Court Opinion

ID: 4645187
Source: CourtListenerOpinion
Date Created: 2020-12-21 18:01:35.079763+00
Date Added: 2024-06-11T08:00:50.591411
License: Public Domain

Slip Op. 20-181

               UNITED STATES COURT OF INTERNATIONAL TRADE

 SAHA THAI STEEL PIPE PUBLIC
 COMPANY LIMITED,

        Plaintiff,

 and

 THAI PREMIUM PIPE COMPANY LTD.
 and PACIFIC PIPE PUBLIC COMPANY
 LIMITED,
                                                 Before: Jennifer Choe-Groves, Judge
        Consolidated Plaintiffs,
                                                 Consol. Court No. 18-00214
 v.

 UNITED STATES,

        Defendant,

 and

 WHEATLAND TUBE COMPANY,

        Defendant-Intervenor.

                                   OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s remand results in the 2016–2017
administrative review of the antidumping duty order covering circular welded carbon steel pipes
and tubes from Thailand.]

                                                                  Dated: December 21, 2020

Daniel L. Porter, Tung Nguyen, and Kimberly Reynolds, Curtis, Mallet-Prevost, Colt & Mosle
LLP, of Washington, D.C., for Plaintiff Saha Thai Steel Pipe Public Company Limited.

Robert G. Gosselink, Jonathan M. Freed, and Aqmar Rahman, Trade Pacific, PLLC, of
Washington, D.C., for Consolidated Plaintiff Thai Premium Pipe Company Ltd.
Consol. Court No. 18-00214                                                                 Page 2

Lizbeth R. Levinson, Ronald M. Wisla, and Brittney R. Powell, Fox Rothschild LLP, of
Washington, D.C., for Consolidated Plaintiff Pacific Pipe Public Company Limited.

Elizabeth A. Speck, Senior Trial Counsel, and L. Misha Preheim, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C.,
for Defendant United States. With them on the brief were Joseph H. Hunt, Assistant Attorney
General, and Jeanne E. Davidson, Director. Of counsel on the brief was Brandon J. Custard,
Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
of Commerce.

Roger B. Schagrin, Elizabeth J. Drake, Christopher T. Cloutier, and Luke A. Meisner, Schagrin
Associates, of Washington, D.C., for Defendant-Intervenor Wheatland Tube Company.

         Choe-Groves, Judge: Plaintiff Saha Thai Steel Pipe Public Company Limited

(“Saha Thai”) and Consolidated Plaintiffs Thai Premium Pipe Company Limited (“Thai

Premium”) and Pacific Pipe Public Company Limited (“Pacific Pipe”) (collectively, “Plaintiffs”)

filed this consolidated action challenging the final results published by the U.S. Department of

Commerce (“Commerce”) in the 2016–2017 administrative review of the antidumping duty

order on circular welded carbon steel pipes and tubes (“CWP”) from Thailand. See Circular

Welded Carbon Steel Pipes and Tubes From Thailand (“Final Results”), 83 Fed. Reg. 51,927

(Dep’t Commerce Oct. 15, 2018) (final results of antidumping duty administrative review; 2016–

2017); see also Decision Mem. for the Final Results of Antidumping Duty Admin. Review;

2016–2017, PD 143 (Oct. 4, 2018) (“Final Decision Memorandum” or “Final IDM”). 1 Before

the court are the Final Results of Redetermination Pursuant to Remand, ECF Nos. 62, 63

(“Remand Results”), which the court ordered in Saha Thai Steel Pipe Public Co. v. United States

(“Saha Thai I”), 43 CIT __, 422 F. Supp. 3d 1363 (2019).

         Plaintiffs argue that Commerce did not comply with the court’s remand order, which

required Commerce to reconsider its unlawful particular market situation adjustment in

1
    Citations to the administrative record reflect the public record (“PD”) document numbers.
Consol. Court No. 18-00214                                                                    Page 3

accordance with the court’s opinion, noting the absence of a direct instruction from the court for

Commerce to reverse its particular market situation adjustment. [Thai Premium]’s Comments

O’ppn Remand Redetermination at 5–6, ECF Nos. 65, 66 (“Thai Premium Cmts.”); Pl. Saha

Thai’s Comments Commerce’s Redetermination Remand at 2–3, ECF No. 67 (“Saha Thai

Cmts.”); Pl. Pacific Pipe’s Comments Commerce’s Remand Redetermination at 2–3, ECF No. 68

(“Pacific Pipe Cmts.”). Plaintiffs assert that Commerce’s Remand Results set forth an

impermissible new justification for a particular market situation adjustment to the cost of

production that is contrary to the court’s remand order, Commerce’s regulations, the applicable

statute, and procedural fairness. Thai Premium Cmts. at 7, 9; Saha Thai Cmts. at 3; Pacific Pipe

Cmts. at 3.

