Commerce to Revisit Approach to Finding Cost-Based PMS, Calls for Comments

The Commerce Department will revisit its approach to "analyzing and determining the existence of a [particular market situation] that distorts costs of production" in antidumping duty proceedings, given the U.S. Court of Appeals for the Federal Circuit's opinion in Nexteel v. United States. Releasing an advance notice of proposed rulemaking in the Nov. 18 Federal Register, Commerce said that it is seeking public comments on what evidence it should and shouldn't consider when finding whether a PMS exists that supports the COP and when the amount of distortion in the COP caused by a PMS cannot be quantified based on the record.

In March 2022, the Federal Circuit ruled that Commerce did not properly support its position that a PMS existed affecting inputs to oil country tubular goods from South Korea (see 2203110044).

From this opinion, Commerce interpreted the Federal Circuit to have made four conclusions: 1) a cost-distorting PMS must cause costs to deviate from what they would have otherwise been during the ordinary course of trade; 2) a PMS must be particular to certain exporters, producers or inputs or market where the inputs are manufactured; 3) if there is a claim of government interference, there should be evidence that the producer or seller of the input received that government assistance and that it had some impact on the price; and 4) Commerce is not required to quantify a cost distortion caused by the PMS to find the existence of a PMS, but if Commerce is able to quantify it, the quantification can help support a finding of the existence of a PMS.

Commerce found that this opinion warranted a revision of its PMS methodology for cost-based distortions. "In light of the CAFC’s holding and analysis in Nexteel, as well as our experience in administering the PMS provision over the past several years, we have determined it is appropriate to revisit Commerce’s approach in certain instances to analyzing and determining the existence of a PMS that distorts costs of production," the notice said.

The agency called for public comments on this revision for three purposes: to identify information that Commerce should consider in evaluating whether a PMS exists that distorts the COP if that information is reasonably available and relevant; to submit information that Commerce should not be required to consider; and to provide comments on adjustments that Commerce may make to its calculations when a PMS finding is made. The last day to submit comments is Dec. 18.