Slip Op. 23-52
UNITED STATES COURT OF INTERNATIONAL TRADE
NEXTEEL CO., LTD.,
Plaintiff,
and
SEAH STEEL CORPORATION,
Consolidated Plaintiff, Before: Jennifer Choe-Groves, Judge v. Consol. Court No. 18-00083 UNITED STATES,
Defendant,
UNITED STATES STEEL CORPORATION, ET AL.,
Defendant-Intervenors.
OPINION
[Sustaining in part and remanding in part the U.S. Department of Commerce’s third remand redetermination following the 2015–2016 administrative review of the antidumping duty order on oil country tubular goods from the Republic of Korea.]
Dated: April 19, 2023
J. David Park, Henry D. Almond, Daniel R. Wilson, Leslie C. Bailey, and Kang Woo Lee, Arnold & Porter Kaye Scholer LLP, of Washington, D.C., for Plaintiff NEXTEEL Co., Ltd. Consol. Court No. 18-00083 Page 2
Jeffrey M. Winton, Amrietha Nellan, and Jooyoun Jeong, Winton & Chapman PLLC, of Washington, D.C., for Consolidated Plaintiff SeAH Steel Corporation.
Claudia Burke, Assistant Director, and Hardeep K. Josan, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., for Defendant United States. With them on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, and Patricia M. McCarthy, Director. Of counsel was Mykhaylo Gryzlov, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.
Thomas M. Beline, Myles S. Getlan, and James E. Ransdell, Cassidy Levy Kent (USA) LLP, of Washington, D.C., for Defendant-Intervenor United States Steel Corporation.
Gregory J. Spak, Frank J. Schweitzer, Kristina Zissis, and Matthew W. Solomon, White & Case LLP, of Washington, D.C., for Defendant-Intervenors Maverick Tube Corporation and Tenaris Bay City, Inc.
Choe-Groves, Judge: Before the Court is the U.S. Department of
Commerce’s (“Commerce”) third remand redetermination in the administrative
review of the antidumping duty order on oil country tubular goods (“OCTG”) from
the Republic of Korea (“Korea”) covering the period from September 1, 2015 to
August 31, 2016. See Commerce’s Final Results of Redetermination Pursuant to
Court Remand (“Third Remand Redetermination”), ECF No. 119-1, pursuant to
Order, ECF No. 114; see also Certain Oil Country Tubular Goods From the
Republic of Korea, 83 Fed. Reg. 17,146 (Dep’t of Commerce Apr. 18, 2018) (final
results of antidumping duty administrative review and final determination of no
shipments; 2015–2016) (“Final Results”), and accompanying Issues and Decision Consol. Court No. 18-00083 Page 3
Memorandum for the Final Results of the 2015–2016 Administrative Review of
the Antidumping Duty Order on Certain Oil Country Tubular Goods from the
Republic of Korea (Apr. 11, 2018) (“Final IDM”), PR 368.1
In NEXTEEL Co. v. United States (“NEXTEEL IV”), 28 F.4th 1226 (Fed.
Cir. 2022), the U.S. Court of Appeals for the Federal Circuit (“CAFC”) remanded
for Commerce to further consider whether a particular market situation could be
found based on any subset of the factors or other reasoning, and for proceedings
consistent with the CAFC’s decision in Stupp Corp. v. United States (“Stupp”), 5
F.4th 1341 (Fed. Cir. 2021). NEXTEEL IV, 28 F.4th at 1238–39, 41.
For the following reasons, the Court sustains in part and remands in part
Commerce’s Third Remand Redetermination.
BACKGROUND
The Court presumes familiarity with the facts and procedural history of this
case and recites the facts relevant to the Court’s review of the Third Remand
Redetermination. See NEXTEEL Co. v. United States (“NEXTEEL I”), 43 CIT
__, __, 392 F. Supp. 3d 1276, 1283–84 (2019); NEXTEEL Co. v. United States
(“NEXTEEL II”), 44 CIT __, __, 450 F. Supp. 3d 1333, 1337–38 (2020);
1 Citations to the administrative record reflect the public administrative record (“PR”) document numbers. ECF Nos. 60, 94. Consol. Court No. 18-00083 Page 4
NEXTEEL Co. v. United States (“NEXTEEL III”), 44 CIT __, __, 475 F. Supp. 3d
1378, 1380–81 (2020).
In this administrative review of OCTG from Korea, Commerce selected
Plaintiff NEXTEEL Co., Ltd. (“NEXTEEL”) and Consolidated Plaintiff SeAH
Steel Corporation (“SeAH”) as mandatory respondents for individual examination.
See NEXTEEL I, 43 CIT at __, 392 F. Supp. 3d at 1283.
In NEXTEEL Co. v. United States (“NEXTEEL I”), 43 CIT __, 392 F.
