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17 April 2024 
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Committee on Anti -Dumping Practices  
Committee on Subsidies and Countervailing Measures  Original: English  
 
  
NOTIFICATION OF LAWS AND REGULATIONS UNDER  
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS  
UNITED STATES 
Supplement  
The following communication, dated and received on 25 March 2024, is being circulated at the 
request of the delegation of the United States.  
 
_______________  
 
 
Pursuant to Article 32.6 of the Agreement on Subsidies and Countervailing Measures and Article  18.5 
of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 
1994, the United States her eby notifies : 
Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the 
Administration of the Antidumping and Countervailing Duty Laws , 89 Fed. Reg.  20766  
(Mar. 25, 2024). 
The United States is amending its regulations to enhance, improve and strengthen its enforcement 
and administration of the antidumping duty and countervailing duty laws. Specifically, the U.S. 
Department of Commerce is revising some of its procedures, codifying certain areas of its practice, 
and enhancin g certain areas of its methodologies and analyses to address price and cost distortions, 
as well as certain countervailable subsidies, in different capacities.  
The regulations are effective April 24, 2024.  
================================================== ===========  
[Docket No. 240307 -0075]  
RIN 0625 -AB23 
Regulations Improving and Strengthening the Enforcement of Trade  Remedies Through the 
Administration of the Antidumping and  Countervailing Duty Laws  
AGENCY: Enforcement and Compliance, International Trade Administration,  Department of 
Commerce.  
ACTION: Final rule.  
----------------------------------------------------------------------- ---------------------------------------  
SUMMARY: Pursuant to its authority under the Tariff Act of 1930, as amended (the Act), the U.S. 
Department of Commerce (Commerce) is  amending its regulations to enhance, improve and 
strengthen its  enforcement and administration of the antidumping duty (AD) and  countervailing duty 
(CVD) laws. Specifically, Commerce is re vising some  of its procedures, codifying certain areas of its G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  practice, and  enhancing certain areas of its methodologies and analyses to address  price and cost 
distortions, as well as certain countervailable  subsidies, in different capacities.  
DATES: These  amendments are effective April 24, 2024.  
FOR FURTHER INFORMATION CONTACT: Scott McBride, Associate Deputy Chief  Counsel, at 
(202)  482-6292, Ian McInerney, Attorney, at (202) 482 -2327,  Hendricks Valenzuela, Attorney, at 
(202) 482 -3558, or Ariela Garvett,  
Senior Advisor, at Ariela.Garvett@trade.gov . 
SUPPLEMENTARY INFORMATION:  
General Background  
    On May 9, 2023, Commerce proposed amendments to its existing  regulations, 19 CFR part  351, 
to improve, strengthen and enhance its  enforcement of the AD and CVD laws. \1\ Relevant to this 
final rule are  the AD/CVD statutory and regulatory provisions in general, as well as  those pertaining 
to filing requirements, scope , circumvention, and  covered merchandise inquiries, the use of new 
factual information, the  CVD facts available hierarchy, surrogate value and CVD benchmark  
selections, particular market situations (PMS), and certain types of  countervailable subsidies, whi ch 
we summarize below.  
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    \1\ See Regulations Improving and Strengthening the Enforcement  of Trade Remedies Through 
the Administration of the An tidumping and  Countervailing Duty Laws, 88 FR 29850 (May  9, 2023) 
(Proposed Rule).  
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    Title VII of the Act vests Commerce with authority to admi nister  the AD/CVD laws. In particular, 
section 731 of the Act directs Commerce  to impose an AD order on merchandise entering the 
United  States when it  determines that a producer or exporter is selling a class or kind of  foreign 
merchandise into the United States at less than fair value  (i.e., dumping), and the U.S. International 
Trade Commission (ITC)  finds material injury or threat of material injury to that industry in  the 
United  States. Section 701 of the Act directs Commerce to impose a  CVD order when i t determines 
that a government of a country, or any  public entity within the territory of a country, is providing, 
directly  or indirectly, a countervailable subsidy with respect to the  manufacture, production, or 
export of a class or kind of merchandise  that is imported into the United States, and when the ITC 
finds that  material injury or threat of material injury to that industry in the  United States. \2\ 
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    \2\ A countervailable subsidy is further defined under section  771(5)(B) of the Act as existing 
when: a government or any public  entity withi n the territory of a country provides a financial  
contribution; provides any form of income or price support; or makes  a payment to a funding 
mechanism to provide a financial  contribution, or entrusts or directs a private entity to make a  
financial contrib ution, if providing the contribution would normally  be vested in the government and 
the practice does not differ in  substance from practices normally followed by governments; and a  
benefit is thereby conferred. To be countervailable, a subsidy must  be spec ific within the meaning 
of section 771(5A) of the Act.  
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    On September 20, 2021, Commerce revised its scope regulations (19  CFR 351.225) and iss ued 
new circumvention (19 CFR 351.226) and covered  merchandise (19 CFR 351.227) regulations. See 
Scope and Circumvention  Final Rule, 86 FR 52300 (September 20, 2021) (Scope and Circumvention  
Final Rule). See also Scope and Circumvention Proposed Rule, 85 F R 49472 (August  13, 2020) 
(Scope and Circumvention Proposed Rule). These  revised and new regulations became effective 
November 4, 2021. On  September 29, 2023, after publication of the May 2023 Proposed Rule,  
Commerce identified some technical issues in tho se scope,  circumvention, and covered merchandise 
referral regulations, and  amended those regulations to address those issues. \3\ We have  
incorporated those changes into these final revised regulations.  
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      \3\ See Administrative Protective Order, Service, and Other  Procedures in Antidumping and 
Countervailing Duty Proceedings, 88 FR  67069, 67077 -78 (September 29, 2023) (APO and Service 
Final Rule).  
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    As we explained throughout the preamble to the Proposed Rule, the  purpose of thes e 
modifications and additions to our regulations is to  improve, strengthen and enhance the 
enforcement and administration of  the AD/CVD laws, make such enforcement and administration 
more efficient, and to address factors which distort costs and prices --factors that make the "playing 
field" less "level" for domestic  interested parties and can contribute to unfair trade. In order to  
achieve the purpose of those regulations, Commerce may at times need to  request further 
documentation from interested parties t hat clarifies  the record to better understand the facts of a 
particular case. Other  times, Commerce may need to extend the deadline to issue a  determination 
so that its decision is fully informed and complete. To  address unfair trade adequately and 
appropr iately, Commerce may need to  remove unnecessary restrictions in its regulations to address 
updated  challenges, like the agency's withdrawal of the prohibitive  transnational subsidies 
regulation. Commerce recognizes that in the  year 2024, there are complexi ties and challenges in 
international trade  which did not exist, or did not exist in the same manner or to the same  degree, 
when previous regulations were issued. Accordingly, Commerce  has determined that revisions and 
updates to Commerce's trade remedy  regulations are warranted.  
    Section 516A(b)(2) of the Act provides a definition of Commerce's  administrative record in 
AD/CVD proceedings and Sec.  351.104(a)(1)  describes in greater detail the information contained 
on the official  record. Nonetheless, interested parties sometimes make the mistake of  merely citing 
sources, or placing Uniform Resource Locator (URL)  website information, or hyperlinks, in their 
submissions to Commerce,  and then later presuming the information contained at the s ource  
documents is considered part of the record. This becomes a problem, for  example, when parties 
submit their case briefs and rebuttal briefs on  the record pursuant to Sec.  351.309 and quote from, 
or otherwise rely  on, information or data derived from the cited sources that were never  submitted 
on the official record. Commerce therefore proposed adding  clarification on this point to 
Sec.  351.104(a)(1) in the Proposed  Rule.\4\ Commerce also proposed listing documents which do 
not need to  be 
[[Page 20767 ]] 
placed on the record, but can merely be cited, in the Proposed Rule. \5\ We received a large number 
of comments on these proposals, and as we  describe in greater detail below, we have revised 
Sec.  351.104 to  provide greater clarity on these issues. \6\ 
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    \4\ See Proposed Rule, 88 FR 29852 -53. 
    \5\ Id. 
    \6\ Commerce also proposed a change to Sec.  351.301(c)(4),  which deals with the use of record 
information as well. However, the  comments Commerce received were overwhelmingly opposed to 
such a  change. Accordingly, Commerce is not making a change to the existing  provision as proposed.  
------------------------------------------------------- -------------------- -----------------------------------  
    In the Proposed Rule, Commerce proposed language to be added to the  regulations addressing 
scope, circumvention, and covered merchandise  inquiries pertaining to filing deadlines, clarification 
requests,  merchandise not yet imported but commercially -produced and sold,  extensions of time, 
regulatory restrictions covering new factual  information, and scope clarifications. \7\ Commerce 
subsequently  received comments from several interested parties on ea ch of its  suggestions. In 
response to those comments, for the reasons we explain  below, Commerce has made certain 
modifications to its final  regulations --primarily on the language pertaining to scope  clarifications.  
-------- -------------------------------- ------------------------------------------- ---------------------------  
    \7\See Proposed Rule, 88 FR 29853 -57. 
--------------------------------------------------------------------------------------------------------------  
    There are times when interes ted parties seek to file Notices of  Subsequent Authority with 
Commerce, in which a party argues in a given  segment of a proceeding that a new Federal court or 
Commerce decision  supports, contradicts, or undermines particular arguments before the  agency. G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  However, Commerce's current regulations do not address the  timing for submitting Notices of 
Subsequent Authority, responsive  comments to a Notice of Subsequent Authority, and new factual  
information regarding the filing of a Notice of Subsequent Authority,  nor the content requirements 
of a Notice of Subsequent Authority.  Commerce, therefore, proposed an addition to Sec.  351.301, 
at paragraph (c)(6), to provide guidance for future Notices of Subsequent  Authority. \8\ We received 
comments on that pr oposal, and as we describe  in greater detail below, we have provided some 
additional language to  clarify this provision in response to those comments.  
---------------------------- -------------------------------------------------------------------------- -------- 
    \8\Id., 88 FR 29857.  
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    Section 776(d) of the Act provides that in circumstances in which  Commerce is applying adverse 
facts available  (AFA) in selecting a  program rate pursuant to sections 776(a) and (b) of the Act, it 
may use  a countervailable subsidy rate determined for the same or similar  program in a CVD 
proceeding involving the same country. Alternatively,  if there is no same or si milar program, 
Commerce may instead use a  countervailable subsidy rate for a subsidy program from a proceeding  
that Commerce considers reasonable to use, including the highest of  such rates. Commerce 
developed its practice of applying its current  hierarchy  in selecting AFA rates in CVD proceedings 
over many years,  preceding its codification into the Act, to effectuate the statutory  purpose of 
section  776(b) of the Act to induce respondents to provide  Commerce with complete and accurate 
information in CVD proceedings in a  timely manner. For purposes of these regulations, Commerce 
chose to  codify that hierarchy in a new paragraph of Sec.  351.308. \9\ We received comments on 
that proposal in response to the Proposed Rule,  and in response to  those comments we have 
modified certain language  pertaining to the CVD hierarchy in investigations.  
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    \9\Id., 88 FR 29858.  
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    In the Proposed Rule, Commerce acknowledged that both government  action and government 
inaction can benefit producers or exporters. \10\ For example, when a government issues a fee, fine, 
or penalty to a  company, yet never collects the payment, that revenue forgone is  considered a 
financial contribution pursuant to section 771(5)(D)(ii)  of the Act. Accordingly, Commerce proposed 
a new regulation  at Sec.   351.529, which codifies its practice in countervailing such a  subsidy. \11\ 
In addition, Commerce proposed considering nonexistent,  weak, or ineffective property (including 
intellectual property), human  rights, labor, and environmental protections  which may distort costs 
of production in selecting surrogate values in accordance with section  773(c)(1) of the Act in 
Sec.  351.408. \12\ Likewise, in determining if  a product has been sold for less than adequate 
remuneration, Commerce  proposed considerin g the distortive effect of those same factors on  prices 
and costs in selecting a benchmark country price or prices, in  Sec.  351.511. \13\ Finally, Commerce 
proposed that those factors might  be the foundation of a cost -based PMS, and proposed two 
examples in the  Proposed Rule to reflect those factors, to be codified in Sec.   351.416. \14\ We 
received numerous comments on those proposals, and  although we have made no changes to the 
fees, fines, and penalties and  less than adequate remuneration propos ed regulations, and only minor  
edits to the surrogate value proposed regulation, we have made some  changes to the PMS 
regulation, for the reasons provided.   
--------------------------------------------------------------------------- ------------------------ -----------  
    \10\Id., 88 FR 29858 -61. 
    \11\Id. 
    \12\Id. 
    \13\Id. 
    \14\Id. 
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    On November 18, 2022, Commerce issued an advanced no tice of  proposed rulemaking indicating 
that it was considering issuing a  regulation that would address the steps taken by Commerce to 
determine  the existence of a PMS that distorts the costs of production. See  Determining the 
Existence of a Particular Mark et Situation That  Distorts Costs of Production; Advanced Notice of 
Proposed Rulemaking,  87 FR 69234 (November 18, 2022) (hereinafter, PMS ANPR). Commerce  
received 19 comments in response to that notice and addressed or  incorporated many of those G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  comments into its proposed regulation at  Sec.  351.416 in the Proposed Rule. \15 \In addition, 
Commerce proposed  regulatory provisions addressing both a sales -based PMS, as well as a  
cost-based PMS. \16\ Its proposed regulation described information that  Commerce would normally 
consider in determining the existence of a PMS,  set forth information that Commerce would not be 
required to consider  in every case, and explained that under certain factual situations,  Commerce 
could determine that a cost -based PMS co ntributed to the  existence of a sales -based PMS. \17\ In 
addition, Commerce set forth 12  examples of circumstances that reflect a PMS that is likely to result  
in a distortion to costs. \18\ The PMS regulation was the primary issue  Commerce received comments 
on in response to the Proposed Rule, and for  the reasons described below, Commerce has revised 
some of the language  throughout Sec.  351.416 for clarity and consistency in response to  many of 
those comments.  
----------------------------------- ------------- --------------------------------------------------------------  
    \15\Id., 88 FR 29861 -67. 
    \16\Id. 
    \17\Id. 
    \18\Id. 
--------------------------------------------------------------------------------------------------------------  
    In addition, Commerce proposed modifications to several of its CVD  regulations, including those 
covering benefit (Sec.  351.503), loans  (Sec.  351.505), equity (Sec.  351.507), debt forgiveness 
(Sec.  351.508), direct taxes (Sec.  351.509), export insurance ( Sec. 351.520), and the attribution 
of subsidies to products in its CVD  calculations (Sec.  351.525). We received several comments in 
response  
[[Page 20768]]  
to some of those regulation changes and have made some revisions to  certain regulations in 
response, as set forth below.  
    Finally, in awareness of changes in the world economy, Commerce  proposed eliminating the 
current regulation prohibiting the  countervailing of certain transnational subsidies, Sec.  351.527, 
and instead reserving it for fut ure consideration. \19\ We received numerous  comments on this 
change to our regulations as well and have determined  to make no changes from the Proposed Rule, 
for the reasons explained  below.  
----------------------------------------------------------------- ---------------------------------------------  
    \19\ Id., 88 FR 29870.  
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Explanation of Modifications From the Proposed Rule to the Final Rule and Responses to Comments  
    In the Proposed Rule, Commerce invited the public to submit  comments. \20\ Commerce received 
53 submissions from interested parties  providing comments, including domestic producers, domestic 
industrial  users, exporters, im porters, foreign governments, and foreign entities.  We have 
determined to make certain modifications to the Proposed Rule  in response to certain issues and 
concerns raised in those submissions.  We considered the merits of each submission and analyzed 
the legal and  policy arguments in light of both our past practice, as well as our  desire to improve, 
strengthen, and enhance the administration and  enforcement of our AD/CVD laws.  
--------------------------------------------------------------------------------- -----------------------------  
    \20\ Id., 88 FR 29850 -51. 
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    The preamble to the Proposed Rule provides background, analysis,  and explanation which are 
relevant to these regulations. With some  modifications, as noted, this final rule would codify those 
proposed on  May 9, 2023. Accordingly, to the extent that parties wish to have a  greater 
understanding of these regulations, we encourage not only  considering the preamble of these final 
regulations, but also a review  of the analysis and explanations in the preamble to the Proposed Rule.  
    In drafting this final rule, Commerce carefully considered each of  the comments received. The 
following sections generally contain a brief  discussion of each regulatory provision(s), a summary of 
the comments  we received, and Commerce's responses to those comments. In addition,  these G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  sections contain explanations of changes Commerce made to the  Proposed Rule, either in response 
to comments or that it deemed  appropriate for conforming, clarifying, or providing additional public  
benefit.  
    1. Commerce has revised Sec.  351.104(a)(1) and added Sec.   351.104(a)(3) through (7) to 
clarify the informatio n sources that may  be cited in submissions without placing them on the official 
record and  the information sources that must be placed on the official record for  Commerce to 
consider them.  
    In the Proposed Rule, Commerce explained that it was updating S ec.  351.104(a), which describes 
in detail the information contained on the  official record, to reflect Commerce's long -standing 
interpretation  that mere citations and references (e.g., hyperlinks and website URLs)  do not 
incorporate the information locate d at the cited sources onto  the official record. Commerce explained 
that this was true whether the  citation is to sources such as textbooks, academic or economic 
studies,  foreign laws, newspaper articles, or websites of foreign governments,  businesses, or 
organizations. \21\ Commerce explained that if an  interested party wished to submit information on 
the record, it would  be required to submit the actual source material in a timely manner and  not 
merely share internet links or citations to those sources in its questionnaire responses, submissions, 
briefs, or rebuttal briefs.  
--------------------------------------------------------------------------- -----------------------------------  
    \21\ Id., 88 FR 29852 -53. Commerce provided reasons that such an  update to the regulation was 
necessary, including to avoid the time  and resources it takes for Commerce to make filers remove  
submissions from the record and resubmit them without arguments  relying on websites and URLs. 
Another reason for the policy is tha t information on websites can, and frequently does, change. At 
the time a weblink is placed on the record, the website might contain  certain information, but later 
in the segment of the proceeding,  that website and the information contained therein might c hange.  
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    Commerce also explained, however, that there are exceptions to this  rule which it adopted over 
the years, and set forth those exceptio ns in  the proposed regulations at Sec.  351.104(a)(1). 
Specifically, Commerce  identified the following as sources which parties could cite and rely  upon, 
without placing the sources on the record: U.S. statutes and  regulations; published U.S. legislative 
history; U.S. court decisions  and orders; certain notices of the Secretary and ITC published in the  
Federal Register, as well as decision memoranda and reports adopted by  those notices; and the 
agreements identified in Sec.  351.101(a). \22\ 
----------------------------------- ---------------------------------------------------------------------------  
    \22\ Id., 88 FR 29871.  
--------------------------------------------------------------------------------------------------------------  
    Commerce explained that Commerce -authored "Issues and Decision  Memoranda, " included in 
that list of excepted citation sources, were  adopted by Federal Register notices and were "not the 
separate  calculation and analysis memoranda that Commerce frequently u ses in its  proceedings. " 
\23\ Commerce stated in the preamble that  "{c}alculation and analysis memoranda " included  
"initiation  checklists, respondent selection memoranda, new subsidy allegation  memoranda, and 
affiliation/collapsing memoranda from other pro ceedings  or other segments of the same 
proceeding. " Commerce provided that all  of those documents would not be considered to be on the 
official record  "unless they have been placed on the record by Commerce or one of the  interested 
parties to the proceedin g." \24\ Furthermore, Commerce  explained that remand redeterminations, 
determinations issued pursuant  to section 129 of the Uruguay Round Agreements Act (URAA) 
(section 129  determinations), and scope rulings must "each be submitted on the  official record o f 
another segment or proceeding " for Commerce to  consider the contents and analysis of those 
determinations in that  segment or proceeding. \25\ 
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    \23\ Id., 88 FR 29853.  
    \24\ Id. 
    \25\ Id. 
------------------------- --------------------------------------------------------------------------- ----------  
    A. The revised regulation addresses documents not originating with  Commerce, published i n the 
Federal Register, containing proprietary  information, or not associated with an ACCESS barcode 
number.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      Commerce received several comments on both the proposed regulation  language, as well as 
Commerce's description of its practice in the  preamble to the Proposed Rule. One commenter 
expressed concerns with  Commerce's restrictions on citations and references (e.g., hyperlinks  and 
website URLs) to documents not originating with Commerce. That  commenter suggested that if 
documents and information (e.g. , academic  publications) were previously placed on the record in 
other segments or  proceedings, then parties should be able to cite those documents using  
Enforcement and Compliance's Antidumping Duty and Countervailing Duty  Centralized Electronic 
Service S ystem (ACCESS) barcode numbers, without  placing the sources anew on the record of the 
immediate segment.  However, there is no question that factual information that has been  filed by 
interested parties with Commerce originating outside of the  agency meets the definition of factual 
information under Sec.   351.102(b)(21). Furthermore, Sec.  351.301(c) requires that new factual  
information be submitted on each  
[[Page 20769]]  
segment of the record under specific deadlines and in a certain form.  Accordingly, as each segment 
is composed of a separate record, and  information from outside of the agency should be placed on 
the record  for consideration, we will continue to maintain that requirement as it  applies to documents 
not originating with Commer ce.  
    Certain commenters also expressed concerns that Commerce's list of  documents that it allows to 
be cited without placing the information on  the record was incomplete. Specifically, one party pointed 
out that  Commerce frequently allows citations to dictionary definitions without  requiring them to be 
separately placed on the record. Another commenter  noted that parties frequently cite World Trade 
Organization (WTO) panel  and appellate body (hereinafter the Panel and Appellate Body,  
respectively) decis ions, as well as North American Free Trade Agreement  dispute Panel decisions, 
without submitting those decisions on the  record. That party also suggested that Commerce should 
allow for all  Federal Government determinations and notices published in the Fede ral Register 
(e.g.,  Presidential proclamations, Executive orders, and  United  States Trade Representative (USTR) 
section 301 determinations,  etc.) to be cited without submitting them on the record. We agree with  
all of those comments and have modified the p roposed regulation to  include references to dictionary 
definitions, dispute settlement  determinations arising out of international agreements cited in 
Sec.  351.101 (Sec.   351.104(a)(3)(ii)), and Federal Register citations in  general 
(Sec.  351.104(a)(5)).  
    In addition, one party suggested that Commerce should also include  various U.S. Customs and 
Border Protection (CBP) rulings, including  those pertaining to the Harmonized Tariff Schedule of the 
United States  (HTSUS), on the list of docum ents not subject to the requirements of  Sec.  351.301. 
Many such rulings are on the CBP website, but it is as  time consuming for Commerce as it is for the 
interested parties to  research the rulings of other agencies not published in the Federal  Register. 
Accordingly, because interested parties bear the burden to  provide sources not originating with 
Commerce or published in the  Federal Register on the record, we have decided not to include CBP  
rulings or unpublished determinations of any other agency, except  for the ITC in AD and CVD 
proceedings, on the list of sources excluded from  the filing and timing requirements of Sec.  351.301.  
    In revising the proposed regulations at Sec.  351.104(a) for this  final rule, Commerce has included 
new paragraphs (a)(3) through (7) to  further clarify which documents may be cited without 
submitting  information on the record under Sec.  351.301. Specifically, Commerce  has revised 
Sec.  351.104(a)(1) to largely reflect the current  regulatory language, but adds language that states 
that scope,  circumvention, or covered merchandise inquiries will be conducted on  the record of the 
AD segment of a proceeding when there are companion  orders.  
    Commerce has made no changes to Sec.  351.104(a)(2) but has added  an add itional 
paragraph  (a)(3) which specifically addresses "filing requirements for documents not originating with 
the Department. " This provision clarifies that if a document does not originate with  Commerce, it 
must be placed on the record, with the exception  of the  aforementioned list of citations Commerce 
has historically permitted to  be cited without submitting such documents on the record. Notably, the  
reference to Commerce memoranda and Federal Register notices and  determinations initially 
referenced in t he Proposed Rule has been  removed from this listing because it is addressed 
elsewhere in the  revised regulation. This provision explains that unless a document not  originating 
with Commerce appears on the list of exceptions, the  procedural and timing requi rements of 
Sec.  351.301 apply. \26\ It also  explains that each citation must be cited in full, and that Commerce  
may decline to consider information sources in its analysis or  determination if those citations are not 
cited in full.  
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      \26\ We note that the term "the Department " has been applied  for these provisions to clarify 
application to documents authored by  all Commerce employees distinct from the Secretary's 
determinations.  
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    In the new Sec.  351.104(a)(4), Commerce has clarified that even  though parties may take 
propri etary, privileged, and classified  information from other segments of the same proceeding and 
place them  on the record of another segment, they cannot do so with mere  citations. All documents, 
even those originating with Commerce, which  contain business pro prietary information must be 
placed on the official  record in their entirety in accordance with the filing and timing  restrictions of 
Sec.  351.301.  
    Furthermore, new Sec.  351.104(a)(5) clarifies that all of  Commerce's Federal Register 
notifications an d determinations may be  cited by parties in submissions on the record without the 
requirement  that they be submitted on the official record, as long as those notices  and 
determinations are cited in full. If they are not cited in full,  Commerce may decline to consider those 
notifications or determinations  in its analysis. This is consistent with Commerce's longstanding  
practice, and the provision states clearly that the procedural and  timing requirements of 
Sec.  351.301 do not apply to such documents.  
    Finally, Sec.  351.104(a)(7) states that public versions of  documents originating with Commerce 
from other segments or proceedings,  but which are not associated with an ACCESS barcode number 
for whatever  reason, including those documents iss ued before ACCESS was established,  must be 
filed on the record in their entirety to be considered by  Commerce in its analysis. Otherwise, the 
record would be incomplete  because other interested parties would not have access to the cited  
documents. Therefor e, the provision explains that the procedural and  timing requirements of 
Sec.  351.301 apply to such documents.  
    B. Public versions of unpublished documents originating with  Commerce and associated with an 
ACCESS barcode number.  
    The record issue which foreign exporters, foreign governments, U.S.  importers, U.S. consumers, 
and domestic industries all agreed upon  involved Commerce's treatment of unpublished Commerce 
determinations  associated with an ACCESS barcode number. Every commenter on Co mmerce's  
treatment of the record in the Proposed Rule disagreed with Commerce  that public versions of draft 
and final remand redeterminations,  preliminary and final section 129 determination memoranda, 
and scope  ruling memoranda from other segments and pro ceedings, that are  associated with an 
ACCESS barcode number, should be required to be  placed on the administrative record of the 
segment before it. Several  commenters claimed that those sources do not meet the five definitions  
of "factual information " in Sec.  351.102(b)(21), and therefore,  should not be subject to the filing 
and timing requirements for new  factual information in Sec.  351.301.  
    Instead, those commenters claimed that each of these documents is  an agency legal 
determination that shou ld be treated like other agency  legal determination documents which are 
unpublished but are not  required to be submitted on the record of other segments or proceedings  
(e.g., preliminary decision memoranda and final issues and decision  memoranda in investi gations 
and administrative reviews). They suggested  that the mere  
[[Page 20770]]  
fact that those particular documents were not published in the Federal  Register does not make them 
any less agency legal determinations.  
    With respect to remand redetermina tions in particular, some  commenters expressed confusion 
with how Commerce could conclude that  agency determinations issued pursuant to a Federal court 
proceeding and  then eventually affirmed and discussed in a public Federal court  holding could be 
treated  as "new factual information, " incapable of  citation and reference in a subsequent Commerce 
proceeding without  submitting it on the segment of an administrative record. One commenter  
pointed out that all remand redeterminations are publicly available on  the Public Access to Court 
Electronic Records (PACER) website, \27\ as well as on ACCESS, and courts are free to consider 
documents from both  sources, which the commenter stated undercut a claim that this  information 
was "new" or merely "factual. " 
--------------------------------------------------------------------------- -----------------------------------  
    \27\ See Public Access to Court Electronic Records, available at  https://pacer.uscourts.gov . 
--------------------------------------------------------------------------- -----------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      In addition to those documents, however, all commenters expressed  concerns that the issue was 
much more extensiv e than just those three  examples. They suggested that every unpublished public 
analysis  document originating with Commerce and associated with an ACCESS  barcode number 
should be citable without submitting the agency analysis  document on the record. The com menters 
expressed concerns that there  was no factual or legal distinction between other AD or CVD analysis  
memoranda and the preliminary and final issues and decision memoranda  which Commerce has 
permitted to be cited in arguments, briefs, and  rebuttal bri efs without requiring them to be submitted 
on each record.  The commenters noted that ACCESS is Commerce's filing system and  Commerce 
analysis teams have the ability to retrieve any of the cited  documents from any segment instantly, 
as long as they have the  appropriate barcode number. Therefore, they suggested that Commerce  
should provide a uniform citation for all submitters in using an ACCESS  barcode in their filings and 
apply that to all Commerce -authored  documents.  
    To the extent that Commerce explain ed in the Proposed Rule that  preliminary and final issues and 
decision memoranda could be cited  without placement on the record because those were adopted 
by reference  in a published Federal Register document, several commenters stated  their belief that 
there was no rational legal distinction between those  incorporated by a Federal Register document 
and those not incorporated  by a Federal Register document. However, even if there was a legal  
distinction between the two types of memoranda based on ref erence in  the Federal Register, many 
commenters pointed out that Commerce  frequently cites many of its other analysis memoranda, 
such as post -preliminary memoranda and new subsidy allegation memoranda in Federal  Register 
documents, yet the record informati on policy described in the  Proposed Rule would not allow any of 
those to be cited without  submitting them on the record.  
    Some commenters claimed that Commerce 's historical treatment of  citations to various public 
and unpublished analysis memoranda was,  at times, inconsistent. In addition, they suggested that 
Commerce was  incorrect in treating any of those analysis memoranda as new facts  because just as 
the five definitions of "factual information " in Sec.  351.102(b)(21) do not apply to remand 
redetermi nations, section  129 determination memoranda, and scope rulings, they equally do not  
apply to the rest of Commerce 's other public analysis memoranda. They  acknowledged that each of 
those public memoranda analyze facts, just  like the aforementioned prelimin ary and final issues and 
decision  memoranda, but also recognized that the more important aspect of those  memoranda was 
that Commerce was making an analysis of those facts and  issuing policy and legal determinations 
based on those facts. They  expressed conc erns that nothing in Sec.   351.102(b)(21) suggests that  
the new factual information regulations were intended to apply to  Commerce analysis and calculation 
memoranda, and nothing in the  regulation was drafted with the intent of prohibiting parties from  
citing past Commerce practice and relying on that practice for support  of arguments before the 
agency. In short, several of the commenters  stated that none of these memoranda are "factual 
information, " but are instead the very basis for Commerce's policies  and practices, and  therefore, 
interested parties should be able to cite them in all  documents, including briefs and rebuttal briefs, 
without having to  submit them on the record under certain timelines and certain  procedures as "new 
factual information, " pursuant to Sec.   351.301.  
    One commenter pointed out that in Commerce 's 1997 regulations, in  responding to comments on 
Sec.  351.301, Commerce described the  information which could be relied upon in briefs and rebuttal 
briefs,  and stated that in "making  their arguments, parties may use factual  information already on 
the record or may draw on information in the  public realm to highlight any perceived inaccuracies . 
. . ." \28\ That commenter noted that all of the public memoranda issued by  Commerce are in  the 
public realm, and therefore, consistent with its  previous comments, Commerce should allow all of 
its public analysis  memoranda from other segments and proceedings to be cited without being  
required to submit those memoranda on the record prior to the drafting  and submission of briefs 
and rebuttal briefs. Another commenter agreed  with this idea, noting that public versions of 
Commerce 's documents are  "just as available to the public as Commerce 's issues and decision  
memoranda " because anyone with an ACCESS account can obtain those  documents.  
--------------------------------------------------------------------------- -----------------------------------  
    \28 \ See Antidumping Duties; Countervailing Duties; Final Rule,  62 FR 272 95, 27332 
(May 19, 1997).  
--------------------------------------------------------------------------- -----------------------------------  
    Furthermore, several commenters found the approach described by  Commerce in the Proposed 
Rule to agency -authored documents to be  problematic with respect to post -preliminary 
determination and results  documents. Some commenters expressed concerns that adopting a 
wholesale  rule that prohibits parties from demonstrating in a case or rebuttal  brief that C ommerce 
has taken a position in a preliminary determination  or administrative results that is inconsistent with G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 10 - 
 
  the agency 's position in another segment or proceeding would result in Commerce  being unable to 
address inconsistencies in its approach across r eviews  and likely lead to increased judicial oversight. 
Yet another commenter  explained that interested parties are confronted with a predicament  when 
they prepare case briefs, because, at the time that they answered  Commerce 's questionnaires, they 
did not  include in their submissions  all relevant Commerce memoranda that would aid Commerce in 
its decision -making process. Therefore, because Commerce prohibits  citations to other relevant 
Commerce public determination memoranda in  briefs and rebuttal briefs, interested parties cannot 
provide Commerce  with necessary public references that would better inform Commerce 's final 
determinations. In addition, certain commenters argued that the  alleged "new" rule forced interested 
parties to identify and submi t all relevant memoranda 30 days prior to a preliminary determination 
or results,  
[[Page 20771]]  
even if it later became evident that it might be beneficial to the  agency for the interested parties to 
cite to other Commerce memoranda.  Such restrictions, th ey stated, would lead to unnecessary  
inconsistencies in Commerce's policies and practice.  
    Finally, another commenter expressed concerns that Commerce's  proposal is unlawful because it 
would deprive interested parties of a  transparent process and, for i mporters in particular, it would 
deprive  them of their due process rights under the Fifth Amendment of the  United States 
Constitution. That commenter suggested that Commerce's  proposal contradicts fundamental 
principle of transparency in  administrative law , citing Slater Steels Corps. v. United States, 279  
F. Supp. 2d 1370, 1379 (CIT 2003) and MacLean -Fogg Co. v. United  States, 100 F. Supp. 3d 1349, 
1362 (CIT 2015) for the concept that  there is a fundamental public interest in transparency in 
government.  That commenter explained that all of the public versions of Commerce -originated 
documents at issue, including calculation and analysis  memoranda, are publicly available, and 
Commerce's issues and decision  memoranda frequently rely on such docum ents to complete the 
rationale  underlying the agency's determinations. The commenter noted that in  Chefline Corp. v. 
United States, 219 F. Supp. 2d 1303, 1309 (CIT 2002),  the U.S. Court of International Trade (CIT) 
recognized that when  "credible evidence f rom outside the record indicates a significant  error in the 
agency's determination, " it would take judicial notice of  that information. Thus, the commenter 
advocated that Commerce allow  parties to cite past analysis documents in their briefs and rebuttal  
briefs and avoid the inevitable litigation which would otherwise follow  under the approach suggested 
in the Proposed Rule.  
    In addition, that commenter expressed concerns that Commerce's  proposed changes to its 
regulation would also violate an importer's  due process rights under the Fifth Amendment. It stated 
that a fundamental  requirement of due process is for parties to have the "opportunity to  be heard 
at a meaningful time and in a meaningful manner, " citing  Mathews v. Eldridge, 424 U.S. 319, 
332 (1976 ) and Young v. Dep't of  Housing and Urban Dev., 706 F. 3d 1372, 1376 (Fed. Cir. 2013). 
Further,  the commenter pointed to a U.S. Court of Appeals for the Federal  Circuit's (Federal Circuit) 
holding which held that "the arbitrary  administration of law is subject to judicial intervention " 
and that parties are "due a fair and honest process " (NEC Corp v. United  States, 151 F. 3d 1361,  
1370-71 (Fed. Cir. 1998)). The commenter  explained that the relevant deadlines for the submission 
of factual  information occu r prior to Commerce's preliminary determinations, but  that in many 
instances, Commerce's reasoning or methodological choices  are not clear until it releases its 
preliminary determination. The  commenter explained that if an interested party is prohibited fr om 
referencing a publicly available document in its case brief unless that  document has already been 
submitted on the record or is a preliminary  or final issues and decision memorandum, it is caught in 
an unfortunate  situation because interested parties co uld not know if certain  memoranda were 
relevant until after the preliminary determination or  results were issued, after the deadline for 
submitting information on  the record had passed. Thus, according to that commenter, this is a  clear 
deprivation of thos e parties' due process rights to be heard in a  meaningful manner.  
    Commerce's Response:  
    In response to all of the above comments, Commerce has decided to  make a substantial revision 
to its regulations. Pursuant to Sec.   351.104(a)(6), interested par ties may, in all submissions, cite 
certain  public preliminary and final issues and decision memoranda in the  following segments, 
without the timing and filing restrictions of Sec.   351.301, as long as they are fully cited and 
accompanied by an ACCESS  barcode number in the citation: investigations, pursuant to 
Sec. Sec.  351.205 and  351.210; administrative reviews, pursuant to Sec.  351.213;  new shipper 
reviews, pursuant to Sec.  351.214; changed circumstances  reviews, pursuant to Sec.  351.216; 
sunset  reviews, pursuant to Sec.   351.218; and circumvention inquiries, pursuant to Sec.  351.226.  
Commerce has historically allowed all of these documents to be cited  without requiring them to be G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 11 - 
 
  placed on the record of other segments or  proceedings, and Commer ce will codify that practice in 
these  regulations.  
    In addition, the same citation allowance will also be applied to  public versions of preliminary and 
final scope rulings pursuant to  Sec.  351.225, and covered merchandise inquiries pursuant to 
Sec.  351.227, draft and final redeterminations on remand, and draft and  final redeterminations 
issued pursuant to section 129 of the URAA.  After consideration of the arguments pertaining to scope 
rulings,  remand redeterminations, and section 129 determinations fr om multiple  commenters, we 
agree that those documents should also be able to be  cited without the requirement that those 
documents be placed on the  administrative record. Like the other documents listed above, they are  
statutory and regulatory public and f inal determinations made by  Commerce in individual segments 
of a proceeding.   
    Furthermore, Commerce has determined that four additional types of  documents argued by 
interested parties should also be able to be cited  without the requirement that those documents be 
placed on the  administrative record: initiation decision documents, such as  initiation checklists; 
memoranda which describe and analyze new subsidy  allegations; scope memoranda issued in an 
investigation; and post -preliminary determinati on or results memoranda which address issues for  
the first time after the preliminary determination or results has been  issued and before the final 
determination or results is issued. In the  first two types of documents, Commerce is making a 
determination to initiate, or not initiate, based on certain information, while in the  third document 
Commerce is conducting an analysis on whether a product  is, or is not covered by the scope of an 
investigation. Finally, in the  fourth document, Commerce is making a de termination for the first time  
upon which parties may file comments. We find each of these documents  serves a unique purpose 
in the agency's proceedings and is largely  self-contained (i.e., they do not require Commerce 
employees to look  outside of the four  corners of the document to understand the  analysis). 
Accordingly, we determine that Commerce and interested  parties should be able to cite to those 
documents in other segments or  proceedings without separately placing them on the record.  
    We emphasize that all citations must be cited in full. Commerce can  only consider and rely on a 
cited information source if it is able to  retrieve that information source, which may not be possible 
if the  citation to the information source is incomplete. Furt hermore, we also  emphasize that unlike 
in past cases, the regulations will now require  that all of these document citations include reference 
to the  associated ACCESS barcode numbers. The inclusion of the associated  ACCESS barcode 
numbers in the citation i s an additional requirement  from what was permitted before, but one that 
most commenters indicated  would be an improvement for parties both outside and within Commerce 
to easily retrieve the documents and consider them in making preliminary  and final deter minations. 
If the citations are not  
 
[[Page 20772]]  
 
cited in full, including the associated ACCESS barcode numbers, the  regulation states that Commerce 
may decline to consider the cited  information sources in its analysis or determination.  
    With respect to the other public documents authored by Commerce and  argued by the comments, 
it is important to stress that the conduct of  an administrative proceeding is a time -intensive, 
resource -intensive,  and fact -intensive endeavor. Although several comment ers stated that  
collapsing memoranda or calculation memoranda, for example, taken from  other segments or other 
proceedings are not "factual information " under the regulatory definition of the term in 
Sec.  351.102(b)(21), we  disagree with that assessment. A collapsing determination, under 
Sec.  351.104(f) requires that Commerce first determine if two entities were  affiliated during a 
particular period of investigation or review, and  then determine whether there is a significant 
potential for the  manipulatio n of prices or production between the two entities such that  they should 
be treated as one collapsed entity. Likewise, when Commerce  issues calculation memoranda, its 
calculations are based upon the  record and data before it in that particular segment of a  proceeding.  
Thus, although we agree with the commenters who noted that each  collapsing and calculation 
memoranda is a legal analysis and decision  by the agency, each of those memoranda also reflect 
conclusions based  on the facts unique to the segment of t he proceeding in which they were  issued. 
Each document is publicly available, accessible on ACCESS,  potentially relevant to a segment or 
proceeding before Commerce, and  contains factual information being introduced on the record of 
the ongoing segment or proceeding for the first time.  
    When Commerce employees are considering such submissions on the  record, they frequently 
must review the record of the segment from  which the memoranda at issue originated and review 
further information  on those  records pertaining to those agency decisions to understand the  broader 
facts and context in which the decisions at issue were made by  the agency. It is a time -consuming 
exercise and, depending on the  complexity of the facts and the record of the other seg ment or  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 12 - 
 
  proceeding, can be difficult and may require that Commerce employees  put even more documents 
from those other segments or proceedings on the  record. This problem becomes even more profound 
when one recognizes  that there are dozens of decision memor anda issued by Commerce on a  
monthly basis in various segments, with some of those documents being  more descriptive of the 
facts under consideration and self -contained  than others. Accordingly, for many decision memoranda 
not listed in  Sec.  351.104(a)(6),  Commerce has determined that it would be best to  continue its 
practice of requiring interested parties pointing to those  analysis and decision memoranda from 
other segments and proceedings to  submit those documents on the record of the segment to which 
the parties are arguing that those memoranda are relevant. We appreciate  that some interested 
parties explained that it would be easier for them  to simply cite all public Commerce decision 
memoranda, but their points  do not take into consideration the time a nd effort Commerce employees  
already devote to analyzing the information placed on the record unique  to the segment before the 
agency. If Commerce were required to  independently review the details and context of the records 
of numerous  additional segments in each case, it would quickly become unmanageable.  
    In response to the arguments that Commerce has tried to prohibit  references to past practices 
and policies in issuing these regulations  (i.e., deprived interested parties of a transparent process 
or deprive  importers of their due process rights under the Fifth Amendment of the  United States 
Constitution) we disagree. Commerce believes, in fact,  that there is no support for such contentions. 
Interested parties may,  in fact, cite all of Commerce's public decision memoranda from other  
segments and proceedings and rely on those memoranda for purposes of  their arguments in every 
case. There is no regulation that restricts  such citation or argument, and nothing in the Proposed 
Rule suggested  that Commerce would prevent reliance on such documents in any given  segment. 
These regulations merely require that when interested parties  cite public documents originating with 
Commerce, and where those  documents are not listed under Sec.  351.104(a)(6), then the 
interested  party must submit a copy of that public decision document on the record  of the segment 
in which it is participating. If the interested party is  already citing that document to support its 
claims, then the interested  party will naturally  have access to the document and should be easily  
able to take the additional step and submit the document on the record  of the segment at issue. If 
anything, Commerce concludes that this  additional step creates a procedure which is more, and not 
less, transparent, than the practice advocated by the commenters, and in no  way deprives importers 
or any other party of their due process rights  under the Fifth Amendment of the United States 
Constitution.  
    Finally, with respect to the statements made by commen ters on post -preliminary determination 
and results submissions, we recognize that  parties may cite any of the documents listed in section 
Sec.  351.104(a)(6) to argue that Commerce acted inconsistently with its  practices or procedures in 
a preliminary Comm erce determination. There  is no question that collapsing and calculation 
memoranda, for example,  from other segments might provide greater factual detail on certain  
policies or practices, as suggested by some of the commenters. However,  it is the very factual 
specificity of the data in such documents which  we believe also warrants the provision of such 
documents and data on  the record for consideration in accordance with the timing and filing  
requirements of Sec.   351.301. The inclusion of such document s on the  record allows analysts and 
interested parties to consider that  information in detail in determining the relevance of those 
previous  Commerce decisions to the facts on the record before the agency.  
    2. Commerce will not revise Sec.  351.301(c)(4 ), as proposed.  
    Section 351.301(c) is the provision in Commerce's regulations that  provides timelines and 
procedures for parties to place new factual  information on the official record, and allows other 
interested parties  the opportunity to respond to those submissions. Section 351.301(c)(4),  in 
particular, pertains to Commerce and its ability to submit new  factual information on the record. In 
light of multiple cases in which  parties have filed unrelated and irrelevant new factual informatio n 
on the record in response to Commerce's placement of a calculation  document on the record, 
Commerce proposed an exception to Sec.   351.301(c)(4) in the Proposed Rule, which would allow 
Commerce to place  a calculation or analysis memorandum from another s egment or proceeding  on 
the record to clarify its practice in response to the parties'  arguments in their briefs and rebuttal 
briefs, while interested parties  could respond with comments, but not with further new factual  
information. \29\ 
--------------------------------------------------------------------------- -----------------------------------  
    \29\ See Proposed Rule, 88 FR 29857.  
--------------------------------------------------------------------------- ----------------------------- ------  
    Commenters were universally opposed to Commerce's proposal to amend  Sec.  351.301(c)(4) 
and to allow the agency to place agency analysis  and calculation memoranda on the record in  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 13 - 
 
   
[[Page 20773]]  
 
response to arguments made in briefs and rebutta l briefs without  allowing interested parties an 
opportunity to submit other agency  analyses or calculation memoranda in response. Certain 
commenters  expressed concerns that merely allowing responsive arguments, but not  responsive 
evidence, would severely l imit interested parties' ability  to meaningfully respond to the documents 
placed on the record by  Commerce, and would prohibit interested parties from being able to  provide 
additional information showing that Commerce's past practice  and policies were inco nsistent with 
that being claimed by the agency,  or, at minimum, clarifying minute distinctions between cases in 
which  those policies and practices were applied.  
    Several other commenters clarified that they were not opposed to a  restriction on unrelated, 
irrelevant, and non -responsive factual  information from interested parties, and some even indicated 
they would  support such limited restrictions, but those commenters stated that a  wholesale 
prohibition on responsive factual information was  unreasonable.  
    Commerce's Response:  
    In light of the comments received by Commerce in response to the  Proposed Rule on both the 
proposed changes to Sec. Sec.   351.104(a) and  351.301(c)(4), Commerce has determined that it 
agrees that t he regulation change, as proposed, would not provide interested parties  with sufficient 
opportunity to respond to information placed by  Commerce on the record late in a segment of a 
proceeding. Accordingly,  Commerce will not adopt the changes proposed to S ec.  351.301(c)(4) in  
the Proposed Rule.  
    3. Commerce has made certain revisions to the proposed amendments  to Sec. Sec.  351.225, 
351.226, and 351.227.  
    A. Commerce will accept responsive arguments pre -initiation in  scope and circumvention inquiries  
in Sec. Sec.  351.225(c)(3) and  351.226(c)(3), and allow responsive factual information 
pre-initiation  in circumvention inquiries.  
    In 2021, Commerce revised its regulations covering scope inquiries  at Sec.  351.225 and created 
new regulations addressi ng circumvention  inquiries pursuant to section 781 of the Act. \30\ The 
revisions were  extensive, and the reasons behind many of the changes were numerous.  One of the 
significant changes was the requirement that if an  interested party requested a scope ruli ng, the 
party must file a  standardized scope application. Section 351.225(c) provides a listing  of all of the 
required information for a scope ruling, \31\ and Sec.   351.226(c) largely incorporates the same 
requirements for a  circumvention inquiry request. \32\ Commerce explained in the Scope and  
Circumvention Final Rule that it hoped that by listing criteria and  standardizing the filing 
requirements in scope and circumvention  inquiries, it would accelerate the process by allowing all of 
the informat ion necessary to initiate to be submitted on the record at  once, rather than requiring 
Commerce to issue supplemental  questionnaires and ask for further information, both before and 
after initiation.  
-------------------------------------------------------- ------------------- -----------------------------------  
    \30\ See Scope and Circumvention Final Rule, 86 FR 52300  (September 20, 2021) (Scope and 
Circumvention Final Rule).  
    \31\ Id., 86 FR 52313 -15. 
    \32\ Id., 86 FR 52339 -41. 
--------------------- ------------------------------------------------------ -----------------------------------  
    In the Proposed Rule, Commerce noted that in the Scope and  Circumvention Final Rule, 
Commerce had indicated that parties would  have an opportunity to challenge the adequacy or 
veracity of a scope  ruling application or circumvention inquiry request. However, such an  opportunity 
was never codified in Sec. Sec.  351.225 and 351.226. \33\ Commerce's experience since the 
issuance of the scope and circumventio n rules was that it would be beneficial to the agency to allow  
"interested parties, other than the applicant or a requestor, a clear  opportunity to submit comments 
to Commerce on the adequacy of the  application or request, within 10 days after the submissi on of 
the application or request. " \34\ Thus, such a change to the regulation  was proposed.  
--------------------------------------------------------------------------- -----------------------------------  
    \33\ See Proposed Rule, 88 FR 29853, n. 9.  
    \34\ Id., 88 FR 29853.  
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- 14 - 
 
      Furthermore, Commerce explained that the factors considered in a  circumvention inquiry differ 
from a scope inquiry in th at, for example,  circumvention inquiries frequently require Commerce to 
consider if  there were patterns of trade. Thus, Commerce explained in the Proposed  Rule that 
Commerce was also proposing that in circumvention inquiries  specifically, responsive new factual 
information could be provided in  that 10 -day time period and that the party alleging circumvention 
could  respond five days afterwards with comments and new factual information  to rebut, clarify, or 
correct the interested parties' new  factual  information. Commerce explained that it expected "that 
by allowing for  both comments and new factual information in this manner, " the record  would contain 
even greater amounts of information so that the agency  could determine if the criteria to in itiate 
were satisfied. \35\ 
-------------------------------------------------------------------------- ------------------------------------  
    \35\ Id. 
--------------------------------------------------------------------------------------------------------- ----- 
    Commerce received several comments on these proposals. Some  commenters opposed allowing 
interested parties to file comments on a  scope application pre -initiation in scope inquiries and 
comments on a  circumvention inquiry request and new factual i nformation pre -initiation in 
circumvention inquiries. They complained that the  procedure would be burdensome and slow the 
process down for initiation,  when in fact, the new and revised regulations were intended to speed 
up the process for scope and circumv ention inquiries. They commented that  the proposed regulation 
changes would lead to a mini -investigation in  each case and create an adversarial process before 
the case was ever  even initiated, and that the very purpose of a scope or circumvention  inquiry i s 
to gather information and to make a determination on the  basis of the record --not to conduct such 
an analysis pre -initiation.  Some commenters even pointed to a proposed bill pending before 
Congress  that would prohibit Commerce from accepting any unsolici ted communications from any 
person other than an interested party  requesting a circumvention inquiry pre -initiation and 
suggested that  Commerce should act in accordance with that proposed legislation and  codify the 
prohibition of all such submissions. Overwhelmingly, the  main concern from those opposed to the 
consideration of additional  information before initiation was that it would slow the process down.  
    In the alternative, some parties suggested that if Commerce  continues to accept c omments and 
new factual information before  initiation, the date for such filings should not be due 10 days after  
filing of a scope ruling application or circumvention inquiry request,  but instead after the 
administrative protective order (APO) is  establish ed. They explained that this would give responsive 
submitting  parties more adequate time to review a scope ruling application or  circumvention inquiry 
request.  
    Commerce's Response:  
    Commerce has made no changes to the proposed Sec. Sec.   351.225(c)(3) and 351.226(c)(3) 
and will permit the submission of  arguments and information as provided in those regulatory 
provisions.  Since 2021, Commerce has conducted scope and circumvention i nquiries in  which 
interested parties have indicated to Commerce that information in  a scope  
 
[[Page 20774]]  
 
ruling application or circumvention inquiry request was not accurate or  was missing key information, 
and it became evident that the regulations  did not adequately provide a means for such concerns to 
be raised and  considered in a timely fashion. These changes remedy that problem. We  believe 
allowing interested parties to file comments 10 days after the  filing of a scope application to address 
the ade quacy of the  application, and file comments and new factual information 10 days  after the 
filing of a circumvention inquiry request to address the  adequacy of that inquiry request, is consistent 
with current practice,  is fair to all interested parties, and  better informs Commerce so that  the 
agency does not initiate a scope inquiry or circumvention inquiry  on inaccurate or incomplete data. 
To the extent that the bill before  Congress proposed that Commerce should be prohibited from 
considering  information wh ich would better inform the agency in determining to  initiate a segment, 
Commerce is in no way bound by that proposed  legislation and must prepare regulations which we 
believe best serve  the parties and the government.  
    To the extent that parties are concerned that this will slow down  the initiation process, it is the 
agency's belief that for scope ruling  applications, it should make no difference. If Commerce does 
not initiate a scope inquiry or reject a scope applic ation within 31 days,  it will be deemed initiated 
pursuant to Sec.  351.225(d)(1). For  circumvention inquiry requests, it is possible that the addition 
of new  factual information may delay initiation by a few days, as we explained  in the Proposed Rule 
and describe further below, but we believe that  greater amounts of information filed in a timely G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 15 - 
 
  fashion will assist  the agency in making an informed and fair decision to initiate, or not  initiate, a 
circumvention inquiry.  
    Finally, we will continue to requ ire the date for filing responsive  arguments, and in circumvention 
inquiries, new factual information, to  be 10 days from the filing of the application or request. The 
date of  issuance of the APO will differ from case to case, and one of the  purposes of th ese regulations 
is to standardize procedures and bring  predictability to scope and circumvention inquiries. We believe 
that 10  days from the date of submission on the record is adequate time for  interested parties to 
consider if there are reasons to be con cerned  about the completeness or veracity of an application 
or circumvention  inquiry request, and if so, to raise those concerns with Commerce on  the record.  
    B. Commerce may request clarifications from a scope ruling  applicant or circumvention inquiry 
requestor, reset the initiation  deadline from the date of filing a complete response to the  clarification 
request, and extend the deadline for initiating a  circumvention inquiry by 30 days if an interested 
party has filed new  factual information in respons e to the circumvention inquiry request,  in the 
Sec. Sec.  351.225(d)(1) introductory text and (d)(1)(ii) and  (iii) and 351.226(d)(1) introductory 
text and (d)(1)(ii) and (iii).  
    Commerce explained in the Proposed Rule that one issue which has  arisen sev eral times since the 
2021 scope and circumvention regulations  were issued is that there have been proceedings in which 
Commerce  wished to seek clarification on one or more aspects of a submission,  but the regulation 
only permitted initiation or rejection o f an application. \36\ Frequently, Commerce may only seek 
answers, for  example, to less than a page of questions, and it is an inefficient use  of the agency's, 
scope applicants', and circumvention inquiry  requesters' time to reject a submission, and then have 
the requesters  resubmit everything with just the answers to those few questions added  to the 
application or request. Commerce, therefore, proposed a  modification to its scope and circumvention 
inquiry regulations to  reset the 30 -day deadline to s tart after a party files a timely  response to a 
clarification request by Commerce.  
-------------------------------------------------------------------------- ------------------------------------  
    \36\ See Proposed Rule, 88 FR 29854.  
--------------------------------------------------------------------------- -----------------------------------  
    In addition, Commerce recognized that by allowing parties to submit  new factual information in 
respo nse to a circumvention inquiry request  and allowing requesters to respond with new factual 
information on  surrebuttal, the additional data may require Commerce to extend beyond  the normal 
allowance of up to an additional 15 days if it is not  practicable fo r Commerce to initiate within 
30 days. Accordingly,  Commerce proposed up to an additional 15 -day extension in that  scenario, to 
allow a combined extension of no more than 30 days beyond  the original 30 -day deadline if new 
factual information was submitted  on the record pre -initiation. \37\ 
--------------------------------------------------------------------------- -----------------------------------  
    \37\ Id., 88 FR 29856.  
------------------------------------------------------------------------------------ --------------------------  
    Commerce received several comments on these provisions. Most of the  commenters expressed a 
frustration that while the 2021 regulations had  created procedures in scope and circumvention 
inquiries that would lead  to 30-day init iations in scope inquiries, and no more than 45 -day initiations 
in circumvention inquiries, the addition of allowing  Commerce to seek clarification, and then resetting 
the 30 -day clock  after a timely response to the clarification request, seemed to  undermine, or at 
least slow down, much of that expedient process. For  that reason, a few commenters objected to 
Commerce being able to seek  clarification, while others requested that Commerce limit its ability  to 
request clarification pre -initiation to a s ingle request.  
    Likewise, several commenters objected to Commerce allowing for an  additional 15 -day extension 
to initiate circumvention inquiries if new  factual information had been submitted on the record in 
response to a  scope application or circumven tion inquiry request. They commented that  this would 
extend the period even further than the scope and  circumvention regulations anticipated when they 
were issued and would  be unnecessary and impractical. One commenter expressed concerns that  
by extending the deadline from 30 days to 60 days, it was an open  invitation to exporters to ship 
additional circumventing merchandise to  the United States, to the detriment of domestic producers, 
because  those entries would not be covered by a subsequent circumvention  finding. They suggested 
that the best defense to prevent further  circumventing merchandise from being exported to the 
United States  would be to allow for no extensions and no additional information on  the record 
pre-initiation.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      One commenter expressed  disagreement with those commenters opposed  to allowing Commerce 
to seek clarification. That commenter stated that  it is a waste of time for Commerce and applicants 
or requestors to  refile because of a few small issues, which could have quickly been  resolv ed and 
provided to the agency upon request if given an  opportunity. That commenter explained that, in the 
past, foreign  exporters and importers took advantage of rejected circumvention  inquiry requests and 
shipped additional products to the United States  before domestic producers could refile their 
submissions with necessary  supplemental information (thereby allowing their merchandise shipped  
pre-initiation from being covered by an affirmative circumvention  finding).  
    Another commenter suggested that if Commerce retains its ability to  seek clarification from scope 
ruling applicants or circumvention  inquiry requestors, Commerce should revise the regulation to 
allow interested parties to submit comments on the adequacy of the responses  to Commerce's 
request s for clarification 10 days after they are  
 