       Thai Premium asserts that normal value for Thai Premium was based on constructed

value in the Final Results and asks the court to address whether Commerce’s particular market

situation adjustments in the Final Results were supported by substantial evidence. Thai Premium

Cmts. at 3–4. In the Constructed Value Profit section of the Remand Results, Commerce noted

Thai Premium’s assertion that in the Final Results “Commerce used [constructed value] as a

basis for normal value for Thai Premium because Thai Premium did not have sales of the foreign

like product in the ordinary course of trade . . . .” Remand Results at 22–23 (citing Thai

Premium’s comments to the draft remand results). On remand, however, the basis for Thai

Premium’s constructed value was not the lack of sales of the foreign like product in the ordinary

course of trade but Commerce’s particular market situation determinations, which the court

discusses below. Id. at 7–9. Because Commerce changed its methodology in the Remand

Results, the issues of (1) whether Thai Premium’s normal value was properly based on

constructed value due to the lack of sales of the foreign like product in the ordinary course of
Consol. Court No. 18-00214                                                                  Page 4

trade, and (2) whether Commerce’s subsequent particular market situation adjustments were

supported by substantial evidence in the Final Results are not before the court at this time.

       For the following reasons, the court remands the Remand Results.

                                        BACKGROUND

       The court presumes familiarity with the facts and procedural history as set forth in its

prior opinion and recounts the facts relevant to the court’s review of the Remand Results. See

Saha Thai I, 43 CIT at __, 422 F. Supp. 3d at 1365–67.

       Defendant-Intervenor Wheatland Tube Company (“Wheatland”) submitted factual

information alleging that a particular market situation in Thailand during the period of review

distorted the costs of hot-rolled steel coil. Wheatland Allegation Letter at 1, PD 69–71 (Feb. 5,

2018) (“Wheatland Allegation”). Wheatland alleged the existence of two independent particular

market situations, either one of which was purportedly sufficient on its own to distort the cost of

production of CWP: (1) the Royal Thai Government subsidized Thai producers of hot-rolled coil,

enabling its sale at below-market prices to downstream producers of CWP, and (2) the prices for

imports of hot-rolled coil into Thailand were distorted through dumping, subsidization, and

global overcapacity. Id. at 4–5. Wheatland requested that Commerce “use an alternative

calculation methodology to calculate constructed value under 19 U.S.C. § 1677b(e) in this

proceeding.” Id. at 1. Commerce accepted Wheatland’s submission alleging the existence of a

particular market situation as to cost of production under 19 C.F.R. § 351.301(c)(2)(v) and set a

deadline for submissions to rebut, clarify, or correct the Wheatland Allegation. Commerce

Deadline Mem. at 1–2, PD 81 (Mar. 21, 2018). Saha Thai and Pacific Pipe submitted rebuttal

factual information. Saha Thai Rebuttal, PD 83 (Mar. 28, 2018); Pacific Pipe Rebuttal, PD 84–

85 (Mar. 28, 2018).
Consol. Court No. 18-00214                                                                 Page 5

       In the Final Results, Commerce determined that a particular market situation distorted the

acquisition cost of hot-rolled coil, a major CWP input, and applied an upward adjustment to the

respondents’ reported cost of production. 2 Final IDM at 8–10. Commerce conducted the sales-

below-cost test and disregarded certain of Saha Thai’s, Pacific Pipe’s, and Thai Premium’s home

market sales made at prices below the cost of production. See Circular Welded Carbon Steel

Pipes and Tubes from Thailand: Decision Mem. for the Prelim. Results of Antidumping Duty

Admin. Review; 2016–2017 at 15–16, PD 87 (Apr. 3, 2018) (“Preliminary Decision

Memorandum” or “Prelim. DM”). Commerce calculated normal value from the remaining

above-cost home market sales and stated expressly that “[it] calculated [normal value] based on

the price Pacific Pipe, Saha Thai, and Thai Premium reported for home market sales . . . .” Id. at

16. “Where [Commerce] w[as] unable to determine [normal value] based on home market sale

prices of comparable merchandise, . . . [Commerce] based [normal value] on constructed value

(CV).” Id. Commerce did not state in the Preliminary Decision Memorandum or the Final

Decision Memorandum that normal value for Thai Premium was based on constructed value.