Supp. 3d 1276 (2019), the Court sustained in part and remanded in part the Final
Results. NEXTEEL I, 43 CIT at __, 392 F. Supp. 3d at 1297. In NEXTEEL Co.
v. United States (“NEXTEEL II”), 44 CIT __, 450 F. Supp. 3d 1333 (2020), the
Court sustained in part and remanded in part the Remand Redetermination.
NEXTEEL II, 44 CIT at __, 450 F. Supp. 3d at 1346–47; see Commerce’s Final
Results of Redetermination Pursuant to Court Remand (“Remand
Redetermination”), ECF No. 81-1, pursuant to Order, ECF No. 73. In NEXTEEL
Co. v. United States (“NEXTEEL III”), 44 CIT __, 475 F. Supp. 3d 1378 (2020),
the Court sustained the Second Remand Redetermination. NEXTEEL III, 44 CIT
at __, 475 F. Supp. 3d at 1380; see Commerce’s Final Results of Redetermination
Pursuant to Court Remand (“Second Remand Redetermination”), ECF No. 96-1,
pursuant to Order, ECF No. 95. In NEXTEEL IV, the CAFC directed the Court to
remand to Commerce to further consider whether a particular market situation Consol. Court No. 18-00083 Page 5
could be found based on any subset of the factors or other reasoning, and for
proceedings consistent with the CAFC’s decision in Stupp. NEXTEEL IV, 28
F.4th at 1238–39, 41.
In the Third Remand Redetermination, Commerce reconsidered the record
and determined that substantial evidence did not support the conclusion that a
particular market situation existed in Korea during the period of review. Third
Remand Redetermination at 11–12, 16. Commerce also reconsidered the
differential pricing analysis and provided further explanation regarding
Commerce’s application of the Cohen’s d test to SeAH’s U.S. sales. Id. at 16–21,
57–73. Commerce determined that the weighted-average dumping margins
calculated in the Second Remand Redetermination would remain the same. Id. at
74.
NEXTEEL filed Plaintiff NEXTEEL Co., Ltd.’s Comments on Remand
Redetermination, in which Plaintiff raises concerns but argues that Commerce’s
Third Remand Redetermination should be sustained. Pl.’s Cmts. on Remand
Redetermination (“Pl.’s Br.”), ECF No. 122. SeAH filed two briefs, Comments of
SeAH Steel Corporation in Partial Opposition to Commerce’s October 21, 2022,
Redetermination and Comments of SeAH Steel Corporation in Partial Support of
Commerce’s October 21, 2022, Redetermination, in which SeAH argues that
Commerce’s differential pricing analysis should be remanded and its particular Consol. Court No. 18-00083 Page 6
market situation analysis should be sustained. Cmts. SeAH Part. Opp’n
Commerce’s Oct. 21, 2022 Redetermination (“Consol. Pl.’s Part. Opp’n Br.”), ECF
Nos. 123, 124; Cmts. SeAH Part. Supp. Commerce’s October 21, 2022
Redetermination (“Consol. Pl.’s Part. Supp. Br.”), ECF No. 126. Defendant-
Intervenor United States Steel Corporation (“Defendant-Intervenor” or “U.S.
Steel”) filed United States Steel Corporation’s Comments in Partial Opposition to
Remand Results, arguing that Commerce’s particular market situation analysis
should be remanded. Def.-Interv.’s Cmts. Part. Opp’n Remand Results (“Def.-
Interv.’s Br.”), ECF No. 121. Defendant filed Defendant’s Response to Comments
Regarding the Remand Redetermination. Def.’s Resp. Cmts. Regarding Remand
Redetermination (“Def.’s Br.”), ECF No. 125. NEXTEEL filed Plaintiff Nexteel
Co., Ltd.’s Reply Comments on Remand Redetermination. Pl.’s Reply Cmts.
Remand Redetermination, ECF No. 127.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(i) 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 hold unlawful any determination found to be unsupported by substantial
record evidence or otherwise not in accordance with the law. 19 U.S.C.
