United States Steel Corporation v. United States

Slip Op. 16-44
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES STEEL CORPORATION ET AL.,
Plaintiff and Consolidated Plaintiffs,
and
MAVERICK TUBE CORPORATION ET AL.,
Plaintiff-Intervenors,
v.
UNITED STATES,
Defendant,
and
MAVERICK TUBE CORPORATION ET AL.,
Defendant-Intervenors.
Before: Claire R. Kelly, Judge
Consol. Court No. 14-00263
Public Version
OPINION AND ORDER
[Sustaining the U.S. Department of Commerce’s final determination in the antidumping
duty investigation of certain oil country tubular goods from India in part and remanding in
part.]
Dated: May 5, 2016
Jeffrey David Gerrish and Jamieson L. Greer, Skadden Arps Slate Meagher & Flom, LLP,
of Washington, DC, argued for plaintiff and consolidated defendant-intervenor United
States Steel Corporation. With them on the brief was Robert E. Lighthizer.
Lizbeth R. Levinson, Kutak Rock LLP, of Washington, DC, argued for consolidated
plaintiffs GVN Fuels Limited, Maharashtra Seamless Limited, and Jindal Pipes Limited.
With her on the brief was Ronald M. Wisla.
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Alan Hayden Price, Wiley Rein, LLP, of Washington, DC, for plaintiff-intervenors Maverick
Tube Corporation and Boomerang Tube LLC. With him on the brief was Robert Edward
DeFrancesco, III.
Roger Brian Schagrin, Schagrin Associates, of Washington, DC, for plaintiff-intervenors
and 	defendant-intervenors 	Boomerang 	Tube 	LLC, 	Energex 	Tube, 	Tejas 	Tubular
Products, TMK IPSCO, Vallourec Star, L.P., and Welded Tube USA Inc. With him on the
brief was John Winthrop Bohn, and Paul Wright Jameson.
Justin Reinhart Miller, Senior Trial Counsel, International Trade Field Office, Civil Division,
U.S. Department of Justice, of New York, NY, argued for defendant. With him on the brief
were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E.
Davidson, Director, and Claudia Burke, Assistant Director, of Washington, DC. 	Of
counsel on the brief was David P. Lyons, Office of the Chief Counsel for Trade
Compliance and Enforcement, U.S. Department of Commerce of Washington, DC.
Kelly, Judge: This consolidated action comes before the court on USCIT Rule 56.2
motions for judgment on the agency record, challenging the Department of Commerce’s
(“Department” or “Commerce”) final determination in the antidumping duty (“ADD”)
investigation of imports of certain oil country tubular goods (“OCTG”) from India for the
period of July 1, 2012 through June 30, 2013. 	See Certain Oil Country Tubular Goods
From India, 79 Fed. Reg. 41,981 (Dep’t Commerce July 18, 2014) (final determination of
sales at less than fair value and final negative determination of critical circumstances)
(“Final Determination”); see also Issues and Decision Memorandum for Final Affirmative
Determination in the Less than Fair Value Investigation of Certain Oil Country Tubular
Goods 	from 	India, 	A-533-857, 	(Jul. 	10, 	2014), 	available 	at
http://ia.ita.doc.gov/frn/summary/india/2014-16868-1.pdf 	(last 	visited 	April 	17, 	2016)
(“Final Decision Memo”).
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United States Steel Corporation (“U.S. Steel”) commenced this action pursuant to
section 516A of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a (2012). 1 	The
court consolidated U.S. Steel’s challenge with an action filed by GVN Fuels Limited
(“GVN”), an individual exporter of OCTG, Maharashtra Seamless Limited (“MSL”) and
Jindal Pipes Limited, (“JPL”), individual producers of OCTG (collectively “GVN Plaintiffs”).
See Order, Jan. 21, 2015, ECF No. 25. U.S. Steel, Consolidated Plaintiffs GVN Plaintiffs,
and 	Plaintiff-Intervenors 	Maverick 	Tube 	Corporation 	(“Maverick”) 	filed 	motions 	for
judgment on the agency record pursuant to USCIT Rule 56.2. See Mot. Pl. United States
Steel for J. Agency R. Under Rule 56.2, Mar. 24, 2015, ECF No. 34; Consolidated Pls.’
Rule 56.2 Mot. J. Agency R., Mar. 23, 2015, ECF No. 32; Mot. Pl.-Intervenor Maverick
Tube Corporation J. Agency R., Mar. 23, 2015, ECF No. 30 (“Maverick Mot.”).
BACKGROUND
On July 29, 2013, in response to a petition filed by U.S. Steel and other petitioners,
including Maverick, Commerce initiated a less-than-fair-value (“LTFV”) investigation of
OCTG from India. 	See Certain Oil Country Tubular Goods from India, the Republic of
Korea, the Republic of the Philippines, Saudi Arabia, Taiwan, Thailand, the Republic of
Turkey, Ukraine, and the Socialist Republic of Vietnam, 78 Fed. Reg. 45,505 (Dep’t
Commerce Jul. 29, 2013) (initiation of ADD investigations). 	On August 26, 2013,
Commerce selected GVN and Jindal SAW as mandatory respondents for examination in
its LTFV investigation. See Antidumping Duty Investigation of Certain Oil Country Tubular
1 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of Title 19
of the U.S. Code, 2012 edition.
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Goods from India: Respondent Selection at 5, PD 57, bar code 3151642-01 (Aug. 26,
2013). 2
On February 18, 2014, Commerce issued its preliminary determination. 	See
Certain Oil Country Tubular Goods From India, 79 Fed. Reg. 10,493 (Dep’t Commerce
Feb. 25, 2014) (preliminary determination of sales at less than fair value, preliminary
affirmative 	determination 	of 	critical 	circumstances, 	in 	part, 	postponement 	of 	final
determination) (“Prelim. Results”); see also Decision Memorandum for the Preliminary
Determination in the Less-Than-Fair-Value Investigation of Oil Country Tubular Goods
from 	India, 	A-533-857, 	(Feb. 	14, 	2014), 	available 	at
http://ia.ita.doc.gov/frn/summary/india/2014-04106-1.pdf 	(last 	visited 	April 	17, 	2016)
(“Prelim. Decision Memo”). Commerce preliminarily determined that certain OCTG from
India “are being, or are likely to be, sold in the United States at [LTFV].” 	Prelim.
Determination, 79 Fed. Reg. at 10,493. 	Commerce preliminarily granted GVN a duty
drawback for exports through the Advance License Program (“ALP”) offered through the
Indian government. Id. at 14. Commerce applied the mixed alternative methodology of
its differential pricing analysis (i.e., average-to-transaction (“A-T”) methodology to Jindal
SAW’s U.S. sales passing the Cohen’s d test) to calculate the weighted-average dumping
margins for Jindal SAW and calculated GVN’s weighted-average dumping margin using
the average-to-average (“A-A”) methodology for all sales. See Prelim. Decision Memo at
2 On December 19, 2014, Defendant submitted an appendix to the administrative record, which
can be found at ECF No. 22-1. All further references to documents from the administrative record
may be located in that appendix.
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12. As a result, Commerce preliminarily assigned weighted-average dumping margins of
55.29% to Jindal SAW, 0.00% to GVN, MSL, and JPL, and an all others rate of 55.29%.
See Prelim. Determination, 79 Fed. Reg. at 10,494.
In its final determination, issued July 11, 2014, Commerce continued to grant GVN
its requested duty drawback under the ALP. See Final Decision Memo at 15. Commerce
had relied upon GVN’s submitted cost of production (“COP”) data in its preliminary
determination, but in its final determination Commerce assigned GVN’s N/L-80 grade
sales of OCTG the highest costs associated with L-80 grade products because cost data
for N/L-80 products was missing from GVN’s cost database and Commerce’s practice is
to assign costs of products meeting the strictest performance requirements where such
cost information is not reported by a respondent. See id. at 30. Commerce continued to
apply the mixed alternative methodology to calculate the weighted-average dumping
margin for Jindal SAW and the A-A methodology to all of GVN’s sales in its final results.