See Prelim. DM; Final IDM. Commerce calculated Plaintiffs’ weighted-average antidumping

margins as 28% for Saha Thai, 30.61% for Pacific Pipe, and 30.98% for Thai Premium. Final

Results, 83 Fed. Reg. at 51,928. The court concluded in Saha Thai I that Commerce’s cost-based

particular market situation adjustment was unlawful and remanded to Commerce “for further

consideration consistent with this opinion.” 43 CIT at __, 422 F. Supp. 3d at 1371.

       Commerce filed the Remand Results under respectful protest and stated that it disagreed

with the court in Saha Thai I. Remand Results at 1, 6. Rather than reverse its particular market

2
  Saha Thai, Pacific Pipe, and Thai Premium were the only three producer-exporters covered by
this administrative review. Final IDM at 2. All three were individually examined as mandatory
respondents. Remand Results at 3.
Consol. Court No. 18-00214                                                                  Page 6

situation determination, Commerce maintained its determination that a particular market

situation distorted the cost of production. Id. at 7–8. Commerce declined to conduct the sales-

below-cost test because it explained that the sales-below-cost test would not be “meaningful”

without an adjustment to the cost of production to account for the particular market situation. Id.

Commerce instead made a particular market situation determination under 19 U.S.C.

§ 1677(15)(C), stating that the distorted cost of production prevented a proper comparison

between home market sales and export prices, and disregarding all home market sales. Id. at 8.

Commerce based normal value on constructed value for each respondent on remand. Id. at 1–2,

8–9. Commerce made a particular market situation determination under 19 U.S.C. § 1677b(e) as

to cost of production and calculated constructed value with an adjustment to the cost of

production as an alternative calculation methodology. Id. at 8–9. Commerce calculated

constructed value profit for each respondent by the alternative method of using Saha Thai’s

home market selling expense ratios and profit rate from the 2015–2016 administrative review.
Id. at 9–11.

                      JURISDICTION AND STANDARD OF REVIEW

       The court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c),

which grant the court authority to review actions contesting the final results of an administrative

review of an antidumping duty order. The court will uphold Commerce’s determinations unless

they are unsupported by substantial evidence on the record or otherwise not in accordance with

the law. 19 U.S.C. § 1516a(b)(1)(B)(i). The court also reviews determinations made on remand

for compliance with the court’s remand order. Ad Hoc Shrimp Trade Action Comm. v. United

States, 38 CIT __, __, 992 F. Supp. 2d 1285, 1290 (2014), aff’d, 802 F.3d 1339 (Fed. Cir. 2015).
Consol. Court No. 18-00214                                                                      Page 7

                                            DISCUSSION

        I.      Governing Law

        Commerce determines antidumping duties by calculating the amount by which the

normal value of subject merchandise exceeds the export price or the constructed export price for

the merchandise. 19 U.S.C. § 1673. When reviewing antidumping duties in an administrative

review, Commerce must determine: (1) the normal value and export price or constructed export

price of each entry of the subject merchandise, and (2) the dumping margin for each such entry.
Id. § 1675(a)(1)(B), (a)(2)(A). The statute dictates the steps by which Commerce may calculate

normal value “to achieve a fair comparison” with export price or constructed export price. Id.

§ 1677b(a).

        First, the statute specifies the methodology for Commerce to determine which sales

should be considered and disregarded in calculating normal value. Normal value is “the price at

which the foreign like product is first sold . . . in the exporting country . . . in the ordinary course

of trade.” Id. § 1677b(a)(1)(B)(i). Sales outside the ordinary course of trade are excluded from

normal value. “Ordinary course of trade” is defined in Section 1677(15) as excluding: (1) sales

made at less than the cost of production, and (2) sales that cannot be compared properly with the

export price or constructed export price due to a particular market situation. Id. § 1677(15)(A),

(C). To determine whether “sales . . . have been made at prices that represent less than the cost

of production,” the statute directs Commerce to conduct the sales-below-cost test. Id.

§ 1677b(b)(1). The cost of production is defined by statute to include the cost of materials and

processing, amounts for selling, general, and administrative expenses, and the cost of all

containers and expenses incidental for shipment. Id. § 1677b(b)(3). Sales that Commerce

determines, by application of the sales-below-cost test, were made at prices below the cost of
Consol. Court No. 18-00214                                                                  Page 8

production, or that Commerce determines were made in a particular market situation, are outside

the ordinary course of trade and are disregarded from the calculation of normal value. See id.