[[Page 20775]]  
 
submitted or 10 days after an APO has been established, whichever is  latest.  
    Commerce's Response:  
    Commerce explained in the Proposed Rule that it is both fair and  more efficient to allow the 
agency to seek clarifications and reset the  10-day deadline rather than reject a scope ruling 
application or  circumvention inquiry request outright, when the a gency just needs a  limited amount 
of clarifying information. It is evident that the  greatest concern from many commenters is that 
Commerce will use the  ability to seek comments as a de facto way to grant extensions and  delay 
scope and circumvention inquiri es. That is not the purpose or  intention of that provision. If a scope 
ruling application is generally  incomplete and inadequate, Commerce will reject it. However, if  
Commerce determines that it needs additional information to supplement  one or two section s of an 
application, for example, or it needs to  understand responses to a limited number of questions, 
Commerce should  be able to seek those answers without rejecting the scope application  or 
circumvention inquiry request. The purpose of these modificatio ns to the regulation is not to let the 
"exception become the rule " in this  regard --we agree that one of the purposes of the standardization 
and the addition of express requirements in the scope and circumvention  regulations was to 
accelerate the process of  initiating and conducting  scope and circumvention inquiries. The ability to 
seek clarification  should not be interpreted as a means for anyone to inhibit that  purpose.  
    Furthermore, the commenters that opposed allowing for an additional  15 days to cons ider whether 
or not to initiate a circumvention inquiry  expressed little understanding of the time and resources it 
takes for  an agency to consider record information and determine whether  initiation is warranted. 
We understand the desire of some commenter s for a speedy process, but as we explained above, 
we do not believe that  Commerce should ignore or prohibit facts and arguments in circumvention  
cases that might undermine the accuracy or completeness of a  circumvention inquiry request. 
Commerce's determi nations are based on  record information, and it is important that when the 
agency initiates  a scope or circumvention inquiry, it does so based on accurate and,  when possible, 
complete information.  
    We therefore continue to find that it is advisable for Commerce to  seek clarifications from 
applicants or requestors pre -initiation, when  necessary. Further, we find that allowing for an extra 
15 days for the  agency to review and analyze new factual re sponsive information on the  record 
pre-initiation is not unreasonable.  
    Commerce does not, however, agree that the agency should allow  other parties to submit further, 
new factual information and arguments  on the record after a party files a timely subm ission in 
response to  Commerce's request for clarification, as suggested by some commenters.  If the facts 
are simple, then Commerce may be able to initiate quickly  after receiving the responses or reject 
the application or request  quickly as well. In other  words, Commerce may not need, or want, 30  full 
days after the timely clarification response has been filed to  initiate a scope or circumvention inquiry. 
If Commerce was required to  allow parties to provide additional submissions after a clarification  has 
been requested and a response has been filed, we believe that there  would be too much of a 
possibility of unnecessary delay --the concern  expressed by most of the commenters on this issue. 
This would be true  whether the deadline is after the submission of t he response or, as  some 
commenters suggested, after the APO has been established.  Therefore, we have not codified an 
additional layer of comments and  submission of new facts following the receipt of clarification  
responses on the record, pre -initiation.  
    Finally, we note that on September 29, 2023, Commerce revised the  language of 
Sec. Sec.  351.225(d) and 351.226(d) with some small  changes. \38\ The new language does not 
conflict with this revised  addition to the regulation, and Commerce is merging the t wo sets of  textual 
revisions together in the final regulation.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  --------------------------------------------------------------------------- -----------------------------------  
    \38\ See APO and Service Final Rule, 88 FR 67077 -78. 
--------------------------------------------------------------------------------------------------------------  
    C. Commerce agrees that the proposed provisions under Sec. Sec.   351.225(f), 351.226(f), and 
351.227(d) should be revised to reflect  that only the filing and timing restrictions set forth in 
Sec.  351.301(c) do not apply to the filing deadlines set for th in the scope,  circumvention, and 
covered merchandise regulations.  
    In Sec. Sec.  351.225(a), 351.226(a), and 351.227(a), each  provision states that "unless 
otherwise specified, the procedures as  described in subpart C of this part (Sec. Sec.  351.301  through 
351.308  and 351.312 through 351.313) apply to this section. " There were  outstanding questions as 
what procedures were "otherwise specified " in Commerce's 2021 regulations, and in the Proposed 
Rule, Commerce  proposed that Sec. Sec.  351.225(f), 351 .226(f), and 351.227(d) be  amended to 
incorporate language that stated that none of the procedures  described in subpart C applied to the 
scope, circumvention and covered  merchandise filing deadlines and procedures. \39\ 
------------------------------------- -------------------------------------------------------------------------  
    \39\ See Proposed Rule, 88 FR 29854.  
--------------------------------------------------------------------------------------------------------------  
    Three commenters pointed o ut that the language proposed by Commerce  inadvertently covered 
too many regulatory provisions, because there was  no reason to believe that the timing and filing 
provisions of  Sec. Sec.  351.225, 351.226, and 351.227 intended to forgo, for  example, the 
formatting requirements of Sec.  351.303, or the rules  pertaining to treatment of, access to, and 
use of business proprietary  information under Sec.  351.306. Those commenters suggested that, in  
fact, Commerce intended only to state that Sec.  351.301(c) does  not apply to those regulations, 
because that is the general regulatory  provision that sets forth filing and timing restrictions for  
submissions of factual information in AD and CVD inquiries.  
    Commerce's Response:  
    We agree with the commenters who stated that Commerce intended only  for the filing and timing 
restrictions of Sec.  351.301(c) to be  inapplicable to the scope, circumvention, and covered 
merchandise  regulations. Accordingly, we have revised the propose d language in  Sec. 
Sec.  351.225(f) and 351.226(f) to state that "The filing and  timing restrictions of Sec.  351.301(c) 
do not apply to this paragraph  (f), and factual information submitted inconsistent with the terms of  
this paragraph may be rejected as unsolicited and untimely, " and revised the proposed language in 
Sec.  351.227(d) to state that "the filing and timing restrictions of Sec.  351.301(c) do not apply to 
this paragraph (d), and factual information submitted inconsistent with the  terms of this  paragraph 
may be rejected as unsolicited and untimely. " With respect to Sec.  351.301(b), Commerce expects 
that the types of  factual information submitted under Sec. Sec.  351.225(f), 351.226(f),  
and 351.227(d) will normally be covered by Sec.  351.102(b) (21)(i) and  (ii). Accordingly, the written 
explanation requirements of Sec.  351.301(b) will continue to apply to those regulations.  
    D. Commerce will continue to allow for extensions to preliminary  circumvention determinations 
up to 90 days in Sec.  351 .226(e)(1).  
    Section 351.226(e)(1) states that a preliminary circumvention  determination will be issued no 
more than 150 days after the  publication of the notice of initiation and does not  
 
[[Page 20776]]  
 
expressly provide for the opportunity of an extension. Furthermore,  Sec.  351.226(l)(2)(ii) provides 
that if Commerce preliminarily  determines that merchandise was circumventing an AD or CVD order 
during  a given period of time, and the merchandise was not being suspended  pursuant t o those 
orders, Commerce will normally direct CBP to suspend  liquidation of all entries of the merchandise 
entered on or after  initiation and collect cash deposits on those entries. The preamble to  the Scope 
and Circumvention Final Rule explains the reason for this  sequence. In summary, Commerce 
determined that in most cases, the  publication of the initiation of a circumvention inquiry in the 
Federal  Register would be sufficient notice for producers, exporters, and  importers that their 
non-subject mer chandise might subsequently be  determined to be subject to an order through a 
circumvention  determination. \40\ Thus, rather than direct suspension starting at the  date of an 
affirmative preliminary determination, the regulation  provides that normally Comme rce will direct 
suspension, and the  collection of cash deposits, to be applied retroactively to entries on  or after G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 18 - 
 
  initiation --thereby preventing parties from quickly shipping  merchandise after initiation to the 
United  States in avoidance of  potential fut ure ADs or CVDs.  
--------------------------------------------------------------------------------------------------------------  
    \40\ See Scope and Circumvention Final Rule, 86 FR 52344 -50. 
--------------------------------------------------------------- -----------------------------------------------  
    In the Proposed Rule, Commerce explained that given the complexity  of certain circumvention 
inquiries, it was reasonable to expressly  provide for an extension to the issuance of a preliminary 
circumventio n determination. \41\ Commerce determined that a 90 -day extension, for a  deadline of 
no more than 240 days from the date of publication of the  notice of initiation, was a reasonable 
extension amount, and emphasized  that this would not alter the maximum dead line for issuing a 
final circumvention determination of 365 days. \42\ 
--------------------------------------------------------------------------------------------------------------  
    \41\ See Proposed Rule, 88 FR 29856.  
    \42\ Id., 88 FR 29856 -57. 
--------------------------------------------------------------------------------------------------------------  
    Multiple commenters objected to Commerce's addition of an extension  allowance to 
Sec.  351.226(e)(1). They expressed concerns that because  no suspension and collection of cash 
deposits would commence for  entries not already suspended under the AD or CVD orders until a  
preliminary determination was issued, that any extension of a  preliminary determination would 
provide circumventing parties with a longer time in which they could benefit from duty -free entry 
and possibly evade the payment of ADs or CVDs altogether. The commenters  suggested that 
Commerce's ability to extend a preliminary circumvention  determination was unnecessary and that 
allowing for an extension  largely undermined the remedy provided in the Scope and Circumvention  
Final Rule in Sec.  351.226(l)(2)(ii), perpetuating ongoing harm to  domestic producers. In particular, 
some commenters expressed concerns  that extending a preliminary ci rcumvention determination by 
three  months could, in fact, guarantee that many entries which entered  earlier in the period of the 
inquiry, and were the foundation of a  circumvention allegation, would be liquidated without regard 
to any A ds or CVDs, defeatin g the very purpose of a circumvention inquiry and  determination.  
    In the alternative, some commenters suggested that if Commerce  continues to allow for an 
extension of a preliminary circumvention  determination, then it should limit such an extension to 
only 45 days,  rather than 90 days. Others proposed that Commerce should limit an  extension to 
50 days, to allow for no more than 200 days before  issuance of a preliminary determination after 
publication of the  initiation Federal Register notic e. Those commenters also suggested  that 
Commerce should consider revising its regulations under Sec.   351.226(l), and permit suspension 
of liquidation of entries in every  circumvention inquiry starting immediately at initiation, rather than  
waiting for a preliminary affirmative circumvention determination,  thereby mitigating the significant 
risk of merchandise being liquidated  as entered before Commerce issues its preliminary 
determination.  
    Commerce's Response:  
    Since Commerce issued its Scope and C ircumvention Final Rule in  2021, Commerce has found 
good cause to extend multiple preliminary  circumvention determinations pursuant to 
Sec.  351.302(b). This is  because circumvention inquiries can be extremely complicated. For  
example, in analyzing if merc handise was assembled or completed in a  third country in 
circumvention of AD or CVD orders, Commerce must  consider the five factors which establish if there 
was circumvention,  the factors which inform Commerce if a process of assembly or  completion is 
minor or insignificant, an analysis of patterns of trade,  a determination of affiliations, and 
consideration of increases in  imports of particular merchandise into the foreign country. \43\ If there 
are multiple parties involved, such analyses require that  Comm erce request a large amount of 
information from the interested  parties, and then analyze all of that data on the administrative  
record. It has been the agency's experience that in many circumvention  inquiries, 150 days is simply 
not enough time for Commerc e to gather  sufficient information, conduct such an analysis, and make 
a preliminary determination.  
--------------------------------------------------------------------------------------------------------------  
    \43\ See sections 781(b)(1), (2), and (3)  of the Act.  
--------------------------------------------------------------------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 19 - 
 
      We appreciate that parties are concerned that extending a  preliminary determination could 
possibly allow more entries of  merchan dise to be liquidated without regard to ADs or CVDs than if  
Commerce issued its preliminary circumvention determination earlier.  However, the presumption 
behind that complaint is that Commerce would  be able to adequately gather all of the necessary 
informa tion and  conduct the necessary analysis of all of the statutory and regulatory  criteria needed 
in a preliminary circumvention determination within 150  days in every circumvention inquiry. Given 
the complexity and number of  circumvention determinations, not to mention other AD and CVD  
proceedings demanding resources and time from Enforcement and  Compliance teams, we stress 
that such a presumption is mistaken.  
    Our experience has shown that there will be some circumvention  inquiries whic h do not require 
more time, or at least not an additional  90 days, to complete a preliminary circumvention 
determination. For  example, a circumvention inquiry with a single producer or exporter  conducted 
pursuant to a minor alterations allegation under sec tion 781(c) of the Act might not require 
Commerce gather as much information  or conduct such a lengthy analysis as, for example, a further 
assembly  or completed circumvention allegation under section 781(a) of the Act,  in a case involving 
multiple producer s or exporters. It is a case -by-case determination, but ultimately, Commerce needs 
the flexibility to  extend its preliminary circumvention determination when the strains on  the record 
and the agency's resources require such an extension.  
     Furthermore, we continue to believe that Commerce should not direct  CBP to suspend liquidation 
and collect cash deposits on non -subject  merchandise not already suspended until it has made an 
affirmative  circumvention determination, as reflected in Sec.   351.226(l)(2)(ii),  for all of the reasons  
 
[[Page 20777]]  
 
provided in the Scope and Circumvention Final Rule. Therefore, we have  made no changes to 
Sec.  351.226(l).  
    In addition, although we appreciate why some commenters have  suggested that Commerc e 
reduce the 90 -day extension allowance to 45 or  50 days, we continue to believe that a 90 -day 
allowance remains  appropriate. Just because the 90 -day allowance exists in the regulation  does not 
mean that Commerce will always extend up to the full 90 days.  Furthermore, regardless of the length 
of the extension, Sec.   351.226(e)(2) still requires Commerce to issue its final circumvention  
determination no later than 365 days from the date Commerce published  the initiation notice in the 
Federal Register.  
    Finally, we must emphasize that even if some additional entries  might be liquidated without regard 
to ADs or CVDs if Commerce extends a  preliminary circumvention determination, that extension will 
not "undermine " the circumvention law or defeat the ver y purpose of a  circumvention inquiry and 
determination, as some commenters alleged.  Commerce will continue to direct CBP to continue to 
suspend entries  which are already suspended at initiation under Sec.  351.226(l)(1).  Further, 
Commerce will continue to direct CBP to suspend entries of,  and collect cash deposits on, 
merchandise covered by an affirmative  circumvention determination retroactively to the date of 
initiation, in  accordance with Sec.  351.226(l)(2)(ii). That means that even if the  period in whi ch 
Commerce made its preliminary determination was  extended, the effect of that decision will only 
reach further back to  cover more entries that have not yet been liquidated. Accordingly, most  of the 
remedy available without the extension provision in Sec.   351.226(e)(1) will remain in place with 
the addition of the extension  provision to Sec.  351.226(e)(1), and the benefit will be that Commerce  
will be able to conduct its inquiry, complete its preliminary analysis,  and enter a preliminary 
circumvention de termination consistent with its  statutory and regulatory obligations.  
    E. Commerce will continue to codify its practice that it will only  conduct a scope ruling of 
merchandise not yet imported if it has been  historically commercially produced and sold i n 
Sec.  351.225(c)(1) and  (c)(2)(x).  
    Commerce explained in the Proposed Rule that although it will  conduct scope inquiries of 
merchandise not yet imported into the United  States, under its practice, it will only do so if that 
merchandise has  been comme rcially produced and sold. \44\ Commerce proposed to codify  that 
practice in Sec.  351.225(c)(1) and (c)(2)(x).  
--------------------------------------------------------------------------------------------------------------  
    \44\ See Proposed Rule, 88 FR 29853.  
--------------------------------------------------------------------------------------------------------------  
    Some commenters were critical of Commerce's practice and the  codification of that practice in 
the re gulations. They expressed  concerns that the "heightened standard " would place an 
unreasonable  burden on applicants. They suggested that Commerce should clarify that  scope ruling G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 20 - 
 
  applicants need only be required to provide evidence  available to them, and no t be required in every 
case to prove that a  product has been commercially produced and sold because sometimes scope  
applicants may not have access to such information. They pointed out  that the initial language of 
Sec.  351.225(c)(2) actually provides that  all of the information required in the application is based 
on language  that states, "to the extent reasonably available to the applicant. " \45\ Their concern 
was that that language proposed for Sec.   351.225(c)(1) states that the applicant "must provide 
evidence that  the product has been commercially produced and sold, " with no  "reasonably available " 
language attached to it. \46\ 
--------------------------------------------------------------------------------------------------------------  
    \45\ See Sec.   351.225(c)(2).  
    \46\ See Proposed Rule, 88 FR 29871.  
--------------------------------------------------------------------------------------------------------------  
    Commerce's Response:  
    It is Commerce's practice to require evidence that merchan dise which has not yet been imported 
into the United States was commercially  produced and sold in other foreign markets before 
Commerce will  initiate a scope inquiry on that merchandise. We have therefore not  changed the 
language in Sec.  351.225(c)(1) as proposed in the Proposed  Rule. As some of the commenters 
pointed out, there are many areas in  our law in which Commerce will consider allegations and 
complaints  based on information which is reasonably available to the party making  the allegation or 
claim. In this case, however, Commerce is extending a  service to review merchandise which has not 
yet even entered the United  States stream of trade. In providing such a service, it is therefore  critical 
that Commerce not expend its time and resources on s ample  sales, prototypes, or mere models of 
merchandise not yet commercially  produced. It is also critical that Commerce not expend its time or  
resources on merchandise which has never been commercially sold and  might never be commercially 
sold in the Unite d States in the future.  Accordingly, the requirement that applicants provide evidence 
of both  of these factors is reasonable and Commerce will not revise its  practice or the proposed 
evidentiary standard in this final rule.  
    With respect to the language  set forth in proposed Sec.   351.225(c)(2)(x), although it falls under 
the introductory language of  paragraph (c)(2), like all of the other elements requesting information  
from scope ruling applicants, we wish to be clear that if an applicant  is unable to provide (1) a 
statement that the product has been  commercially produced, (2) a description of the countries in 
which the  product is sold, or has been sold, and (3) relevant documentation which  reflects the details 
surrounding the production and sale of tha t product in countries other than the United States, then 
Commerce will  not conduct a scope inquiry of that merchandise. We have made one minor  change, 
however, from the Proposed Rule to Sec.  351.225(c)(2)(x)(B),  that allows evidence of countries in 
which  merchandise is either  currently being sold, or evidence of countries in which the merchandise  
"has been sold " in the past. Although the contemporaneity of such  sales would be important, there 
is no requirement under Commerce's  practice that the sales must  be currently made in other 
countries.  
    F. Commerce has modified its scope clarification regulation, Sec.  351.225(q), in response to the 
comments received.  
    Section 351.225(q) was added to the regulations in the Scope and  Circumvention Final Rule and 
Commerce explained in the Proposed Rule  that it was intended to codify Commerce's historical usage 
of such  clarifications to address scope -related issues not addressed by scope  rulings. \47\ The current 
regulation provides an example in which, after  Commerce has previously issued repeated 
interpretations of particular  language in a scope, Commerce issues a scope clarification that takes  
the form of an interpreti ve footnote to the scope when the scope is  published or set forth in 
instructions to CBP. However, Commerce  explained in the Proposed Rule that this was not the only 
situation in  which Commerce issues a scope clarification post -order, and it  determined tha t the 
regulation would benefit by setting forth other  instances in the regulation in which a scope 
clarification would be  appropriate. Further, Commerce provided examples in which a scope  
clarification could take different forms (e.g., Federal Register  notices, memoranda in the context of 
an 
 
[[Page 20778]]  
 
ongoing segment, and the aforementioned interpretive footnote). \48\ 
--------------------------------------------------------------------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 21 - 
 
      \47\ Id., 88 FR 298 55-56. 
    \48\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Commerce received a few comments on the proposed changes to Sec.   351.225(q), primarily 
concerned with the breadth and re ach of the  language of the provision. Commenters expressed 
concerns that Commerce  was trying to avoid the disciplines of the scope ruling regulation  
requirements through the scope clarification provision. Commenters  worried that the provision was 
trying to  avoid notice and comment, due  process protections, and essentially issue scope rulings 
without a  fulsome analysis. Some commented that the current language was  sufficient, while others 
questioned even the current (i.e., unmodified)  language of the provision, challenging the clause in 
Sec.  351.225(q)  which states that scope clarifications can be used to clarify "whether  a product is 
covered or excluded by the scope of an order at issue  based on previous scope determinations 
covering the same or simi lar products " \49\ and asking how that analysis differs from the analysis  
conducted under Sec.  351.225(k)(1)(i)(C).  
--------------------------------------------------------------------------------------------------------------  
    \49\ See Sec.  351.225(q).  
--------------------------------------------------------------------------------------------------------------  
    Some commenters suggested that all scope clarifications should be  published in the Federal 
Register, or that, at minimum, Commerce should  include all scope clarifications in the quarterly 
notice of scope  rulings published in the Federal Register in accord ance with Sec.   351.225(o). They 
also objected to the fact that it is Commerce's  practice to issue scope clarifications in the context of 
ongoing  segments, instead of conducting a separate segment, like a scope  ruling, and allowing 
parties outside of the s egment to comment on a  clarification. They stated that scope clarifications, 
by their nature,  are not company -specific and could affect the trading community  broadly.  
    Other commenters requested that Commerce explain in greater detail  its authority to interpret a 
scope through a scope clarification, and  one commenter protested Commerce's reference to the 
four scenarios set  forth in the proposed regulation as just examples, and its statement in  the 
Proposed Rule preamble that "these examples  are not exhaustive. " \50\ That commenter expressed 
concerns that such broad language  provided uncertainty to the parties and, again, suggested that 
Commerce  was trying to evade the disciplines of a scope ruling analysis under  Sec.  351.225(k) 
through scop e clarifications.  
-------------------------------------------------------------------------- ------------------------------------  
    \50\ See Proposed Rule, 88 FR 29856.  
-------------------------------------------------------------------------------------- ------------------------  
    Commerce's Response:  
    Commerce has considered the comments raised by the commenters and  concluded that the 
language of Sec.  351.225(q) should be narrowed and  revised to better reflect the purpose and form 
of a scope  clarifi cation.  
    To begin, Commerce has the statutory and regulatory authority as  the administrator of the trade 
remedy laws to clarify the scope of an  order when the need arises. Commerce has a long history of 
issuing  clarifications in its proceedings, and the re is no question that such  clarifications assist in the 
administration of the AD and CVD laws.  However, a scope clarification is not equivalent to a scope 
ruling or  scope determination, and Commerce never intended for the regulation to  equivocate the 
two through the codification of the original Sec.   351.225(q) or the proposed revision in the Proposed 
Rule. The  commenters have pointed to concerns with both the original and modified  language, and 
we understand those concerns. Thus, we have revised the  provision in response to those concerns.  
    First, in the introductory language to Sec.  351.225(q), Commerce  explains that a scope 
clarification may be issued in any segment of a  proceeding that provides an interpretation of specific 
language in the  scope of an order and addresses other scope -related issues, but makes  clear that a 
scope clarification may not analyze or determine whether a  product is covered by the scope of an 
order in the first instance,  outside of the situations explicitly listed in the regulation. The  purpose of 
a scope ruling, unlike a scope clarification, is to  determine if a specific physical product, in the first 
instance, is  covered or not covered by an AD or CVD order.   
    Next, rather than provide "examples " that were non -exhaustive, as  was set forth in the Proposed 
Rule, the new Sec.  351.225(q)(1)  provides four specific situations in which a scope clarification may 
be applied. First, it may be used to determine if a product is covered or  excluded by the scope of an 
order if Commerce has previously issued at  least two scope determinations or rulings covering the G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 22 - 
 
  same products  with the same physical characteristics. This is the example which is  set forth in the 
existing regulation. Such a situation arises, for  example, when one  exporter exports a product with 
certain physical  characteristics, and Commerce issues a scope ruling on that product.  Then, another 
exporter exports a product with the same physical  characteristics, and Commerce issues a scope 
ruling on that product as  well. Then a third exporter exports a product, again, with the same  physical 
characteristics, and Commerce determines that rather than  repeat the same analysis through 
multiple scope rulings, a scope  clarification is the appropriate means of communicating it s 
determination in general going forward for that particular product with  specific physical 
characteristics.  
    In response to those commenters who requested that Commerce explain  the difference between 
this language and the analysis set forth in  Sec.  351.225(k)(1)(i)(C), in Commerce's analysis under 
Sec.  351.225(k), Commerce is considering whether a product is covered, or  not covered, by an AD 
or CVD order in the first instance, and is  looking to Commerce's earlier scope rulings and 
determinations cov ering physically same or similar products under the order at issue, as well  as 
orders with same or similar scope language, for guidance. In the  example above, Commerce would 
likely consider the sources listed in  Sec.  351.225(k)(1)(i)(C) as part of its ana lysis of the products  
exported by the first and second scope ruling applicants to determine  if both products are covered, 
or not covered, by the scope of an AD or  CVD order. It is only once Commerce continues to receive 
repeated  requests for scope rulings on the same physical product that Commerce  might determine, 
instead, to issue a general scope clarification  covering products with the same physical 
characteristics.  
    The second situation set forth in the regulation pertains to  section 771(20)(B) of the  Act, for 
merchandise imported by, or for the  use of, the Department of Defense, in which coverage by the 
scope of an  AD or CVD order is not at issue. Under that provision, the issue is not  if the product is 
covered by an order, but if the merchandise is a ble to avoid the payment of duties pursuant to the 
limited governmental  importation exception set forth in the statutory provision. The purpose  of a 
scope ruling is to determine if a product is covered by the scope  of an order, not if subject 
merchandise s hould be excluded from  coverage pursuant to a statutory exception to the trade 
remedy laws. In  that situation, a scope clarification is an appropriate means of  addressing the issue.  
    The third situation relates to language or descriptors in the scope  of an order that has been 
subsequently updated, revised, or replaced  under certain circumstances. The regulation explains 
that those  circumstances involve modifications to the language in the scope of an  order pursuant to 
litigation or a changed circumstance s review under  section 751(b) of the Act, changes to HTSUS 
clarifications, as  administered by the ITC, and changes to  
 
[[Page 20779]]  
 
industrial standards set forth in a scope, as determined by the  industry source for those standards 
identified in the sco pe. Such  changes have the potential to lead to confusion and, therefore, in  those 
circumstances a scope clarification might be beneficial. For  example, sometimes, products covered 
by a particular HTSUS  classification set forth in an AD or CVD order following an  investigation may 
not be subsequently covered by that same HTSUS  classification when it is revised in the future. In 
that case, Commerce  might issue a scope clarification in an ongoing segment of a  proceeding, 
explaining that the HTSUS classif ications are provided for  illustrative reasons, but are not binding 
on the merchandise covered by  a scope. Accordingly, if the product was covered at the time the AD 
or CVD order was issued, Commerce could explain through a scope  clarification that the sub sequent 
change in that classification would  not change the coverage status of merchandise under the AD or 
CVD order.  
    Finally, the fourth situation pertains to the need for  clarification of an analysis conducted by 
Commerce in a previous scope  determina tion or scope ruling. The regulation provides an example 
where  Commerce previously determined in a country -of-origin determination,  pursuant to 
Sec.  351.225(j)(2), that the country -of-origin was  established at a certain stage of production 
where the agenc y determined that the essential component of the product was produced or  where 
the essential characteristics of the product were imported. If  Commerce observes that a company 
in a segment of the proceeding has  divided that stage of production between two o r more countries,  
Commerce may need to clarify its previous country -of-origin analysis to  explain in which part of the 
stage of production was the essential  component produced or the essential characteristics imparted. 
Such an  analysis might not require a new scope ruling but could instead be  addressed through a 
scope clarification.  
    In response to those commenters suggesting that scope  clarifications should never be conducted 
in segments of proceedings,  and should always be published in the Federal Regi ster, or at least be  
published in the quarterly notice of scope rulings under Sec.   351.225(o), we disagree that G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 23 - 
 
  publication in the Federal Register is  usually necessary. Historically, Commerce has addressed scope  
clarifications in individual segments beca use the nature of a scope  clarification is such that it is 
targeted only to a limited issue  before the agency, like many other calculation and methodological  
issues which Commerce normally faces in its investigations and  administrative reviews on a 
case-by-case basis. However, we recognize  that there may be situations in which a scope clarification 
may be less  specific to the case at hand and may have outsized effects on those  subject to an AD 
or CVD order in general. In that situation, Commerce  believes the agency would benefit from the 
broader participation of the  "trading community, " as noted by one of the commenters. Accordingly,  
removing the "examples " language from the proposed regulation,  Commerce has modified 
Sec.  351.225(q)(2) to provide tha t scope  clarifications may take the form of an interpretive footnote 
to the  scope when the scope is published or issued in its instructions to CBP,  in a memorandum 
issued in an ongoing segment of a proceeding, or, at  the discretion of the Secretary, in a F ederal 
Register document. The  regulation provides that when the scope clarification is conducted as a  
standalone segment, Commerce will publish a preliminary notice of scope  clarification in the Federal 
Register, provide parties with at least 30  days to fi le comments with the Secretary, and then address 
comments  received in a final notice of scope clarification published in the  Federal Register. To be 
clear, Commerce does not believe that the  publication of a scope clarification in the Federal Register 
will be necessary for most scope clarifications, but Commerce does agree that  it should be an option 
available for Commerce in certain circumstances.  
    G. Commerce has made minor edits to Sec. Sec.  351.225(m)(2),  351.226(m)(2), 
and 351.227(m)(2) to clarify certain terms in those  provisions.  
    In reviewing the proposed revisions to the scope, circumvention,  and covered merchandise 
regulations, Commerce became aware that  language proposed for Sec. Sec.  351.225(m)(2), 
351.226(m)(2), and  351.227(m)(2) stated that the Secretary would include on  the record of  the 
CVD proceeding a copy of the "final determination " and a  "preliminary determination. " \51\ We have 
concluded that such  language is not sufficiently clear. Therefore, in the final  regulations, we are 
revising that sentence in Sec.  351.22 5(m)(2) to  state that once the Secretary issues a final scope 
ruling on the record  of the AD proceeding, the Secretary will include a copy of the final  scope ruling 
memoranda, a copy of the preliminary scope ruling  memoranda if one had been issued, and "all 
relevant instructions to  U.S. Customs and Border Protection. " The language for Sec.   351.227(m)(2) 
will align with the circumvention language, but will  instead apply to a covered merchandise 
proceeding. We determine that  this change will provide added cl arity on the information which will 
be placed on the record of the CVD proceeding following a scope,  circumvention or covered 
merchandise determination issued on the record  of the companion AD proceeding.  
--------------------------------------------------- -----------------------------------------------------------  
    \51\ See Proposed Rule, 88 FR 29872, 29873.  
--------------------------------------------------------------------------------------------------------------  
    H. Commerce made no changes in re sponses to other scope and  circumvention issues raised in 
the comments on the Proposed Rule.  
    One commenter criticized Commerce's existing regulations that  require that scope, 
circumvention, and covered merchandise proceedings  in companion orders should  be conducted on 
the record of the AD  proceeding. That commenter also suggested that Commerce should place  
preliminary scope, circumvention, and covered merchandise rulings/determinations on the record at 
the same time that those preliminary  determinations  are placed on the AD record. Furthermore, that 
commenter  expressed frustration that although parties with an APO in previous AD  segments could 
move information from one AD segment to another under  the revised Sec.  351.306(b)(3), those 
who were not covere d by an APO  in those segments could not.  
    Another commenter expressed concerns with the language of the  current standard APO, stating 
that it does not reflect the cross -proceeding sharing provisions of Sec.  351.306(b)(3) and (4). They  
offered suggestio ns for language to revise the standard APO once these  regulations become final.  
    Commerce's Response:  
    Commerce will continue to conduct scope, circumvention, and covered  merchandise segments 
covering companion orders on the record of the AD  segment.  We will not place information on the 
CVD record following the  notification to interested parties that all subsequent filings should  be filed 
on the AD segment of the proceeding, as explained in  Sec. Sec.  351.225(m)(2), 351.226(m)(2), 
and 351.227(m)(2), u ntil final  scope rulings and circumvention and covered merchandise 
determinations  are issued. With respect to the APO, Commerce intends to modify its  standard 
language to incorporate the changes to the regulation, but  those changes will not be reflected in  the 
regulation and the APO will  not be revised until the effective date of the final rule.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 24 - 
 
      4. Commerce has made certain revisions to the proposed amendments  
 
[[Page 20780]]  
 
to Notices of Subsequent Authority --Sec.  351.301(c)(6).  
    As Commerce expl ained in the Proposed Rule, sometimes while an  administrative segment is 
ongoing, a Federal court may issue a holding,  or Commerce may issue an administrative decision, 
in another case which  an interested party believes is directly applicable to an issue  currently before 
the agency. \52\ When that occurs, the interested party  may file on the record a Notice of Subsequent 
Authority. The uniqueness  of a Notice of Subsequent Authority is that the subsequent authority  may 
occur at any time, including after the t ime for new factual  information under Sec.  351.301(c) has 
passed, after briefs and  rebuttal briefs have been filed consistent with Sec.  351.309(c) and  (d), and 
possibly right up until Commerce issues a final determination  or final results in a segment of  an AD 
or CVD proceeding.  
-------------------------------------------------------------------------- ------------------------------------  
    \52\ Id., 88 FR 29857.  
-------------------------------------------------------------------------- ----------------------------------- - 
    Currently, Commerce has no regulation guiding the filing of, or  receipt and use of, a Notice of 
Subsequent Authority, nor is there any  regula tion allowing other interested parties to comment on 
such a  Notice. Further, there is no regulation which addresses the filing of a  Notice of Subsequent 
Authority in light of the administrative  procedures and deadlines which Commerce faces in the last 
few weeks of  a segment (e.g., meeting internally to get official clearances for the  agency's decisions 
and positions, drafting and finalizing positions,  completing calculations when necessary, and 
preparing documents for  publication in the Federal Register and  for release to the parties  under the 
APO). Accordingly, under statutory deadlines, it might simply  be untenable for Commerce to consider 
a Notice of Subsequent Authority  in the days immediately preceding a final determination or final  
results. Commerce, t herefore, determined in the Proposed Rule that it  would be beneficial to issue 
a regulation which addressed the  procedures and deadlines for the filing of a Notice of Subsequent  
Authority and a response to such a notice. \53\ It therefore proposed a  new reg ulatory provision, 
Sec.  351.301(c)(6), which stated that  Commerce would "only be required to consider and address " 
a Notice of  Subsequent Authority if it was filed 30 days or more before a final  determination or 
results deadline and a response to that Not ice if it  was filed 25 days or more before that final 
determination or results  deadline. \54\ Furthermore, the proposed regulation set forth the  content 
requirements of such a Notice and responsive comments in Sec.   351.301(c)(6)(iii).  
--------------------- ------------------------------------------------------ -----------------------------------  
    \53\ Id. 
    \54\ Id., 88 FR 29873.  
--------------------------------------------------------------------------- -----------------------------------  
    Some commenters generally accepted Commerce's proposal, while four  commenters expressed 
concerns. Two commented that Commerce already had  sufficient discretion to consider and address 
Notice of Subsequent  Authority whenever and however it wished, and v oiced concerns that  parties 
would abuse what they consider "subsequent authority " under  this provision. Another expressed 
concerns that not only did Commerce  have such discretion, but if Commerce was unable to consider 
arguments  before its final determinat ion or results, then the party would have  the opportunity to 
appeal the decision and Commerce could address the  alleged authority in a remand redetermination. 
That party also stated  that Commerce's restriction of filing dates of 30 days and 25 days  might b e 
unlawful, because when a precedential court or agency decision  is issued, Commerce is required by 
law to consider it and follow it,  regardless of whether the decision is issued one day or one month  
before a final determination or decision. That commenter  emphasized  that constraining parties to 
file by 30 days and 25 days would not  relieve Commerce of its legal obligation to follow binding 
precedent.  The three commenters therefore suggested that Commerce should not  implement the 
proposed Notice of Subseque nt Authority provisions, or at  least not implement the timing 
restrictions, in the proposal.  
    The fourth commenter expressed concerns that the 30 -day and 25 -day deadlines would lead to 
unnecessary litigation when subsequent  authorities, of which Commerc e was aware, arose and 
Commerce  nonetheless issued final determinations or results inconsistent with  binding authorities. 
That commenter suggested that the regulation  should allow Commerce to consider extensions in G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 25 - 
 
  certain circumstances,  or at least move t he deadlines closer to the final determination or  results 
deadlines by 15 days.  
    Commerce's Response:  
    After consideration of the comments, we agree that the timing  language as proposed in 
Sec.  351.301(c)(6)(ii) was too restrictive  given Commerce's legal obligation to consider subsequent 
authorities  when possible. Accordingly, we have removed the language of Sec.   351.301(c)(6)(ii) 
which stated that Commerce would "only be required  to consider and address " Notices of Subsequent 
Authority and rebuttal  comments submitted within the 30 -day and 25 -day deadlines. Instead, the  
revised language states only that Commerce "will consider and  address " Notices of Subsequent 
Authority and rebuttal comments filed  within those deadlines.  
    On the other hand, we also believe that interested parties should  file Notices of Subsequent 
Authority only when the authorities are  immediate and "subsequent " to agency actions. Commerce 
has timing  requirements in each of its segments  for parties to make the agency  aware of relevant 
court and agency decisions as the segment progresses.  If a party is aware of the existence of an 
alleged binding authority  but does not alert Commerce of that alleged authority until 30 days  before 
the dead line for issuing the final determination or results, we  believe that such an action would be 
inconsistent with our normal  deadlines and an abuse of this provision. Accordingly, we have added 
a second timing requirement to the regulation that Notice of Subs equent  Authority may only be filed 
within 30 days after the alleged subsequent  authority was issued.  
    In addition, a new sentence was added to the regulation which  states that given statutory 
deadlines, "the Secretary may be unable to  consider and addre ss the arguments and applicability of 
alleged  subsequent authorities adequately in a final determination or final  results if a Notice of 
Subsequent Authority or rebuttal submission is  submitted later in the segment of the proceeding. " 
Finally, we edited  references to final results "of administrative review " to make it  just final results in 
general because a Notice of Subsequent Authority  may be filed in other administrative segments, 
such as circumvention  inquiry proceedings under section 781 of the Act and Sec.  351.226 or a  scope 
ruling proceeding under Sec.  351.225.  
    We appreciate the concerns expressed by the commenters that if a  court holding, for example, is 
binding on Commerce and arises  immediately before the issuance of a final determination or results,  
Commerce may be lawfully bound by that holding despite the fact that  Commerce may also be 
administratively unable to consider and address  that holding before the agency decision is issued by 
a statutory  deadline. As one of the commenters stated , in that case, the only  option may be for 
parties to litigate the issue and have Commerce  address the subsequent authority in a remand 
redetermination.  
 
[[Page 20781]]  
 
Still, though, it is possible in some cases that Commerce may be able  to consider and address 
subsequent authorities and arguments in less  than 30 or 25 days before the deadline for a final 
determination or  final results, but Commerce's ability or inability to consider and  address subsequent 
authority in a truncated period of time would be  highly case -specific and cannot be guaranteed by 
the regulation.  
    Section 351.301(c)(6)(ii) primarily is intended to inform the  public that if Notices of Subsequent 
Authority are filed 30 days or  more before the deadline of a final determination or resu lts, and a  
response is filed 25 days or more before the deadline for a final  determination or results, Commerce 
will be able to consider and address  the alleged authority and arguments for and against its 
application to  the segment of the proceeding. Accor dingly, if the alleged authority  was issued before 
those deadlines, interested parties must file their  Notice of Subsequent Authority by the 30 -day 
deadline. If interested  parties wait to submit notice of the alleged authority after those  deadlines, or 
if the alleged authority was issued after those  deadlines, then Commerce's ability to consider and 
address the alleged  authority will be entirely dependent on the agency's administrative  resources 
and existing time constraints before the agency issues its  final determination or results.  
    5. Commerce has made certain revisions to the CVD AFA hierarchies  in--Sec.  351.308(j).  
    In 2015, in the Trade Preferences Extension Act (TPEA), Congress  added section 776(d) to the 
Act, which addresses Commerce's application  of AFA under sections 776(a) and 776(b). The 
provision discusses  Commerce's ability to select the highest CVD rate or highest dumping  margin in 
certain circumstances, provides that there are no obligations  to make certain estimates or address 
certain claims, and gives guidance  for Commerce in otherwise selecting a CVD rate or dumping 
margin from  the facts otherwise ava ilable. \55\ With respect to CVD proceedings, in  particular, 
section 776(d) of the Act states that Commerce may "(i) use a countervailable subsidy rate applied 
for the same or similar  program in a countervailing duty proceeding involving the same country;  or 
(ii) if there is no same or similar program, use a countervailable  subsidy rate for a subsidy program G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 26 - 
 
  from a proceeding that the  administering authority considers reasonable to use. " \56\ That language 
implements, in general, Commerce's longstanding use of CVD AFA  hierarchies, and Commerce stated 
in the Proposed Rule that it was  codifying those hierarchies, in full, by adding a new paragraph to  
Sec.  351.308. \57\ 
--------------------------------------------------------------------------- ------------------ -----------------  
    \55\ See TPEA of 2015, Public Law 114 -27, 129 Stat. 362, 384  (2015), sec. 502, codified at 
19 U.S.C. 1677e(b)(1).  
    \56\ See sections 776(d)(1)(A)(i) and (ii) of the Act.  
    \57\ See Proposed Rule, 88 FR 29858.  
-------------------- ------------------------------------------------------- -----------------------------------  
    As a preliminary matter, although Commerce proposed that the CVD  AFA hierarchies be codified 
as Sec.  351.308(g) in the Proposed Rule,  we have subsequently concl uded that other provisions 
found in section  776(d) of the Act, and parts of Commerce's AFA practice in general,  should be 
codified in Sec.  351.308 and should logically precede the  CVD AFA hierarchies in the regulation. 
Accordingly, we have moved the  CVD AFA hierarchies to Sec.  351.308(j) in this final rule, and have  
reserved Sec.  351.308(g), (h), and (i) for future rulemaking. \58\ 
--------------------------------------------------------------------------- -----------------------------------  
    \58\ To prevent confusion, to the extent parties made arguments  about proposed 
Sec.  351.308(g) in their comments, we have referred  to those comments below as referencing 
Sec.  351.308(j).  
------------------------------------------------------------------------ --------------------------------------  
    In the CVD hierarchy regulation, Commerce provides for one  hierarchy for investigations in 
Sec.  351.308(j)(1) and a second  hierarchy for administrative reviews in Sec.  351.308(j)(2). In  
addition, the regulation provides guidance on the application of the  CVD hierarchy in both types of 
segments in Sec.  351.308(j)(3),  providing that Commerce will treat rates less than 0.5 percent as 
a de minimis rate, will normally determine a program to be a similar or  comparable  program based 
on Commerce's treatment of the program's  benefit, and will normally select the highest program 
rate available in  accordance with the hierarchical sequence, unless Commerce determines  that the 
highest rate is otherwise inappropriate. In addit ion, in  accordance with section 776(c)(1) of the Act, 
which requires certain  facts available derived from secondary information to be corroborated,  
Sec.  351.308(j)(3)(iv) states that when Commerce determines a CVD AFA  rate from secondary 
information using  the hierarchy, it will determine  those facts available to be corroborated.  
    Commerce received several comments on the AFA CVD hierarchies.  Generally, the comments 
were supportive, though most of those  commenters expressing support for the provision opp osed 
Commerce's  proposed use of an "above -zero" threshold in the first step of the  AFA hierarchy 
governing investigations, and instead suggested that the  regulation should include an "above -de 
minimis " threshold. While  these commenters recognized that the intention of the proposed rule was  
to codify existing Commerce practice, they also commented that the  "above -de minimis " threshold 
in no way conflicted with the statutory  language and, in fact, would better reflect the purpose and 
goals of  the AFA CVD hierarchy. Those commenters focused primarily on concerns  that parties could 
obtain a more favorable result by failing to  cooperate than if they had cooperated fully by gaming 
the "above -zero" threshold, undermining Commerce's statutory directive to  discou rage 
non-compliance. Further, some commenters also expressed  concerns that even though 
section  776(d)(3) of the Act was added by  Congress in the TPEA and explicitly states that in selecting 
an AFA  rate Commerce is not required to estimate what a CVD rate w ould have  been if the 
respondent had cooperated, or demonstrate that an AFA rate  reflects a respondent's "alleged 
commercial reality, " the "above -zero" threshold implicitly considers both.  
    In addition, multiple commenters suggested revisions to the  proposed regulation as it relates to 
instances when Commerce may  determine that a rate selected from a hierarchy is inappropriate.  
Section 351.308(j)(3)(iii) states that "{the} Secretary will  normally select the highest program rate 
available in accordance wi th the hierarchical sequence, unless the Secretary determines that such a  
rate is otherwise inappropriate. " One commenter noted that deviation  from the hierarchy may be 
necessary to ensure the statutory purpose of  AFA is achieved and stated that the placement of 
Sec.  351.308(j)(3)(iii) at the end of the regulatory provision made this  purpose seem like an 
afterthought. This commenter suggested moving a  portion of this paragraph to the introductory 
section of paragraph (j),  and subsequently deleting Se c.  351.308(j)(3)(iii).  
    Other commenters requested that Commerce elaborate on specific  instances in which Commerce 
may deviate from an AFA hierarchy or  otherwise deem a rate selected via a hierarchy to be G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 27 - 
 
  inappropriate.  These suggestions included, inte r alia, requests that: Commerce clarify  that the use 
of the word "normally " permits deviation from the  hierarchy when it fails to effectuate the purpose 
of the AFA statute;  an explicit statement that Commerce will not apply the hierarchy to  generate a 
de m inimis CVD rate for uncooperative respondents; and  modifications to paragraph (j)(3)(iii) of 
Sec.  351.308 to specifically  note that Commerce may deviate from a hierarchy if the rate "fails to  
ensure that the party  
 
[[Page 20782]]  
 
does not obtain a more f avorable result by failing to cooperate than if  it had cooperated fully, or is 
not sufficiently adverse so as to deter  future noncompliance. " 
    In addition, one commenter requested that Commerce clarify that it  will not apply lower AFA rates 
in response to the same types of  uncooperative responses regarding the same program from one 
segment of  a proceeding to another, while another commenter s uggested that  Commerce must 
calculate "a reasonably accurate estimate of the  respondent's actual rate " and, therefore, should 
edit paragraphs  (j)(1)(iii) and (j)(2)(ii) and (iii) of Sec.  351.308 to read that  Commerce will "apply 
the highest calculated above -de minimis rate for  the most similar or comparable program. " 
    Finally, another commenter expressed broad disagreement with the  proposed regulation, claiming 
that the application of an adverse  inference in CVD rate calculations is not pe rmitted by the WTO 
and inconsistent with the "spirit" of the CIT's understanding of the use  of AFA in general. This 
commenter referenced certain Panel and  Appellate Body decisions in support of its statement that 
the 1994 WTO  Agreement on Subsidies and Cou ntervailing Measures (SCM Agreement) does  not 
allow the imposition of "punitive " measures and that the purpose  of Article 12.7 of the 
SCM Agreement is not to "punish non -cooperating  parties. " Further, that same commenter stated 
that Commerce's use of  AFA "contradicts the legal principles " expressed by the CIT,  referencing 
challenges to AD proceedings and CVD proceedings which did  not involve Commerce's application of 
the CVD AFA hierarchies.  
    Commerce's Response:  
    After consideration of the comments, we have determined to make one  change to the proposed 
regulation covering the AFA hierarchies. We are  replacing "above -zero" with "above -de minimis " in 
Sec.  351.308(j)(1)(i). While Commerce seeks to balance the dual goals of  relevancy and inducement 
in its application of AFA, it must do so while  properly effectuating the statutory goal of compliance 
and ensuring  that parties do not obtain a more favorable result by failing to  cooperate than if they 
had cooperated fully. We believe replacing  the "above -zero" requirement with an "above -de minimis " 
threshold in  paragraph (g)(1)(i) of Sec.  351.308 better accomplishes this  objective, for the reasons 
stated by the commenters. For example, as  the commenters pointed out, there could be situations 
in which parties  obtain a more favorable result by failing to cooperate than if they had  cooperated 
fully through an abuse of the "above -zero" threshold. Such  an outcome would be unacceptable. We 
do not believe the same situation  would arise with the use of  an "above -de minimis " threshold.  
Accordingly, we have adopted the suggested revised standard in this  final rule.  
    On the other hand, we disagree with the one commenter's proposal to  move the "normally select " 
and "unless the Secretary determines that  such a rate is otherwise inappropriate " language in 
Sec.  351.308(j)(3)(iii) to elsewhere in the regulation. Section  351.308(j)(3) contains several 
generally -applicable rules and  principles for when Commerce is utilizing the AFA hierarchies, and we  
believe  a general principle that Commerce will select the highest  program rate available in 
accordance with the hierarchical sequence,  unless otherwise deemed inappropriate, is properly 
placed in this  section, whereas moving this statement to the introductory sec tion would not provide 
additional clarity. Moreover, we disagree that the  placement of paragraph (j)(3)(iii) in Sec.  351.308 
does not indicate  that this provision is more or less important than any other in the  regulation.  
    Regarding the requests that we elaborate on specific instances in  which Commerce may deviate 
from an AFA hierarchy or otherwise deem a  rate selected via a hierarchy to be inappropriate in the 
regulation, we  have not elected to make such explicit declarations in this final rule,  as we  believe 
that codifying such scenarios would unnecessarily inhibit  Commerce's flexibility to address situations 
on a case -by-case basis.  The introductory language of paragraph (j) of Sec.  351.308 states that  
"the Secretary will normally select the highest  program rate available  using a hierarchical analysis 
as follows . . . " and further provides  in paragraph (j)(3)(iii) that "{the} Secretary will normally  select 
the highest program rate available in accordance with the  hierarchical sequence, unless the 
Secretary determines that such a rate  is otherwise inappropriate " (emphasis added). We believe this 
language  provides Commerce with sufficient flexibility to codify its long -standing practice, but still 
allows Commerce to apply an alternative  AFA remedy in ex ceptional situations. It is Commerce's 
long-standing  practice that it will normally utilize the applicable hierarchy (either  for investigations 
or administrative reviews) when selecting a program  rate as AFA. However, we recognize that there G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 28 - 
 
  may be certain  instances  where Commerce must deviate from this default approach when the facts  
of a given case or of a particular type of subsidy program across  several cases necessitate such 
deviation. For example, in certain CVD  investigations, we have determined that  rather than apply 
an AFA CVD  hierarchy to certain non -responsive companies for particular income tax  programs, the 
facts on the record warranted an adverse finding that  those non -cooperative companies paid no 
income tax during the relevant  period. \59\ Pursuant to such a finding, we therefore determined to  
apply the corporate income tax rate as the highest possible benefit  that could be applied for such 
programs. \60\ 
--------------------------------------------------------------------------- -----------------------------------  
    \59\ See, e.g., Countervailing Duty Investigation of Certain  Hardwood Plywood Products from the 
People's Republic of China: Final  Affirmative Determination, and Final Affirmative Critical  
Circumstances Determination, in Part, 82 FR 53473 (November 16,  2017), and accompanying Issues 
and Decision Memorandum (IDM) at 8  (citing Aluminum Extrusions from the People's Republic of 
China:  Final Affirmative Countervailing Duty Determination, 76 FR 18521  (April 4, 2011), and 
accompanying IDM at the section, "Application  of Adverse Inferences: Non -Cooperative Companies) 
(explaining that  Commerce applied an adverse inference that each of the non -responsive companies 
paid no income tax during the period of  investigation and "{the} st andard corporate income tax rate  
in China is 25 percent . . . . We, therefore, find the highest  possible benefit for all income tax 
exemption and reduction programs  combined is 25 percent (i.e., the income tax programs combined  
provide a countervailable be nefit of 25 percent). "). 
    \60\ Id. 
--------------------------------------------------------------------------- -----------------------------------  
    Accordingly, given the wide variety of potential fact patterns and  unforeseen circumstances that 
Commer ce may encounter in the future, we  do not believe specifically outlining and limiting the 
circumstances  Commerce may, or may not, deviate from its default methodology of  selecting the 
highest program rate in the regulation would be  beneficial to Commerce's  application of AFA in CVD 
investigations and  administrative reviews in future cases.  
    Likewise, we will not place language in the regulations that states  that Commerce will or will not 
apply different AFA rates in response to  the same program for the s ame parties from one segment 
of a proceeding  to the next. Commerce applies two distinct hierarchical methodologies  for 
investigations and administrative reviews, and therefore,  naturally, the AFA rate which results from 
those two different  hierarchies might differ, even when applied to the same parties in a  different 
segment on the same proceeding. Commerce's use of different  hierarchies for investigations and 
administrative reviews, which  reflect inherent differences in the circumstances ar ound investigations  
versus administrative reviews, has been upheld by the CIT on multiple  
 
[[Page 20783]]  
 
occasions, \61\ accepting that "the administrative review AFA hierarchy  achieves the dual goals of 
relevancy and inducing cooperation. " \62\ Maintaini ng consistency in applying our CVD AFA 
hierarchy provides  predictability and transparency to parties involved in administrative  proceedings, 
and we see no reason to change that practice in these  regulations.  
------------------------------------------------ --------------------------- -----------------------------------  
    \61\ See, e.g., Clearon Corp. v. United States, 359 F. Supp. 3d.  1344, 1360 -61 (CIT 2019) 
(sustaining Commerce's application of the  second step of the review hierarchy, noting the hierarchy  
method is  judicially approved); Essar Steel Ltd. v. United States, 908 F.  Supp. 2d 1306, 1310 -11 
(CIT 2013) (sustaining Commerce's application  of the second step of the review hierarchy and use 
of an adverse  rate calculated for Essar for a similar program  in a previous  administrative review of 
the CVD order at issue), aff'd 753 F. 3d  1368 (Fed. Cir. 2014); and SolarWorld Ams. Inc. v. 
United  States,  229 F. Supp. 3d 1362, 1366 (CIT 2017) (SolarWorld) (sustaining  Commerce's 
application of the second step of t he review hierarchy  despite a lower rate than using the 
investigation hierarchy).  
    \62\ See SolarWorld, 229 F. Supp. 3d at 1370 (stating  "{t}he court assesses the methodology 
for reasonableness and  for sufficient explanation of the reasoning underlying the approach  . . .. 
Although it could be argued that a case -by-case hierarchy  system also would be reasonable, that 
possibility does not make  Commerce's hierarchy structure unreasonable. "). 
------------------------------------------------------- -------------------- -----------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      The TPEA added section 776(d)(3)(A) to the Act which states that  Commerce "is not required " for 
"any purpose " to "estimate what the  countervailable subsidy rate " would have been if the party "had 
cooperated. " \63\ Nonetheless, one commenter suggested that Commerce  should amend its 
hierarchies to do just that when applying AFA in CVD  proceedings. We have not adopted that 
suggestion in this final rule.  The proposed and final rule reflect Commerce's p ractice, which has been  
upheld as in accordance with law by the CIT. \64\ Under that practice,  through the hierarchy, 
Commerce selects the highest above -de minimis  rate for similar or comparable programs, but not 
necessarily identical  or "most" similar prog rams. Under its practice, as now codified by  this final rule, 
Commerce determines a program to be a similar or  comparable program based on the Secretary's 
treatment of the benefit,  as stated in Sec.  351.308(j)(3)(ii).  
------------------------------------- -------------------------------------- -----------------------------------  
    \63\ See section 776(d)(3)(A) of the Act.  
    \64\ See Changzhou Trina Solar Energy Co. v. United States, 352  F. Supp. 3d 1316, 1329 ( "Under 
Commerce's established  {hierarchy} methodology and consistent with the plain text of  the statute, 
Commerce selects a similar program, not necessarily the  most similar program. "); see also Bio -Lab 
Inc. v. United States,  487 F. Supp. 3d 1291, 1308 (CIT 2020) ( "Selecting a program that is  similar 
is enough to satisfy the statute. ") 
--------------------------------------------------------------------------- -----------------------------------  
    Finally, we disagree with the commenter who expressed concerns that  Commerce's CVD AFA 
hierarchy is inconsistent with the United States'  WTO obligations and the general AFA views of the 
CIT. Commerce's  practice and these regulations are fully in compliance with the United  States' WTO 
obligations. Furthermore, Commerce's use of CVD AFA  hierarch ies has been sustained by the CIT on 
numerous occasions, as  noted earlier in this section. Thus, we find the commenter's suggestion  that 
Commerce may not utilize such AFA rates in its CVD calculations  (if circumstances warrant) to be 
unavailing and we have  made no further  revisions to Sec.  351.308 other than as described above.  
    6. Commerce has made minor changes to its regulations addressing  government inaction which 
distorts certain costs through weak,  ineffective, or nonexistent property (including i ntellectual 
property),  human rights, labor, and environmental protections.  
    In the Proposed Rule, Commerce explained that because "government  inaction and failure to 
enforce property (including intellectual  property), human rights, labor, and environmental 
protections lowers  the cost of production for firms in their jurisdiction, " it was  proposing 
modifications to its regulations to consider such inaction  when determining if certain potential 
surrogate values, benchmark  prices, or input costs o f production are potentially distorted or  
otherwise not in accordance with market principles. \65\ Commerce  explained that this is because 
such firms are not paying a "cost of  compliance " to meet regulatory standards for which firms 
operating in  other juris dictions are responsible. \66\ Commerce also discussed how  the economics 
literature explains this in terms of externalities and  public goods, identifying the fact that firms base 
their decisions  almost exclusively on direct cost and profitability considerat ions and  largely ignore 
the indirect societal costs of their production  decisions. \67\ 
--------------------------------------------------------------------------- -----------------------------------  
    \65\ See Proposed Rule, 88 FR 29859 -61; see also OECD,  OECD  Regulatory Policy Outlook 2018: 
Glossary, available at https://www.oecd -ilibrary.org/sites/9789264303072 -51-
en/index.html?i temId=/content/component/9789264303072 -51-en, accessed February 2, 2021.  
    \66\ Id., 88 FR 29858 -61. 
    \67\ Id., 88 FR 29859 (citing International Monetary Fund  (Thomas Helbling), "Externalities: 
Prices Do Not Capture  All Costs, " Finance & Development (date unspecified); Coase, Ronald,  "The 
Problem of Social Cost. " Journal of Law and Economics, 3 (1):  1-44 (1960); Cornes, Richard, and 
Todd Sandler, The Theory of  Externalities, Public Goods, and Club Goods, Cambridge University  
Press (1986); and Paul Samuelson, "Diagrammatic Exposition of a  Theory of Public Expenditure, " 
The Review of Economics and  Statistics, 37 (4): 350 -56 (1955)).  
--------------------------------------------------------------------------- -----------------------------------  
    Notably, although Commerce received several comments on the  proposed revisions to 
Sec. Sec.  351.408(d), 351.416(g)(10) and (11),  and 351.511(a)(2), it received no comments that 
challenged the concept  that weak, ineff ective, or nonexistent real, personal and intellectual  property 
protections, human rights protections, labor protections, and  environmental protections can result 
in lower direct costs of  production that do not reflect indirect societal costs. Commerce  explained in 
the Proposed Rule that for each of these situations, there  are scenarios that can result in distorted 
costs of production (e.g., a  lack of environmental laws or the existence of slave, forced, or child  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 30 - 
 
  labor). \68\ Accordingly, Commerce explained that, consistent with its  statutory and inherent 
authority to select appropriate surrogate values  in determining a normal value for a non -market 
economy analysis, select  appropriate benchmarks prices in its less than adequate remuneration  
analysis, and det ermine if a particular market situations exists that  distort costs of production, 
Commerce was codifying its ability to  consider such arguments if interested parties raised such 
claims and  provided sufficient evidence to support allegations. \69\ 
---------- ----------------------------------------------------------------- -----------------------------------  
    \68\ Id., 88 FR 29859.  
    \69\ Id. 
--------------------------------------------------------------------------- -----------------------------------  
    A. Commerce does not agree with the overarching, generalized  concerns expressed by certain 
commenters.  
    Certain commenters expressed overarching concerns about Commerce's  proposals, claiming that 
Commerce did not have the appropriate  expertise or statutory authority to address the lack of 
various  "social " protections in its analysis. One commenter sugges ted that  Commerce was 
"attempting to set itself up as judge, jury and  executioner on matters of property rights, human 
rights, labor rights " and "environmental protections, " and that by analyzing the  protections provided 
by various countries, Commerce was  "unilaterally " "asserting authority to stand in judgment of the  
enforcement of various rights by other sovereign nations, " despite the  fact that allegedly Commerce 
possesses no particular expertise in how  property rights (including intellectual property), human 
rights, labor  rights, or environmental protections should best be "defined,  implemented and 
enforced. " That commenter claimed that nothing in the  trade laws appoints Commerce to act as the 
"global rights police " and expressed concerns that Commerce's  proposal would "punish respondents  
for operating in countries that do not meet a U.S. administration's  policy preferences. " 
    Another commenter claimed that Commerce was trying to "insert  social  
 