See Final Decision Memo at 12; see also Final Determination, 79 Fed. Reg. at 41,981.
Therefore, Commerce assigned a weighted average dumping margin of 9.91% to Jindal
SAW, 2.05% to GVN, MSL, and JPL, and an all others rate of 5.79%. 	See Final
Determination 79 Fed. Reg. at 41,982.
U.S. Steel challenges Commerce’s determination: (1) to apply the ratio test within
its differential pricing analysis, Br. Pl. United States Steel Corporation Supp. Mot. J.
Agency R. Confidential Version 65–74, ECF No. 31, Mar. 23, 2015 (“U.S. Steel Br.”); (2)
that Jindal SAW was not affiliated with certain suppliers, id. at 15–31; (3) to use Jindal
SAW’s reported yield losses rather than partially applying adverse facts available (“AFA”)
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to those costs,3 id. at 31–39; (4) to grant GVN a duty drawback adjustment, id. at 39–44;
(5) to collapse GVN with affiliated producers MSL and JPL, id. at 45–56; and (6) that MSL
and JPL’s home market sales of OCTG only included one level of trade. 	Id. at 56–65.
Maverick adopts U.S. Steel’s arguments. Maverick Mot. 1. GVN Plaintiffs challenge what
they characterize as Commerce’s apparent application of AFA to fill gaps in its reporting
of COP for dual grade merchandise as contrary to law. Mem. P. & A. Supp. Consolidated
Pls.’ Rule 56.2 Mot. J. Agency R. 10–17, Mar. 23, 2015, ECF No. 32-1 (“GVN Plaintiffs
Br.”). 	Defendant, United States (“Defendant”), responds that the court should deny the
motions of Plaintiff and Consolidated Plaintiffs and sustain Commerce’s Final Results in
full. 	See Def.’s Corrected Resp. Opp. Pls.’ and Pl.-Intervenors’ Mots. J. Administrative
R. Proprietary Version 2, Sep. 30, 2015, ECF No. 58 (“Def.’s Resp. Br.”). 	In addition,
U.S. Steel filed a response, as defendant-intervenor, in opposition to the motion of GVN
Plaintiffs. 	See Mem. United States Steel Corporation Opp. Mot. J. Agency R. Filed By
Pls. GVN Fuels Limited, Maharashtra Seamless Limited, and Jindal Pipes Limited
Confidential Version, Sep. 21, 2015, ECF No. 49 (“U.S. Steel Resp. Br.”).
For the reasons that follow, the court sustains Commerce’s determinations: (1)
granting GVN a duty drawback adjustment under the advance license export program
operated by the Indian government; (2) collapsing GVN with MSL and JPL, its affiliated
3 Although 19 U.S.C. § 1677e(a)–(b) (2012) and 19 C.F.R. § 351.308(a)–(c) (2013) each
separately provide for the use of facts otherwise available and the subsequent application of an
adverse inference to those facts, Commerce uses the shorthand term “adverse facts available”
or “AFA” to refer to Commerce’s use of such facts otherwise available with an adverse inference.
See, e.g., Final Decision Memo at 38 (discussing the circumstances where the statute permits
Commerce to apply AFA to uncooperative companies).
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producers; and (3) finding that all of MSL and JPL’s home market sales occurred within
the same level of trade. 	However, the court remands Commerce’s determination with
respect to its differential pricing analysis, specifically Commerce’s application and
explanation of its ratio test in this case, for further explanation and consideration. Further,
the court remands Commerce’s determinations for further explanation and consideration
that: (1) Jindal SAW was unaffiliated with certain suppliers of inputs; (2) Jindal SAW’s
yield loss data reasonably reflected its costs of production; and (3) the highest COP in
GVN’s cost database should be assigned to its dual-grade products. The court defers its
decision on U.S. Steel’s claim that Commerce acted contrary to law in declining to apply
partial AFA to Jindal SAW’s reported yield loss data.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i) and 28 U.S.C.
§ 1581(c) (2012), 4 which grant the court authority to review actions contesting the final
determination in an ADD investigation. The court “shall hold unlawful any determination,
finding or conclusion found . . . to be unsupported by substantial evidence on the record,
or otherwise not in accordance with law . . . .” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. 	Commerce’s Use of the Ratio Test in its Differential Pricing Analysis
U.S. Steel challenges Commerce’s use of the ratio test in its differential pricing
analysis as inconsistent with the statute and Commerce’s own practice. 	U.S. Steel Br.
4 Further citations are to the relevant provisions of Title 28 of the U.S. Code, 2012 edition unless
otherwise noted.
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65. 	U.S. Steel argues that the thresholds used generally in the ratio test portion of
Commerce’s differential pricing analysis are arbitrary, see id. at 68, and that Commerce
has never provided a reasoned explanation for these thresholds. Id. at 69–70. Further,
U.S. Steel argues that Commerce’s ratio test is unreasonably applied in this investigation.
See id. at 72. 	In response, Defendant argues that Commerce acted within its statutory
authority to reasonably fill statutory gaps left by Congress to establish its differential
pricing methodology, and that Commerce properly applied that methodology. Def. Resp.
Br. 33–34; 35–39. The court finds that, although Commerce has considerable discretion
to decide when to apply an alternative methodology to calculate dumping margins for
respondents, it failed to adequately explain why the thresholds it has developed as part
of the ratio test in its differential pricing methodology were reasonably applied in this
investigation.
To determine whether merchandise is being sold in the United States at less than
fair value and, if so, to calculate the ADD rate for the individually examined exporters and
producers, Commerce must compare normal value to the export price of each entry of
subject merchandise. 5 See 19 U.S.C. § 1675(a)(2)(A)(ii); 19 U.S.C. § 1677b(a); 19 U.S.C.
§ 1677(35)(A). 	The statute provides that Commerce shall ordinarily use the A-A
5 Commerce calculates a respondent’s dumping margin by determining “the amount by which the
normal value exceeds the export price of the subject merchandise.” 19 U.S.C. § 1677(35)(A).
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methodology 6 to calculate dumping margins in an investigation, but Commerce may use
the A-T methodology 7 as an alternative to the default A-A method if:
(i) 	there is a pattern of export prices . . . for comparable merchandise
that differ significantly among purchasers, regions, or periods of time,
and
(ii) 	[Commerce] explains why such differences cannot be taken into
account using a method described in paragraph (1)(A)(i) [(A-A)] or
(ii) [(transaction-to-transaction)].8
19 U.S.C. § 1677f-1(d)(1)(B). The statute provides no methodology for how Commerce
shall identify and measure a pattern of export prices, how significantly those prices must
differ among purchasers, regions, or periods of time, or what form of “export prices”
Commerce must consider in its pattern analysis. See id. § 1677f-1(d)(1)(B)(i). Commerce
has implemented and continues to develop a practice, which it calls its differential pricing
analysis, “for purposes of examining whether to apply an alternative comparison method
in this LTFV investigation.”9 Prelim. Decision Memo at 10.
6 The A-A methodology “involves a comparison of the weighted average of the normal values with
the weighted average of the export prices . . . for comparable merchandise.” 	19 C.F.R.
§ 351.414(b)(1) (2013).
7 The A-T methodology “involves a comparison of the weighted average of the normal values to
the export prices . . . of individual transactions for comparable merchandise.” 	19 C.F.R.
§ 351.414(b)(3) (2013).
8 Commerce’s regulations echo this preference, providing that Commerce will apply A-A to
calculate dumping margins in investigations unless another method is appropriate in a particular
case. See 19 C.F.R. § 351.414(c)(1) (2013). Further citations to the Code of Federal Regulations
are to the 2013 edition, unless otherwise noted.
9 Commerce has developed its differential pricing analysis to evaluate whether the conditions for
the A-T exception are met in an investigation. 	Commerce first announced this approach, and
coined the term “differential pricing analysis” in the ADD investigation of xanthan gum from the
People’s Republic of China. See Xanthan Gum From the People’s Republic of China, 78 Fed.
Reg. 33,351, 33,351–52 (Dep’t Commerce June 4, 2013) (final determination of sales at LTFV).