§ 1677b(b)(1), (a)(1)(B)(i). “Whenever such sales are disregarded, normal value shall be based

on the remaining sales of the foreign like product in the ordinary course of trade.” See id.

§§ 1677b(a)(1)(B)(i), (b)(1); 1677(15)(A), (C).

       Second, when using market prices to determine normal value, Commerce may make

certain adjustments to the remaining home market prices. The statute lists authorized

adjustments for incidental shipping and delivery expenses, direct taxes, and differences between

the subject merchandise and foreign like products in quantity, circumstances of sale, or level of

trade. Id. § 1677b(a)(6), (7).

       Third, if Commerce cannot determine the normal value of the subject merchandise based

on home market sales, then Commerce may use qualifying third-country sales or constructed

value as a basis for normal value. Id. § 1677b(a)(4), (a)(1)(B)(ii), (b)(1). Constructed value

represents: (1) the cost of materials and fabrication or other processing of any kind used in

producing the merchandise; (2) the actual amounts incurred and realized for selling, general, and

administrative expenses, and for profits, in connection with the production and sales of a foreign

like product, in the ordinary course of trade, for consumption in the foreign country; and (3) the

cost of packing the subject merchandise. Id. § 1677b(e). When calculating constructed value, if

Commerce determines that a particular market situation exists “such that the cost of materials

and fabrication or other processing of any kind does not accurately reflect the cost of production

in the ordinary course of trade, [then] [Commerce] may use . . . any other calculation

methodology.” Id.
Consol. Court No. 18-00214                                                                      Page 9

        II.     Particular Market Situation Allegation

        Plaintiffs argue that Commerce made an impermissible “sales-based” particular market

situation determination on remand, when no “sales-based” particular market situation allegation

was submitted before the time period expired and interested parties were not permitted to submit

rebuttal factual information. Thai Premium Cmts. at 8–9; Saha Thai Cmts. at 7–10; Pacific Pipe

Cmts. at 3–5. Commerce asserted that it relied on remand on the same cost-based particular

market situation determination it made in the Final Results. Remand Results at 15–16; see also

Def.-Intervenor [Wheatland]’s Comments Commerce’s Redetermination Remand at 4–5, ECF

No. 69 (“Wheatland Cmts.”).

        The statute recognizes two types of particular market situations. The first is a particular

market situation that prevents a proper comparison between home market sales and the export

price or constructed export price under Section 1677(15)(C). 19 U.S.C. § 1677(15)(C). The

second is a particular market situation that prevents “the cost of materials and fabrication or

other processing of any kind” from “accurately reflect[ing] the cost of production in the ordinary

course of trade . . . .” Id. § 1677b(e).

        The applicable regulation provides that “allegations regarding market viability or the

exceptions in paragraph (c)(2) of this section, must be filed, with all supporting factual

information, in accordance with § 351.301(d)(1).” 19 C.F.R. § 351.404(d). One exception

provided in paragraph (c)(2) specifies that “[t]he Secretary may decline to calculate normal value

in a particular market . . . [if] a particular market situation exists that does not permit a proper

comparison with the export price or constructed export price . . . .” Id. § 351.404(c)(2)(i).

Section 351.301 does not have a subsection (d), but subsection (c) provides that “[a]llegations

regarding market viability in an antidumping investigation or administrative review, including
Consol. Court No. 18-00214                                                                    Page 10

the exceptions in § 351.404(c)(2), are due, with all supporting factual information, 10 days after

the respondent interested party files the response to the relevant section of the questionnaire,

unless the Secretary alters this time limit.” Id. § 351.301(c)(2)(i); see Final IDM at 5

(recognizing that subsection (c) sets the deadline for allegations as to market viability, including

the exceptions in Section 351.404(c)(2)). No deadline is specified for the submission of “factual

information in support of other allegations not specified in paragraphs (c)(2)(i)–(iv) of this

section,” but if Commerce accepts such factual submission, Commerce must “issue a schedule

providing deadlines for submission of factual information to rebut, clarify or correct the factual

information.” 19 C.F.R. § 351.301(c)(2)(v).

       Here, Commerce properly accepted the Wheatland Allegation and afforded interested

parties the opportunity to submit information to rebut, clarify, or correct the allegation.