§ 1516a(b)(1)(B)(i). Consol. Court No. 18-00083 Page 7
DISCUSSION
I. Particular Market Situation
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). When Commerce looks to determine normal value in accordance
with 19 U.S.C. § 1677b, if Commerce concludes that it must resort to using
constructed value under 19 U.S.C. § 1677b(e), and 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,” the statute authorizes Commerce to use any other reasonable calculation
methodology. Id. § 1677b(e). The origin in the statute of “particular market
situation” is its inclusion in the framework of “normal value” when the Tariff Act
of 1930 was amended by the Uruguay Round Agreements Act. See Pub. L. 103- Consol. Court No. 18-00083 Page 8
465, § 224, 108 Stat. 4809, 4878 (1994);2 cf. Trade Preferences Extension Act of
2015 (“TPEA”), Pub. L. No. 114-27, 129 Stat. 362 (2015) (adding the concept of a
particular market situation in the definition of the term “ordinary course of trade”
for purposes of constructed value and clarifying remedial action if Commerce finds
the existence of a particular market situation). The Trade Preferences Extension
Act of 2015 amended certain subsections of the Tariff Act of 1930. See TPEA,
Pub. L. No. 114-27, 129 Stat. 362. Section 504 of the TPEA permits Commerce to
consider certain sales and transactions “to be outside the ordinary course of trade”
when “the particular market situation prevents a proper comparison with the export
price or constructed export price.” 19 U.S.C. § 1677(15). When calculating
constructed value under the revised statute, if Commerce finds an extant particular
market situation, “such that the cost of materials and fabrication or other
processing of any kind does not accurately reflect the cost of production in the
2 See also Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Art. 2.2 (“[w]hen there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country[ ], such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits”) (footnote omitted). Consol. Court No. 18-00083 Page 9
ordinary course of trade, the administering authority may use another calculation
methodology under this subtitle or any other calculation methodology.” Id.
§ 1677b(e). Congress did not define “particular market situation” in 1994 or 2015,
but as observed in NEXTEEL IV, § 1677b(e) plainly “identifies the factual support
Commerce must provide to invoke this provision.” NEXTEEL IV, 28 F.4th at
1234. Congress also provided examples in adopting the Statement of
Administrative Action:
The [Antidumping] Agreement does not define “particular market situation,” but such a situation might exist where a single sale in the home market constitutes five percent of sales to the United States or where there is government control over pricing to such an extent that home market prices cannot be considered to be competitively set. It also may be the case that a particular market situation could arise from differing patterns of demand in the United States and in the foreign market. For example, if significant price changes are closely correlated with holidays which occur at different times of the year in the two markets, the prices in the foreign market may not be suitable for comparison to prices to the United States.
Statement of Administrative Action, H.R. REP. No. 103-316, vol. 1, at 822 (1994),
as reprinted in 1994 U.S.C.C.A.N. 4040, 4162. “These are all situations in which
some circumstance distorts costs so that they are not set based on normal market
forces or do not move with the rest of the market.” NEXTEEL IV, 28 F.4th at
1234.
The CAFC found that three of the five particular market situation factors
were not supported by substantial evidence: the Korean Government’s subsidies to Consol. Court No. 18-00083 Page 10
hot-rolled coil (“HRC”) producers, strategic alliances, and steel industry
restructuring. Id. at 1234–38. The CAFC noted that “Commerce has not taken a
clear position on whether it believes the other two circumstances alone are
sufficient” and that “it is far from a foregone conclusion that Commerce would
have found a particular market situation based on these two factors alone.” Id. at
1237. The CAFC stated:
In summary, we agree with the Court of International Trade that substantial evidence does not support the existence of a particular market situation created by Commerce’s five enumerated circumstances. Because we are limited to reviewing Commerce’s reasoning, we do not decide whether a particular market situation could be found based on any subset of the factors or other reasoning.
Id. at 1241.
The Parties focus on whether the CAFC issued an open-ended remand and to
what extent Commerce should have been bound to follow the CAFC’s holdings in
NEXTEEL IV. See, e.g., Def.-Interv.’s Br.; Pl.’s Br.; Def.’s Br. On remand,
Commerce acknowledged that, “the CAFC left open the possibility that a
[particular market situation] could be found based on an analysis of any subset of
the factors or other reasoning. Thus, the CAFC ruled that Commerce may seek to
justify a [particular market situation] finding on remand.” Third Remand
Redetermination at 6–7. Commerce did not reopen the record on remand, but
reexamined the existing record. Id. at 8, 36–37. Whether to reopen the record is a Consol. Court No. 18-00083 Page 11
matter for Commerce’s discretion, and the Court concludes that Commerce’s
determination to not reopen the record was reasonable. See Essar Steel Ltd. v.
United States, 678 F.3d 1268, 1278 (Fed. Cir. 2012) (“The decision to reopen the
record is best left to the agency.”); Changshan Peer Bearing, Co. v. United States,
38 CIT __, __, 953 F. Supp. 2d 1354, 1362 (2014) (“[T]he court views an order
compelling an agency to reopen an administrative record on remand as the
exception rather than the rule, consistent with the principle that courts, as a general
matter, should allow agencies to exercise discretion as to whether to reopen an
administrative record on remand.”).