(footnote continued)
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The court affords Commerce significant deference in determinations “involv[ing]
complex economic and accounting decisions of a technical nature.” Fujitsu Gen. Ltd. v.
United States, 88 F.3d 1034, 1039 (Fed. Cir. 1996). Despite Commerce’s wide discretion,
it “must cogently explain why it has exercised its discretion in a given manner,” Motor
Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48–49 (1983).
Fashioning a test to evaluate what constitutes a pattern under the statute is sufficiently
complex and technical to warrant significant deference. 	See Fujitsu, 88 F.3d at 1039.
Commerce’s methodological approach must nevertheless be a “reasonable means of
effectuating the statutory purpose” and its conclusions must be supported by substantial
evidence in order to be afforded deference. 	Ceramica Regiomontana, S.A. v. United
States, 10 CIT 399, 404–05, 636 F. Supp. 961, 966 (1986), aff’d, 810 F.2d 1137, 1139
(Fed. Cir. 1987).
Commerce’s differential pricing analysis requires a finding of “a pattern of [export
prices] . . . for comparable merchandise that differs significantly among purchasers,
regions, or time periods.” Prelim. Decision Memo at 10. “If such a pattern is found, then
the [differential pricing] analysis evaluates whether such differences can be taken into
account when using the [A-A] method to calculate the weighted-average dumping
Since Commerce first applied the differential pricing analysis in an ADD investigation, it has
applied this approach for uncovering masked dumping. See, e.g., Silica Bricks and Shapes From
the People’s Republic of China, 78 Fed. Reg. 70,918 (Dep’t Commerce Nov. 27, 2013) (final
determination of sales at less than fair value); Circular Welded Carbon Steel Pipes and Tubes
From Thailand, 78 Fed. Reg. 65,272 (Dep’t Commerce Oct. 31, 2013) (final results of ADD
administrative review; 2011-2012); Hardwood and Decorative Plywood From the People’s
Republic of China, 78 Fed. Reg. 58,273 (Dep’t Commerce Sept. 23, 2013) (final determination of
sales at less than fair value).
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margin.” Id. Regarding the mechanics of the application of its differential pricing analysis,
Commerce 	explained 	that 	it 	first 	applied 	the 	Cohen’s 	d 	test, 	as 	it 	has 	in 	other
investigations, to measure the extent of the price “difference between the mean of a test
group and the mean of a comparison group.”10 Id. at 11.
Next, Commerce’s differential pricing analysis employed the ratio test, which
“assesses the extent of the significant price differences for all sales as measured by the
Cohen’s d test.” See id. Commerce described the mechanics of its ratio test as follows:
If the values of sales to purchasers, regions, and time periods that pass the
Cohen’s d test accounts for 66 percent or more of the value of total sales,
then the identified pattern of [export prices] . . . that differ significantly
supports the consideration of the application of the [A-T] method to all sales
as an alternative to the [A-A] method. 	If the value of sales to purchasers,
regions and time periods that pass the Cohen’s d test accounts for more
than 33 percent and less than 66 percent of the value of total sales, then
the results support consideration of the application of an [A-T] method to
those sales identified as passing the Cohen’s d test as an alternative to the
[A-A] method, an application of the [A-A] method to those sales identified
as not passing the Cohen’s d test. If 33 percent or less of the value of total
sales pass the Cohen’s d test, then the results of the Cohen’s d test do not
support consideration of an alternative to the [A-A] method.
Id. 	However, Commerce explained that the Cohen’s d test only evaluates sales where
both the test and comparison groups have at least two observations and where the sales
10 "The Cohen’s d coefficient is used to evaluate the extent to which the net prices to a particular
purchaser, region or time period differ significantly from the net prices of all other sales of
comparable merchandise.” Prelim. Decision Memo at 11. Commerce considers test group sales
to pass the Cohen’s d test if the resulting Cohen’s d coefficient is equal to or greater than 0.8,
which Commerce deems to be a strong indication of significant price differences. Id. Conversely,
Commerce views a Cohen’s d coefficient value of less than 0.8 as indicating that the price
differences are not significant. Id.
However, “sales passing the Cohen’s d test do not, in and of themselves” establish that
there is a pattern of export prices that differ significantly among purchasers, regions or period of
time. See Final Decision Memo at 9; see also 19 U.S.C. § 1677f-1(d)(1)(B)(i).
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quantity for the comparison group accounts for at least five percent of the total sales
quantity. 	See id. 	Commerce further explained that the value of sales that pass the
Cohen’s d test, which is the numerator for the ratio test, only includes the sales that are
evaluated. See id. Yet, Commerce further explained that in this investigation, when
accumulating the results of the Cohen’s d test under the ratio test, these
results must be considered with respect to all U.S. sales and not a subset
of respondent’s U.S. sales. 	If the Department is unable to evaluate some
sales then it simply cannot find these sales contributed to a pattern of prices
that differ significantly, as required by the statute.
Final Decision Memo at 13. Thus, as Commerce described its application of the ratio test
the denominator includes all sales, not just those that pass the Cohen’s d test although
some sales may be excluded from the numerator. See id.
In the final step of its differential pricing analysis, if the results of the Cohen’s d test
and the ratio test “demonstrate the existence of a pattern of [export prices] . . . that differ
significantly,” 	Commerce 	examines 	“whether 	using 	only 	the 	[A-A] 	method 	can
appropriately account for such differences.” Prelim. Decision Memo at 11. It does so by
comparing the weighted average dumping margin obtained through the A-A method
versus that obtained through using the A-T method. See id. “If the differences between
the two calculations is meaningful,” Commerce presumes that the A-A method cannot
account for the differences. 11 Id. In such circumstances, Commerce considers using A-
T appropriate. Id.
11 Commerce considers a difference in the weighted average dumping margins meaningful if:
(1) there is a 25 percent relative change in the weighted-average dumping margin
(footnote continued)
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After applying its differential pricing analysis, Commerce preliminarily found “that
60.68 percent of Jindal SAW’s U.S. sales pass the Cohen’s d test, and confirm the
existence of a pattern of export prices . . . for comparable merchandise that differ
significantly among purchasers, regions or time periods.” 	Id. at 10. 	Notwithstanding
Commerce’s pattern finding, Commerce elected to apply its A-A methodology to all of
Jindal SAW’s U.S. sales because it found no “meaningful difference in the weighted-
average dumping margins when calculated using the [A-A] method and an alternative
method based on the [A-T] method applied to all U.S. sales which pass the Cohen’s d
test.” Id. With regard to GVN’s U.S. sales, Commerce preliminarily determined to use its
A-A methodology for all transactions because Commerce found “that 22.54 percent of
GVN’s U.S. sales pass the Cohen’s d test and therefore the analysis does not confirm the
existence of a pattern of export prices . . . for comparable merchandise that differ
significantly among purchasers regions or time periods.” Id. at 12.
In its final determination, Commerce rejected U.S. Steel’s objections that its
application of the ratio test of its differential pricing analysis was unreasonable or unlawful.
See Final Decision Memo at 9. 	As it had in its preliminary determination, Commerce
applied its A-T methodology to Jindal SAW’s sales passing the Cohen’s d test because
Commerce asserted that the statute gave it the discretion to determine how it “should
measure whether there is a pattern of [export prices] that differed significantly or how the
between the [A-A] method and the appropriate alternative method where both
rates are above the de minimis threshold, or (2) the resulting weighted-average
dumping margin moves across the de minimis threshold.
Prelim. Decision Memo at 11–12.
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[A-T] method may be applied as an alternative to the standard [A-A] method.” See Final
Decision Memo at 10 (referencing SAA, H.R. Doc. No. 103-316 (1994), reprinted in 1994
U.S.C.C.A.N. 4040); see also Prelim. Decision Memo at 10–12. 	Commerce found that
“24.14 percent of GVN’s sales pass the Cohen’s d test, which does not confirm the
existence of a pattern of prices that differ significantly.” 	Final Decision Memo at 12.
Accordingly, Commerce applied the A-A method to all of GVN’s U.S. sales. Id.
