Dillinger France S.A. v. United States

Slip Op. 18-
UNITED STATES COURT OF INTERNATIONAL TRADE
DILLINGER FRANCE S.A.,
Plaintiff,
v.
UNITED STATES, Before: Gary S. Katzmann, Judge
Court No. 17-00159
Defendant,
and
NUCOR CORPORATION and SSAB ENTERPRISES
LLC,
Defendant-Intervenor.
OPINION
[Plaintiff’s motion for judgment on the agency record is granted in part and Commerce’s Final
Results are remanded consistent with this opinion.]
Dated:2FWREHU
Marc E. Montalbine, DeKieffer & Horgan PLCC, of Washington, DC, argued for plaintiff. With
him on the brief were Gregory S. Menegaz and Alexandra H. Salzman.
Vito S. Solitro, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, DC, argued for defendant. With him on the brief were Chad A. Readler,
Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant
Director. Of counsel on the brief was Jessica DiPietro, Attorney, Office of the Chief Counsel for
Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.
Stephanie M. Bell, Wiley Rein, LLP, of Washington, DC, argued for defendant-intervenor, Nucor
Corporation. With her on the brief were Alan H. Price and Christopher B. Weld.
Roger B. Schagrin, Schagrin Associates, of Washington DC, for defendant-intervenor, SSAB
Enterprises LLC.
Court No. 17-00159 Page 2
Katzmann, Judge: At the center of this case is the challenge to the Department of
Commerce’s (“Commerce”) final affirmative determination of sales at less-than-fair value in its
anti-dumping investigation of certain carbon and alloy steel cut-to-length (“CTL”) plate from
France. Certain Carbon and Alloy Steel Cut-To-Length Plate from Austria, Belgium, France, the
Federal Republic of Germany, Italy, Japan, the Republic of Korea, and Taiwan: Amended Final
Affirmative Antidumping Determinations for France, the Federal Republic of Germany, the
Republic of Korea and Taiwan, and Antidumping Duty Orders (“Final Determination”), 82 Fed.
Reg. 24,096 (May 25, 2017), P.R. 456 and accompanying Issues and Decision Memorandum
(“IDM”) (Mar. 29, 2017), P.R. 445. Plaintiff Dillinger France S.A. (“Dillinger”) contests multiple
aspects of Commerce’s decision -- including the level of trade analysis, the application of partial
adverse facts available, the use of the differential pricing methodology, and cost-shifting between
products -- and asks the court to remand the Final Determination. Pl.’s Br., Dec. 18, 2017, ECF
Nos. 26–28. Defendant the United States (“the Government”) and Defendant-Intervenor Nucor
Corporation (“Nucor”) ask the court to sustain Commerce’s decision in its entirety. Def.’s Br.,
Feb. 16, 2018, ECF No. 32; Def.-Inter.’s Br., Feb. 20, 2018, ECF Nos. 38–39. The court sustains
the Final Determination in part and remands Commerce’s application of partial adverse facts
available for reconsideration.
BACKGROUND
I. Legal Background.
Pursuant to United States antidumping law, Commerce must impose antidumping duties
on subject merchandise that “is being, or is likely to be, sold in the United States at less than fair
value” and that causes material injury or threat of material injury to a domestic industry. 19 U.S.C.
Court No. 17-00159 Page 3
§ 1673 (2012). 1 “Sales at less than fair value are those sales for which the ‘normal value’ (the
price a producer charges in its home market) exceeds the ‘export price’ (the price of the product
in the United States).” Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1322, 1326
(Fed. Cir. 2017) (quoting Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013)).
Normal value is defined as “the price at which the foreign like product is first sold . . . in the
exporting country [i.e., the home market].” 19 U.S.C. § 1677b(a)(l)(B)(i). 19 U.S.C. §
1677b(a)(1)(B)(i) dictates that Commerce make a fair comparison between the export price and
normal value, and specifically, that the comparison between export price and normal value be
made at the same level of trade. See also Hyundai Steel Company v. United States, 41 CIT __,
__, 279 F. Supp. 3d 1349, 1356 (2017); Pasta Zara SpA v. United States, 34 CIT 355, 369, 703 F.
Supp. 2d 1317, 1329 (2010).
Section 1677f-1(d)(1) and 19 C.F.R. § 351.414(b) describe three methods by which
Commerce may compare the normal value to the export price: (1) average-to-average (“A-to-A”),
a comparison of weighted-average normal values to weighted-average export prices for
comparable merchandise; (2) transaction-to-transaction (“T-to-T”), a comparison of normal values
based on individual transactions to the export prices of individual transactions for comparable
merchandise; and (3) average to transaction (“A-to-T”), a comparison of weighted-average normal
values to the export prices of individual transactions for comparable merchandise. Commerce
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provision of Title 19
of the U.S. Code, 2012 edition. Citations to 19 U.S.C. § 1677e, however, are not to the U.S. Code
2012 edition, but to the unofficial U.S. Code Annotated 2018 edition. The current U.S.C.A.
reflects the amendments made to 19 U.S.C. § 1677e (2012) by the Trade Preferences Extension
Act of 2015, Pub. L. No. 114–27, § 502, 129 Stat. 362, 383–84 (2015) (“TPEA”). The TPEA
amendments are applicable to all determinations made on or after August 6, 2015 and, therefore,
are applicable to this proceeding. See Dates of Application of Amendments to the Antidumping
and Countervailing Duty Laws Made by the Trade Preferences Extension Act of 2015, 80 Fed.
Reg. 46,793, 46,794 (Dep’t Commerce Aug. 6, 2015).
Court No. 17-00159 Page 4
“will use the average-to-average method unless [Commerce] determines another method is
appropriate in a particular case.” 19 C.F.R. § 351.414(c)(1); see Stanley Works (Langfang)
Fastening Systems Co., Ltd. v. United States, 41 CIT __, __, 279 F. Supp. 3d 1172, 1177–78
(2017). Commerce may use the A-to-T method if “(i) there is a pattern of export prices . . . for
comparable merchandise that differ significantly among purchasers, regions, or periods of time,
and (ii) [Commerce] explains why such differences cannot be taken into account using a method
described in paragraph (1)(A)(i) [A-to-A] or (ii) [T-to-T].” 19 U.S.C. § 1677f-1(d)(1)(B); see
Stanley Works, 279 F. Supp. 3d at 1176–77.
When either necessary information is not available on the record or a respondent (1)
withholds information that has been requested by Commerce, (2) fails to provide such information
by Commerce’s deadlines for submission of the information or in the form and manner requested,
(3) significantly impedes an antidumping proceeding, or (4) provides information that cannot be
verified, then Commerce shall “use the facts otherwise available in reaching the applicable
determination.” 19 U.S.C. § 1677e(a). This subsection thus provides Commerce with a
methodology to fill informational gaps when necessary or requested information is missing from
the administrative record. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed.
Cir. 2003); Hyundai Steel, 279 F. Supp. 3d. at 1355. Commerce “may use an inference that is
adverse to the interests of that party in selecting from among the facts otherwise available” if it
“finds that an interested party has failed to cooperate by not acting to the best of its ability to
comply with a request for information[.]” 19 U.S.C. § 1677e(b)(1)(A). A respondent’s failure to
cooperate to “the best of its ability” is “determined by assessing whether [it] has put forth its
maximum effort to provide Commerce with full and complete answers to all inquiries.” Nippon
Steel, 337 F.3d at 1382.
Court No. 17-00159 Page 5
II. Factual and Procedural Background.
Commerce initiated a less than fair value investigation regarding certain carbon and alloy
steel CTL plate from countries including France. Certain Carbon and Alloy Steel Cut-To-Length
Plate From Austria, Belgium, Brazil, France, the Federal Republic of Germany, Italy, Japan, the
Republic of Korea, the People’s Republic of China, South Africa, Taiwan, and the Republic of
Turkey: Initiation of Less-Than- Fair-Value Investigations, 81 Fed. Reg. 27,089 (Dep’t Commerce
May 5, 2016), P.R. 43. Dillinger was chosen as one of the mandatory respondents 2 from France.
Certain Carbon and Alloy Steel Cut-To- Length Plate From France: Preliminary Determination of
Sales at Less Than Fair Value and Postponement of Final Determination, 81 Fed. Reg. 79,437
(Dep’t Commerce Nov. 14, 2016), P.R. 372, and accompanying Preliminary Decision
Memorandum (“PDM”) at 2, P.R. 364. In its initial questionnaire, Commerce requested affiliate
sales information, including, if the sales were not at arm’s length, the affiliate’s sales to unaffiliated
customers. Initial Antidumping Duty Questionnaire at B-5 and 6 (May 31, 2016), P.R. 84. In its
Section A questionnaire response, Dillinger reported three channels of distribution for its home
market sales: (1) direct sales from its factory, (2) sales through affiliated service centers, and (3)
2
In antidumping duty investigations or administrative reviews, Commerce may select mandatory
respondents pursuant to 19 U.S.C. § 1677f-1(c)(2), which provides:
If it is not practicable to make individual weighted average dumping margin
determinations [in investigations or administrative reviews] because of the large
number of exporters or producers involved in the investigation or review, the
administering authority may determine the weighted average dumping margins for
a reasonable number of exporters or producers by limiting its examination to—
(A) a sample of exporters, producers, or types of products that is statistically
valid based on the information available to the administering authority at
the time of selection, or
(B) exporters and producers accounting for the largest volume of the subject
merchandise from the exporting country that can be reasonably examined.