A. HRC Imports from China
Defendant-Intervenor alleges that Commerce presumed impermissibly in its
Third Remand Redetermination that the CAFC “mandated Commerce to reach
certain evidentiary conclusions.” Def.-Interv.’s Br. at 2. Defendant-Intervenor
focuses on Commerce’s statement that:
In [NEXTEEL IV], however, the CAFC held “[a]lthough low-priced Chinese steel could contribute to a particular market situation, the record does not show sufficient particularity for this circumstance to create a particular market situation on its own.” While we respectfully disagree with the CAFC that the evidence does not show sufficient particularity for this factor to establish a [particular market situation] on its own, the CAFC’s holding is binding in this case.
Third Remand Redetermination at 57 (internal citation omitted); Def.-Interv.’s Br.
at 2. This statement appears in Commerce’s Third Remand Redetermination and Consol. Court No. 18-00083 Page 12
seemingly indicates that Commerce believes that the evidence of low-priced
Chinese steel could support a particular market situation determination on its own,
absent instructions from the CAFC to the contrary.
The CAFC’s remand directions were open-ended, stating that, “we do not
decide whether a particular market situation could be found based on any subset of
the factors or other reasoning.” NEXTEEL IV, 28 F.4th at 1241. The CAFC also
stated, however, that, “[a]lthough low-priced Chinese steel could contribute to a
particular market situation, the record does not show sufficient particularity for this
circumstance to create a particular market situation on its own.” Id. at 1237. The
CAFC did not make specific evidentiary rulings with respect to the issues of low-
price Chinese products and Korean electricity, but instead remanded for Commerce
to conduct its analysis again without further parameters. Id. at 1241.
Commerce determined that evidence placed on the record by Maverick Tube
Corporation and U.S. Steel demonstrated that imports of low-priced Chinese steel
could contribute to the existence of a particular market situation. Third Remand
Redetermination at 12. Commerce considered that evidence on the record
demonstrated that the Chinese government highly subsidized steel products and
that distortions in the Chinese economy resulted in significant overcapacity. Id. at
12–13. Commerce referenced the Official Journal of the European Union, which
estimated that in 2015, China accounted for 50.3 percent of the world’s actual Consol. Court No. 18-00083 Page 13
crude steel production and that China’s steel production overcapacity was
estimated at 350 million metric tons. Id. at 13. Commerce considered the
Government of Korea’s estimate that China’s steel production overcapacity was
450 million metric tons in 2015 and accounted for 60 percent of global steel
production overcapacity. Id.
Commerce determined that data submitted on the record demonstrated that
an increase in Chinese exports of steel products may have created downward
pressure on steel prices in Korea. Id. at 14. Commerce referenced data from the
Korean Iron & Steel Association showing that from 2011 to 2015, Korean imports
of Chinese steel products rose from 10,200,000 metric tons (mt) to 13,740,000 mt,
representing a 35 percent increase. Over the same time period, Commerce noted
that steel imports from China increased their Korean market share from 18 percent
to 25 percent. Id. Commerce considered that in 2015, the price differential
between Korean-produced hot-rolled steel and Chinese-produced hot-rolled steel
was U.S. dollars (USD) 118 per mt; as a result, Korean producers of hot-rolled
steel found it increasingly difficult to operate profitably. Id. Commerce
considered further data from the Global Trade Atlas (“GTA”) showing that
Chinese exports of hot-rolled carbon and alloy steel products to Korea increased
from 3,156,607,961 kilograms (kg) in 2012 to 3,820,686,369 kg in 2016,
representing a 21 percent increase and that over the same time period, the average Consol. Court No. 18-00083 Page 14
unit value of Chinese exports of hot-rolled carbon and alloy steel products to Korea
fell from USD 544.34 per mt to USD 313.08 per mt, representing a 43 percent
decrease. Id. Commerce determined that Chinese steel production overcapacity
resulted in an increase in Chinese steel exports to Korea and a drastic decline in
average unit values from China. Id.
Commerce determined that the record evidence demonstrated that “imports
of low-priced Chinese steel could potentially contribute to a [particular market
situation].” Id. (emphasis added). Notably, Commerce did not determine that the
record evidence showed sufficient particularity to the Korean market to support a
particular market situation. The Court observes that Commerce used tentative
language such as “could contribute to the existence of a [particular market
situation],” “may have created downward pressure,” and “could potentially
contribute to a [particular market situation],” without stating that the overcapacity
of Chinese steel imports definitively created a particular market situation. Id.
Commerce stated that, “[a]ccordingly, although we are concluding on remand that
a [particular market situation] is not supported by substantial evidence for this
particular [period of review] on this record, we also acknowledge that in a future
determination Commerce may find a [particular market situation] based on this
factor if the evidence demonstrates sufficient particularity.” Id. at 16. Consol. Court No. 18-00083 Page 15
The Court agrees with Commerce’s determination that the record evidence
does not show that an increase in Chinese steel exports was particular to Korea and
the drastic decline in average unit values from China was particular to Korea.