Wheatland alleged the existence of a particular market situation that distorted the cost of hot-

rolled steel coil. Wheatland Allegation at 1, 4–5. The Wheatland Allegation did not pertain to

market viability or a particular market situation that did not permit a proper comparison with the

export price or constructed export price, which would have fallen under 19 C.F.R. § 351.404(d)

as one of the exceptions identified in 19 C.F.R. § 351.404(c)(2). The deadline for factual

submissions under 19 C.F.R. § 351.404(d) did not apply to the Wheatland Allegation. Instead,

the Wheatland Allegation fell under 19 C.F.R. § 351.301(c)(2)(v) for “Other allegations,” for

which there was no specified time limit. See Wheatland Allegation at 1, 4–5; Remand Results at

15. The type of particular market situation alleged in the Wheatland Allegation and the

applicable submission deadline were not altered by Commerce’s subsequent actions. The court

concludes that Commerce’s actions in accepting the Wheatland Allegation under 19 C.F.R.

§ 351.301(c)(2)(v) and setting a deadline for interested parties to submit information to rebut,
Consol. Court No. 18-00214                                                                   Page 11

clarify, or correct the Wheatland Allegation were consistent with its regulations, and the

Wheatland Allegation regarding a particular market situation distorting the cost of hot-rolled

steel coil was not time-barred as argued by Plaintiffs.

         III.   Unauthorized Particular Market Situation Determinations

         Plaintiffs assert that Commerce based normal value on constructed value without

disregarding home market sales as outside the ordinary course of trade by any of the statutorily

mandated methods. Thai Premium Cmts. at 9–12; Saha Thai Cmts. at 3–13; Pacific Pipe Cmts.

at 5–7. Plaintiffs argue also that Commerce must show that a particular market situation

prevented a proper comparison with the export price or constructed export price before it may

disregard home market sales as being outside the ordinary course of trade under 19 U.S.C.

§ 1677(15)(C). Thai Premium Cmts. at 9–11; Saha Thai Cmts. at 12–13; see Pacific Pipe Cmts.

at 6–7. Saha Thai contends that Commerce did not follow the applicable statutory requirement

of 19 U.S.C. § 1677b(b)(1), which requires Commerce to first show that home market sales were

made at prices below the cost of production by conducting the sales-below-cost test to determine

which sales should be disregarded as outside the ordinary course of trade. Saha Thai Cmts. at

11–12.

         In the Final Results, Commerce determined that a particular market situation existed that

distorted the cost of production and conducted the sales-below-cost test with an adjustment to the

cost of production. Final IDM at 9–10. Commerce disregarded the below-cost home market

sales and based normal value on the remaining home market sales. Prelim. DM at 16. The court

concluded in Saha Thai I that Commerce was not permitted to “apply a cost-based particular

market situation adjustment in the context of a sales-based comparison.” 43 CIT at __, 422 F.

Supp. 3d at 1371.
Consol. Court No. 18-00214                                                                   Page 12

       Commerce maintained the same particular market situation determination on remand that

it made in the Final Results. Remand Results at 16. “Commerce relied on the cost-based

[particular market situation] finding made in the Final Results in the Draft Results of Remand

Redetermination, with no change to [its] determination that a cost-based [particular market

situation] existed during the period of review.” Id. Commerce asserted that a particular market

situation in Thailand distorted the acquisition cost of hot-rolled steel coil, a major input for the

subject merchandise, such that the respondents’ cost of production of the subject merchandise

did not reflect accurately the cost of production of the subject merchandise in the ordinary course

of trade. Id. at 19–20.

       Commerce did not conduct the sales-below-cost test on remand. Id. at 7–8. Commerce

declared that conducting the sales-below-cost test would not be “meaningful” without an

adjustment to the cost of production—which the court prohibited in Saha Thai I—to account for

the particular market situation and to compare “home market sale prices to a cost of production

that does not accurately reflect production costs in the ordinary course of trade fails to

accomplish the intent of the sales-below-cost test, which is to determine whether the

respondents’ home market sales were made in the ordinary course of trade.” Id.; see also id. at

19; Wheatland Cmts. at 2. Commerce noted that “without being able to make a [particular

market situation] adjustment in calculating the respondents’ cost of production and perform an

accurate sales-below-cost test, . . . the [particular market situation] in Thailand which distorted

the acquisition cost of [hot-rolled coil] has resulted in each respondent’s home market sales

being outside of the ordinary course of trade.” Remand Results at 15.