Court No. 17-00159 Page 6
sales of non-prime merchandise. Letter from deKieffer & Horgan, PLLC to Sec’y Commerce, re:
Certain Carbon and Alloy Steel Cut-To-Length Plate from France; Dillinger France S.A. Section
A Resp. (June 29, 2016) at A-12 & 13, C.R. 70–83, P.R. 154–52. As part of its response to
supplemental questionnaires issued by Commerce, Dillinger also submitted a “selling activities
chart,” in which it identified the selling activities undertaken for each channel of distribution and
the degree of involvement in each activity. Letter from deKieffer & Horgan, PLLC to Sec’y
Commerce, re: Certain Carbon and Alloy Steel Cut-To-Length Plate from France; Dillinger France
S.A. and Berg Steel Pipe Corp; Second Suppl. Sections A, B & C Resp. (Oct. 21, 2016) at 2–7,
C.R. 362–63, P.R. 343.
Dillinger initially informed Commerce that it had difficulties collecting and reporting
certain information on downstream 3 sales made by Dillinger’s home market service center
Eurodécoupe, SAS (“Eurodécoupe”). Letter from deKieffer & Horgan, PLLC to Sec’y Commerce
(June 8, 2016) at 1–3, C.R. 35, P.R. 102 (“June 8 Letter”). However, upon further request by
Commerce, Dillinger was able to identify all of Eurodécoupe’s home market sales by searching
Eurodécoupe’s sales and inventory records, including sales prices for all transactions, but was
unable to identify the manufacturer of plate sold in every transaction. Third Suppl. Sections B &
C Resp. (Nov. 2, 2016) at 2–5, C.R. 374, P.R. 358.
Commerce published its preliminary determination on November 14, 2016, and amended
this determination on December 2, 2016 in light of ministerial errors. PDM; Certain Carbon and
Alloy Steel Cut-to-Length Plate From France: Amended Preliminary Determination of Sales at
3
The Merriam-Webster dictionary defines “downstream” as “in or toward the latter stages of a
usually industrial process or the stages (such as marketing) after manufacture.” Downstream,
MERRIAM-WEBSTER.COM, https://www.merriam-webster.com/dictionary/downstream (last visited
Oct. 25, 2018).
Court No. 17-00159 Page 7
Less Than Fair Value, 81 Fed. Reg. 87,019 (Dec. 2, 2016), P.R. 390. In its preliminary
determination, Commerce found that there was one level of trade for Dillinger’s home market
sales. PDM at 12. Commerce also applied facts available for the Eurodécoupe transactions in
which the plate manufacturer remained unidentified by attributing all sales to Dillinger and
consequently using these transactions in its dumping margin calculation. Id. at 10. Commerce
applied its differential pricing method to calculate Dillinger’s dumping margin, and found that the
use of its A-to-T method was appropriate in this case. Id. at 4–7. Additionally, when evaluating
Dillinger’s cost of production, Commerce allocated costs between prime and non-prime plate
according to values recorded in Dillinger’s normal books and records. Id. at 15.
Following the submission of case and rebuttal briefs, Commerce published its final
determination on April 4, 2017, and, in response to ministerial error comments, published an
amended final determination on May 15, 2017 in which it calculated a final antidumping margin
of 6.15 percent for Dillinger. Final Determination. In its IDM, Commerce continued to find that
there was one level of trade for Dillinger’s home market sales, to apply the A-to-T differential
pricing method, and to allocate costs between prime and non-prime plate according to values
recorded in Dillinger’s normal books and records. IDM at 12–13. Commerce also applied partial
adverse facts available (“AFA”) for the Eurodécoupe transactions in which the plate manufacturer
remained unidentified. Rather than using the reported sales price information for these
transactions, Commerce used “the highest non-aberrational net price among Dillinger France’s
downstream home market sales, and assigned that price to all of these sales where Dillinger France
failed to report the manufacturer of the CTL plate in [Commerce’s] margin calculations for the
final determination.” Id. at 47.
Court No. 17-00159 Page 8
Dillinger initiated this action challenging Commerce’s Final Determination on June 23,
2017, Summ., ECF No. 1, and filed its complaint on July 24, 2017, Compl., ECF No. 8. This court
granted Nucor’s consent motion to intervene as defendant-intervenor on August 24, 2017. Order,
ECF No. 20. Dillinger filed its Motion for Judgment on the Agency Record on December 18,
2017. Pl.’s Br. The Government submitted its Response in Opposition to Plaintiff’s Rule 56.2
Motion on February 16, 2018. Def.’s Br. Nucor filed its response brief, and subsequently its
revised response brief, on February 16, 2018 and February 20, 2018, respectively. Def.-Inter.’s
Br., ECF Nos. 32–33, 38–39. Dillinger submitted its reply on March 26, 2018. Pl.’s Reply, ECF
Nos. 42–43. This court heard oral argument on October 2, 2018. ECF No. 49.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C.
§ 1516a(a)(2)(A)(i)(I) and (a)(2)(B)(iii). The standard of review in this action is set forth in 19
U.S.C. § 1516a(b)(l)(B)(i): “[t]he court shall hold unlawful any determination, finding or
conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in
accordance with law.”
DISCUSSION
I. Commerce’s Level of Trade Determination.
Noting that in the context of making a “fair comparison” between the export price and
normal value, the Act specifically directs that the comparison be made at the same level of trade,
19 U.S.C. § 1677b(a)(1)(B)(i), see supra, p. 3, Dillinger argues that Commerce violated this
provision when it collapsed all of Dillinger’s reported home market and United States channels of
distribution into one level of trade. In particular, Dillinger contends that Commerce’s level of
trade determination is unsupported by substantial evidence because it failed to recognize a separate
Court No. 17-00159 Page 9
level of trade of sales made through affiliated service centers. Pl.’s Br. at 4. In its view, the record
established that Dillinger’s “affiliated service centers perform the functions normally performed
by distributors and therefore sales by these service centers are at a more remote level of trade than
direct sales by Dillinger as a producer.” Pl.’s Br. at 5. Dillinger notes that, under Commerce’s
regulations, different levels of trade represent separate marketing stages, such as direct sales by
producers to customers and sales by resellers or distributors. Pl.’s Br. at 4–5 (citing 19 C.F.R. §
351.412(c)(2); Preamble to Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296,
27,371 (May 19, 1997) (“Preamble”)). Dillinger states that record evidence shows that the
affiliated service centers function as distributors by warehousing plate and selling it to downstream
customers in smaller lot sizes or cut to order and that the affiliated centers have their own sales,
logistics, and production personnel. Pl.’s Br. at 5–6 (citing Letter from Judith L. Holdsworth,
deKieffer & Horgan, to Sec’y of Commerce (June 8, 2016) at 1–3, C.R. 35, P.R. 102; Second
Suppl. Sections A, B, & C Resp. (Oct. 21, 2016) at App. SA-15, p. 7, C.R. 362. Therefore,
according to Dillinger, the service centers exist at a different marketing stage than the direct sales,
and Commerce’s decision that Dillinger’s selling activities were at only one level of trade was in
“direct conflict” with the Preamble and unsupported by substantial evidence in the record.
Substantial evidence is “more than a mere scintilla,” but “less than the weight of the
evidence.” Altx, Inc. v. United States, 370 F.3d 1108, 1116 (Fed. Cir. 2004). “A finding is
supported by substantial evidence if a reasonable mind might accept the evidence as sufficient to
support the finding.” Maverick Tube Corp. v. United States, 857 F.3d 1353, 1359 (Fed. Cir. 2017)
(citing Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938)). “The substantiality of
evidence must take into account whatever in the record fairly detracts from its weight.” CS Wind
Vietnam Co. v. United States, 832 F.3d 1367, 1373 (Fed. Cir. 2016). This includes “contradictory
Court No. 17-00159 Page 10
evidence or evidence from which conflicting inferences could be drawn.” Suramerica de
Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed. Cir. 1994) (quoting Universal
Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)).
The court finds that Commerce’s level of trade determination was supported by substantial
evidence. Pursuant to Commerce’s regulations, sales are made at different levels of trade if they
are made at different marketing stages. 19 C.F.R. § 351.412(c)(2). “Substantial differences in
selling activities are a necessary, but not sufficient, condition for determining that there is a
difference in the stage of marketing.” Id. Commerce typically divides selling activities into four
categories: 1) sales and marketing; 2) freight and delivery; 3) inventory maintenance and
warehousing; and 4) warrant and technical support. See Hyundai Steel, 279 F. Supp. 3d at 1369;
Certain Orange Juice from Brazil, 75 Fed. Reg. 50,999 (Dep’t Commerce Aug. 18, 2010) and
accompanying IDM at cmt. 7 (dividing selling functions into the four categories).
Based on the evidence in the record, Commerce reasonably concluded that the sales
activities of the affiliated service centers did not differ substantially enough to merit a separate
level of trade. IDM at 41–42. Dillinger reported two selling functions performed by factories that
the affiliated service centers did not -- rebates and personnel training -- while the affiliated service
centers performed one selling function -- inventory maintenance -- which Dillinger’s factories did
not. Id. at 40–42, 42 n.133; Selling Functions Chart. Commerce determined that these differences
in selling activities were not substantial enough to warrant separate levels of trade. IDM at 42;
Pasta Zara SpA v. United States, 781 F. Supp. 2d 1297, 1301 (“Commerce permissibly determined
on the record as a whole that Zara’s selling activities directed to its local customers were not so
separate from Zara’s other selling activities.”); Hyundai Steel, 279 F. Supp. 3d at 1370
(“Commerce reasonably determined that the differences here were not substantial. According to
Court No. 17-00159 Page 11
evidence in the record, overall, only two out of the sixteen selling functions -- cash discounts and
direct guarantees -- provided in the home market were not provided in the U.S. market.”);
Sucocitrico Cutrale Ltda. v. United States, 36 CIT ___, ___, 2012 WL 2317764, at *6 (2012)
(“Although Commerce noted minor differences between the two markets, these differences to not
rise to the level required by the statute.”).