Although the CAFC issued an open-ended remand, the Court concludes that it was
reasonable for Commerce in its Third Remand Redetermination to follow the
CAFC’s direction that the evidence on the record regarding low-priced Chinese
steel did not establish with sufficient particularity a particular market situation in
Korea on its own, especially given Commerce’s decision to not reopen the record.
Moreover, the Court is persuaded because Commerce conducted a full evaluation
of the record evidence on remand and determined that substantial evidence on the
record did not support a particular market situation in Korea. The Court sustains
Commerce’s determination that record evidence of low-priced Chinese steel did
not support a particular market situation determination in Korea.
B. Korean Electricity Market
Commerce determined that there was insufficient evidence on the record to
establish that the Government of Korea’s involvement in the Korean electricity
market contributed to a particular market situation in Korea during the period of
review. Third Remand Redetermination at 6–16. Commerce did not reopen the
record on remand but reexamined the record to perform its particular market
situation analysis. Id. For example, Commerce examined several record Consol. Court No. 18-00083 Page 16
documents that supported Commerce’s determination that the Korean Government
heavily monitored and regulated the electricity rates of the Korea Electric Power
Corporation. See Maverick Tube Corporation’s Letter, “Certain Oil Country
Tubular Goods from the Republic of Korea: Other Factual Information Submission
for Valuing the Particular Market Situation in Korea,” (May 4, 2017) (“Particular
Market Situation Allegation”), PR 95–113; id. at Ex. 3 (Maverick Tube
Corporation’s Letter, “Oil Country Tubular Goods from the Republic of Korea:
Submission of Factual Information” (Nov. 13, 2015)) at Ex. X-13 (Government of
Korea’s Letter, “Response of the Government of Korea to the Department of
Commerce’s Questionnaire January 21, 2015 Welded Line Pipe From the Republic
of Korea [Countervailing Duty] Original Investigation,” (January 21, 2015)) at I–
34; id. at Ex. 5 (Electricity [Particular Market Situation] Allegation Letter) at Ex.
4. Commerce determined that this evidence demonstrated that government policy
controlled Korean electricity prices and that the Government of Korea may have
intervened in the electricity market and distorted electricity prices in order to
achieve policy goals such as controlling inflation, but that there was insufficient
evidence to demonstrate that Korean electricity prices were distorted during the
period of review. Third Remand Redetermination at 9–10.
Commerce considered a report from the International Energy Agency
(“IEA”) showing that in 2016, the median industrial electricity price including Consol. Court No. 18-00083 Page 17
taxes among IEA members was 6.97 British pence (pence) per kilowatt hour
(kWh) and the Korean industrial electricity price including taxes was 6.965 pence
per kWh, nearly identical to the median IEA electricity rate. Id. at 10. Commerce
determined that Korean industrial electricity prices (including taxes) were, on
average, in line with the median of electricity rates in other countries in 2016. Id.
Commerce determined that the same report showed that Korea’s annual industrial
electricity prices were approximately 43 percent lower than electricity prices in
Japan. Id. Commerce determined that although Japan and Korea were the only
two countries located in Asia included in the IEA study, there were variables other
than geographic location that factored into identifying an appropriate comparison.
Id. Commerce determined that the record evidence demonstrated that shortly
before the relevant period, Japan changed its energy consumption make-up by
transitioning from nuclear energy to liquid natural gas, which explained why
Japan’s prices were significantly higher than the median electricity prices of all
countries in the IEA study. Id. at 10–11. Commerce determined that without
sufficient evidence on the record of this review demonstrating that Japanese
electricity rates were the most appropriate comparison for Korean electricity rates,
the median industrial electricity rate among IEA members was a better comparison
for Korea’s electricity rates. Id. at 11. Commerce considered that this comparison,
which used a median of the broader scope of electricity price data, was less likely Consol. Court No. 18-00083 Page 18
to have results affected by market peculiarities or distortions in any single country.
Id.
The Court concludes that Commerce was not required to compare Korea’s
electricity rates with Japan’s electricity rates because Commerce’s explanation was
reasonable for why Japan’s prices were significantly higher than the median
electricity prices of all countries in the IEA study. The Court also concludes that
Commerce’s decision to use a comparison with the median industrial electricity
rate among IEA members was reasonable given Commerce’s explanation that the
comparison provided the median of the broader scope of electricity price data and
was less likely to have results affected by market peculiarities or distortions
specific to a particular country.
