test and Commerce unlawfully determined that a
particular market situation existed under Section 1677(15)(C) based on distortions to the cost of
production. The court concludes that Commerce’s application of an alternative calculation
methodology is not in accordance with the law because Commerce was not authorized to conduct
a cost-based particular market situation analysis under Section 1677b(e) without a statutory
ground for calculating constructed value. The court directs Commerce to remove the particular
market situation determinations under Sections 1677(15)(C) and 1677b(e) as to the cost of
production on second remand and recalculate the respondents’ weighted-average dumping
margins without disregarding home market sales from the calculation of normal value on that
basis.
CONCLUSION
The court concludes that Commerce’s cost-based particular market situation
determinations are not in accordance with the law.
Accordingly, it is hereby
ORDERED that the Remand Results are remanded for Commerce to remove the cost-
based particular market situation determinations and recalculate the relevant margins without a
particular market situation adjustment; and it is further
Consol. Court No. 18-00214 Page 20
ORDERED that Commerce shall afford the parties at least twelve (12) business days to
comment on the draft second remand results; and it is further
ORDERED that this case shall proceed according to the following schedule:
(1) Commerce shall file the second remand results on or before February 16,
2021;
(2) Commerce shall file the administrative record on or before March 2, 2021;
(3) Comments in opposition to the second remand results shall be filed on or
before April 2, 2021;
(4) Comments in support of the second remand results shall be filed on or before
May 3, 2021; and
(5) The joint appendix shall be filed on or before May 17, 2021.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: December 21, 2020
New York, New York