Dillinger argues that Commerce impermissibly did not account for differences in “sawing
and cutting” functions between the factories and affiliated service centers, and cites Pasta Zara
SpA, 703 F. Supp. 2d 1317 (2010) for support. Pl.’s Br. at 9–10. That case is inapposite. There,
Commerce failed to consider packing, advertising, and freight expenses in its level of trade
analysis because those expenses had been accounted for elsewhere in its dumping calculation;
however, as the court explained, because those are selling activities under Commerce’s
regulations, they must be considered as part of the level of trade analysis. Pasta Zara, 703 F. Supp.
2d at 1327–28; see supra, p. 10 (discussing the four categories of selling activities which include
marketing, freight, and delivery). In contrast, here Commerce reasonably considered “cutting and
sawing” to be product processing, and not a selling activity, and thus did not include cutting and
sawing as a factor in its level of trade analysis. IDM at 42.
Finally, Dillinger contends that Commerce’s determination was not in accordance with law
because Commerce’s conclusion that Dillinger’s affiliated service centers and factories operated
at the same level of trade was inconsistent with Commerce’s typical treatment of affiliated service
centers. Pl.’s Br. at 7–8 (citing Notice of Final Determination of Sales at Less than Fair Value:
Certain Cold-Rolled Steel Flat Products from the United Kingdom, 81 Fed. Reg. 49,929 (July 29,
2016) and accompanying IDM at cmt. 1, p. 8 & n.21; Notice of Final Determination of Sales at
Less than Fair Value: Structural Steel Beams from Germany, 67 Fed. Reg. 35,497 (May 20, 2002)
Court No. 17-00159 Page 12
and accompanying IDM at cmt. 3; Stainless Steel Bar from Germany: Final Results of
Anitdumping Duty Administrative Review, 69 Fed. Reg. 32,982 (June 14, 2004) and
accompanying IDM at cmt. 1).
Commerce has also come to the opposite conclusion in prior cases. See, e.g., Non-Oriented
Electrical Steel From the Republic of Korea: Final Determination of Sales at Less than Fair Value
and Negative Final Determination of Critical Circumstances, 79 Fed. Reg. 61,612 (Dep’t
Commerce Oct. 14, 2014) and accompanying IDM at 8–15 (“We disagree . . . that the selling
activities associated with the reseller channel of distribution are significantly different to warrant
a[] [level of trade] designation separate from POSCO’s direct sales to unaffiliated customers.”);
Light-Walled Rectangular Pipe and Tube From Mexico: Preliminary Results and Partial
Rescission of Antidumping Administrative Review 2011–2012, 78 Fed. Reg. 54,864 (Dep’t
Commerce Sept. 6, 2013) at 8–9 (finding one level of trade where the respondent sold sales either
directly or through an affiliated reseller), unchanged in final results, 79 Fed. Reg. 5375 (Dep’t
Commerce Jan. 31, 2014); see also Corus Staal BV v. U.S. Dep’t Commerce, 27 CIT 388, 401,
259 F. Supp. 2d 1253, 1271 (2003) (“Commerce has not explained whether it generally finds that
producers and service centers operate at the same LOT -- but there is no requirement that it do so.
Rather than broadly differentiating between types of sellers, Commerce compares the observations
of different selling functions, which is consistent with statute, regulation, and SAA.”).
Moreover, the proceedings Dillinger cites in support of its position are distinct from this
case. In Cold-Rolled Steel Flat Products from the United Kingdom, there were “significant
differences in numerous selling functions,” rather than the minor differences present here. See
Cold-Rolled Steel IDM at cmt. 1. The conclusions in Structural Steel Bar from Germany and
Stainless Steel Bar from Germany were based on a level of trade analysis method no longer in use
Court No. 17-00159 Page 13
by Commerce in which it did consider further processing. See Steel Beams IDM at cmt. 3; Steel
Bar IDM at cmt. 1. Those proceedings are thus not reflective of Commerce’s current typical level
of trade practice. 4 Therefore, Commerce’s level of trade determination is supported by substantial
evidence and in accordance with law.
II. Application of Partial Adverse Facts Available to Service Center Downstream Sales.
Dillinger contends that Commerce’s application of partial adverse facts available (“AFA”)
to the downstream sales of its affiliated service centers was not supported by substantial evidence
because (1) Dillinger put forth its best efforts to provide the price and manufacturer data requested
by Commerce, and (2) for transactions where the manufacturer data was unknown but the sales
price was contained in the record, Commerce impermissibly replaced the record sales prices with
the highest non-aberrational net price among Dillinger France’s downstream home market sales.
The court determines that substantial evidence supports Commerce’s conclusion that Dillinger did
not put forth best efforts to provide the manufacturer data for all downstream service center
transactions, and thus permissibly resorted to partial AFA. However, the court concludes that
Commerce did not adequately justify its decision to ignore existing record price data and replace
this record evidence with the highest non-aberrational net price. Accordingly, the court remands
to Commerce for reconsideration of this decision.
As previously discussed, when either necessary information is not available on the record,
or a respondent (1) withholds information that has been requested by Commerce, (2) fails to
provide such information by Commerce’s deadlines for submission of the information or in the
form and manner requested, (3) significantly impedes an antidumping proceeding, or (4) provides
4
Commerce’s current analytical practice has been upheld by this court. See Alloy Piping Products,
Inc. v. United States, Slip Op. 2008-30, at 19 (CIT Mar. 13, 2008); Hyundai, 279 F. Supp. 3d at
1369.
Court No. 17-00159 Page 14
information that cannot be verified, then Commerce shall “use the facts otherwise available in
reaching the applicable determination.” 19 U.S.C. § 1677e(a). This subsection thus provides
Commerce with a methodology to fill informational gaps when necessary or requested information
is missing from the administrative record. See Nippon Steel, 337 F.3d at 1381. Commerce “may
use an inference that is adverse to the interests of that party in selecting from among the facts
otherwise available”, if it “finds that an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information[.]” 19 U.S.C. § 1677e(b)(1)(A). A
respondent’s failure to cooperate to “the best of its ability” is “determined by assessing whether
[it] has put forth its maximum effort to provide Commerce with full and complete answers to all
inquiries.” Nippon Steel, 337 F.3d at 1382.
Dillinger argues that it did indeed put forth its maximum effort to provide the information
on Eurodécoupe’s downstream sales. Pl.’s Br. at 10–19. Dillinger notes that it initially alerted
Commerce that it would have difficulty fully reporting all the requested information; however,
when Commerce continued to request that information, Dillinger asserts that it provided as much
as it could through a manual search of Eurodécoupe’s records and through reviewing the mill
certificates for individual transactions. Pl.’s Br. at 10–12; Third Suppl. Sections B & C Resp. at
2–5. According to Dillinger, it was able to report “the correct price for each and every transaction.
The only information that was missing for a small number of transactions was the manufacturer of
some of the plate.” Pl.’s Br. at 12. In its submissions, Dillinger explained that plate from various
manufacturers is co-mingled in Eurodécoupe’s warehouse and that the manufacturer information
on individual pieces that have been further processed and put back into inventory is not always
recorded. See Service Center Reporting Letter at 1–3, C.R. 35, P.R. 102; Third Suppl. Sections B
& C Resp. at 2–3. Therefore, according to Dillinger, evidence on the record suggests Dillinger
Court No. 17-00159 Page 15
put forth its best efforts and Commerce’s decision to apply partial AFA was not supported by
substantial evidence.
The Government argues that Commerce’s decision to apply partial AFA was supported by
substantial evidence. First, the Government asserts that, because Dillinger was able to provide
mill certificates for some transactions, and “Dillinger presumably would not know whether its
service center customer requires mill certificates until the time of sale,” there is no evidence on the
record that the identity of the plate sold to customers in a particular transaction was unavailable to
Dillinger. Def.’s Br. at 23. Nucor elaborates, suggesting that because “[t]here is nothing on the
record indicating that mill certificates are missing for any transaction for which no manufacturer
was identified or that Dillinger undertook any effort to find mill certificates for those transactions,”
Commerce’s determination is supported by substantial evidence. Def.-Inter.’s Br. at 20; see IDM
at 47 (finding that Dillinger had demonstrated familiarity with Eurodécoupe’s systems by
providing requested information about some sales transactions, and that, therefore, Dillinger
should have been able to report information for all sales transactions). Second, the Government
contends that “[t]he identity of the manufacturers of CTL plate resold by Dillinger’s affiliate,
Eurodécoupe, is the type of information that an importer reasonably should ‘anticipate being called
upon to produce’ and that a large steel producer, such as Dillinger, should be able to provide after
‘conduct[ing] prompt, careful, and comprehensive investigations.’” Def.’s Br. at 22 (citing IDM
at 47; Nippon Steel, 337 F.3d at 1382).
The court concludes that Commerce’s reliance on the absence of mill certificates for the
transactions with missing manufacturer data to support its determination that Dillinger could
access the missing information is unreasonable and unsupported by substantial evidence on the
record. As discussed supra, Dillinger did detail the thorough efforts it undertook to provide the
Court No. 17-00159 Page 16
mill certificates for transactions with missing manufacturer data and provided mill certificates
available to it. 5 It is unclear how the presence of mill certificates Dillinger indicates it could
provide and the absence of mill certificates which Dillinger claims were unavailable to it
substantially support the conclusion that Dillinger did have access to the missing information.