       Commerce’s exclusion of home market sales due to distortions in the cost of production

is not authorized by the statute. Congress provided specifically in Section 1677(15)(A) for
Consol. Court No. 18-00214                                                                  Page 13

Commerce to consider sales outside the ordinary course of trade when sales are below the cost of

production. The path specified by Congress to determine that sales are below the cost of

production is for Commerce to first conduct the sales-below-cost test set forth in Section

1677b(b)(1) to affirmatively confirm that sales are made below the cost of production as

calculated according to Section 1677b(b)(3). Section 1677b(b)(1) provides:

       Whenever the administering authority has reasonable grounds to believe or suspect
       that sales of the foreign like product under consideration for the determination of
       normal value have been made at prices which represent less than the cost of
       production of that product, the administering authority shall determine whether, in
       fact, such sales were made at less than the cost of production. If the administering
       authority determines that sales made at less than the cost of production—

               (A) have been made within an extended period of time in substantial
               quantities, and

               (B) were not at prices which permit recovery of all costs within a reasonable
               period of time,

       such sales may be disregarded in the determination of normal value. Whenever
       such sales are disregarded, normal value shall be based on the remaining sales of
       the foreign like product in the ordinary course of trade. If no sales made in the
       ordinary course of trade remain, the normal value shall be based on the constructed
       value of the merchandise.

19 U.S.C. § 1677b(b)(1). The statute directs Commerce to compare the reported home market

sales prices to the cost of production calculated by adding the component costs and expenses

listed in Section 1677b(b)(3). Id. § 1677b(b)(1), (3); see also Prelim. DM at 15. After

conducting the sales-below-cost test, Commerce shall disregard those reported home market

sales prices that are less than the calculated cost of production as outside the ordinary course of

trade. 19 U.S.C. § 1677(15)–(15)(A).

       Here, Commerce did not follow the specified method when it disregarded as outside the

ordinary course of trade sales made purportedly at prices below the cost of production, without

confirming that the sales were in fact made below the cost of production by conducting the sales-
Consol. Court No. 18-00214                                                                  Page 14

below-cost test. The statute requires Commerce to conduct the sales-below-cost test set forth in

Section 1677b(b)(1) before disregarding below-cost sales as outside the ordinary course of trade

under Section 1677(15)(A). Nothing in the statute grants Commerce authority to bypass the

sales-below-cost test, and the specificity of the sales-below-cost test leaves no ambiguity. See

Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992) (“[C]ourts must presume that a

legislature says in a statute what it means and means in a statute what it says there.”). The court

concludes that Commerce’s exclusion of home market sales due to distortions in the cost of

production without conducting the sales-below-cost test to determine whether those sales were in

fact outside the ordinary course of trade is contrary to law.

       Commerce’s exclusion of below-cost sales is not redeemed by invoking Section

1677(15)(C) with a determination that the distorted cost of production created a particular market

situation preventing a proper comparison between reported home market sales prices and export

price. Section 504 of the Trade Preferences Extension Act of 2015 (“TPEA”), Pub. L. No. 114-

27, 129 Stat. 362, added a particular market situation provision to the list of sales and

transactions outside the ordinary course of trade. The amended provision provides:

       (15) Ordinary course of trade. The term “ordinary course of trade” means the
       conditions and practices which, for a reasonable time prior to the exportation of the
       subject merchandise, have been normal in the trade under consideration with
       respect to merchandise of the same class or kind. The administering authority shall
       consider the following sales and transactions, among others, to be outside the
       ordinary course of trade:

               (A) Sales disregarded under section 773(b)(1) [19 USCS § 1677b(b)(1)].
               ...
               (C) Situations in which the administering authority determines that the
                   particular market situation prevents a proper comparison with the
                   export price or constructed export price.

19 U.S.C. § 1677(15). The statute defines “situations” narrowly as “sales and transactions” by

directing Commerce to consider “sales and transactions . . . to be outside the ordinary course of
Consol. Court No. 18-00214                                                                 Page 15

trade [including] . . . [s]ituations in which [Commerce] determines that the particular market

situation prevents a proper comparison with the export price or constructed export price.” See
id.

       Commerce did not explain how a particular market situation affecting sales and

transactions in the home market prevented a proper comparison between reported home market

sales prices and export prices. In fact, Commerce conceded in the Remand Results that “[it]

ha[d] not considered whether a [particular market situation] existed in the home market for the

sale of the foreign like product such that home market sales cannot be used as the basis for

normal value.” Remand Results at 15. No allegation that a particular market situation affecting

sales and transactions in the home market and preventing a proper comparison between reported

home market sales prices and export prices was submitted.