Because Commerce’s comparison of Korea’s electricity rates with the
median industrial electricity rate among IEA members was reasonable and
Commerce’s determination that Korean industrial electricity prices (including
taxes) were, on average, in line with the median of electricity rates in other
countries in 2016 was supported by substantial evidence, the Court sustains
Commerce’s determination that there was insufficient evidence on the record to
establish that the Government of Korea’s involvement in the Korean electricity
market contributed to a particular market situation in Korea during the period of
review. Consol. Court No. 18-00083 Page 19
II. Commerce’s Differential Pricing Analysis
In NEXTEEL IV, the CAFC directed that the Second Remand
Redetermination be remanded for Commerce to reconsider the use of the Cohen’s
d test in view of the Stupp opinion. NEXTEEL IV, 28 F.4th at 1239. On remand,
Commerce continued to apply the Cohen’s d test and determined that the statistical
assumptions identified by the CAFC in Stupp were not pertinent to Commerce’s
analysis, which considered an entire population and did not rely on sampling.
Third Remand Redetermination at 16–21, 57–73. SeAH opposes the Third
Remand Redetermination in part, arguing that Commerce failed to support its use
of a 0.8 threshold in its application of the Cohen’s d test, abused its discretion in
not considering academic literature relied on by the CAFC in NEXTEEL IV, and
improperly relied on Commerce’s analysis in the Final Results of Redetermination
Pursuant to Court Remand (“Stupp Remand Redetermination”) filed in Stupp
Corp. v. United States, Court No. 15-00334. Consol. Pl.’s Part. Opp’n Br. at 2–13;
see Stupp Remand Redetermination, Court No. 15-00334, ECF No. 208-1.
Defendant contends that Commerce supported its use of the Cohen’s d test and
SeAH has not provided a basis for a fourth remand. Def.’s Br. at 16–31.
A. Commerce’s Use of the 0.8 Threshold
Commerce utilizes the Cohen’s d test to measure differences in prices
between two groups relative to the variance in prices within those groups. Third Consol. Court No. 18-00083 Page 20
Remand Redetermination at 18. When the differences in the means measured
relative to the variances, the Cohen’s d coefficient, is found to be 0.8 or greater, the
difference is considered “large” and “significant.” Id. SeAH contends that
because the CAFC expressed concern regarding the use of the 0.8 threshold to
interpret data that did not follow the statistical assumptions of normality, sufficient
observation size, and roughly equal variances, Commerce was required to explain
its use of the 0.8 threshold in the Third Remand Redetermination. Consol. Pl.’s
Part. Opp’n Br. at 3–5. SeAH argues that Commerce did not provide an
explanation for the reasonableness of the 0.8 threshold and, instead, based its
determination on the inapplicable case Mid Continent Steel & Wire, Inc. v. United
States (“Mid Continent”), 940 F.3d 662 (Fed. Cir. 2019). Id. at 4–6. Defendant
contends that Commerce provided a reasonable explanation for its use of the 0.8
threshold and addressed the concerns raised by the CAFC. Def.’s Br. at 19–23.
Defendant asserts that Commerce’s citation to Mid Continent was not dispositive,
and that Commerce also relied on Stupp to support its use of the 0.8 threshold. Id.
at 23.
In Stupp, the CAFC observed that the Cohen’s d test was based on certain
statistical assumptions, including the normality, sufficient size, and roughly equal
variances of the considered populations. Stupp, 5 F.4th at 1357–58. The CAFC
expressed concern that Commerce’s methodology disregarded these statistical Consol. Court No. 18-00083 Page 21
assumptions and remanded Commerce’s determination with instructions for
“Commerce to clarify its argument that having the entire universe of data rather
than a sample makes it permissible to disregard the otherwise-applicable
limitations on the use of the Cohen's d test.” Id. at 1357–60. The CAFC cited
these concerns in its remand of this case. NEXTEEL IV, 28 F.4th at 1238–39.
In the Third Remand Redetermination, Commerce explained the purpose of
the Cohen’s d test:
Section 777A(d)(1)(B)(i) of the Tariff Act of 1930, as amended (the Act) requires that Commerce find that there exists a pattern of prices that differ significantly for comparable merchandise among purchasers, regions, and time periods. As part of Commerce’s “differential pricing analysis,” the “Cohen’s d test” examines whether, for comparable merchandise, the prices to a particular purchaser, region, or time period differ significantly from all other prices. The Cohen’s d test is based on the concept of “effect size” which measures the difference in the means of some measurement between two groups relative to the variance in that measurement within each of the two groups. In effect, the denominator of this ratio is the “yardstick” by which the difference in the means is measured. When this difference in the means relative to the variances within the underlying data, i.e., the effect size or the “Cohen’s d coefficient,” is found to be “large,” i.e., 0.8 or larger, then the difference in the prices is found to be “significant.”
Third Remand Redetermination at 18 (internal citations omitted).