In applying the ratio test, Commerce continued that it
finds reasonable, given its growing experience of applying [the statute] and
the application of the [A-T] method as an alternative to the [A-A] method,
that when two thirds or more of a respondents sales are at prices that differ
significantly, then the extent of these sales is so pervasive that it would not
permit the Department to separate the effect of the sales where prices differ
significantly from those where prices do not differ significantly. . . . Finally,
when the Department finds that between one third and two thirds of U.S.
sales are at prices that differ significantly, then there exists a pattern of
prices that differ significantly, and the effect of this pattern can reasonably
be separated from the sales whose prices do not differ significantly.
Accordingly, in this situation, the Department finds that it is appropriate to
address the concern of masked dumping by considering the application of
the [A-T] method as an alternative to the [A-A] method for only those sales
which constitute the pattern of prices that differ significantly.
Id. at 11. 	In addition, Commerce continued to decline to exclude sales for which
comparisons were not made in the Cohen’s d test from the denominator of its ratio test.
Id.
Initially, U.S. Steel argues that, even if Commerce has reasonably filled the gaps
in the statute by developing the ratio test, the ratio test is inconsistent with Commerce’s
past practice. See U.S. Steel Br. 67–68. However, all of the proceedings cited by U.S.
Steel involve Commerce’s application of the Nails test to determine whether respondents
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were engaged in targeted dumping. 12 	Commerce explained that its “approach in this
matter has changed over time as the Department has gained experience in examining
whether the [A-T] method is an appropriate method.” 	Final Decision Memo at 10.
Commerce’s explanation is reasonable and sufficient. 	Therefore, Commerce was not
obliged to follow its practice under the Nails test, see NMB Singapore Ltd. v. United
States, 	557 	F.3d 	1316, 	1328 	(Fed. 	Cir. 	2009), 	and 	U.S. 	Steel’s 	argument 	that
Commerce’s use of the ratio test conflicts with its practice under the Nails test does not
undermine Commerce’s authority to apply its new practice.
Nonetheless, while Commerce has reasonably explained why its differential
pricing methodology is generally tailored to the statutory purpose, see State Farm, 463
U.S. at 48–49, Commerce has failed to adequately explain why its thresholds as applied
in this investigation are reasonable. 	U.S. Steel argues that the effect of Commerce’s
practice of limiting the application of the Cohen’s d test to sales where the test and
comparison groups have at least two observations was to exclude over [[ 	]]% of the
value of GVN’s sales and almost [[ 	]]% of the value of Jindal SAW’s sales from testing
12 In 2008, Commerce began using what is now referred to as the Nails test in investigations to
determine if a foreign exporter or producer is engaging in targeted dumping. 	See generally
Certain Steel Nails From the People’s Republic of China, 73 Fed. Reg. 33,977 (Dep’t Commerce
June 16, 2008) (final determination of sales at LTFV); Certain Steel Nails From the United Arab
Emirates, 73 Fed. Reg. 33,985 (Dep’t Commerce June 16, 2008) (notice of final determination of
sales at not LTFV); see also Mid Continent Nail Corp. v. United States, 34 CIT 512, 513–15, 712
F. Supp. 2d 1370, 1372–74 (2010). 	For several years Commerce used the Nails test to help
decide whether the statutory preconditions are satisfied to employ the A-T methodology. 	On
March 4, 2013, Commerce shifted its approach, departing from its previous targeted dumping
analysis, and it first used its differential pricing analysis in the ADD investigation of xanthan gum
from the People’s Republic of China. See Xanthan Gum From the People’s Republic of China,
78 Fed. Reg. 33,351, 33,351–52 (Dep’t Commerce June 4, 2013) (final determination of sales at
LTFV).
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under Commerce’s differential pricing analysis. See U.S. Steel Br. 72. Here, Commerce
has relied exclusively on its thresholds developed for different circumstances, i.e., where
a significant value of sales is not excluded from testing. 	See Prelim. Decision Memo at
11; Final Decision Memo at 11. 	Commerce must explain why its ratios are reasonable
even though a significant value of respondents’ sales were excluded.
If the denominator of Commerce’s ratio test (i.e., the value of all of respondents’
sales) remains constant, then the ratio of the value of sales passing the Cohen’s d test
relative to the value of all sales may differ substantially from another investigation where
a lesser value of sales is excluded from application of the Cohen’s d test. 	Because the
breadth of Commerce’s application of its A-T methodology is significantly determined by
the ratio of the value of export sales that pass the Cohen’s d test to the value of all export
sales, Commerce could not rely upon its explanation for the thresholds developed in
investigations where such a significant value of respondents’ sales were not excluded
from the numerator without explaining why these ratios were reasonable in circumstances
where a significant value of sales were excluded. If two otherwise similar investigations
identified similar patterns of prices that differed by purchaser, region, or time period, the
results of Commerce’s differential pricing analysis may differ significantly if, in one
investigation, a significant value of sales is excluded from Commerce’s ratio analysis.
This result has at least the potential to treat the same behavior differently. 	Given the
value 	of 	sales 	excluded 	from 	the 	analysis 	here, 	the 	court 	remands 	Commerce’s
determination to provide further explanation as to why its thresholds as applied in this
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investigation are reasonable or otherwise reconsider the parameters of its differential
pricing methodology in such contexts.13
As a separate argument, U.S. Steel asks the court to read the statute as requiring
the application of the A-T methodology to all sales. See U.S. Steel Br. 66–67. Citing the
SAA, U.S. Steel argues that “[t]he SAA does not require – or even suggest – that there is
any precondition to applying the A-T methodology beyond” those contained in the statute.
See U.S. Steel Br. 66 (citing SAA, H.R. Doc. No. 103-316, vol. 1 at 843, reprinted in 1994
U.S.C.C.A.N. at 4178). 	But this argument presumes that the statute does not delegate
to Commerce the question of when and to what extent the A-T methodology should be
employed once the statutory preconditions for application of A-T have been satisfied.
U.S. Steel claims that Congress’s intent was to apply the A-T methodology to as many
sales as possible. 	See U.S. Steel Br. 66. 	Yet, the statute, the regulation, and the SAA
all express that the A-A methodology will be the default rule and A-T the exception. See
19 U.S.C. § 1677f-1(d)(1)(B); 19 C.F.R. § 351.414(c) (2013); SAA, H.R. Doc. No. 103-
316, vol. 1 at 843, 1994 U.S.C.C.A.N. at 4178. 	If Congress had had such an intent, it
knew how to convey it in the language of the statute. 14 The provision of the SAA cited by
13 U.S. Steel argues that, “[t]o the extent Commerce is allowed to continue to employ the ratio test
in its differential pricing analysis, [the court] should direct the agency to use the total value of sales
that are subject to the Cohen’s d test as the denominator of the calculation used in the ratio test.”
U.S. Steel Br. 72–73. 	The court declines to mandate that Commerce implement U.S. Steel’s
suggested remedy, and leaves it to the agency to reconsider its determination in light of the court’s
decision.
14 U.S. Steel’s citation to Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. United States, 38
CIT __, __, 990 F. Supp. 2d 1384, 1389 (2014) for the proposition that the ratio test limits the
application of A-T, which it argues runs contrary to the statute, is misplaced. 	In Borusan
(footnote continued)
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U.S. Steel is nothing more than a general explanation that the conditions recited in the
statute govern Commerce’s use of the A-T methodology. 	See id. 	No language in the
statute explicitly indicates Congress mandated the application of A-T to all sales. See 19
U.S.C. § 1677f-1(d)(1)(B).