[[Page 20784]]  
 
considerations into AD calculations " through "social dumping, " which  historically the United States 
did not advocate addressing in the AD  law. That commenter expressed concerns that by including 
social dumping  in its analysis, Commerce was inviting other countries to do the same , and to punish 
United States' exporters because of the United States's  own alleged "under enforcement of labor 
rights. " 
    Other commenters challenged Commerce's overall analysis as too  broad because it does not 
define what "weak, ineffective, or  nonexis tent property (including intellectual property), human 
rights,  labor, or environmental protections " means in every case and does not  explain if objective 
international standards, U.S. standards, or other  standards are intended to be used in every case to 
determine if such  protections are deficient or not deficient.  
    Conversely, other commenters stated that not only was Commerce  acting within its statutory and 
inherent authority, but that Commerce's  proposal is too narrow, and Commerce should consider 
even more  scenarios involving property (including intellectual property), human  rights, labor, and 
environmental protections (and the resulting low or  nonexistent compliance costs). Specifically, 
those commenters suggested  that because a country could take im mediate steps following an  
allegation of a lack of effective protections in an effort to forestall  Commerce's actions and 
"greenwash a failure to adopt and effectively  enforce such protections, " Commerce should add a 
requirement to its  overarching language  that Commerce would consider not only weak,  ineffective, 
or nonexistent protections, but also "arbitrary " protections with no lawful history or context. In other 
words, those  commenters advocated that interested parties should be able to argue  that an alleged 
protection in a given case was, in fact, set up solely  to avoid Commerce reconsidering prices or costs 
in its various  analyses, and that such "arbitrary " protections should not be treated  as actual or real 
protections by the agency.  
    Commerce's Response:  
    Commerce has the statutory and inherent authority to consider the  impact of weak, ineffective, 
or nonexistent protections on its analysis  of surrogate values, benchmark prices, and costs of 
production in its  PMS analysis. As explained in the Proposed Rule, it is well established  that 
Commerce has the authority to consider if potential benchmark  prices and potential surrogate values 
are distorted, and are,  therefore, inappropriate to use in its analysis. \70\ Not only have  courts 
affirmed such a n authority, but Commerce's consideration of  potential labor surrogate values in light 
of evidence of the existence  of forced labor in potential surrogate countries was also prominent in  
three cases before the CIT, again, cited in the Proposed Rule. \71\ G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 31 - 
 
  --------------------------------------------------------------------------------------------------------------  
    \70\ Id., 88 FR 29860.  
    \71\ Id., at nn. 36 and 39 (citing, e.g., Ad Hoc Shrimp Trade  Action Comm. v. United States, 
219 F. Supp. 3d 1286, 1292 (CIT 2017)  (citing Final Results of Redetermination Pursuant to Court 
Remand,  Ad Hoc Shrimp Trade Action Committee v. United States, Court No. 15 -00279, 
Slip Op. 17-27 (CIT March 16, 2017), dated June 6, 2017,  available at 
https://access.trade.gov/resources/remands/17 -27.pdf , aff'd Ad Hoc Shrimp Trade Action Comm. 
v. United States, 234 F.  Supp. 3d 1315, 1320 (CIT 2017)); Fina l Results of Redetermination  Pursuant 
to Court Remand, Tri Union Frozen Products Inc. et al. v.  United States, Consol. Court No. 14 -00249, 
Slip Op. 17071 (CIT June  13, 2017), dated July 25, 2017, at 8 -9, available at 
https://access.trade.gov/resources/remands/17 -71.pdf , aff'd Tri Union Frozen  Prods., Inc. v. 
United  States, 254 F. Supp. 3d 1290 (CIT 2017),  aff'd Tri Union Frozen Products, Inc. v. 
United  States, 741 Fed.  Appx. 801 (Fed. Cir. 2018) (collectively, Tri Union Frozen);  Refillable 
Stainless Steel Kegs from the People's Republic of China:  Final Affirmative Determination of Sales 
at Less Than Fair Value and  Final Affirmative Determination of Critical Circumstances, in Part,  84 
FR 57010 (October 24, 2019), and accompanying IDM at 35; and  Final Results of Redetermination 
Pursuant to Court Remand, New  American Keg v. United States, Slip Op. 21 -30 (March 23, 2021),  
dated July 7, 2021, at 3 (citing Tri Unio n Frozen), available at  
https://access.trade.gov/resources/remands/21 -30.pdf ). 
--------------------------------------------------------------------------------------------------------------  
    Commerce emphasizes that in each of the modified regulatory  provisions, the focus is on whether 
weak, ineffective, or nonexistent  protections  distort prices or costs. This is the same distortion  
analysis Commerce applies for all less than adequate remuneration  benchmarks and surrogate 
values if interested parties claim that those  prices or values are distorted. In that regard, the PMS 
examples at issue are consistent with the other examples of a PMS set forth in  Sec.  351.416(g). 
Commerce will not use distorted potential benchmark  prices or distorted potential surrogate values, 
and its refusal to use  distorted values in its methodologies and cal culations is not a novel  concept. 
Further, Congress explicitly directed Commerce in section  773(e) of the Act to consider "another 
calculation methodology " if it determines that a PMS exists "such that the cost of materials and  
fabrication or other process ing of any kind does not accurately reflect  the cost of production in the 
ordinary course of trade. " Again, it is  standard practice for Commerce to consider arguments based 
on real -world factors that can affect the cost of production, and to reject the  use of prices or costs 
which Commerce has determined to be distorted or  potentially distorted.  
    What would, in fact, be inappropriate would be for Commerce to  knowingly ignore real -world 
factors that distort or potentially distort  costs placed on the record. One of the commenters 
expressed concerns  that Commerce is trying to incorporate "social dumping " \72\ into its  AD analysis 
through these regulations. However, Commerce's intent  through these regulations is not to consider 
foreign government  policie s into its calculations to effectuate change in those policies,  but instead 
to focus on one overarching analysis relevant to its  calculations: whether the record reflects that 
certain prices or costs  at issue were, more likely than not, distorted by identified weak,  ineffective, 
or nonexistent protections. Commerce has a great deal of  experience in analyzing if prices or costs 
are distorted, and it is in  accordance with that expertise that Commerce is issuing these  regulations.  
----------------------- ---------------------------------------------------------------------------------------  
    \72\ "Social dumping " is defined as "the practice of allowing  employers to lower wages and reduce 
employees' benefits in order to  attract and retain employment and investment. " See 
Collins  Dictionary, "Social Dumping, " retrieved November 8, 2023, 
https://www.collinsdictionary.com/us/dictionary/english/social -dumping . 
--------------------------------------------------------------------------------------------------------------  
    Accordingly, there is no validity to the concerns that Commerce is  trying to be a "judge, jury and 
executioner " on the pro perty rights  (including intellectual property), human rights, labor rights, and  
environmental protections administered and enforced by other countries,  nor that it is trying to act 
as "global rights police " through these  regulatory changes, nor that it is trying to push certain 
United  States  "policy preferences. " As Commerce recognized in the Proposed Rule,  every country 
retains discretion to pursue its own priorities,  including the implementation and enforcement of 
certain laws, policies  and standards f or the public welfare. \73\ If Commerce determines that a  
company were able to produce its merchandise for prices cheaper than  foreign competitors because 
it followed no workplace safety laws and  used forced or child labor, it would be both logical and 
reasonable for  Commerce to reject potential surrogate values derived from sales of  that merchandise G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 32 - 
 
  in a non -market economy AD proceeding. On the other  hand, it would be illogical and unreasonable 
to ignore arguments and  record information that shows that thos e surrogate values are distorted  for 
fear of generalized claims that Commerce is trying to impose itself  as a global judge or policeman 
over other countries'  
 
[[Page 20785]]  
 
social -, environmental -, and property -welfare priorities. Such claims  are inconsi stent with what the 
agency explained in the Proposed Rule  and are inconsistent with the regulatory modifications being 
proposed.  
--------------------------------------------------------------------------------------------------------------  
    \73\ See Pro posed Rule, 88 FR 29858.  
--------------------------------------------------------------------------------------------------------------  
    Governments may implement and enforce their property (including  intellectual property), human 
rights, labor, and env ironmental laws and  protections as they believe appropriate, just as Commerce 
may continue  to apply its AD and CVD laws in a manner that rejects the use of  distorted prices and 
costs when it determines such a rejection is  supported by record information. Further, just as 
governments might  determine to take certain actions and provide certain subsidies to  certain 
industries, even though other authorities might reasonably  determine to countervail those subsidies, 
the same holds true when  governm ents determine to not take certain actions that require  compliance 
costs of producers within their borders. When governments  decide not to enact environmental 
restrictions on a factory's pollution  to protect the soil, water, air, or wildlife, or not to enf orce existing 
laws under which that factory would normally be required to  undertake costs to implement those 
protections, it is both logical and  reasonable that other countries may consider the impact such 
decisions  have on the costs of production for that  factory in their AD  calculations. This is not, despite 
the criticisms of some of the  commenters, a judgment on the social welfare policies, priorities, and  
laws of different countries. Instead, it is a recognition of economic  reality --the lack of enforcem ent 
of certain protections granted in  other countries, or the nonexistence of those protections under law  
entirely, can have a notable impact on a company's or industry's costs  of production.  
    In sum, the proposed amendments to the AD and CVD regulation s in this regard are intended to 
allow for interested parties to raise  issues and supply information on the record about foreign 
government  inaction on implementing or enforcing certain articulated protections  and for Commerce 
to consider that inaction in its analysis and  calculations. Accordingly, Commerce rejects claims that 
it is restricted by law from considering arguments and facts on the record  that certain prices or costs 
are distorted as a result of weak,  ineffective, or nonexistent protections in o ther countries.  
    In response to the concerns that Commerce is not an expert in labor  law, environmental law, 
human rights law, intellectual property law, or  property law in general, the agency is not holding 
itself out as an  expert in these areas. Howev er, Commerce is the U.S. Government agency  with an 
expertise in analyzing costs of production in an AD analysis  and has a long -established practice of 
selecting surrogate values in  non-market economy cases and benchmark prices in less than 
adequate  remuner ation CVD cases. One commenter expressed concerns that Commerce  was "not 
equipped " to consider the impact of weak, ineffective, or  nonexistent protections on costs and prices, 
but Commerce has decades  of experience of analyzing cost and price distortions. Accordingly, the  
agency disagrees with that assessment of Commerce's knowledge,  experience, and abilities. The 
test Commerce applies in each of these  cases is one of price or cost distortion --not one of compliance 
with international laws, agre ements, or standards. Commerce needs to  consider only whether 
evidence on the record suggests that prices or  costs are lower than they would otherwise be as a 
result of weak,  ineffective, or nonexistent protections. If the answer to that question  is "yes," a cost 
might not be appropriate to use as a surrogate  value, a price might not be appropriate to use as a 
benchmark for a  less than adequate remuneration case, and the reported cost of an input  might not 
be appropriate to use in Commerce's cost of product ion calculations.  
    Furthermore, we disagree with the claim that Commerce must define  what "weak" or "ineffective " 
property (including intellectual  property), human rights, labor, and environmental standards are, in  
every case, in these regulations. In f act, such decisions are fact -specific and made on a case -by-case 
basis. In addition, Commerce does  not agree that it should consider or codify certain international  
standards or sources for its analysis in each case for the same reason.  Indeed, trying to i ncorporate 
certain international standards,  specifically, into the regulations for this purpose could inhibit  rather 
than support an outcome appropriate with the facts and  circumstances in a specific case. For 
example, if the evidence on the  record reflect ed that laws in a given country meet certain  
international standards, but the record also reflects that certain  government authorities have never G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 33 - 
 
  required a factory or industry to  abide by those laws, thereby allowing certain factories or industries  
to avoid compliance costs and produce and sell their merchandise for  lower prices, then a regulation 
setting forth international benchmarks  would not only be of little value, but also prevent the agency 
from reviewing both the law and the facts as they apply to a business or  industry in that foreign 
country. This is not to say in certain cases,  with certain allegations, Commerce might not benefit 
from considering  an international standard, or other laws in the foreign country itself,  or even laws  
and standards in other countries, as part of its  determination whether certain protections are weak 
or ineffective. Just  as Commerce considers all of the information placed before it in other  cases 
involving surrogate values and determinations of benchmar ks in less than adequate remuneration 
cases, Commerce would conduct the same  type of analysis in determining if protections are weak or 
ineffective,  including in analyzing a PMS allegation under Sec.  351.416(g)(10).  
    Finally, we also disagree that Comm erce should extend its analysis  to evaluate whether property 
(including intellectual property), human  rights, labor, and environmental protections are "arbitrary. " 
Regardless of the intention of a protection, if a producer was required  to pay a patent -owne r for the 
rights to use certain technology, for  example, and that protection was enforced by the government, 
then Commerce would not find that government inaction existed, nor that any  distortions resulted 
from such inaction. Even if the protections were  only temporary during the production period subject 
to examination, as  explained above, it is not Commerce's intention to judge why  protections exist, 
but only to determine if those protections were weak  or ineffective during that period of investigation 
or review and if the  costs of production were distorted because of those weak or ineffective  
protections. Accordingly, we have not incorporated the suggestion to  include "arbitrary " as a factor 
for these proposed regulatory  revisions.  
    B. Commerce will an alyze weak or ineffective protections by  entities entrusted or directed by the 
government to provide such  protections.  
    In addition to more general allegations and concerns involving  Commerce's proposals to amend 
its regulations to address the cost and price distortions potentially arising from weak, ineffective, or  
nonexistent property (including intellectual property), human rights,  labor, and environmental 
protections, Commerce received many individual  questions and concerns. For example, two 
comm enters requested that  Commerce acknowledge that if an entity was entrusted or directed by 
the government, but is not  
 
[[Page 20786]]  
 
a public body or government entity itself, with the responsibility of  providing some or all of the listed 
protections, then Commerce would  still conduct the same analysis it would apply if the government 
itself was responsible for providing those protections, including within the  context of a PMS analysis 
under Sec.  351.416(g)(10).  
    Commerce's Response:  
    Commerce agrees with the premise that, no matter if the entity that  is supposed to provide a 
protection is a government -controlled entity  or is a private entity entrusted or directed by the 
government to  provide a protection, the agency's analysis will b e the same in  determining if the 
protections at issue are weak or ineffective. As the  examples in Sec.  351.416(g) are only examples, 
Commerce determined  that it was not necessary to add further language about entrustment and  
direction into that regulation ; however, we agree that the crux of our  analysis is not the authority 
failing to grant an effective protection,  but rather the fact that the protection itself is ineffective and 
the result is distorted prices or costs.  
    C. The factual information deadl ines of Sec.  351.301(c)(3) apply  to some of these regulatory 
revisions.  
    One commenter requested that Commerce clarify that the deadlines  covering submissions of 
factual information to value factors of  production under Sec.  351.408(c) and measure the adequacy 
of remuneration under Sec.  351.511(a)(2) found in Sec.  351.301(c)(3)  apply equally to proposed 
Sec. Sec.  351.408(d) and 351.511(a)(2)(v).  
    Commerce's Response:  
    Commerce confirms that factual information deadlines covering  submissions of factual information 
to value factors of production under  Sec.  351.408(c) and measure the adequacy of remuneration 
under Sec.  351.511(a)(2) found in Sec.  351.301(c)(3) apply equally to Sec. Sec.   351.408(d) and 
351.511(a)(2)(v). To be clear, Sec.  351.408(d) does not  stand alone, but rather exists in addition 
to the surrogate value  methodology described in Sec.  351.408(c), which is the reason  paragraph  (d) 
starts with the statement, "Notwithstanding the factors  considered under paragraph (c) of thi s 
section . . . . " Accordingly,  the deadlines applicable to Sec.  351.408(c) apply equally to 
Sec.  351.408(d).  
    D. Commerce may reject prices which are distorted but not  aberrational.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 34 - 
 
      One commenter suggested that, with respect to Sec. Sec.  351.408  and 351.511, Commerce 
should clarify that prices or costs do not need  to be "aberrational " to be disregarded under the 
proposed government  
inaction provisions.  
    Commerce's Response:  
    Commerce confirms that prices and costs may be distorted, but need  not be aberrational, for the 
agency to reject the use of a surrogate  value or benchmark for a less than adequate remuneration 
analysis. In  general, aberrational sales or costs are normally outliers —values  which are so high or 
so low, that they may not eve n appear to be  market -driven. Commerce would not normally consider 
aberrational sales  or costs in a surrogate value or less than adequate remuneration  analysis. 
However, for purposes of selecting a surrogate value or  determining the appropriate benchmark t o 
measure the adequacy of  remuneration, prices or costs can be distorted by multiple factors  (e.g., 
weak, ineffective, or nonexistent protections) without being  considered aberrational. If the record 
contains potential surrogate  values or benchmark prices which Commerce determines are not 
distorted  and are from an economically comparable country that produces  comparable merchandise, 
then in choosing a surrogate, it will normally  prefer the non -distorted prices or costs over the 
distorted pr ices or  costs. That analysis need not require a finding that prices or costs  are aberrational 
in any way.  
    E. The revised regulations are consistent with the United States's  WTO obligations.  
    Some commenters expressed concerns that Commerce's conside ration of  the impact of foreign 
government inaction on costs or prices  incorporates concepts not embodied in the relevant 
WTO agreements and  allows Commerce to manipulate its trade remedy laws in an effort to  force 
property (including intellectual property ), human rights, labor,  and environmental standards on 
other WTO members. They commented that  the Agreement on Implementation of Article VI of the 
General Agreement  on Tariffs and Trade (AD Agreement) does not permit such  considerations, 
pointing to a disp ute Panel decision in European Union -Antidumping Measures on Biodiesel from 
Argentina, in which the dispute  Panel concluded that a dumping analysis is not intended to cover  
certain distortions arising out of government actions or  circumstances. \74\ They al so suggested that 
other international and WTO  agreements cover such matters satisfactorily.  
--------------------------------------------------------------------------------------------------------------  
\74\ See Report of the Panel, European Union --Anti-Dumping  Measures on Biodiesel from Argentina, 
WT/DS473/R , (May 23, 2016)  (European Union -Antidumping Measures on Biodiesel from Argentina),  
at para. 7.240.  
--------------------------------------------------------------------------------------------------------------  
    Commer ce's Response:  
    Commerce's AD statute and regulations are in full compliance with  the United States' WTO 
obligations. Commerce is permitted under U.S.  law and the AD Agreement to consider factors that 
may objectively  distort costs of production. There i s no obligation for WTO members  enshrined in 
any of the WTO Agreements to ignore price or cost  distortions caused by another government's 
decision to ignore or permit  a company to pollute, use slave labor, or discriminate in violation of  a 
country's own la ws, or in absence of laws altogether, and therefore,  benefit from cheaper production 
costs. As we indicated above, Commerce  is codifying its consideration of the appropriate surrogate 
values,  benchmark prices, or input cost in an PMS analysis. These  consid erations are not intended 
to impose any standards on any country.  
    Indeed, in the context of a surrogate value (which involves using  values from other countries for 
a non -market economy analysis) and less  than adequate remuneration analysis (which invol ves 
using prices from  other countries to determine an appropriate benchmark value), the  rejection of 
certain surrogates or benchmarks will have no bearing on  the countries from which those prices or 
costs originate in any way.  Thus, it is hard to see how s uch an analysis could "punish " the source 
countries, as stated by some in their comments. Further, for  both a surrogate value and PMS 
analysis, Commerce's analysis under  Sec. Sec.  351.408 and 351.416 will normally be limited only 
to "significant " inputs, reflecting that Commerce's analysis will be a  targeted analysis focused only 
on certain alleged "weak, ineffective,  or nonexistent " protections and their impact on certain costs 
of production, and no more.  
    Finally, we disagree that  other WTO Agreements address Commerce's  concerns in this regard in 
any way. These modifications to the trade  remedy regulations address distortions in costs or prices 
caused by  weak, ineffective, or nonexistent protections, and other WTO Agreements  do not  address 
such cost or price distortions.  
    F. Commerce need not reward more stringent protections by foreign  governments.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 35 - 
 
      Two commenters requested that when Commerce conducts its surrogate  value analysis, if it finds 
that a potential surrogate value has  stronger environmental or other such protections than other 
potential  surrogate values, Commerce should "make an allowan ce" for that --essentially improving 
chances for use of that surrogate value over  others. They make the same suggestion  
 
[[Page 20787]]  
 
for potential benchmark prices. Likewise, they suggested an offset to  an input cost in a PMS analysis 
to reflect strong social welfare  protections. They comment that doing so would be consistent with 
the United States' support of renewable energy and climate change reduction  programs in other 
capacities.  
    Commerce's Response:  
    Commerce declines to elevate the use of c ertain potential surrogate  values or benchmark prices 
over others based on, for example, their  effective protection of the environment, in this rule. One of  
Commerce's ultimate goals in this exercise is to select surrogate  values which are comparable to th e 
factors of production reported by  the non -market economy. If a value is distorted, that may remove 
it from consideration. However, Commerce is under no obligation to provide  offsetting extra credit 
based on excellent environmental, labor, human  rights, or property rights (including intellectual 
property)  protections. The same is equally true in selecting benchmark prices and  determining if the 
costs of an input as reported are reasonable.  Indeed, if anything Commerce believes that such an 
adjustm ent to those  values could create distortions rather than avoid them.  
    G. External concerns do not impact these regulations.  
    Some parties commented that United States businesses are actively  working to raise standards 
and protections in other countri es, and they  suggested that these regulations should be withdrawn 
because other  countries might become frustrated and stymie those efforts. Other  parties stated that 
various environmental programs in other countries  meet the same goals as Commerce supposed ly 
intends in these  regulations, and thus Commerce should not counteract those programs  when given 
the opportunity, consistent with the proposed regulations.  
    Commerce's Response:  
    As noted above, Commerce's concerns in issuing these regulations  are to use surrogate values 
and benchmark prices not distorted by weak,  ineffective, or nonexistent property (including 
intellectual property),  human rights, labor, or environmental protections. Likewise, it is also  
Commerce's intention to not use input prices  distorted by a PMS. The  efforts by outside parties and 
governments to strengthen such  protections in other countries are not at issue in these regulations,  
and therefore, do not affect the content of these regulations.  
    H. Commerce will not codify addi tional procedures suggested by  certain commenters.  
    Certain commenters requested that in determining the existence of  foreign government inaction 
in Sec. Sec.  351.408, 351.511, and  351.416(g)(10) and (11), Commerce should directly address 
the burden of  proof in the regulation, describe how much the foreign government will  be required to 
participate, address how Commerce will consider  information on the record, and indicate if it intends 
to verify claims  of government inaction.  
    Commerce's Response:  
    When selecting a surrogate value or benchmark price, an interested  party alleging price or cost 
distortions has an obligation to place  information on the record to substantiate its claims. Likewise, 
the same holds true if a party argues the existence of  a PMS or if  government inaction is at issue. 
We see no need to add further detail  on the need for parties to provide Commerce with arguments 
and information on the record.  
    With respect to how Commerce will consider such information, again,  it will weigh all of the 
information before it and make a determination  as to the appropriate surrogate value or benchmark 
price or determine  if a PMS exists.  
    Finally, under the st atute, verification is only required in  investigations. However, Commerce may 
determine that verification is  warranted in other segments of a proceeding. Accordingly, Commerce 
has determined not to codify a verification requirement in the regulation,  recog nizing that in some 
situations, the government inaction and its  effect on prices or costs is evident, and little more is 
needed on the  record, while in others, the agency may need to gather more  information, and perhaps 
even conduct a verification, to full y understand the objective facts of the alleged situation.  
    I. Commerce will not include additional, alternative language  suggested by commenters in the 
regulation.  
    Two commenters requested that Commerce should "clarify " in Sec. Sec.  351.408 and 35 1.511 
that interested parties are only  required to show that government inaction relating to a 
significant  input, or a labor input, existed and that there were "depressed or  suppressed prices " for 
that input --not that parties must actually  prove that the g overnment inaction caused the depressed G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 36 - 
 
  or suppressed  prices. They suggested that Commerce should specify in the regulations  that 
interested parties need only provide information available to  them, and that rather than 
demonstrating that an "impact " on pri ces exists, as set forth in the proposed Sec.  351.511(a)(2)(v), 
Commerce  should use language about prices being "suppressed or depressed. " They also 
commented that Commerce should revise its language to only  require that an interested party submit 
the information which is "best available " to them in making an allegation of distortions --not 
"sufficient information " as is currently set forth also in Sec.   351.511(a)(2)(v). Likewise, another 
commenter suggested t hat Commerce  should be flexible with interested parties and allow them to 
submit  reports and other third -party information that may not be  contemporaneous, but still 
supports their claims.  
    Commerce's Response:  
    Commerce will not modify the language in either Sec.  351.408 or  Sec.  351.511 as requested. 
First, we do not agree that "best available information " is the correct standard for an allegation 
under  these regulations. If an interested party believes that government  inaction exists, and may 
have an impact on prices or costs, but does  not provide sufficient information to support such an 
allegation on the  record, Commerce will not pursue the issue further. An allegation of  cost or price 
distortions caused by weak, ineffective, or nonexistent  prote ctions must be accompanied by 
sufficient information for Commerce  to determine that the allegation is reasonable. A mere allegation 
with little supporting information will not suffice, even if that is the  only information available to the 
interested party making the  allegation.  
    With respect to the types and quality of documents Commerce might  accept for these allegations, 
we have also decided not to codify such  requirements at this time because, again, these are decisions 
made on a  case-by-case basis. Additionally, Commerce must maintain its own  flexibility in 
determining if the evidence of alleged government  inaction and distorted benchmark prices and 
surrogate values is  acceptable and sufficient to warrant further Commerce action. Instead,  for both 
Sec.  351.408(d)(1)(i) and (ii), we have added the words "the Secretary determines " to clarify that 
it is Commerce, and not the  alleging parties, who will determine if the evidence is sufficient on  the 
record to support the alleged claim. Further, for Sec.   351.511(a)(2)(v) we have rearranged some 
of the text to make it clearer  that this provision pertains specifically to the Secretary's authority  to 
exclude  
 
[[Page 20788]]  
 
certain proposed benchmark prices from its analysis.  
    With respect to the need to use the phrase "suppressed or  depressed " prices or costs rather than 
the term "impact " in Sec.   351.511 or "appropriate " in Sec.  351.408, though we agree that  
Commerce is primarily concerned about prices or costs being lowered by  distortions caused by 
government inaction, and therefore, in most if  not all cases under these provisions, Commerce will 
be focused on  "suppressed or depressed prices, " we cannot ignore the fact that  artificially higher 
prices can be just as distortive as  suppressed or  depressed prices. In accordance with its regulations, 
Commerce rejects  potential surrogate values and benchmark prices when they are distorted  and not 
just when they are suppressed or depressed. Accordingly, it  would be illogical for Commerc e to use 
a surrogate value or benchmark  price which it determines is over -inflated for a reason(s) based on  
record evidence and to revise the regulatory language to permit the  usage of distorted high prices. 
Accordingly, we are not making the  suggested rev isions.  
    J. Commerce will not further refine the term "limited number " or remove the restriction to 
"significant inputs " in Sec.  351.408(d).  
    Proposed Sec.  351.408(d) limited the surrogate values that  Commerce will consider disregarding 
based on an allegation of foreign  government inaction to only "significant inputs or labor " and when  
the proposed surrogate value is "derived from one count ry or an  average of values from a limited 
number of countries. " \75\ In the  Proposed Rule, Commerce explained that such limitations are 
appropriate  because it anticipated that such an analysis could be resource  intensive. \76\ Commerce 
explained that it ant icipated that the phrase  "limited number " would "normally involve averaged 
values that are  sourced from no more than three countries. " \77\ 
--------------------------------------------------------------------------------------------------------------  
    \75\ See Proposed Rule, 88 FR 29874.  
    \76\ Id., 88 FR 29861.  
    \77\ Id., at n.41.  
--------------------------------------------------------------------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 37 - 
 
      One commenter suggested that Commerce should more broad ly define  the term "limited number " 
to not preclude a scenario where there may  be averaged values from dozens of countries, but where 
a significant  percentage of the value is derived from a limited number of countries.  Other 
commenters requested that Commerce should not limit its analysis  in a PMS allegation to "significant 
inputs " only, and their  suggestions equally apply to the same restriction placed in Sec.   351.408(d).  
    Commerce's Response:  
    We have determined not to remove the restriction o f applying this  provision only to "significant 
inputs or labor, " nor will we remove  the restriction in the PMS regulation. In both provisions, an 
analysis  of the circumstance at issue (i.e., government inaction resulting in  weak, ineffective, or 
nonexisten t protections) would require an  analysis of the facts and the law. Furthermore, it would 
require in  both provisions an analysis of the costs at issue and determination as  to whether they are 
distorted or likely distorted. We do not anticipate  that it would  be reasonable for Commerce to 
conduct such an analysis  for all potential surrogate values in a given case. Accordingly, we are  not 
removing the restrictions set forth in the proposed regulation.  
    With respect to the definition of "a limited number, " we have not  codified that term because we 
think that it should be left to Commerce  on a case -by-case basis to determine how many countries 
may be at issue  in an allegation, the nature of the alleged government inactions, and  if an average 
of values will incl ude countries with both government  inaction allegations and no government 
inaction allegations. It is  still Commerce's understanding that even three countries might be more  
than a "limited number " if the allegations of government inaction  pertain to all th ree. Accordingly, 
we have made no change in this  regard for purposes of the final rule.  
    K. Commerce will not issue a regulation in the final rule that  countervails government inaction 
with respect to property (including  intellectual property), human rights, labor, and environmental  
protections.  
    Two commenters suggested that Commerce should take the proposed  government inaction 
regulations and adapt them into the CVD law. They  commented that weak and ineffective 
government protecti ons should be  countervailed as a subsidy which ultimately injures United States  
industries.  
    Commerce's Response:  
    The purpose of these regulations is not to treat weak, ineffective,  or nonexistent government 
protections as a countervailable subsidy,  but instead to consider that the lack of protections has 
real-world impacts  on costs of production and prices, and reject the use of distorted  surrogate 
values, benchmark prices, or input costs if Commerce  determines that government inaction resulted 
in such distortions. We,  therefore, are not adopting this suggestion in the final rule.  
    L. Commerce has added text to Sec.  351.416(d)(3)(v) to clarify  that if Commerce looks to other 
countries to determine if certain  protections are weak, ineffective or n onexistent, Commerce will  
normally consider countries that are economically comparable to analyze  the cost effects of 
government inaction.  
    Certain commenters expressed concerns with proposed Sec.   351.416(d)(2)(v), a provision which 
stated that Commerce may look to  information in other countries to determine if property (including  
intellectual property), human rights, labor, or environmen tal protections in the subject country are 
weak, ineffective, or  nonexistent. In doing so, the proposed provision stated that Commerce  may 
consider if those protections exist in those other countries and  are effectively enforced there.  
    One commenter su ggested that the provision should be withdrawn  because it was unclear and 
not transparent as required by the WTO  Agreements. That commenter requested that Commerce 
should remove words  such as "weak" and "ineffective, " as they are too general and  provide 
Commerce with too much discretion. Further, the same commenter  suggested that because 
determinations of distortion are made on a case -by-case basis, Commerce should not rely on its 
past analysis in other  cases under this provision to give it any guidance, as every government  action 
and inaction is unique and should be considered so in every  case. 
    Another commenter expressed concerns that nothing in United States  law permits Commerce to 
look to entirely different countries and  determine whether  actual market prices would have been 
different if the  country under examination had, hypothetically, followed the policies  and practices of 
those different countries.  
    Commerce's Response:  
    Upon consideration of the general concerns about Commerce's  consideration of weak, ineffective, 
and nonexistent protections, as  well as the claims specific to this provision, Commerce has 
determined  that further clarification is necessary in the regulation. The proposed  
Sec.  351.416(d)(2)(v) is now Sec.  351.416( d)(3)(v) and Commerce has  revised the regulation to 
include language which states: "For purposes  of this paragraph (d)(3)(v), the Secretary will normally 
look to cost  effects on same or similar merchandise produced in economically  comparable countries  
 G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 38 - 
 
  [[Page 20789]]  
 
in analyzing the impact of such protections on the cost of  production. " Commerce anticipated that 
an analysis under this  provision would cover same or similar merchandise, and would normally  be 
limited to economically comparable countries, but  never stated that  in the Proposed Rule. 
Accordingly, we received concerns from various  parties that Commerce would look to the 
United  States or similar  countries to determine "acceptable " property (including intellectual  
property), human rights, labor, or environmental protections, even when  the country at issue is a 
developing country and in no way economically  comparable to the United States. Such an 
interpretation of that  provision was never the agency's intention.  
    For other alleged PMS all egations, Commerce does not intend to look  to the experience of other 
governments. However, Commerce continues to  find that if a country has wide -spread pollution, 
child labor, slavery,  or abuses of intellectual property or other property laws, it would be  illogical to 
compare labor values, for example, within the same country  to decide if a particular surrogate is 
distorted or useable.  Nonetheless, it would be equally illogical to look at values of  products in other 
countries that are not the same or simil ar to the  input or subject merchandise at issue. Furthermore, 
the experiences of  foreign governments may differ greatly, but if economies are  comparable, it is 
reasonable to believe that a comparison of property,  human rights, labor, and environmental 
protections on the cost of  production would be more appropriate than if the two economies were  
vastly different. Commerce disagrees with the commenter who stated that  Commerce does not have 
the authority to use such an analysis to  consider if weak, ineffective , or nonexistent protections 
distorted  costs, but we do agree that in conducting such an analysis, Commerce  should be aware of 
both the similarities and the differences of the  subject country and the country being considered for 
comparison  purposes.  
    Accordingly, Commerce has retained the language covering this  provision in the Proposed Rule, 
but Commerce has added the  aforementioned sentence to provide greater clarity on how the analysis  
under this provision would be conducted.  
    M. Commerce has added  language to Sec.  351.408(d)(1)(i) and (ii)  to clarify that it is Commerce 
who determines if a value is derived  from a country that provides subsidies, that was subject to an 
AD order, or is from a source with weak, ineffective, or nonexistent  protections . 
    In the proposed language for Sec.  351.408(d)(1)(i) and (ii), the  provisions stated that Commerce 
could reject the use of a potential  surrogate value if: (1) it was derived from a country that provides  
broadly available export subsidies; (2) it was s hown to be subsidized  in that country; (3) it was 
subject to an AD order; or (4) it was  derived from a facility, party, industry, intra -country region or 
a country with certain weak, ineffective, or nonexistent protections.  Upon consideration of the 
language used in those proposed provisions,  Commerce concluded that the text at issue presumed 
that parties would  understand that it's Commerce who determines that one of those factors  applies. 
To provide clarification on this point in the final  regulation s, Commerce has modified both paragraphs 
to note that  Commerce alone decides that the proposed surrogate value is derived  from such 
sources.  
    7. Commerce has substantially revised proposed Sec.  351.416, its  PMS regulation, in response 
to several commen ts. 
    On November 18, 2022, Commerce issued an advanced notice of  proposed rulemaking (PMS 
ANPR) in which it explained that the 2015 TPEA  amended section 773(e) of the Act to provide that 
if "a particular  market situation exists such that the cost of mat erials and fabrication  or other 
processing of any kind does not accurately reflect the cost of  production in the ordinary course of 
trade, " Commerce "may use  another calculation methodology under this subtitle or any other  
calculation methodology. " \78\ Commerce recognized that the Act did  not define a PMS and did not 
identify the information which Commerce  should consider in determining if a market situation exists 
or is particular. Commerce stated that it hoped to provide some clarity on  this issue in fut ure 
regulations, which was why it was issuing the  advanced notice of proposed rulemaking.  
--------------------------------------------------------------------------------------------------------------  
    \78\ See PMS ANPR, 87 FR 69234 (citing section 773(e) of the  Act). 
--------------------------------------------------------------------------------------------------------------  
    In the PMS ANPR, Commerce referenced the limited legislative  history o n the provision, in which 
it highlighted that a member of the  U.S. House of Representatives argued that the legislation would  
"empower " Commerce to be able to disregard prices or costs of inputs  that foreign producers 
purchased if Commerce concluded that t hose input  values were "subsidized " or "otherwise outside 
the ordinary course  of trade. "\79\ Commerce also cited statements made on the U.S. Senate  floor 
by a U.S. Senator stating that the legislation would help stop  U.S. workers and manufacturers from G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 39 - 
 
  "being cheated " by foreign  industries that were "not playing fair " and "illegally subsidizing " the 
production of certain products. " \80\ Commerce accordingly invited  public comments on various 
factors it might consider in preparing a  regulation that would address "the information which 
Commerce should  consider, or need not consider, in determining a PMS that distorts  costs of 
production. " \81\ Commerce received 19 comments in response  from the public on this issue, from 
which it took m any ideas  incorporated in the draft regulations, and others it addressed or  rejected 
in the preamble of the Proposed Rule. \82\ 
--------------------------------------------------------------------------------------------------------------  
    \79\ Id., 87 F R 69235 (citing the Congressional Record --House,  H4666, H4690 (June 25, 2015)).  
    \80\ Id. (citing the Congressional Record --Senate, S2899, S2900  (May 14, 2015)).  
    \81\ Id. 
    \82\ See Proposed Rule, 88 FR 29861 -67, 29875 -77. 
--------------------------------------------------------------------------------------------------------------  
    Commerce received a significant amount of commentary on its  proposed Sec.  351.416 in t he 
Proposed Rule, covering both sales and  cost-based PMS decisions. Commerce considered each 
comment and has  modified its proposed regulation in response to those comments.  Further, where 
Commerce disagreed with arguments made by the  commenters, it has add ressed those comments 
below.  
    A. Commerce has the authority to issue its proposed PMS regulation.  
    Several commenters supported Commerce's authority to issue a  regulation that addresses both 
sales-based and cost -based PMS analyses  and thanked the age ncy for its attempts to provide clarity 
on the  issue, stating their belief that the proposed regulations would allow  for more effective 
implementation and enforcement of the cost -based PMS  provision in the Act. One commenter cited 
additional legislative  history for the concept that the amended trade laws were intended to  give 
Commerce "flexibility in calculating a duty that is not based on  distorted pricing or costs " in any 
situation "when a PMS exists. " \83\ One commenter expressed concerns that Commerce's proposed  
regulations unnecessarily limit its authority to make cost -based PMS  determinations in listing sources 
of information which it may or may  not consider in a given case.  
-------------------------------------------------------------------- ------------------------------------------  
    \83\ See S. Rep. No. 114 -45 (2015) (Senate Finance Committee  Report), at 37.  
--------------------------------------------------------------------------------------------------------------  
    Certain commenter s expressed concerns, however, that Commerce may  not have the authority 
under the WTO AD Agreement, specifically under  Article 2.2.1.1 of the AD Agreement, to  
 
[[Page 20790]]  
 
address distorted costs through a PMS. Article 2.2.1.1 of the AD  Agreement state s that "costs shall 
normally be calculated on the basis  of records kept by the exporter or producer under investigation,  
provided that such records are in accordance with the generally  accepted accounting principles of 
the exporting country and reasonably  reflect the costs associated with the production and sale of 
the product under consideration. " \84\ In a dispute brought before the  Appellate Body, the 
European  Union determined that the cost of soybeans  in the production of biodiesel from Argentina 
was un reasonable because  the domestic prices of soybeans, the main raw material used by  biodiesel 
producers in Argentina, were found to be artificially lower  than international prices due to distortions 
created by the Argentine  export tax system. \85\ It therefore disregarded those costs in its AD  
calculations. The Appellate Body concluded that this finding, alone,  was "not, in itself, a sufficient 
basis under Article 2.2.1.1 " to disregard those costs "when constructing the normal value of  
biodiesel. " \86\ The Appellate Body stated that an investigating  authority was "free to examine the 
reliability and accuracy of costs  recorded in the records " of a producer to determine if all costs were  
captured, were over -or-under -stated, or were not at arm's length,  thereby calling into question the 
reliability of the reported  costs. \87\ However, if the company's books and records reflected those  
costs accurately, "within acceptable limits, " even if the costs  themselves were distorted by various 
factors, the Appellate B ody concluded that Article 2.2.1.1 did not permit investigating authorities  to 
reject the use of those costs as "unreasonable. " \88\ A subsequent  Panel adopted the 
Appellate  Body's interpretation of Article 2.2.1.1 of  the AD Agreement and found that the 
European  Union's rejection of  regulated natural gas input costs from Russia (which the 
European  Union  concluded were far below market prices paid in the unregulated Russian  natural gas 
markets) in determining the costs to construct the normal  value of welded  tubes and pipes from G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 40 - 
 
  Russia was not in accordance with  Article 2.2.1.1, because the Appellate Body had concluded that 
the "reasonably reflect the costs " language pertains to the  reasonableness of a producer's records, 
and not the reasonableness of  the producer's costs themselves. \89\ The commenters pointed to 
these  cases and to Appellate Body and Panel conclusions in arguing that  Commerce's statute and 
proposed regulations were inconsistent with the  Appellate Body's interpretation of the AD 
Agreement. On that basis,  they suggested that Commerce should not issue a final PMS regulation  
codifying and clarifying its cost -based PMS practice.  
------------------------------------------------------------------------------------------------- -------------  
    \84\ See Article 2.2.1.1 of the AD Agreement.  
    \85\ See European Union --Anti-Dumping Measures on Biodiesel from  Argentina, WT/DS473/AB/R  
(October 6, 2016), at para. 6.54.  
    \86\ Id. at para. 6.55.  
    \87\ Id. at para. 6.41.  
    \88\ Id. 
    \89\ See European Union --Cost Adjustment Methodologies and  Certain Anti -Dumping Measures 
on Imports from Russia (Second  Complaint), WT/DS494/R  (July 24, 2020), at paras. 7.229 -7.253.  
--------------------------------------------------------------------------------------------------------------  
    Commerce's Response:  
    As a preliminary matter, Commerce is issuing its PMS regulations in  accordance with its statutory 
authority as the administrator and  enforcer of certain trade remedies codified in the Act. That 
includes  section 773(e) of the Act, which directs Commerce  to use another  calculation methodology 
if it determines "that a particular market  situation exists such that the cost of materials and 
fabrication or  other processing of any kind does not accurately reflect the cost of  production in the 
ordinary course of  trade. " To the extent that the  commenters believe that Commerce's proposed 
regulations are  inconsistent with the text of the AD Agreement, the Act itself is  consistent with U.S. 
obligations under the AD Agreement. As the  proposed regulations are in full c ompliance with the 
Act, we do not  believe this line of argument calls into question our ability to issue  regulations on the 
matter.  
    With respect to the United States' WTO obligations, Commerce  disagrees that the United States 
is prohibited by the AD Ag reement from  considering and addressing costs of production distorted by 
only certain government actions or inactions, but not others, in its AD  calculations. Commerce is 
permitted under U.S. law to consider factors  which may distort costs of production if record evidence 
indicates the  existence of such distortions. Likewise, Commerce is not prohibited by  the WTO 
Agreements to consider certain actions or inactions taken by  governments or other organizations 
that distort prices or costs in the  authorities' calculations through a PMS analysis. Neither the Act 
nor the AD Agreement limit departures from the use of recorded costs in  determining normal value 
to circumstances where there is an inaccuracy  or unreasonable methodology or value used in 
determining the costs of  production recorded in the books and records of the subject producer.  
Rather, as the TPEA makes clear, departures are warranted when the  costs themselves, however 
recorded, do not accurately reflect the cost  of production in the ordin ary course of trade. The AD 
Agreement is  intended to help provide transparency and accuracy to AD calculations,  not to 
circumscribe the price and cost distortions which WTO members  should ignore or reject.  
    Finally, with respect to the concerns that Com merce has limited its  statutory authority through 
the proposed regulations, we do not believe  that the regulations curtail our authority. Instead, they 
notify the  public of the information that is normally relevant and significant to  our PMS 
determinations . 
    B. The Act permits Commerce to address a cost -based PMS without  also being required to address 
a sales -based PMS.  
    Three commenters took issue with Commerce's interpretation of the  Act in the Proposed Rule, as 
reflected in Sec.  351.416, that addr esses  sales-based particular market situations separately from 
cost-based  particular market situations. Citing various CIT decisions, they  commented that it is not 
enough under the Act for Commerce to find that  the "cost of materials and fabrication or oth er 
processing of any kind  does not accurately reflect the cost of production in the ordinary  course of 
trade, " and that for Commerce to "use another calculation  methodology " under section 773(e) of 
the Act, Commerce is required to  reach further legal and factual conclusions that the perceived  
distortion "prevents a proper comparison " to the U.S. price, under  sections 771(15)(C) 
and 773(a)(1)(B)(ii)(III) of the Act. They  sugge sted that Commerce's interpretation is "inconsistent " 
with the  governing statute and that the only distortion which Commerce can  address is a distortion 
at such a level that the distortion prevents a  proper price comparison with home market or 
third-countr y sales.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 41 - 
 
      Key to their concern are the examples of "sales and transactions " listed in section 771(15) of the 
Act which defines "ordinary course of  trade. " Under the definition section of the Act, "ordinary course 
of trade " means "the conditions and prac tices which, for a reasonable  time prior to the exportation 
of the subject merchandise, have been  normal in the trade under consideration with respect to 
merchandise of  the same class or kind. " \90\ That language is consistent with  Commerce's 
interpretatio n of the  
 
[[Page 20791]]  
 
Act, and the commenters do not suggest otherwise. However, after the  definition, it states that the 
administering authority "shall consider  the following sales and transactions, among others, to be 
outside the  ordinary course of trade, " and lists disregarded sales, disregarded  transactions, and 
"{s}ituations in which the administering  authority determines that the particular market situation 
prevents a  proper comparison with the export price or constructed export prices. " \91\ The 
commenters pointed out that in a Federal Circuit decision,  Hyundai Steel Co., \92\ the court affirmed 
a CIT holding that tied a  sales-based PMS with a cost -based PMS decision. The Federal Circuit in  
Hyundai Steel Co. further held that the "TPEA amendment to section  1677(15) linked the constructed 
value subsection with 'situations in  which the administering authority determines that the particular 
market  situation prevents a proper comparison with the export price or the  constructed 
export  price.'  " \93\ The commenters therefore suggested  that for Commerce to find and adjust for 
a cost -based PMS, it must  determine that the cost distortions create a price -based PMS that  prevents 
a proper comparison between the normal value and the export  price or co nstructed export prices.  
--------------------------------------------------------------------------------------------------------------  
    \90\ See section 771(15) of the Act.  
    \91\ See section 771(15)(C) of the Act.  
    \92\ See Hyundai Steel Co. v. United States, 19 F.4th 1346,  1353-54 (Fed. Cir. 2021) 
(Hyundai  Steel Co.).  
    \93\ Id. 
----------------------------------------------------------------------------------------- ---------------------  
    In addition, one of the commenters expressed concerns that because  Article 2.2 of the 
AD Agreement only speaks to a PMS which addresses a  situation in which "sales do not permit a 
proper comparison, " the proposed regulations appea r to violate the United States' WTO  obligations.  
    Commerce's Response:  
    Commerce disagrees with the position taken by the three commenters  that Congress intended 
for Commerce to address a cost -based PMS that  distorts costs of production only if it al so decided 
that the PMS would  also prevent a proper comparison of normal value with the export price  or 
constructed export price. Commerce does not believe that the Act  creates such an obligation and 
has never applied its cost -based PMS  analysis in that ma nner in any of its proceedings.  
    First and foremost, the second sentence of section 771(15) of the  Act, which lists examples of 
sales or transactions that are not in the  "ordinary course of trade " is not exhaustive. By its terms, 
the statute states that  Commerce "shall consider the following sales and  transactions, among others, 
to be outside the ordinary course of  trade " (emphasis added), and then lists three examples, 
including a  sales-based PMS. \94\ Accordingly, a determination by Commerce that  certain costs of 
production are not reflective of the ordinary course  of trade (i.e., not "normal in the trade under 
consideration with  respect to merchandise of the same class or kind ") could also result,  in the words 
of the Federal Circuit, "in situation s in which the  administering authority determines that the 
particular market situation  prevents a proper comparison with the export price or the constructed  
export price. " \95\ For this reason we have included paragraph (h) in  Sec.  351.416, which states 
that a cost -based PMS may contribute to a  PMS that prevents or does not permit a proper comparison 
of home market  or third -country sales prices with export prices or constructed export  prices. 
However, because a cost -based PMS could contribute to a sales -based PMS, which the Federal Circuit 
acknowledged was possible due to  the TPEA amendments to section 771(15) of the Act, \96\ that 
possibility  does not logically dictate that Commerce cannot otherwise address costs  distorted by a 
PMS. Nor does the link betwee n sections 773(e) and  771(15)(C) of the Act imply that Commerce's 
ability to "use another  calculation methodology " under section 773(e) of the Act when it  discovers 
distorted costs of production is severely curtailed only to  situations in which Commerce co nducts a 
second analysis and makes a  second determination that the prevention of a proper comparison 
exists.  The statute simply does not require such an extensive and multi -tiered  analysis in every case 
in which Commerce determines the existence of a  cost-based PMS.  
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- 42 - 
 
      \94\ See section 771(15) of the Act.  
    \95\ See Hyundai Steel Co., 19 F.4th at 1353 -54. 
    \96\ Id., 19 F.4th at 1354.  
--------------------------------------------------------------------------------------------------------------  
    In addition, the commenters' interpretation conflicts wi th Congress' intention in adding the 
cost-based PMS provision in the  statute. As explained above, Congress expressed that it intended 
to give Commerce "flexibility in calculating a duty that is not based on  distorted pricing or costs " in 
any situation "when a PMS exists, " \97\ and Members of Congress expressed the hope that the 
additions to  the Act would give Commerce the ability to address distorted costs  incurred by foreign 
producers who were "not playing fair. " \98\ The commenters' interpretation of the Act would allow 
Commerce to address  cost distortions only in a very limited subset of cases, contrary to  that 
intent. \99\ Furthermore, if Commerce could only make an adjustment  after finding a sales -based 
PMS in every case, it would l imit Commerce's flexibility to define what conditions lead to a PMS. That 
is counter to Congress' intent, as shown through the legislative history  of the TPEA, where Members 
of Congress expressed a desire to give  Commerce greater flexibility, instead of li miting its flexibility, 
in calculating a duty not based on distorted pricing or costs. Commerce  disagrees that such an 
interpretation of the Act is reasonable, as it  would lead to a result inconsistent with the very purpose 
of the  addition of the provision .\100\ Accordingly, we are not revising the  regulations to reflect such 
an interpretation of the Act.  
--------------------------------------------------------------------------------------------------------------  
    \97\ See Senate Finance Committee Repor t at 37.  
    \98\ See Congressional Record -Senate, S2899, S2900 (May 14,  2015)).  
    \99\ Congress has recognized that Commerce may adjust its AD  calculations for cost 
distortions  in a few sections of the Act,  including Commerce's ability to consider the existence of a 
cost-distorting PMS in its calculations. For example, section  773(f)(1)(A) of the Act states that in 
calculating costs of  production, costs "shall normally " be calculated based on the  records of the 
exporter or producer of the m erchandise, if such  records are kept in accordance with the generally 
accepted  accounting principles of the exporting and producing country and  "reasonably reflect the 
costs associated with the production and  sale of the merchandise. " Commerce's long -stand ing 
interpretation  of that provision, as affirmed by the Federal Circuit in Thai  Plastic Bags, has been to 
adjust a company's reported costs of  production if Commerce determines that record evidence does 
not show  that the reported costs "reasonably reflect " the actual cost of  production. See Thai Plastic 
Bags Indus. Co. v. United States, 746  F. 3d 1358, 1363 -69 (Fed. Cir. 2014).  
    In Thai Plastic Bags, the Federal Circuit affirmed Commerce's  determination that the respondent's 
reported labor and overhead  costs did not "reasonably reflect " the company's production costs  and 
held that Commerce's reallocation of the reported costs "to diminish " the cost "distortions " reflected 
in the company's books  and records was supported by substantial evidence on the record and  in 
accordance with law.  
    \100\ See Church of the Holy Trinity v. United States, 143 U.S.  457, 459 (1892); and Public 
Citizen v. U.S. Dep't of Justice, 491  U.S. 440, 454 (1989) (discouraging an interpretation of a statute  
which would lead to u nreasonable, odd, and absurd results that are  inconsistent with the intent of 
Congress). To the extent that  commenters cite language from certain CIT decisions suggesting  
possible alternative interpretations of the Act, those  interpretations were made with in the restrictions 
of limited  arguments and specific facts in the cases before the Court. These  regulations are the first 
instance in which Commerce has provided an  extensive analysis of the history of the relevant 
statutory  provisions and the Federal Cir cuit's PMS holdings.  
--------------------------------------------------------------------------------------------------------------  
    Finally, we agree that Article 2.2 of the AD Agreement pertains to  the ability of administering 
authorities to address s ales-based  particular market situations, just as we agree that Article 2.2.1.1 
of 
 
[[Page 20792]]  
 
the AD Agreement states that costs shall normally be calculated on the  basis of records kept by the 
exporter or producer under investigation,  provided that s uch records reasonably reflect the costs 
associated with  the production and sale of the product under consideration. Just  because one 
provision of the AD Agreement recognizes that an  administering authority may address a PMS which 
does not permit a  proper comparison of prices, does not mean that other types of  particular market G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 43 - 
 
  situations which result in cost distortions cannot  also be addressed by administering authorities 
consistent with members'  WTO obligations.  
    C. Certain language in the proposed Sec.  351.416 required revision  for consistency and 
clarification.  
    In different claims about various provisions in the proposed  regulation, several commenters 
expressed concerns about word choices  and inconsisten t language and terms being applied in 
proposed Sec.   351.416. We have considered those concerns and agree each of the  different sections 
contained certain terminology and phrases that  should be revised and clarified. Accordingly, for each 
section we will  describe the significant revisions made from the Proposed Rule below.  
    i. Section 351.416(a) --the introduction of the regulation and  definition of PMS.  
    Revisions:  
    In revised paragraph (a), Commerce has clarified that we are  defining both types of particular 
market situations. For a sales -based  PMS, we have clarified that a PMS can be a PMS that prevents 
or does  not permit a proper comparison of sales prices, as set forth in  sections 773(a)(1)(B)(ii)(III) 
and 773(a)(1)(C)(iii) of the Act. A  cost-based PMS is defined as a PMS that contributes to the 
distortion  of the cost of materials and fabrication or other processing of any  kind, such that the cost 
of production  of the merchandise subject to an  investigation, suspension agreement, or AD order 
does not accurately  reflect the cost of production in the ordinary course of trade, as set  forth in 
section 773(e) of the Act.  
    In addition, numerous commenters requested  that Commerce remove the  term "distinct " from 
paragraph (a), (c), (d), and (e), and we agree  with that request. The commenters suggested that 
nothing in the Act  requires a market situation to be "distinct " from other circumstances  or sets of 
circumstances  in other countries, for example, and they fear  that courts will misinterpret such 
language as requiring an additional  obligation or analysis. They point out that, just as Commerce 
explained  in the Proposed Rule that a market situation need not be "unique " or "excessively narrow 
in its application " \101\ to be particular, there  is also no statutory requirement that a market 
situation must be  "distinct. " We understand and share those commenters' concerns and  have 
therefore removed the term "distinct " from the final rule.  
--------------------------------------------------------------------------------------------------------------  
    \101\ See Proposed Ru le, 88 FR 29864.  
--------------------------------------------------------------------------------------------------------------  
    ii. The evidentiary standard and requirements for filing a PMS  allegation Sec.  351.416(b).  
    Revisions:  
    In revised pa ragraph (b) of Sec.  351.416, Commerce has clarified  that if a PMS allegation has 
been made previously in the same  proceeding, or in a previous or ongoing different proceeding, the  
interested party must identify the facts and arguments distinguishable  from those provided in the 
other segment or proceeding. To prevent any  confusion, because we have removed the word 
"distinct " in paragraphs  (a), (c), and (d) of the regulation, as described above, we have  revised the 
term distinct as used in proposed paragraph  (b) to the word  "distinguishable. " 
    iii. Covering sales -based PMS determinations, including examples of  a sales -based PMS and the 
possible use of constructed value if Commerce  determines a sales -based PMS exists.  
    Revisions:  
    In revised paragraph (c), Commerce has explained that its analysis  is specific to the period of 
investigation or review and that it will  consider both circumstances and sets of circumstances in the 
home  market to determine if a PMS prevents or does not  permit a proper  comparison of home 
market prices with export or constructed export  prices.  
    iv. Covering cost -based market situation determinations, including  the analysis applied by 
Commerce, a description of information it  normally finds beneficial i n making such a determination, 
and a  description of information it finds to be of little value in most  cases --Sec.  351.416(d).  
    Revisions:  
    In revised paragraph (d) of Sec.  351.416, Commerce has clarified  that a cost -based PMS analysis 
is specific to a period of investigation  or review and that its analysis is conducted in three parts. 
First, Commerce determines if a circumstance or set of circumstances existed  during the period of 
investigation or review that may have impacted the  costs of producin g subject merchandise, or costs 
or prices of inputs  into the production of subject merchandise. Second, Commerce considers  if the 
cost of production was distorted and, therefore, did not  accurately reflect the costs of production of 
subject merchandise in  the ordinary course of trade during that period of time. Third,  Commerce 
determines if it is more likely than not that the circumstance  or set of circumstances at issue 
contributed to the distortion of the  costs of production of subject merchandise. If all  three of these  
factors exist, Commerce will determine the existence of a cost -based  PMS. G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 44 - 
 
      Furthermore, in a new paragraph (d)(2) of Sec.  351.416, Commerce  moved the references to 
the "likelihood " standard from each of the  proposed examples in paragrap h (g) in the Proposed Rule 
and placed that  process of analysis in one section applicable to all cost -based PMS  allegations. The 
final regulation explains that in determining if a  circumstance or set of circumstances contributed to 
the distortion of  the cos ts of subject merchandise, Commerce will weigh the information  on the 
record and determine whether it is more likely than not that the  circumstances or set of 
circumstances at issue contributed to observed  cost distortions of subject merchandise during the 
period of  investigation or review. This is consistent with Commerce's standard  analysis of many facts 
and factors in its AD procedures. It is of  particular importance to an analysis such as this one in 
which certain  actions or inactions may impa ct costs of production, but proving a  direct cause and 
effect relationship may be extremely difficult, if not  impossible. Accordingly, a weighing of the record 
information and a  determination that a PMS more likely than not contributed to a  distortion of c osts 
is the logical standard of analysis and satisfies  the intent of Congress in implementing the cost -based 
PMS provision in  the Act.  
    An additional modification made to paragraph (d) of Sec.  351.416,  and described above, is 
language included in parag raph (d)(3)(v) which  states that if Commerce considers an allegation that 
property  (including intellectual property), human rights, labor, or  environmental protections in the 
subject country are weak, ineffective,  or nonexistent, then Commerce may determin e that it is 
appropriate to  look to the enforcement of such protections in other countries to  determine if a 
cost-based PMS existed during the period of  investigation or review. The additional language states 
that, for  purposes of that provision, the Secre tary will normally look to cost  effects on same or 
similar merchandise produced in economically  comparable countries in analyzing the impact of such 
protections on the  cost 
 
[[Page 20793]]  
 
of production. This consideration was always the intention of the  agency, but a few commenters 
expressed concerns that Commerce would  consider other countries with very different economies in 
its analysis.  Accordingly, the agency has determined that this additional language  should be added 
to the regulation to clarify th at normally Commerce  will look to countries with comparable economies 
in determining the  effects of such enforced protections.  
    In addition, in response to requests from several commenters  pertaining to proposed 
paragraph  (d)(2)(ii), we have removed the term  "considerably " from paragraph (d)(3)(ii) of 
Sec.  351.416 because, as  those commenters suggested, if Commerce will consider reports and  
documentation that indicate lower prices for significant inputs would  likely result from certain 
govern mental actions or inactions, there is  no requirement in the Act that those lower prices be 
"considerably  lower, " only that those prices not reflect costs or prices in the  ordinary course of trade 
(i.e., that they are distorted).  
    Next, in paragraph (d)( 4) of Sec.  351.416, Commerce has revised  the introductory language of 
proposed paragraph (d)(3) stating that  "it will not be required " to consider certain information, to 
an explanation that given the nature of the listed information, even if  that informa tion is all correct, 
that the provision of such information  on the record will not preclude Commerce from making a 
finding of a  cost-based PMS. We agree with those who commented that Commerce does  not have 
the authority to ignore record evidence, and the p roposed  language raised concerns as to 
Commerce's intentions. However, the  purpose of this provision was, and continues to be, to provide 
guidance  that there are sources of information and related arguments which  parties have filed and 
raised with Commerce  in the past which, in its  experience, generally do not assist Commerce's 
analysis. For example,  in the AD investigation of biodiesel from Argentina, Commerce found a  PMS 
existed, despite acknowledging that the source of the PMS (a  government export tax) h ad been in 
place for numerous years. Commerce  found that it was not "precluded " from finding a PMS "where 
the distortion at issue has occurred over several years " and that "the fact that Argentina's soybean 
export tax regime has been in place since  2002 does not render its effects on Argentina's domestic 
soybean prices  within the ordinary course of trade. " \102\ That conclusion is now  reflected in 
paragraph (d)(4)(iv). The submission of such information  and related arguments in most cases does 
nothin g but distract Commerce  and other interested parties from focusing on the information on the  
record which does assist the analysis. Accordingly, we have included  this "does not preclude " 
provision to hopefully benefit all parties  in providing guidance as t o the information Commerce 
actually needs.  
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- 45 - 
 