In its analysis, Commerce relied on Mid Continent to support its
determination that the CAFC had previously affirmed the reasonableness of the 0.8
threshold to determine whether price differences were significant. Id. at 19–20
(citing Mid Continent, 940 F.3d at 673). In Mid Continent, the CAFC held that Consol. Court No. 18-00083 Page 22
Commerce was within “the wide discretion left to it under 19 U.S.C. § 1677f-
1(d)(1)(B)” in adopting the 0.8 threshold because:
Commerce reasoned that even a small absolute difference in the means of the two groups can be significant (for the present statutory purpose) if there is a small enough dispersion of prices within the overall pool as measured by a proper pooled variance or standard deviation; the 0.8 standard is “widely adopted” as part of a “commonly used measure” of the difference relative to such overall price dispersion; and it is reasonable to adopt that measure where there is no better, objective measure of effect size.
Mid Continent, 940 F.3d at 673. In Stupp, the CAFC recognized that Mid
Continent had resolved the issue of whether Commerce’s adoption of the 0.8
threshold was reasonable but did not reach the question of whether the 0.8
threshold could be applied when the data did not satisfy the statistical assumptions
of the Cohen’s d test. Stupp, 5 F.4th at 1356–57.
On remand, Commerce determined that the statistical assumptions are not
relevant to Commerce’s application of the Cohen’s d test to SeAH’s price data.
Third Remand Redetermination at 20. Specifically, Commerce explained that:
Such criteria, i.e., the normality of the distribution, equal variances and the number of observations (i.e., the sample size), are relevant to determine whether the results of an analysis based on a sample are representative of the full population as a whole. The results of an analysis based on sampled data are estimates of the actual values of the parameters for the full population, and using statistical inference based on these statistical characteristics of the sampled data will determine, with predefined criteria, whether the estimates in the analysis results represent the actual values of the parameters for the full population of data. Consol. Court No. 18-00083 Page 23
Id. This explanation does not resolve the CAFC’s concerns raised in Stupp
pertaining to the use of the 0.8 threshold when the statistical assumptions are not
observed. As the CAFC observed, “Professor Cohen derived his interpretive
cutoffs under certain assumptions. Violating those assumptions can subvert the
usefulness of the interpretive cutoffs, transforming what might be a conservative
cutoff into a meaningless comparator.” Stupp, 5 F.4th at 1360. The Court
remands for reconsideration or further discussion the issue of Commerce’s
calculation and application of the 0.8 threshold in Cohen’s d analysis.
B. Consideration of Academic Material
In Stupp, the CAFC cited academic literature discussing the statistical
assumptions of the Cohen’s d test. See id. at 1357–59. Commerce determined that
it did not need to address this academic literature in the Third Remand
Redetermination because the academic literature was not on the administrative
record for this case. Third Remand Redetermination at 60–63, 68. SeAH argues
that “Commerce was, at a minimum, required to engage with the academic
literature that the CAFC took judicial notice of and cited in the Stupp decision.”
Consol. Pl.’s Part. Opp’n Br. at 7. SeAH contends that because Commerce did not
reject references to the academic literature in SeAH’s administrative case brief and
referenced the materials in the Final IDM, the texts are part of the administrative Consol. Court No. 18-00083 Page 24
record. Id. at 7–9. SeAH also argues that Commerce abused its discretion by not
reopening the administrative record on remand to permit the academic literature to
be placed on the record. Id. at 9–11.
Defendant contends that the Stupp decision and the Court’s remand did not
require Commerce to address the academic literature cited by the CAFC. Def.’s
Br. at 25–26. Defendant also argues that SeAH is precluded from challenging
Commerce’s decision to not reopen the administrative record because SeAH did
not request that the administrative record be reopened on remand and failed to
exhaust its administrative remedies. Id. at 24. If the arguments are not barred by
exhaustion, Defendant argues, then SeAH has failed to demonstrate that
Commerce abused its discretion in not reopening the administrative record and that
SeAH did not carry its burden to build an adequate record. Id. at 24–25.
Defendant asserts that Commerce’s failure to reject citations to academic literature
in SeAH’s case brief and references to the academic literature in the Final IDM
were in error and did not result in the academic literature being placed on the
administrative record. Id. at 26–29.
The Court remanded this matter to Commerce for further proceedings in
conformity with the CAFC’s decision in NEXTEEL IV. In NEXTEEL IV, the
CACF held that “[b]ecause Commerce's use of Cohen's d here presents identical
concerns to those in Stupp, we vacate this portion of [NEXTEEL III] and remand Consol. Court No. 18-00083 Page 25
to the Court of International Trade to reconsider in view of Stupp.” NEXTEEL IV,
28 F.4th at 1239. In Stupp, the CAFC considered multiple academic sources
addressing the statistical assumptions underlying the Cohen’s d test. Stupp, 5 F.4th
at 1357–59. The CAFC directed the Court to remand Commerce’s determination:
to give Commerce an opportunity to explain whether the limits on the use of the Cohen's d test prescribed by Professor Cohen and other authorities were satisfied in this case or whether those limits need not be observed when Commerce uses the Cohen's d test in less-than-fair- value adjudications. In that regard, we invite Commerce to clarify its argument that having the entire universe of data rather than a sample makes it permissible to disregard the otherwise-applicable limitations on the use of the Cohen's d test.