U.S. Steel’s arguments that the tiers established by Commerce’s ratio test are
arbitrary in a general sense are similarly unavailing. 	See U.S. Steel Br. at 68–69. 	So
long as Commerce’s rationale for adopting such thresholds is reasonably explained, the
court’s standard of review does not require that Commerce explain the statistical
calculations and methodologies that allowed it to arrive at such thresholds. 	See State
Farm, 463 U.S. at 48–49; Ceramica Regiomontana, 10 CIT at 404–05, 636 F. Supp. at
966. 	U.S. Steel’s argument that “Commerce has not provided a reasoned basis why it
cannot ‘separate the effect’ of differential pricing when 67% of sales are affected but it
can make such a distinction where 65% of sales are affected,” U.S Steel Br. at 70,
amounts to nothing more than a general philosophical criticism of the concept of a
threshold. 	See U.S. Steel Br. at 68–69. 	It is inherent in the concept of a threshold that
observations that fall on the margins of either side will be treated disparately from those
on the other side. Such a criticism would no less apply if Commerce had set its threshold
Mannesmann, the plaintiff argued that Commerce was required to discern that the respondents
had acted purposefully in finding targeted dumping. See Borusan Mannesmann, 38 CIT at __,
990 F. Supp. 2d at 1387. The court held that neither the statute nor the SAA imposed any such
requirement. Id. at __, 990 F. Supp. 2d at 1389. Similarly, Nippon Steel Corp. v. United States,
337 F.3d 1373 (Fed. Cir. 2003), also cited by U.S. Steel, see U.S. Steel Br. at 67, merely held
that the statutory provision allowing Commerce to adopt an adverse inference when using
information otherwise available for a non-cooperating respondent does not have an intent
requirement. See Nippon Steel Corp., 337 F.3d at 1383 (Fed. Cir. 2003).
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at 33% as it would at 66%. So long as Commerce has explained its rationale behind such
a threshold, the court will defer to Commerce’s significant statistical and economic
expertise in fashioning it. See Fujitsu, 88 F.3d at 1039.
Commerce has explained that “when a third or less of a respondent’s U.S. sales
are not at prices that differ significantly, then these significant price differences are not
extensive enough to satisfy the first requirement of the statute,” which requires Commerce
to find a pattern of export prices for comparable merchandise that differ significantly
among purchasers, regions or period of time. See Final Decision Memo at 11. Likewise,
“when two thirds or more of a respondent’s sales are at prices that differ significantly, then
the extent of these sales is so pervasive that it would not permit the Department to
separate the effect of the sales where prices differ significantly from those where prices
do not differ significantly.” Id. Additionally, when Commerce finds that “between one third
and two thirds of U.S. sales are at prices that differ significantly, then there exists a pattern
of prices that differ significantly, and the effect of this pattern can reasonably be separated
from the sales whose prices do not differ significantly.” 	Id. 	The court can discern from
Commerce’s explanation that Commerce has developed its ratio test to identify the
existence and extent to which there is a pattern of export prices for comparable
merchandise that differ significantly among purchasers, regions or periods of time. U.S.
Steel fails to show that Commerce’s ratio test fails to reveal such a pattern that in fact
exists.
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II. 	Claims Relating to Mandatory Respondent Jindal SAW
A. 	Affiliation of Jindal SAW with Suppliers of Inputs
U.S. Steel argues that Commerce lacked substantial evidence for finding Jindal
SAW unaffiliated with its suppliers of steel billets and electricity, the primary inputs for
producing subject merchandise. U.S. Steel’s Br. 25. U.S. Steel argues that Commerce
ignored evidence that Jindal SAW’s two suppliers: (1) “are under the common control of
the O.P. Jindal Family and Group and are affiliated,” id. at 13; (2) “[t]he O.P. Jindal family,
through the O.P. Jindal Group, exercises control over Jindal SAW [and its suppliers of
steel billets and electricity] due to family relationships, stock ownership, and a close
supplier relationship,” id. at 18; and (3) “these ‘members of [the family] . . . and lineal
descendants’ hold the top leadership positions in each flagship company that makes up
the O.P. Jindal Group,” id. at 19. Lastly, U.S. Steel asserts that “[t]he O.P. Jindal family
exercise control over Jindal SAW [and its suppliers of steel billets and electricity] by way
of stockholdings in all three companies that [[ 	]] the 5% threshold
established in the statute.” 	Id. at 22–23. 	Defendant argues that U.S. Steel’s claims
depend on a “skewed reading of the record” and that Commerce “reasonably based its
determinations on record evidence.” 	Def.’s Resp. Br. at 11. 	The court finds that, given
the record evidence of indirect ownership and close supplier relationships, Commerce
has failed to adequately explain why it was reasonable to conclude that Jindal SAW and
its suppliers of steel billets and electricity were not under the common control of the O.P.
Jindal 	family. 	Therefore, 	the 	court 	remands 	this 	issue 	to 	Commerce 	for 	further
consideration and explanation.
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The statute defines affiliated persons through the following categories:
(A) Members of a family, including brothers and sisters (whether by whole
or half blood), spouse ancestors, and lineal descendants.
(B) Any officer or director of an organization and such organization.
(C) Partners.
(D) Employer and Employee.
(E) Any person directly or indirectly owning, controlling, or holding with
power to vote, 5 percent or more of the outstanding voting stock or
shares of any organization and such organization.
(F) Two or more persons directly or indirectly controlling, controlled by, or
under common control with, any person.
(G) Any person who controls any other person and such other person.
19 U.S.C. § 1677(33). 15 	Commerce’s regulations incorporate the statutory definition of
“affiliated persons” and “affiliated parties” and further clarify the non-exhaustive list of
considerations Commerce shall take into account in assessing whether control over
another person exists as an element of affiliation. 	19 C.F.R. § 351.102(b)(3). 	In
evaluating whether control exists within § 1677(33), Commerce will consider “[c]orporate
or family groupings; franchise or joint venture agreements; debt financing; and close
supplier relationships.” 	Id. 	However, Commerce “will not find that control exists on the
15 In its brief, U.S. Steel asserts that, in addition to category (F), Jindal SAW and its suppliers of
steel billets and electricity should be considered affiliated under categories (A),(B), and (E). U.S.
Steel’s Br. 16; see also 19 U.S.C. § 1677(33). At oral argument, citing Dongkuk Steel Mill Co. v.
United States, 29 CIT 724 (2005) and Ferro Union, Inc. v. United States, 23 CIT 178, 44 F. Supp.
2d 1310 (1999), U.S. Steel argued that the statute permits Commerce to consider members of a
family that are affiliated with one another under § 1677(33)(A) as a person who may directly or
indirectly control or be under common control with other persons under § 1677(33)(F). See Conf.
Oral Arg., 00:26:33–00:27:30, Mar. 3, 2016, ECF No. 94. 	Although U.S. Steel contended that
affiliation under § 1677(33)(A),(B), and (E) provided additional context for breaking down why
there is common control, see id. at 00:06:10-00:06:13, it conceded that the basis for finding Jindal
SAW affiliated with its suppliers of steel billets and electricity is § 1677(33)(F). See id. at 00:06:14-
00:06:20. 	Therefore, the court restricts its review to whether Commerce’s determination that
Jindal SAW and its suppliers of steel billets and electricity were under the common control of the
O.P. Jindal family was supported by substantial evidence.
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basis of these factors unless the relationship has the potential to impact decisions
concerning 	the 	production, 	pricing, 	or 	cost 	of 	subject merchandise.” 	Id. 	Under
Commerce’s practice, in cases involving control through corporate or family groupings,
Commerce has noted that the control factors of individual members of the group are
considered in the aggregate. See, e.g., Issues and Decision Memorandum for the Final
Results of the 2001-2002 Administrative Review of the Antidumping Duty Order on Steel
Concrete Reinforcing Bar from the Republic of Korea, A-580-844, (Apr. 13, 2004),
available at http://ia.ita.doc.gov/frn/summary/korea-south/04-8375-1.pdf (last visited Apr.
17, 2016).
Commerce must further explain its determination that Jindal SAW and its suppliers
of steel billets and electricity were not directly or indirectly under the common control of
members of the O.P. Jindal family under § 1677(33)(F). Defendant does not dispute that
Commerce’s 	regulation 	requires 	that 	it 	evaluate 	family 	groupings 	and 	supplier
relationships in determining whether control exists under §§ 1677(33)(F). 	See Def.’s
Resp. Br. 15; see also 19 C.F.R. § 351.102(b)(3). 	Nor does Defendant dispute that
Commerce’s practice is to evaluate the control factors of individual members of the family
grouping (e.g. stock ownership, management positions, board membership) in the
aggregate. 	See Def.’s Resp. Br. 15–16. 	Indeed, Commerce did investigate the
aggregated direct interests of O.P. Jindal family members as well as the O.P. Jindal family
members’ board positions in various O.P. Jindal Group entities. 	See Verification of the
Cost Response of Jindal SAW Limited in the Antidumping Duty Investigation of Oil
Country Tubular Goods (“OCTG”) from India at 5–7, CD 343, bar code 3195642-01 (Apr.