However, Commerce’s other reason for applying partial AFA -- that an importer like
Dillinger should have been aware of the need to record and provide manufacturer information on
downstream sales -- is supported by substantial evidence. As the Federal Circuit opined in Nippon
Steel, which Commerce cited as the basis for its decision:
Before making an adverse inference, Commerce must examine respondent’s
actions and assess the extent of respondent’s abilities, efforts, and cooperation in
responding to Commerce’s requests for information. Compliance with the “best of
its ability” standard is determined by assessing whether respondent has put forth its
maximum effort to provide Commerce with full and complete answers to all
inquiries in an investigation. While the standard does not require perfection and
recognizes that mistakes sometimes occur, it does not condone inattentiveness,
carelessness, or inadequate record keeping. It assumes that importers are familiar
with the rules and regulations that apply to the import activities undertaken and
requires that importers, to avoid a risk of an adverse inference determination in
responding to Commerce’s inquiries: (a) take reasonable steps to keep and maintain
full and complete records documenting the information that a reasonable importer
should anticipate being called upon to produce; (b) have familiarity with all of the
records it maintains in its possession, custody, or control; and (c) conduct prompt,
careful, and comprehensive investigations of all relevant records that refer or relate
to the imports in question to the full extent of the importers’ ability to do so.
Nippon Steel, 337 F.3d at 1382 (emphasis added). In light of Nippon Steel’s requirements,
Commerce’s determination that “[t]he information in question (i.e., the identity of the
5
Commerce requested mill certificates for eight transactions. Third Suppl. Sections B & C Resp.
at 4. In its response to Commerce, Dillinger indicated that certificates were unavailable for three
transactions because the customer had not requested mill certificates. Id. Dillinger did not provide
two additional mill certificates due to time constraints but provided the relevant manufacturer
information from the mill certificates for those two transactions. Id. at 5. The “best of its ability”
standard does not require perfection, Nippon Steel, 337 F.3d at 1382, and in light of the extensive
steps Dillinger undertook to provide Commerce with the manufacturer data, the court concludes
that Dillinger did exert maximum effort pursuant to the “best of its ability standard.”
Court No. 17-00159 Page 17
manufacturers of the CTL plate at issue that was resold by Dillinger France’s affiliate,
[Eurodécoupe]) is the type of information that a large steel manufacturer such as Dillinger France
should reasonably be able to provide,” and that Dillinger’s failure to have this information
available merited the application of partial AFA, was supported by substantial evidence. IDM at
46–47.
Dillinger argues that “when, as in this case, a respondent notifies the Department of its
difficulties in providing requested information pursuant to 19 U.S.C. § 1677m(c), the Department
may not impose adverse facts available unless it has first responded to the ‘overtures of cooperation
from the exporter/producer.’” Pl.’s Br. at 18 (quoting World Finer Foods v. United States, 24 CIT
541, 544–45 (2000)). According to Dillinger, because Commerce did not respond to Dillinger’s
letter notifying Commerce of Dillinger’s difficulty identifying the manufacturers for all
transactions, Commerce cannot apply AFA.
However, Dillinger here did not meet all of the criteria under § 1677m(c). 6 Before
Commerce is required to respond, interested parties must explain why they have difficulty
6
19 U.S.C. § 1677m(c) provides:
(c) Difficulties in meeting requirements
(1) Notification by interested party
If an interested party, promptly after receiving a request from the
administering authority or the Commission for information, notifies the
administering authority or the Commission (as the case may be) that such
party is unable to submit the information requested in the requested form
and manner, together with a full explanation and suggested alternative
forms in which such party is able to submit the information, the
administering authority or the Commission (as the case may be) shall
consider the ability of the interested party to submit the information in the
requested form and manner and may modify such requirements to the extent
necessary to avoid imposing an unreasonable burden on that party.
Court No. 17-00159 Page 18
providing the requested information and offer an alternative form of the information. 19 U.S.C. §
1677m(c)(1); World Finer Foods, 24 CIT at 543–45 (holding that because the plaintiff notified
Commerce of its difficulties reporting the information and “offer[ed] to supply any ‘limited
information that Commerce felt might be worthwhile or helpful,’” Commerce was required to
provide the plaintiff with guidance). While Dillinger did notify Commerce of its difficulties
supplying the requested manufacturer information, it did not offer any alternative form of
information that Commerce could use instead pursuant to § 1677m(c)(1). See June 8 Letter.
Therefore, § 1677m(c) does not apply here.
The court next considers how Commerce applied partial AFA. The Government contends
that, “[a]s a partial adverse facts available rate, Commerce reasonably assigned the highest non-
aberrational net price among Dillinger’s downstream home market sales to the sales where
Dillinger failed to report the manufacturer of CTL plate in its margin calculations.” Def.’s Br. at
23–24; IDM at 47. The court is unpersuaded by this argument. Although, as discussed above, 19
U.S.C. § 1677e permits Commerce to use adverse facts available to fill in information gaps, that
is not what Commerce did in this case. Here, Commerce replaced known, unchallenged record
information -- the sales price recorded in transactions where the CTL plate’s manufacturer was
unknown -- with adverse facts available. IDM at 47. In the IDM, Commerce did not explain what
(2) Assistance to interested parties
The administering authority and the Commission shall take into account any
difficulties experienced by interested parties, particularly small companies,
in supplying information requested by the administering authority or the
Commission in connection with investigations and reviews under this
subtitle, and shall provide to such interested parties any assistance that is
practicable in supplying such information.
Court No. 17-00159 Page 19
authority permitted it to replace known information with adverse facts available. Furthermore,
Commerce did not explain how it determined the “highest non-aberrational price.”
In its brief, the Government cites to Acciai Speciali Terni S.P.A. v. United States, 25 CIT
245, 142 F. Supp. 2d 969, 994 (2001), in support of Commerce’s decision to utilize the highest
non-aberrational net price among Dillinger’s downstream home market sales. In that case, the
court found that Commerce reasonably determined that the price data on the record was unreliable
due to numerous errors and inconsistencies in the price data provided, and thus application of AFA
to fill the gap in reliable price data was appropriate. Id. at 987–89. In the instant case, however,
the reliability of the reported sales prices has not been called into question and there is no
informational gap in the sale prices for Commerce to fill. Therefore, Commerce’s decision to
apply partial AFA to replace information in the record was not supported by substantial evidence
and was contrary to law, and the court remands this issue to Commerce for reconsideration of its
decision.
III. Commerce’s Application of the Differential Pricing Methodology.
Dillinger contends that Commerce’s use of its differential pricing methodology (“DPM”)
was not supported by substantial evidence and was contrary to law. Specifically, Dillinger argues
that: (1) the World Trade Organization’s (“WTO”) decision in United States – Antidumping and
Countervailing Measures on Large Residential Washers from Korea (WT/DS464/AB/R) adopted
Sept. 26, 2016 (“Korean Washers”) should prompt this court to reconsider whether Commerce’s
DPM is a reasonable interpretation of the statute; (2) Commerce’s DPM fails to show that
Dillinger’s prices differed significantly among purchasers, regions, or periods of time; and (3)
Court No. 17-00159 Page 20
Commerce’s use of zeroing as part of its DPM is impermissible under the statute. 7 The court
concludes that Korean Washers is not controlling and that Commerce’s application of its DPM
here is supported by substantial evidence and in accordance with law.
A. Legal and Statutory Framework of Differential Pricing.
When calculating a dumping margin, Commerce may compare the weighted average of the
normal values 8 to the weighted average of the export prices 9 (or constructed export prices 10) for
7
Dillinger initially contended that Commerce improperly applied the A-to-T method without first
considering whether the T-to-T method would be appropriate. Pl.’s Br. at 29–30. Subsequently,
however, Dillinger acknowledged that this court’s decision in Mid Continent Nail Corp. v. United
States, 39 CIT __, 113 F. Supp. 1318 (2015) appeared to foreclose that challenge to Commerce’s
methodology. Pl.’s Reply at 18 (citing Mid Continent, 113 F. Supp. at 1325–26 (reasoning that
Commerce’s interpretation that it was not required to consider both the A-to-A and T-to-T method
before using A-to-T)). At oral argument, Dillinger confirmed that it was not challenging this
portion of Commerce’s DPM analysis.
8
Normal value is
the price at which the foreign like product is first sold (or, in the absence of a sale,
offered for sale) for consumption in the exporting country, in the usual commercial
quantities and in the ordinary course of trade and, to the extent practicable, at the
same level of trade as the export price or constructed export price.
19 U.S.C. § 1677b(a)(1)(B)(i).
9
Export price is
the price at which the subject merchandise is first sold (or agreed to be sold) before
the date of importation by the producer or exporter of the subject merchandise
outside of the United States to an unaffiliated purchaser in the United States or to
an unaffiliated purchaser for exportation to the United States, as adjusted under
subsection (c) of this section.
19 U.S.C. § 1677a(a).
10
Constructed export price is
the price at which the subject merchandise is first sold (or agreed to be sold) in the
United States before or after the date of importation by or for the account of the
producer or exporter of such merchandise or by a seller affiliated with the producer
Court No. 17-00159 Page 21
comparable merchandise or compare the normal values of individual transactions to the export
prices (or constructed export prices) of individual transactions for comparable merchandise. 19
U.S.C. § 1677f-1(d)(1); see also Stanley Works, 279 F. Supp. 3d at 1176. As discussed above,
Section 1677f-1(d)(1) and 19 C.F.R. § 351.414(b) describe three methods by which Commerce
may compare the normal value to the export price: (1) average-to-average (“A-to-A”), a
comparison of weighted-average normal values to weighted-average export prices for comparable
merchandise; (2) transaction-to-transaction (“T-to-T”), a comparison of normal values based on
individual transactions to the export prices of individual transactions for comparable merchandise;
and (3) average to transaction (“A-to-T”), a comparison of weighted-average normal values to the
export prices of individual transactions for comparable merchandise. Commerce “will use the
average-to-average method unless [Commerce] determines another method is appropriate in a
particular case.” 19 C.F.R. § 351.414(c)(1); see Stanley Works, 279 F. Supp. 3d at 1177–78.