      \102\ See Biodiesel from Argentina: Final Determination of Sales  at Less Than Fair Value and final 
Affirmative Determination of  Critical Circ umstances, in Part, 83 FR 8837 (March 1, 2018)  (Biodiesel 
from Argentina), and accompanying IDM at Comment 3.  
--------------------------------------------------------------------------------------------------------------  
    Lastly, paragraph (d)(4)(iv) of  Sec.  351.416 removes general  references from proposed 
paragraph (d)(3)(iv) to historical policies  adopted by a government or nongovernmental entities. It 
now more  directly states the existence of the same or similar governmental or  nongovernmental 
action s in the subject country that preceded the period  of investigation or review will be of little to 
no relevance to  Commerce's analysis (as discussed in the preceding paragraph). The  removed 
language explaining that the pre -existence of government or  industr y actions does not make 
circumstances or sets of circumstances  "market based " or nullify distortions of costs during a period 
of investigation or review remains true. However, because that language  seemed to create some 
confusion for the public, it was removed to  simplify the example of information that will not preclude 
the finding  of a PMS.  
    v. Addressing the factors which make a market situation  "particular "--Sec.  351.416(e).  
    Revisions:  
    Paragraph (e) of Sec.  351.416, which addresses facto rs to consider  in determining if a market 
situation is particular, was revised in this  final rule to use language consistent with other provisions 
in the  regulation and was updated to apply equally to both sales -based and  cost-based particular 
market situa tions. We agree with some of the  commenters who expressed concerns that it was 
illogical to have a  provision that defined what particularity meant for one type of PMS but  not the 
other. The final regulation explains that a market situation is  particular if  it impacts prices or costs 
for only certain parties or  products in the subject country. Further, additional language was added  
to paragraph (e)(1)(i) that explains clearly that Commerce's analysis  does not concern the number 
of parties or products, but ra ther whether  the market situation impacts only certain parties and 
products, as  opposed to the general population of parties or products in the subject  country.  
    vi. Addressing Commerce's ability to adjust, or not adjust, its  calculation for a cost -based PMS --
Sec.  351.416(f)  
    Revisions:  
    Paragraph (f) of Sec.  351.416 was significantly revised to provide  greater clarity and explanation 
of Commerce's authority, once it finds  that a cost -based PMS exists, to address that PMS in its 
calculations.  Notably, the Act simply states in section 773(e) that Commerce "may use another 
calculation methodology under this subtitle or any other  calculation methodology. " Accordingly, the 
revised paragraph (f) of  Sec.  351.416, which now clarifies that it only applie s to particular  market 
situations under paragraphs (d) and (e), is divided into three  separate provisions. The first states 
generally that if Commerce  determines that a PMS exists in the subject country which has  
contributed to a distortion in the cost of materials and fabrication or  other processing, such that 
those costs do not accurately reflect the  cost of production of subject merchandise in the ordinary 
course of  trade, Commerce may adjust for those distortions in its cost of  production calculation s. 
    The second provision explains that if Commerce cannot precisely  quantify the distortions in the 
cost of production caused by the PMS  after consideration of the information on the record, it may 
use any  reasonable methodology to adjust its calculatio ns to address those  distortions based on that 
record information. This provision was  expanded from the Proposed Rule to address concerns raised 
by commenters that Commerce would ignore available and relevant record  information and make 
adjustments to its c alculations using information  outside of the record unrelated to that information, 
which was never  Commerce's intention.  
    The third provision was added to reflect that even if Commerce  determines that a PMS exists, it 
may also determine that an adjustme nt to its cost of production calculations is inappropriate based 
on record  information. There was language in most of the proposed examples in  Sec.  351.416(g) 
of the Proposed Rule which stated that Commerce would  only find a PMS existed if it could adjust  
for distortions in its  calculations of the cost of production. However, that was not an  accurate 
reflection of Commerce's analysis or practice, as pointed out  by some commenters. In fact, 
Commerce may determine that a cost -based  PMS exists, but not make a n adjustment because it 
determines that an  
 
[[Page 20794]]  
 
adjustment is not appropriate, necessary, or warranted. Accordingly, we  removed that language 
from the examples of paragraph (g) and imported  the concept to paragraph (f), with additional 
explanat ion to provide  clarity. Specifically, the final rule provides guidance on factors  which 
Commerce may consider in determining if an adjustment is  appropriate: (1) whether the cost G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 46 - 
 
  distortion is already sufficiently  addressed in its calculations in accordanc e with another statutory  
provision, such as the transactions disregarded and major input rules  of sections 773(f)(2) and (3) 
of the Act; (2) whether a reasonable  method for quantifying an adjustment to the calculations is 
absent from  the record (e.g., no interested party has proposed a methodology to  address the 
cost-based PMS which would work in Commerce's  calculations); and (3) whether information on the 
record suggests that  the application of an adjustment to Commerce's calculations would  otherwise 
be unreasonable. We believe that describing such factors in  the regulations will better inform 
interested parties on the type of  information Commerce requires to make not only a cost -based PMS  
determination, but also a separate determination as to wh ether an  adjustment can, or should, be 
made to its cost of production  calculations.  
    vii. Providing examples of cost -based particular market  situations --Sec.  351.416(g).  
    Revisions:  
    As explained above, Commerce moved references to the  "likelihoo d," weighing -of-evidence 
analysis, and its ability to  adjust cost calculations from the Sec.  351.416(g) examples provided in  
the Proposed Rule to other provisions of the regulation.  
    Otherwise, most revisions to the text of the various examples were  implemented to bring the 
language of those provisions into conformity  with language used in other parts of Sec.  351.416. For 
instance, each  example now mentions that a determination of a cost -based PMS is based  on record 
information and is specific to the p eriod of investigation or  review being examined by the agency. 
These changes were implemented in  this provision, as they were in other provisions, in response to  
comments and concerns we received on this issue from multiple  commenters and to provide greate r 
clarity as to Commerce's cost -based  PMS analysis.  
    One of the listed examples, paragraph (g)(9), was the source of  concern for several commenters, 
who stated that they believed that the  language of the provision was too broad and could open the 
door t o other governments making costs adjustments to the AD calculations of  U.S. exporters based 
on U.S. domestic policies only tangentially  related to business decisions, costs, or prices. They cited 
U.S. industrial policies, supply chain measures, greenhouse gas emission  reduction programs, and 
trade restrictions pertaining to Russia's  invasion of Ukraine as examples that reflect government 
actions that  may "otherwise influence " the production of merchandise not only in  the United States, 
using a te rm Commerce included in the proposed  paragraph (g)(9) example. Upon consideration of 
those comments, we  agree that the proposed paragraph (g)(9) example was too broadly  written, 
and we have restricted it to only three mandated government  requirements --the use of a certain 
percentage of domestic -manufactured  inputs, the sharing or use of certain intellectual property or  
production processes, or the formation of certain business  relationships with other entities to 
produce subject merchandise or a  significant  input into the production of subject merchandise. We  
believe this new language reflects the specific examples of potential  cost-distorting circumstances 
which Commerce sought to address in the  regulation.  
    Furthermore, in the proposed examples where Co mmerce had referenced  "state-owned 
enterprises, " we have removed that term, as the focus of  Commerce's examples is more general 
than just that situation, focused  not on the type of government entity, but on whether a government,  
government -controlled entit y, or other public entity has taken actions,  or not taken certain actions, 
that result in distorted costs of  production. One party requested that Commerce define the term 
"state-owned enterprise, " but because that term is now removed from this  regulation, there is no 
reason to define that term at this time. We  have, however, added greater context to the entire 
provision and  provided further description of the actions intended to be addressed by  
paragraph  (g)(12). Accordingly, the provision now explains that  a cost -based PMS may exist when 
"nongovernmental entities take actions " which the Secretary concludes can lead to cost distortions. 
It states  that such actions "include, but are not limited to, the formation of  business relationships 
between one or more producers of subject  merchandise and suppliers of significant inputs to the 
production of  subject merchandise, including mutually -beneficial strategic alliances  or 
noncompetitive arrangements, as well as sales by third -country  exporters of significant  inputs into 
the subject country " for dumped  prices. We believe that this revised description of the example set  
forth in paragraph (g)(12) better illustrates the type of  nongovernmental actions that can become 
a PMS which distorts a  producer's costs of pr oduction.  
    viii. Explaining that a cost -based PMS may contribute to a sales -based PMS --Sec.  351.416(h).  
    Revisions:  
    The only revisions Commerce made to Sec.  351.416(h) were the same  revisions it made to other 
provisions: (1) bringing the language into  conformity with the Act's terminology; (2) explaining that 
Commerce's  determinations are based on record informatio n; and (3) emphasizing  that its 
cost-based and price -based PMS determinations are specific to  the period of investigation or review 
at issue. Commerce received many  comments on this provision expressing very different perceptions 
and claims on Commerce's a uthority in this regard. As explained above, some  commenters G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  suggested that Commerce could only make adjustments for  cost-based PMS determinations that it 
determined based on record  evidence contributed to a sales -based PMS. However, other commenters  
claim ed that that regardless of record evidence, Commerce should always  presume that a cost -based 
PMS causes a sales -based PMS. In addition,  Commerce received a third group of comments that 
suggested that  Commerce has no authority to ever determine that a cost -based PMS can  contribute 
to a sales -based PMS.  
    For the reasons explained above, Commerce has concluded that the  Act does not require that 
Commerce must first determine a sales -based  PMS exists before it can make adjustments to its 
calculations for a  cost-based PMS. It also does not restrict Commerce from considering  that a 
cost-based PMS may contribute to a sales -based PMS, and in fact,  as pointed out by the Federal 
Circuit in Hyundai Steel Co., the "TPEA amendment to section 1677(15) linked the constructed value 
subsection  with 'situations in which the administering authority determines that  the particular 
market situation prevents a pro per comparison with the  export price or the constructed export 
price.'  " \103\ Accordingly, it  is reasonable to conclude that Congress intended to grant Commerce 
the ability to consider cost -based particular market situations in  determining if a sales -based PMS 
exists. However, despite that ability  and 
 
[[Page 20795]]  
 
authority to consider such information, we continue to see no reason to  presume that the existence 
of a cost -based PMS always results in a  sales-based PMS, nor that a cost -based PMS cannot ex ist 
unless it also  creates a sales -based PMS. That does not reflect Commerce's experience  in 
administering and determining the existence of cost -based and sales -based particular market 
situations. For these reasons, we have made no  further revisions to pro posed Sec.  351.416(h).  
--------------------------------------------------------------------------------------------------------------  
    \103\ See Hyundai Steel Co., 19 F.4th 1346, 1353 -54. 
---------------------------------------------------------------- ----------------------------------------------  
    D. Additional comments and requests specific to particular  paragraphs of proposed Sec.  351.416 
but not directly incorporated into  the final rule.  
    As explained above, Commerce received 53 comments from different  governments, 
organizations, importers, producers, and exporters on many  different provisions in the proposed 
regulations, and in several of  those comments, commenters proposed changes or requested that 
Commerce  clarify further certain points in the preamble to the final rule.  Commerce provided its 
rationale for those changes which we incorporated  into the revised Sec.  351.416 above. For the 
remainder of suggested  edits which we did not in corporate, and in response to requests that we  
clarify further certain points in the preamble, we address those  comments below.  
    i. Comments on the evidentiary standard of Sec.  351.416(b).  
    Several commenters commented on the evidentiary standard se t forth  in proposed 
Sec.  351.416(b), which stated that interested parties must  include with their PMS allegation 
"relevant information reasonably  available to that interested party supporting the claim. " \104\ 
Various commenters supported, opposed, or sou ght further modification  of the allegation evidentiary 
standard. Those in support of the  standard explained that it reasonably reflects that petitioners  
sometimes have only limited access to information about a PMS and,  therefore, a "reasonably 
available " standard is a realistic standard  to expect of parties making an allegation. The purpose of 
a PMS  examination, in the context of an investigation or review, is  ultimately to gather more 
information about the alleged circumstance or  set of circumstances alle gedly distorting prices or 
costs, and to  determine if in fact a PMS actually exists in the first place. An  increased and unrealistic 
standard would make it more difficult for  Commerce to initiate a PMS examination, and possibly 
prevent Commerce  from addres sing cost distortions as intended by Congress in placing the  
cost-based PMS in the Act.  
--------------------------------------------------------------------------------------------------------------  
    \104\ See Proposed Rule, 88 FR 29875.  
------------------------------------------------------------------------------------------------------- -------  
    However, two commenters objected to the standard, claiming that  Commerce's proposed 
language lowers the evidentiary threshold to allege  the existence of a PMS from its current practice. 
Section 351.404,  which covers the selection of the market to be used as the basis for  normal value, 
provides at Sec.  351.404(c)(2)(i) that Commerce may  "decline to calculate normal value in a 
particular market under  paragraph (c)(1) of this section " if the Secretary determines that G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 48 - 
 
  "a particular market situation  exists that does not permit a proper  comparison with the export price 
or constructed export price. " \105\ In the preamble to the AD regulations implementing that 
sales-based PMS  provision, Commerce explained that the "party alleging the existence " of a PM S 
"has the burden of demonstrating that there is a reasonable  basis for believing " that a PMS 
exists. \106\ The commenters suggested  that a "reasonable basis for believing " is a higher standard 
than "relevant information reasonably available to that interested party  supporting the claim, " and 
because Sec.   351.416(b) applies equally to  both sales -based and cost -based PMS allegations, 
Commerce's proposed  regulation lowers the PMS allegation standard from its past practice.  
----------------------------- ---------------------------------------------------------------------------------  
    \105\ See Sec.  351.404(c)(2)(i).  
    \106\ See Antidumping Duties; Countervailing Duties; Final Rule,  62 FR 27295, 27357 
(May 19, 1997) (1997 Preamble).  
--------------------------------------------------------------------------------------------------------------  
    Those commenters expressed concerns that because Commerce does not  provide further 
guidance on the term "reasonably available, " petitioners c ould abuse the vague terminology, alleging 
whatever they  wanted on a case -by-case basis. They also expressed concerns that  Commerce could 
likewise abuse the terminology by arbitrarily  determining what is "reasonable " in each case as it 
determines  appropria te. They expressed concerns that Commerce's current  "reasonable basis " 
standard is inconsistent with the statutory  presumption that Commerce uses a producer's reported 
costs of  production in its calculations, absent actual probative evidence that  cost dist ortions may 
exist in those books and records. They commented  that by allegedly lowering the evidentiary 
threshold using vague  terminology, Commerce is placing unnecessary burdens on respondents to  
prove in each case that no PMS exists and requiring Commerce to expend  unnecessary resources on 
addressing incomplete allegations.  
    A third group of commenters requested that Commerce revise the  described evidentiary standard 
in Sec.  351.416(b) to always permit  parties making a cost -based PMS allegation to solely rely on 
cost-based  PMS determinations in a previous segment of the same proceeding under a  rebuttable 
presumption of the ongoing existence of a cost -based PMS. In  the Proposed Rule, Commerce 
explained that it would not adopt a  rebuttab le presumption to apply to future proceedings once it 
had determined the existence of a cost -based PMS in one segment of a  proceeding, as requested by 
several commenters in response to the PMS  ANPR, because unlike a non -market economy 
designation (which co mmenters  had used as an example), which applies to an entire economy, a 
cost-based PMS is based on a circumstance or set of circumstances that may  or may not be 
"particular to certain products or individuals in the  subsequent years. " \107\ Some commenters 
continued to urge Commerce to  reconsider this decision, commenting that frequently Commerce has 
found  cost-based particular market situations to exist in subsequent segments  of a proceeding. They 
also pointed out that it is not uncommon, even in  the contex t of proceedings that do not involve the 
non-market economy  entity, for Commerce to rely on previous distortion findings in  subsequent 
proceedings unless parties rebut those earlier  determinations with new evidence, such as earlier 
agency findings that  certain world market prices are distorted, for example in the selection  of 
benchmarking prices for a less than adequate remuneration analysis,  pursuant to 
Sec.  351.511(a)(2)(iii). They suggested that, likewise, it  would be reasonable to allow those alleging 
a PMS which has already  been determined to distort costs in a previous segment of the  proceeding, 
to rely solely on that previous determination in their PMS  allegation submissions under 
Sec.  351.416(b). Additionally, they  suggested that such a presumption  would be lawful and fair 
because  respondents could still respond with rebuttal factual information in  the investigation or 
review. Further, they commented that such a  presumption would decrease administrative burdens 
by not requiring  Commerce to do an extensive PMS cost -based analysis in every adjacent  12-month 
period.  
--------------------------------------------------------------------------------------------------------------  
    \107\ See Proposed Rule, 88 FR 29865.  
---------------------------------- ----------------------------------------------------------------------------  
    Finally, another commenter essentially advocated for the opposite  of those requesting a 
rebuttable presumption that a cost -based PMS  exists in subsequent segments of a  
 
[[Page  20796]]  
 G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 49 - 
 
  proceeding. That commenter requested that Commerce clarify that cost -distortion findings are 
case-specific and suggested that Commerce  should never rely on its previous findings of 
cost-distortions in  previous segments of a proceeding, as facts s uch as prices and costs  are 
constantly changing and there is no guarantee that a cost -based PMS  found to exist in a particular 
period of investigation or review will  continue to exist in another. Such decisions, the commenter 
stated, are  to be made by Comm erce based solely on the facts of the case before it.  
    Commerce's Response:  
    We have not revised the evidentiary standard as set forth in the  Proposed Rule in Sec.  351.416(b) 
in the final rule as requested by the  commenters. First, we disagree with the commenters who 
expressed  concerns that Commerce has somehow lowered its evidentiary standard  from "a 
reasonable basis for believing " to something less stringent.  While those commenters focused on the 
term "reasonably available, " we believe the more important term in the clause at issue is "supporting  
the claim. " If a PMS allegation is made with no evidence "supporting  the claim, " Commerce will not 
initiate on that PMS allegation. It is  Commerce's current practice to consider if the i nformation 
accompanying  a PMS allegation is sufficient to support the claim of a PMS. If  Commerce determines 
that the information provided does not adequately  support the claim, but that the alleging party has 
the ability to  retrieve certain additional evi dence to further support the allegation,  Commerce may 
request that the party submit the additional information  before the agency determines to initiate, or 
not initiate, a PMS  examination. We believe that standard is fully consistent with the  "reasonable 
basis for believing " standard expressed in the preamble  to Sec.  351.404(c)(2). \108\ 
--------------------------------------------------------------------------------------------------------------  
    \108\ See 1997 Preamble, 62 FR 27357.  
------------------- -------------------------------------------------------------------------------------------  
    Furthermore, Commerce frequently uses a "reasonably available " standard in its AD and CVD 
proceedings; thus, the usage of such a  standard is fully consistent wi th Commerce's normal practice. 
For example, in investigations, Congress provides in the Act that a  petition must contain information 
"reasonably available to the  petitioner " supporting its allegations. \109\ Furthermore, in  Commerce's 
regulations for investigations, scope inquiries and  circumvention inquiries, petitioners, applicants 
and requesters are all  required to provide "reasonably available " information in their  
submiss ions.\110\ Thus, we disagree that the standard set forth in  Sec.  351.416(b) is unreasonable 
and have maintained that standard in  the final rule.  
--------------------------------------------------------------------------------------------------------------  
    \109\ See sections 702(b)(1) and 732(b)(1) of the Act.  
    \110\ See Sec. Sec.  351.202(b), 351.225(c), and 351.226(c).  
--------------------------------------------------------------------------------------------------------------  
    In addition, we are not implementing a rebuttable presumption in  our regulations for subsequent 
segments in the same proceeding at this  time. We agree with the commenter that pointed out that 
facts do  frequently change in a proceeding from year to year, such as prices and  costs for certain 
inputs, costs for subject merchandise, the  application of government programs, and 
nongovernmental actions that  may distort costs, and that Commerce must make both sales -based 
and cost-based PMS determinations on a segment -to-segment bas is. On the  other hand, we also 
agree with the commenters that noted that Commerce  has found cost -based particular market 
situations to exist in  sequential segments of the same proceeding, and that in a given case,  
Commerce might conclude that previous cost -based PMS determinations  could form part of the 
"relevant information reasonably available to  that interested party supporting the claim " standard 
for purposes of  initiating a cost -based PMS examination. However, given the evolving  circumstances 
in sequential cases across AD orders, we have concluded  that such a determination is best left to be 
determined by Commerce on  a case -by-case basis and have determined not to codify such a  
rebuttable presumption in Sec.  351.416(b).  
    ii. Comments on the second sentence of Sec.  351.416(b) and  Commerce's authority to 
self-initiate a PMS examination.  
    One commenter suggested that Commerce should delete the requirement  in the second sentence 
of Sec.  351.416(b) that if a similar PM S was  alleged in a previous segment of the same proceeding, 
the alleging  party must identify in the submission the facts and arguments which can  be 
distinguished from those provided in the previous segment. The  commenter stated that this provision 
does not  provide certainty  regarding what will be required of alleging parties and could increase  
Commerce's administrative burden. Furthermore, the commenter  interpreted this requirement to 
unreasonably force an alleging party to  identify the bases on which an op posing party could build an G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  argument  against finding a PMS, based on the distinguishing features from the  previous segment, 
which the commenter suggested is a departure from  other allegations administered by Commerce.  
    Three other commenters requested t hat Commerce reaffirm its  authority to find a PMS in the 
context of an investigation or  administrative review, sua sponte, without an allegation by other  
parties, when information on the record supports initiation, as  affirmed by the CIT for a sales -based 
PMS determination. \111\ 
--------------------------------------------------------------------------------------------------------------  
    \111\ In referencing the CIT, the commenters cite Atar, S.r.l.  v. United States, 33 CIT 658, 670 
(June 5, 2009) (find ing that  "{t}he general shortcoming in plaintiff's argument is that  neither the 
statute nor the regulations prohibit Commerce from  determining, even absent an allegation, that a 
third-country market  is affected by a particular market situation. Moreover, the Preamble  language, 
in stating that Commerce "typically " proceeds only upon  a timely allegation, does not state or imply 
that Commerce intended  to confine its own discretion such that it could not act sua  sponte " (citing 
the 2017 Preamble, 62 FR 27357)) and ( "{n}or  do the statute or regulations require Commerce to 
provide a  "substitute " for such an allegation. "). 
--------------------------------------------------------------------------------------------------------------  
    Commerce's Respons e: 
    We have not removed the requirement that parties submitting an  allegation similar to one made 
in a previous or ongoing segment of a  proceeding must identify the facts and arguments in the 
submission  which are distinguishable from those provided in t he other segment, and  in fact, we have 
modified it to cover similar allegations in other  proceedings as well. As we stated in the Proposed 
Rule, it is a burden  on both the agency and other parties when an allegation is submitted in  a 
segment and the allegi ng party does not indicate where the facts or  claims diverge from previous 
allegations submitted to Commerce. \112\ To the extent that the commenter believes it weakens its 
allegation to  point out distinguishing features from its previous allegations, if an  allegation cannot 
stand up to the evidentiary requirements set forth in  the regulation, then that fact suggests the 
allegation itself is weak.  
--------------------------------------------------------------------------------------------------------------  
    \112\ See Proposed Rule, 88 FR 29862.  
--------------------------------------------------------------------------------------------------------------  
    With respect to Commerce's ability to examine, and possibly  determine, the existence of a PMS 
witho ut an allegation, we agree with  the commenters and the CIT that there are no statutory 
restrictions on  Commerce's ability to conduct such an examination sua sponte in the  context of its 
administrative proceedings. We do not believe that such  an unrestricte d authority must be codified 
in the regulation, however.  
    iii. Comments on the examples of a sales -based PMS in Sec.   351.416(c)(1).  
    Commerce received multiple comments on the examples of a sales -based PMS set forth in 
Sec.  351.416(c)(1)(i) through  (iv). 
    a. Comments on past practice and the examples in Sec.   351.416(c)(1).  
 
[[Page 20797]]  
 
    Several commenters requested that Commerce clarify that those  examples are intended to codify 
past agency practice and do not reflect  a change in practice . 
    Commerce's Response:  
    The examples are intended to illustrate a circumstance or set of  circumstances that may prevent 
or not permit a proper comparison of  prices in the home market or a third -country market and the 
export  price or constructed export price. As with the examples of a cost PMS  listed under 
paragraph  (g), the examples under paragraph (c)(1) are not  entirely a codification of past practice, 
but, to some extent, indicate  the type of circumstance or circumstances Commerce anticipates might  
result in the existence of a PMS. For example, Commerce has found a PMS  as the result of direct 
government control over the pricing of home  market sales. \113\ Moreover, "government control 
over pricing to an  extent that home market prices cannot be considered competitively set " is a 
specific example of a possible PMS identified by the Statement of  Administrative Action 
accompanying the Uruguay Round Agreements Act  (SAA). \114\ 
----------------------------------------- ---------------------------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 51 - 
 
      \113\ See Biodiesel from Argentina IDM at Comment 2.  
    \114\ See Statement of Administrative Action Accompanying the  Uruguay Round Agreements Act, 
H.R. Doc. 103 -316, Vol. 1 (1994),  at 822. 
--------------------------------------------------------------------------------------------------------------  
    The other examples of a sales -based PMS listed in paragraph (c)(1),  while not taken from past 
practice, are not inconsistent with pa st practice and do not reflect a change to what Commerce 
considers to be a  sales-based PMS. Rather, each example illustrates a circumstance in  which 
comparison market sales might not provide a proper comparison to  the export price or constructed 
export pri ce. 
    b. Comments on the term "may" in Sec.  351.416(c)(1).  
    One commenter expressed its appreciation for Commerce setting forth  examples, stating that it 
will assist Commerce and interested parties  in quickly identifying sales -based particular market 
situations in  future cases with similar facts, while another commenter suggested that  Commerce 
should state that the examples set forth in Sec.   351.416(c)(1)(i) through (iv) "will" prevent or not 
permit a proper  comparison of prices, not  "may" prevent a proper comparison of  prices, as was set 
forth in the Proposed Rule.  
    Commerce's Response:  
    In response to the first of the comments, we agree that by  providing examples of past sales -based 
particular market situations, we  hope to pro vide clarification as to the types of circumstances or sets  
of circumstances that could prevent or not permit a proper comparison  of prices, but we disagree 
that such circumstances "will" prevent or  not permit a proper comparison of prices in every case. 
Every PMS  determination is based upon the information on the record of the  segment of the 
proceeding before Commerce. Accordingly, we have not  modified the language from "may" to "will," 
as suggested.  
    c. Comments on the "normalcy " of certain government actions  described in Sec.  351.416(c)(1).  
    In addition, several commenters expressed concerns about the  specific examples set forth in the 
regulation, commenting that export  taxes, export limitations, anticompetitive regulations t hat confer  
unique status on favored producers or create barriers to new entrants  to an industry, and direct 
government control over pricing of subject  merchandise can all be part of the normal "conditions 
and practices " applied by governments, producers, and exporters in the ordinary course  of trade 
under section 771(15) of the Act. They expressed concerns that  addressing "anticompetitive 
regulations " in this manner is  inconsistent with the intent of the AD law and that "direct government  
contro l over pricing " may not necessarily lead to distortions in  prices.  
    They also suggested that these examples are already adequately  addressed through Commerce's 
non-market economy methodology, and that  Commerce would be acting inconsistently with the Act  
in addressing such  examples using a sales -based PMS analysis.  
    Other commenters suggested that to the extent each of these  examples involve government 
policies or broad economic phenomena, the  use of such examples in the regulation is inconsistent 
with the "original intent " of the AD Agreement.  
    Commerce's Response:  
    There is no support for the allegations that the examples listed as  possible sales -based particular 
market situations in Sec.   351.416(c)(1)(i) through (iv) are inconsistent with Comm erce's  obligations 
under the Act or the United States' obligations under the  AD Agreement. Further, Commerce only 
applies a PMS analysis to market  economy countries and, therefore, there is no merit to the 
suggestion  that the examples raised would be addre ssed through Commerce's non -market economy 
methodology. Additionally, as noted above, the examples  are illustrative and not exhaustive, and in 
every case, Commerce still  must determine if the facts on the record of a given investigation or  
review before it support a finding of a sales -based PMS. The examples  provided could be particular 
market situations if the alleged  circumstances are shown to distort prices on the record of an  
investigation or review, and are intended to provide the public with  guidance, but a PMS 
determination is one anchored in record evidence,  and Commerce will not determine the existence 
of a PMS without a  thorough analysis. Further, to the extent comparability between  comparison 
market prices and export or constructed export  prices can be  addressed through another section of 
the Act (e.g., price adjustments  to normal value under section 773(a)(6) of the Act), Commerce 
may determine an adjustment for the sales -based PMS is not appropriate.  Accordingly, we have 
made no changes to the examples set forth in the  Proposed Rule.  
    iv. Comments on the use of constructed value in Sec.   351.416(c)(3).  
    Section 351.416(c)(3) states that if Commerce determines the  existence of a sales -based PMS, 
it may conclude that it is necessary t o determine normal value by constructing a value in accordance 
with section 773(e) of the Act and Sec.  351.405 of Commerce's regulations.  Certain commenters 
indicated their support for this provision, stating  that it is fully consistent with section 773(a )(4) of G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 52 - 
 
  the Act, while  others requested that Commerce clarify that sales prices will only be  disregarded when 
a sales -based PMS is shown by record evidence to  prevent proper comparisons of prices, as required 
by both the Act and  the AD Agreement.  
    In ad dition, some commenters requested that Commerce "make clear " that it will seek to use 
home or third -country sales as the basis of  normal value to the extent possible, including using 
third-country  sales where a home market may be disqualified due to a PMS.  
    Commerce's Response:  
    Commerce agrees that Sec.  351.416(c)(3), as proposed, is  consistent with section 773(a)(4) of 
the Act and agrees that sales will  only be disregarded when the record evidence reflects that a PMS  
prevented or did not permit a p roper comparison of sales prices in the  home market or third -country 
market with export prices or constructed  export prices during the period of investigation or review. 
However,  the conclusion that the PMS prevents or does not permit a proper  comparison of 
comparison  
 
[[Page 20798]]  
 
market prices with export prices or constructed export prices will be  reached when the existence of 
a PMS is demonstrated. The question is  whether particular market circumstances prevent 
comparison market  prices fr om serving as the basis of "normal value " for purposes of  comparison 
with export or constructed export sales, not the extent to  which the PMS may affect comparison 
market prices or whether the PMS  affects both comparison market and export market prices eve nly. 
Thus,  there is no need for additional analysis to determine that comparison  market sales cannot 
provide the basis for a proper comparison once they  are determined to be outside the ordinary 
course of trade via an  affirmative PMS finding.  
    In respon se to the request that Commerce codify a preference for  the use of third -country sales 
over constructed value for determining  normal value when home market sales are deemed outside 
the ordinary  course of trade and unusable, we note that the Proposed Rule d id not  address 
Commerce's decision -making analysis in determining normal value  when Commerce concludes that 
no home market sales were made in the  ordinary course of trade during the investigation or review 
period. We  continue to determine that no such anal ysis is necessary in the final  rule. 
    v. Comments on Sec.  351.416(d)(1) as it applies to a cost -based  market situation.  
    As explained above, Commerce revised Sec.  351.416(d) in response  to many comments received 
on the provision. There were some co mments,  however, with which we disagreed and did not 
incorporate changes into  the regulation. For example, two commenters expressed concerns with  
Sec.  351.416(d) in its entirety and called for its removal, arguing  that it reverses the statutory 
burden of proof and requires exporters  to demonstrate that a cost -based PMS does not exist rather 
than requiring those alleging the PMS to prove that it exists based on  record evidence. Another 
commenter suggested that Commerce should  remove all references to "accurately reflect the cost 
of production " throughout Sec.  351.416(d), including the header and Sec.  351.416(d)(1)(ii), and 
replace it with "reasonably reflects the cost  of production, " because the commenter expressed 
concerns th at the term  "accurately reflect " suggests a standard of precision which is  unrealistic and 
inconsistent with Commerce's emphasis in the draft  regulation that it need not quantify with 
precision the distortions  caused by a cost -based PMS.  
    In addition, t wo commenters suggested that section 733(e)(1) of the  Act requires that each cost 
or price distortion finding be respondent -specific and unique to the costs paid for inputs compared 
to what  Commerce deems to be the amount that would have been paid in the  ordinary course of 
trade (i.e., absent the PMS). They suggested that in  investigations or reviews in which Commerce 
determines the existence of  a cost -based PMS, the regulation should indicate that Commerce will  
determine on a transaction -by-transaction ana lysis whether reported  costs exceeded, or were 
exceeded by, the undistorted cost of an input.  For those transactions in which the reported costs 
exceed distorted  costs, those commenters suggested that Commerce should not apply a PMS  
adjustment that covers those transactions.  
    Commerce's Response:  
    We disagree with the commenters who expressed concerns that the  regulation "reverses " the 
burden of proof. After a party makes their  allegation of a sales -based or cost -based PMS, Commerce 
still must  determi ne on the record if the evidence supports such a claim. Commerce  may issue 
questionnaires, will consider comments from all of the  interested parties, and weigh the evidence 
on the record to determine  if a PMS exists. The regulation provides additional guid ance on  examples 
and factors Commerce normally will consider or find less  helpful, but in no way does it reverse any 
burden of proof.  
    Furthermore, we also have elected not to remove the term  "accurately reflect " from the 
regulation. The language of section  773(e) of the Act specifically refers to a finding that the "cost of  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 53 - 
 
  materials and fabrication or other processing of any kind does not  accurately reflect the cost of 
production in the ordinary course of  trade. " If costs are distorted, they do not accurately reflect the  
cost of production in the ordinary course of trade --no more and no  less. Commerce does not interpret 
the use of that phrase to mandate an  overly burdensome level of proof for interested parties a nd 
does not  interpret the phrase to mean that cost distortions must be precisely  quantified. Indeed, as 
explained in the Proposed Rule, the Federal  Circuit has already explicitly held that Commerce is not 
required to  precisely quantify a distortion in cost s by the PMS to find the  existence of a PMS.  \115\ 
The regulation is codifying Commerce's PMS  practice to assist in the administration and enforcement 
of the Act. We  do agree, however, that if the burden of proof is interpreted to be too  restrictive, 
Congr ess' intention that Commerce effectively address  cost-based particular market situations in AD 
investigations and  reviews would be greatly undermined.  
--------------------------------------------------------------------------------------------------------------  
    \115\ See Proposed Rule, 88 FR 29863 (citing NEXTEEL Co., Ltd. v. United States, 28 F.4th 1226, 
1234 (Fed. Cir. 2022) (NEXTEEL)).  
----------- ---------------------------------------------------------------------------------------------------  
    Finally, there is no language in the Act that requires Commerce to determine on a 
transaction -by-transaction, or a company -by-company, basis if reported  costs exceeded undistorted 
costs during the period of investigation or review. Accordingly, we have not incorporated into the 
regulation the suggestion that a transaction -by-transaction analysis of distorted costs is required in 
analyzing a cost -based PMS  and implementing an adjustment under paragraph (f).  
    vi. Comments on Commerce's proposed analysis that after weighing all the information on the 
record, Commerce will determine if it is more likely than not that a market situation contributed to 
a dist ortion in the cost of production.  
    As explained above, Commerce has determined to remove references to the analysis which it will 
conduct in weighing evidence of an alleged market situation and determining if that circumstance or 
set of circumstances co ntributed to the distortion in the cost of production of subject merchandise 
during the period of investigation or review in Sec.  351.416(g) and various other parts of the 
regulation. Instead, it will address that analysis solely in Sec.  351.416 in the n ew paragraph (d)(2). 
The new provision states that Commerce will determine if a market situation existed during the 
relevant period by determining whether it is more likely than not that the circumstance or set of 
circumstances contributed to the distortio ns of cost of production based on record information.  
    In the Proposed Rule, Commerce explained that it had received comments in response to the PMS 
ANPR arguing that Commerce must prove through a direct "cause and effect" standard that a market 
situati on caused cost distortions, while other comments suggested that Commerce should just 
presume that all potential particular market situations contribute to cost distortions. \116\ Commerce 
explained that a direct "cause and effect" test would not be realisti c or appropriate because 
sometimes the information to directly tie price and cost changes to external factors might not be 
publicly available, or the nature of the market situation  
 
[[Page 20799]]  
 
(e.g., the existence of slave labor or domestic content requirements) might be such that although 
the impact might be demonstrated by the weight of the evidence on the record, a direct and traceable 
"cause and effect" standard simply would be unattainable and could not be administered. \117\ 
However, Com merce also determined it could not presume all potential cost based market situations 
had an impact on costs or prices. As Commerce explained, a PMS determination is a "fact -intensive" 
analysis and a circumstance or set of circumstances might distort costs  in one case but not in 
another. Accordingly, Commerce determined that "on a case -by-case basis" it would consider "all 
relevant information on the record pertaining to an alleged cost -based PMS and determine whether 
it is more likely than not that the all eged" market situation contributed to the distortions of prices 
or costs in the subject country. \118\ We continue to believe that is the only reasonable analysis 
available to the agency in light of the realities of market situations that might contribute t o distorted 
costs, as shown through the examples in Sec.  351.416(g), and have therefore codified that standard 
in the regulations.  
--------------------------------------------------------------------------------------------------------------  
    \116\ Id., 88 FR 29866.  
    \117\ Id. 
    \118\ Id. 
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- 54 - 
 
      Despite Commerce's explanation in the Proposed Rule, certain commenters suggested that the 
term "s uch that" in the statutory language requires that when Commerce weighs the evidence on 
the record, it cannot make a determination on the basis of the likelihood of a market situation 
contributing to the distortion of costs and may only make a determination  on the basis of a direct 
"cause and effect" or "pass -through" analysis. In other words, they suggest that by using the term 
"such that," Congress expected that Commerce would only make an adjustment to its calculations 
if there was evidence that a circums tance or set of circumstances could be directly traced to a 
distortion of costs of production.  
    To the extent that such an interpretation of the statute means that Commerce might not be able 
to address certain market situations that were likely to be co ntributing to the distortion of costs of 
production, because they were not directly tied to specific cost distortions, some commenters 
suggested that this outcome was reasonable. They suggested that a cost -based PMS determination, 
and an adjustment pursuan t to that determination, was intended by Congress to be an exception to 
the use of an entity's actual, recorded costs of production and, therefore, was also intended by 
Congress to be a rarely -used trade remedy. They expressed concerns that Commerce's use of a 
"likelihood" standard is inconsistent with that intention, as is the inclusion of many of the examples 
of a potential cost -based PMS in proposed Sec.  351.416(g), which they suggest do not rise to the 
standard of a rare or exceptional circumstance or set of circumstances that are the direct cause of 
distortions in the cost of production. Still, another commenter expressed concerns that Commerce's 
use of a "likelihood" analysis in weighing the evidence on the record not only goes beyond the 
intentions o f Congress in the statute, but also is such a broad abuse of its authority that it is in 
violation of the nondelegation doctrine of Article 1, Section 1 of the U.S. Constitution. That 
commenter noted that the CIT in Jilin Forest Industry \119\ recently hel d that agencies cannot 
willfully expand their powers through continuous self -empowerment. The commenter argues that 
through its use of a likelihood standard in the proposed regulations, Commerce engaged in 
self-empowerment in the Proposed Rule in violation  of the nondelegation doctrine.  
--------------------------------------------------------------------------------------------------------------  
    \119\ See Jilin Forst Industry Jinqiao Flooring Group Co. Ltd. v. United States, Slip Op. 23 -14 
(CIT February  9, 2023) (Jilin Forest Industry), at 33 -34 and 36.  
--------------------------------------------------------------------------------------------------------------  
    In advocating for the "cause -and-effect" or "pass -through" standard, some commenters poin ted 
to a statement in NEXTEEL, \120\ where the Federal Circuit faulted Commerce for not providing 
sufficient evidence on the record about a countervailable subsidy, and for not showing that the 
subsidies "affected the price of the input" to the extent that they "did 'not accurately reflect the cost 
of production in the ordinary course of trade.' " \121\ In the Federal Circuit's analysis, it pointed out 
that Commerce had neither made a "finding that any subsidies were passed through to the prices of 
{hot-rolled coil}" or "that they affected Korean {oil country tubular goods (OCTG)} producers any 
more than OCTG producers elsewhere." \122\ On the basis of that language, the commenters 
suggested that Commerce is required to use a "pass -through" analysis in every cost-based PMS 
analysis.  
--------------------------------------------------------------------------------------------------------------  
    \120\ See NEXTEEL, 28 F.4th at 1235.  
    \121\ See Proposed Rule, 88 FR 29866 (citing NEXTEEL, 28 F.4th at 1235).  
    \122\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Furthermore, two more commenters expressed concern s that the likelihood standard is too 
speculative, and that the use of such a standard in weighing record evidence would result in PMS 
determinations unsupported by record evidence.  
    Other commenters expressed their support for Commerce's use of a likel ihood standard, arguing 
that Commerce's proposal is administrable and consistent with Congress's intent to effectively 
address particular market situations that contribute to the distortion of costs of production. They 
also expressed their support for Comm erce's interpretation of the Federal Circuit's holding in 
NEXTEEL articulated in the Proposed Rule, stating that the Federal Circuit did not mandate a 
"cause -and-effect" or "pass -through" requirement for subsidies or other market situations.  
    Commerce's  Response:  
    Congress amended the Act in 2015 to allow Commerce to consider cost -based particular market 
situations in its proceedings to effectively address what Congress perceived to be unfair use of 
distorted costs by foreign entities in producing sub ject merchandise. We disagree that the statute G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  shows that Congress intended for Commerce to consider cost -based PMS allegations only rarely, just 
as we would disagree that the statute shows that Congress intended for Commerce to consider such 
allegations i n every AD investigation or review. As reflected in Sec.  351.416(b), Commerce will 
consider a PMS allegation if an interested party submits a timely allegation as to the existence of a 
PMS along with information that supports the claim. In addition, if re cord information before 
Commerce in an AD investigation or review suggests the existence of a cost -based PMS, Commerce 
will conduct a cost -based PMS analysis in that segment of the proceeding on that basis. Such a 
consideration is not tied to any concept o f rareness or frequency. Accordingly, we find no merit in 
the suggestion that Commerce should not use a likelihood standard because Congress intended for 
a cost -based PMS analysis and adjustment to be rarely applied.  
    To be clear, under Sec.  351.416(d) (2), in determining whether a cost -based PMS exists that has 
contributed to distortions in costs of production, Commerce will weigh the record evidence and make 
a determination on that basis. Commerce will not make a determination that a cost -based PMS "ma y 
or may not" exist. Rather, Commerce will make a determination that a cost -based PMS 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  
 
[[Page 20800]]  
 
course of trade," \123\ consistent with the language of section 773(e) of the Act or it will find that 
there is insufficient evidence on the record to make such a finding.  
---------------------------------------------------------------------------------- ----------------------------  
    \123\ See section 773(e) of the Act.  
--------------------------------------------------------------------------------------------------------------  
    The term "such that" is "used to express purpose or result." \124\ Incorporating that definition 
into the statutory language, Commerce will determine if there is sufficient record information to find 
that, as a result of the cost -based PMS, there were distortions to the costs of production. The PMS 
does not have to be the onl y circumstance or set of circumstances contributing to a distortion in 
costs, but merely one of the circumstances making such a contribution. The key is that Commerce 
will determine if it is likely, that the circumstance or set of circumstances at issue co ntributed to 
distortions in the cost of production, and if it did, Commerce will also determine whether or not it is 
appropriate to adjust its AD calculations for that PMS. Such an analysis and determination are fully 
consistent with the agency's obligatio ns and authority under the Act. It is a weighing exercise 
delegated by Congress to Commerce as the administrator of the AD law and, therefore, we reject 
the argument that applying a rational and reasonable "likelihood" test in this capacity is a violation 
of the nondelegation doctrine of the U.S. Constitution.  
--------------------------------------------------------------------------------------------------------------  
    \124\ See Collins Dictionary, "such that," retrieved November 8, 2023, 
https://www.collinsdictionary.com/dictionary/english/such -that. 
--------------------------------------------------------------------------------------------- -----------------  
    Despite the claims of several of the commenters, the Act does not address the methodology or 
analysis Commerce must conduct in reaching such a conclusion. Indeed, the Act is generally silent 
on the analysis or methodology to be employ ed by Commerce in making all of its evidence -based 
determinations in the Act. As the administrator of the AD law, it is Commerce's authority and 
responsibility to determine the appropriate methodology or analysis to use in reaching such a 
determination. We  have determined to codify in the regulation Commerce's "likelihood" analysis 
because we appreciate that some commenters have suggested that we should just presume 
causality, while others have suggested that causality must be traced through from beginning to end 
and shown in granular detail. For the reasons set forth in the Proposed Rule, we reject both of those 
options and conclude that the use of a "more likely than not" standard is appropriate. \125\ 
------------------------------------------------------- -------------------------------------------------------  
    \125\ See Proposed Rule, 88 FR 29866.  
--------------------------------------------------------------------------------------------------------------  
    Furthermore, for the reasons explained in t he Proposed Rule, we disagree that the Federal Circuit 
mandated that Commerce apply a "pass -through" analysis when addressing a cost -distorting 
subsidy, or any other type of cost -based PMS for that matter, in NEXTEEL. \126\ The Federal Circuit G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  was not faced  with this issue, and the cited language was provided to give examples of information 
which Commerce could have provided, but did not, in proving that the existence of a subsidy 
distorted costs in that case. \127\ We do not interpret the Federal Circuit's l anguage in NEXTEEL to 
direct Commerce to incorporate a particular methodology or analysis across the board in determining 
if a PMS has contributed to the distortion of costs of production.  
------------------------------------------------------------------- -------------------------------------------  
    \126\ Id. 
    \127\ See NEXTEEL, 28 F.4th at 1235.  
--------------------------------------------------------------------------------------------------------------  
    Indeed, given the many types of cost -based particular market situations which might distort costs 
of production, we strongly believe that a mandated "pass -through" requirement would have 
overwhelmingly negative consequences and undermine the purpose of  the provision in the Act in the 
first place. It would require that in many, if not most, of the cases in which a cost -based PMS may 
exist, Commerce would be prohibited from addressing that PMS because the nature of the PMS is 
such that it is impossible or  excessively difficult to directly tie the market situation "cause" to the 
cost distortion "effect." To put it into perspective, it would be, at minimum, extremely burdensome 
and costly for U.S. industries seeking trade remedy relief or the U.S. Government , to use economic 
studies and other data to measure with specificity the direct financial impacts of slavery on specific 
labor wages, of intellectual property theft on the specific financial benefits which should have been 
appreciated by the owner of a pat ent or trademark, of export restraints on particular domestic prices, 
or of domestic -content and technology transfer requirements on particular costs of manufacturing. 
In fact, there is a possibility that none of these examples of potential cost -based part icular market 
situations listed in Sec.  351.416(g) which would, given certain circumstances, normally have 
distortive effects on costs of production, could be directly traceable through a "pass -through" 
analysis. We do not find such an interpretation to b e reasonable or consistent with Congress' 
intentions and have therefore rejected the calls by certain commenters to revise the regulation to 
reflect a direct "cause -and-effect" or "pass -through" standard of weighing the evidence on the record 
in reaching a  final PMS determination.  
    vii. Comments on the lists of information which Commerce determines to be, as a rule, relevant 
to cost -based PMS analysis.  
    Commerce received multiple comments on the list of information which it proposed to be relevant, 
in general, to a cost -based market situation analysis. One commenter expressed concerns that the 
information listed in proposed Sec.  351.416(d)(2)(i) through (v) might not always be available to 
the parties, and expressed a particular concern about proposed  paragraphs (d)(2)(i) through (iii) 
because governments or independent entities or organizations might not always produce such 
information. The commenter expressed a concern that if such data are unavailable, Commerce might 
automatically determine that the re is insufficient record information to support the existence of a 
cost-based market situation.  
    Another commenter suggested that Commerce consider removing analyses of the price effects of 
government action and inaction in proposed paragraphs (d)(2)(i i) and (iii) because each report or 
documentation might define or interpret data differently and have different understandings of terms 
such as "fair market value" or "significant input," which could lead to confusion on the record. That 
commenter expresse d concerns that Commerce was relinquishing some flexibility and discretion in 
including such reports and documentation on the list of relevant sources.  
    A few commenters expressed concerns with the nature and quality of foreign government and 
independen t analytical and academic organizations studies and reports. Some requested that 
Commerce clarify that hypothetical results from such reports, such as the reference to report 
conclusions in proposed paragraph (d)(2)(ii) that "lower prices for a significant  input in the subject 
country would likely result from government or nongovernmental actions or inactions taken in the 
subject country or other countries," could not be the sole basis for a cost -based market situation 
determination. Conversely, others expr essed concerns that Commerce might create a hierarchy 
among such reports and studies, prioritizing certain studies over others on a claim that some are 
more "speculative" than others due to a lack of source data. They suggested that Commerce should 
make cl ear that just because one study may be based on less information than another does not 
mean that Commerce should automatically give it less weight. Instead, they suggested that 
Commerce should  
 
[[Page 20801]]  
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- 57 - 
 
  consider all information on the record and tak e into consideration the reality that objective studies 
may not be available for every product and industry.  
    Commerce also received comments from commenters who suggested for every portion of the 
Proposed Rule in which Commerce relies on the term "sign ificant input," it should remove the term 
"significant," because the use of that term would be overly restrictive. That term appeared in 
proposed Sec.  351.416(d)(2)(i) through (iii) and (v) and (d)(3)(ii) and in multiple examples listed 
in proposed Sec. 3 51.416(g). The commenters suggested that Commerce should remove the 
restrictive term "significant" because section 773(e) of the Act does not limit Commerce's authority 
in that manner, and in fact the Act uses the term "of any kind." They disagreed with Co mmerce's 
explanation in the Proposed Rule that use of the term is necessary to prevent an administrative 
burden, instead suggesting that no party would file a PMS allegation for inputs which do not have a 
meaningful impact on the cost of production after a djusting for distorted costs. One commenter also 
expressed concerns that all "significant" inputs might not be distorted, but that a combination of 
other less "significant" inputs might be distorted and that the collected "insignificant" input distorted 
costs would have an impact on the overall cost of production.  
    In addition, one commenter expressed concerns with Commerce's comparison of prices paid for 
significant inputs used to produce subject merchandise under the alleged market situation to prices 
paid for the same input without the market situation, in the home market or elsewhere, in proposed 
paragraph (d)(2)(i), alleging that section 773 of the Act "does not allow for a comparison" of input 
prices in one country where a market situation allegedly  exists and input prices in other countries 
where no such situation exists.  
    Furthermore, another commenter expressed concerns with Commerce's consideration of previous 
agency determinations or results that did or did not support the existence of an all eged PMS with 
regard to the same or similar merchandise in previous segments or proceedings. That commenter 
requested that Commerce explain that each record is separate and distinct and that it cannot 
presume an outcome or conclusion based on previous dete rminations or results. An additional 
commenter requested that Commerce emphasize that cost -based PMS determinations are based on 
the facts on the record and not presumptions based on information external to the record.  
    With respect to proposed paragrap h (d)(2)(v), which pertained to the consideration of the use of 
property (including intellectual property), human rights, labor, and environmental protections in 
other countries and is addressed to a greater extent above, one commenter suggested that 
Comme rce should remove the terms "weak" and "ineffective" entirely because neither term is 
defined and the terms create too much discretion for Commerce to make a cost -based PMS 
determination on an arbitrary basis. That commenter expressed concerns that such a broad use of 
discretion is inconsistent with the United States' WTO obligations. Likewise, other commenters 
expressed concerns with the same provision, arguing that because the provision does not explain 
how Commerce is going to consider various factors in  doing price comparisons between governments 
with distinguishable economies and programs, Commerce should provide further guidance and 
standards in the final rule or preamble. Those commenters also complained that no burden of proof 
is set forth in this pr ovision and that Commerce should provide further guidance and standards on 
that burden in the final rule or preamble. Lastly, those same commenters expressed concerns that 
Commerce had not listed any environmental, labor, human rights, or property (includi ng intellectual 
property) standards in the regulation or preamble, and absent such standards, Commerce might 
"unfairly penalize" countries on a case -by-case basis for providing protections in a way which is 
different, but not less effective, how the United  States provides protections.  
    In addition, another commenter expressed concerns with the existence of proposed 
paragraph  (d)(2)(v) altogether, stating that Commerce's consideration of the actions or inactions of 
other governments in determining whether  or not costs are distorted during a certain period of time 
is inconsistent with section 771(15) of the Act and the SAA \128\ because both of those legal sources 
require that the "ordinary course of trade" analysis focus on the conditions and practices gen erally 
made in the same market as merchandise being examined. That commenter suggested that the law 
does not permit Commerce to analyze conditions and practices in other countries as set forth in 
proposed paragraph (d)(2)(v) because the prices and protecti ons which Commerce would analyze 
using such information would not be costs incurred in the home market "in the ordinary course of 
trade" during the period of investigation or review.  
------------------------------------------------------------------------- -------------------------------------  
    \128\ See SAA at 834 (noting that the SAA states that Commerce "may consider other types of 
sales or transactions to be outside the ordinary course of trade when such sales or transactions have 
characteristics that  are not ordinary as compared to sales or transactions generally made in the 
same market").  
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      Finally, another commenter expressed concerns tha t proposed paragraph (d)(2)(v) could be 
inconsistent with the United States' WTO obligations because it may result in the United States 
demanding that certain WTO members, for whom a PMS has been alleged, maintain certain 
standards for environment, labor, human rights, and property (including intellectual property) 
protections, while making no such demand of other countries if no PMS has been alleged with respect 
to their industries.  
    Commerce's Response:  
    As explained above, in response to certain co mments, Commerce made certain changes to the 
list of information which it will generally find beneficial in most cases in determining the existence 
of a market situation which distorts costs of production, and that list now appears in 
Sec.  351.416(d)(3). However, Commerce has not revised that list in response to the comments 
listed here, but instead addresses the comments raised.  
    First, although the information sources listed in Sec.  351.416(d)(3)(ii) and (iii) will generally be 
helpful if complete an d timely, we agree with the commenter who suggested that sometimes, some 
or all of these sources may not exist, may be incomplete, or may not be current. We also agree that 
sometimes, even if the various reports and documentation are timely and complete, t here may be 
inconsistency between the terminology used and presumptions upon which the data and results 
provided rely. All of these concerns are standard concerns whenever an agency relies on outside 
studies and reports, and Commerce has a long history of familiarity with such potential concerns. 
None of these predictable data concerns, however, dissuade us from recognizing that despite those 
possible considerations, reports, and documents such as those listed in Sec.  351.416(d)(3)(ii) 
and (iii) generally benefit our cost -based PMS analysis.  
    Furthermore, we disagree that considerations of price and cost effects remove Commerce's 
flexibility and discretion in administering this area of law. By listing these sources, we believe the 
public and Commerce bot h benefit  
 
[[Page 20802]]  
 
from knowing the types of information which Commerce considers generally beneficial to a 
cost-based PMS analysis and in no way does it remove Commerce's ability to consider alternative 
information or even reject the listed sources if they suffer from inadequacies or other problems 
which Commerce determines undermine the conclusions of the listed sources on the record. To be 
clear, in response to one commenter's concerns, Commerce will not automatically reject a cost -based 
PMS allegation if the data listed in Sec.  351.416(d)(3) is not on the record, including the reports 
and documentation listed in paragraph (d)(3)(ii) or (iii), or even if the information is on the record 
but proves to be unusable, or is unavailable, if other  information is on the record. Ultimately, 
Commerce's determination of a cost -based market situation will be one based on all of the 
information on the record before it, and not just the historically helpful sources listed in 
Sec.  351.416(d)(3).  
    In response to the comments raised on the results of certain "external" reports which some 
commenters called "hypothetical" or "based on presumptions," Commerce will make its 
determinations based on the record as a whole. If a report includes solid data which s upports its 
conclusions, for example, and is not contradicted by other information on the record, Commerce 
may determine based on record evidence that a cost -based PMS exists, consistent with that report. 
Claiming that a report's conclusions on price effec ts are "hypothetical" or "presumptive" ignores that 
fact that the reports Commerce frequently has received from such sources have been based on a 
great deal of data and analysis. For this reason, we continue to include such sources in the list of 
documenta tion which Commerce generally finds to be helpful to its cost -based PMS analysis. In 
addition, we agree with the commenters who suggested that sometimes one study may be based 
on less data than another. However, this fact alone does not mean that the study  with more data is 
necessarily more accurate or beneficial. Commerce has no intention of creating a "hierarchy" of 
reports based on data sources, but instead will consider all information on the record before it and 
determine the relevance of such studies and reports individually on a case -by-case basis.  
    Likewise, Commerce will continue to consider previous determinations of the existence of a 
cost-based PMS by Commerce in Sec.  351.416(d)(3)(iv) to be generally helpful. We do not disagree 
that each rec ord stands alone, but there is no question that if Commerce has previously considered 
a circumstance or set of circumstances in a subject country covering the same or similar 
merchandise, that those analysis and facts are relevant to Commerce's analysis.  
    Commerce makes a PMS determination specific to a period of investigation or review, but if the 
merchandise, parties, and circumstances are the same or similar, all of that information can be 
extremely relevant to Commerce's analysis and ultimate conclus ion. G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      With respect to the arguments that Commerce cannot lawfully compare prices and costs outside 
the subject country and the alleged market situation with prices and costs within the subject country 
under proposed Sec.  351.416(d)(3)(i) and (v), we di sagree that section 773 of the Act, or any 
statutory provision, hampers Commerce's analysis in that manner. If a market situation distorts 
costs in a subject country, sometimes there might be other prices of the same or similar merchandise 
within the same country which can be compared for purposes of determining if the circumstance or 
set of circumstances distorts costs of production. One of the commenters cites language in the SAA 
for its argument in this regard, which states that "Commerce may consider ot her types of sales or 
transactions to be outside the ordinary course of trade when such sales or transactions have 
characteristics that are not ordinary as compared to sales or transactions generally made in the 
same market." \129\ We do not disagree that when Commerce is able to compare costs to other 
non-distorted costs in the same market, that is "generally" an informative comparison and very 
likely the most informative comparison available to Commerce.  
--------------------------------------------------- -----------------------------------------------------------  
    \129\ Id. 
--------------------------------------------------------------------------------------------------------------  
    However, in certain circumstances, the record may not reflect that factual scenario. It may be 
that the entire market for an input or subject merchandise within the subject country has been 
distorted, or at least that certain merchandise is not being p urchased or sold in accordance with 
market principles anywhere in the subject country, because of the nature and size of the alleged 
market situation. When that is the case, it is completely reasonable and logical that Commerce may 
consider prices and cost s outside of the subject country of a significant input into subject 
merchandise to determine if a cost -based PMS exists. We know of no statutory, regulatory, or judicial 
prohibition on Commerce considering such data in determining if certain costs reasona bly reflect the 
costs of production in the ordinary course of trade. Indeed, Commerce has made this type of 
comparison in both determining the existence of a cost -based PMS and in determining the 
appropriate adjustment to remedy the PMS. \130\ As we have st ressed, Commerce's determination 
is based on the entire record, and information about both internal and external costs and prices may 
assist Commerce in determining whether the costs reported accurately reflect the cost of materials 
and fabrication or othe r processing of any kind in the ordinary course of trade, as required by 
section  773(e) of the Act.  
--------------------------------------------------------------------------------------------------------------  
    \130\ See, e.g., Biodiesel from Argentina  IDM at Comment 3.  
--------------------------------------------------------------------------------------------------------------  
    We understand that some commenters believe that the phrase "normal in the trade under 
consideration" and the term "ordinar y" in the statutory definition of "ordinary course of trade" in 
section 771(15) of the Act suggests that even if costs of production were distorted, if those costs 
were used by an examined producer or exporter in its normal business practices, Congress int ended 
for Commerce to determine that those costs were "ordinary" and use those costs in its calculations. 
We find that such an interpretation is inconsistent with the language of section 773(e) of the Act 
requiring Commerce to consider whether costs, as re ported, "accurately reflect the cost of production 
in the ordinary course of trade," because under that interpretation all reported costs would be 
"accurate." That interpretation is also inconsistent with the intentions of Congress for Commerce to 
address foreign production costs benefiting from lower, distorted costs of production. Accordingly, 
we find that such an interpretation of the definition of "ordinary course of trade" would undermine 
the very purpose of the cost -based PMS provision in the Act. Com merce will therefore continue to 
address distorted costs in its cost -based PMS analysis.  
    Furthermore, we are not removing the terms "weak" or "ineffective" in the regulation in describing 
certain protections, nor will we try to set up standards or defi ne those terms, as no regulation could 
predict every and all possible scenario under this provision. It is clearly a case -by-case analysis. A 
government may have intellectual property protections in its laws but provides nothing but a 
proverbial "slap on t he wrist" for violations of the law, in no way dissuading irresponsible  
 