Id. at 1360.
Though the CAFC relied on academic literature in Stupp, the CAFC did not
instruct Commerce to directly respond to the specific sources of information.
Rather, the CAFC directed the remand in Stupp to allow Commerce an opportunity
to discuss whether statistical limitations on the Cohen’s d test were satisfied or
relevant to Commerce’s analysis when an entire universe of data was considered.
See id. Though the statistical limitations were drawn from academic literature,
Commerce was not required by the CAFC to incorporate the academic literature
into its response. Commerce explained why statistical assumptions, such as
normality, sufficient observation size, and roughly equal variances, are not relevant Consol. Court No. 18-00083 Page 26
when the population considered consists of the total universe of data. Third
Remand Redetermination at 20–21, 58–60.
SeAH cited certain academic texts in its administrative case brief to
Commerce. See SeAH’s Admin. Case Br. (Nov. 30, 2017) at 30–34, PR 319.
Commerce cited to some of these academic texts in the Final IDM. See Final IDM
at 67–72. In the Third Remand Redetermination, Commerce determined that it
could not consider the relevant academic literature because the documents were not
included on the administrative record. Id. at 60–63. In the Third Remand
Redetermination, Commerce claimed that it did not realize that the academic texts
cited in SeAH’s administrative case brief were not on the administrative record
during the initial review and conceded that discussion of the academic literature in
the Final IDM was an oversight that “may have resulted from the discussion and
analysis of such texts in the final results of the preceding first administrative
review of this [antidumping duty] order, where the academic texts were part of the
record of the first review.” Third Remand Redetermination at 62 & n.284.
Commerce claimed that the discussion “had been simply copied from the final
results of the first review” and that it was “clarifying this oversight” on remand.
Id. Commerce determined that “[s]uch an oversight by Commerce does not negate
either Commerce’s need to maintain the boundaries of an administrative record or Consol. Court No. 18-00083 Page 27
to enforce the time limits for the submission of [new factual information]
consistent with 19 CFR § 351.301.” Id. at 62.
SeAH contends that Commerce’s reliance on the cited academic literature in
the Final IDM effectively placed the academic literature on the administrative
record. Consol. Pl.’s Part. Opp’n Br. at 7–9. In support of its argument, SeAH
cites to Clearon Corp. v. United States, 38 CIT 1122 (2014). Id. at 8. In Clearon
Corp., Commerce used the World Development Report in selecting a surrogate
country, but a copy of the World Development Report was not included in the
administrative record. Clearon Corp., 38 CIT at 1147. The Court held that
because Commerce relied upon the World Development Report as factual
information in reaching its determination, the document was part of the record and
directed Commerce to add the document to the record so that the Court could
determine the reasonableness of Commerce’s determination. Id. Defendant argues
that the instant case is more analogous to another situation considered in Clearon
Corp., in which Commerce considered information from a 2010 financial statement
but referenced a 2011 financial statement inadvertently. Def.’s Br. at 28; Clearon
Corp., 38 CIT at 1132.
Here, Commerce discussed SeAH’s argument and the supporting academic
literature in the context of whether the application of the Cohen’s d coefficient and
0.8 threshold were reasonable. Final IDM at 67–72. Commerce’s detailed Consol. Court No. 18-00083 Page 28
response to the argument was more significant than a simple typographic error.
Because Commerce relied on the academic literature cited in SeAH’s
administrative case brief in its analysis supporting the Final Results, the Court
concludes that Commerce effectively made the academic literature part of the
administrative record. Commerce’s attempt to retroactively explain the
consideration of the academic literature as an oversight does not excuse
Commerce’s failure to consider the evidence in the Third Remand Results. The
Court remands this matter to Commerce for reconsideration of the academic
literature cited in the Final IDM.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that this action is sustained in part and remanded in part to
Commerce for reconsideration consistent with this opinion, and it is further
ORDERED that this case shall proceed according to the following schedule: (1) SeAH shall place on the administrative record on or before April 26,
2023 copies of academic literature cited by Commerce in the Final IDM;
(2) Commerce shall file its fourth remand determination on or before June
20, 2023;
(3) Commerce shall file the administrative record on or before July 5, 2023; Consol. Court No. 18-00083 Page 29
(4) Comments in opposition to the fourth remand determination shall be filed
on or before August 2, 2023;
(5) Comments in support of the fourth remand determination shall be filed
on or before August 30, 2023; and
(6) The joint appendix shall be filed on or before September 27, 2023.
/s/ Jennifer Choe-Groves Jennifer Choe-Groves, Judge
Dated: April 19, 2023 New York, New York