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Consol. Court No. 14-00263 	Page 23
14, 2014) (“Jindal SAW Cost Verification Report”). However, Commerce did not evaluate
the 	collective 	stock 	ownership 	(including 	indirect 	stock 	ownership), 	management
positions, and board memberships held by O.P. Jindal family members in Jindal SAW,
JSPL, and [[ 	]] as its practice requires. 	Commerce failed to explain why it
deviated from its practice here.
Commerce acknowledged that the relatedness of the members of the O.P. Jindal
family. Prelim. Decision Memo at 6. Likewise, Commerce acknowledged the existence
of corporate groupings and close supplier relationships among Jindal SAW and its
suppliers, noting that
[a]ccording to the record, the respondents are members of two “informal”
groups of companies associated with the Jindal family. These two groups
originated with two brothers: Mr. O.P. Jindal (now deceased) and Mr. B.C.
Jindal. Mr. B.C. Jindal’s son, Mr. D.P. Jindal, then separated from his father
and created a third group of companies, “the D.P. Jindal group.” 	Jindal
SAW belongs to the O.P. Jindal group . . . . The O.P. Jindal group includes
suppliers of inputs used by the OCTG producers in all three groups.
Id. 	However, 	without 	examining 	the 	family’s 	management 	positions 	and 	board
memberships, Commerce’s examination of the collective direct stock ownership of O.P.
Jindal family members alone was insufficient to reasonably conclude that the family was
not legally or operationally in a position to exercise restraint or direction over Jindal SAW,
JSPL, and [[ 	]]. This was particularly true in light of record evidence indicating
that the O.P. Jindal family may have had the capacity to exercise control through the
promoter groups of these entities.16
16 “Promoter” is a term of art under Indian securities law. It includes:
(footnote continued)
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With respect to Jindal SAW, Commerce reviewed the following individual direct
holdings of each of the four sons of O.P. Jindal: P.R. Jindal ([[ 	]]%), Sajjan Jindal
([[ 	]]%), Naveen Jindal ([[ 	]]%), and Rattan Jindal ([[ 	]]%). 	See Jindal SAW
Cost Verification Report at 5–6. 	However, Commerce limited its examination of the
family’s indirect holdings in Jindal SAW to reviewing the family’s holdings of [[
]], the largest shareholder in Jindal SAW. See id. at
6. 	Commerce justified its limited examination of indirect holdings by explaining that the
other ten largest shareholders in Jindal SAW were not publicly traded, so Commerce was
unable to obtain a list of shareholders of those entities. See id. Commerce determined
that the aggregated direct holdings of Jindal family members in [[ 	]] was
[[ 	]]%. Id. at 6. In its Jindal SAW Cost Verification Report, Commerce made no finding
regarding the aggregate total direct and indirect holdings of the O.P. Jindal Family in
Jindal SAW. 	See id. at 6. 	Nor did Commerce trace the aggregated direct and indirect
holdings of the O.P. Jindal family members in either JSPL or [[ 	]]. See id. at
6.
(i) 	the person or persons who are in control of the issuer;
(ii) 	the person or persons who are instrumental in the formulation of a plan or
programme pursuant to which specified securities are offered to the public;
(iii) 	the person or persons named in the offer documents as promoters.
U.S. Steel Deficiency Comments on Jindal SAW’s Questionnaire Response at Ex. F at 5, PD
167–171, bar codes 3167500–01 through 3167500–05 (Dec. 9, 2013). 	Likewise, “promoter
group” is a term of art under Indian securities law defined as including the promoter and
individuals and corporations with various relationships to the promoter, which may include family
relationships and holding of equity shares in the promoter at varying thresholds. Id.
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U.S. Steel cites record evidence in a Jindal SAW financial prospectus that Jindal
SAW’s promoters were P.R. Jindal, the Jindal Family, and persons or entities controlled
by them (directly or indirectly). 	U.S. Steel Reply Br. 6 (citing U.S. Steel Deficiency
Comments on Jindal SAW Questionnaire Response at Ex. G, PD 167–171, bar codes
3167500-01–05 (Dec. 6, 2013) (“U.S. Steel Comments Jindal SAW Questionnaire
Response”)). 	U.S. Steel also noted at oral argument that the prospectus limits the
promoters of Jindal SAW to P.R. Jindal, his family members, and entities that they control.
See Conf. Oral Arg., 00:20:47–00:20:56, Mar. 3, 2016, ECF No. 94 (“Conf. Oral Arg.”);
see also U.S. Steel Comments Jindal SAW Questionnaire Response at Ex. G. U.S. Steel
cites additional information, albeit at times from slightly outside the period of review, that
the promoters and promoter groups of each of Jindal SAW, JSPL, and [[ 	]]
collectively held significant percentages of the total shareholdings in each entity relative
to non-promoter group shareholders. 	See Conf. Oral Arg. 00:21:23–00:26:27 (citing
Jindal SAW Cost & Sales Verification Exhibits at Ex. 4, CD 260–295, bar codes 3190334-
01–05 (Mar. 25, 2014); U.S. Steel Supplemental Comments Jindal SAW Questionnaire
Response at 177, 181, CD 216, bar code 3181479-02 (Feb. 14, 2014)).
In light of this record evidence indicating that O.P. Jindal family members
controlled the promoter groups and the fact that the statute requires Commerce to look
at indirect holdings, Commerce must explain why it was reasonable for it to conclude that
O.P. Jindal’s indirect holdings through promoter groups were not significant enough to
indicate control. The fact that Commerce did not specifically refer to the direct or indirect
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holdings of any O.P. Jindal family member in either JSPL or [[ 	]] underscores
the unreasonableness of Commerce’s conclusion given the record evidence.
Moreover, although Commerce traced the board memberships and management
positions of Jindal family members in Jindal SAW, JSPL, and [[ 	]], Commerce
failed to explain why it was reasonable to conclude that these memberships and positions
did not create the potential to impact decisions concerning production, pricing, and cost
of subject merchandise, or indicate that the O.P. Jindal family was not in a position to
exercise restraint and direction over all of these entities. Commerce recognized that P.R.
Jindal is the Chairman of Jindal SAW, see Jindal SAW Cost Verification Report at 4, and
that “Indresh Batra (husband of and Sminu Jindal) holds the position of Managing Director
of Jindal SAW. [It] noted from a review of the Annual Reports of the other companies that
. . . Mr. Ratan Jindal, brother of P.R. Jindal, is the Chairman and Managing Director of
[JSPL].” Id. at 7.
Commerce discounted the control significance of these board memberships and
management positions because “none of the Jindal brothers (i.e., P.R. Jindal, Sa[j]jan
Jindal, Ratan Jindal or Naveen Jindal) appears as a director of another brother’s company
nor do they hold a management position in another brother’s company.” 	Id. 	Although
Commerce recognized that Savitri Jindal sat on the boards of both Jindal SAW and JSPL,
it failed to explain why it attached no control significance to this fact, nor did it explain why
her presence on boards of both companies did not detract from its other control findings.
Further, U.S. Steel pointed to record evidence that Sajjan Jindal is the Chairman and
Managing Director of [[ 	]]. 	U.S. Steel Br. 2 (citing Jindal SAW Section A
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Consol. Court No. 14-00263 	Page 27
Response at Ex. A-4, PD 93–104, bar codes 3159648-1–12 (Oct. 24, 2013)). Commerce,
however, did not make findings as to the board composition and memberships in Jindal
SAW’s electricity supplier.