[[Page 20803]]  
 
companies or individuals from violating those protections. Under any definition, such a law and 
protections would be considered "weak." Likewise, another government ma y have hypothetically 
strong protections in its laws for protecting the waterways around a factory or for protecting G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  workforce health and safety, but if the evidence on the record shows that the government does not 
enforce those laws or that they are large ly ignored by businesses and government officials alike, 
there is no question that such laws and protections could be described as "ineffective."  
    As we have described above, weak and ineffective property (including intellectual property), 
human rights,  labor, and environmental protections may contribute to distorted prices and costs of 
production, but might not contribute to any cost distortions, and a conclusion by Commerce on such 
matters must be based on the record evidence before it. As we have prev iously explained, in making 
such a determination, Commerce will weigh all of the evidence on the record in its analysis and 
determine if it is more likely than not that the alleged market situation contributed to distorted costs 
of production.  
    We do no t agree that Commerce's analysis, as set forth in the regulation, "unfairly penalizes" 
countries for providing protections in a manner differently from the United States. Commerce's 
determination is not a "penalty" on a foreign government or a subjective s tatement on the priorities 
and values of another sovereign nation. It is an objective determination based on record evidence 
as to whether the lack of certain compliance costs ordinarily associated with certain enumerated 
protections contributed to a disto rtion in costs for certain producers or exporters in the subject 
country. As we explain above, we disagree with the generalized claims by certain commenters that 
the AD Agreement requires the United States to use prices and costs which it determines, based  on 
record evidence, are distorted due to weak, ineffective, or nonexistent protections in its calculations.  
    On the other hand, we fully agree with the commenters who expressed concerns that different 
countries enforce certain protections through diffe rent methods, and even if those methods may 
differ from the United States, they may still prove to be strong and effective. Accordingly, we believe 
that it would not be logical to set forth restrictive standards in the regulation to determine what 
protecti ons, or methods of protection, are strong or weak, or effective or ineffective. Instead, a 
determination of the strength and effectiveness of a protection in the subject country is an analysis 
best left for interested parties to argue and for Commerce to a nalyze, consider, and determine on a 
case-by-case basis.  
    Furthermore, we do not agree that paragraph (d)(3)(v) is inconsistent with the United States' 
WTO obligations. The United States is not demanding certain property (including intellectual 
property ), human rights, labor, and environmental protections be applied in certain countries, but 
not in others. Instead, the United States is merely determining if weak, ineffective, or nonexistent 
protections in the subject country had an impact on the cost of production. That analysis is neutral 
among all countries and provides no preference for one over the other. Accordingly, it does not 
create a conflict with the United States' WTO most favored nation obligations.  
    Finally, we have declined to remove the term "significant" from "significant input" whenever that 
term arises in the regulations. If, as some of the commenters stated, no party will make allegations 
on "insignificant" inputs because insignificant inputs will not have a meaningful impact on the c ost 
of production, after adjusting for distorted costs, then the use of the term should be of no 
consequence to parties making PMS allegations because the regulatory language will reflect actual 
practice. However, if a combination of "insignificant inputs"  can, collectively and hypothetically, have 
a meaningful impact on the cost of production, Commerce would anticipate that interested parties 
would be inclined to make PMS allegations on those alleged distorted costs as well, either individually 
or in the a ggregate. We have determined that the administrative and resource burden on the agency 
to review and consider PMS allegations for several "insignificant" inputs in potentially numerous 
cases would, be unreasonable and inhibit, or even prevent, the timely c ompletion of the proceeding 
in which such allegations are made. Accordingly, we have retained the use of the term "significant 
input" throughout the PMS regulations.  
    viii. The definition of "ordinary course of trade" does not prohibit Commerce from det ermining 
that past government or nongovernmental actions do not preclude a finding of distorted costs of 
production under Sec.  351.416(d)(4)(iv) or otherwise undermines the PMS examples set forth in 
Sec.  351.416(g).  
    Commerce included language in the Proposed Rule that stated that the agency would "not be 
required to consider" certain information, and as noted above, we received several comments that 
expressed concerns that Commerce did not have the authority to prohibit consideration of 
information on  the record. We agree and have revised the introductory language that was in 
proposed paragraph (d)(3) to instead explain that the examples set forth "will not preclude the 
finding of a market situation" in the introductory language of Sec.  351.416(d)(4).  Commerce will 
not prohibit parties from submitting such information on the record, and Commerce will consider 
their claims based on that information, but even if all they state is true, we have determined it is 
important to stress that Commerce normally w ill not consider such arguments beneficial or 
persuasive to its analysis.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      One of those examples, as proposed, spoke to "the existence of historical policies and previous 
actions taken or not taken by the government or industry in the subject country," and we received 
comments that essentially expressed concerns that such a provision was too broad. As explained 
above, we have narrowed and simplified the language in that provision to reflect what we were 
trying to address at its core: "The existence of th e same or similar governmental or nongovernment 
actions in the subject country that preceded the period of investigation or review" will not preclude 
the finding of a market situation. As we explained in the Proposed Rule, in Commerce's experience 
some par ties have argued that "because an export restriction, or other market distorting policy or 
practice, has existed for many years in the subject country, the costs resulting from those actions 
or policies are now part of the 'ordinary course of trade' for th at country." \131\ Commerce explained 
that it disagreed with that interpretation and explained that cost distortions cannot become 
non-distortive merely because of historical usage. As Commerce stated in the Proposed Rule, "the 
pre-existence of government actions or inactions, or other circumstances, does not make those 
situations market -based or nullify the distortion of costs during the relevant period of investigation 
or review." \132\ Commerce also explained that "actions taken by a foreign government t hat are 
not in accordance with general market principles or otherwise result in price suppression will 
normally distort costs of production every year they are in effect," and the mere fact that those 
actions previously existed will not  
 
[[Page 20804]]  
 
prevent Commerce from finding the existence of a cost -based PMS. \133\ 
--------------------------------------------------------------------------------------------------------------  
    \131\ See Proposed Rule, 88 FR 29863.  
    \132\ Id. 
    \133\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Despite Commerce's explanation in the Proposed Rule, some commenters suggested that because 
the term "ordinary course of trade" is define d in section 771(15) of the Act as "the conditions and 
practices which, for a reasonable time prior to the exportation of the subject merchandise, have 
been normal in the trade under consideration with respect to merchandise of the same class or kind," 
such language indicates that not only can Commerce not refuse to consider historical information, it 
is, in fact, required to analyze historic conditions over a "reasonable" period of time prior to the 
exportation of the subject merchandise. In that regard, w e agree that Commerce is required to 
consider "conditions and practices" which are "normal in the trade" for the subject merchandise 
during a period of time in considering if costs are incurred in the ordinary course of trade. It is for 
that reason we have  modified the language in the regulation from that proposed in the Proposed 
Rule. 
    However, we disagree with the premise that because government actions, such as subsidies, 
nongovernmental actions, or government and nongovernmental inactions, have been applied over 
time, that fact alone "normalizes" those actions and inactions, and requires Commerce to consider 
those actions or inactions to be in the "ordinary course of trade," even if those actions or inactions 
have distortive effects on prices and cost s. The commenters suggesting such an interpretation of 
the Act expressed concerns with Commerce's determination that past actions or inactions do not 
prevent a finding of a cost -based market situation in proposed Sec.  351.416(d)(3)(iv). They also 
commente d that all of the examples set forth in Sec.  351.416(g) of potential cost -based particular 
market situations cannot be addressed in Commerce's calculations if those government or 
nongovernmental actions existed in a time period preceding an investigation or administrative 
review, with some commenters claiming that most of the listed examples are just common economic 
policies and global phenomena which are in the ordinary course trade and are not particular to 
individual respondents.  
    As we explained abo ve, we find that such an interpretation of section 771(15) of the Act is 
inconsistent with the below -cost PMS provision in section 773(e) of the Act, requiring Commerce to 
consider whether costs, as reported, "accurately reflect the cost of production in t he ordinary course 
of trade." \134\ Under such an interpretation of "ordinary course of trade," if all subsidies and 
government or nongovernmental actions or inactions were considered "normal," no matter if they 
impacted costs or not, then all reported cos ts would be considered "accurate." Such an interpretation 
is illogical --the statute does not turn a blind eye to government or nongovernmental actions that 
distort costs of production under a blanket claim of historic normalization.  
----------------------- ---------------------------------------------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      \134\ See section 773(e) of the Act.  
--------------------------------------------------------------------------------------------------------------  
    Furthermore,  such an interpretation is also inconsistent with the intentions of Congress for 
Commerce to address foreign companies benefiting from lower, distorted costs of production through 
the below -cost PMS provision. As Commerce explained in the PMS ANPR, members  of the U.S. House 
of Representatives and U.S. Senate expressed concerns about inputs being "subsidized" or 
"otherwise outside the ordinary course of trade," \135\ and that U.S. industries were "being cheated" 
by foreign industries that were "illegally sub sidizing" certain products," \136\ in introducing the 
legislation into law. Such language does not suggest that Congress intended to allow government or 
nongovernmental actions or inactions that distort costs of production to be considered "normal" or 
"ordinary" just because they were in place before the period of investigation or review.  
--------------------------------------------------------------------------------------------------------------  
    \135\ See PMS ANPR, 87 FR 69235 (citing the Congressiona l Record --House, H4666, H4690 
(June  25, 2015)).  
    \136\ Id. (citing the Congressional Record --Senate, S2899, S2900 (May 14, 2015)).  
--------------------------------------------------------------------------------------------------------------  
    Accordi ngly, we have revised and simplified the regulation as explained above in 
Sec.  351.416(d)(4)(iv) to more accurately explain that the mere existence of the same or similar 
government or nongovernmental actions in the subject country that preceded the perio d of 
investigation or review will not preclude a finding of a market situation. In addition, we have 
continued to provide all twelve of the examples set forth in Sec.  351.416(g) in the Proposed Rule, 
with some modifications, as described above.  
    ix. Pr oviding a list of sources which Commerce determines will be of little to no benefit in most 
cases to a cost -based PMS determination in Sec.  351.416(d)(4) will not have a "chilling effect" on 
other arguments.  
    Certain commenters approved of Commerce's l isting of the types of information that it generally 
does not find beneficial to a cost -based PMS analysis. Such commenters considered the list to be 
helpful and consistent with the Act and Federal Circuit precedent, citing NEXTEEL. Those commenters 
sugges ted that by providing a list of sources which generally do not benefit Commerce's analysis, 
interested parties will be better aware of what arguments to make or not make in persuading the 
agency that a cost -based PMS exists or does not exist, thereby savin g every participant's time and 
resources. In contrast, some commenters also suggested that such a list was not necessary and 
might unduly restrict Commerce's ability and flexibility to consider all of the record evidence on a 
case-by-case basis.  
    Still other commenters expressed a concern that listing documents which Commerce "would not 
consider," creates a "chilling effect" and prevents parties from making good arguments based on 
record evidence which might be uniquely appropriate to the case before the  agency. Those 
commenters expressed concerns that because of such restrictions, parties might be predisposed to 
not even submit information on the record which could otherwise be helpful to a cost -based PMS 
analysis in a specific, given case. Still other c ommenters expressed concerns that by including such 
a list, Commerce might even be violating the due process rights of those who should be able to 
provide any argument they wish to argue their positions before the agency.  
    Commerce's Response:  
    In changing the introductory language of proposed Sec.  351.416(d)(3), which used the language 
"will not consider," into the "will not preclude a finding" language in Sec.  351.416(d)(4), as 
described above, Commerce has addressed any due process claims or argu ments that such a list 
might unduly restrict Commerce's ability and flexibility to consider certain arguments and facts on 
the record. Parties are not prevented from submitting information and arguments on the record and 
Commerce will consider such argumen ts and facts, but we continue to believe that the public benefits 
from understanding that the agency generally finds little benefit to its analysis in most cases when 
the listed information and arguments are submitted, for the reasons explained in the Prop osed Rule.  
    As for the concerns expressed for a "chilling effect," in some ways, that is the purpose of the 
regulatory provision to the extent that it allows parties to better understand the value of making 
certain arguments over others. No party should waste its time and resources making an argument 
based on certain information which Commerce has  
 
[[Page 20805]]  
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  determined previously to be largely irrelevant to its cost -based PMS analysis. One commenter 
suggested that Commerce should continue to just address such views on a case -by-case basis and 
provide no list of examples of arguments and facts that it frequently finds to be irrelevant, but we 
have determined that the public benefits more from the inclusion of those examples in the regulation 
and und erstanding that such arguments are generally of little help to Commerce in deciding if a 
cost-based market situation exists. Thus, Commerce does not believe that the described examples 
of arguments and facts listed under Sec.  351.416(d)(4) will have a "ch illing effect" on valid 
cost-based PMS allegations.  
    Section 351.416(d)(4)(i) provides that the lack of precision in the quantifiable data relating to 
the distortion of prices or costs in the subject country will not preclude the finding of a cost -based  
PMS. Commerce provided a lengthy explanation for this provision in the Proposed Rule. \137\ Certain 
commenters suggested that Commerce should remove the provision from the list because they 
expressed concerns that it might prevent parties from providing mo re accurate or precise data in 
response to, or in making, a PMS allegation. Others expressed concerns that it suggested that 
Commerce will not consider quantifiable data at all in its analysis. Still, others expressed concerns 
that the provision suggested that Commerce would conclude that it was acceptable to rely on 
erroneous data in certain circumstances in making a cost -based PMS adjustment where precise 
quantifiable data were unavailable. Lastly, one commenter requested that Commerce explain that 
the ap plicability of a data source is different from the precision of data and, therefore, even if 
Commerce determines to retain the regulatory provision, it should explain to the public that parties 
can still argue that one data source is more applicable and ap propriate than another data source, 
and that decisions about the precision of quantifiable data would only come after Commerce 
determined the appropriate data sources to apply.  
------------------------------------------------------------------------------- -------------------------------  
    \137\ See Proposed Rule, 88 FR 29863.  
--------------------------------------------------------------------------------------------------------------  
    Section 351.416(d)(4)(ii) addresses costs of production which would  allegedly exist absent a 
cost-based PMS, providing that without objective data, Commerce would not find such "hypothetical" 
or speculated costs to be of assistance to its analysis. One commenter expressed concerns that the 
provision might preclude Commerc e from finding a PMS based on an input which, due to the PMS, 
makes up a relatively small percentage of the cost of production. For example, a single production 
input might, absent a PMS, represent a large percentage of a manufacturer's cost of production.  
However, because of a PMS, it may be significantly undervalued and instead represent a small 
percentage of the manufacturer's reported cost of production. The commenter reasoned that if 
Commerce refuses to consider a "hypothetical" cost analysis of what a n input's value would be 
absent the PMS, then it might fail to actually address the cost distortions in the first place. The 
commenter therefore disagreed that arguments about hypothetical costs are of no value and posited 
that Commerce should not base its  analysis only on "significant" inputs but rather on cost distortions 
in inputs generally.  
    With respect to both of these provisions, one commenter expressed agreement with the statement 
that Commerce made in the preamble to the Proposed Rule, that in r eviewing the record to 
determine if there is a cost -based PMS, Commerce's "analysis is usually qualitative, rather than 
quantitative, in nature," in that Commerce is not required to find a precise quantitative distortion to 
determine a PMS exists. \138\ In the Proposed Rule, Commerce explained that "whether Commerce's 
analysis is solely qualitative or both qualitative and quantitative," Commerce would "consider all 
relevant information submitted on the record by interested parties." \139\ Accordingly, the 
commenter emphasized that even if precise quantifiable data are unavailable, qualitative allegations 
and information can be useful if those allegations and information are supported by objective record 
evidence. The commenter stated that Commerce should note  the importance of qualitative 
allegations and information in the final rule.  
--------------------------------------------------------------------------------------------------------------  
    \138\ Id., 88 FR 29862.  
    \139\ Id. 
------------------------- -------------------------------------------------------------------------------------  
    Commerce's Response:  
    We agree with the commenter that stated that qualitative allegations and information, be it claims 
that forced labor in the country has a sup pressing effect on overall labor values, for example, or that 
a government's technology transfer requirements possibly distort the market price for particular G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  products, can be extremely useful to Commerce's cost -based PMS analysis, as long as those 
allegat ions and information are supported by objective evidence on the record. That is true under 
paragraph (d)(4)(ii) for both allegations of a PMS and information provided in response to those 
allegations.  
    With respect to Sec.  351.416(d)(4)(i), we will not  remove the provision, but rather will state that 
we agree with the commenters who wanted Commerce to emphasize that this provision is not meant 
to prevent or dissuade parties from submitting more accurate or precise data on the record. Like 
qualitative al legations and information supported by objective evidence on the record, more 
comprehensive, accurate and precise data are always appreciated and considered by Commerce in 
its analysis when such information is placed on the record. Commerce's cost -based PM S 
determinations are based on record evidence, and we disagree with the commenter who expressed 
concerns that the regulation suggests the agency would not consider quantifiable data or the 
commenter who expressed concerns that Commerce was suggesting that it would be acceptable to 
rely on erroneous data. Such claims are unfounded. The purpose of Sec.  351.416(d)(4)(i) is to 
address those situations in which some quantifiable data are on the record that support finding the 
existence of a cost -based PMS, but commenters suggested that because the data are not adequately 
precise, those data are meritless or should be ignored. We continue to find that such claims are of 
no benefit to Commerce's cost -based PMS analysis and have therefore included that example on t he 
list. 
    In response to the request that Commerce clarify that the appropriateness of data sources is a 
different issue from whether the quantifiable data are adequately precise as articulated in the 
regulation, we agree with the commenter. There may b e situations in which there are multiple data 
sources before the agency and Commerce will determine which data source is the appropriate data 
source to use in its calculations based on the perceived benefits of each, including the precision and 
detail of q uantifiable data specific to the costs of production of subject merchandise. In that case, if 
one data source has more precise quantifiable data specific to the costs of production of the subject 
merchandise than other data sources, that could be a factor,  among others, which leads Commerce 
to select that data source as the one it uses for purposes of its analysis.  
    The scenario set forth in Sec.  351.416(d)(4)(i) addresses the situation, which Commerce has 
experienced multiple times, in which  
 
[[Page 20 806]]  
 
Commerce has determined to rely on certain data and interested parties attempt to undermine the 
usefulness of the information by claiming that the quantifiable data in that data base are insufficiently 
precise to support a cost -based PMS allegation.  It is that argument which Commerce finds to be of 
no assistance to its analysis and to which Sec. 351.416(d)(4)(i) applies.  
    In response to the comments stating that Commerce's PMS analysis might be undermined by the 
undervaluation of an input, thereby  making it appear to be insignificant on its face, absent an 
argument of a hypothetical cost without the existence of a PMS under Sec.  351.416(d)(4)(ii), we 
disagree. The provision states explicitly that allegations of speculated prices or costs of signif icant 
inputs unsupported by objective data may prove to be of little value to Commerce's PMS analysis. 
In the scenario raised by the commenters, if a party alleged that a PMS undervalued a particular 
input, and provided an objective analysis with data whic h reflect that the input would be significant 
absent the existence of the alleged PMS, such an allegation and data would be helpful to Commerce's 
analysis. However, if the allegation was devoid of any objective analysis and data, then, as the 
provision sta tes, speculated prices and costs would be of little assistance to the agency's analysis. 
The issue in such a situation would not be, as suggested by the commenters, whether the input was 
significant or not significant --that matter could be determined throu gh the PMS analysis. The issue 
under Sec.  351.416(d)(4)(ii) would be whether the alleging party merely speculated about the 
prices or costs of the input, or whether the PMS allegation was supported by objective data on the 
record.  
    x. The factors liste d by Commerce to determine if a market situation is particular in 
Sec.  351.416(e) are in accordance with law.  
    Section 351.416(e) addresses factors Commerce will consider in determining if a market situation 
is particular. As explained above, Commerce has simplified the provision from that proposed and 
revised certain language to bring it into conformity with other text in the regulation, as requested 
by some commenters. Commerce has also modified the language so that it applies equally to 
sales-based a nd cost -based particular market situations. Certain commenters questioned 
Commerce's decision to provide a separate particularity consideration from a market situation 
determination, arguing that such a separate consideration is unnecessary under the Act. However, 
we believe that both the CIT and Federal Circuit have disagreed with this assessment in various G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  holdings and that Commerce is required in PMS determinations to separately analyze if a market 
situation is particular to certain parties or products i n the subject country. Accordingly, we have 
retained paragraph (e) to provide factors Commerce will consider as part of its particularity analysis.  
    Some commenters also commented that Commerce should focus not on whether a market 
situation "impacts" pr ices or costs for only certain parties in paragraph (e)(1), but instead focus on 
whether a market situation "suppressed" or "lowered" prices or costs for certain parties. Although 
we do agree that in cost -based PMS analyses and determinations, Commerce's p rimary concern will 
be whether a market situation had a downward effect on costs of production to the disadvantage of 
the domestic industry, we also recognize that sometimes market situations may, counter to market 
principles, causing prices and costs to b oth rise and fall. For purposes of determining whether a 
market situation is particular, we do not see the distinction between distortions which cause costs 
to decline or distortions which cause costs to rise. The important part of the particularity analys is is 
whether the market situation impacted prices or costs for only certain parties or products in the 
subject country. Accordingly, we have determined to maintain the use of the term "impact" in the 
regulation in determining if a market situation is part icular.  
    Comments on this provision otherwise essentially fell into one of two interpretations of the word 
"particular." One group of commenters expressed concerns that Commerce misunderstood in the 
proposed regulation what the term particular means and  misunderstood various statements made 
by the courts. They suggested that a market situation cannot be particular if it exists in one form or 
another outside of the subject country, for it must be unique only to the subject country. They also 
suggested tha t it cannot be particular if it applies to industries beyond those of producers of subject 
merchandise or inputs into subject merchandise. They commented that a market situation is only 
particular if it is limited, by its terms, to producers of subject mer chandise, and that any 
interpretation broader than that is lawfully impermissible.  
    These commenters expressed concerns that Commerce's proposed regulation indicated that a 
cost-based market situation could contribute to distortions of costs for a large  number of parties or 
products, including parties and products with no relationship to subject merchandise. They expressed 
concerns that such an analysis goes beyond the intentions of Congress, and that the Act was 
amended only to address particular progra ms which distort costs solely for subject merchandise in 
the subject country, and no more.  
    Furthermore, one commenter suggested that because a Panel concluded that the term "particular" 
in a price -based PMS case meant "distinct, individual, single and specific," \140\ Commerce's 
proposed regulations are WTO inconsistent because they allowed for Commerce to adjust its 
calculations for market situations that applied to industries far beyond such a limitation.  
--------------------------------------------------------------------------------------------------------------  
    \140\ See Panel Report , Australia --Anti-dumping Measures on A4 Copy Paper, WTO Doc. 
WT/DS529/R  (adopted 27 January 2020).  
--------------------------------------------------------------------------------------------------------------  
    However, other commenters suggested that the  term "particular" in the Act is undefined and need 
not be limited to a particular country, economy, or industry, and that even the Federal Circuit in 
NEXTEEL recognized that a global phenomenon like the presence of low -priced Chinese steel could 
contribut e to a cost -based PMS in multiple countries as long as there is "sufficient particularity" to 
the market in question. \141\ Some commenters advocated adoption of the proposed provision 
without a change. Other commenters advocated for Commerce to maintain th e factors set forth in 
the Proposed Rule for particularity, but also requested that Commerce elaborate further on the 
circumstance or set of circumstances that could impact prices or costs for certain parties or products 
and the amount of impact which Comm erce would consider sufficient to make the market situation 
"sufficiently particular" for purposes of a PMS determination.  
--------------------------------------------------------------------------------------------------------------  
    \141\ See NEXTEEL,  28 F.4th at 1237.  
--------------------------------------------------------------------------------------------------------------  
    Commerce's Response:  
    We disagree with the commenters who suggested that Commerce is required by the Act or the 
courts to limit its analysis only to government actions in the subject country that are targeted solely 
to producers of subject merchandise or inputs into subject merchandise. The term at issue is 
"particular market situation," and the focus is on the distortion of costs of production for a cost -based 
PMS and whether a comparison of sales is proper for a sales -based PMS. Some situations may impact 
particular parties, other situations may impact particular products, and others may be so  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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[[Page 20807]]  
 
expansive as to impact a large number of parties and products among the general population of the 
subject country. For a situation to be considered particular, the key question is whether it has 
impacted only certain parties or products or whether it is su fficiently broad as to impact the general 
population of parties and products in the subject country. We do not believe the analysis should be 
any further complicated than that question.  
    Any other understanding of the term "particular market situation" in the context of a cost -based 
PMS would require Commerce to ignore situations that distort costs in the subject country because 
a situation could impact other manufacturers in the subject country as well as manufacturers of the 
merchandise subject to an i nvestigation or order (e.g., all steel manufacturers could be impacted 
and not just manufacturers of steel wheels). Such limitations on Commerce's ability to determine if 
costs are distorted would be arbitrary and inconsistent with the purposes of the cost -based PMS 
provision, and we find no support of such a limitation in the Act. Section 351.416(e)(1) clarifies that 
Commerce's analysis is relatively simple and straightforward, as reflected by the 12 examples set 
forth in Sec.  351.416(g) --if a market situ ation distorts costs of production for only certain parties 
or products in the subject country, it is particular.  
    With respect to the request from some commenters that Commerce provide further analysis in 
its regulations or preamble as to the amount of  impact which Commerce would consider sufficient 
to make a market situation "sufficiently particular," we have determined that such an analysis is a 
decision best left to be addressed on a case -by-case basis. There are many different types of market 
situat ions, as shown by the examples set forth in Sec.  351.415(g), and the delineation between 
"certain parties and products" and "the general population of parties and products in the subject 
country" would be one best left to the facts on the case before Comm erce. Accordingly, we will not 
include any further direction, at this time, in the regulation.  
    xi. Commerce's authority to determine the appropriate adjustment to apply, as set forth in 
Sec.  351.416(f), is lawful.  
    As explained above, Commerce revi sed Sec.  351.416(f) as presented in the Proposed Rule in 
several ways. The provision now clarifies that when the Secretary is unable to precisely quantify the 
distortions to the cost of production of subject merchandise to which the PMS contributed, the 
methodology used by Commerce to determine an appropriate adjustment will be based on record 
information. We have also added a provision which states that Commerce may determine that an 
adjustment is not appropriate even if it does find the existence of a PM S if certain circumstances 
exist, with examples of such circumstances listed. These changes were all made to the paragraph in 
response to comments we received on the Proposed Rule.  
    There were additional comments on the provision from the public, and su ggestions which, after 
consideration, we determined not to incorporate into the regulation. All commenters agreed that if 
the information on the record provided a means of precisely quantifying the distortion to costs, then 
an adjustment based on that quan tification was required. However, at that point there was 
disagreement. Some commenters stated that if the distortion to costs cannot be quantified precisely, 
then Commerce does not have the authority to make an adjustment. Other commenters suggested 
that Commerce must still find a means to quantify the distortion in some way based on record 
evidence if it cannot quantify the distortions precisely. A third set of commenters supported 
Commerce's proposed regulation and suggested that Commerce should be free to use whatever 
information on the record it believes appropriate to make an adjustment, consistent with the 
language of section 773(e) of the Act, which states that Commerce may use "any other calculation 
methodology" once a cost -based PMS is determined t o exist. \142\ That third set of commenters 
suggested that whatever methodology Commerce determined to use in a given case should be 
fact- and case -specific, and tied to the nature of the product at issue and the availability of 
information.  
--------------- -----------------------------------------------------------------------------------------------  
    \142\ These commenters suggested that such an analysis is consistent with the Federal Circuit's 
opinion in NEXTEEL, which stated nothing in the statute requ ires Commerce to precisely quantify 
the distortion caused by a PMS in order to make an affirmative PMS finding. See NEXTEEL, 28 F.4th 
at 1234.  
--------------------------------------------------------------------------------------------------------------  
    For the other two sets of commenters, they pointed out that section 773(b) of the Act requires 
an analysis as to whether sales of subject merchandise are outside the course of trade due to 
distorted costs. They commented that Commerce failed in the Propo sed Rule to address the holdings G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 67 - 
 
  by the CIT and Federal Circuit which held that the statute does not permit Commerce to apply its 
below -cost test to transactions it finds distorted by a PMS, and they requested that either Commerce 
remove paragraph (f) enti rely or address the legislative restrictions and court decisions in the 
provision or the preamble to these regulations.  
    They also suggested that, despite the Federal Circuit's holding in NEXTEEL that Commerce need 
not quantify the cost distortions prec isely in adjusting for a cost -based PMS, Commerce cannot 
adjust its calculations without some determination as to the amount of distortions caused by a 
cost-based PMS and allowance for parties to make arguments in each case to that effect. Otherwise, 
they suggested that any adjustment to Commerce's calculations could not be based on a "reasonable 
methodology."  
    In addition, some commenters expressed concerns that in using the term "reasonable 
methodology," the regulations did not define what methodologie s are "reasonable." Likewise, other 
commenters requested that Commerce define what "calculations" are intended when the regulation 
states that Commerce may adjust its calculations in paragraph (f), again citing CIT and Federal 
Circuit holdings that stand f or the proposition that the statute does not contain a provision which 
allows Commerce to apply a PMS adjustment for purposes of its below -cost test.  
    Another commenter suggested that Commerce should include the term "significant" before the 
word "disto rtions" because Congress only intended for significant cost distortions to be addressed 
by Commerce in its calculations.  
    In addition, other commenters suggested that the regulation should prohibit the application of 
AFA under sections 776(a) and (b) of  the Act in determining an adjustment for a cost -based PMS 
and prohibit the consideration of previous Commerce determinations based on AFA.  
    Finally, those same commenters also suggested that Commerce should prohibit the application of 
an adjustment for  a cost -based PMS based on a subsidy when Commerce has already countervailed 
a subsidy at issue in the companion CVD proceeding to prevent the application of a double remedy.  
    Commerce's Response:  
    The purpose of these regulations is to address Commerce's analysis for determining the existence 
of a PMS. Paragraph (f) addresses the fact that Commerce has the authority to adjust its calculations 
once it determines the existence of a cost -based PMS.  As several commenters pointed out, we are 
restricted by the Act and the courts' interpretation of the Act from making certain adjustments to 
our calculations.  
 
[[Page 20808]]  
 
We are also aware, as some other commenters have noted, that recently legislati on has been 
proposed to Congress to remove those restrictions. Accordingly, we have decided not to codify with 
any specificity the adjustments Commerce may or may not make in its calculations in paragraph  (f), 
and instead have drafted the regulation using general terminology which may apply if the status of 
the adjustments Commerce can make to its calculations remains the same or changes. We will 
therefore not define the terms "reasonable methodology" or "calculations" in the regulation, but we 
do recognize  that at the time these regulations are issued, Commerce is unable to adjust for a 
cost-based PMS determination when performing the sales -below -cost test, pursuant to 
section  773(b)(1) of the Act.  
    Likewise, we will not add the term "significant" before  the term "distortion in the cost of materials 
and fabrication or other processing," or any other use of the term "distortion" in paragraph  (f) 
because the Act does not require such a restriction and we believe that such a restriction would 
unreasonably li mit Commerce's authority to determine to adjust, or not adjust, its calculations as it 
finds appropriate, on a case -by-case basis. There may be one proceeding in which Commerce finds 
that a PMS contributed to one distortion in costs, while in another proce eding it finds that the PMS 
contributed to several different cost distortions. The addition of the word "significant" to the term 
would require Commerce to determine if a single or combination of distortions met a standard of 
significance before it could m ake an adjustment to its calculations in every case. We will not include 
such an additional requirement in the regulation. Notably, we have already limited our cost -based 
PMS analysis to "significant" inputs into the production of subject merchandise or th e subject 
merchandise itself; therefore, we see no reason to further limit our analysis in paragraph  (f) in the 
manner suggested by the commenter.  
    In response to the request from certain commenters that the regulation should impose an 
across -the-board prohibition on the use of AFA under sections 776(a) and (b) of the Act in 
determining an adjustment for a cost -based PMS or prohibit the consideration of previous Commerce 
determinations based on AFA in making an adjustment, we do not believe such regulato ry 
prohibitions would be appropriate. The appropriateness of the use of AFA is determined on a 
case-by-case basis. For example, it is possible that in a given investigation or review, Commerce G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  might determine that a single respondent benefited from a cost -based PMS. If Commerce requested 
information from the respondent pertaining to the PMS allegation in the conduct of the proceeding, 
and the respondent failed to act to the best of its ability in providing the necessary information, then 
the application of AFA under sections 776(a) and (b) in selecting from possible adjustments to its 
calculations would be warranted. An across -the-board prohibition on the use of AFA or previous 
agency determinations based on AFA would unreasonably prevent such an application  in that case. 
Accordingly, we have not incorporated the suggested prohibitions into paragraph  (j) of 
Sec.  351.416.  
    With respect to commenters who suggested that Commerce should prohibit the application of an 
adjustment for a cost -based PMS based on t he existence of a subsidy in an AD proceeding when 
Commerce has already countervailed that subsidy in a companion CVD proceeding to prevent the 
application of a double remedy in the regulation, we disagree that such a regulatory restriction is 
necessary or  warranted. The AD and CVD laws are separate regimes that provide separate remedies 
for certain unfair trade practices and in proceedings in which Commerce has been faced with such 
an argument, Commerce found that neither the Act nor the record evidence su pported an 
"adjustment of the AD remedy to account for a putative overlap with the CVD remedy." \143\ In 
other words, Commerce concluded that the existence of the CVD remedy was not grounds to 
reconsider or adjust the PMS remedy in a companion dumping inve stigation. Additionally, when that 
determination was appealed to the Federal Circuit, the court upheld Commerce's determination that 
the record did not support a finding that a double remedy resulted when the same government 
action countervailed in a CVD p roceeding was also the basis of a cost -based PMS finding and 
adjustment in the companion AD proceeding. \144\ Accordingly, no addition of such an 
all-encompassing prohibition to paragraph (f) is warranted.  
--------------------------------------------------- -----------------------------------------------------------  
    \143\ See Final Results of Redetermination Pursuant to Court Remand, Vicentin S.A.I.C. et al. v. 
United States, Consol. Court No. 18 -00111, Slip Op. 20 -91 (CIT July 1, 2020), dated 
November  12, 2020, at 5 -6, available at https://access.trade.gov/resources/remands/20 -91.pdf . 
    \144\ See Vicentin S.A.I.C. et al. vs. United States, 42 F.4th 1372 , 1381 (Fed. Cir. 2022) (Vicentin 
S.A.I.C.) ("{the PMS adjustment} resulted in an adequate remedy for dumping, which is not 
duplicative of the countervailing duty remedy.").  
---------------------------------------------------------------------------------- ----------------------------  
    Lastly, in response to the suggestion that Commerce cannot make an adjustment to its 
calculations without some quantification of the distortion of costs, we note that the purpose of 
Commerce's adjustment is to address the o bserved cost distortions. Accordingly, in general, 
Commerce's selected methodology will attempt to estimate the amount of distortions in the cost of 
production of the subject merchandise pursuant to that exercise. As noted above, we have modified 
the langu age of the regulation to reflect that when Commerce uses a reasonable methodology to 
determine an appropriate adjustment to its calculations, that methodology will be based on record 
information. We have not defined what adjustments Commerce may make to ad dress those cost 
distortions. Whatever methodology Commerce employs to determine the appropriate adjustment 
(e.g., Commerce might determine at time it is appropriate to replace a distorted value on the record 
with a market -determined value, while other tim es Commerce might determine it appropriate to 
adjust the reported costs with an amount to offset the cost distortions) will be case -specific and 
depend on the facts on the record and what information is provided to Commerce for purposes of 
making an adjust ment. Thus, we have determined it would not be appropriate to set forth standards 
for quantifying the cost distortions and determining an appropriate adjustment to its calculations in 
all cost -based PMS determinations in the final regulation.  
    xii. The examples set forth in Sec.  351.416(g) help clarify the types of actions and inactions 
Commerce may determine to be a PMS.  
    Several commenters expressed strong support for Commerce's decision to include examples of 
government or nongovernment actions th at may be found to be a cost -based PMS in paragraph  (g) 
of the regulation. They stated that such examples will help inform both Commerce employees and 
parties outside of Commerce as to the circumstances or set of circumstances which sometimes 
distort costs  of production of subject merchandise and inputs into subject merchandise.  
    One commenter requested that Commerce emphasize that the list is not comprehensive, and that 
there are many more circumstances beyond the 12 examples that might be determined to  be a 
cost-based PMS.  
    Other commenters provided multiple examples in which the circumstances listed in 
paragraphs  (g)(1) through (12) might not distort costs and, therefore, would not always be 
determined to be  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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[[Page 20809]]  
 
cost-based particular market situations. One commenter suggested in one example that producers 
might respond to government export restrictions by cutting production or input producers might 
simply pocket rebates and, in both cases, the result would be no changes in p rices or costs  of 
production.  
    Some of those commenters expressed concerns that including the 12 examples might confuse 
the public into thinking these circumstances will always be, de facto, a cost -based PMS and they 
suggested that Commerce should remov e the examples altogether. Other commenters did not 
suggest the removal of the examples, but instead, requested that Commerce emphasize that these 
are just examples and that two similar fact patterns can have very different impacts on the cost of 
productio n, depending on facts specific to the record before the agency in a specific proceeding.  
    For paragraph (g)(1), some commenters opposed the focus on "global" overcapacity --stating that 
mere "overcapacity" should be sufficient for that example, global or  otherwise. Others suggested 
that any situation which is "global" in effect would not be particular and, therefore, could not be a 
PMS. Still, others did not question that Commerce has the authority to address global overcapacity 
in its regulations, but ra ther suggested that such an analysis could lead to legal disputes and trade 
tensions with other global partners. Those commenters requested that Commerce remove that 
example from the proposed regulation for diplomatic purposes.  
    For paragraph (g)(2), ce rtain commenters suggested that government ownership does not always 
lead to distorted costs, while another commenter agreed with Commerce that direct and indirect 
actions pertaining to inputs, particularly actions or inactions by the government, can have significant 
impacts on the overall distortion of costs of production.  
    For paragraphs (g)(4) and (5), two commenters suggested that government intervention and 
export restrictions do not always cause distortions, and they requested that Commerce emphasi ze 
in those examples that Commerce must also find that costs of production were  distorted before 
finding the existence of a PMS.  
    For paragraph (g)(8), one commenter expressed its support for that example, highlighting that 
financial assistance takes di fferent forms (e.g., tax incentives, such as rebates and exemptions). 
Another commenter suggested that, despite the legislative history of the below -cost PMS provision 
in the Act, Commerce should not address government subsidies through the dumping law in a PMS 
determination, but instead should address such concerns solely in a CVD proceeding. Still other 
commenters suggested that government assistance is irrelevant in calculating costs of production, 
but notwithstanding if there is already a CVD companion order countervailing the subsidy at issue, 
Commerce may not find a cost -based PMS if it results in the application of a remedy twice for the 
same action, which is impermissible under U.S. WTO obligations and U.S. law.  
    With respect to paragraph (g)(9), one commenter voiced its strong endorsement for a finding 
that government actions which otherwise influence the production of subject merchandise or 
significant inputs can distort costs of production, such as technology transfer requirements and, 
therefore , be an example of a below -cost PMS. Another commenter, however, expressed concerns 
with the economics behind such an example, because if Commerce is only concerned about 
suppressed prices, then domestic content requirements and technology transfer require ments might 
actually artificially raise prices and costs rather than diminish them. That commenter suggested that 
because Commerce's assumption that the government actions listed in this example only distorts 
costs downward is flawed, paragraph (g)(9) shou ld be removed as an example.  
    With respect to paragraphs (g)(10) and (11), certain commenters expressed their support for 
Commerce's acknowledgement that weak, ineffective, or nonexistent property (including intellectual 
property), human rights, labor, and environmental protections  could impact costs of production and 
could warrant an adjustment to Commerce's AD calculations. Others, however, critiqued the 
regulations for providing no guidance on how Commerce intends to address such allegations, what 
sources it intends to use in det ermining if protections are weak or ineffective, and how a respondent 
with no control over such government policies could respond to questionnaires on the issue. As noted 
above, still others expressed concerns that these provisions were in violation of Uni ted States' 
international obligations and unfairly "punished" governments for administering their laws in a 
different manner than the United States.  
    For paragraph (g)(12), one party requested that Commerce define the term "strategic alliance," 
while an other suggested that adjusting cost calculations based on prices derived from private 
company arrangements was illogical because sometimes such arrangements increase rather than 
decrease the costs of production and, if the companies are affiliated, the Act  already addresses 
distorted prices and costs through the transactions disregarded and major input rules in 
sections  773(f)(2) and (3) of the Act.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      Lastly, one commenter asked Commerce to consider that strategic alliances do not require joint 
ownership,  familial grouping, or formal agreements to exist to distort costs. Therefore, this 
commenter reasoned, Commerce should acknowledge that it will not disregard relationships in which 
these circumstances may not be formally recognized or named.  
    Commerce' s Response:  
    Commerce agrees with every commenter that emphasized that the examples in Sec.  351.416(g) 
are just illustrative and that the list is not comprehensive (i.e., exhaustive). As multiple commenters 
argue, governmental and nongovernmental actio ns and inactions frequently do not contribute to the 
distortion of costs of production; thus, depending on the facts in an individual case, the described 
example simply may not be a cost -based PMS. That is made clear by the actual text of each example, 
but because many commenters expressed concerns about that fact, we are emphasizing in the 
preamble that these are just examples, dependent on the facts of each case. Nonetheless, 
Commerce also believes that listing examples provides a better illustration of c ost-based particular 
market situations than just a definition or test. It certainly provides more guidance than not having 
examples at all, as suggested by one commenter. Accordingly, we have retained each example in 
the final regulation.  
    With respect to comments on the individual examples which are not focused on case -specific 
distortions, Commerce responds as follows.  
     Commerce has retained the use of the term "global" before "overcapacity" in paragraph  (g)(1) 
because that is the intended example and one which Commerce has observed and addressed in past 
proceedings. \145\ Commerce disagrees that it does not have the authority to address distortions 
caused by global overcapacity in the subject country, and Commerce does not believe the potential 
effects of addressing global overcapacity on other  
 
[[Page 20810]]  
 
trading partners is relevant for purposes of the trade remedy laws.  
--------------------------------------------------------------------------------------------------------------  
    \145\ See Circular Welded Carbon Steel Standard Pipe and Tube Products from Turkey: Amended 
Final Results of Antidumping Duty Administrative Review; 2020 -2021, 88 FR 2606 
(January  1, 2023), and accompanying IDM at Comment 1.  
---------------------------------------- ----------------------------------------------------------------------  
     In response to the comments on paragraph (g)(8), Commerce agrees that government financial 
assistance can take many forms, but disagrees that it cannot address subsidies through a cost-based 
PMS for the reasons explained above and in the Proposed Rule. \146\ We emphasize that financial 
assistance does not always mean that a subsidy is countervailable, but it may still have an impact 
on costs of production and, therefore, warrant a co st-based PMS determination. Further, as 
explained above, even if Commerce has countervailed a subsidy in a companion CVD investigation 
or review, that does not mean that the application of a cost -based PMS adjustment results in a 
double remedy. In fact, ag ency experience has shown that it does not. \147\ 
--------------------------------------------------------------------------------------------------------------  
    \146\ See Proposed Rule, 88 FR 29864 -65. 
    \147\ See Vicentin S.A.I.C., 42 F.4th at 1377; see also Urea Ammonium Nitrate Solutions from 
the Republic of Trinidad and Tobago: Final Affirmative Determination of Sales at Less than Fair Value, 
87 FR 37824 (June 24, 2022), and accompanying IDM at Comment 1.  
------------------------------------------- -------------------------------------------------------------------  
     With respect to the comments on paragraph (g)(9), Commerce does not disagree that 
government actions which otherwise influence the production of subject merchandise may 
sometimes dist ort prices and costs downward, while other times, they may actually distort prices 
and costs upward. In either case, such actions have a distortive impact on costs of production. The 
existence of costs of production which are not in the ordinary course of trade is a different issue 
from whether Commerce should make an adjustment to its calculations in response to those 
distortions under Sec.  351.416(f). Commerce has retained this example in paragraph (g), however, 
as addressed above, Commerce has modified the example to address only three articulated 
circumstances which may impact prices and costs.  
     In response to the comments on paragraphs (g)(10) and (11), for the reasons provided above, 
Commerce has determined that it has the authority to address wea k, ineffective, and nonexistent 
protections that distort costs of production, and Commerce does not believe that it would be G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 71 - 
 
  appropriate at this time to set forth standards and tests to address hypothetical scenarios in the 
regulation. Such analyses and de terminations will be fact -specific and addressed by Commerce on 
a case -by-case basis. Furthermore, as Commerce is only analyzing factors which distort costs of 
production, such an analysis is in no way a violation of the United States' WTO obligations.  
     Finally, with respect to paragraph (g)(12), Commerce has revised the language to explain that 
the provision applies to nongovernmental entities that, for example, form business relationships 
between producers of subject merchandise and suppliers of signi ficant inputs to the production of 
subject merchandise, including mutually -beneficial strategic alliances or noncompetitive 
arrangements, that result in distortive prices and costs. This language adequately describes the 
business relationships at issue in this example, and an additional definition of strategic alliances is 
not necessary in the regulation, as requested by one commenter. Furthermore, as the transactions 
disregarded rule and major input rule of sections 773(f)(2) and (3) of the Act apply only in 
circumstances involving affiliated entities, Commerce disagrees with the commenter that expressed 
concerns that those provisions undermine the viability of this example. As set forth in 
Sec.  351.416(f)(3)(i), Commerce may determine not to apply an adju stment if it determines that 
either of these provisions has sufficiently addressed the cost distortions caused by a PMS, but the 
fact that a PMS has contributed to the distortion of costs of production is a different issue than 
whether or not Commerce shou ld make an adjustment to its calculations. Likewise, some 
nongovernmental entity actions may distort costs of production upward while others might suppress 
prices and costs downward, but in either case the fact that a PMS exists that distorted costs of 
production during the period of investigation or review is not at issue. Again, whether Commerce 
determines to adjust its calculations under Sec.   351.416(f)(3) is a different issue from whether or 
not a cost -based PMS exists in the first place.  
    xiii. Cos t-based particular market situations may contribute to a sales -based PMS, as set forth in 
Sec.  351.416(h).  
    Several commenters expressed support for the inclusion of Sec.  351.416(h). Certain commenters 
suggested, however, that Commerce should modify t he language of Sec.  351.416(h) from "may 
consider" to "will consider" to require Commerce to always consider if a cost -based PMS contributes 
to a sales -based PMS. Those commenters suggested that because Commerce did not explain under 
what scenarios it wou ld consider such a relationship to exist in the proposed regulation, it either 
must make such a consideration mandatory in every case it finds the existence of a cost -based PMS 
or set forth further guidance as to how it will determine a possible linkage be tween the two market 
situations. Another commenter likewise suggested that Commerce should revise its regulation to 
make clear that it will thoroughly review record information in every case in which it finds the 
existence of a cost -based PMS to determine if improper comparisons between home market or 
third-country market prices and export prices or constructed export prices exist, in part, because of 
the cost distortions caused by the cost -based PMS. In addition, still other commenters requested 
that Comme rce issue further guidance on the standards it would use to conduct an analysis under 
this provision, including the burden on the party alleging a connection between a cost -based PMS 
and a sales -based PMS.  
    In addition, certain other commenters expresse d concerns that paragraph (h) is inconsistent with 
the Act. They pointed out that as recently as 2020, Commerce agreed, stating its position that "there 
is no statutory basis for Commerce to find a price -based PMS using the same data as Commerce 
used to fi nd a cost -based PMS," \148\ and suggested that the proposed regulatory provision stands 
for the "exact" opposite interpretation. Other commenters suggested further that a cost -based PMS 
that impacts a physical input consumed identically for the production of domestic and export sales 
cannot generate a divergence that would frustrate a price -to-price comparison. In support of this 
conclusion, they cited the aforementioned Federal Circuit decision, Hyundai Steel Co., in which the 
court held that a PMS "that a ffects costs of production would presumably affect prices for domestic 
sales and export sales, so there would be no reason to adjust only for home market prices." \149\ 
Both sets of commenters therefore suggested that Commerce remove this provision from th e 
regulation.  
--------------------------------------------------------------------------------------------------------------  
    \148\ See Certain Cold -Rolled and Steel Flat Products from the Republic of Korea: Final Results 
of Antidumping Duty Administrat ive Review, 2017 -2018, 85 FR 41995 (July 13, 2020) (Cold -Rolled 
Steel from Korea), and accompanying IDM at Comment 1.  
    \149\ See Hyundai, Steel Co., 19 F.4th at 1355, n. 11 (citing Husteel Co. v. United States, 426 
F. Supp. 3d 1376, 1388 (CIT 2020)).  
--------------------------------------------------------------------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      Commerce's Response:  
    Commerce made no revisions to Sec.  351.416(h) in response to these comments. First, 
Commerce disagrees with the com menters that portrayed this as the "exact" same scenario which 
Commerce was addressing in Cold -Rolled Steel from Korea. Section  
 
[[Page 20811]]  
 
351.416(h) states that after Commerce determines the existence of a cost -based PMS, it may 
determine, based on record information, whether that PMS also contributed to a sales -based PMS. 
It does not say that it will be the only factor contributing to a sales -based PMS, or that Commerce 
will make its sales -based PMS determination using only the "same data" as it used to determine the 
existence of a cost -based PMS. Furthermore, Commerce does not disagree with the Federal Circuit 
in its logic that in many cases, if a market situation distorts costs in the home market, it may, under 
certain facts, equally disto rt prices for export sales and constructed export sales. For these reasons, 
Commerce has not issued a provision that states that a cost -based PMS always results in a 
sales-based PMS.  
    Instead, Sec.  351.416(h) suggests that a cost -based PMS may, under c ertain facts, contribute 
to a circumstance or set of circumstances that prevents or prohibits a proper comparison of home 
market or third market sales to export or constructed export sales. Commerce knows of no statutory 
restriction that prevents Commerce from considering distorted costs of production as a factor, 
amongst others, that may inhibit comparisons between sales in different markets. However, 
Commerce also believes that such a determination would be case -specific and may be highly 
dependent on oth er factors also contributing to a sales -based PMS. Accordingly, Commerce does not 
believe it would be appropriate to incorporate standards or guidance to hypothetical scenarios in the 
regulation.  
    Likewise, we will not revise the "may consider" language  in the regulation to "will consider," as 
requested by certain commenters. Because, as Commerce has explained, the link between a 
cost-based PMS and sales -based PMS would be highly dependent on the facts of a case, Commerce 
believes that it would be a misu se of agency resources to conduct such an analysis every time 
Commerce determines the existence of a cost -based PMS. Instead, the provision allows for 
Commerce to conduct such an analysis when an interested party makes a sales -based PMS 
allegation, or if C ommerce determines based on the facts before it in an investigation or 
administrative review that such an analysis is warranted. We have determined that making the 
analysis possible, but not mandatory, is the appropriate standard to apply in the regulation . 
    Finally, with respect to the standard which a party alleging a cost -based PMS has contributed to 
a sales -based PMS must meet, Commerce believes it is the same standard as set forth in 
Sec.  351.416(b). The alleging party must submit a timely allegati on supported by relevant 
information reasonably available to it in support of the allegation. We see no reason why the standard 
should be different for an allegation of a sales -based PMS with a cost -based PMS contribution, from 
that of an allegation of a s ales-based PMS without a cost -based PMS contribution.  
    xiv. Other comments pertaining to Sec.  351.416.  
    a. Commerce will not align the deadlines for filing sales -based and cost -based PMS allegations.  
    Several commenters suggested that Commerce sh ould align the deadline for alleging a 
sales-based PMS with the deadline for alleging a cost -based PMS, claiming that it would be easier to 
allege that a cost -based PMS has contributed to a sales -based PMS if both deadlines are set 20 days 
after a responde nt submits its complete response to the original questionnaire. One commenter 
requested that Commerce consider moving that deadline to 50 days after a respondent has 
submitted its questionnaire response, to allow parties time to analyze respondents' questi onnaire 
responses fully and determine if a PMS exists.  
    Commerce's Response:  
    Commerce did not modify its deadlines in the Proposed Rule and will not modify its regulations to 
do so in the final regulation. Commerce currently has the flexibility to s et such deadlines without the 
restriction of a regulation and there are resource -related and administrative reasons for which 
Commerce has been reluctant to modify these deadlines in the past. Accordingly, because we wish 
to retain the flexibility to set s uch deadlines as necessary, there will be no alignment of sales -based 
PMS and cost -based PMS allegation deadlines in the final regulation.  
    b. Commerce will not eliminate its application of a non -market economy analysis under 
section  773(c) of the Act, nor will it apply its PMS analysis only to non -market economies.  
    One commenter proposed that Commerce eliminate its application of a non -market economy 
analysis and instead apply a cost -based PMS analysis on a case -by-case basis to government actions 
it determines are distorting costs of production for all countries. That commenter suggested that G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 73 - 
 
  such an application of the cost -based PMS provision would ensure fairer treatment for all types of 
economies in comparison to its non -market economy methodolog y. 
    Another commenter suggested that, rather than apply its cost -based PMS analysis to all market 
economies, Commerce should only apply the cost -based PMS analysis to those countries which it 
determines are non -market economies.  
    Commerce's Response:  
    Commerce finds no rationale to cease its application of the non -market economy analysis set 
forth in section 773(c) of the Act, and no reason that it should instead apply its cost -based PMS 
analysis only to non -market economies. Accordingly, we will n ot incorporate either of these 
suggestions into the regulation.  
    c. This regulation will increase transparency and accuracy in both of Commerce's PMS analyses.  
    One commenter expressed concerns that Commerce's PMS regulations might prove an obstacle 
to transparency and due process, as well as reduce the accuracy of its AD decisions.  
    Commerce's Response:  
    We disagree that by setting forth in Sec.  351.416 Commerce's analysis for determining if a 
sales-based PMS and cost -based PMS exists, the reg ulation is creating an obstacle to transparency 
and due process. In fact, it is the opposite. Commerce has issued extensive proposed regulations 
and considered and addressed numerous comments on those regulations to clarify and provide 
transparency as to i ts market situation determinations. As a result of this regulation, Commerce's 
policies and considerations in determining the existence of a PMS are now expressed in greater detail 
and available for wider public consideration and understanding than at any time in the agency's 
history.  
    Furthermore, we disagree that this regulation in any way reduces the accuracy of our AD 
determinations and decisions. Instead, by addressing, in detail, market situations that prevent or 
prohibit a proper comparison of hom e market and third market sales with export and constructed 
export sales and governmental and nongovernmental actions and inactions that contribute to the 
distortion of costs of production, Sec.  351.416 increases, rather than decreases, Commerce's ability  
to accurately calculate AD margins in its investigations and administrative reviews.  
    8. Commerce has made no changes to the proposed amendment to the CVD benefit regulation --
Sec.  351.503.  
    In the Proposed Rule, Commerce indicated that it was revis ing Sec. 351.503 to divide existing 
paragraph (c) into two parts. The first part reflects the existing language, with an additional 
explanation that Commerce is not  
 
[[Page 20812]]  
 
required to consider whether there has been any change in a firm's behavior because of a 
subsidy. \150\ The second part states that when the government provides assistance to a firm to 
comply with certain government regulations, requirements, or obligations, Commerce will normally 
only measure the benefit of the subsidy (i .e., the government assistance) and will not be required 
to also consider the cost to comply with those regulations, requirements or obligations. \151\ These 
modifications to the benefit regulation were intended to codify Commerce's existing practices and 
policies.  
--------------------------------------------------------------------------------------------------------------  
    \150\ See Proposed Rule, 88 FR 29867.  
    \151\ See id.  
---------------------------------------------------------------------------- ----------------------------------  
    Commerce received comments on these proposed changes to its benefit regulation, and based on 
some of the comments, it was evident that not every submitter was aware of Commerce's 
long-standing practices in this area o f CVD law. On this basis alone we therefore believe that these 
additions to the regulation will provide greater transparency to the public.  
    In sum, Commerce received comments from nine parties on the proposed amendments in 
Sec.  351.503(c). Of those, s ix of the commenters supported the amended language within 
Sec.  351.503(c). Of the remaining three commenters, two stated that Commerce failed to provide 
sufficient clarity on defining the terms "cost in complying" and "government -imposed regulation, or 
obligation."  
    The new Sec.  351.503(c)(2) states that when a government provides assistance to a firm to 
comply with a government regulation, requirement, or obligation, the Secretary, in measuring the 
benefit from the subsidy, will not consider whether the firm incurred a "cost in complying with the 
government -imposed regulation, requirement, or obligation."  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 74 - 
 
      In addition, one of the commenters stated that, contrary to what the proposed regulation seems 
to suggest, Commerce cannot determine that a coun tervailable subsidy exists or the amount, if any, 
of a benefit conferred by focusing exclusively on what the government has provided. This commenter 
suggested that the Act and the regulations require Commerce to determine the type of financial 
contribution  at issue, and the benefit corresponding to that type of financial contribution, by 
recognizing what, if anything, the foreign manufacturer provided in return. For example, this 
commenter explained that when a government transfers funds to a foreign produc er, Commerce 
cannot presume, looking exclusively at the funds transferred, that a grant has been provided. 
Instead, the commenter explained that Commerce must determine whether the funds constitute a 
loan, an equity infusion, a purchase of goods, or a purc hase of services. The differences in these 
types of financial contributions depend on what, if anything, the foreign producer provides in return. 
For example, a direct transfer of funds would be a loan and not a grant if the foreign producer were 
to provid e payments of principal or interest in return to the foreign government. Accordingly, this 
commenter expressed concerns with the language of Sec.  351.503(c)(2), which it commented 
appears to suggest that Commerce will only consider the government's action s, and not the actions 
of the subsidy recipient, in determining a benefit.  
    Another party expressed concerns that Sec.  351.503(c)(2) is inconsistent with section 771(6) of 
the Act, which the commenter stated requires Commerce to subtract from the gross  countervailable 
subsidy received "any application fee, deposit, or similar payment paid in order to qualify for, or to 
receive, the benefit of the countervailable subsidy."  
    That same commenter also stated that the new Sec.  351.503(c)(2) is also incon sistent with 
section  771(5)(E)(iv) of the Act. Section 771(5)(E)(iv) of the Act states that when the government 
provides a good or service, Commerce will determine whether a benefit is provided by examining 
whether the price paid by the recipient for the g overnment good or service was for "adequate 
remuneration." The Act provides that the adequacy of remuneration will be based on "prevailing 
market conditions" that include "price, quality, availability, marketability, transportation, and other 
conditions of  purchase or sale." Therefore, this commenter suggested that section 771(5)(E)(iv) of 
the Act requires that Commerce account for the full costs associated with respondent's eligibility and 
receipt of a countervailable subsidy, while the changes to the regu lation appeared to reject full 
consideration of all those associated costs.  
    Another commenter expressed concerns that Sec.  351.503(c)(2) was overly broad and in conflict 
with the plain language of the statute and provided an example to support its com ment. This 
commenter hypothesized a situation in which a foreign producer purchased land from the 
government for the development of its manufacturing facility and the land purchase agreement 
required the producer, as a condition of the land sale, to upgrad e a public road for a neighboring 
community as a public service that otherwise would be undertaken by the government. This 
commenter suggested that under that proposed situation, Commerce's regulation would ignore 
important information as part of its analy sis. 
    Lastly, one commenter stated that specifically in the context of environmental subsidies, 
Commerce's proposed across the board refusal to consider compliance costs conflicts with the Biden 
Administration's support for the renewable energy and clim ate change reduction programs. The 
commenter raised its concern that Commerce's proposed regulation is especially problematic with 
regards to compliance costs associated with environmental standards. For instance, a government 
may regulate the carbon emiss ion standards of a foreign producer. That foreign producer may face 
significant costs in meeting the government's emission standards that may otherwise outweigh any 
benefit that the government would offer the foreign producer in return for meeting these st andards. 
Nevertheless, under the proposed regulation, Commerce would disregard foreign producers' 
resources expended even where the overall program conferred no measurable benefit for the foreign 
producer. This commenter requested that Commerce must not ad opt a regulation that would confer 
a benefit when no such benefit exists. It commented that this is not the appropriate time for 
Commerce to amend its existing regulations to clarify that compliance costs with a government 
program (e.g., an incentive progr am relating renewable energy) cannot be considered as an offset 
and instead essentially treat these compliance costs as a grant.  
    Commerce's Response:  
    In response to the commenters who stated that Commerce has not provided an adequate 
explanation of  the terms "cost in complying with the government -imposed regulation, requirement, 
or obligation," we note that in the Proposed Rule, Commerce explained that much of the agency's 
interpretation of the Act and examples were originally set forth in the CVD P reamble. \152\ 
--------------------------------------------------------------------------------------------------------------  
    \152\ See Proposed Rule, 88 FR 29867 (citing Countervailing Duties: Final Rule, 63 FR 65348, 
65361 (November 25, 1998) (CVD Pre amble)).  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  --------------------------------------------------------------------------------------------------------------  
    However, given the comments from these two commenters, Commerce has concluded that it 
would be prudent to repeat the discussion and explanation of compliance costs and a 
government -imposed mandate. Commerce believes  
 