Commerce may use the A-to-T method if “(i) there is a pattern of export prices . . . for comparable
merchandise that differ significantly among purchasers, regions, or periods of time, and (ii)
[Commerce] explains why such differences cannot be taken into account using a method described
in paragraph (1)(A)(i) [A-to-A] or (ii) [T-to-T].” 19 U.S.C. § 1677f-1(d)(1)(B); see Stanley
Works, 279 F. Supp. 3d at 1176–77. Section 1677f-1(d) does not prescribe how Commerce should
determine whether a pattern of prices that differ significantly exists.
Commerce’s “differential pricing analysis consists of three tests, segregated into two
stages.” Stanley Works, 279 F. Supp. 3d at 1178 (citing Apex Frozen Foods Private Ltd. v. United
or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted
under subsections (c) and (d) of this section.
19 U.S.C. § 1677a(b).
Court No. 17-00159 Page 22
States, 862 F.3d 1337, 1342 n.2 (Fed. Cir. 2017)). “In the first stage, Commerce utilizes two tests
to determine whether there exists a pattern of prices that differ significantly, such that an alternative
comparison method should be considered, pursuant to 19 U.S.C. § 1677f-1(d)(1)(B)(i).” Id. The
first test is a “statistical measure of the extent of the difference between the mean of a test group
and the mean of a comparison group” known as the Cohen’s d test. Id. (internal quotations
omitted). The Cohen’s d test quantifies “the extent to which the net prices to a particular purchaser,
region or time period differ significantly from the net prices of all other sales of comparable
merchandise.” Id. (internal citations omitted). If the Cohen’s d coefficient is .8 or greater, the net
price to a particular purchaser, region, or time period “passes” the test. Id. at 1179.
Commerce next applies the ratio test, which assesses the extent of the significant price
differences for all sales as measured by the Cohen’s d test. Id.; PDM at 6. “If the value of sales
to purchasers, regions, and time periods that pass the Cohen’s d test account for 66 percent or more
of the value of total sales, then the identified pattern of prices that differ significantly supports the
consideration of the application of the A–T method to all sales as an alternative to the A–A
method.” Stanley Works, 279 F. Supp. 3d at 1179; see PDM at 6.
“If Commerce determines that both of these tests demonstrate the existence of a pattern of
prices that differ significantly enough to warrant consideration of an alternative comparison
method, then Commerce proceeds to the second stage of the differential pricing analysis, in which
it examines whether using only the A–A method can appropriately account for those differences,
pursuant to 19 U.S.C. § 1677f–1(d)(1)(B)(ii).” Stanley Works, 279 F. Supp. 3d at 1179; see PDM
at 6. At this second stage, the meaningful difference analysis, “[a] difference in the weighted-
average dumping margins is considered meaningful if (1) there is a 25 percent relative change in
the weighted-average dumping margin between the A–A method and the appropriate alternative
Court No. 17-00159 Page 23
method where both rates are above the de minimis threshold, or (2) the resulting weighted-average
dumping margin moves across the de minimis threshold.” Stanley Works, 279 F. Supp. 3d at 1179.
B. Korean Washers.
As Dillinger acknowledges, this court and the Federal Circuit have upheld various aspects
of Commerce’s DPM. 11 Pl.’s Br. at 22. Nonetheless, Dillinger encourages this court to “review
these decisions in light of the persuasive authority of Korean Washers.” Id. In that case, the
Appellate Body of the WTO found that the DPM was “inconsistent ‘as such’ with Article 2.4.2 of
the Anti-Dumping Agreement,” 12 which closely resembles 19 U.S.C. § 1677f-1(d)(1). Korean
Washers. Dillinger notes that at a meeting of the WTO Dispute Settlement Body, the United States
stated its intention to implement the Korean Washers decision, and that the deadline for the United
States to bring its antidumping methodology into conformity with its WTO obligations was
December 26, 2017. Korean Washers, Status Report, WT/DS464/17 (Nov. 10, 2017). According
to Dillinger, once Commerce changes its practice to comply with WTO obligations, it must adhere
to the new practice consistently, regardless of any existing U.S. court decisions upholding
Commerce’s prior practice. Pl.’s Br. at 21 (citing Dongbu Steel Co. v. United States, 635 F.3d
1363, 1371–73 (Fed. Cir. 2011)). Dillinger further suggests that, because the Charming Betsy
Doctrine indicates that U.S. statutes should never be interpreted to conflict with international
11
See, e.g., Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337 (Fed. Cir. 2017);
Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1322 (Fed. Cir. 2017); Stanley Works,
279 F. Supp. 3d 1172; Xi’an Metals & Minerals Imp. & Exp. Co. v. United States, 41 CIT __, 256
F. Supp. 3d 1346 (2017); Tri Union Frozen Prods., Inc. v. United States, 40 CIT __, 163 F. Supp.
3d 1255 (2016).
12
A law, regulation or measure of a WTO Member that violates a WTO agreement “as such”
means that the “Member’s conduct -- not only in a particular instance that has occurred, but in
future situations as well -- will necessarily be inconsistent with that Member’s WTO obligations.”
U.S. Steel Corp. v. United States, 33 CIT 984, 986, 637 F. Supp. 2d 1199, 1206 n.7 (2009) (citation
omitted).
Court No. 17-00159 Page 24
obligations absent express Congressional language to the contrary, this court should find Korean
Washers particularly persuasive. Id. (citing Murray v. Schooner Charming Betsy, 6 U.S. (2
Cranch) 62, 81, 2 L. Ed. 208 (1804)).
However, as Dillinger acknowledges, id. at 22, WTO decisions do not directly bind
Commerce or this court. Corus Staal BV v. Dep’t of Commerce, 395 F.3d 1343, 1348 (Fed. Cir.
2005) (citing Timken v. United States, 354 F.3d 1334, 1344 (Fed. Cir. 2004)); The Stanley Works
(Langfang) Fastening Sys. Co. v. United States, 42 CIT __, __, Slip Op. 18-99 (Aug. 13, 2018) at
50 (“WTO decisions are irrelevant to the interpretation of domestic U.S. law.”). Indeed, WTO
decisions are not self-executing under U.S. law; they can only be implemented through a
prescribed statutory procedure. See, e.g., SAA, H.R. Rep. No. 103-316 at 656, 659 (“WTO dispute
settlement panels will have no power to change U.S. law or order such a change. Only Congress
and the Administration can decide whether to implement a WTO panel recommendation and, if
so, how to implement it.”); 19 U.S.C. § 3538; see also Stanley Works, Slip. Op. 18-99 at 50–51.
Indeed, Congress “expressly designed [its implementation procedure] so as to preserve the
independence of U.S. law from adverse decisions of the [WTO] until such time as the political
branches decide that, of the options available to the United States under the WTO Agreements, a
change in U.S. law and/or policy or methodology is most appropriate.” Andaman Seafood Co. v.
United States, 34 CIT 129, 140, 675 F. Supp. 2d 1363, 1373 (2010) (citing 19 U.S.C. § 3538). Put
another way, “[i]ssues brought before WTO panels and the Appellate Body deal with whether a
country is complying with the terms of the WTO Agreement,” whereas “[c]ases brought before
the Court of International Trade present questions dealing with domestic U.S. law.” Stanley
Works, Slip Op. 18-99 at 51 (internal citations omitted). Because “Commerce’s interpretation of
a statute might well be a perfectly reasonable interpretation of U.S. law and nonetheless be found
Court No. 17-00159 Page 25
to violate the WTO Agreement . . . plaintiff’s argument that the Appellate Body’s decision in
Washers from Korea somehow shows that Commerce’s interpretation and implementation of the
targeted dumping statute is unreasonable under U.S. law is far wide of the mark.” Id. Thus, as
Korean Washers has not yet been implemented under U.S. law, “[w]e therefore accord no
deference to the cited WTO case[].” Corus Staal, 395 F.3d at 1349.
Additionally, Dillinger’s citation to Dongbu Steel is inapposite. In that case, Commerce
had changed its practice because an adverse WTO decision had been implemented, and
Commerce’s application of zeroing became inconsistent between investigations and administrative
reviews. Dongbu Steel, 635 F.3d at 1371–72. The Federal Circuit found that Commerce had
inadequately explained its inconsistent application. Id. at 1372–73; see also Apex, 863 F.3d at
1336. In contrast, Korean Washers has not been implemented, and this court here is “not faced
with a conflicting statutory interpretation demanding Commerce’s explanation.” Apex, 863 F.3d
at 1337. For these reasons, the court does not find Korean Washers persuasive here.
C. Pattern of Significant Price Differences Among Purchasers, Regions, and Time.
Dillinger alleges that Commerce failed to find a pattern of significant price differences
among purchasers, regions, and time, pursuant to 19 U.S.C. § 1677f-1(d)(1)(B). Specifically,
Dillinger contends that Commerce (i) failed to demonstrate a “pattern” of differences; (ii)
improperly aggregated price differences across the categories of purchasers, region, and time; and
(iii) improperly considered the significance of price differences. The court concludes that
Commerce’s decision was supported by substantial evidence and in accordance with law.
When evaluating whether Commerce’s interpretation and application of a statute is in
accordance with law, courts consider “whether Congress has directly spoken to the precise
question at issue,” and, if not, whether the agency’s interpretation of the statute is reasonable.
Court No. 17-00159 Page 26
Apex, 862 F.3d at 1344 (quoting Chevron U.S.A, Inc. v. Natural Res. Def. Council, Inc., 467 U S.
