Commerce Erred by Switching Scope Decision on German Company's Thermal Paper, CIT Complaint Says

The Commerce Department violated the law when it found antidumping duty respondent Papierfabrik August Kohler's Blue4est developer-free paper to be within the scope of the AD duty order on thermal paper from Germany, the respondent told the Court of International Trade in a Jan. 21 complaint. Commerce, in its preliminary determination, found the Blue4est paper to be outside of the scope of the order but changed its decision in the final results. This decision wasn't based on a change in evidence but rather a "conclusory decision to ignore the limited scope of the term 'thermal paper' as defined in the petition," the respondent said (Koehler Paper SE v. U.S., CIT #21-00633).

Koehler's case was one of three filed against Commerce's final determination on Jan. 21. The petitioners, Appvion Operations and Domtar Corporation alleged in a second lawsuit that Koehler should be hit with partial adverse facts available for its failure to accurately report certain product information (see 2201210038), and another German producer, Matra Americas, filed a third complaint also challenging Commerce's decision to include the Blue4est paper in the scope of the order.

During the investigation, Koehler presented Commerce with evidence that its thermal paper does not use a thermal active coating in that no chemical processes are involved. Rather, the Blue4est paper uses a physical process. In the investigation's preliminary determination, Commerce agreed with Koheler that its Blue4est paper was outside the scope of the AD order since it does not use a thermal active coating, disagreeing with the petitioners' arguments to the contrary.

However, in the investigation's final determination, Commerce included the Blue4est paper as subject to the AD order after taking another look at the petition and finding that any paper that can be used to create an image on the paper through a thermal process is a thermal paper. Koehler described this decision as "arbitrary" since the agency included its paper because there was "some functional overlap" between the Blue4est paper and the traditional thermal paper.

"Commerce failed to explain the reasoning for the change in its position or even identify the arguments or evidence it considered that resulted in that change," the complaint said. "By failing to explain the 'factual and legal conclusions' that resulted in its reversed finding, Commerce violated 19 C.F.R § 351.225(f)(5). As a result of its arbitrary scope determination, Commerce erroneously included Blue4est paper when calculating the weighted average dumping margin." The resulting dumping margin was 2.90%.

Koehler also contested Commerce's use of the Cohen's d test when it found that masked dumping was occurring in the period of investigation. Serious doubt has been cast over the use of this test in Commerce's differential pricing analysis following a July U.S. Court of Appeals for the Federal Circuit decision in Stupp Corporation v. U.S. (see 2107150032). The decision remanded the use of the test to Commerce to figure out whether the agency fulfills certain conditions required for the proper use of the test.

The respondent piggybacked on this decision, arguing that Commerce failed to first assure that it met these statistical necessities before conducting the Cohen's d test. "Specifically, by applying the A-T method to certain Koehler sales data in reliance upon its application of the Cohen’s d statistical test, without first assuring that the Cohen’s d test requirements of normality, size, and equal variance were satisfied, Commerce acted arbitrarily, capriciously, and contrary to law," the brief said.