Commerce Proposes Rule Against Non-Quantifiable Data in Making PMS Decisions

The Commerce Department will not consider arguments for a particular market situation that are devoid of quantifiable data, the agency said as part of a proposed update to its antidumping duty regulations. While Commerce acknowledged that it legally can consider non-quantifiable data per the U.S. Court of Appeals for the Federal Circuit's decision in NEXTEEL v. U.S. (see 2304200048), the agency said it finds such arguments "typically unhelpful" to its analysis, proposing to not be required to consider them in determining whether a PMS exists. Commerce added that it will not be required to consider "speculative costs or prices" as well.

The proposed rule includes broader changes to Commerce's AD/CVD regulations, including by clarifying "that references, citations, and hyperlinks to most documents provided in a submission do not incorporate the underlying referenced information on to the official record," with some exceptions. Other changes would "allow Commerce to place previous analysis and calculation memoranda from other segments or proceedings on the record after written arguments have been submitted without being required to allow other parties to submit new factual information in response." Comments on the proposal are due July 10.

Some of the most substantive changes to how Commerce sets AD rates would involve the PMS issue. Commerce interpreted the NEXTEEL decision as making at least four key findings, one of which said the agency is not required to "precisely quantify a distortion in costs by the PMS to find the existence of a PMS," though such quantification could support the finding of a PMS, Commerce said in the proposed rule. The agency went a step further in its interpretation, which disallows PMS findings based on both speculative and non-quantifiable evidence.

"Although Commerce need not use precise quantifiable data to find the existence of a PMS, Commerce also should not rely on mere hypotheticals and speculations, with no objective data to support such claims," the agency said.

Commerce also proposed that it not be required to consider information on "actions taken or not taken by governments, state enterprises, or other public entities in other market economy countries in comparison with the actions taken or not taken by the government of the subject country." However, Commerce said an exception to this rule would apply when considering whether government inaction in providing protections distorts a company's cost of production.

Another type of evidence it proposed that it shouldn't consider when making a PMS decision would be "references to historical policies and previous actions taken by the government of the subject country with respect to the subject merchandise or a significant input into the production." The agency said that while each of these adjustments might be warranted in certain cases, it proposed that, "as a general matter, when a PMS cannot be precisely quantified, Commerce may use a methodology to adjust its calculations that is reasonable based on the facts in the record before it."

Commerce offered 12 examples of factors that could be considered a PMS under Commerce's new regulations. In two of the examples, a PMS would exist where a foreign government does not require an importer, producer or exporter to pay duties or taxes linked with trade remedies for a significant input, or where that government rebates such duties and taxes. The agency added that it will use a case-by-case approach for determining PMS, deciding not to use a rebuttable presumption of a PMS in subsequent proceedings where a PMS was found initially.

Besides the proposed regulations on PMS, the proposal also would allow Commerce to "place previous analysis and calculation memoranda from other segments or proceedings on the record after written arguments have been submitted without being required to allow other parties to submit new factual information in response," the agency said.

Commerce also would modify the regulations "to address notices of subsequent authority submitted on the record and allow for the filing of responsive arguments and factual information," and include the CVD adverse facts available hierarchy in the regulations. A new section would "address foreign government inactions that benefit foreign producers," including by "codifying Commerce’s practice of determining that countervailable subsidies are conferred by certain unpaid or deferred fees, fines, and penalties," the proposed rule said.

The proposed rule "also addresses the consideration of evidence on the record of weak, ineffective, or nonexistent property, intellectual property, human rights, labor, and environmental protections and the impact that the lack of such protections has on the prices and costs of products in selecting surrogate values and benchmarks," Commerce said.

Among other things, the proposal also would "update and address scope, circumvention and covered merchandise issues that have arisen since Commerce amended and created those regulations in 2021," such as how to address "merchandise commercially produced, but not yet imported." The proposed regulations would also cover "the acceptance of preinitiation submissions in response to scope applications and circumvention inquiry requests" and "the revision of time limits if Commerce seeks clarification on a scope application or circumvention inquiry request."

Other proposed changes related to scope and circumvention proceedings include "a clarification of when 'continue to suspend' language applies to entries pre-initiation in scope and covered merchandise proceedings" and "revisions to allow the sharing of information between AD and CVD segments when scope, circumvention, or covered merchandise inquiries for companion orders are conducted on the AD segment." The proposed rule also would provide "greater detail on the application of scope clarifications" and allow for extensions for initiation and preliminary circumvention determinations, Commerce said.