[[Page 20813]]  
 
that this explanation will not only provide a sufficient understanding of these concepts to interested 
parties but also provides a fuller explanation as to  why Commerce has adopted this practice for at 
least the last 25 years.  
    To begin, a determination of whether a benefit is conferred is completely separate and distinct 
from an examination of the "effect" of a subsidy. In other words, a determination of  whether a firm's 
costs have been reduced or revenues have been enhanced bears no relation to the effect of those 
cost reductions or revenue enhancements on the firm's subsequent performance (e.g., its prices or 
output). In analyzing whether a benefit exis ts, Commerce is concerned with what goes into a 
company, such as enhanced revenues and reduced -cost inputs. Commerce is not concerned as much 
with what the company actually does with the subsidy. The agency's emphasis on reduced -cost 
inputs and enhanced re venues is derived from elements contained in the examples of benefits in 
section 771(5)(E) of the Act and in Article 14 of the SCM Agreement. In contrast, the effect of 
government actions on a firm's subsequent performance, such as its prices or output, ca nnot be 
derived from any elements common to the examples in section 771(5)(E) of the Act or Article 14 of 
the SCM Agreement.  
    For example, as a hypothetical, imagine a situation in which the government establishes new 
environmental restrictions that require a firm to purchase new equipment to adapt its facilities, and 
that the government also provides the firm with subsidies to purchase that new equipment. Now, 
however, assume that the government's subsidies do not fully offset the total increase in the firm's 
costs (i.e., the net effect of the new environmental requirements and the subsidies leaves the firm 
with costs that ar e higher than they previously were). In this situation, the Act treats the imposition 
of new environmental requirements and the subsidization of compliance with those requirements as 
two separate actions. A subsidy that reduces a firm's cost of compliance remains a subsidy that is 
subject to the Act's remaining tests for countervailability even though the overall effect of the two 
government actions, taken together, may leave the firm with higher costs.  
    As another example, assume a government promulgated safety regulations requiring auto makers 
to install seatbelts in back seats, and then gave the auto makers a subsidy to install the seatbelts, 
but the subsidies did not fully offset the total increase  of the auto maker's costs. Similar to the 
environmental restriction subsidies described above, we would draw the same conclusion from this 
situation. In the two examples, the government action that constitutes the benefit is the subsidy to 
install the equ ipment, because this action represents an input cost reduction. The government action 
represented by the requirement to install the equipment will not be construed as an offset to the 
subsidy provided to reduce the costs of installing the equipment.  
    Thus, if there is a financial contribution and a firm pays less for an input than it otherwise would 
pay in the absence of that financial contribution (or receives revenues beyond the amount it 
otherwise would earn), that is the end of the inquiry insofar as  the benefit element is concerned. 
Commerce need not consider how a firm's behavior is altered when it receives a financial contribution 
that lowers its input costs or increases its revenues.  
    Section 771(5)(C) of the Act explains that the "benefit" and  the "effect" of a subsidy are two 
separate concepts. While there must be a benefit for a subsidy to exist, section 771(5)(C) of the Act 
expressly provides that Commerce "is not required to consider the effect of the subsidy in 
determining whether a subsid y exists." This message is reinforced by the SAA, \153\ which states 
that "the new definition of subsidy does not require that Commerce consider or analyze the effect 
(including whether there is any effect at all) of a government action on the price or outp ut of the 
class or kind of merchandise under investigation or review."  
--------------------------------------------------------------------------------------------------------------  
    \153\ See SAA at 926.  
------------------------------------------------ --------------------------------------------------------------  
    Paragraph (c) of Sec.  351.503 in the current regulation further reinforces this principle by stating 
affirmatively that, in determining whether a benefit is conferred, Commerce is not requ ired to 
consider the effect of the government action on the firm's performance, including its prices or output, 
or how the firm's behavior otherwise is altered.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      With respect to the statement made by one of the commenters that Commerce is required to 
consider what a foreign manufacturer "provided in return" in order to determine the type of financial 
contribution provided, Commerce clarifies that the payment for a government good or service or the 
payment of interest or principal on a loan is not the sam e thing as a "cost of compliance," as set 
forth under Sec.   351.503(c).  
    The methodologies for calculating the benefit for a financial contribution provided in the form of 
a loan or the provision of a good or service are set forth within both the Act an d the current CVD 
regulations. To use one of the examples above, assume a government promulgated safety 
regulations requiring automakers to install seatbelts in back seats and then gave the auto makers a 
subsidy to install the seatbelts. The government sub sidy to the automaker was in the form of a loan. 
While we would not consider and offset the cost of the automaker for the cost and installation of the 
seatbelts in the calculation of the loan benefit, we would still calculate the loan benefit as required 
by the methodology set forth in the Act and in our regulations by taking the difference between what 
the automaker paid on the government loan and the amount of interest the automaker would have 
paid on a comparable loan that it could actually obtain on the  market. The decision by the 
government to provide a subsidy to assist a firm with complying with an existing 
government -imposed regulation, requirement or obligation is a separate and discernible action from 
the action in which the government imposed the regulation, requirement, or obligation. Therefore, 
each of these actions is treated separately under the Act.  
    However, on a more basic level, when a government imposes a regulation, requirement or 
obligation on a party, a government has no further obli gation to provide assistance to a party to 
comply with that regulation, requirement, or obligation. For example, governments normally impose 
an obligation on parties to pay taxes. However, if the government, through an action or government 
obligation, then  exempts, in whole or part, the taxes that a particular party is obligated or required 
to pay, then that exemption is a financial contribution, and if that program is found to be specific 
and provide a benefit, the tax exemption could be determined to be a  countervailable subsidy. In 
other words, just as the tax obligation is separate from the countervailable exemption, so too would 
a government requirement that automobiles carry seatbelts be separate from a government subsidy 
to pay for some of the complia nce costs to install seatbelts in the first place.  
    In response to the comment that Sec.  351.503(c)(2) is inconsistent with section 771(6) of the 
Act, which the commenter stated requires Commerce to subtract from the gross countervailable 
subsidy recei ved "any application fee, deposit, or similar payment paid in order to qualify for, or to 
receive, the benefit of the countervailable subsidy,"  
 
[[Page 20814]]  
 
Commerce must first note that this reading of section 771(6) of the Act is incorrect. Section 7 71(6) 
of the Act explicitly states that "the administering authority may subtract from the gross 
countervailable subsidy" (emphasis added). The statutory use of the word "may" instead of the word 
"shall" or "will" does not establish a requirement but provi des the administering authority with a 
level of discretion with respect to the criteria set forth within section 771(6) of the Act.  
    In addition, the commenter also misunderstands the use of the term "application fee, deposit, or 
similar payment paid." The costs for complying with an imposed obligation or requirement are not 
like an application fee, deposit, or similar payment to receive the benefit of a countervailable subsidy. 
For example, if the government requires that an industrial mill remove harmf ul materials from 
industrial gases before being released into the environment and the mill purchases a scrubber to 
comply with that requirement, then the mill did not make an "application fee, deposit, or similar 
payment" within the meaning of section 771( 6) of the Act. The industrial mill simply paid for a piece 
of capital equipment. That payment was not a cost of receiving a subsidy, it was the simple exchange 
of money for a good.  
    Indeed, the commenter's interpretation of section 771(6) of the Act is inconsistent with how 
subsidies and the costs of compliance operate. Under an interpretation of the Act proposed by the 
commenter, assume that the government imposes a 30 percent income tax on all firms but provides 
high-tech firms with a 50 percent reduct ion in their income taxes. Under the commenter's 
interpretation of section 771(6) of the Act, Commerce would be required to deduct the amount of 
income taxes the firms paid from the amount of the 50 percent income tax subsidy reduction the 
high-tech firms received because the income taxes they were required to pay constitute an 
"application fee, deposit, or similar payment paid" to qualify or receive the benefit from the income 
tax subsidy. Accordingly, the commenter misunderstood section 771(6) of the Act and, 
consequently, the language of the new Sec.  351.503(c)(2) of our regulations.  
    As noted above, this commenter also expressed concerns that the new Sec.  351.503(c)(2) of our 
regulations is inconsistent with section 771(5)(E)(iv) of the Act. Section  771(5)(E)(iv) of the Act G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  states that when the government provides a good or service, Commerce will determine whether a 
benefit is provided by examining whether the price paid by the recipient for the government good 
or service was for "adequate remunerati on." The adequacy of remuneration will be based on 
"prevailing market conditions" that include "price, quality, availability, marketability, transportation, 
and other conditions of purchase or sale." Therefore, the commenter suggested that 
section  71(5)(E )(iv) of the Act requires that Commerce account for the full "costs" associated with 
a respondent's eligibility and receipt of a countervailable subsidy. In putting forth such an 
interpretation, the commenter provided no further support other than a genera l allegation. Further, 
in alleging that Commerce must account for "costs" under that statutory provision, the commenter 
did not note that term "costs" does not actually appear in section 771(5)(E)(iv) of the Act.  
    In response, it is worth pointing out t hat Sec.  351.503(c)(2) refers to "subsidies" and "assistance" 
provided to comply with a government -imposed regulation, requirement, or mandate. Thus, it is 
clear from the language of Sec.  351.503(c)(2) that tax incentives, loans, and grants would fall wi th 
the purview of this new regulation. Under section 771(5)(E) of the Act, the concept of "adequate 
remuneration" and "prevailing market conditions" do not apply to subsidies provided in the form of 
tax incentives, grants, or loans. However, if the subsidy  or assistance at issue within 
Sec. 351.503(c)(2) did take the form of a provision of a good or service, then the benefit calculation 
of the provision of the good or service would certainly be determined based upon the criteria set 
forth under section 771( 5)(E)(iv) of the Act.  
    In addition, as noted above, one commenter expressed concerns that Commerce's modification 
to Sec.  351.503(c) is overly broad and in conflict with the plain language of the Act based on a 
hypothetical situation. Specifically, tha t commenter suggested that if a foreign producer purchased 
land from the government for the development of its manufacturing facility and the land purchase 
agreement required the producer, as a condition of the land sale, to upgrade a public road for a 
neighboring community as a public service that otherwise would be undertaken by the government, 
then under the contract, the producer would be required to build the road and the government would 
be required to reimburse the producer for 80 percent of the road  construction cost. Under that 
hypothetical, the producer would absorb 20 percent of the cost, but the commenter stated that 
under Commerce's proposed regulatory changes, the road building obligation under the land 
purchase agreement could be misconstrued as a "government -imposed mandate," the foreign 
producer's road building cost as a "compliance cost," and the government's reimbursement under 
the contract as "compliance assistance." The commenter expressed concerns that Commerce would 
therefore, under the  revised regulation, misinterpret the contract, misinterpret the condition of sale, 
and incorrectly ignore the respondent's contribution and costs. According to the commenter, 
Commerce would consider only the value of the government's reimbursement as a gr ant when, 
according to the contract, the foreign producer was paying a purchase premium for the land by 
incurring costs in the amount of 20 percent of the construction of a road.  
    Commerce disagrees with the presumed outcome of the commenter's hypotheti cal. Whether a 
government act or program conveys a countervailable subsidy is solely determined under the criteria 
that is set forth under the Act and the CVD regulations, and not under contract law. If a government 
signs a contract to provide a company wi th $200 million to build a manufacturing facility, the fact 
that there is a contract to provide the recipient with a $200 million grant does not allow the 
government grant to fall outside the scope of the CVD law.  
    In addition, these types of hypothetic als demonstrate why such examples may not always be 
helpful in applying a practice or preparing a regulation. Any decision as to the countervailability of a 
government action or program, and the calculation of any benefit conferred by that government 
action, can only be based on a complete set of facts with respect to the provision of government 
assistance. One can make few general observations with respect to this example because it lacks 
several critical facts and details. Assuming the provision of land w as specific (from the example the 
commenter concedes that there is a financial contribution), the analysis of whether there is a benefit 
would be made under section 771(5)(E)(iv) of the Act and Sec.  351.511. However, based on the 
lack of specifics within the example, it would be useless to opine as to how this example would be 
treated under Sec.   351.503(c).  
    Even with respect to the analysis of whether the provision of land was provided for adequate 
remuneration as defined by the statute and CVD regula tions, there are many questions which remain 
outstanding under such a hypothetical as to how the producer's  
 
[[Page 20815]]  
 
absorption of 20 percent of the road construction should be treated. For example, for the provision 
of land to other firms, Commerc e would need to know if the government required that those firms 
pay the full cost to the company to construct the roads at issue. Commerce would also need to know G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  the details as to the criteria listed in the land purchase contracts between the private par ties, and, 
when the land was sold to the producer, and if the government included land that had the sole road 
that connected the neighboring community to other communities in the area. Furthermore, 
Commerce would want to know, as part of its analysis, if a fter construction the producer had sole 
use of that road. Therefore, we disagree that the outcome of this hypothetical scenario can be 
determined under the limited set of facts put forth by the commenter. Furthermore, we disagree 
with the commenter's assum ption that Commerce would "misconstrue" or "misunderstand" anything 
from such a contract on the administrative record because of the language being added to 
Sec.  351.503(c).  
    In response to the commenter's policy comments on environmental subsidies and  the current 
administration's support for renewable energy and climate change reduction programs, any decision 
of whether a government action or program provides a countervailable benefit can only be made 
with respect to the criteria that are set forth wit hin the Act and the CVD regulations. Nowhere in 
Sec.  351.503(c) is Commerce proposing to treat compliance costs as a grant, and we have fully 
described above how compliance costs are treated with respect to our analysis of the benefit 
conferred by the pro vision of a countervailable subsidy. Lastly, we agree with the commenter that 
Commerce's regulations should not confer a benefit when no such benefit exists, and Commerce 
sees nothing in the modifications to Sec.  351.503(c) which would do such a thing.  
    9. Commerce has made certain changes to the proposed amendment to the CVD loan regulation -
-Sec.  351.505.  
    For the regulation pertaining to loans, Commerce has determined to move current 
Sec.  351.505(d) to a new Sec.  351.505(e) and add a new provi sion in paragraph (d) titled 
"Treatment of outstanding loans as grants after three years of no payments of interest or principal." 
While it is rare to encounter this issue, Commerce has concluded that it is important to codify a 
practice and methodology to  address situations where the government has not collected any loan 
payments for a long period of time to promote both clarity and consistency in our administration of 
the CVD law.  
    The revisions to Sec.  351.505(d) address loans upon which there have b een no payments of 
interest and principal over a long period of time. Our current practice is that when we examine these 
types of loans in which there have been no payments of either interest or principal over an extended 
period of time, we treat them as i nterest -free loans. It is evident, however, that if the foreign 
government or a government -owned bank has not collected payments on an outstanding loan after 
a three -year period, the foreign government made a decision to simply not collect loan payments at  
all. Commerce has therefore created this provision to address the scenario if no loan payments have 
been made to the government or a government -owned bank on a loan for three years. Under that 
situation, Commerce will normally treat the outstanding loan a s a grant. To ensure consistency with 
section 771(5)(E)(ii) of the Act, we also are stating that we would not treat this type of loan as a 
grant if the respondent can demonstrate that this nonpayment of interest and principal is consistent 
with the terms o f a comparable commercial loan that it could obtain on the market.  
    We received comments from 11 interested parties with respect to the amendment incorporated 
into Sec.  351.505(d), with six of the parties supporting this new regulation on the treatment  of 
loans. However, one of the parties supporting this new regulation stated that Commerce should 
clarify: (1) that the benefit should include both outstanding principal and any unpaid accrued 
interest; (2) that for loans with a balloon payment of principa l due at the end of term, the 
nonpayment of interest should be sufficient grounds to treat the loan as a grant; and (3) for 
uncreditworthy firms, accrued interest should be calculated using an uncreditworthy benchmark.  
    In addition, Commerce received th e following comments on the proposed change to 
Sec.  351.505(d):  
     One commenter suggested that Commerce should defer to the actual terms of the loan contract 
and that the three -year triggering period does not account for different payment terms that ma y be 
present in the loan contract;  
     A second commenter stated that it was not clear whether the exception regarding whether the 
nonpayment is consistent with the terms of a comparable commercial loan applies to loans made 
under "balloon" payment terms (i.e., loans that do not require payments for an extended period and 
then require larger interest and principal payments once the grace period has expired);  
     A third commenter stated that a loan is a different financial contribution from a grant, as a loan 
requires an obligation of repayment while a grant does not require such an obligation, and a loan is 
usually provided by a bank, whereas grants are usually provided by a government;  
     A fourth commenter expressed concerns that Commerce's proposed c hange shifts the burden to 
a respondent to show that it could obtain a comparable loan, and that such a shift in a burden of 
provision was inappropriate; and  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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       A fifth commenter suggested that that Sec.  351.505(d) is not needed because the existing 
regulations already allow Commerce to decide when a loan may be treated as a grant. \154\ 
--------------------------------------------------------------------------------------------------------------  
    \154\ See Sec.  351.505(d)(2) (allowing Commerce to tre at the loan as a grant if the event upon 
which repayment depends is not a viable contingency); see also Sec.  351.508 (allowing Commerce 
to treat the total of principal and interest as benefits in the case of an assumption or forgiveness of 
a debt).  
------ --------------------------------------------------------------------------------------------------------  
    In addition, some of the commenters stated that the three -year period set forth by 
Sec.  351.505(d) is arbitrary, particularly because in the Unite d States, the statutes of limitation set 
by individual states on debt collection range from three to 15 years for written contracts, with 
six years being the most common threshold.  
    Commerce's Response:  
    In the Proposed Rule, we proposed a three -year period as the triggering time period for treating 
a loan as a grant. \155\ After consideration of the concerns raised by the commenters, we continue 
to believe that a three -year period is the appropriate am ount of time for which nonpayment on the 
outstanding loan can lead to Commerce treating the loan as a grant. Respondents may demonstrate, 
however, that the loan should not be treated as a grant by showing that they could obtain a 
comparable loan with these  terms of nonpayment.  
--------------------------------------------------------------------------------------------------------------  
    \155\ See Proposed Rule, 88 FR 29867.  
--------------------------------------------------------------------------------- -----------------------------  
    As noted above, one of the parties stated that Commerce should clarify that the benefit should 
include both outstanding principal and any unpaid accrued interest. We agree that it is the normal 
practice of Commerce to incl ude both the amount of principal and any accrued, unpaid interest that 
would have been paid when a government forgives or assumes a firm's debt when that debt 
obligation was provided in the  
 
[[Page 20816]]  
 
form of a loan. \156\ However, with respect to the  situation addressed under Sec.  351.505(d), there 
has not been a formal case of debt assumption or forgiveness. In such a situation, the government, 
for whatever reason, has simply stopped collecting payments on the outstanding loan. In a prior 
period of review in which that loan was outstanding, we may have already treated the nonpayment 
on the loan as an interest -free loan, and thus, calculated a benefit based on the amount of interest 
paid on the loan (i.e., zero) and the amount of interest that would h ave been paid on a loan from a 
commercial bank. Therefore, in those instances, Commerce determines that it would be 
inappropriate to treat accrued, unpaid interest as a grant because we had already calculated a 
countervailable benefit to account for that u npaid interest. Because whether to include any accrued, 
unpaid interest in the benefit calculation will be dependent on case -specific facts, we have not 
included that suggested provision within Sec.  351.505(d). Instead, the decision of whether to 
include any accrued, unpaid interest in the benefit calculation will be made on a case -by-case basis. 
If there is a determination that the firm was uncreditworthy at the time the relevant 
government -provided loan was made, we agree with that commenter that any acc rued interest that 
is to be treated within our benefit determination will be calculated using an uncreditworthy 
benchmark as set forth within Sec.  351.505.  
--------------------------------------------------------------------------------------------------- -----------  
    \156\ See Sec.  351.505(a).  
--------------------------------------------------------------------------------------------------------------  
    That same commenter also suggested that for loans with a balloon payment of principal due at 
the end of term, Commerce should indicate in the regulation that the nonpayment of interest should 
be sufficient grounds to treat the loan as a grant.  
    With respect to this comment and other comments made with respect to "balloon" loans, such 
loans would fall within the definition of "comparable commercial loans" under both 
section  771(5)(E)(ii) of the Act and Sec.  351.505 of the CVD regulations. The refore, Commerce has 
concluded that the three -year trigger period, in addition to taking into account the exception G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  provided for receipt of a comparable commercial loan, should also consider the terms of the loan 
contract. Thus, we have modified the final version of Sec.  351.505(d). Specifically, the additional 
language will state that the Secretary will normally treat a loan as a grant if "no payments on the 
loan have been made" (versus the proposed language --"no payments of interest and principal have 
been made") in three years unless the loan recipient can demonstrate that nonpayment is consistent 
with the terms of a comparable commercial loan it could obtain on the market "or the payments on 
the loan are consistent with the terms of the loan contract."  
    In response to the concerns raised by other commenters, Commerce agrees that loans require a 
repayment obligation and grants do not carry that repayment obligation. However, once a 
governmental provision of funds no longer has an obligation of repaymen t, or once the government 
waives or no longer collects repayment of those funds, then those funds (i.e., loans) effectively 
become a grant, and Commerce has an established practice of treating those funds as a grant. 
Moreover, whether a loan is normally pr ovided by a bank or grants are normally provided by a 
government is irrelevant as to whether a loan or a grant provided by a government constitutes a 
financial contribution and a benefit under the Act.  
    With respect to the issue of burden shifting, we d isagree that this regulatory change shifts a 
burden onto a respondent to show that it could obtain a comparable loan. Only the respondent has 
the information to demonstrate that the nonpayment on the outstanding loan is consistent with the 
terms of a compa rable commercial loan it could obtain on the market, or that the nonpayment on 
the loan is consistent with the terms of the loan contract. Notably, the language regarding a 
comparable commercial loan that a recipient could obtain on the market is taken dir ectly from 
section  771(5)(E)(ii) of the Act.  
    Commerce does not dispute the claim that statutes of limitation set by individual states on debt 
collection range from three to 15 years. However, we do not believe that such a fact is relevant to 
this chang e in the regulation. Section 351.505(d) does not address a situation where there is an 
ongoing legal dispute between the government and an individual firm regarding a debt that is being 
contested or where the government is seeking to collect a debt from th e loan recipient. Instead, the 
regulation addresses a situation where the government, for whatever reason, is no longer requesting 
payment from a recipient of a government loan. If a loan recipient can demonstrate that the 
outstanding debt is under a legal  dispute with the government or that the government is actively 
seeking loan payment from the recipient, then this regulatory provision will not apply, and Commerce 
will not treat that disputed loan debt as a grant under this provision.  
    Regarding the t hree-year "triggering -period," as Commerce explained in the Proposed Rule, 
Commerce first sought to determine whether there was a clear standard used within the banking 
sector with respect to the treatment of "bad debt" or the treatment of outstanding loan s in which 
payment has not been made based on the terms of the loan contract. \157\ Such standards normally 
provide discretion to the individual bank to determine when it has no reasonable expectations of 
recovering the contractual cash flows on a financial  asset. Unfortunately, Commerce determined that 
these practices did not provide sufficient administrative and public clarity and guidance for purposes 
of the CVD regulations. \158\ 
---------------------------------------------------------------------------- ----------------------------------  
    \157\ See Proposed Rule, 88 FR 29867.  
    \158\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Based upon these conclusions, Commerce decided to adopt a three -year period, which we believe 
is appropriate after considering all of the comments we received on this provision. We believe that 
a three -year period is a reasonably long period of time because it will only apply to a very limited 
number of l oans. To be clear, Commerce rarely encounters investigated loans in which the loan 
terms do not require the payment of interest for an entire three -year period. In addition, we rarely 
have investigations on government loan programs in which it is alleged t hat the government does 
not require at least payment of interest or principal within a three -year period, or that the regulations 
under which the investigated loan program operates does not require any loan payment within a 
three -year period. Furthermore, although some commenters characterized a three -year period as 
"arbitrary," notably none of the commenters provided a useful alternative period.  
    Nevertheless, it is important to emphasize that under Sec.  351.505(d), the three -year period 
provides an ex ception and not the rule. If the loan recipient can demonstrate that nonpayment is 
consistent with the terms of a comparable commercial loan it could obtain on the market, then the 
three -year triggering period will not apply. Furthermore, as we explain abo ve, we have modified the 
proposed regulation to also allow a loan recipient to demonstrate that the payments on the loan are G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  consistent with the terms of the loan contract. Accordingly, the three -year triggering period under 
this regulation will only apply  if a loan recipient cannot show either of these situations to be true.  
 
[[Page 20817]]  
 
    In response to the comments that Commerce already has the ability to treat a loan as a grant 
under existing Sec. Sec.  351.505(d) introductory text and (d)(2) and 351.508, we note that while 
we do have current regulations that allow Commerce to decide when a loan may be treated as a 
grant, the new regulation at Sec.  351.505(d) applies to loans that would not fall under the current 
regulations at Sec. Sec.  351.505( d)(2) and 351.508. Accordingly, we disagree that Commerce 
already has the ability to treat loans such as this as grants and believe that this additional 
modification to the regulation is necessary.  
    Lastly, we note that Commerce is moving current Sec.  351.505(d) to a new Sec.  351.505(e) 
which addresses the treatment of a contingent liability interest -free loan. Under this current 
provision, Commerce will treat a contingent liability interest -free loan as a grant, if at any point in 
time, Commerce deter mines that the event upon which repayment depends is not a viable 
contingency. However, this regulation does not address the situation where the recipient firm either 
has taken the required action or achieved the contingent goal and the government has not required 
repayment of the contingent loan. While Commerce considers a future amendment to this section of 
the loan regulation to account for non -repayment when the recipient has met the contingent action 
or goal and the government has not taken repayment, for now Commerce may address this issue 
under the new Sec.  351.505(d).  
    10. Commerce has made certain changes to the proposed amendment to the CVD equity 
regulation at Sec.  351.507.  
    Commerce is making two significant changes in this final rule to its equity regulation. First, it is 
modifying current Sec.  351.507(c) by moving the existing language to a new Sec.  351.507(d) and 
adding a new provision in paragraph (c), titled "Outside investor standard." This outside investor 
standard codifies Commer ce's long -standing practice in which the analysis of equity is conducted 
with respect to whether an outside private investor would make an equity investment into that firm 
under its usual investment practice, not whether a private investor who has already invested would 
continue to invest.  
    Second, Commerce is adding language to the description of the allocation of the benefit in the 
new Sec.  351.507(d). Currently, the benefit conferred by equity will be allocated over the same 
time period as a non -recurring subsidy under Sec.  351.524(d), which is the average useful life (AUL) 
of assets. This standard works well for the vast majority of the cases in which Commerce finds a 
countervailable equity benefit, which usually has been the case with respect to an  equity infusion 
into a state -owned steel company. However, in a few cases, such as DRAMs from Korea, \159\ 
Commerce has determined that the AUL of the assets results in an unreasonable period of time in 
which to provide relief to the domestic industry from  unfair and distortive foreign government 
subsidies, counter to the purpose of the CVD law. To prevent such an unfair and distortive allocation, 
the modified language of Sec.  351.507(d) will provide that the benefit conferred by an equity 
infusion shall b e allocated over a period of 12 years or the same time period as a non -recurring 
subsidy under Sec.  351.524(d), whichever is longer.  
--------------------------------------------------------------------------------------------------------------  
    \159\ See Final Affirmative Countervailing Duty Determination: Dynamic Random Access Memory 
Semiconductors from the Republic of Korea, 68 FR 37122 (June 23, 2003) (DRAMs from Korea), and 
accompanying IDM at Comment 8.  
--------------------------------------------- -----------------------------------------------------------------  
    In the Proposed Rule, Commerce proposed new regulatory language and provided an extensive 
background on Commerce's 40 -year history in implementing and enforcing the outside investor 
standard.\160\ One commenter noted that the first sentence of the new proposed Sec.   351.507(c) 
referred to a "new private investor," but then in the second sentence referred to both an "outside 
private investor" and a non -outside "private investor." That comm enter suggested that Commerce 
clarify that the first sentence was intended to refer to a "new outside private investor." Commerce 
agrees that such a suggestion would be appropriate and provide clarity to the regulation, and it has 
modified the regulation i n accordance with that suggestion in the final rule.  
--------------------------------------------------------------------------------------------------------------  
    \160\ See Proposed Rule, 88 FR 29867 -69. 
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      Otherwise, Commerce has determined to make no further changes to its proposed 
Sec.  351.507(c) and (d). Commerce's provision of the history and reasoning behind both changes 
is set forth e xtensively in the Proposed Rule, and Commerce will not reiterate that entire history or 
reasoning in this preamble to the final rule.  
    In response to our request for comments on our Proposed Rule, we received 15 comments from 
interested parties to the c hanges in our equity regulation with nine of these parties supporting the 
revisions. The six parties that objected to the proposed revisions to the equity regulation objected 
to both of the proposed changes to the regulation. We are addressing the challeng es to the two 
changes separately below.  
    A. Commerce's codification of its outside investor standard is lawful and reasonable.  
    With respect to the outside investor standard, some commenters expressed concerns that 
Commerce failed to consider the viewpoint of an "inside" investor, and they alleged that such a 
failure could not be reconciled with section 771(5)(E) of the Act, wh ich states that "a benefit shall 
normally be treated as conferred where there is a benefit to the recipient if the investment decision 
is inconsistent with the usual investment practice of private investors, including the provision of risk 
capital, in the country in which the equity infusion is made." Section 351.507(a)(1) has the same 
language. Thus, those commenters commented that both the Act and the regulations do not make 
a provision for "outside private investors," and that the only statutory language  pertains to "private 
investors." Those commenters stated that if a government with an existing investment in a company 
makes an equity investment on terms that comport with the terms that "inside" private investors 
with similar investments would have acce pted, then the investment decision is consistent with the 
usual investment practice of private investors and there is no countervailable benefit under the 
statute. These commenters also stated that there are essentially no differences in the motivation 
and analysis in the investment decisions between internal private investors (i.e., owner -investors) 
and outside private investors.  
    One of the commenters stated that a rational investment decision based on commercial principles 
does not exclude the reason for continuing to invest to protect income of previous investments, 
citing the 1986 CVD investigation determination in Groundfish from Canada. \161\ Likewise, that 
commenter also noted that in a 1989 CVD investigation, Steel Wheels from Brazil, \162\ Commerc e 
stated that a "a rational investor does not let the value of past investments affect present or future 
decisions," which demonstrates the consistency of business logic between inside and outside 
investors. \163\ 
------------------------------------------- -------------------------------------------------------------------  
    \161\ See Final Affirmative Countervailing Duty Determination; Certain Fresh Atlantic Groundfish 
from Canada, 51 FR 10041, 10047 (March 24, 1986) (Groundfish from Canada).  
    \162\ See Final Affirmative Countervailing Duty Determination; Steel Wheels from Brazil, 
54 FR 15523, 15529 -30 (April 18, 1989) (Steel Wheels from Brazil), and accompanying IDM at 
Comment  10. 
    \163\ Id. 
---------------------------------------------------------- ----------------------------------------------------  
    Another commenter noted that in the 1993 CVD investigation determination in Certain Steel 
Products from  
 
[[Page 20818]]  
 
Austria, \164\ Commerce explained that a distinction between inside investors a nd outside investors 
is unreasonable stating that "{Commerce} has expressed the view that the perspectives of inside 
and outside investors cannot legitimately be distinguished." \165\ As such, that commenter pointed 
out that Commerce stated that an inside investor can therefore act with the same rational 
motivations as an outside investor and "not let the returns of past investments affect present or 
future decisions." \166\ This commenter stated that even though the question in Certain Steel 
Products from Austria was whether Commerce should adopt a different standard for inside investors, 
Commerce's reasoning is also applicable to the inverse --an outside investor standard is also 
unreasonable because there is no legitimate reason to distinguish between the two. 
--------------------------------------------------------------------------------------------------------------  
    \164\ See Final Affirmative Countervailing Duty Determination: Certain Steel Products from 
Austria, 58 FR 37217, 37249 (July 9, 1993) (C ertain Steel Products from Austria), at the General 
Issues Appendix.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      \165\ Id. 
    \166\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Lastly, one commenter generally objected to Commerce's use of an outside investor standard, 
arguing that it is not reasonable because Commerce can neither categorically determine that no 
debt-to-equity conversion can meet the reasonable investor test, nor categorically determine that 
no inside inves tor is able to make an investment that will generate a reasonable rate of return within 
a reasonable period of time.  
    Commerce's Response:  
    At its core, the criticisms of Commerce's outside investor standard are criticisms of its overall 
equity analy sis which has been in place since at least 1986. As noted, Commerce explained the 
history of this practice and the reasoning behind its policy and practices in the Proposed Rule.  
    As a preliminary point, Commerce fundamentally disagrees that section 771 (5)(E) of the Act, 
which states that "a benefit shall normally be treated as conferred where there is a benefit to the 
recipient if the investment decision is inconsistent with the usual investment practice of private 
investors, including the provision of risk capital, in the country in which the equity infusion is 
made,"  \167\ is in any conflict with the outside investor standard.  
--------------------------------------------------------------------------------------------------------------  
    \167\ See se ction 771(5)(E) of the Act.  
--------------------------------------------------------------------------------------------------------------  
    Before the enactment of the URAA on December 8, 1994, which implemented the changes to the 
Act as a result of the  Uruguay Round and the creation of the WTO, and the SCM Agreement, 
specifically, section 771(5) of the Act defined one type of subsidy as the provision of capital on 
"terms inconsistent with commercial considerations." \168\ The URAA amended the Act and st ated 
that a benefit is conferred in the case of an equity infusion "if the investment decision is inconsistent 
with the usual investment practice of private investors." However, while the language changed from 
"terms inconsistent with commercial considerat ions" to "inconsistent with the usual investment 
practice of private investors," this did not denote a change in the benefit analysis with respect to 
whether a firm is equity -worthy.  
------------------------------------------------------------------------- -------------------------------------  
    \168\ See Trade Agreements Act of 1979, Public Law 96 -39, 80 Stat. 144 (July 26, 1979) (Trade 
Agreements Act of 1979).  
--------------------------------------------------------------------------------------------------------------  
    The SAA reveals th at under the revised benefit section under the URAA at section 771(5)(E) of 
the Act, the only replacement with respect to our established methodology in determining whether 
a benefit exists was with respect to the provision of goods and services and in det ermining whether 
there is a benefit conferred by a government loan guarantee. \169\ In addition, Sec.  351.507(a)(4) 
of our current CVD regulations states that the Secretary will consider a firm to have been 
equity -worthy if the Secretary determines that, f rom the perspective of a reasonable private investor 
examining the firm at the time the government -provided equity infusion was made, the firm showed 
an ability to generate a reasonable rate of return within a reasonable period of time. In determining 
whether a benefit is conferred within the meaning of section 771(5)(E) of the Act, we note that the 
Act does not define "the usual investment practice of private investors." However, the CVD equity 
regulation states that a reasonable private investor will make  its investment decisions based on 
whether the investment will "generate a reasonable rate of return within a reasonable period of 
time." \170\ This standard is set forth in Sec.   351.507(a)(4) and is taken from the 1989 Proposed 
Rules. \171\ Thus, the stan dard used in the examination of whether there is a benefit conferred by 
the government provision of equity was identical under both section 771(5)(E) of the Act and 
section  771(5) of the pre -URAA version of the Act. That standard was also addressed by the CIT in 
the Court decisions, BSC I \172\ and BSC II. \173\ 
--------------------------------------------------------------------------------------------------------------  
    \169\ See SAA at 927.  
    \170\ See Sec.  351.507(a)(4).  
    \171\ See Countervailin g Duties Notice of Proposed Rulemaking and Request for Public 
Comments, 54 FR 23366, 23381 (May 31, 1989) (1989 Proposed Rules).  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      \172\ See British Steel Corp. v. United States, 605 F. Supp. 286 (CIT 1985) (BSC I).  
    \173\ See British Steel Corp. v. U nited States, 632 F. Supp. 59 (CIT 1986) (BSC II).  
--------------------------------------------------------------------------------------------------------------  
    At the time of the CIT decisions in BSC I and BSC II, section 771(5) of the Act defined on e type 
of subsidy as the provision of capital on "terms inconsistent with commercial considerations." \174\ 
In BSC II, the CIT relied upon the definition of "commercial considerations" that was established a 
year earlier in BSC I. In BSC I, with respect to  the provision of equity capital, the CIT construed the 
"commercial considerations" test to mean that an investment is consistent with commercial 
considerations if a reasonable investor could expect a reasonable rate of return on its investment 
within a re asonable period of time. Moreover, pertaining to the question of whether government 
funds are provided to a company under conditions inconsistent with commercial considerations, 
in 1979, the Subcommittee on Trade of the House Committee on Ways and Means ob served that in 
its interpretation of the Act "with regard to the provision of capital, 'commercial considerations' shall 
mean consideration of whether at the time the capital is provided, the recipient is required, and can 
be expected within a reasonable p eriod of time, to derive from its operations a reasonable rate of 
return on its invested capital." \175\ 
--------------------------------------------------------------------------------------------------------------  
    \174\ See Title I of the Trade Agree ments Act of 1979 (adding section 771(5) of the Act, which 
defined the term "subsidy").  
    \175\ See Summary of Recommendations in Legislation Implementing the Multilateral Trade 
Negotiations, 96th Cong., 1st Sess. 4 (Comm. Print 21 (1979)).  
------------- -------------------------------------------------------------------------------------------------  
    Thus, it is clear from the language in the Act, the CVD regulations, and the legislative history that 
"the usual investment practice of private investors" is that a reasonable private investor will make 
its investment decisions based on whether the inv estment will "generate a reasonable rate of return 
within a reasonable period of time." Otherwise, what "private investors" Commerce considers 
reasonable for purposes of its equity analysis was left by Congress for Commerce to discern through 
its practice and regulations over time. As Commerce explained in the Proposed Rule, over a 40 -year 
span of time, Commerce concluded that the standard of the private investor should be based on an 
outside private investor and is now codifying that practice.  
    In respo nse to the claims that there is "no" difference in the motivations and  
 
[[Page 20819]]  
 
investment analysis between owner -investors and outside private investors, Commerce must 
highlight that through 40 years of practice, many interested parties have disag reed with that 
assessment. For example, in the aforementioned Steel Wheels from Brazil, when Commerce 
evaluated government equity infusions from the point of view of a private outside investor, a 
respondent argued that its motive as an owner -investor was t o maximize average returns on its past 
and future investments into the steel company, not to marginal returns on investments as an outside 
investor would. \176\ Likewise, in Stainless Steel Plate from the United Kingdom, \177\ the 
respondent claimed that by focusing exclusively on considerations that would motivate the 
investment decisions of an outside investor, Commerce incorrectly found British Steel Corporation 
(BSC) to be unequity -worthy during the review period. The respondent argued that unlike an outs ide 
investor, as an owner it had to consider taking steps to minimize BSC's losses and to encourage the 
company's return to profitability. Furthermore, in the Certain Steel Products from Austria 
investigation, respondents argued that an inside investor's d ecision may reflect a desire to reduce 
or forestall an expected loss rather than to increase returns on investment. They argued that an 
inside investor may make an additional investment to help save the firm from insolvency. \178\ 
-------------------------- ------------------------------------------------------------------------------------  
    \176\ See Steel Wheels from Brazil, 54 FR 15529 and IDM at Comment 10.  
    \177\ See Stainless Steel Plate from the United Kingdom; Final Results of Countervailing 
Administrative Review, 51 FR 44656 (December 11, 1986) (Stainless Plate from the 
United  Kingdom).  
    \178\ See Certain Steel Products from Austria, 58 FR 37249.  
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      In addition to the respondents stating that there are differences in the motivations and investment 
analysis between owner -investors and outside private investors, the CIT has explicitly recognized 
these differences in motivations. The CI T in BSC II acknowledged that while it may make sense for 
an owner to want to continue to run a loss -making operation so long as variable costs are recovered, 
this standard is inapposite to investment decisions by investors acting according to economically  
rational considerations to look for a return on investment with a reasonable time. \179\ Likewise, in 
Hynix Semiconductor, Inc., \180\ the CIT expressly affirmed Commerce's approach that "the 
existence and status of previous investments in a company are ext raneous considerations when 
weighing new investment in the same company." \181\ The CIT called this approach the "expected 
utility model," which was another name for the outside investor standard, and relied on BSC II in 
ruling against the respondent plain tiff's argument that Commerce should take the perspective of an 
existing investor considering a new investment to bolster prior investments. \182\ 
--------------------------------------------------------------------------------------------------------------  
    \179\ See BSC II, 632 F. Supp at 64 -65. 
    \180\ See Hynix Semiconductor, Inc. v. United States, 425 F. Supp. 2d 1287 (CIT 2006) (Hynix 
Semiconductor, Inc.).  
    \181\ Id., 425 F. Supp. 2d at 1313.  
    \182\ Id. 
--------------------------------------------------------------------------------------------------------------  
    All of these arguments and decisions reflect what Commerce explained in the Proposed Rule: the 
motivations of an owner -investor can, and frequently do, differ from that of an outside private 
investor, and Commerce's practice, and now regulations, consider the actions of a reasonable outside 
private investor in its equity an alysis. Forty years of precedent and practice demonstrate that inside 
investors sometimes may base investment decisions on criteria other than whether the investment 
will "generate a reasonable rate of return within a reasonable period of time," while outs ide private 
investors will generally not be inclined to base investment determinations on those other criteria.  
    In response to the statements by the one commenter with regard to Groundfish from Canada and 
Steel Wheels from Brazil, there is no validity to the commenter's points because Commerce believes 
that the commenter misunderstood the Commerce determinations made in those cases. In both 
cited cases, Commerce explicitly rejected the decisions of the insider investor to make additional 
equity investme nts into financially troubled companies because Commerce recognized that the 
motivations of inside investors may be different from those of outside private investors. \183\ 
------------------------------------------------------------------------------------ --------------------------  
    \183\ See Groundfish from Canada; see also Steel Wheels from Brazil.  
--------------------------------------------------------------------------------------------------------------  
    With respect to the commenter that quoted  certain language from Certain Steel Products from 
Austria to support its claim against the outside investor standard, we also believe that commenter 
may be confused as to the details of that investigation. In the Certain Steel Products from Austria 
invest igation, respondents stated that an inside investor may make an additional investment to help 
save the firm from insolvency. Therefore, the respondents were essentially arguing that with respect 
to an equity analysis for investments made by owners, Commerc e should adopt a different analysis 
specifically for inside investors that may have different motivations than those of an outside investor. 
Commerce rejected this argument, declining to create two investor standards and apply two investor 
equity tests. In  any case, that is not the issue with respect to this regulation. Here, the issue is 
Commerce codifying its single practice of applying an outside investor standard in an equity analysis.  
    Finally, in response to the commenter who suggested that Commerc e cannot categorically 
determine either that no debt -to-equity conversion can meet the reasonable investor test, nor that 
no inside investor is able to make an investment that will generate a reasonable rate of return within 
a reasonable period of time, we  believe that commenter misunderstood Commerce's practice. As we 
explained in the Proposed Rule, Commerce has been using the outside investor standard since at 
least 1986. In all that time, Commerce has never claimed that a debt -to-equity conversion cannot  
meet the equity -worthy standard of generating a reasonable rate or return within a reasonable 
period of time. In addition, Commerce has never made a comprehensive finding that an inside 
investor is unable to make an investment that would generate a reason able rate of return within a 
reasonable period of time. This amendment to Sec.  351.507 incorporates into the equity regulation 
our long -standing practice with respect to the use of an outside investor standard, but it in no way 
suggests changes to the age ncy's existing practice as suggested by that commenter. All of 
Commerce's determinations made with respect to the provision of equity are made on a case -by-case G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  basis with an analysis of all the facts on the record in a manner consistent with the Act and t he CVD 
regulations. There is no comprehensive exception or policy whereby all debt -to-equity conversions 
or investments made by an insider investor fail the standard of the equity -worthy test of being able 
to generate a reasonable rate of return within a r easonable period.  
    The codification of our outside investor standard continues our longstanding practice of examining 
whether a provision of equity, be it direct through new funds or through a debt -to-equity conversion, 
confers a countervailable benefit  by examining whether the provision of equity will generate a 
reasonable rate of return within a reasonable period of time. This means that when there is a private 
inside investor or a private debtor converting existing debt in a firm into equity, our equi ty analysis 
will be based  
 
[[Page 20820]]  
 
on the standard of an outside private investor (i.e., whether that new investment will generate a 
reasonable rate of return within a reasonable period of time). If we determine that a private insider 
investor or p rivate party converting debt -into-equity provides a new equity investment that is 
consistent with the outside investor standard, then we will normally consider that private investor 
prices are available within the meaning of Sec.  351.507(a)(2) and will us e those prices in 
determining whether the government provision of equity confers a benefit. In situations where the 
government is the sole owner and investor into a firm, we will also use the outside private investor 
standard to determine whether the gover nment provision of equity into the firm will generate a 
reasonable rate of return within a reasonable period of time. Other criteria used by the government 
such as trying to rescue an insolvent firm or recover its previous investments will not be consisten t 
with "the usual investment practice of private investors."  
    B. Commerce's modification to the allocation of an equity benefit is reasonable.  
    The commenters who disagreed with Commerce's changes to its equity regulation also challenged 
the amendmen t to the regulation regarding the allocation of an equity benefit over a minimum period 
of 12 years or the AUL established for the investigation or administrative review, whichever is longer. 
These commenters raised these same comments with respect to this  identical amendment to the 
allocation period for debt forgiveness under Sec.  351.508(c).  
    Those commenters stated that Commerce has allocated the benefit from non -recuring subsidies 
over the AUL of the relevant industry for decades and should not modi fy that allocation methodology 
for any reason. Acknowledging that Commerce provided the DRAMs from Korea investigation as an 
example of an unreasonable allocation period based on the AUL of the product (wherein the AUL was 
five years), the commenters state d that because the allocation period was based on real -world 
experience of that industry and a typical research and development (R&D) cycle and life span for 
equipment, Commerce was incorrect in concluding that the allocation period was in any way 
unreason able. 
    Furthermore, those commenters characterized the 12 -year allocation period for equity as 
arbitrary. They commented that any allocation applied by Commerce should relate to the subject 
merchandise at issue, instead of an arbitrary minimum of 12 yea rs. As Commerce explained in the 
Proposed Rule, \184\ according to the Congressional Research Service, the vast majority of U.S. CVD 
measures during that period were applied to four industries: (1) base metals; (2) products of 
chemical and allied industries ; (3) resins, plastics, and rubber; and (4) machinery and electrical 
equipment. \185\ Looking to the Modified Accelerated Cost Recovery Asset Life Table, \186\ 
Commerce determined that those four industries fall under five asset classes, which, when averaged , 
results in a 12 -year AUL of assets for the class. Put another way, the allocation period for 
non-recurring subsidies for the vast majority of Commerce's CVD measures since 1995 was 12 years. 
Accordingly, Commerce proposed a 12 -year minimum allocation per iod to provide relief to the 
domestic industry from the harm caused by certain foreign government countervailable equity 
subsidies.  
--------------------------------------------------------------------------------------------------------------  
    \184\ See Proposed Rule, 88 FR 29868 -69. 
    \185\ Id. 
    \186\ See Internal Revenue Service Publication 946 (2021), Table B -2, the Modified Accelerated 
Cost Recovery Asset Life Table.  
------------------------------------------------------------------------------- -------------------------------  
    The commenters explained, however, that not all industries fall within those four industries, and 
for several industries, such as the industry at issue in DRAMs from Korea, the AUL of the product is 
less than 12 years. I n making this claim, the commenters stated that Commerce's admitted reason G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  for setting such an allocation minimum was to allow it to continue to countervail non -recurring 
subsidies for industries whose assets turn over relatively quickly. Therefore, they c hallenged a 
12-year allocation period for those industries with shorter amortization rates, arguing that it would 
"artificially extend" the AUL to 12 years and, accordingly, distort the benefit calculation.  
    They also commented that Commerce's allocation minimum would unreasonably include a 
calculation of benefit associated with costs of capital, where Commerce builds into its allocation 
methodology a discount rate associated with the responding parties' c osts of borrowing. In addition, 
the commenters expressed concerns that the application of the proposed revision would lead to an 
extended allocation period for non -recurring subsidy programs that would increase the retroactive 
period for each subsidy progr am. They suggested that by extending the allocation period, subsidy 
projects that no longer benefit the company during the investigation period could be captured 
erroneously in the CVD calculation. As a consequence, they commented that the calculated subsi dy 
rate could end up in excess of the actual subsidy received by the company.  
    In the alternative, they suggested that if Commerce continues to insist on a 12 -year allocation 
period for equity (and debt forgiveness), then it should establish that period  as a rebuttable 
presumption and not a hard rule and permit parties an opportunity to demonstrate that the 
under -12, company -specific AUL is reasonable.  
    Commerce's Response:  
    All countervailable benefits must be determined based on the specific fact s on the record and 
must be determined in accordance with the Act and Commerce's CVD regulations. No one is arguing 
otherwise. However, consistent with the Act and CVD regulations, the calculation of benefits 
conferred by countervailable subsidies are not subject to different rules based upon the merchandise 
being investigated. The benefit from a $10 million grant is $10 million, regardless of the recipient, 
the merchandise being produced by the grant recipient, or the AUL of the merchandise being 
produced.  To be clear, at issue in this regulation is not the calculation of a subsidy benefit, despite 
some of the points made by the commenters, but instead the allocation of that benefit over a certain 
period of time.  
    With respect to the allegation that the allocation period of a subsidy benefit must be specific to 
the subject merchandise, the commenters cite no provision in the Act to support such a claim. In 
fact, for many types of subsidies, the benefit is allocated to the year of receipt which takes no 
measure of the type of merchandise that is subject to the investigation or administrative review. In 
truth, the Act is silent as to the allocation period for a subsidy; thus, Commerce's proposed changes 
to both Sec.  351.507(d) and Sec. 351.508(c) to include  a 12-year minimal allocation period in the 
case of equity and debt forgiveness is fully consistent with Commerce's statutory authority to apply 
the CVD law in a reasonable and administrable manner.  
    Even our current allocation regulation at Sec.  351.5 24(b) explicitly acknowledges that, for many 
subsidies, Commerce does not always allocate the benefit from non -recurring subsidies over the AUL 
of subject merchandise. Under Sec.  351.524(b), Commerce will allocate or expense the benefit from 
a non -recurri ng subsidy only to the year of receipt if the subsidy benefit is less than 0.5 percent of 
relevant sales. Therefore, two companies in the same investigation, and thus producing the  
 
[[Page 20821]]  
 
same subject merchandise, could have the identical subsidy  benefit allocated over different periods.  
    With respect to the arguments that an allocation period of five years was reasonable in DRAMs  
from Korea and based upon a typical R&D cycle and life span for equipment, Commerce must first 
clarify that neither the allocation period nor the AUL tables used in our cases are based upon R&D 
cycles for the industry producing subject merchandise. Accord ingly, that particular fact is irrelevant 
to the arguments challenging this regulatory change. The current regulations base the allocation 
period on the AUL of the assets.  
    In DRAMs from Korea, the government led a massive bailout of a financially -troub led firm by 
converting debt into equity and by forgiving debt to allow that firm to remain financially viable so it 
would not cease operations. \187\ The forgiveness of debt and equity provisions were not specific to 
subject merchandise nor to the equipment  that manufactured the subject merchandise. \188\ 
Instead, the government -led bailout was a complete restructuring of the firm's capital formation to 
ensure the continuation of the firm's operations. \189\ The forgiveness of debt and equity provisions 
undert aken at the direction of the government ensured the survival of Hynix and the company 
continued to operate for more than 20 years after the provision of these subsidies, a period much 
longer than five years. Thus, it is clear that the economic benefit, or the "commercial impact" of 
these subsidies, to use the argument of various commenters, is much longer than five years.  
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- 88 - 
 
      \187\ See DRAMS from K orea IDM at Comment 7.  
    \188\ Id. at 12.  
    \189\ Id. 
--------------------------------------------------------------------------------------------------------------  
    As the CIT stated in BSC I, fundamentally, the value of a subsidy must be measured in accordance 
with its benefit to the recipient, which is not necessarily limited to the period of time assets are 
actually used. \190\ Similarly, in other cases like Certain Steel Products from Austria, respondents 
also stated that the governments' decisio ns to provide new equity funds was not related to the 
production of subject merchandise but to help save firms from insolvency. \191\ 
--------------------------------------------------------------------------------------------------------------  
    \190\ See BSC I, 605 F. Supp. at 295 -96. 
    \191\ See Certain Steel Products from Austria, 58 FR 37249.  
--------------------------------------------------------------------------------------------------------------  
    With respect to the general issue of allocat ion periods, it is important to note the history of this 
issue. There are no statutory, economic, or financial rules that mandate the choice of an allocation 
period, and theoretically one could argue that a subsidy benefits a firm forever, thereby renderin g 
arbitrary any period short of the actual lifespan of the firm or facilities.  
    As noted above, the Act is silent with respect to the allocation of benefits, and what little legislative 
history there is on the subject deals with the shape of the benefit  stream rather than its length. At 
most, the legislative history exhorts Commerce to use a "reasonable" method of allocation. \192\ 
Commerce first explained its general policies on the allocation of subsidies focusing on the provision 
of grants provided for  the purchase of capital equipment in the 1982 Subsidies Appendix. \193\ 
Commerce stated in that document that the legislative history of the Act required that where a grant 
was bestowed specifically to purchase capital equipment that the benefit flowing fr om the grant 
should be allocated in relation to the useful life of that equipment. Moreover, a subsidy for capital 
equipment should also be "front -loaded" in these circumstances. That is, it should be allocated more 
heavily to the earlier years of the equi pment's useful life, reflecting its greater commercial impact 
and benefit in those years. \194\ 
--------------------------------------------------------------------------------------------------------------  
    \192\ See Senate Report on Trade Agreements Ac t of 1979, No. 249, 96th Cong., 1st Sess. 
(July 17, 1979), at 85 -86. 
    \193\ See Final Affirmative Countervailing Duty Determinations; Certain Steel Products from 
Belgium, 47 FR 39304, 39317 (September 7, 1982), at Appendix 2 --Methodology (containing the  
1982 Subsidies Appendix).  
    \194\ Id., 47 FR 39316.  
--------------------------------------------------------------------------------------------------------------  
    The Senate Report to the legislative history of the Trade Agreements Act of 1979 explained that 
there was "a special problem in determining t he gross subsidy with respect to a product in the case 
of nonrecurring subsidy grants or loans, such as those which aid an enterprise in acquiring capital 
equipment or a plant. Reasonable methods of allocating the value of such subsidies over the 
productio n or exportation of the products benefiting from the subsidy must be used." \195\ The 
House Report to the same Act also noted the "special problem with regard to subsidies which provide 
an enterprise with capital equipment or a plant. In such cases, the ne t amount of the subsidy should 
be amortized over a reasonable period, following the beginning of full -scale commercial operation of 
the equipment or plant, and assessed in relation to the products produced with such equipment or 
plant during such period." \196\ Thus, both the Senate and House Reports on the issue of the 
allocation of nonrecurring subsidies noted that the allocation should be over a "reasonable time 
period." The House Report went slightly further with respect to grants that were provided for  the 
purchase of capital equipment stating that the subsidy could be amortized based on the commercial 
operation of the capital equipment. \197\ 
--------------------------------------------------------------------------------------------------------------  
    \195\ See S. Rep. No. 249, 96th Cong., 1st Sess. at 85.  
    \196\ See House Report on Trade Agreements Act of 1979, No. 96 -317, 96th Cong., 1st Session. 
(July 3, 1979), at 74 -75. 
    \197\ Id. 
------------------------------------------------------------ --------------------------------------------------  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      For the 1982 steel investigations that were the subject of the 1982 Subsidies Appendix, the 
allocation period of 15 years was based on Internal Revenue Service (IRS) data for integrated mills 
in the Un ited States. Commerce used this IRS data because it sought a uniform period for allocation 
and one that reflected the estimated average life of steel assets worldwide. \198\ Commerce stated 
that it could not calculate the average life of capital assets on a  company -by-company basis since 
different accounting principles, extraordinary write -offs, and corporate reorganizations yielded 
extremely inconsistent results. \199\ In determining whether a grant was to be allocated or 
expensed, Commerce determined to all ocate grants that were large (i.e., at least $50 million) and 
specifically provided for the purchase of capital equipment. Where the grant was small (e.g., grants 
generally less than one percent of the company's gross revenues) and provided for items that are 
generally expensed in the year purchased such as wages or purchases of material, Commerce 
expensed the subsidy in the year the grant was received. \200\ 
---------------------------------------------------------------------------------------------------- ----------  
    \198\ See 1982 Subsidies Appendix, 47 FR 39317.  
    \199\ Id. 
    \200\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Commerce next addressed the allocation period in t he 1984 Subsidies Appendix. \201\ Commerce 
again stated that on the question of the allocation of subsidies, the legislative history revealed 
nothing more concrete than a directive that {Commerce} use "reasonable methods." \202\ 
Commerce stated that funds p rovided under government direction or directly by the government 
provide a subsidy to the extent that the recipient pays less for the funds than it would on the market. 
In 
 
[[Page 20822]]  
 
the case of a loan, this is the difference between the cash flows ( i.e., the company's receipts and 
payments) on the loan under examination and the cash flows for a comparable commercial loan 
taken out by the same company. \203\ For equity, it is the difference between what the government 
paid for a share of the company an d what the market would have paid for the share. \204\ For grants, 
the saving to the recipient is the face value of the grant --that is, the difference between what the 
company paid for the funds (i.e., zero), and what it would have to pay on the market to r eceive the 
funds (i.e., the face value of the grant). \205\ 
--------------------------------------------------------------------------------------------------------------  
    \201\ See Cold -Rolled Carbon Steel Flat -Rolled Products from Argentina: Final Affi rmative 
Countervailing Duty Determination and Countervailing Duty Order, 49 FR 18006, 18016 
(April  26, 1984), at the Subsidies Appendix (1984 Subsidies Appendix).  
    \202\ Id. 
    \203\ Id. 
    \204\ Id. 
    \205\ Id. 
------------------------------------- -------------------------------------------------------------------------  
    Differences in cash flows can arise in a single moment, as with grants (i.e., complete receipt of 
the funds at once), or over several years, as with long -term loans (i.e., throug h periodic 
repayment). \206\ The point at which the difference in cash flows occurs does not always coincide 
with the economic benefit of the subsidy, and therefore, does not necessarily provide an appropriate 
schedule for assessing CVDs. The economic benef it is diffused around the time that the cash flow 
differential occurs. For example, it would be inappropriate to allocate a $1 billion grant received on 
March 17, 1984, entirely to March 17, 1984. The grant continues to benefit the company after that 
date, and thus, Commerce would not counteract the economic benefit of the grant by assessing 
CVDs to products exported on only that single day. Therefore, to counteract the benefit of such 
actions, Commerce had to determine an appropriate period over which to a llocate benefits and 
decide how much of the benefit to allocate to each year.  
--------------------------------------------------------------------------------------------------------------  
    \206\ Id. 
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      Commerce first attempted to codify different allocation periods for subsidies in the 1989 Proposed 
CVD Rules. \207\ Commerce stated in the pre amble to the 1989 Proposed CVD Rules that it would 
consider the use of a set 10 -year allocation period for all non -recurring benefits before issuing its 
final rules; however, it never issued those final rules. In the decades since the 1989 Proposed CVD 
Rules, Congress has not addressed the allocation period for subsidies in the Act, deferring the issue 
to Commerce's expertise. Accordingly, through its practice, Commerce has developed allocation 
rules to ensure that a reasonable method of allocation will pro vide adequate relief to the domestic 
parties with respect to offsetting the injurious effect of unfair foreign government subsidies and to 
ensure consistency and predictability in the allocation period. Towards that end, Commerce has 
implemented through th e formal rule -making process allocation rules that differentiate between 
different forms of financial contributions and for different types of subsidy benefits. We have different 
allocation rules for non -recurring subsidies and recurring subsidies. \208\ We even have allocation 
rules that differentiate whether a non -recurring subsidy will be allocated over an AUL or only 
allocated (i.e., expensed) in the year of receipt. \209\ Moreover, recurring subsidies are allocated 
(i.e., expensed) in the year of receipt  regardless of the merchandise that is under investigation. \210\ 
--------------------------------------------------------------------------------------------------------------  
    \207\ See 1989 Proposed Rules, 54 FR 23376 -77. 
    \208\ Id. 
    \209\ Id., 54 FR 23383 -84. 
    \210\ Id. 
--------------------------------------------------------------------------------------------------------------  
    Different types of subsidy prog rams also have different allocation periods wholly unrelated to the 
recipients' production operations. There are specialized allocation rules for loans. \211\ There are 
different allocation periods for income tax programs \212\ and different allocation peri ods for the 
provision of goods and services. \213\ None of the allocation periods for these common subsidy 
programs are related to the production of subject merchandise or related to the AUL of the recipients' 
capital assets.  
------------------------------- -------------------------------------------------------------------------------  
    \211\ Id., 54 FR 23376 -77. 
    \212\ Id., 54 FR 23374 -75. 
    \213\ Id., 54 FR 23375 -76. 
----------------------------------------------------------------------------------- ---------------------------  
    For grant programs, there are different allocation periods based on the purpose of the grants. For 
example, grants provided for R&D, export promotion, or training are allocated to the year of 
receipt, \214\ while grants for c apital equipment are allocated over time based on the AUL, except 
in instances where the grant benefit for capital equipment is less than 0.5 percent of the recipient's 
relevant sales. \215\ Thus, if each of the respondents in an investigation receive a $30  million grant 
to purchase equipment used to manufacture subject merchandise, the grant received by one 
respondent could be allocated to the year of receipt due to the size of its sales revenue while, for 
the other respondent, that identical grant is alloc ated over time.  
--------------------------------------------------------------------------------------------------------------  
    \214\ Id., 54 FR 23384.  
    \215\ Id., 54 FR 23385.  
------------------------------------------------------------------------- -------------------------------------  
    For example, if a respondent received a $30 million tax credit based on a firm's purchase of 
equipment used to manufacture subject merchandise, it would be allocated (fully expensed) in the 
year that it uses the ta x credit to reduce its income tax liability. On the other hand, another 
respondent, instead of receiving a $30 million tax credit, might have instead received a $30 million 
grant to purchase equipment used to manufacture subject merchandise. Under that hyp othetical, 
instead of the benefit being fully allocated to one year, the benefit would instead be allocated over 
time. Similarly, Commerce could calculate a $30 million countervailable benefit from the provision 
of capital equipment for less than adequate remuneration to a firm and under the allocation rules 
established by the CVD regulations, the benefit would be allocated (i.e., expensed) in the year in 
which the firm paid for the capital equipment.  
    In sum, Commerce has adopted and codified different allocation rules for different types of 
subsidies over the past 40 years, consistent with the Act and the legislative history of this issue. G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  Throughout that period, for purposes of the CVD law, Commerce has concluded that the purpose of 
an allocation perio d is to provide adequate relief to domestic parties with respect to offsetting the 
injurious effect of unfair foreign government subsidies. Further, Commerce has also determined that 
an allocation period for a subsidy should ensure consistency and predicta bility across CVD 
proceedings. \216\ This understanding of the purposes of an allocation period has consistently been 
Commerce's starting point in determining an appropriate allocation period for a subsidy.  
-------------------------------------------------- ------------------------------------------------------------  
    \216\ Id., 54 FR 23376 -77. 
--------------------------------------------------------------------------------------------------------------  
    Accordingly, we believe that the allocation perio ds set forth within Sec. Sec.  351.507(d) 
and 351.508(c)(1) to account for the unique nature of equity and debt forgiveness subsidies are not 
only consistent with those purposes, but also consistent with Commerce's statutory and regulatory 
obligations.  
    In addition to the challenge to the 12 -year minimal allocation period in general, one commenter 
expressed concerns that by extending the AUL to 12 years for industries with shorter amortization 
rates, Commerce's allocation methodology would introduce a di stortive calculation of benefit 
associated with costs of capital. This commenter stated that this would occur where Commerce builds 
into its allocation methodology a discount rate associated with the responding parties' costs of 
borrowing. As a preliminary  matter, Commerce agrees that it calculates the discount rate based on 
a respondent's cost of borrowing.  
 