Commerce also relied on the fact that Jindal SAW’s Articles of Association
provided that “each director has a single vote and the Board may only take action with a
majority of the votes except in case of a tie where the Chairman may place a tie-breaking
vote,” to discount the control significance of the board membership and management
positions of the various Jindal family members. 	Jindal SAW Cost Verification Report at
7. However, Commerce did not investigate voting patterns or the existence of voting trust
agreements that could impact the Jindal family’s ability to take action notwithstanding its
non-majority status on the board of Jindal SAW. See id. In order for its control findings
to be supported by substantial evidence, on remand Commerce must explain why its
conclusion 	was 	reasonable 	in 	light 	of 	the 	detracting 	evidence 	relating 	to 	board
memberships and management positions of the various Jindal family members.
Commerce also failed to evaluate the nature of supplier relationships in its final
determination, which Commerce’s regulation provides it will consider among the factors
in evaluating a relationship of control within its affiliation determination. 	See 19 C.F.R.
§ 351.102(b)(3).17 	Where Commerce finds that a close supplier relationship “has the
17 At oral argument, in response to the court’s question as to whether Commerce considered the
supplier relationship between JSPL and Jindal SAW and seeking an explanation of why it did not
favor a determination that Jindal SAW was affiliated with JSPL or [[ 	]], see Confidential
Letter from Court to Parties Concerning Questions for Oral Argument 7–8, Jan. 28, 2016, ECF
No. 80, Defendant conceded that Commerce did not address the supplier relationship in its
decision memorandum. See Conf. Oral Arg., 00:43:35-00:43:39. Defendant likewise conceded
that Commerce’s regulation lists supplier relationships as a factor. Id. at 00:43:29–00:43:33.
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Consol. Court No. 14-00263 	Page 28
potential to impact decisions concerning the production, pricing or costs” of such
merchandise, Commerce may also find control sufficient to establish affiliation under
§ 1677(33). See 19 C.F.R. § 351.102(b)(3).18 U.S. steel cites record evidence indicating
that Jindal SAW purchases approximately [[ 	]]% of its steel billets from JSPL, U.S.
Steel Br. 27 (citing Jindal SAW Supplemental Section D Questionnaire Response at Ex.
D-16, CD 117–118, bar codes 3172116-01–02 (Jan. 6, 2014)). This evidence suggests
the relationship has the potential to impact production, pricing, or cost decisions.
Therefore, Commerce must consider the close supplier relationships between Jindal
SAW and JSPL and explain why it did not indicate the O.P. Jindal family controlled both
Jindal SAW and JSPL.
Defendant argues that U.S. Steel points to “no evidence—such as an exclusive
sales contract—that might demonstrate such reliance.” Def.’s Resp. Br. 17. Although a
close supplier relationship may be an arm’s length relationship, the regulation indicates
that Commerce shall evaluate such a relationship and consider if the supplier has become
reliant upon the buyer. See 19 C.F.R. § 351.102(b)(3); SAA, H.R. Rep. No. 103-316, vol.
1 at 838, 1994 U.S.C.C.A.N. at 4,175. A legal obligation requiring one entity to purchase
from the other, such as an exclusive sales contract, is not the only relationship that has
the potential to impact decisions concerning the production, pricing or costs. 	In fact,
Commerce’s practice, consistent with the SAA’s definition of such a relationship, is to
evaluate whether a buyer company has become reliant on the seller, or vice versa. See
18 A close supplier relationship is one “in which the supplier or buyer becomes reliant upon the
other.” SAA, H.R. Rep. No. 103-316, vol. 1 at 838, 1994 U.S.C.C.A.N. at 4,175.
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Certain Cold-Rolled and Corrosion Resistant Carbon Steel Flat Products From Korea, 62
Fed. Reg. 18,404, 18,417 (Dep’t Commerce Apr, 15, 2007) (final results of antidumping
administrative reviews); see also SAA, H.R. Rep. No. 103-316, vol. 1 at 838, 1994
U.S.C.C.A.N. at 4,174–75. 	Here, Commerce’s analysis did not address these reliance
considerations.
Defendant argues that after Commerce traced the indirect share ownership of O.P.
Jindal family members in Jindal SAW, Commerce found “the record evidence did not
provide a basis to impute control by the Jindal family through the promoter groups
identified by U.S. Steel.” Def.’s Resp. Br. 16 (citing Jindal SAW Cost Verification Report
at 5–7). Defendant argues that U.S. Steel relies on promoter entities to support its indirect
control argument, and U.S. Steel has not shown that the Jindal family’s ownership in the
promoter companies is significant. 	See id. at 15. 	Yet, Defendant’s statement that
Commerce searched publicly available databases of the Bombay Stock Exchange and
the National Stock Exchange of India, and found no entity listed called the “O.P. Jindal
Group,” see id. at 15–16; see also Jindal SAW Cost Verification Report at 5, does not
relieve Commerce from explaining how it could conclude the O.P. Jindal family did not
control Jindal SAW, JSPL, and [[ 	]].
Commerce 	failed 	to 	address 	the 	significance 	of 	the 	corporate 	and 	family
relationships among the O.P. Jindal family members that held direct and indirect interests
in Jindal SAW, JSPL, and [[ 	]] as well as their roles as managers and directors
of 	these 	companies. 	Commerce 	also 	failed 	to 	analyze 	whether 	close 	supplier
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relationships made Jindal SAW reliant on JSPL or [[ 	]], or vice versa.
Therefore, the court remands Commerce for further consideration and explanation.
B. 	Commerce’s Acceptance of Jindal SAW’s Reported Yield Loss Data
U.S. Steel argues Commerce lacked substantial evidence to conclude that Jindal
SAW’s cost reporting methodology allocated yield losses on a basis that reasonably
reflected differences in the processing costs for merchandise with differing physical
characteristics. U.S. Steel Br. 31–32. To remedy such deficiencies in Jindal SAW’s COP
data, U.S. Steel argues Commerce should have applied AFA to Jindal SAW’s yield
losses. 	Id. at 37–39. 	In response, Defendant argues “Commerce verified the accuracy
of Jindal SAW’s yield loss methodology,” and, in any event, Commerce reasonably
refused to apply AFA because “Jindal SAW cooperated with Commerce’s requests for
information.” 	Def.’s Resp. Br. 59. 	Commerce lacked substantial evidence for its
conclusion that Jindal SAW’s reported yield loss data reasonably reflected its COP for
each specific category of subject merchandise.
Commerce generally “shall consider all available evidence on the proper allocation
of costs . . . if such allocations have been historically used by the exporter or producer.”
Id. According to the statute,
[c]osts shall normally be calculated based on the records of the exporter or
producer of the merchandise, if such records are kept in accordance with
generally accepted accounting principles of the exporting country . . . and
reasonably reflect the costs associated with the production and sale of the
merchandise.
19 U.S.C. § 1677b(f)(1)(A). If Commerce determines that the records of the respondent
cannot properly form an accurate basis upon which to calculate that respondent’s COP,
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then Commerce shall use facts otherwise available in reaching the determination. 	19
U.S.C. § 1677e(a). 	Commerce may apply AFA in selecting from among the facts
otherwise available where it “finds that an interested party has failed to cooperate by not
acting to the best of its ability to comply with [its] request for information.” 	19 U.S.C.
§ 1677e(b).
Commerce initially evaluates the respondent’s COP data, as reported, to ensure
that 	the 	reported 	COP 	reporting 	methodology 	complies 	with 	generally 	accepted
accounting 	principles 	(“GAAP”) 	of 	the 	exporting 	country. 	See 	19 	U.S.C.
§ 1677b(f)(1)(A).19 Thereafter, Commerce evaluates whether a respondent’s COP data,
as reported, “reasonably reflect[s] the costs associated with the production and sale of
the merchandise.” 19 U.S.C. § 1677b(f)(1)(A).
The statute does not define what it means for reported cost information to
reasonably reflect that party’s COP. 	See 19 U.S.C. § 1677b(f)(1)(A). 	The Court of
Appeals for the Federal Circuit has broadly defined when costs “reasonably reflect the
costs associated with the production and sale of the merchandise” to mean that the costs,
as reported would not distort the company’s true costs. 	Am. Silicon Techs. v. United
States, 261 F. 3d 1371, 1377 (Fed. Cir. 2001); see also 19 U.S.C. § 1677b(f)(1)(A). Given
the record evidence before it, Commerce inadequately explained why Jindal SAW’s yield
19 U.S. Steel does not challenge that the cost data reported by Jindal SAW was kept in accordance
with Indian GAAP. 	Therefore, the court need not address whether Jindal SAW’s yield losses
satisfied the first prong of 19 U.S.C. § 1677b(f)(1)(A).