837, 842–43 (1984)); Stanley Works, 279 F. Supp. 3d at 1184. If the statute is silent or ambiguous
regarding the relevant issue, the traditional second prong of the Chevron analysis requires courts
to “defer to the agency’s interpretation of its own statute as long as that interpretation is
reasonable.” Koyo Seiko Co., Ltd. v. United States, 36 F.3d 1565, 1573 (Fed. Cir. 1994); see
Kyocera Solar, Inc. v. United States Int’l Trade Comm’n, 844 F.3d 1334 (Fed. Cir. 2016).
19 U.S.C. § 1677f-1 does not prescribe how Commerce is to conduct its targeted dumping
analysis, and therefore Commerce’s discretionary choice to employ DPM is entitled to deference
so long as that methodological choice is reasonable. Stanley Works, 279 F. Supp. 3d at 1185
(citing JBF RAK LLC v. U.S., 790 F.3d 1358, 1362 (Fed. Cir. 2015) and Chevron, 467 U.S. at
842–43). “Antidumping . . . duty determinations involve complex economic and accounting
decisions of a technical nature, for which agencies possess far greater expertise than courts,” PSC
VSMPO–Avisma Corp. v. United States, 688 F.3d 751, 764 (Fed. Cir. 2012), cited in Apex, 862
F.3d at 1347, and so courts afford Commerce significant deference in those determinations, see
id.; Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1039 (Fed. Cir. 1996). See also Stanley
Works, 279 F. Supp. 3d at 1185. Nonetheless, Commerce “must cogently explain why it has
exercised its discretion in a given manner.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 48 (1983); see also CS Wind Vietnam Co. v. United States, 832 F.3d
1367, 1377 (Fed. Cir. 2016) (“The requirement of explanation presumes the expertise and
experience of the agency and still demands an adequate explanation in the particular matter.”
(citing Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167–68 (1962))).
The court concludes that Commerce’s application of its DPM in this case is a reasonable
exercise of its discretion and that Commerce adequately explained in the IDM its choice of
Court No. 17-00159 Page 27
methodology. At the administrative stage, Dillinger expressed its concerns that its made-to-order
sales and various other economic considerations meant that Commerce’s DPM only detected
random variations, rather than a significant pattern of price differences. Dillinger provides no
support for its assertion that its made-to-order sales would cause distortions in Commerce’s
calculations. However, Commerce explained that companies’ economic goals were reflected
through their pricing behavior, IDM at 21, and that DPM was designed to reveal when companies
resorted to targeted dumping, id. at 22. Commerce also detailed why its DPM took into account
both higher and lower priced sales:
The SAA states that “targeted dumping” is where “an exporter may sell at a dumped
price to particular customers or regions, while selling at higher prices to other
customers or regions.” For “targeted” or masked dumping to exist, there must be
both lower-priced U.S. sales which evidence dumping as well as higher-priced,
non-dumped U.S. sales which “conceal,” mask, hide this evidence of dumping.
Therefore, since the purpose of section 777A(d)(1)(B) is to provide a remedy for
“targeted dumping,” pursuant to which the Department must satisfy the pattern
requirement to demonstrate that the respondent’s pricing behavior in the U.S.
market exhibits characteristics “where targeted dumping may be occurring,” the
Department continues to find reasonable and logical its approach of including both
lower-priced and higher-priced U.S. sales as part of a potential pattern of prices that
differ significantly.
Id. at 22 (internal citations omitted); see Stanley Works, 279 F. Supp. 3d at 1191.
Moreover, Commerce specifically addressed Dillinger’s concerns about the made-to-order
nature of its products and explained that the CONNUMs 13 Commerce used in its analysis took into
account variation between Dillinger’s products.
Dillinger France further asserts that its made-to-order products are inferably so
unique and embrace such a wide range of grades within a given product control
number (CONNUM) that any comparison of U.S. prices on a CONNUM basis must
take into account these inter-CONNUM variations. The Department disagrees.
The CONNUM and its constituent physical characteristics are all subject to
notification and comment during this investigation. Dillinger France provided
13
Sales of individual products are denominated by product control numbers denoted as
“CONNUM” entries.
Court No. 17-00159 Page 28
comments, and Dillinger France’s arguments have been fully considered. The
established CONNUMs are the foundation for reporting not only comparison and
U.S. market sales, but also Dillinger France’s costs of production, and are the basis
for comparison of U.S. prices with normal value. Since the purpose of the
differential pricing analysis is to consider whether the A-to-A method is appropriate
to calculate Dillinger France’s weighted-average dumping margin, and the
comparisons on which this calculation is based is defined by CONNUMs, the
Department therefore finds that it is appropriate, and reasonable, to use these same
CONNUMs as the basis for the comparisons of U.S. prices in the differential
pricing analysis.
IDM at 21–22. 14
Dillinger further asserts that Commerce’s DPM improperly aggregates price differences
across the categories of purchasers, region, and time, and that consequently, Commerce
“completely failed to establish any pattern of price differences with respect to each category on its
own” in contravention of the statute. Pl.’s Br. at 26. In its IDM, Commerce addressed in detail
how its DPM evaluated such differences, consistent with the statute:
The Cohen’s d test compares the U.S. sale prices sequentially to each purchaser,
region, and time period, with all other U.S. sale prices (i.e., the U.S. sales to all
other purchasers, regions, or time periods, respectively) of comparable
merchandise. What appears to be the concern of Dillinger France, for example with
purchasers, is that the U.S. sales to each purchaser may not be evenly distributed
across the other two types of groups, regions, and time periods. Thus, Dillinger
France posits that the “Department therefore cannot determine whether a price
difference is actually due to real differences between purchasers or simply due to
the fact that the sales are to purchasers in different regions or during different time
periods.”
The Department finds that this is neither a flaw in the Cohen’s d test and nor a
distortion of the results, nor that there are flaws related to the other two groups (i.e.,
U.S. sales to a particular region that are equally distributed across all purchasers
and time periods or U.S. sales in a particular time period that are equally distributed
across all purchasers and regions). The one possible distortion that could arise, for
example that each purchaser is located in a specific region, is that similar results
would occur when comparing prices by purchaser and by region. However, the
ratio test does not double-count the sales value when a given U.S. sale price is found
to be significantly different by purchaser and region. There is no assumption about
correlated distribution of sales between purchasers, regions, or time periods, and
14
Dillinger does not challenge Commerce’s selected CONNUMs in this litigation.
Court No. 17-00159 Page 29
indeed a given U.S. sale price may be found to be significantly different by all three
categories. Yet the ratio test ensures that any such correlation between purchasers,
regions and/or time periods does not distort the results of the test and result in a
finding that a larger proportion of the U.S. sale value is at prices which differ
significantly.
IDM at 23.
Finally, Dillinger asserts that Commerce improperly considered the significance of price
differences because, according to Dillinger, “[t]he significance of differences in export prices can
only be seen with respect to their relationship to the development of the normal value and cost of
production of comparable merchandise.” Pl.’s Br. at 28. Dillinger provides no support for this
requirement, and the term “significance” is not defined in the statute. “Commerce is entitled to
interpret the statutory language, and the court must defer to that interpretation, so long as it is
reasonable.” Stanley Works, 279 F. Supp. 3d at 1186 (rejecting plaintiff’s assertion that
Commerce must interpret “significant” as “statistically significant”) (internal citations omitted).
In its IDM, Commerce adequately explained why its interpretation of “significant” did not take
into account the factors suggested by Dillinger: the pattern requirement relates to differences
among U.S. prices, and thus normal value and cost of production are not relevant considerations.
IDM at 21. For these reasons, Commerce’s interpretation of the statute is entitled to deference. 15
D. Zeroing.
Dillinger argues that Commerce’s use of zeroing “distorts both of the requirements
provided in section 1677f-1(d)(1)(B)” because it compares “a non-zeroed margin” with a “zeroed
margin” and the difference in result between the A-to-A and A-to-T method is due solely to this
asymmetrical use of zeroing. Pl.’s Br. at 31. However, in the Apex line of cases, the Federal
15
Dillinger relied upon Korean Washers throughout its briefing on these issues. However, as
discussed above, Korean Washers is not persuasive here.
Court No. 17-00159 Page 30
Circuit upheld Commerce’s use of zeroing in its differential pricing methodology: “[w]e hold that
Commerce’s meaningful difference analysis -- comparing the ultimate antidumping rates resulting
from the A-A methodology, without zeroing; and the A-T methodology, with zeroing -- was
reasonable.” Apex, 862 F.3d at 1348. The Federal Circuit rejected the very same argument
Dillinger raises here, stating:
[W]e find it immaterial whether the A-A and A-T margins would be nearly identical
if zeroing were applied evenly or not at all . . . The notion that Commerce’s chosen
methodology is unreasonable because it only measures the effects of zeroing is
misplaced . . . [D]ifferences revealed by zeroing are not inconsequential or to be
ignored . . . In other words, the effects of zeroing are precisely what 19 U.S.C. §
1677f-1(d)(1)(B) seeks to address.
Id. at 1349 (citations omitted).
Dillinger also alleges that the exception in § 1677f-1(d)(1)(B) applies only to significant
differences for the same product among purchasers, regions, or time periods and does not relate to
significant price differences between different products. Pl.’s Br. at 31. The Government argues
that, because Dillinger did not raise the issue of applying the A-to-T method between different
products at the administrative level, Dillinger failed to exhaust its administrative remedies with
respect to this argument. Def.’s Br. at 37. In response, Dillinger contends that its inter-product
argument is “part and parcel” of its argument that zeroing distorts the requirements under § 1677f-
1(d)(1)(B)(i)-(ii) for application of the A-to-T method. Pl.’s Reply at 17.