[[Page 20823]]  
 
However, that calculated discount rate is unrelated to the allocation period and would not change 
based on the allocation period. Thus, we disagree that it would create any distortions as stated by 
the commenter. Under Sec.  351.524(d)(3), the discount rate is based upon a company's costs of 
long-term, fixed rate loans for the year in which the government agreed to provide th e subsidy. For 
example, if the government agreed to provide a subsidy to a respondent in 2020, Commerce would 
calculate the discount rate based on the respondent's costs of borrowing in 2020. That calculation 
would not change if the allocation period was t hree, eight, or 12 years. In fact, two companies with 
the identical AUL can have different costs of borrowing, and thus can have different calculated 
discount rates. Therefore, we disagree that the modified regulation would introduce any distortions 
into c alculations of benefit associated with costs of capital.  
    Lastly, in response to the commenter that requested that Commerce should, at minimum, make 
the 12 -year minimum allocation period a rebuttable presumption, we do not agree that such an 
option woul d be a reasonable change to the regulation. Adopting this suggestion would undermine 
our reasons, described above, for providing a predictable minimum 12 -year allocation period for 
equity and debt forgiveness subsidies. Moreover, the proposal is also incon sistent with the treatment 
of the allocation periods for other types of subsidy programs within our regulations such as loans, 
loan guarantees, income tax programs, the provision of goods and services, and recurring grants, 
in which the allocation period o f the subsidy benefit is not established as a rebuttal presumption.  
    11. Commerce has made no further changes to the proposed amendment to the CVD debt 
forgiveness regulation, Sec.  351.508.  
    For the debt forgiveness regulation, we are modifying Sec.   351.508(c), which currently allocates 
the benefit of debt forgiveness over the same period of time as a non -recurring subsidy under 
Sec  351.524(d). The modification to paragraph (c) would measure the allocation by that period, or 
over a period of 12 yea rs, whichever is longer.  
    The current standard tied to the AUL of assets works well for the vast majority of the cases in 
which Commerce finds a countervailable debt forgiveness benefit, as the provision of debt 
forgiveness is normally part of a governm ent-led restructuring package for a state -owned steel 
company. However, there are cases, as discussed in the Proposed Rule and in the equity section 
above, where this regulatory standard leads to a result that appears to be inconsistent with the 
purpose of  the CVD law to provide relief to the domestic industry from unfair and distortive foreign 
government subsidies.  
    Therefore, we are modifying Sec.  351.508(c) of our CVD regulations to state that Commerce will 
treat the benefit from debt forgiveness as a non -recurring subsidy and will allocate the benefit to a 
particular period in accordance with Sec.  351.524(d), or over 12 years, whichever is longer. We 
explained both in the Proposed Rule and further above in the equity section why we selected the 
allocation period of 12 years. \217\ 
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      \217\ See Proposed Rule, 88 FR 29868 -69. 
-------------------------------------------------------------------- ------------------------------------------  
    We received comments from 11 parties with respect to this amendment to our debt forgiveness 
regulation, with six of the parties supporting the revisions to this regulation. The parties that 
expressed oppositio n to this revision expressed the same concerns with respect to the identical 
revision to the equity regulation. Accordingly, for further analysis on these comments, and the 
reasoning behind our decision to continue to amend the 12 -year minimum allocation p eriod in 
Sec.  351.508(c), see the equity section above.  
    12. Commerce has made no further changes to the proposed amendments to the CVD regulations 
covering direct taxes, Sec.  351.509.  
    For purposes of the CVD regulation addressing direct taxes, we  are adding a new paragraph  (d) 
to Sec.  351.509, which states that benefits from income tax -related subsidies are not tied to 
particular products or markets. In the CVD Preamble, Commerce stated that it considers certain 
subsidies such as payments for pla nt closures, equity infusions, debt forgiveness, and debt -to-equity 
conversions as not tied to certain products or markets because they benefit all production. \218\ 
Commerce also stated in the CVD Preamble that we recognized that there may be scenarios whe re 
the attribution rules that are set forth under Sec.  351.525 do not precisely fit the facts of a particular 
case, and that we are "extremely sensitive to potential circumvention of the countervailing duty 
law." \219\ Moreover, Commerce concluded that if  subsidies allegedly tied to a particular product 
are in fact provided to the overall operations of a company, Commerce will attribute the subsidy 
over sales of all products by the company. \220\ In addition, in the years following the issuance of 
the curre nt CVD regulations, Commerce determined with respect to a tying claim of tax credits that 
tax credits reduce a firm's overall tax liability which benefits all of the firm's domestic production 
and sales. \221\ 
----------------------------------------------- ---------------------------------------------------------------  
    \218\ See CVD Preamble, 63 FR 65400.  
    \219\ Id. 
    \220\ Id. 
    \221\ See Large Residential Washers from the Republic of Korea: Final Affirmative Countervailing 
Duty Determination, 77  FR 75975 (December 26, 2012) (Washers from Korea), and accompanying 
IDM. 
--------------------------------------------------------------------------------------------------------------  
    Therefore, based on the language in the CVD Preamble and our experience since the issuance of 
the current CVD regulations, we have added a pr ovision to the CVD regulations that states, "If a 
program provides for a full or partial exemption, reduction, credit, or remission of an income tax, 
the Secretary normally will consider any benefit to be not tied with respect to a particular market 
under Sec.  351.525(b)(4) or to a particular product under Sec.  351.525(b)(5)." In accordance with 
this provision, if subsidies in fact benefit the overall operations of a firm, even if they are allegedly 
tied to a particular product or market, we will attribut e the subsidy to all sales of all the firm's 
products.  
    We received comments from five parties that supported this amended provision and another 
commenter who generally concurred with the amendment but stated that Commerce should retain 
discretion with respect to the allocation of the benefit if they grant the direct tax program based on 
a specific market or product. In addition, two commenters stated that Commerce should not 
implement this proposal. One of these commenters stated that it is Commerce's l ong-standing 
practice to evaluate the purpose of the subsidy in determining whether the subsidy is tied, and that 
Commerce does not trace how the subsidy is used. In addition, according to that commenter, 
Commerce has not offered a reason for its proposed departure from its long -established attribution 
rules. The other commenter stated that the proposed change under Sec.  351.509(d) provides 
Commerce with greater discretion in deciding when a tax is tied to a particular market or product 
and it is not clear  how Commerce will exercise that discretion, nor does the preamble indicate why 
Commerce needs such discretion. That commenter also expressed concerns that this amendment 
would contradict section 701(a)(1) of the Act, which states that Commerce must establ ish that the 
government or a public entity is providing, directly or indirectly, a countervailable subsidy with 
respect to  
 
[[Page 20824]]  
 
the manufacture, production, or export of merchandise under investigation.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 93 - 
 
      Commerce's Response:  
    As a prelimi nary matter, we agree with the commenter that stated that Commerce has a 
long-standing practice when analyzing whether a subsidy benefit is tied to a particular product or 
particular market. It was in the 1982 Subsidies Appendix that Commerce published the  criteria for 
determining whether a subsidy is tied, and that standard is the one that is still used and reflected in 
the CVD Preamble. Under this standard, a subsidy benefit is "tied" when the intended use is known 
to the subsidy giver and so acknowledged  prior to or concurrent with the bestowal of the subsidy. 
This is the standard that Commerce will continue to use with respect to whether a subsidy benefit is 
tied to a particular product or market.  
    However, in the CVD Preamble, Commerce explicitly rec ognized that there may be scenarios 
where the attribution rules that are set forth under Sec.  351.525 do not precisely fit the facts of a 
particular case and emphasized that it was "extremely sensitive to potential circumvention of the 
countervailing duty  law." \222\ Moreover, Commerce concluded that if subsidies allegedly tied to a 
particular product are in fact provided to the overall operations of a company, Commerce will 
attribute the subsidy over sales of all products by the company. Direct tax progra ms reduce or 
eliminate income taxes paid by a firm, which by their very nature benefit the overall operations of 
the recipient firm.  
--------------------------------------------------------------------------------------------------------------  
    \222\ See CVD Preamble, 63 FR 65400.  
-------------------------------------------------------------------------------------------------------- ------  
    We disagree with respect to the comment that this amendment contradicts section 701(a)(1) of 
the Act. Section 701(a)(1) of the Act does not establish an attribution methodology to be used for 
any type of countervailable program, much less for a program that provides for a full or partial 
exemption, reduction, credit, or remission of an income tax. This section of the Act requires 
Commerce to investigate and quantify countervailable subsidies provided directly or indirectly to the 
manufacture, pro duction, or exportation of subject merchandise, which we are doing under the new 
language at Sec.  351.509(d). Section 351.509(d) is fully consistent with the requirements in 
section  701(a)(1) of the Act and no commenter provided further reasoning to sugge st otherwise.  
    We also disagree with the commenter that stated that Commerce has not offered a reason for its 
proposed departure from its long -established attribution rules. In the Proposed Rule, Commerce 
sought public comment and explicitly stated why we were making this amendment with respect to 
the attribution of direct taxes, citing language in the CVD Preamble that explained that the attribution 
rules under Sec.   351.525 may not precisely fit the facts of a particular case. \223\ Moreover, 
Commerce e xplained in the Proposed Rule that the CVD Preamble explicitly concluded that if 
subsidies allegedly tied to a particular product are in fact provided to the overall operations of a 
company, Commerce will attribute the subsidy over sales of all products by  the company, and that 
direct tax benefits addressed under Sec.  351.509 meet the "tying" exception criterion established 
in the CVD Preamble. \224\ These types of direct tax programs reduce or eliminate income taxes 
paid by a firm. Income taxes are based o n a firm's total taxable income which is comprised of the 
overall tax liability generated from all the firm's production and sales. Thus, these types of direct 
tax programs benefit the overall domestic production of the firm. No commenter provided any type  
of support or reasoning that would contradict our conclusion that a program that provides for a full 
or partial exemption, reduction, credit, or remission of an income tax reduces the overall tax liability 
of a firm which is generated from all the firm's production and sales.  
--------------------------------------------------------------------------------------------------------------  
    \223\ See Proposed Rule, 88 FR 29869.  
    \224\ Id. 
------------------------------------------------------------------- -------------------------------------------  
    Commerce also disagrees with the commenter who stated, with no cited support, that this 
amendment amounts to tracing how a subsidy is used. In the CVD Preamble, Commerce stated the 
concept of fungibility rela ted to the issue of whether Commerce could, or should, trace the use of 
specific funds to determine whether such funds were used for their stated purpose. \225\ Neither the 
fungibility of money nor the tracing of the use of a subsidy is relevant to this ame ndment to our 
regulations. Under the provisions of Sec.  351.509(d), Commerce is in no way suggesting that it will 
trace the use of a subsidy through a company's books and records to determine whether subsidy 
funds were used appropriately (i.e., for their intended use). Indeed, there is no proposal that 
Commerce will go through a firm's books and records to ascertain which sales, costs, funds, and 
expenses contributed to the firms total taxable income in order to calculate or attribute the benefit G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 94 - 
 
  conferred  from a program that provides for a full or partial exemption, reduction, credit, or remission 
of an income tax. Instead, the revised language merely explains that if a program provides for a full 
or partial exemption, reduction, credit, or remission of an  income tax, Commerce normally will 
consider any benefit to be not tied with respect to a particular market or product.  
--------------------------------------------------------------------------------------------------------------  
    \225\ See CVD Preambl e, 63 FR 65403.  
--------------------------------------------------------------------------------------------------------------  
    We also did not implement the suggestion that Commerce should retain discretion with respect 
to the allocation of the benefit  if the granting of the direct tax program was based on a specific 
market or product. Acceptance of this suggestion would directly contradict the reasons for 
implementing Sec.  351.509(d). Income taxes are based on a firm's total taxable income which is 
comprised of the overall tax liability generated from all the firm's production and sales. Thus, these 
types of direct tax programs benefit the overall production of a firm. This fundamental element of a 
program that provides for a full or partial exemption,  reduction, credit, or remission of an income 
tax does not change whether the granting of the income tax exemption, reduction, remission, or 
credit is based on a specific market or product.  
    Lastly, one commenter suggested that the change to Sec.  351.5 09(d) provides Commerce with 
greater discretion in deciding when a tax is tied to a particular market or product, and it commented 
that it was not clear how Commerce would exercise such discretion. We believe that this party has 
misread or misinterpreted t he language within Sec.   351.509(d). The language within 
Sec.  351.509(d) does not provide Commerce with greater discretion to decide when a direct tax is 
tied to a particular market or product. In fact, one could argue that it limits Commerce's discretion  
in some ways. Specifically, Sec.  351.509(d) states that Commerce normally will not find a program 
that provides for a full or partial exemption, reduction, credit, or remission of an income tax to be 
tied to a particular market or product. Nonetheless, a s explained in the Proposed Rule and CVD 
Preamble, Commerce currently has the discretion to determine if subsidies allegedly tied to a 
particular product are in fact provided to the overall operations of a company, and if it makes such 
a determination, the  agency may determine to attribute the subsidy to sales of all products by the 
company. The revision to Sec.  351.509(d) neither increases nor takes away that discretion from 
the agency.  
    13. Commerce has made no further modifications to its proposed ch anges to the CVD regulation 
covering export insurance --Sec.  351.520(a)(1).  
 
[[Page 20825]]  
 
    With respect to export insurance, Commerce is modifying Sec. 351.520(a)(1) to include a period 
of time (normally five years) over which Commerce may examine wh ether premium rates charged 
were inadequate to cover the long -term operating costs and losses of the program. If Commerce 
determines that those rates were inadequate to cover such costs and losses during that period of 
time, then it may determine that a be nefit exists.  
    As Commerce explained in the CVD Preamble, \226\ this standard of benefit for export insurance 
is based on paragraph (j) of the Illustrative List. \227\ In the CVD Preamble, Commerce stated that 
in determining whether the premiums charged u nder an export insurance program covered the 
long-term operating costs and losses of the program, we anticipated that we would continue to make 
that determination based on the five -year rule. \228\ Since 1998, when the current CVD regulations 
were published , we have consistently applied a period of five years to analyze whether the premiums 
charged under an export insurance program are adequate to cover the long -term operating costs 
and losses of the program. \229\ Therefore, we are amending Sec.  351.520(a) to include the 
five-year period considered in Commerce's standard export insurance benefit analysis. Accordingly, 
any allegation made with respect to an export insurance program should be based on a five -year 
period to satisfy Commerce's standard benefit a nalysis for this program. All the comments received 
with respect to Sec.   351.520(a) supported this change.  
--------------------------------------------------------------------------------------------------------------  
    \226\ Id., 63 FR 65385.  
    \227\ See Illustrative List of Export Subsidies, annexed to the 1994 WTO Agreement on Subsidies 
and Countervailing Measures as Annex I (Illustrative List); see also SAA at 928 ("Unlike existing 
section  771(5)(A)(i), new section 771(5) does not incorporate the I llustrative List of Export Subsidies 
into the statute. The Illustrative List, an annex to the Tokyo Round Code, continues in modified form 
as Annex I to the Subsidies Agreement. However, the Illustrative List has no direct application to G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 95 - 
 
  the CVD portion of  the Subsidies Agreement. . . . It is the Administration's intent that Commerce 
adhere to the Illustrative List except where the List is inconsistent with the principles set forth in the 
implementing bill").  
    \228\ See CVD Preamble, 63 FR 65385.  
    \229\ See, e.g., Washers from Korea, 77 FR 75975; and Bottom Mount Combination 
Refrigerators -Freezers from the Republic of Korea: Final Affirmative Countervailing Duty 
Determination, 77 FR 17410 (March 26, 2012), and accompanying IDM at Comment 2.  
----------- ---------------------------------------------------------------------------------------------------  
    14. Commerce has made no further amendments to its regulation covering the calculation for 
ad valorem subsidy rates and attribution of subsidies to a pr oduct, Sec.  351.525.  
    Commerce is making a minor change to the language within paragraphs (b)(2) and (3) of 
Sec.  351.525, which concern the attribution of an export subsidy and a domestic subsidy. Currently 
under existing Sec.   351.525(b)(2), when Commerce determines that a subsidy is specific within the 
meaning of sections 771(5A)(A) and (B) of the Act, because the subsidy is in law or fact contingent 
on export performance, alone or as one of two or more conditions, Commerce wi ll attribute that 
export subsidy only to products exported by the firm. Similarly, when Commerce determines that a 
subsidy program is specific as a domestic subsidy as defined within the meaning of 
section  771(5A)(D) of the Act, then under existing Sec.  3 51.525(b)(3), Commerce will attribute 
that domestic subsidy to all products sold by the firm, including products that are exported.  
    As currently written, both Sec.  351.525(b)(2) and (3) use the language "the Secretary will," 
without condition. Under t his amendment, the language used in both paragraphs (b)(2) and (3) of 
Sec. 351.525 will be changed to "the Secretary will normally." The change to this section of the 
regulation will not change our established practice of allocating an export subsidy only to products 
exported by the firm and allocating domestic subsidies to all products sold by the firm, including 
exports. The insertion of the word "normally" into both paragraphs (b)(2) and (3) would merely 
ensure that there is no perceived conflict with th e language in paragraphs (b)(2) and (3) and the 
language in Sec.  351.525(b)(7) that allows Commerce to attribute a subsidy to multinational 
production under extremely limited circumstances. In addition, the proposed insertion of the word 
"normally" into b oth paragraphs (b)(2) and (3) of Sec.  351.525 indicates a limited provision of 
Commerce's discretion.  
    One point which was not made in the Proposed Rule, which we emphasize in this final rule with 
respect to this regulation, involves export subsidies. An export subsidy is defined under 
section  771(5A)(B) of the Act as a subsidy that is, in law or fact, contingent upon export 
performance, alone or as one of two or more conditions. If Commerce determines that a subsidy is 
an export subsidy because it is c ontingent upon export performance as one of two or more 
conditions, the fact that other conditions are not contingent upon export performances is not itself 
sufficient to depart from the standard attribution and allocation methodology that an export is sol ely 
attributed and allocated to products that are exported by the firm.  
    Commerce received several comments on this regulation that supported this change to 
Sec.  351.525(b)(2) and (3). However, there were some submissions in which commenters 
expressed opposition to this amendment. Most of these commenters explained that the amendment 
should not be adopted because it would create "excessive unpredictability" and "standardless 
uncertainty" through agency discretion into the calculation of a subsidy rate. Those commenters 
expressed concerns that by introducing the word "normally" into the attribution rules for export 
subsidies and domestic subsidies, which are clear and well -established, without any boundary to 
that discretionary language, Commerce was crea ting uncertainty where none needs to exist.  
    In addition, one commenter expressed concerns that the addition of the term "normally" to this 
regulation would contradict section 701(a)(1) of the Act, which states that Commerce must establish 
that the gove rnment or a public entity is providing, directly or indirectly, a countervailable subsidy 
with respect to the manufacture, production, or export of merchandise under investigation.  
    Commerce's Response:  
    We disagree that the insertion of the word "no rmally" into paragraphs (b)(2) and (3) of 
Sec.  351.525 will create unpredictability and uncertainty in the attribution of export and domestic 
subsidies. While Commerce does not disagree that the term "normally" provides a small degree of 
flexibility or di scretion, such flexibility or discretion is narrow. "Normally" means usually or 
regularly  \230\--in other words, the standard practice. If Commerce were to attribute export 
subsidies not to products exported by a firm, or to attribute domestic subsidies no t to products sold 
by a firm, Commerce would have to provide a reason on the record for not following its normal 
practice. Commerce does not see how this would make the agency's practice "unpredictable" or 
"standardless." Indeed, the term "normally" indica tes the very existence of a standard.  
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      \230\ See Collins Dictionary, "Normally," retrieved November 9, 2023, 
https://www.collinsdictionary.com/us/dictionary/english/normally . 
------------------------------------------------------------------------------------------------------------- - 
    In fact, the use of the term "normally" and its equivalent, "in general," have appeared in most of 
Commerce's CVD regulations for at least 25 years, and even Sec.  351.525(b) itself starts with the 
words "in general." Throughout that time period, Com merce has  
 
[[Page 20826]]  
 
administered its CVD regulations and has never had problems with "excessive unpredictability" and 
"standardless uncertainty," as suggested by some of the commenters. Accordingly, we disagree that 
adding the term "normally" to Sec .  351.525(b)(2) and (3) will create any of the confusion suggested 
by certain commenters.  
    Lastly, in response to the commenter that expressed concerns that this change would contradict 
section  701(a)(1) of the Act, we disagree. Section 701(a)(1) of th e Act does not set forth an 
attribution methodology to be used with respect to either a domestic subsidy or an export subsidy. 
This section of the Act requires that Commerce investigate and quantify countervailable subsidies 
provided directly or indirectly  to the manufacture, production, or exportation of subject merchandise. 
The addition of the term "normally" to Sec. 351.525(b)(2) and (3) in no way undermines or 
contradicts that analysis. Therefore, this modification to the regulation does not in any way 
contradict section 701(a)(1) of the Act.  
    15. Commerce has determined to withdraw its transnational subsidy regulation, Sec.  351.527.  
    After considering the comments received on our proposal to withdraw this section, Commerce has 
determined to repea l the current transnational subsidies regulation. In repealing this regulation, we 
clarify that when appropriate, Commerce will investigate and countervail transnational subsidies 
(i.e., subsidies provided by a government or public entity in one country th at benefit producers or 
exporters in another country).  
    Section 701 of the Act does not impose geographic limitations on countervailing unfair foreign 
subsidies. As was explained in the CVD Preamble, Sec.  351.527 was derived from now -repealed 
section 3 03(a)(1) of the Act. \231\ When Sec.  351.527 was promulgated, Commerce's 
administrative experience at that time was that normally governments were subsidizing 
manufacturing and production activities in their own countries rather than subsidizing manufactur ing 
and production abroad. Consistent with the experience at that time, upon promulgating 
Sec.  351.527, in 1998, Commerce repeated this perspective and, accordingly, stated, "{i}n our 
view, neither the successorship of section 701 for Subsidies Code membe rs nor the repeal of 
section  303 by the {Uruguay Round Agreements Act (URAA)}, eliminated the transnational subsidies 
rule, and there is no other indication that Congress intended to eliminate this rule." \232\ 
--------------------------------------------- -----------------------------------------------------------------  
    \231\ See CVD Preamble, 63 FR 65405. Section 303 (19 U.S.C. 1303) was repealed in 1994, 
effective January 1, 1995, pursuant to the URAA.  
    \232\ See Proposed Rule, 88 FR 29870 (citing 1997 Proposed CVD Rules, 62 FR 8847, referencing 
the subsidy attribution regulation covering multinational firms).  
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    Since that time, the assum ptions underlying Commerce's interpretation of section 701 of the Act 
have changed. In the intervening two decades, Commerce has observed increasing instances in 
which a government subsidizes foreign production. As a result, we now believe that our past 
regulatory interpretation of section 701 of the Act was overly restrictive and not required by statute. 
Commerce's self -imposed restriction on its ability to countervail subsidies only if those subsidies 
were provided to entities of a country solely by the g overnment of that country, when subsidies from 
other foreign governments would otherwise be determined countervailable under the CVD law and 
injurious to producers of the domestic like product, is inconsistent with the very purpose of the CVD 
law. Section 701 of the Act does not require such a restrictive interpretation.  
    We received numerous comments expressing strong support for eliminating the current 
transnational subsidies regulation. These commenters argue that Commerce has the statutory 
authority to investigate and countervail transnational subsidies. Whereas the now -repealed 
section  303(a)(1) of the Act previously focused on the administering authority's analysis of 
subsidization on "article{s} or merchandise manufactured or produced in {the} coun try {of 
bestowal}," this limiting language was repealed by section 261(a) of the URAA, as well as the 
entirety of section 303 of the Act. \233\ In place of the now -repealed section 303 of the Act, G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  section  701 of the Act introduced a new subsidy definition, in which there is no limitation on 
Commerce's authority to investigate the "subject country" or otherwise circumscribe the "country" 
from which the subsidy emanates. \234\ 
------------------------------------------------------------------------------------- -------------------------  
    \233\ See SAA at 923. The SAA accompanying the URAA explains the change, in relevant part, 
as follows: "under existing law, section 303 applies in the case of a country which is not a 'country 
under the Agreement' and contains  its own definition of subsidy. In light of the new subsidy definition 
contained in the Subsidies Agreement, it is unnecessary and confusing to retain section 303."  
    \234\ See Aerolineas Argentinas v. United States, 77 F.3d 1564, 1575 (Fed. Cir. 1996). The 
Federal Circuit has pronounced a clear rule: "When a statute has been repealed, the regulations 
based on that statute automatically lose their vitality. Regulations do not maintain an independent 
life, defeating the statutory change."  
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    Numerous commenters provided specific examples of the increasing prevalence in which a 
government provided a subsidy that benefits foreign pr oduction. Several commenters cited the 
People's Republic of China's (China) "Belt and Roade Initiative" (BRI) as a primary example. One 
such commentator explained that subsidies associated with China's BRI program have propped up 
third country export platf orms for a variety of industries. Another commentator explained that 
programs like China's BRI have driven a rapid expansion of Chinese industrial capacity in third 
countries with significant government support, which both displaces sustainable, market -based 
investment and perpetuates global distortion. Significantly, industrial capacity projects under the 
BRI often proceed with support from investment funds that have the trappings of international 
lending or development institutions but that are ultimately  vehicles for Chinese industrial policy 
initiatives. In certain industries, including the steel industry, BRI -linked subsidies have transplanted 
excess capacity into third countries, resulting in a proliferation of non -market production that has 
avoided AD /CVD orders on unfairly traded imports directly from China.  
    Commerce's Response:  
    We agree with these comments. Section 701 of the Act does not impose geographic limitations 
on countervailing unfair foreign subsidies. Section 351.527 was promulgated  over 25 years ago in a 
global trade environment much different than the current trade environment. Specifically, the 
subsidization landscape of 25 years ago related primarily to transnational transactions involving 
foreign aid. \235\ In contrast, in today' s subsidization landscape, governments provide cross -border 
equity infusions, fundings, loans, etc., and they are no longer limited to foreign aid. Rather, they 
are provided to  
 
[[Page 20827]]  
 
promote the grantor country as well as the recipient's country  manufacturing capacities for a 
particular industry. \236\ We also have observed direct investments in a third country from 
state-owned enterprises, with backings from state -owned policy banks, promoting the specific 
grantor country's industry policies. \237\ 
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    \235\ See, e.g., Final Affirmative Countervailing Duty Determination; Fuel Ethanol from Brazil, 
51 FR 3361 (January 27, 1986),  and accompanying IDM (determining funds that were provided by 
the World Bank with the Government of Brazil (GOB) required to match the World Bank's fund 
commitment. While Commerce countervailed the portion attributed to GOB funds, it found that the 
portio n of funds provided by the World Bank not countervailable); Final Affirmative Countervailing 
Duty Determinations; Certain Steel Products from the Republic of Korea, 47 FR 57535 
(December  27, 1982), and accompanying IDM (determining funding for helping war reparations are 
the result of unique circumstances and reflect political and economic considerations that are outside 
of the realm of activities which are contemplated by the CVD law. Thus, Commerce could not envision 
an instance in which benefits flowing from payments of war reparations confer subsidies within the 
meaning of the Act).  
    \236\ See, e.g., Economic Statecraft in China's New Overseas Special Economic Zones, 
International Food Policy Research Institute (March 2012), found at 
https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/126834/filename/127045.pdf . 
    \237\ Id. 
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      Some commenters argue that, regardless of whether Commerce removes Sec.  351.527, the 
statute prohibits Commerce from countervailing transnational subsidies. One comm enter points out 
that the statute only gives Commerce the authority to impose a countervailing duty on merchandise 
from a single country. Therefore, they argue that the statute clearly establishes that Commerce's 
investigations, and subsequent imposition o f countervailing duties as a result of its investigations, 
are limited to a single country (i.e., "a" country).  
    We are unpersuaded by this argument. As some commenters acknowledged, the text of 
section  701 of the Act does not prohibit Commerce from fin ding that a transnational subsidy is 
countervailable and further, section 701 of the Act allows Commerce to countervail a subsidy from 
multiple countries if those countries are part of an international consortia.  
    Another commenter relied on repealed se ction 303(a)(1) of the Act and the 1993 General Issues 
Appendix, \238\ which provided guidance on pre -URAA determinations, arguing that Congress 
intended section 701(a) of the Act to have to the same meaning and application as the language in 
repealed secti on 303(a)(1) of the Act. We find this comment also to be unpersuasive. As explained 
above, the language in section 303 of the Act was repealed in its entirety, and the language that 
existed in section 303(a)(1) was revised and is different from that found in the language codified, 
pursuant to the URAA, in section 701(a) of the Act.  
--------------------------------------------------------------------------------------------------------------  
    \238\ See Certain Steel Products from Austria, 58 FR 37217, at Comment 2 of the General Issues 
Appendix.  
--------------------------------------------------------------------------------------------------------------  
    Some commenters noted practical constraints with respect to transnational subsidy allegations, 
particularly the risk of imposing unreasonable evidentiary obligations on the government of the 
exporting countries and, exporting enterprises, as well as the government or other entities of third 
countries. We acknowledge these concerns, but believe that it i s premature to speculate as to 
Commerce's future evidentiary standards for allegations or findings on various potential 
transnational subsidies. The existence of a transnational subsidy would be a case -specific one, and 
Commerce will not speculate on what evidence is needed to allege or prove the existence of a 
countervailable transnational subsidy without analyzing in the first instance the record evidence 
presented in a particular proceeding.  
    As the administering authority for countervailing duty proc eedings, it is Commerce's charge to 
enforce U.S. CVD law, such that U.S. industries are receiving the fullest extent of the remedy 
provided by the statute. As the dynamics of global trade continue to evolve and foreign governments 
implement novel approache s to subsidization, the removal of Sec.  351.527 strengthens Commerce's 
ability to accomplish its statutory mission to assess and remedy unfair foreign trade practices that 
harm U.S. workers, farmers, and companies.  
    16. Commerce has made no further mod ifications to its new CVD regulation covering fees, fines, 
and penalties --Sec.  351.529.  
    Commerce explained in the Proposed Rule that when a government fails to enforce its regulations, 
requirements, or obligations by not collecting a fee, a fine, or a  penalty, such inaction can be 
considered a countervailable subsidy. \239\ In that case, the government has forgone revenue it was 
otherwise due, therefore, benefiting the party not paying the fee, fine, or penalty, pursuant to 
section  771(5)(D)(ii) of the Act. There are various examples of a government providing benefits to 
parties through inaction. For example, a firm might have owed certain fees to the government for 
management of waste disposal, certain fines for violations of occupational safety and hea lth 
standards in its facility, or certain penalties for non -compliance with other labor laws and regulations 
that were never paid. A government may also have failed to take any action to collect fees, fines, or 
penalties that were otherwise due in the firs t place. In both scenarios, it is Commerce's long -standing 
practice to treat unpaid and deferred fees, fines, and penalties as a countervailable subsidy, no 
matter if the government took efforts to seek payment, recognized that no payment had been made, 
or indicated to the company that it was permitting a payment to be deferred. Section 351.529 of 
the Proposed Rule codified that practice.  
--------------------------------------------------------------------------------------------------------------  
    \239\ See Proposed Rule, 88 FR 29858.  
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    Paragraph (a) under Sec.  351.529 explains that a financial contribution exists if Commerce 
determines that a fee, fine, or penalty which is otherwise due has been forgone or not collected G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  within the meaning of section 771(5)(D)(ii) of the Act, with or without evidence on the record that 
the government took efforts to seek payment or acknowledged nonpayment or d eferral.  
    Paragraph (b) explains that if the government has exempted or remitted a fee, fine, or penalty, 
in part or in full, and Commerce determines that it is revenue which has been forgone or not collected 
in paragraph (a), then a benefit exists to t he extent that the fee, fine, or penalty paid by the party 
is less than if the government had not exempted or remitted that fee, fine, or penalty. Likewise, also 
under proposed paragraph (b), if Commerce determines that payment of the fee, fine, or penalty  
was deferred, it will determine that a benefit exists to the extent that appropriate interest charges 
were not collected, and the deferral will normally be treated as a government loan in the amount of 
the payments deferred, according to the methodology d escribed in Sec.  351.505. The language for 
determining the benefit for nonpayment or deferral is similar to other revenue forgone benefit 
regulations, such as Sec.  351.509, covering direct taxes, and Sec.  351.510, covering indirect taxes 
and import char ges (other than export programs).  
    Commerce received several comments on this proposed regulation. We have determined to make 
no modification to the proposed regulation in response to those comments for the reasons provided 
below.  
    Several commenters approved of Commerce's codificati on of its practice in this regard. One 
commenter expressed its support for the fact that Commerce may find the existence of a 
countervailable subsidy even if the government has not taken efforts to seek payment or grant 
deferral, or otherwise acknowledged nonpayment of the fee, fine, or penalty. Under their view, an 
unpaid obligation is an unpaid obligation, regardless of the actions taken by the government. That 
commenter suggested that Commerce might also include in the regulation that it could rely on 
evidence from third parties, such as reports by international or non -governmental organizations to 
establish the existence of an unpaid fee, fine, or penalty.  
    Other commenters supporting the regulation expressed concerns that the  
 
[[Page 20828]]  
 
regulat ion, as drafted, could be interpreted too narrowly to only apply when the nonpayment of a 
fee, fine, or penalty is unique to a particular party, and not when a law or other government measure 
generally imposes an exception to the payment of a fee, fine, or  penalty for certain industries, 
enterprises, or other groups. The commenters expressed concerns that respondents or foreign 
governments could argue that payment of a fee, fine, or penalty would not be "otherwise due" or 
"otherwise required" under that sce nario. They therefore requested that Commerce clarify in the 
final rule that it will consider a financial contribution to have been conferred under this provision 
even when non -payment of fees, fines, or penalties by certain entities is provided for by law . 
    Additional commenters supporting the provision expressed concerns that the regulation was too 
narrow in addressing government inaction, and that it should also apply to the other examples 
Commerce described in the preamble to the Proposed Rule --specifically, weak, ineffective, or 
nonexistent property (including intellectual property), human rights, labor, and environmental 
protections. Those commenters suggested that Commerce should determine that the government 
inaction in those situations is a finan cial contribution that provides a benefit specific to those 
industries and enterprises benefiting from lower costs and, therefore, Commerce should countervail 
that government inaction in practice and in its regulations.  
    Other commenters focused on the "otherwise due" language. One sought further clarification as 
to when the benefit of an unpaid fee, fine, or penalty is "otherwise due." Another commenter, 
focusing both on the "otherwise due" language, as well as on the regulatory language stating that 
there need not be evidence of affirmative government demands for payment, commented that the 
word "due" means "immediately enforceable," and therefore, in the absence of an automatic or 
formal final assessment of the fee, fine, or penalty, claimed that Comme rce lacks the statutory 
authority to treat the non -collection of such obligations as a countervailable subsidy. In other words, 
for example, if a law is passed that exempts certain companies from paying certain fines, until those 
fines actually come due an d the government demands payment, the commenter stated that the 
revenue cannot be due or "forgone." Therefore, the commenter suggested that Commerce should 
provide for this alleged revenue forgone limitation in the regulation.  
    Another commenter stated that the proposed regulation presents a vague definition of 
government inaction and unreasonably expands the scope of subsidies permitted by law, while other 
commenters expressed concerns that Commerce's practice and the regulation undermines the 
sovereign  authority of foreign regulatory and enforcement agencies to determine the extent to which 
they will pursue, settle, or dismiss these types of claims. They expressed concerns that this 
regulation fails to account for legitimate disputes between the foreign  government regulatory or 
enforcement authority and the foreign producer, including, for example settlements of litigation in G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  which the government determines that a lesser amount, or nonpayment, of a fee, fine, or penalty is 
acceptable, as part of a bigger  settlement package.  
    Commerce's Response:  
    In response to the request that Commerce include in the regulation that the agency could rely on 
evidence from third parties, such as reports by international or non -governmental organizations, to 
establish  the existence of unpaid fees, fines, or penalties, Commerce has determined that no such 
additional language is needed. It is Commerce's practice in determining if there is a financial 
contribution, including a financial contribution in the form of revenue  forgone, to consider all of the 
information on the record before it. That would include international and non -governmental 
organization reports, but it could also include other sources of information. Therefore, consistent 
with long -standing established p ractice, in making any findings or determinations under this 
regulation, Commerce will analyze and consider all of the facts and information on the record of the 
proceeding. Accordingly, Commerce has determined not to include the language suggested by that  
commenter in the regulation.  
    With respect to the suggestion that Commerce should clarify that Sec.  351.529 applies when the 
law itself excludes certain industries, enterprises, or other groups from paying certain fees, fines, or  
penalties, Commerce d oes not disagree that it could apply, but we do not believe that the regulation 
should be revised. Without question, a de jure exemption in the law from the requirement to pay a 
fee, fine, penalty, direct tax, indirect tax, or import charge, or an exemptio n from the requirements 
of various laws, regulations, or programs, can confer a countervailable subsidy within the meaning 
of the Act. However, Commerce can address such subsidies in its application of the CVD law with or 
without Sec.  351.529. The issue i s whether language specific to exclusions from payment by statute 
or regulation should be added to this regulatory provision unique to fees, fines, and penalties. We 
have decided that the inclusion of such language would be inappropriate because similar la nguage 
does not exist in the regulatory provisions for direct taxes, indirect taxes, import charges, and other 
relevant revenue forgone examples.  
    Section 771(5)(D)(ii) of the Act states that there is a financial contribution conferred by forgoing 
or not collecting revenue that is otherwise due, (e.g., granting tax credits or deductions from taxable 
income), and the SAA states that although section 771(5)(D) of the Act provides a list of four broad 
categories of government practices that constitute a "fi nancial contribution," the examples of 
particular types of government practices under each of these categories are not intended to be 
exhaustive. \240\ Therefore, the range of government acts or practices that constitute revenue 
forgone is broad. We are con cerned that if we applied the suggested language in this particular 
regulatory provision, but not to others where it would also naturally apply, a court might incorrectly 
hold that we intended for such a requirement to only apply to some, and not all, of t he regulations 
addressing revenue forgone by a government through nonpayment or non -collection of certain 
obligations. That is not Commerce's intention because de jure exemptions from payment of financial 
obligations are countervailable across the board fo r all types of revenue forgone by the government. 
Thus, we are not including the suggested language in Sec.  351.529.  
--------------------------------------------------------------------------------------------------------------  
    \240\ See SAA at 927.  
--------------------------------------------------------------------------------------------------------------  
    In response to the commenters who suggested that Commerce should include the ability of the 
agency to countervail weak, ineffective, or nonex istent property (including intellectual property), 
human rights, labor, and environmental protections in this regulation, we disagree that such a 
request is consistent with our intentions in issuing Sec.   351.529. Section 351.529 is intended to 
codify our long-standing practice of treating unpaid and deferred fees, fines, and penalties as a 
countervailable subsidy. It was never intended to address all subsidies conferred by government 
inaction.  
    However, this regulation was also never intended to preclud e Commerce from addressing either 
the inactions or measures of a government under the other forms of financial contributions  
 
[[Page 20829]]  
 
defined within the statute. Section 701(a) of the Act requires Commerce to impose a CVD equal to 
the countervailab le subsidies conferred either directly or indirectly upon the manufacture, 
production, or exportation of subject merchandise. Therefore, any government act, measure, or 
practice that provides a financial contribution and a benefit within the meaning of sec tions 771(5)(D) 
and 771(5)(E) of the Act and is specific within the meaning of section 771(5A) of the Act is 
countervailable. In addition, our regulations explicitly acknowledge that there may be cases where G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  a government program is not covered by a specifi c rule and provide for a general rule as to the 
benefit measurement for those types of programs. \241\ Accordingly, although Commerce finds that 
it would be inappropriate to include other areas of government inaction in a regulation drafted to 
address, spec ifically, the nonpayment of fees, fines, and penalties, Commerce also finds that the 
refusal to include such language in the regulation in no way supports or detracts from the 
commenters' points with respect to the countervailability of other forms of gove rnment inaction.  
--------------------------------------------------------------------------------------------------------------  
    \241\ See Sec.  351.503(a) and (b).  
---------------------------------------------------------------------------------------- ----------------------  
    With regard to the arguments about the term "otherwise due," the financial contribution, and the 
related benefit, under the language of this regulation is the amount of the payment that was required 
of a party but was not made or  was made only in part. Given the potential range of fees, fines, and 
penalties that could fall within this regulation and the various foreign government regulations, 
policies, and practices that may cover any of these fees, fines, and penalties, Commerce does not 
believe that it can provide further guidance in the regulation as to the timing of benefits. The timing 
of the benefit will differ depending on the facts on the record (e.g., the terms of a fine, the various 
forms the fine might take, and types of  payment that a party may use to pay for all, or some, of the 
fine). Thus, further language in the regulation on the timing of a benefit could be counterproductive 
and unnecessarily limit Commerce's ability to address the timing of a benefit based on the u nique 
facts of a record before it.  
    Moreover, with respect to the alleged definition of revenue "otherwise due" and revenue forgone, 
we disagree with that commenter's understanding of the CVD law in general. Section 771(5)(D) of 
the Act defines one type  of financial contribution as forgoing or not collecting revenue that is 
otherwise due. Congress, in creating and enacting the CVD law, did not provide a statutory definition 
for the word "due." Thus, the commenter's presented definition of "due" is not bi nding. Indeed, the 
explicit language within the Act uses the phrase "not collecting" without the use of any qualifier such 
as "automatic" or "final assessment," as suggested by the commenter. Although not a controlling 
definition, even the cite to Black's Law Dictionary used by the commenter itself for the term "due" 
does not, in fact, include within its definition the words "automatic" or "final," as suggested by the 
commenter. \242\ 
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    \242\ See Black's Law Dictionary, 2nd Ed., "due," retrieved November 8, 2023, 
https://thelawdi ctionary.org/due . ("Owing; payable; justly owed. That which one contracts to pay 
or perform to another; that which law or justice requires to be paid or done" and "Owed, or owing, 
as distinguished from payable. A debt is often said to be due from a person where he is the party 
owing it, or primarily bound to pay, whether the time for payment has or has not arrived").  
----------------------------------------------------------------------------------------------------------- --- 
    Furthermore, the commenter's points with respect to the limitations of a revenue forgone analysis 
are illogical. For example, if a government creates an income tax law which sets the corporate 
income rate at 25 percent and makes it applicable to al l corporations except those in the car industry, 
it would be nonsensical to claim that a countervailable subsidy has not been provided to the car 
industry because no bill was demanded of the car manufacturers. In creating this income tax law, 
the governmen t undertook an act or practice to exempt one industry from income taxes. Similarly, 
if a government created a law to address the releasing of pollutants into the water which provided 
for fines of companies that violate this law, but specifically exempted o r simply did not include the 
car industry within this law, this exclusion or exemption would provide a financial contribution and 
benefit under the statute to the car industry if it was determined that an investigated car 
manufacture released pollutants in to the water, and the benefit would be based on the amount of 
the fines it otherwise would have been assessed under the law if it were any manufacturer other 
than a car manufacturer.  
    In addition, it is counterintuitive to argue that a financial contrib ution within the meaning of 
section 771(5)(D)(ii) of the Act would not exist if a government exempts an enterprise or industry 
from the requirements of a law, regulation, or program that imposes fees, fines, or penalties (or 
taxes for that matter). Indeed,  with respect to exporters, a government providing exporters with 
such exemptions is the very definition of an export subsidy, a type of countervailable subsidy 
explicitly referenced in section 771(5A)(B) of the Act. As the U.S. Supreme Court stated in 
Zenith,\243\ the CVD law was intended to offset the unfair competitive advantages that foreign 
producers would otherwise enjoy from export subsidies provided by their governments, and the G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  points made by the commenter on revenue forgone in this context would b e contrary to those 
intentions. Accordingly, Commerce will not include the limitations suggested by that commenter in 
Sec.  351.529.  
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    \243\ See Zenith Radio Corporation v. United States, 437 U.S. 443, 455 (1978) (Zenith).  
--------------------------------------------------------------------------------------------------------------  
    With respect to the claim that the regulation presents a vagu e definition of government inaction 
and unreasonably expands the scope of subsidies, we disagree. The regulation is limited only to the 
nonpayment of fees, fines, and penalties, and the regulation explicitly addresses revenue forgone 
by the government it w as otherwise due, thereby, providing a financial contribution that benefits the 
party not paying the fee, fine, or penalty.  
    We also disagree with that same commenter's claim that the regulation unreasonably expands 
the scope of subsidies which Commerce  may lawfully address. Section 351.102(a)(25) of our 
regulations state that "government -provided" is a shorthand expression for an act or practice that 
is alleged to be a countervailable subsidy. Under section 771(5)(D) of the Act, a government act or 
practice may provide a financial contribution, which under section 771(5)(E) of the Act may confer 
a benefit to the recipient. If Commerce determines under section 771(5A) of the Act that the financial 
contribution providing a benefit is specific, then Commerc e may countervail that subsidy. \244\ 
Moreover, as noted above, the SAA states that section 771(5)(D) of the Act provides a list of four 
broad categories of government practices that constitute a "financial contribution," and that the 
examples of particular  types of government practices under each of these categories are not 
intended to be exhaustive. \245\ The nonpayment and non -collection of fees, fines, and penalties is 
a clear example of revenue forgone under section 771(5)(D) of the Act, and therefore, t his regulation 
in no way "expands" the scope of subsidies which Commerce may address in its CVD law.  
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    \244\ See SAA at 925.  
    \245\ Id. at 9 27. 
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    Finally, in response to the concerns of certain commenters that Sec.  351.529 undermines the 
sovereign authority of  
 
[[Page 20830]]  
 
foreign regulatory and enforcement agencies to determine the extent to which they will pursue, 
settle, or dismiss these types of claims, we disagree. Neither the Act nor the SCM Agreement 
"undermine{} the sovereign authority" of foreign governments, and this r egulatory provision is 
consistent with both.  
    For example, a foreign government is free to subsidize its car industry; however, the Act and the 
SCM Agreement allow the United States government to offset those subsidies with countervailing 
duties. If a f oreign government does not wish to collect a fee, fine, or penalty that should have been 
paid by one of its domestic car manufacturers, it is free not to do so as well. Commerce is not 
suggesting that the foreign government cannot prioritize the collection  of certain financial obligations 
by certain parties over others. However, under both the Act and the SCM Agreement, just as the 
foreign government has the right to not collect foreign fees, fines, and penalties, the United States 
has the right to counterv ail that non -collection of foreign fees, fines, and penalties by the foreign 
government.  
    With respect to the issue about settlements and litigation, Commerce recognizes that where there 
is the presence of an independent judiciary system, there could be  a legitimate legal dispute between 
two parties such as a government agency and a private company with respect to money or taxes 
due. That could lead to a court holding that the private party pay less or no fees, fines, and penalties. 
It could also lead to  the payment of less or no fees, fines, or penalties pursuant to a larger litigation 
settlement between the government and a private company. Commerce recognizes such holdings 
and settlements arising out of litigation occur both in the United States, as we ll as other countries, 
and that the existence of such holdings and settlements could be facts on the record before 
Commerce in considering whether to countervail or not countervail the nonpayment and 
non-collection of certain fees, fines, or penalties.  
    However, it is important to emphasize that the judgment of an independent court on a legitimate 
legal dispute is different from a court accepting a settlement of a dispute between the government G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 103 - 
 
  and a private party. Unlike a court holding, a settlement of  a debt, fee, or fine between a government 
and a private party could constitute both a financial contribution and a benefit under the Act 
regardless of whether that settlement has been sanctioned by a court. The countervailability of such 
a subsidy would b e based on the facts on the record.  
    We understand that foreign governments may decide to waive the payment of certain fees, fines, 
and penalties for a host of reasons, including litigation, and ultimately such a waiver is a benefit to 
the recipient reg ardless of the motivations of the foreign government. Accordingly, we disagree with 
the commenters that stated that Commerce cannot countervail the nonpayment of fees, fines, or 
penalties depending on the reason provided for such a waiver by the foreign go vernment. 
Nonpayment and non -collection of fees, fines, and penalties is, by any other identifier, nonpayment 
and non -collection of fees, fines, and penalties, and in many cases, Commerce will be able to 
countervail such nonpayment and non -collection as re venue forgone by the foreign government in 
accordance with Sec.  351.529.  
    17. Commerce is changing each reference to Customs Service in part 351 of its regulations to 
U.S. Customs and Border Protection and adding a definition of U.S. Customs and Border  Protection -
-Sec. 351.102(b)(53).  
    The Customs Service, which was created on July 31, 1789, was integrated into a new agency, the 
U.S. Customs and Border Protection, on March 1, 2003. However, Commerce's antidumping and 
countervailing duty regulations c ontinue to refer to the agency which administers the trade remedy 
laws in part 351 as the Customs Service, other than in the definition of "Customs Service" in current 
Sec.  351.102(b)(14). Commerce is now amending its regulations in this final rule to rem ove the 
term Customs Service, wherever it appears, and to replace it with the correct agency name --
U.S. Customs and Border Protection. Furthermore, Commerce has added a definition for the term 
U.S. Customs and Border Protection to its regulations.  
    18. Commerce is adding the definition of the term "days" to clarify that the term normally means 
calendar days when used throughout part 351 --Sec.  351.102(b)(14).  
    Commerce's regulations currently do not define whether the term "days," when used throughout  
part 351, references calendar days or business days, and Commerce is frequently asked by outside 
parties whether certain regulatory deadlines are based on calendar or business days. Commerce has 
consistently treated the term "days" in its regulations, wit h no further qualifier, to mean calendar 
days. \246\ Accordingly, to add clarity to the regulations, Commerce is amending the regulation at 
Sec.  351.102(b)(14), replacing the definition of "Customs Service" with the definition of the term 
"days." The defin ition of "days" states that for purposes of deadlines and time limits for submissions, 
if the term "days" is used, without a qualifier, the term will generally mean calendar days. If 
Commerce intends in a particular provision to use business days instead, then the definition states 
that the regulation will explicitly indicate that the business day alternative applies. \247\ 
--------------------------------------------------------------------------------------------------------------  
    \246\ See e.g., Sodium Nitrite from India: Preliminary Affirmative Determination of Sales at Less 
Than Fair Value, Postponement of Final Determination, and Extension of Provisional Measures, 
87 FR 50604 (August 17, 2022) (stating, in accordance with Se c.  351.210(b), "Commerce will make 
its final determination no later than 135 days after the publication of this preliminary 
determination."); and Sodium Nitrite from India: Final Affirmative Determination of Sales at Less 
Than Fair Value, 88 FR 1052 (Janu ary 6, 2023) (announcing Commerce's final determination signed 
on December 30, 2022, or 135 calendar days after the preliminary determination).  
    \247\ See, e.g., Sec.  351.304(d)(1) (stating that a submitter must take certain actions "within 
two busines s days after receiving the Secretary's explanation").  
--------------------------------------------------------------------------------------------------------------  
Summary of Changes From the Proposed to the Final Rule  
    Commerce has made the following changes to the regulatory text in the Proposed Rule that are 
reflected in the final regulatory text and preamble of this final rule as follows:  
    Commerce has revised Sec.  351.102(b)(14) to define the term "days" to explain that the term 
generally means  calendar days and not business days, and if Commerce wishes for business days to 
be applied, it will explicitly state as such.  
    Commerce revised Sec.  351.104(a)(1) and added Sec.  351.104(a)(3) through (7) to identify 
the information sources that may be cited in submissions without submitting them on the official 
record and the information sources that must be submitted on the official record for Commerce to 
consider them in the ongoing segment of a proceeding. All citations to public documents from ot her 
segments and proceedings which may be cited without submitting them on the record must include 
the ACCESS barcode in the citation.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      Commerce determined to not revise Sec.  351.301(c)(4) as was presented in the Proposed Rule, 
in agreement with the co mmenters who expressed concerns that the proposed revision would not 
provide interested parties with sufficient opportunity to respond to  
 
