CIT Upholds Commerce's Decision Not to Find PMS Affecting OCTG Inputs in Korea, Sends Back 'd' Test

The Commerce Department properly found that a particular market situation did not exist in South Korea affecting inputs for oil country tubular goods from South Korea, the Court of International Trade ruled in a case on an antidumping review on Korean OCTG. Judge Jennifer Choe-Groves said the agency legally found that hot-rolled coil imports from China and South Korea's electricity market did not constitute a PMS.

However, the court did send back Commerce's explanation of the 0.8 threshold used with the Cohen's d test as part of its differential pricing analysis to root out "masked" dumping. Choe-Groves said use of this threshold was not squared with questions raised by the U.S. Court of Appeals for the Federal Circuit over the fact that the agency did not satisfy certain statistical assumptions when using the d test. The court also sent back Commerce's consideration of the test to reconsider certain academic literature the agency left off the record.

Commerce originally found that a PMS existed and distorted the cost of production for the OCTG goods based on five factors. The case found its way to the Federal Circuit, where the appellate court outright said that three of the factors could not contribute to a PMS, leaving the remaining two factors to be considered by Commerce (see 2203110044). Back at the trade court, the agency looked at each factor and found that a PMS did not exist.

First addressing hot-rolled coil imports from China, Commerce found that the evidence shows that low-priced Chinese steel imports "could have" contributed to a PMS but that ultimately these imports were not particular enough to the Korean market. The agency repeatedly used tentative language when discussing the possibility of a PMS but would end up siding against the existence of a PMS -- a position upheld by Choe-Groves.

"The Court agrees with Commerce’s determination that the record evidence does not show that an increase in Chinese steel exports was particular to Korea and the drastic decline in average unit values from China was particular to Korea," the opinion said.

To reexamine the Korean electricity market factor, Commerce heard arguments on whether it should compare International Energy Agency data on Japan to the Korean data. The agency decided this wasn't appropriate given that Japan's prices were "significantly higher" than the median electricity prices of all countries in the IEA study -- the mark Commerce actually used to compare Korean electricity rates. The court upheld this move as backed by substantial evidence.

Commerce's stance on the Cohen's d test, however, was remanded by the court on two grounds: the 0.8 threshold and consideration of academic material. The Federal Circuit raised questions over the use of this threshold in Stupp Corp. v. U.S. since Commerce did not satisfy statistical assumptions such as equal variances and normally distributed data when running the test. The agency said these assumptions didn't need to be met since it used the entire population of the data and not just a sample.

The court found this explanation does not resolve the Federal Circuit's concerns since the test's author, Professor Jacob Cohen, "derived his interpretive cutoffs under certain assumptions." The Federal Circuit said in Stupp that "[v]iolating those assumptions can subvert the usefulness of the interpretive cutoffs, transforming what might be a conservative cutoff into a meaningless comparator.”

In its most recent remand results, Commerce also found that it did not need to address academic literature discussed in Stupp on the Cohen's d test since it was not on the administrative record. Choe-Groves found this to be incorrect given that Commerce relied on this literature in its remand, effectively making it part of the administrative record. "Commerce’s attempt to retroactively explain the consideration of the academic literature as an oversight does not excuse Commerce’s failure to consider the evidence in the Third Remand Results," the opinion said.

(Nexteel Co. v. United States, Slip Op. 23-52, CIT Consol. # 18-00083, dated 04/19/23; Judge: Jennifer Choe-Groves; Attorneys: J. David Park of Arnold & Porter for plaintiff Nexteel; Jeffrey Winton of Winton & Chapman for consolidated plaintiff SeAH Steel Corp.; Claudia Burke for defendant U.S. government; Thomas Beline of Cassidy Levy for defendant-intervenor U.S. Steel Corp.; and Gregory Spak of White & Case for defendant-intervenors Maverick Tube Corp. and Tenaris Bay City)