The court concludes that Dillinger failed to exhaust its administrative remedies for
advancing its inter-product argument. This court “shall, where appropriate, require the exhaustion
of administrative remedies.” 28 U.S.C. § 2637(d). “The doctrine of exhaustion provides ‘that no
one is entitled to judicial relief for a supposed or threatened injury until the prescribed
administrative remedy has been exhausted.’” Essar Steel, Ltd. v. United States, 753 F.3d 1368,
1374 (Fed. Cir. 2014) (quoting Sandvik Steel Co. v. United States, 164 F.3d 596, 599 (Fed. Cir.
Court No. 17-00159 Page 31
1998)). “Simple fairness to those who are engaged in the tasks of administration, and to litigants,
requires as a general rule that courts should not topple over administrative decisions unless the
administrative body not only has erred but has erred against objection made at the time appropriate
under its practice.” Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383–84 (Fed.
Cir. 2008) (quoting United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952)).
“Exhaustion serves two main purposes: ‘to allow an administrative agency to perform functions
within its special competence—to make a factual record, to apply its expertise, and to correct its
own errors,’ and to ‘promot[e] judicial efficiency by enabling an agency to correct its own errors
so as to moot judicial controversies.’” Stanley Works, 279 F. Supp. 3d at 1189 (quoting Sandvik
Steel, 164 F.3d at 600). The issue here -- whether § 1677f-1(d)(1)(B) ever permits Commerce to
use the A-to-T method when evaluating significant price differences between products --
implicates both of these concerns; had Dillinger raised its inter-product argument at the
administrative level, “Commerce would have had the opportunity to better develop the record and
apply its expertise to assess its [practice].” Id. Dillinger’s contention that its inter-product
argument is merely “part and parcel” of its zeroing allegations does not excuse its failure to raise
the inter-product argument at the administrative level. See id. A challenge to one aspect of §
1677f-1(d)(1)(B)’s application “do[es] not incorporate any conceivable challenge to elements of
that analysis.” Id.
Nor do any of the exceptions to administrative exhaustion apply. Dillinger contends that
“[b]ecause Dillinger’s argument is based upon a pure question of interpretation of the statute, it
would qualify for the exception related to pure legal questions.” Pl.’s Reply at 18. “Statutory
construction alone is not sufficient to resolve this case.” Consol. Bearings Co. v. United States,
348 F.3d 997, 1003 (Fed. Cir. 2003). “Rather, the question is whether the methodology is
Court No. 17-00159 Page 32
justifiable, and to resolve that issue, a factual record needs to be developed.” Stanley Works, 279
F. Supp. 3d at 1190 (citing Consol Bearings, 348 F.3d at 1003 (determining that the pure legal
question exception could not apply when the court would have to assess Commerce’s justifications
for its practice)); Mittal Steel Point Lisas, 548 F.3d at 1384 (finding the pure question of law
exception not applicable when argument relies on unique facts of the case); Fuwei Films
(Shandong) Co. v. United States, 35 CIT __, __, 791 F. Supp. 2d 1381, 1384–85 (2011)
(concluding that the pure legal question exception could not apply when the statute at issue did not
speak to the required methodology and Commerce’s interpretation was needed to fill the statutory
gap)).
Dillinger also argues that the exception for futility applies because, “[i]n all the decades
that the Department and the courts have been dealing with the issue of zeroing, the Department
has not once found that anything in the antidumping statute prevented it from using zeroing or
restricted the application of zeroing in any respect.” Pl.’s Reply at 18. “The futility exception to
the exhaustion requirement has been applied in situations in which enforcing the exhaustion
requirement would mean that parties would be required to go through obviously useless motions
in order to preserve their rights.” Corus Staal BV v. United States, 502 F.3d 1370, 1378–81 (Fed.
Cir. 2007) (internal quotations omitted). However, this court generally takes a strict view of
administrative exhaustion, and the futility exception is quite narrow: “The mere fact that an adverse
decision may have been likely does not excuse a party from a statutory or regulatory requirement
that it exhaust administrative remedies.” Id. (internal citations omitted).
Here, “even if it is likely that Commerce would have rejected [Dillinger’s] legal and factual
showings, it would still have been preferable, for purposes of administrative regularity and judicial
efficiency, for [Dillinger] to make its arguments in its case brief and for Commerce to give its full
Court No. 17-00159 Page 33
and final administrative response in the final results,” id. at 1380, because, as discussed above,
Commerce would have had the opportunity to better develop the record and apply its expertise to
address Dillinger’s concerns. “[A] litigant must diligently protect its rights in order to be entitled
to relief.” JBF RAK, 790 F.3d at 1367 (quoting Mukand Int’l, Ltd. v. United States, 502 F.3d
1366, 1370 (Fed. Cir. 2007)).
Moreover, Dillinger’s inter-product argument fails on the merits. Dillinger provides no
reasoning or authority to support its assertion that it is “unlawful for the Department to apply inter-
product zeroing under the guise of applying the exception in section 1677f-1(d)(1)(B).” See Pl.’s
Br. at 27, 29, 31. In contrast, as discussed above, Commerce adequately explained how its
application of zeroing identifies dumping and is consistent with the statute. As Commerce’s
interpretation of the statute is reasonable and nothing in the statute dictates how Commerce should
conduct its targeted dumping analysis, this court defers to Commerce’s methodological choice.
See JBF RAK, 790 F.3d at 1362; Chevron, 467 U.S. at 842–43; supra, pp. 25–26 (discussing the
deference owed to Commerce when its statutory interpretation is reasonable). 16
IV. Cost Shifting.
Dillinger challenges Commerce’s production cost determination of its prime and sub-prime
plates. Pl.’s Br. at 32. Dillinger alleges that Commerce’s use of Dillinger’s balance sheets to
determine production costs, in lieu of the production costs Dillinger calculated, is not in
accordance with law. Id. Dillinger further contends that Commerce’s finding that prime and sub-
prime plates have different applications is unsupported by substantial evidence. Id. at 37. The
court holds Commerce’s use of Dillinger’s balance sheet to be a reasonable methodological choice
16
Dillinger relied upon Korean Washers throughout its briefing on zeroing. However, as discussed
above, Korean Washers is not persuasive here.
Court No. 17-00159 Page 34
permitted by the statute, precedent, and Commerce’s practice and is thus in accordance with law.
The court further finds Commerce’s determination that prime and sub-prime plates have different
applications to be supported by substantial evidence.
A. Legal Background.
19 U.S.C. § 1677b governs the calculation of costs in determining antidumping duties. The
statute defines the constructed value of imported merchandise as “an amount equal to the sum of-
- (1) the cost of materials and fabrication or other processing of any kind employed in producing
the merchandise, during a period which would ordinarily permit the production of the merchandise
in the ordinary course of trade.” 19 U.S.C. § 1677b(e). Subsection (f) applies to subsection (e)
and outlines the ways in which Commerce shall calculate cost:
(A) In general
Costs shall normally be calculated based on the records of the exporter or producer
of the merchandise, if such records are kept in accordance with the generally
accepted accounting principles of the exporting country (or the producing country,
where appropriate) and reasonably reflect the costs associated with the production
and sale of the merchandise. The administering authority shall consider all
available evidence on the proper allocation of costs, including that which is made
available by the exporter or producer on a timely basis, if such allocations have
been historically used by the exporter or producer, in particular for establishing
appropriate amortization and depreciation periods, and allowances for capital
expenditures and other development costs.
19 U.S.C. § 1677b(f)(1)(A).
B. Use of Balance Sheet.
According to Dillinger, Commerce’s use of Dillinger’s balance sheet -- which bases the
production cost of sub-prime plates on their net recovery price -- to reallocate cost between prime
and sub-prime plates contravened the statute and is inconsistent this court’s precedent. Pl.’s Br. at
32–33, (citing 19 U.S.C. § 1677b(e) and IPSCO v. United States 965 F.2d 1056 (Fed. Cir. 1999)).
Court No. 17-00159 Page 35
Dillinger argues that section 19 U.S.C. § 1677b(b)(3) requires that “the reported cost of production
for a product should correspond to the full costs of producing that product including ‘the cost of
materials and of fabrication or other processing of any kind employed in producing’ the product.”
Pl.’s Br. at 32 (citing IPSCO, 965 F.2d at 1059 (stating that, “[b]y its terms, the statute expressly
covers actual production costs”)). Because the materials and production process are the same, and
sub-prime plates can only be differentiated from prime plates after production, Dillinger argues
that the production costs of both types of plate are equal under the antidumping statute. Id. at 34.
In Dillinger’s view, Commerce’s use of Dillinger’s balance sheet in its cost determination “has the
effect of reporting the cost of non-prime plate at less than the actual full cost incurred in producing
that merchandise and reporting the cost of production for prime plate at an amount greater than the
actual cost incurred in producing that merchandise.” Id. at 32. Therefore, because this reallocation
resulted in Commerce increasing the cost of prime plates and decreasing the cost of sub-prime
plates to reflect their lower market value, Dillinger contends that Commerce violated the statute’s
requirement to use the actual costs of production. Id. at 32–33. Dillinger claims that Commerce
instead should have used the actual production costs Dillinger calculated, which reflect an equal
cost allocation between prime and subprime plates. Id. at 32.