       Commerce determined instead “that the [particular market situation] with respect to the

cost of production of circular pipes and tubes prevent[ed] a proper comparison of normal value

based on the respondents’ home market sale prices with the respondents’ export prices or

constructed export prices.” Id. at 8, 19–20; see also Def.’s Resp. Comments Remand

Redetermination at 12–13, ECF No. 70 (“Def. Resp.”). Commerce did not explain how a

particular market situation affecting the cost of production prevented a comparison between the

reported home market sales prices and the export prices. Commerce merely repeated its

conclusory determination that the particular market situation as to cost of production prevented a

proper comparison:

       [S]ection [1677](15)(C) of the Act states that Commerce shall consider situations
       in which we determine that a particular market situation prevents a proper
       comparison of normal value with the export price or constructed export price, to be
       outside the ordinary course of trade. On this basis, we find that the existence of the
       [particular market situation] concerning the cost of production of circular pipes and
Consol. Court No. 18-00214                                                                Page 16

       tubes in Thailand precludes a proper comparison of normal value with U.S. price,
       pursuant to section [1677](15)(C) of the Act.

Remand Results at 19–20.

       The statute cannot be read to authorize Commerce to make a particular market situation

determination under Section 1677(15)(C) on the basis of distorted cost of production. Congress

provided a separate mechanism under Section 1677(15)(A) for Commerce to consider sales and

transactions outside the ordinary course of trade when the cost of production of that merchandise

is implicated. Because Congress specified in Sections 1677(15)(A) and 1677b(b) the method by

which Commerce may disregard below-cost sales, Congress obviated consideration of a

particular market situation affecting the cost of production from Section 1677(15)(C). An

alternative reading would render impermissibly superfluous Sections 1677(15)(A) and 1677b(b).

Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 576 U.S. 519, 538 (2015)

(citing Gustafson v. Alloyd Co., 513 U.S. 561, 574 (1995) (“[T]he Court will avoid a reading

which renders some words altogether redundant.”)). The distinction between exclusions of sales

as below the cost of production under Section 1677(15)(A) and exclusions of sales due to a

particular market situation preventing proper comparison under Section 1677(15)(C) “makes a

great deal of sense.” See Husteel Co. v. United States, 44 CIT __, __, 426 F. Supp. 3d 1376,

1388 (2020). A particular market situation that affects the cost of production would presumably

affect prices for domestic sales and export sales alike and thus would have no preclusive effect

on the comparison between the two. See id. The court concludes that Commerce’s cost-based

particular market situation determination to disregard sales as outside the ordinary course of

trade under Section 1677(15)(C) is contrary to law.

       In response to Pacific Pipe’s and Saha Thai’s argument that Commerce cannot exclude

home market sales based on a cost-based particular market situation determination, Defendant
Consol. Court No. 18-00214                                                                      Page 17

asserts:

           Because the term “ordinary course of trade” is contained in 19 U.S.C. § 1677b(e),
           Commerce acted in accordance with the statute when it “found that a cost-based
           [particular market situation] existed in Thailand which distorted the acquisition cost
           of [hot-rolled coil], the primary input used in the production of circular pipes and
           tubes, [and, as a result] . . . that the respondents’ cost of materials and fabrication
           or other processing do not accurately reflect the cost of production of circular pipes
           and tubes in the ordinary course of trade.

Def. Resp. at 9–10 (alterations in original). Defendant also argues that “Commerce’s

determination that it could not use the respondent’s [sic] home market sales as the basis for

normal value because they are outside of the ordinary course of trade” was lawful. Id. at 12.

Defendant apparently argues that Commerce can disregard sales as outside the ordinary course of

trade due to distortions in the cost of production based on Section 1677b(e)’s reference to the

ordinary course of trade.

           Commerce cannot invoke Section 1677b(e) as its authority to exclude home market sales

and base normal value on constructed value. Section 504 of the TPEA amended the statutory

provisions governing constructed value. The amendment provided for Commerce to determine

whether a particular market situation distorted the cost of production when computing

constructed value. The amended language provides:

           [F]or purposes of paragraph (1) [in reference to calculating constructed value] if a
           particular market situation exists such that the cost of materials and fabrication or
           other processing of any kind does not accurately reflect the cost of production in
           the ordinary course of trade, the administering authority [Commerce] may use
           another calculation methodology under this subtitle or any other calculation
           methodology.