[[Page 20831]]  
 
information placed by Commerce on the record late in a segment of a proceeding.  
    Commerce revised Sec. Sec.  351.225(f), 351.226(f), and 351.227(d) to reflect that only the 
filing and timing restrictions set forth in Sec.  351.301(c) do not apply to the filing deadlines set 
forth in the scope, circumvention, and covered merchandise regulations. Further , in response to 
comments and concerns from outside parties, the proposed amendments to Sec.  351.225(q) have 
been revised to limit and further clarify the situations in which a scope clarification may be applied, 
and the means by which it may be issued. C ommerce also made minor edits to the terminology 
proposed in Sec. Sec.  351.225(m)(2), 351.226(m)(2), and 351.227(m)(2) to clarify what 
preliminary and final documents from scope, circumvention, and covered merchandise segments 
should be placed on the CVD record once a proceeding covering companion orders is completed on 
the AD record.  
    Commerce revised certain language in the newly proposed Sec.  351.301(c)(6), clarifying that 
Commerce can only guarantee that it will address Notices of Subsequent Author ity filed within 
30 days of the issuance of the alleged authority and 30 days before a final determination or final 
results deadline (and 25 days before a final determination or final results deadline for rebuttal 
comments), but removed proposed language w hich would have stated that Commerce would not 
consider and address submissions after the pre -final determination and results deadlines. Commerce 
agreed with commenters who explained that when Commerce is able, it must address subsequent 
authorities, but n otes that the regulation explains that Commerce may not be able to consider and 
address such authorities if there is little time after the submission is filed before the issuance date 
of a final determination or results.  
    With respect to the proposed am endments to Sec.  351.308, Commerce revised the lettering to 
have the CVD AFA hierarchy appear at paragraph (j), reserving paragraphs (g), (h), and (i) for future 
rulemaking to codify, in part, additions Congress made to section 776 of the Act in 2015. 
Furthermore, in response to multiple comments, Commerce removed its "above -zero" threshold in 
the first step of the CVD AFA hierarchy for investigations, and instead replaced it with a 
"above -de minimis" threshold to better reflect the statutory purpose of AF A to induce cooperation 
by interested parties.  
    Commerce made minor changes to its regulations addressing government inaction which distorts 
prices or costs through weak, ineffective, or nonexistent property (including intellectual property), 
human righ ts, labor, and environment protections. Specifically, Commerce modified 
Sec.  351.416(d)(2)(v) of the PMS regulation to clarify that if Commerce looks to the actions of 
governments in other countries to analyze the cost effects of government inaction, it w ill normally 
consider only the actions of governments in comparable economies. Furthermore, Commerce revised 
the proposed language for Sec.  351.408(d)(1)(i) and (ii) to clarify that it is Commerce who 
determines as part of its surrogate value analysis if a proposed value on the record "was derived" 
from a country that provides broadly available export subsidies," that particular instances of 
subsidization occurred with respect to a proposed surrogate value, and that a proposed surrogate 
value was subject t o an AD order, or was derived from a facility, party, industry, intra -country region 
or a country with weak, ineffective, or nonexistent protections.  
    Commerce substantially revised its proposed PMS regulation, Sec.  351.416, in response to many 
outside  comments on the regulation. Such revisions include the following: (1) addition and revision 
of terminology throughout the regulation for consistency and clarification; (2) clarification in 
Sec.  351.416(a) that the regulation is defining both sales -based particular market situations and 
cost-based particular market situations; (3) the removal of the terms "distinct" and "considerably" 
from proposed Sec.  351.416(a), (b), (c), (d), and (e), so as not to create any confusion that further 
standards or tests a re required as part of Commerce's PMS analysis; (4) revisions to Sec.  351.416(c) 
to explain that Commerce's sales -based PMS analysis is limited to certain period of investigation or 
review; (5) revisions to Sec.  351.416(d) to clarify that Commerce's anal ysis is limited to the relevant 
period of investigation or review, and is divided into three parts --a finding of a circumstance or set 
of circumstances that impacts costs or prices, a finding that costs were distorted, and a finding that 
it is more likely than not that the circumstances or set of circumstances at issue contributed to the 
distortion of the costs of production of the subject merchandise; (6) additional changes to 
Sec.  351.416(d) to clarify Commerce's analysis of a cost -based PMS allegation, including a listing 
of information in Sec.  351.416(d)(4) that will not preclude it from finding the existence of a PMS; 
(7) modifications to Sec.  351.416(e) to explain that a market situation's particularity is not G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 105 - 
 
  determined by the number of impacted pa rties, but only if it applies to certain parties and products, 
and that the provision applies equally to both sales -based and cost -based PMS determinations; 
(8) extensive changes to Sec.  351.416(f) --explaining that if Commerce determines the existence 
of a cost -based PMS, it can adjust its calculations of the cost of production, and if it cannot precisely 
quantify the distortions in the cost of production caused by the PMS, then it can use any reasonable 
methodology to adjust its calculations based on reco rd information. Furthermore, the regulation 
provides that even if Commerce determines the existence of a cost -based PMS, it may determine to 
make no adjustment if it believes an adjustment is not warranted, and the regulation provides 
guidance on factors w hich Commerce may consider in determining if an adjustment is appropriate; 
(9) revisions to certain language used in its proposed examples of cost -based particular market 
situations in Sec.  351.416(g), a refinement of the circumstances described in Sec.  351.406(g)(9), 
and provision of more extensive descriptions of nongovernmental actions in Sec.  351.416(g)(12) 
that could become a PMS which distorts a producer's costs of production; and (10) certain minor 
revisions to Sec.  351.416(h) to bring that provi sion into conformity with the language of other 
provisions of the PMS regulation.  
    Commerce modified the proposed amendment to Sec.  351.505(d), the loan regulation, to state 
that Commerce will normally treat a loan as a grant if no "payments on the loa n" have been made 
in three years unless the loan recipient can demonstrate that nonpayment is consistent with the 
terms of a comparable commercial loan it could obtain on the market or "the payments on the loan 
are consistent with the terms of the loan con tract." Commerce made the modifications to allow for 
parties to show that the payments on the loan were consistent with the terms of a contract, and not 
to treat accrued, unpaid interest in every case as a grant, as proposed in the Proposed Rule, in 
respon se to comments filed on the record addressing "balloon" loans and the case -specific nature of 
the inclusion, or exclusion, of accrued, unpaid interest in Commerce's benefit calculations.  
    Commerce also made a small change to its proposed amendments to S ec.  351.507(c), its equity 
regulation, adding the word "outside" to the term "private investor," to clarify that the sentence was 
meant only to apply to  
 
[[Page 20832]]  
 
outside private investors, and not private investors within a company.  
    Lastly, th e Customs Service was integrated into a new agency, the U.S. Customs and Border 
Protection, in 2003. Commerce amended its regulations in this final rule to remove the term "the 
Customs Service," wherever it appears, and to replace it with the correct agenc y name --
U.S. Customs and Border Protection. In furtherance of that modification, Commerce has also added 
a definition of U.S. Customs and Border Protection at Sec.  351.102(b)(53).  
Classifications  
Executive Order 12866  
    The Office of Management and Budg et has determined that this final rule is significant for 
purposes of Executive Order 12866.  
Executive Order 13132  
    This final rule does not contain policies with federalism implications as that term is defined in 
section 1(a) of Executive Order 13132 of August 4, 1999, 64 FR 43255 (August 10, 1999).  
Paperwork Reduction Act  
    This final rule does not contain a col lection of information subject to the Paperwork Reduction Act 
of 1995, 44 U.S.C. Chapter 35.  
Regulatory Flexibility Act  
    The Chief Counsel for Regulation has certified to the Chief Counsel for Advocacy of the Small 
Business Administration under the prov isions of the Regulatory Flexibility Act, 5 U.S.C. 605(b), that 
the rule would not have a significant economic impact on a substantial number of small business 
entities. A summary of the need for, objectives of, and legal basis for this rule is provided in  the 
preamble and is not repeated here. Commerce did not receive comments opposing this certification G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 106 - 
 
  in response to the Proposed Rule. Thus, a Final Regulatory Flexibility Analysis is not required and 
has not been prepared.  
List of Subjects in 19 CFR Part  351 
    Administrative practice and procedure, Antidumping, Business and industry, Confidential business 
information, Countervailing duties, Freedom of information, Investigations, Reporting and 
recordkeeping requirements.  
    Dated: March 8, 2024.  
Ryan M ajerus,  
Deputy Assistant Secretary for Policy and Negotiations, performing the non -exclusive functions and 
duties of the Assistant Secretary for Enforcement and Compliance.  
    For the reasons stated in the preamble, the U.S. Department of Commerce amends 19 CFR 
part 351 as follows:  
PART 351 --ANTIDUMPING AND COUNTERVAILING DUTIES  
0 
1. The authority citation for 19 CFR part 351 continues to read as follows:  
    Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 note; 19 U.S.C. 1671 et seq.; and 
19 U.S.C. 3538.  
0 
2. In part 351, remove the text "the Customs Service" wherever it appears and add in its place the 
text "U.S. Customs and Border Protection".  
0 
3. In Sec.  351.102, revise paragraph (b)(14) and add paragraph (b)(53) to read as follows:  
Sec.  351.102  Definitions.  
* * * * *  
    (b) * * *  
    (14) Days. Deadlines and time limits for submissions with the Secretary that reference a number 
of "days," will generally mean calendar days. If certain deadlines or time limits are intended to apply 
to business days instead, which are Monday through Friday, except Federal holidays, then the 
applicable regulatory provisions implementing such deadlines or time limits will explicitly indicate 
the use of the business day alternative.  
* * * * *  
    (53) U.S. Customs and Border Protection. U.S. Customs and Border Protection means 
United  States Customs and Border Protection of the United States Department of Homeland Security.  
0 
4. In Sec.  351.104, revise paragraph (a)(1) and add paragraphs (a)(3) t hrough (7) to read as 
follows:  
Sec.  351.104   Record of proceedings.  
    (a) * * *  
    (1) In general. The Secretary will maintain an official record of each antidumping and 
countervailing duty proceeding. The Secretary will include in the official record all factual 
information, written argument, or other material developed by, presente d to, or obtained by the 
Secretary during the course of a proceeding that pertains to the proceeding. The official record will 
include government memoranda pertaining to the proceeding, memoranda of ex parte meetings, G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 107 - 
 
  determinations, documents published in  the Federal Register, and transcripts of hearings. The official 
record will contain material that is public, business proprietary, privileged, and classified. For 
purposes of section 516A(b)(2) of the Act, the record is the official record of each segment  of the 
proceeding. For a scope, circumvention, or covered merchandise inquiry pertaining to companion 
antidumping and countervailing duty orders conducted on the record of the antidumping duty 
segment of the proceeding, pursuant to Sec. Sec.  351.225, 352 .226, and 351.227, the record of 
the antidumping duty segment of the proceeding normally will be the official record.  
* * * * *  
    (3) Filing requirements for documents not originating with the Department --(i) In general. 
Documents not originating with th e Department must be placed on the official record for the 
documents to be considered by the Secretary in the Secretary's analysis and determinations. With 
the exception of the sources enumerated in paragraph (a)(3)(ii) of this section, mere citations to 
hyperlinks, website Uniform Resource Locators (URLs), or other sources of information do not 
constitute placement of the information from those sources on the official record. Unless the 
exceptions of paragraph (a)(3)(ii) apply, the filing and timing requir ements of Sec.  351.301 apply 
to such information.  
    (ii) Exceptions for publicly available documents not originating with the Department. The following 
publicly available sources of information not originating with the Department will be considered by 
the Secretary in the Secretary's analysis and determinations when fully cited by submitting parties 
without the requirement that the information sources be placed on the official record: United States 
statutes and regulations; published United States legisl ative history; United States court decisions 
and orders; Federal Register notices and determinations; Commission reports adopted by reference 
in the Federal Register; dictionary definitions; international agreements identified in 
Sec.  351.101(a) and dispu te settlement determinations arising out of those international 
agreements. The Secretary may decline to consider sources of information in its analysis or 
determination that are not cited in full.  
    (4) Filing requirements for proprietary, privileged, a nd classified information. When lawfully 
permitted, all proprietary, privileged, and classified information, including documents originating 
with the  
 
[[Page 20833]]  
 
Department containing such information from another segment of the same proceeding, must be 
placed on the official record in their entirety for the Secretary to consider that information in its 
analysis and determinations, and the filing and timing restrictions of Sec.  351.301 apply to such 
information.  
    (5) Notices and determinations orig inating with the Department and published in the Federal 
Register. All notices and determinations originating with the Department and published in the Federal 
Register may be cited by parties in submissions for consideration by the Secretary without the 
requirement that the notice or determination be placed on the official record, as long as those notices 
and determinations are cited in full. The Secretary may decline to consider notices or determinations 
that are not cited in full. Section 351.301 does not  apply to Federal Register notices and 
determinations.  
    (6) Public versions of certain unpublished documents originating with the Department which may 
always be referenced by citation without placing the information on the record. Public versions of 
the following documents originating with the Department derived from other segments and 
proceedings may be cited in submissions for consideration by the Secretary without being placed on 
the record, as long as those documents are cited in full. In providing a  citation to a document 
originating with the Department, the submitter must explain in the text of the submitted document 
the factual and legal reasons for which the submitter is citing the document and an Enforcement and 
Compliance Antidumping Duty and Co untervailing Duty Centralized Electronic Service System 
(ACCESS) barcode number associated with the document must be included as part of the citation. 
If an ACCESS barcode number is not included in the citation or is incorrectly transcribed, or the 
documen t is not cited in full, the Secretary may decline to consider the cited decision document in 
its analysis or determination. The timing and filing restrictions of Sec.  351.301 shall not apply to 
these documents:  
    (i) Preliminary and final issues and dec ision memoranda issued in investigations pursuant to 
Sec. Sec.  351.205 and 351.210;  
    (ii) Preliminary and final issues and decision memoranda issued in administrative reviews, 
pursuant to Sec.  351.213;  
    (iii) Preliminary and final issues and decisi on memoranda issued in new shipper reviews, pursuant 
to Sec.  351.214;  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      (iv) Preliminary and final issues and decision memoranda in changed circumstances reviews, 
pursuant to Sec.  351.216;  
    (v) Preliminary and final issues and decision memoranda in sunset reviews, pursuant to 
Sec.  351.218;  
    (vi) Preliminary and final decision memoranda issued in scope inquiries pursuant to Sec.  351.225, 
circumvention inquiries pursuant to Sec.  351.226, and covered merchandise inquiries pursuant to 
Sec.  351.227 ; 
    (vii) Draft and final redeterminations on remand;  
    (viii) Draft and final redeterminations issued pursuant to section 129 of the Uruguay Round 
Agreements Act;  
    (ix) Initiation decision documents, such as initiation checklists;  
    (x) New subsi dy allegation memoranda;  
    (xi) Scope memoranda issued in an investigation; and  
    (xii) Post -preliminary determination or results memoranda addressing issues for the first time in 
the period of time between preliminary and final determinations or resul ts. 
    (7) Special rules for public versions of documents originating with the Department with no 
associated ACCESS barcode numbers. Public versions of documents originating with Commerce in 
other segments or proceedings under paragraph (a)(6) of this sec tion but not associated with an 
ACCESS barcode number, including documents issued before the implementation of ACCESS, must 
be submitted on the record in their entirety to be considered by the Secretary in its analysis and 
determinations and are subject to  the timing and filing restrictions of Sec.  351.301.  
* * * * *  
0 
5. In Sec.  351.225:  
0 
a. Revise paragraph (c)(1);  
0 
b. Add paragraphs (c)(2)(x) and (c)(3);  
0 
c. Revise paragraph (d)(1);  
0 
d. Add introductory text to paragraph (f);  
0 
e. Revise paragraph (l)(1);  
0 
f. In paragraph (l)(5), remove "the Customs Service's" and add in its place "the U.S. Customs and 
Border Protection's"; and  
0 
g. Revise paragraphs (m)(2) and (q).  
    The revisions and additions read as follows:  
Sec.  351.225   Scope ru lings.  
* * * * *  
    (c) * * *  
    (1) Contents. An interested party may submit a scope ruling application requesting that the 
Secretary conduct a scope inquiry to determine whether a product, which is or has been in actual 
production by the time of the fi ling of the application, is covered by the scope of an order. If the 
product at issue has not been imported into the United States, the applicant must provide evidence 
that the product has been commercially produced and sold. The Secretary will make availa ble a 
scope ruling application, which the applicant must fully complete and serve in accordance with the 
requirements of paragraph (n) of this section.  
    (2) * * *  
    (x) If the product has not been imported into the United States as of the date of the filing of the 
scope ruling application:  
    (A) A statement that the product has been commercially produced;  
    (B) A description of the countries in which the product is sold, or has been sold; and  
    (C) Relevant documentation which reflects the detail s surrounding the production and sale of that 
product in countries other than the United States.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      (3) Comments on the adequacy of the request. Within 10 days after the filing of a scope ruling 
application under paragraph (c)(1) of this section, an inter ested party other than the applicant is 
permitted one opportunity to submit comments regarding the adequacy of the scope ruling 
application.  
    (d) * * *  
    (1) Acceptance and initiation of a scope inquiry based on a scope ruling application. Except as 
provided under paragraph (d)(1)(ii) or (d)(2) of this section, within 30 days after the filing of a scope 
ruling application, the Secretary will determine w hether to accept or reject the scope ruling 
application and to initiate or not initiate a scope inquiry, or, in the alternative, paragraph (d)(1)(ii) 
will apply.  
    (i) If the Secretary determines that a scope ruling application is incomplete or otherwise  
unacceptable, the Secretary may reject the scope ruling application and will provide a written 
explanation of the reasons for the rejection. If the scope ruling application is rejected, the applicant 
may resubmit the full application at any time, with all  identified deficiencies corrected.  
    (ii) If the Secretary issues questions to the applicant seeking clarification with respect to one or 
more aspects of a scope ruling application, the Secretary will determine whether or not to initiate 
within 30 days after the applicant files a timely response to the Secretary's questions.  
    (iii) If the Secretary does not reject the scope ruling application or initiate the scope inquiry within 
31 days after the filing of the application or the receipt of  
 
[[Page 208 34]] 
 
a timely response to the Secretary's questions, the application will be deemed accepted, and the 
scope inquiry will be deemed initiated.  
* * * * *  
    (f) Scope inquiry procedures. The filing and timing restrictions of Sec.  351.301(c) do not apply 
to this paragraph (f), and factual information submitted inconsistent with the terms of this paragraph 
may be rejected as unsolicited and untimely.  
* * * * *  
    (l) * * *  
    (1) When the Secretary initiates a scope inquiry under paragraph (b) or (d) of th is section, the 
Secretary will notify U.S. Customs and Border Protection of the initiation and direct U.S. Customs 
and Border Protection to continue the suspension of liquidation of entries of products subject to the 
scope inquiry that were already subject  to the suspension of liquidation, and to apply the cash 
deposit rate that would be applicable if the product were determined to be covered by the scope of 
the order. Such suspension shall include, but shall not be limited to, entries covered by the final 
results of administrative review of an antidumping or countervailing duty order pursuant to 
Sec.  351.212(b), automatic assessment pursuant to Sec.  351.212(c), and a rescinded 
administrative review pursuant to Sec.  351.213(d), as well as any other entrie s already suspended 
by U.S. Customs and Border Protection under the antidumping and countervailing duty laws which 
have not yet been liquidated in accordance with 19 CFR part 159.  
* * * * *  
    (m) * * *  
    (2) Companion antidumping and countervailing dut y orders. If there are companion antidumping 
and countervailing duty orders covering the same merchandise from the same country of origin, the 
requesting interested party under paragraph (c) of this section must file the scope ruling application 
pertaining  to both orders on the records of both the antidumping duty and countervailing duty 
proceedings. If the Secretary accepts the scope applications on both records under paragraph (d) of 
this section, the Secretary will notify the requesting interested party that all subsequent filings 
should be filed only on the record of the antidumping duty proceeding. If the Secretary determines 
to initiate a scope inquiry under paragraph (b) or (d) of this section, the Secretary will initiate and 
conduct a single inquiry with respect to the product at issue for both orders only on the record of 
the antidumping duty proceeding. Once the Secretary issues a final scope ruling on the record of the 
antidumping duty proceeding, the Secretary will include on the record of the cou ntervailing duty 
proceeding a copy of the scope ruling memoranda, a copy of the preliminary scope ruling 
memoranda, if one had been issued, and all relevant instructions to U.S. Customs and Border 
Protection.  
* * * * *  
    (q) Scope clarifications. The Sec retary may issue a scope clarification at any time which provides 
an interpretation of specific language in the scope of an order and addresses other scope -related 
issues but does not address or determine whether a product is covered by the scope of an ord er in 
the first instance other than in the situations listed in this paragraph (q).  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 110 - 
 
      (1) Scope clarifications may be used in the following situations to clarify:  
    (i) Whether a product is covered or excluded by the scope of an order based on two or m ore 
previous scope determinations covering products which have the same or similar physical 
characteristics (including chemical, dimensional, and technical characteristics);  
    (ii) Whether a product covered by the scope of an order, and for which coverag e is not at issue, 
is not subject to the imposition of antidumping or countervailing duties pursuant to a statutory 
exception to the trade remedy laws, such as the limited governmental importation exception set 
forth in section 771(20)(B) of the Act;  
    (iii) Whether language or descriptors in the scope of an order that are subsequently updated, 
revised, or replaced, in the following circumstances, continue to apply to the product at issue:  
    (A) Modifications to the language in the scope of an order pur suant to litigation or a changed 
circumstances review under section 751(b) of the Act;  
    (B) Changes to Harmonized Tariff Schedule classifications, as administered by the Commission; 
and 
    (C) Changes to industrial standards set forth in a scope, as de termined by the industry source for 
those standards identified in the scope; and  
    (iv) To clarify an analysis conducted by Commerce in a previous scope determination or scope 
ruling. For example, an issue may arise as to whether certain processing, obse rved in a segment of 
proceeding and conducted in a third country, falls within a stage of production previously determined 
by the Secretary in a country -of-origin analysis in the same proceeding, pursuant to paragraph (j)(2) 
of this section, to be the stag e of production at which the essential component of the product is 
produced or where the essential characteristics of the product are imparted.  
    (2) Scope clarifications may take the form of an interpretive footnote to the scope when the scope 
is published or issued in instructions to U.S. Customs and Border Protection, or in a memorandum 
issued in an ongoing segment of a proceeding. At the dis cretion of the Secretary, a scope clarification 
may also take the form of preliminary and final notices of scope clarification published in the Federal 
Register. If the Secretary decides to publish preliminary and final notifications of scope clarification , 
it must provide interested parties at least 30 days after the publication of the preliminary notification 
of scope clarification to file comments with the Secretary. The Secretary will address those comments 
in the final notification of scope clarificati on published in the Federal Register.  
0 
6. In Sec.  351.226:  
0 
a. Add paragraph (c)(3);  
0 
b. Revise paragraphs (d)(1) and (e)(1);  
0 
c. Add introductory text to paragraph (f);  
0 
d. In paragraph (l)(5), remove "the Customs Service's" and add in its place "the U.S. Customs and 
Border Protection's"; and  
0 
e. Revise paragraph (m)(2).  
    The additions and revisions read as follows:  
Sec.  351.226   Circumvention inquiries.  
* * * * *  
    (c) * * *  
    (3) Comments and information on the adequacy of the re quest. Within 10 days after the filing of 
a circumvention inquiry request under paragraph (c)(1) of this section, an interested party other 
than the requestor is permitted one opportunity to submit comments and new factual information 
regarding the adequac y of the circumvention inquiry request. Within five days after the filing of new 
factual information in support of adequacy comments, the requestor is permitted one opportunity to 
submit comments and factual information to rebut, clarify, or correct that f actual information.  
    (d) * * *  
    (1) Initiation of a circumvention inquiry. Except as provided under paragraphs (d)(1)(ii) 
and (d)(2) of this section, within 30 days after the filing of a request for a circumvention inquiry, 
the Secretary will determi ne whether to accept or reject the request and whether to initiate or not 
initiate a  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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[[Page 20835]]  
 
circumvention inquiry. If it is not practicable to make such determinations within 30 days, the 
Secretary may extend the 30 -day deadline by an additional 15 days if no interested party has filed 
new factual information in response to the circumvention request pursuant to paragraph (c)(3) of 
this section. If interested parties have filed new factual information pursuant to paragraph (c)(3) of 
this section, t he Secretary may extend the 30 -day deadline by an additional 30 days.  
    (i) If the Secretary determines that the request is incomplete or otherwise unacceptable, the 
Secretary may reject the request, and will provide a written explanation of the reasons for the 
rejection. If the request is rejected, the requestor may resubmit the full request at any time, with 
all identified deficiencies corrected.  
    (ii) If the Secretary issues questions to the requestor seeking clarification with respect to one or 
more aspects of a circumvention inquiry request, the Secretary will determine whether or not to 
initiate within 30 days after the requestor files a timely response to the Secretary's questions.  
    (iii) If the Secretary determines that a request for a  circum vention inquiry satisfies the 
requirements of paragraph (c) of this section, the Secretary will accept the request and initiate a 
circumvention inquiry. The Secretary will publish a notice of initiation in the Federal Register.  
* * * * *  
    (e) * * *  
    (1) Preliminary determination. The Secretary will issue a preliminary determination under 
paragraph (g)(1) of this section no later than 150 days after the date of publication of the notice of 
initiation of paragraph (b) or (d) of this section. If the Secretary concludes that an extension of the 
preliminary determination is warranted, the Secretary may extend that deadline by no more than 
90 additional days.  
* * * * *  
    (f) Circumvention inquiry procedures. The filing and timing instructions of Sec.  351.301(c) do 
not apply to this paragraph (f), and factual information submitted inconsistent with the terms of this 
paragraph may be rejected as unsolicited and untimely.  
* * * * *  
    (m) * * *  
    (2) Companion antidumping and countervailing duty orders . If there are companion antidumping 
and countervailing duty orders covering the same merchandise from the same country of origin, the 
requesting interested party under paragraph (c) of this section must file the request pertaining to 
both orders on the re cord of both the antidumping duty and countervailing duty segments of the 
proceeding. If the Secretary accepts the circumvention requests on both records under 
paragraph  (d) of this section, the Secretary will notify the requesting interested party that al l 
subsequent filings should be filed only on the record of the antidumping duty proceeding. If the 
Secretary determines to initiate a circumvention inquiry under paragraph (b) or (d) of this section, 
the Secretary will initiate and conduct a single inquiry  with respect to the product at issue for both 
orders only on the record of the antidumping duty proceeding. Once the Secretary issues a final 
circumvention determination on the record of the antidumping duty proceeding, the Secretary will 
include on the r ecord of the countervailing duty proceeding copies of the final circumvention 
determination memoranda, the final circumvention determination Federal Register notice, the 
preliminary circumvention determination memoranda, the preliminary circumvention deter mination 
Federal Register notice, and all relevant instructions to U.S. Customs and Border Protection.  
* * * * *  
0 
7. In Sec.  351.227:  
0 
a. Add introductory text to paragraph (d);  
0 
b. In paragraph (d)(5)(i), remove "The Customs Service" and add in its pl ace "The U.S. Customs 
and Border Protection";  
0 
c. Revise paragraphs (l)(1);  
0 
d. In paragraph (l)(5), remove "the Customs Service's" and add in its place "the U.S. Customs and 
Border Protection's"; and  
0 
e. Revise paragraph (m)(2).  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 112 - 
 
      The addition and revisions read as follows:  
Sec.  351.227   Covered merchandise referrals.  
* * * * *  
    (d) Covered merchandise inquiry procedures. The filing and timing restrictions of Sec.  351.301(c) 
do not apply to this paragraph (d), and factual information submitted inconsistent with the terms of 
this paragraph (d) may be rejected as unsolicited and untimely.  
* * * * *  
    (l) * * *  
    (1) When the Secretary publishes a notice of initiation of a covered merchandise inquiry under 
paragraph (b)(1)  of this section, the Secretary will notify U.S. Customs and Border Protection of the 
initiation and direct U.S. Customs and Border Protection to continue the suspension of liquidation of 
entries of products subject to the covered merchandise inquiry that were already subject to the 
suspension of liquidation, and to apply the cash deposit rate that would be applicable if the product 
were determined to be covered by the scope of the order. Such suspension shall include, but shall 
not be limited to, entries c overed by a final results of administrative review of an antidumping or 
countervailing duty order pursuant to Sec.  351.212(b), automatic assessment pursuant to 
Sec.  351.212(c), and a rescinded administrative review pursuant to Sec.  351.213(d), as well a s 
any other entries already suspended by U.S. Customs and Border Protection under the antidumping 
and countervailing duty laws which have not yet been liquidated in accordance with 19 CFR part  159. 
* * * * *  
    (m) * * *  
    (2) Companion antidumping and countervailing duty orders. If there are companion antidumping 
and countervailing duty orders covering the same merchandise from the same country of origin, and 
the Secretary determines to initiate a covered merchandise in quiry under paragraph (b)(1) of this 
section, the Secretary will initiate and conduct a single inquiry with respect to the product at issue 
only on the record of the antidumping duty proceeding. Once the Secretary issues a final covered 
merchandise determi nation on the record of the antidumping duty proceeding, the Secretary will 
include on the record of the countervailing duty proceeding a copy of the final covered merchandise 
determination memoranda, the final covered merchandise determination Federal Reg ister notice, 
the preliminary covered merchandise determination memoranda and preliminary covered 
merchandise determination Federal Register notice, if a preliminary determination was issued, and 
all relevant instructions to U.S. Customs and Border Protect ion. 
* * * * *  
0 
8. In Sec.  351.301, add paragraph (c)(6) to read as follows:  
Sec.  351.301   Time limits for submissions of factual information.  
* * * * *  
    (c) * * *  
    (6) Notices of subsequent authority --(i) In general. If a United States Federal c ourt issues a 
decision, or the Secretary in another segment or proceeding issues a determination, that an 
interested party believes is directly relevant to an issue in an ongoing segment of the  
 
[[Page 20836]]  
 
proceeding, that interested party may submit a Notice of Subsequent Authority with the Secretary. 
Responsive comments and factual information to rebut or clarify the Notice of Subsequent Authority 
must be submitted by interested parties no later than five days after the submission of a Notice of 
Subsequent Authority.  
    (ii) Timing restrictions for consideration. The Secretary will consider and address a Notice of 
Subsequent Authority in its final determinations or final results which is submitted no later than 
30 days after the alleged subsequent au thority was issued and no later than 30 days before the 
deadline for issuing the final determination or results. Rebuttal submissions must be filed no later 
than 25 days before the deadline for issuing the final determinations or results. Given statutory 
deadlines for administrative proceedings, the Secretary may be unable to consider and address the G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 113 - 
 
  arguments and applicability of alleged subsequent authorities adequately in a final determination or 
final results if a Notice of Subsequent Authority or rebut tal submission is submitted later in the 
segment of the proceeding.  
    (iii) Contents of a notice of subsequent authority and responsive submissions. A Notice of 
Subsequent Authority must identify the Federal court decision or determination by the Secreta ry in 
another segment or proceeding that is alleged to be authoritative to an issue in the ongoing segment 
of the proceeding, provide the date the decision or determination was issued, explain the relevance 
of that decision or determination to an issue in the ongoing segment of the proceeding, and be 
accompanied by a complete copy of the Federal court decision or agency determination. Responsive 
comments must directly address the contents of the Notice of Subsequent Authority and must 
explain how the respon sive comments and any accompanying factual information rebut or clarify 
the Notice of Subsequent Authority.  
0 
9. In Sec.  351.306, revise paragraph (b) to read as follows:  
Sec.  351.306   Use of business proprietary information.  
* * * * *  
    (b) By an aut horized applicant. (1) An authorized applicant may retain business proprietary 
information for the time authorized by the terms of the administrative protective order (APO).  
    (2) An authorized applicant may use business proprietary information for purpo ses of the segment 
of the proceeding in which the information was submitted.  
    (3) If business proprietary information that was submitted to a segment of the proceeding is 
relevant to an issue in a different segment of the same proceeding, an authorized applicant may 
place such information on the record of the subsequent segment as authorized by the APO of the 
segment where the business proprietary information was submitted.  
    (4) If business proprietary information that was submitted to a countervailin g duty segment of 
the proceeding is relevant to a subsequent scope, circumvention, or covered merchandise inquiry 
conducted on the record of the companion antidumping duty segment of the proceeding pursuant to 
Sec.  351.225(m)(2), Sec.  351.226(m)(2), or S ec.  351.227(m)(2), an authorized applicant may 
place such information on the record of the companion antidumping duty segment of the proceeding 
as authorized by the APO of the countervailing duty segment where the business proprietary 
information was subm itted.  
    (5) If business proprietary information that was submitted to a scope, circumvention, or covered 
merchandise inquiry conducted on the record of a companion antidumping duty segment of the 
proceeding pursuant to Sec.  351.225(m)(2), Sec.  351.226 (m)(2), or Sec.   351.227(m)(2) is 
relevant to a subsequent countervailing duty segment of the proceeding, an authorized applicant 
may place such information on the record of the companion countervailing duty segment of the 
proceeding as authorized by the A PO of the antidumping duty segment where the business 
proprietary information was submitted.  
* * * * *  
0 
10. In Sec.  351.308, add reserved paragraphs (g) through (i) and paragraph (j) to read as follows:  
Sec.  351.308   Determinations on the basis of facts available.  
* * * * *  
    (g)-(i) [Reserved]  
    (j) Adverse facts available hierarchy in countervailing duty proceedings. In accordance with 
sections 776(d)(1)(A) and 776(d)(2) of the Act, when the Secretary applies an adverse inference in 
selecting a countervailable subsidy rate on the basis of facts otherwise available in a countervailing 
duty proceeding, the Secretary will normally select the highest program rate available using a 
hierarchical analysis as follows:  
    (1) For investigations, conduc ted pursuant to section 701 of the Act, the hierarchy will be applied 
in the following sequence:  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 114 - 
 
      (i) If there are cooperating respondents in the investigation, the Secretary will determine if a 
cooperating respondent used an identical program in the in vestigation and apply the highest 
calculated above -de minimis rate for the identical program;  
    (ii) If no rate exists which the Secretary is able to apply under paragraph (j)(1)(i), the Secretary 
will determine if an identical program was used in anothe r countervailing duty proceeding involving 
the same country and apply the highest calculated above -de minimis rate for the identical program;  
    (iii) If no rate exists which the Secretary is able to apply under paragraph (j)(1)(ii), the Secretary 
will de termine if there is a similar or comparable program in any countervailing duty proceeding 
involving the same country and apply the highest calculated above -de minimis rate for the similar 
or comparable program; and  
    (iv) If no rate exists which the Secr etary is able to apply under paragraph (j)(1)(iii), the Secretary 
will apply the highest calculated above -de minimis rate from any non -company -specific program in 
a countervailing duty proceeding involving the same country that the Secretary considers the 
company's industry could possibly use.  
    (2) For administrative reviews, conducted pursuant to section 751 of the Act, the hierarchy will 
be applied in the following sequence:  
    (i) The Secretary will determine if an identical program has been used in any segment of the 
proceeding and apply the highest calculated above -de minimis rate for any respondent for the 
identical program;  
    (ii) If no rate exists which the Secretary is able to apply under paragraph (j)(2)(i), the Secretary 
will determine if  there is a similar or comparable program within any segment of the same proceeding 
and apply the highest calculated above -de minimis rate for the similar or comparable program;  
    (iii) If no rate exists which the Secretary is able to apply under paragra ph (j)(2)(ii), the Secretary 
will determine if there is an identical program in any countervailing duty proceeding involving the 
same country and apply the highest calculated above -de minimis rate for the identical program or, 
if there is no identical prog ram or above -de minimis rate available, determine if there is a similar or 
comparable program in any  
 
[[Page 20837]]  
 
countervailing duty proceeding involving the same country and apply the highest calculated 
above -de minimis rate for the similar or compar able program; and  
    (iv) If no rate exists which the Secretary is able to apply under paragraph (j)(2)(iii), the Secretary 
will apply the highest calculated rate for any non -company -specific program from any countervailing 
duty proceeding involving the s ame country that the Secretary considers the company's industry 
could possibly use.  
    (3) When the Secretary uses an adverse facts available countervailing duty hierarchy, the 
following will apply:  
    (i) The Secretary will treat rates less than 0.5 per cent as de minimis;  
    (ii) The Secretary will normally determine a program to be a similar or comparable program based 
on the Secretary's treatment of the program's benefit;  
    (iii) The Secretary will normally select the highest program rate available in accordance with the 
hierarchical sequence, unless the Secretary determines that such a rate is otherwise inappropriate; 
and 
    (iv) When applicable, the Secretary will determine an adverse facts available rate selected using 
the hierarchy to be corrobo rated in accordance with section 776(c)(1) of the Act.  
Sec.  351.402  [Amended]  
0 
11. In Sec.  351.402, remove "the Customs Service's" and add in its place "the U.S. Customs and 
Border Protection's" in paragraph (f)(2)(ii).  
0 
12. In Sec.  351.408, add paragraph (d) to read as follows:  
Sec.  351.408   Calculation of normal value of merchandise from nonmarket economy countries.  
* * * * *  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 115 - 
 
      (d) A determination that certain surrogate value information is not otherwise appropriate --(1) In 
general. Notwiths tanding the factors considered under paragraph (c) of this section, the Secretary 
may disregard a proposed market economy country value for consideration as a surrogate value if 
the Secretary determines that evidence on the record reflects that the use of such a value would be 
inappropriate.  
    (i) In accordance with section 773(c)(5), the Secretary may disregard a proposed surrogate value 
if the Secretary determines that the value is derived from a country that provides broadly available 
export subsidies,  if particular instances of subsidization occurred with respect to that proposed 
surrogate value, or if that proposed surrogate value was subject to an antidumping order.  
    (ii) In addition, the Secretary may disregard a proposed surrogate value if the S ecretary 
determines based on record evidence that the value is derived from a facility, party, industry, 
intra-country region or a country with weak, ineffective, or nonexistent property (including 
intellectual property), human rights, labor, or environmen tal protections.  
    (2) Requirements to disregard a proposed surrogate value based on weak, ineffective, or 
nonexistent protections. For purposes of paragraph (d)(1)(ii) of this section, the Secretary will only 
consider disregarding a proposed market econ omy country value as a surrogate value of production 
if the Secretary determines the following:  
    (i) The proposed surrogate value at issue is for a significant input or labor;  
    (ii) The proposed surrogate value is derived from one country or an avera ge of values from a 
limited number of countries; and  
    (iii) The information on the record supports a claim that the identified weak, ineffective, or 
nonexistent property (including intellectual property), human rights, labor, or environmental 
protection s undermine the appropriateness of using that value as a surrogate value.  
    (3) The use of a surrogate value located in a country which is not at a level of economic 
development comparable to that of the nonmarket economy. If the Secretary determines, pu rsuant 
to this section, after reviewing all proposed values on the record derived from market economy 
countries which are at a level of economic development comparable to the nonmarket economy, 
that no such proposed value is appropriate to value a specific  factor of production, the Secretary 
may use a value on the record derived from a market economy country which is not at a level of 
economic development comparable to that of the nonmarket economy country as a surrogate to 
value that specific factor of pro duction.  
    (4) The use of a surrogate value not located in a country which is a significant producer of 
comparable merchandise. If the Secretary determines, pursuant to this section, after reviewing all 
proposed surrogate values on the record derived fro m market economy countries which are 
significant producers of merchandise comparable to the subject merchandise, that no such proposed 
value is appropriate to value a specific factor of production, the Secretary may use a value on the 
record derived from a  market economy country which is not a significant producer of merchandise 
comparable to the subject merchandise as a surrogate to value that specific factor of production.  
0 
13. Add Sec.  351.416 to read as follows:  
Sec.  351.416   Determination of a part icular market situation.  
    (a) Particular market situation defined. A particular market situation is a circumstance or set of 
circumstances that does the following as determined by the Secretary:  
    (1) Prevents or does not permit a proper comparison of  sales prices in the home market or third 
country market with export prices and constructed export prices; or  
    (2) Contributes to the distortion of the cost of materials and fabrication or other processing of 
any kind, such that the cost of production o f merchandise subject to an investigation, suspension 
agreement, or antidumping order does not accurately reflect the cost of production in the ordinary 
course of trade.  
    (b) Submission requirements when alleging the existence of a particular market sit uation. When 
an interested party submits a timely allegation as to the existence of a particular market situation 
in an antidumping duty proceeding, relevant information reasonably available to that interested 
party supporting the claim must accompany the allegation. If the particular market situation being 
alleged is similar to an allegation of a particular market situation made in a previous or ongoing 
segment of the same or another proceeding, the interested party must identify the facts and 
arguments in  the submission which are distinguishable from those provided in the other segment or 
proceeding.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 116 - 
 
      (c) A determination that a particular market situation prevented or did not permit a proper 
comparison of prices existed during the period of investigatio n or review. The Secretary may 
determine that a particular market situation, identified in paragraph (a)(1) of this section, existed 
during the period of investigation or review if a circumstance or set of circumstances prevented or 
did not permit a proper  comparison between sales prices in the home market or third country market 
of the foreign like product and export prices or constructed export prices of subject merchandise for 
purposes of an antidumping analysis.  
    (1) Examples of particular market sit uations in the home market that may prevent or do not 
permit a proper  
 
[[Page 20838]]  
 
comparison with U.S. price. Examples of a circumstance or set of circumstances in the home market 
that may prevent or not permit a proper comparison of prices, and are t herefore particular market 
situations, include, but are not limited to, the following:  
    (i) The imposition of an export tax on subject merchandise;  
    (ii) Limitations on exports of subject merchandise from the subject country;  
    (iii) The issuance and enforcement of anticompetitive regulations that confer a unique status on 
favored producers or that create barriers to new entrants to an industry; and  
    (iv) Direct government control over pricing of subject merchandise to suc h an extent that home 
market prices for subject merchandise cannot be considered competitively set.  
    (2) Examples of particular market situations in a third country market that may prevent or not 
permit a proper comparison of prices. In situations where  third country prices may be needed to 
calculate normal value in a dumping calculation, the Secretary may determine that third country 
prices cannot be properly compared to export prices or constructed export prices for reasons similar 
to those listed in p aragraph (c)(1) of this section.  
    (3) The use of constructed value may be warranted if a proper comparison of prices is prevented 
or not permitted. If the Secretary determines that a particular market situation prevented or did not 
permit a proper compa rison of sales prices in the home market or third country market with export 
prices or constructed export prices during the period of investigation or review, the Secretary may 
conclude that it is necessary to determine normal value by constructing a value  in accordance with 
section 773(e) of the Act and Sec.  351.405.  
    (d) A determination that a market situation existed during the period of investigation or review 
such that the cost of materials and fabrication or other processing of any kind does not a ccurately 
reflect the cost of production in the ordinary course of trade --(1) In general. For purposes of this 
paragraph (d)(1), the Secretary will determine that a market situation, identified in paragraph (a)(2) 
of this section, existed during the period  of investigation or review if the Secretary determines the 
following, based on information on the record:  
    (i) A circumstance or set of circumstances existed that may have impacted the costs of producing 
subject merchandise, or costs or prices of input s into the production of subject merchandise;  
    (ii) The cost of materials and fabrication or other processing of any kind, including the prices of 
inputs used to produce subject merchandise, were not in accordance with market principles or 
distorted, an d therefore did not accurately reflect the cost of production of subject merchandise in 
the ordinary course of trade; and  
    (iii) The circumstance or set of circumstances at issue contributed to the distortion of the cost of 
production of subject merchandise.  
    (2) The Secretary will determine if it is more likely than not that a circumstance or set of 
circumstances contr ibuted to distorted costs or prices. In accordance with paragraph (d)(1)(iii), the 
Secretary will weigh the information on the record and determine whether it is more likely than not 
that the circumstance or set of circumstances contributed to the distorti on in the cost of production 
of subject merchandise during the period of investigation or review, and therefore, that a market 
situation existed during that period.  
    (3) Information the Secretary may consider in determining the existence of a market sit uation. 
In determining whether a market situation existed in the subject country such that the cost of 
materials and fabrication or other processing did not accurately reflect the cost of production of 
subject merchandise in the ordinary course of trade du ring the period of investigation or review, the 
Secretary will consider all relevant information placed on the record by interested parties, including, 
but not limited to, the following:  
    (i) Comparisons of prices paid for significant inputs used to pro duce subject merchandise under 
the alleged market situation to prices paid for the same input under market -based circumstances, 
either in the home country or elsewhere;  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 117 - 
 
      (ii) Detailed reports and other documentation issued by foreign governments or inde pendent 
international, analytical, or academic organizations indicating that lower prices for a significant input 
in the subject country would likely result from governmental or nongovernmental actions or inactions 
taken in the subject country or other cou ntries;  
    (iii) Detailed reports and other documentation issued by foreign governments or independent 
international, analytical, or academic organizations indicating that prices for a significant input have 
deviated from a fair market value within the su bject country, as a result, in part or in whole, of 
governmental or nongovernmental actions or inactions;  
    (iv) Agency determinations or results in which the Secretary determined record information did 
or did not support the existence of the alleged par ticular market situation with regard to the same 
or similar merchandise in the subject country in previous proceedings or segments of the same 
proceeding; and  
    (v) Information that property (including intellectual property), human rights, labor, or 
environmental protections in the subject country are weak, ineffective, or nonexistent, those 
protections exist and are effectively enforced in other countries, and that the ineffective enforcement 
or lack of protections may contribute to distortions in the co st of production of subject merchandise 
or prices or costs of a significant input into the production of subject merchandise in the subject 
country. For purposes of this paragraph (d)(3)(v), the Secretary will normally look to cost effects on 
same or simil ar merchandise produced in economically comparable countries in analyzing the impact 
of such protections on the cost of production.  
    (4) No restrictions based on lack of precise quantifiable data, hypothetical prices or actions of 
governments and indust ries in other market economies. In determining whether a market situation 
exists in the subject country such that the cost of materials and fabrication or other processing do 
not accurately reflect the cost of production in the ordinary course of trade, th e following will not 
preclude the finding of a market situation:  
    (i) The lack of precision in the quantifiable data relating to the distortion of prices or costs in the 
subject country;  
    (ii) The speculated cost of production of the subject merchand ise, or the speculated prices or 
costs of a significant input into the production of the subject merchandise, unsupported by objective 
data, that a party claims would hypothetically exist in the subject country absent the alleged 
particular market situatio n or its contributing circumstances;  
    (iii) The actions taken or not taken by governments, government -controlled entities, or other 
public entities in other market economy countries in comparison with the actions taken or not taken 
by the government, st ate enterprise, or other public entity of the subject country, with the exception 
of information associated with the allegations addressed in paragraph (d)(3)(v) of this section; and  
    (iv) The existence of the same or similar government or nongovernment  actions in the subject 
country that  
 
[[Page 20839]]  
 
preceded the period of investigation or review.  
    (e) Factors to consider in determining if a market situation is particular --(1) In general. If the 
Secretary determines that a market situation exists  under paragraph (c) or (d), the Secretary must 
also determine if the market situation is particular. A market situation is particular if it impacts prices 
or costs for only certain parties or products in the subject country. In reaching this determination , 
the following applies:  
    (i) A particular market situation may exist even if a large number of certain parties or products 
are impacted by the circumstance or set of circumstances. The Secretary's analysis does not concern 
the specific number of produc ts or parties, but whether the market situation impacts only certain 
parties or products, or the general population of parties or products, in the subject country;  
    (ii) The same or similar market situations can exist in multiple countries or markets an d still be 
considered particular for purposes of this paragraph (e)(1) if the Secretary determines that a market 
situation exists which distorts sales prices or cost of production for certain parties or products 
specifically in the subject country; and  
    (iii) There are varied circumstances in which a market situation in a subject country can be 
determined to be particular, and a market situation may apply only to certain producers, importers, 
exporters, purchasers, users, industries, or enterprises, indi vidually or in any combination.  
    (2) Information the Secretary may consider in determining if a market situation is particular. In 
determining if a market situation in the subject country is particular in accordance with 
paragraph  (e)(1) of this section , the Secretary will consider all relevant information placed on the 
record by interested parties, including, but not limited to, the following:  
    (i) The size and nature of the market situation;  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 118 - 
 
      (ii) The volume of merchandise potentially impacted by the price or cost distortions resulting from 
the market situation; and  
    (iii) The number and nature of the entities potentially affected by the price or cost distortions 
resulting from a market situation.  
    (f) The Secretary may adjust its calculations to address distortions to which a particular market 
situation under paragraphs (d) and (e) of this section has contributed --(1) In general. If the 
Secretary determines a particular market situati on exists in the subject country which has 
contributed to a distortion in the cost of materials and fabrication or other processing, such that 
those costs do not accurately reflect the cost of production of subject merchandise in the ordinary 
course of tra de, in accordance with sections 771(15) and 773(e) of the Act, the Secretary may 
address such distortions to the cost of production in its calculations.  
    (2) Imprecise quantification of the distortions. If, after consideration of the information on the 
record, the Secretary is unable to precisely quantify the distortions to the cost of production of 
subject merchandise in the ordinary course of trade to which the particular market situation has 
contributed, the Secretary may use any reasonable methodolog y based on record information to 
adjust its calculations to address those distortions.  
    (3) The Secretary may determine not to adjust its calculations. If the Secretary determines that 
a particular market situation exists in the subject country which ha s contributed to the distortions 
to the cost of production, but that an adjustment to its calculations of the cost of production of 
subject merchandise is not appropriate based on record information, the Secretary may determine 
not to adjust its calculatio ns. In determining whether an adjustment is appropriate, the Secretary 
may consider the following:  
    (i) Whether the cost distortion is already sufficiently addressed in its calculations in accordance 
with another statutory provision, such as the transac tion disregarded and major input rules of 
sections 773(f)(2) and (3) of the Act;  
    (ii) Whether a reasonable method for quantifying an adjustment to the calculations is absent from 
the record; and  
    (iii) Whether information on the record suggests that  the application of an adjustment to the 
Secretary's calculations would otherwise be unreasonable.  
    (g) Examples of particular market situations which contribute to distortions in the cost of materials 
and fabrication or other processing of any kind, su ch that those costs do not accurately reflect the 
cost of production in the ordinary course of trade. Examples of particular market situations which 
may contribute to the distortion of the cost of production of subject merchandise in the subject 
country, a lone or in conjunction with others, include, but are not limited to, the following:  
    (1) A significant input into the production of subject merchandise is produced in such amounts 
that there is considerably more supply than demand in international marke ts for the input and the 
Secretary concludes, based on record information, that regardless of the impact of such overcapacity 
of the significant input on other countries, such overcapacity contributed to distortions of the price 
or cost of that input in th e subject country during the period of investigation or review;  
    (2) A government, government -controlled entity, or other public entity in the subject country 
owns or controls the predominant producer or supplier of a significant input used in the produ ction 
of subject merchandise and the Secretary concludes, based on record information, that such 
ownership or control of the producer or supplier contributed to price or cost distortions of that input 
in the subject country during the period of investigati on or review;  
    (3) A government, government -controlled entity, or other public entity in the subject country 
intervenes in the market for a significant input into the production of subject merchandise and the 
Secretary concludes, based on record informa tion, such that the intervention contributed to price or 
cost distortions of that input in the subject country during the period of investigation or review;  
    (4) A government in the subject country limits exports of a significant input into the producti on 
of subject merchandise and the Secretary concludes, based on record information, that such export 
limitations contributed to price or cost distortions of that input in the subject country during the 
period of investigation or review;  
    (5) A governmen t in the subject country imposes export taxes on a significant input into the 
production of subject merchandise and the Secretary concludes, based on record information, that 
such taxes contributed to price or cost distortions of that input in the subject country during the 
period of investigation or review;  
    (6) A government in the subject country exempts an importer, producer, or exporter of subject 
merchandise from paying duties or taxes associated with trade remedies established by the 
government rel ating to a significant input into the production of subject merchandise during the 
period of investigation or review;  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      (7) A government in the subject country rebates duties or taxes paid by an importer, producer or 
exporter of subject merchandise assoc iated with trade remedies established by the government 
related to a significant input into the production of subject  
 
[[Page 20840]]  
 
merchandise during the period of investigation or review;  
    (8) A government, government -controlled entity, or other pu blic entity in the subject country 
provides financial assistance or other support to the producer or exporter of subject merchandise, 
or to a producer or supplier of a significant input into the production of subject merchandise and the 
Secretary concludes , based on record information, that such assistance or support contributed to 
cost distortions of subject merchandise or distortions in the price or cost of a significant input into 
the production of subject merchandise in the subject country during the pe riod of investigation or 
review;  
    (9) A government, government -controlled entity, or other public entity in the subject country 
mandates, through law or in practice, the use of a certain percentage of domestic -manufactured 
inputs, the sharing or use of certain intellectual property or production processes, or the formation 
of certain business relationships with other entities to produce subject merchandise or a significant 
input into the production of subject merchandise and the Secretary concludes, base d on record 
information, that those requirements contributed to cost distortions of subject merchandise or 
distortions in the price or cost of a significant input into the production of subject merchandise in 
the subject country during the period of invest igation or review;  
    (10) A government, government -controlled entity, or other public entity in the subject country 
does not enforce its property (including intellectual property), human rights, labor, or environmental 
protection laws and policies, or th ose laws and policies are otherwise shown to be ineffective with 
respect to either a producer or exporter of subject merchandise, or to a producer or supplier of a 
significant input into the production of subject merchandise in the subject country and the Secretary 
concludes, based on record information, that the lack of enforcement or effectiveness of such laws 
and policies contributed to cost distortions of subject merchandise or distortions in the price or cost 
of a significant input into the production of subject merchandise during the period of investigation 
or review;  
    (11) A government, government -controlled entity, or other public entity in the subject country 
does not implement property (including intellectual property), human rights, labor, or e nvironmental 
protection laws and policies and the Secretary concludes, based on record information, that the 
absence of such laws and policies contributed to cost distortions of subject merchandise, or 
distortions in the price or cost of a significant inpu t into the production of subject merchandise in 
the subject country during the period of investigation or review; and  
    (12) Nongovernmental entities take actions which the Secretary concludes, based on record 
information, contributed to cost distortions  of subject merchandise or distortions in the price or cost 
of a significant input into the production of subject merchandise in the subject country during the 
period of investigation or review. Actions that result in distortive prices and costs by 
nongove rnmental entities covered by this example include, but are not limited to, the formation of 
business relationships between one or more producers of subject merchandise and suppliers of 
significant inputs to the production of subject merchandise, including mutually -beneficial strategic 
alliances or noncompetitive arrangements, as well as sales by third -country exporters of significant 
inputs into the subject country for prices for less than fair value.  
    (h) A particular market situation which contributes to distortions in the cost of materials and 
fabrication or other processing of any kind, such that the costs do not accurately reflect the cost of 
production in the ordinary course of trade, may also contribute to a particular market situation that 
prevent s or does not permit a proper comparison of prices. If the Secretary determines that a 
particular market situation existed during the period of investigation or review such that the cost of 
materials and fabrication or other processing of any kind did not accurately reflect the cost of 
production of subject merchandise in the ordinary course of trade, the Secretary may consider, 
based on record information, whether that particular market situation also contributed to the 
circumstance or set of circumstances  that prevented, or did not permit, a proper comparison of 
home market or third country sales prices with export prices or constructed export prices, in 
accordance with section 771(15)(C) of the Act.  
0 
14. In Sec.  351.503, revise paragraph (c) to read as follows:  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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  Sec.  351.503   Benefit.  
* * * * *  
    (c) Distinction from effect of subsidy --(1) In general. In determining whether a benefit is 
conferred, the Secretary is not required to consider the effect or impact of the government action 
on the firm's performance, including its costs, prices, output, or whether the firm's behavior is 
otherwise altered.  
    (2) Subsidy provided to support compliance with a government -imposed mandate. When a 
government provides assistance to a firm to comply with a govern ment regulation, requirement or 
obligation, the Secretary, in measuring the benefit from the subsidy, will not consider whether the 
firm incurred a cost in complying with the government -imposed regulation, requirement, or 
obligation.  
* * * * *  
0 
15. In Sec .  351.505, revise paragraph (d) and add paragraph (e) to read as follows:  
Sec.  351.505   Loans.  
* * * * *  
    (d) Treatment of outstanding loans as grant after three years of no payments of interest or 
principal. With the exception of debt forgiveness ti ed to a particular loan and contingent liability 
interest -free loans, addressed in Sec.  351.508 and paragraph (e) of this section, the Secretary will 
normally treat a loan as a grant if no payments on the loan have been made in three years unless 
the loan  recipient can demonstrate that nonpayment is consistent with the terms of a comparable 
commercial loan it could obtain on the market, or the payments on the loan are consistent with the 
terms of the loan contract.  
    (e) Contingent liability interest -free loans --(1) Treatment as loans. In the case of an interest -free 
loan, for which the repayment obligation is contingent upon the company taking some future action 
or achieving some goal in fulfillment of the loan's requirements, the Secretary normally will  treat 
any balance on the loan outstanding during a year as an interest -free, short -term loan in accordance 
with paragraphs (a), (b), and (c)(1) of this section. However, if the event upon which repayment of 
the loan depends will occur at a point in time m ore than one year after the receipt of the contingent 
liability loan, the Secretary will use a long -term interest rate as the benchmark in accordance with 
paragraphs (a), (b), and (c)(2) of this section. In no event may the present value (in the year of 
receipt of the contingent liability loan) of the amounts calculated under this paragraph exceed the 
principal of the loan.  
    (2) Treatment as grants. If, at any point in time, the Secretary determines that the event upon 
which repayment depends is not a vi able contingency, the Secretary will treat the outstanding 
balance of the loan as a grant received  
 
[[Page 20841]]  
 
in the year in which this condition manifests itself.  
0 
16. In Sec.  351.507, revise paragraph (c) and add paragraph (d) to read as follows:  
Sec.  351.507   Equity.  
* * * * *  
    (c) Outside investor standard. Any analysis made under paragraph (a) of this section will be based 
upon the standard of a new outside private investor. The Secretary normally will consider whether 
an outside private i nvestor, under its usual investment practice, would make an equity investment 
in the firm, and not whether a private investor who has already invested in the firm would continue 
to invest in the firm.  
    (d) Allocation of benefit to a particular time peri od. The benefit conferred by an equity infusion 
shall be allocated over a period of 12 years or the same time period as a non -recurring subsidy 
under Sec.  351.524(d), whichever is longer.  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
- 121 - 
 
  0 
17. In Sec.  351.508, revise paragraph (c)(1) to read as follows:  
Sec.  351.508   Debt forgiveness.  
* * * * *  
    (c) * * *  
    (1) In general. The Secretary will treat the benefit determined under paragraph (a) of this section 
as a non -recurring subsidy and will allocate the benefit to a particular year in accordance with 
Sec.  351.524(d), or over a period of 12 years, whichev er is longer.  
* * * * *  
0 
18. In Sec.  351.509, add paragraph (d) to read as follows:  
Sec.  351.509   Direct taxes.  
* * * * *  
    (d) Benefit not tied to particular markets or products. If a program provides for a full or partial 
exemption, reduction, cred it, or remission of an income tax, the Secretary normally will consider 
any benefit to be not tied with respect to a particular market under Sec.  351.525(b)(4) or to a 
particular product under Sec.  351.525(b)(5).  
0 
19. In Sec.  351.511, add paragraph (a) (2)(v) to read as follows:  
Sec.  351.511   Provision of goods or services.  
    (a) * * *  
    (2) * * *  
    (v) Exclusion of certain prices. In measuring the adequacy of remuneration under this section, 
the Secretary may exclude certain prices from its anal ysis if interested parties have demonstrated, 
with sufficient information, that those prices are derived from countries with weak, ineffective, or 
nonexistent property (including intellectual property), human rights, labor, or environmental 
protections, an d that the lack of such protections would likely impact such prices.  
* * * * *  
0 
20. In Sec.  351.520, revise paragraph (a)(1) to read as follows:  
Sec.  351.520   Export insurance.  
    (a) * * *  
    (1) In general. In the case of export insurance, a benefit exists if the premium rates charged are 
inadequate to cover the long -term operating costs and losses of the program normally over a 
five-year period.  
* * * * *  
0 
21. In Sec.  351.525, revise pa ragraphs (b)(2) and (3) to read as follows:  
Sec.  351.525   Calculation of ad valorem subsidy rate and attribution of subsidy to a product.  
* * * * *  
    (b) * * *  G/ADP/N/1/USA/1/Suppl.36 • G/SCM/N/1/USA/1/Suppl.37  
 
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      (2) Export subsidies. The Secretary will normally attribute an export subsidy only to products 
exported by a firm.  
    (3) Domestic subsidies. The Secretary will normally attribute a domestic subsidy to all products 
sold by a firm, including products t hat are exported.  
* * * * *  
Sec.  351.527   [Removed and Reserved]  
0 
22. Remove and reserve Sec.  351.527.  
0 
23. Add Sec.  351.529 to read as follows:  
Sec.  351.529   Certain fees, fines, and penalties.  
    (a) Financial contribution. When determining if a  fee, fine, or penalty that is otherwise due, has 
been forgone or not collected, within the meaning of section 771(5)(D)(ii) of the Act, the Secretary 
may conclude that a financial contribution exists if information on the record demonstrates that 
payment was otherwise required and was not made, in full or in part. In making such a 
determination, the Secretary will not be required to consider whether the government took efforts 
to seek payment or grant deferral, or otherwise acknowledged nonpayment, of the fee, fine, or 
penalty.  
    (b) Benefit. If the Secretary determines that the government has exempted or remitted in part 
or in full, a fee, fine, or penalty under paragraph (a) of this section, a benefit exists to the extent 
that the fee, fine, or penalty paid by a party is less than if the government had not exempted or 
remitted that fee, fine, or penalty. Further, if the government is determined to have deferred the 
payment of the fee, fine, or penalty, in part or in full, a benefit exists to the extent t hat appropriate 
interest charges are not collected. Normally, a deferral of payment of fees, fines, or penalties will be 
treated as a government provided loan in the amount of the payments deferred, according to the 
methodology described in Sec.  351.505.  
[FR Doc. 2024 -05509 Filed 3 -22-24; 8:45 am]  
BILLING CODE 3510 -DS-P 
 
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