The court is unpersuaded by Dillinger’s arguments and finds that Commerce’s use of
Dillinger’s balance sheets was in accordance with law. As discussed above, 19 U.S.C. §
1677b(f)(1)(A) provides that “[c]osts shall normally be calculated based on the records of the
exporter or producer of the merchandise, if such records are kept in accordance with the generally
accepted accounting principles of the exporting country (or the producing country, where
appropriate) and reasonably reflect the costs associated with the production and sale of the
merchandise.” Dillinger’s books were kept in accordance with generally accepted accounting
Court No. 17-00159 Page 36
principles (“GAAP”), and Commerce adequately explained its reasoning for not deviating from
using these records in its IDM:
Further, we note that section 773(f)(1)(A) of the Act mandates that a respondent’s
costs should be based on the company’s normal books and records, if such records
are kept in accordance with the GAAP of the exporting country and reasonably
reflect the costs associated with the production of the merchandise. In its normal
books and records, Dillinger France values non-prime products at their likely
selling price and uses this value as an offset to its prime production. This value is
significantly lower than the average value of prime production that Dillinger France
assigned for purposes of reporting costs to the Department. This lower cost reflects
the lower market value and different end uses for non-prime products compared to
prime products. As such, we find Dillinger France’s normal treatment of non-prime
products to be reasonable and consistent with GAAP and the lower of cost or
market principle. Therefore, we find no basis for departing from Dillinger France’s
normal treatment of these products in its books and records, and, consistent with
the Preliminary Determination, we continue to adjust Dillinger France’s reported
costs to reflect Dillinger France’s normal treatment of non-prime and prime CTL
plate.
IDM at 60.
Tension Steel Indust. Co. v. United States and PSC VSMO-Avisma Corp. v. United States
also support Commerce’s use of Dillinger’s GAAP-consistent books. See Tension Steel Indus.
Co. v. United States, 40 CIT __, 179 F. Supp. 3d 1185 (2016); PSC VSMO-Avisma Corp. v. United
States, 688 F.3d 751 (Fed. Cir. 2012). In Tension Steel, this court found that “[v]aluing the cost
of non-prime pipe at the net recovery price of the product is consistent with GAAP” and thus
Commerce “reasonably used the net recovery price to value the non-prime pipe.” 179 F. Supp. 3d
at 1195–96. In PSC VSMO-Avisma Corp., the Federal Circuit gave Commerce’s cost
methodology for joint products “tremendous deference,” 688 F.3d at 764 (quoting Fujitsu Gen.
Ltd. v. United States, 88 F.3d 1034, 1039 (Fed. Cir. 1996)), and found reasonable Commerce’s
approach, whereby it tied the value of one joint product to its “real world price,” id. at 765.
Dillinger argues that the Federal Circuit’s holding in IPSCO precludes this “shifting of
costs from non-prime to prime merchandise based upon the market value of the non-prime
Court No. 17-00159 Page 37
merchandise.” Pl.’s Br. at 33. Dillinger contends that the Federal Circuit held that a methodology
that shifted production costs from one non-prime co-product to another prime co-product, below
the actual cost of production, was “unreasonable.” Id. at 34 (citing IPSCO, 965 F.2d at 1058–59.
Dillinger alleges that the situation here is analogous, and “[a]ll products subject to the
investigation, whether prime or not, must be reported at their actual cost of production.” Id.
IPSCO, however, was decided before Congress amended 19 U.S.C. § 1677b to include
subsection (f), which, as discussed supra, specifically allows for Commerce to use GAAP-
compliant “books and records” to determine cost of production, so long as they “reasonably reflect
costs associated with the production and sale of the merchandise.” 19 U.S.C. § 1677b(f)(1)(A).
The Federal Circuit, therefore, did not have subsection (f) on which to rely in deciding IPSCO.
IPSCO, moreover, is factually distinguishable from the present case. In IPSCO, the
Federal Circuit rejected cost reallocation between prime and limited-use certain oil country tubular
goods (OCTG) from Taiwan because the products at issue there had the same applications. IPSCO,
965 F.2d at 1059–61. In the case of both prime and limited-use OCTG, “buyers purchase the
separate grades for the same purpose – ‘down hole’ use in oil and gas wells.” Id. at 1058.
Therefore, the Federal Circuit concluded that this court’s order for Commerce to use a
methodology which would decrease the cost of limited-grade OCTG and increase the cost of prime
OTCG, despite their same production process and applications, was “unreasonable.” Id. at 1061.
Here, however, Commerce determined, consistent with its practice, 17 that Dillinger’s prime and
non-prime plate had different applications. IDM at 59–60.
17
Dillinger contends that “the Department’s reduction of the actual cost of non-prime merchandise
to account for its sales value directly conflicts with the Department’s practice of excluding
inventory write-downs that are attributable to finished goods from a respondent’s cost of
production.” Pl.’s Reply at 21. Loss on completion, however, is not at issue here. It is
Commerce’s practice “to analyze products sold as non-prime on a case-by-case basis to determine
Court No. 17-00159 Page 38
On point is the Federal Circuit’s subsequent discussion of IPSCO in Thai Pineapple Pub.
Co. v. United States, which stated that IPSCO did not control a case involving “…parts of the
pineapple, i.e., the cylinder, core, shells, and ends” with “significantly different uses and values,”
meaning “they are not interchangeable when it comes to canned pineapple fruit versus juice
production.” Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1368 (Fed. Cir. 1999). In
Thai Pineapple, Thai producers argued that an “alternative methodology was necessary [to
determine cost of production] because their financial accounting cost allocations were based on
certain managerial and tax goals, and thus, were not reflective of actual production costs.” Id. at
1364. Commerce disagreed, rejecting “weight-based raw material fruit cost allocation for both
[cost of production] and [constructed value].” Id. Thus, “Commerce relied upon the
methodologies reflected in their financial accounting records.” Id. This court, however, found
that Commerce had erred in relying on the financial accounting records and remanded the case for
Commerce to apply “either the Thai producers’ weight-based allocation methodologies or a non-
output price-based cost allocation methodology.” Id. at 1363. The Federal Circuit overturned this
decision, finding that “[a]ntidumping investigations are complex and complicated matters in which
Commerce has particular expertise and thus, Commerce’s determinations are entitled to
deference.” Id. at 1367 (citing Chevron, 467 U.S. at 844). The Federal Circuit held that
“Commerce’s reliance on the books and records of [the Thai producers] was reasonable and is
how such products are costed in the respondent’s normal books and records, whether they remain
in scope, and whether they can still be used in the same applications as prime merchandise.” IDM
at 59–60 (citing Welded Line Pipe From the Republic of Korea: Final Determination of Sales at
Less Than Fair Value, 80 Fed. Reg. 61,366 (Oct. 13, 2015) and the accompanying IDM at cmt. 9;
Steel Concrete Reinforcing Bar From Turkey: Final Negative Determination of Sales at Less Than
Fair Value and Final Determination of Critical Circumstances, 79 Fed. Reg. 21,986 (Sept. 15,
2014), and the accompanying IDM at cmt. 15). Commerce’s reliance Dillinger’s GAAP-consistent
records is therefore consistent with Commerce’s practice and not contrary to law.
Court No. 17-00159 Page 39
supported by substantial evidence.” Id. Although Thai Pineapple involved both products included
and excluded from the investigation -- unlike the prime and sub-prime pipe both covered by the
investigation in IPSCO -- it nonetheless deferred to Commerce in its reliance on books and records
in its constructed cost methodology and squarely addressed IPSCO’s limited application to co-
products with the same post-production application. Because prime and subprime pipes have
different post-production applications, IPSCO does not control here. The court, therefore, defers
to Commerce’s methodological choice to rely on Dillinger’s books and records, as such choice
was not an unreasonable interpretation of 19 U.S.C. § 1677b, and thus was in accordance with law.
Dillinger alleges that Commerce’s finding that its prime and sub-prime plates have
different applications was not supported by substantial evidence. Dillinger argues that because
both prime and non-prime plates have structural applications, “[t]he fact that the specific uses of
non-prime plate are limited to applications that do not require a warranty in no way changes the
actual cost of production of non-prime plate or permits a shifting of actual costs from non-prime
to prime plate.” Pl.’s Br. at 37.
The court is not persuaded by this argument and finds that Commerce’s determination was
supported by substantial evidence. Commerce considered whether sub-prime plates were a minor
downgrade of prime plates so as to remain within the same product group, or whether their
application was sufficiently different so as to belong to a different product group. IDM at 60.
Commerce reviewed the record of the investigation, as well as Dillinger France’s Supplemental
Response, and found “non-prime products are sold without certification as to grade, type, or
chemistry . . . Prime merchandise is used in applications that require these types of certifications,”
id., such as “as agricultural and construction equipment, bridges, machine parts, ships, and
buildings,” Def.’s Br. at 39; see International Trade Commission Preliminary Report (May 27,
Court No. 17-00159 Page 40
2016) at I-22, P.R. 318 at 75; Dillinger Suppl. Section D Resp. (Aug. 17, 2016) at 4, P.R. 202;
IDM at 60; Dillinger Verification Report, C.R. 678, P.R. 413, “while non-prime merchandise is
used in applications such as counterweights for cranes and steel road planks,” IDM at 60 (citing
Dillinger France’s Suppl. Section D Resp. (Aug. 17, 2016), at 4). Based on this record evidence,
Commerce determined that prime and sub-prime steel plates have sufficiently different
applications to warrant cost reallocation to reflect that the sub-prime plate’s value is “significantly
impaired to a point where its full cost cannot be recovered.” IDM at 60. For these reasons,
Commerce’s decision was supported by substantial evidence and in accordance with law.
CONCLUSION
With the exception of Commerce’s application of partial AFA, the court concludes that the
Final Determination is in accordance with law and supported by substantial evidence. The court
remands Commerce’s partial AFA application for reconsideration consistent with this opinion.
Commerce shall file with this court and provide to the parties its remand results within 90 days of
the date of this order; thereafter, the parties shall have 30 days to submit briefs addressing the
revised final determination to the court and the parties shall have 15 days thereafter to file reply
briefs with the court.
SO ORDERED.
/s/ Gary S. Katzmann
Gary S. Katzmann, Judge
Dated:2FWREHU
New York, New York