19 U.S.C. § 1677b(e). Section 1677b(e) only applies if the precondition “for purposes of

paragraph (1)” is met. Id. Paragraph (1) lists the costs to be added to calculate constructed

value. Id. § 1677b(e)(1). Commerce must meet the precondition of calculating constructed

value before it can rely on Section 1677b(e) to make a cost-based particular market situation
Consol. Court No. 18-00214                                                                   Page 18

determination. Here, Commerce had not met the precondition of calculating constructed value

when it made a particular market situation determination based on distorted cost of production.

Contrary to Defendant’s assertion, Commerce was not authorized to make a cost-based particular

market situation determination under Section 1677b(e), when the precondition of calculating

constructed value was not yet satisfied.

        Defendant’s argument conflates the language in Section 1677(15) (“the following sales

and transactions, among others, to be outside the ordinary course of trade”) with the language in

Section 1677b(e) (“the cost of production in the ordinary course of trade”) based on the common

phrase “ordinary course of trade.” See id. §§ 1677b(e); 1677(15). The statutory framework sets

forth a sequence of steps, as explained above, that Commerce must follow in determining

antidumping duties. Sections 1677b(a)(1)(B)(i) and 1677(15) provide that the home market sales

price excludes sales and transactions made outside the ordinary course of trade. Id.

§§ 1677b(a)(1)(B)(i); 1677(15). If the conditions to base normal value on constructed value are

met, Section 1677b(e) provides that Commerce may consider whether the cost of production is

reflected accurately in the ordinary course of trade. Id. § 1677b(e). The fact that the phrase

“ordinary course of trade” is found in Section 1677b(e) does not insert “distorted cost of

production” into Section 1677(15)’s list of sales and transactions outside the ordinary course of

trade. Defendant’s interpretation is “untenable in light of [the statute] as a whole.” Dep’t of

Revenue of Or. v. ACF Indus., 510 U.S. 332, 343 (1994) (citing United Sav. Assn. of Tex. v.

Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988) (“A provision that may seem

ambiguous in isolation is often clarified by the remainder of the statutory scheme . . . because

only one of the permissible meanings produces a substantive effect that is compatible with the

rest of the law . . . .”)).
Consol. Court No. 18-00214                                                                 Page 19

         Commerce did not follow the statutory framework in this case. Commerce’s

determination that the cost of production is not reflected accurately in the ordinary course of

trade is not interchangeable with a determination that sales are outside the ordinary course of

trade.

         The court concludes that Commerce’s exclusion of home market sales is not in

accordance with the law because Commerce unlawfully excluded purported below-cost sales

without conducting the sales-below-cost test and Commerce unlawfully determined that a

particular market situation existed under Section 1677(15)(C) based on distortions to the cost of

production. The court concludes that Commerce’s application of an alternative calculation

methodology is not in accordance with the law because Commerce was not authorized to conduct

a cost-based particular market situation analysis under Section 1677b(e) without a statutory

ground for calculating constructed value. The court directs Commerce to remove the particular

market situation determinations under Sections 1677(15)(C) and 1677b(e) as to the cost of

production on second remand and recalculate the respondents’ weighted-average dumping

margins without disregarding home market sales from the calculation of normal value on that

basis.

                                          CONCLUSION

         The court concludes that Commerce’s cost-based particular market situation

determinations are not in accordance with the law.

         Accordingly, it is hereby

         ORDERED that the Remand Results are remanded for Commerce to remove the cost-

based particular market situation determinations and recalculate the relevant margins without a

particular market situation adjustment; and it is further
Consol. Court No. 18-00214                                                              Page 20

         ORDERED that Commerce shall afford the parties at least twelve (12) business days to

comment on the draft second remand results; and it is further

         ORDERED that this case shall proceed according to the following schedule:

                (1) Commerce shall file the second remand results on or before February 16,

                   2021;

                (2) Commerce shall file the administrative record on or before March 2, 2021;

                (3) Comments in opposition to the second remand results shall be filed on or

                   before April 2, 2021;

                (4) Comments in support of the second remand results shall be filed on or before

                   May 3, 2021; and

                (5) The joint appendix shall be filed on or before May 17, 2021.

                                                                  /s/ Jennifer Choe-Groves
                                                                 Jennifer Choe-Groves, Judge
Dated:    December 21, 2020
         New York, New York