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loss data reasonably reflected its COP. 20
Commerce’s determination to accept Jindal SAW’s reported yield losses is not
supported by substantial evidence. 	Commerce’s finding that Jindal SAW’s books and
records captured total yield loss [[
]] does not permit it to conclude that products with different physical
characteristics generated [[ 	]] yield losses, as Jindal SAW reported. 	See Cost of
Production and Constructed Value Calculation Adjustments for the Final Determination –
Jindal SAW at 7, PD 354, bar code 3215359-01 (Jul. 10, 2014) (“Jindal SAW Cost
Calculation Memo”). 	Commerce concedes that Jindal SAW’s yield loss allocation
methodology allocated yield losses [[ 	]] production stages regardless of
specific physical characteristics (i.e., wall thickness or diameter) of its product. 	Final
Decision Memo at 36, 40. 	Commerce stated that, “[a]lthough yield is not calculated by
production stage as advocated by the petitioners, we do not find evidence that the
reported yield is unreasonable” because “reallocation of conversion costs after a certain
proprietary production stage would result in an insignificant change in the reported costs
and therefore the reported costs are reasonable.” Id. at 40.
20 It is undisputed that, during the investigation, Commerce instructed Jindal SAW to report unique
cost information in its cost database for each control number (“CONNUM”) based on different
physical characteristics Commerce identified in the subject merchandise. 	See Final Decision
Memo at 36; Def.’s Resp. Br. 62. It is likewise undisputed that Commerce found that [[
]]
of OCTG across different CONNUMs. Final Decision Memo at 36; see also Cost of Production
and Constructed Value Calculation Adjustments for the Final Determination – Jindal SAW, PD
354, bar code 3215359-01 (Jul. 10, 2014). Jindal SAW reported multiple CONNUMs with [[
]] information. See id. at 1–2.
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Yet, Commerce cites to no record evidence to support its conclusion that such
costs were [[ 	]] distributed or that allocating such COP differently would have
resulted in an insignificant change. By comparison, Commerce measured whether Jindal
SAW’s conversion cost data was distorted by comparing two equal lengths of subject
merchandise with different diameters and wall thicknesses that represented the largest
production quantity in Jindal SAW’s cost database. Jindal SAW Cost Calculation Memo
at 3. Commerce then used length to weight conversion factors provided by Jindal SAW,
and Commerce found that the difference between calculating costs on a [[
]] and on a [[ 	]] resulted in a difference in allocated
cost of [[ 	]]%. Id. Based on this comparison, Commerce concluded that “the reported
product specific conversion costs for the [[ 	]] are inaccurate and unusable.” 21 	Id.
Commerce conducted no such comparison between yield losses allocated by physical
characteristic or production stage versus costs [[ 	]] across all products
with different physical characteristics or stages of production. See id. Since Commerce
merely accepted Jindal SAW’s reported yield losses without comparing costs, as it had
with respect to conversion costs, Commerce could not have determined if this yield loss
reporting methodology potentially distorted Jindal SAW’s yield losses. 	Therefore,
21 Likewise, with respect to conversion costs at later stages of production, Commerce investigated
whether the conflicting methodologies advocated by the parties would result in significant
distortions to Jindal SAW’s actual costs. Again, Commerce did so by obtaining a reallocation of
costs for three selected CONNUMs based on processing times it obtained at verification. Id. at
7. Commerce compared costs as reported to those after reallocation, and Commerce determined
that its “testing showed that there were [[
]] Id.
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Commerce’s determination that Jindal SAW’s yield losses accurately reflected its COP
was not supported by substantial evidence.
Defendant argues that tracking yield losses by stage of production or CONNUM-
specific characteristics would result in the total yield losses reported by Jindal SAW over
the overall course of its production of subject merchandise. See Def.’s Resp. Br. 61. This
argument misses the point. Even if Jindal SAW’s total yield losses over its overall course
of production are accurately reported, Commerce has failed to explain, or to test, whether
the costs for two CONNUMs with different characteristics would have different yield
losses. Without doing so, any conclusion that such yield losses did not vary by product
could not have been supported by substantial evidence.
Defendant further seeks to justify Commerce’s determination that Jindal SAW’s
reported yield losses reasonably reflected its COP by arguing that “[e]ven if different
production stages could generate different yields, Commerce noted that [[ 	]] of
the OCTG that Jindal SAW produced went through precisely the same production
stages—namely, threading and coupling.” Def.’s Resp. Br. 61. Even if [[ 	]]% of Jindal
SAW’s product went through the same production stages, that would not confirm that
products with [[ 	]] physical characteristics [[ 	]] lose [[ 	]] amounts of
material during those production stages. 	It stands to reason that pipes of [[
]] would lose [[ 	]] amount of material. 	Commerce may
have had a basis to conclude that yield losses that occurred at later production stages
were insignificant, but it cites to no record evidence to support this assertion. Commerce
does not indicate it undertook any investigation to test whether certain production stages
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resulted in insignificant generation of scrap. Therefore, Commerce’s implicit conclusion
that yield losses [[ 	]] by physical characteristic or production stage could not
have been supported by substantial evidence.
On remand, Commerce must explain why Jindal SAW’s reported yield loss data,
which clearly did not track yield losses by production stage or physical characteristics of
the merchandise, nonetheless did not distort Jindal SAW’s COP for specific CONNUMs
of subject merchandise or reconsider its determination. 	The court defers any review of
Commerce’s decision to decline to apply AFA to Jindal SAW’s yield loss data until
Commerce supports its determination regarding whether its yield loss data reasonably
reflects its COP with substantial evidence.
III. 	Claims Relating to Mandatory Respondent GVN
A. 	Collapsing of GVN with MSL and JPL
U.S. Steel argues that “Commerce improperly collapsed GVN with its affiliated
suppliers, MSL and JPL.” 	U.S. Steel Br. 45. 	Defendant responds that U.S. Steel’s
arguments are belied by the record evidence in support of Commerce’s collapsing
determination. 	See Def. Resp. Brief 18. 	The court finds Commerce’s determination is
supported by substantial evidence.
Commerce’s regulations permit it to
treat two or more affiliated producers as a single entity where those
producers have production facilities for similar or identical products that
would not require substantial retooling of either facility in order to restructure
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manufacturing priorities . . . and [Commerce] concludes that there is a
significant potential for the manipulation of price or production. 22
19 C.F.R. § 351.401(f)(1). 	Commerce’s regulations provide that the factors Commerce
may consider in assessing whether there is a “significant potential for manipulation of
price or production” for collapsing affiliated producers include:
(i) The level of common ownership;
(ii) The extent to which managerial employees or board members of one
firm sit on the board of directors of an affiliated firm; and
(iii) Whether operations are intertwined, such as through the sharing of sales
information, involvement in production and pricing decisions, the sharing
of 	facilities 	or 	employees, 	or 	significant 	transactions 	between 	the
affiliated producers.
19 C.F.R. § 351.401(f)(2).
Although Commerce’s collapsing regulation speaks of treating two or more
affiliated producers as a single entity, Commerce has developed a practice of collapsing
exporters with affiliated producers of subject merchandise under certain circumstances.
See Certain Frozen and Canned Warmwater Shrimp From Brazil, 69 Fed. Reg. 76,910,
76,912 (Dep’t Commerce Dec. 23, 2004) (notice of final determination of sales at less
than fair value); see also Issues and Decision Memorandum for the Antidumping Duty
Investigation of Certain Frozen and Canned Warmwater Shrimp From Brazil, A-351-838,
22 If affiliated producers are collapsed, those companies may be considered a single entity.
Collapsing entities allows sales of one collapsed entity to be considered sales of the other for
purposes of Commerce’s dumping margin calculation. See 19 C.F.R. § 351.401(f)(1); 19 U.S.C.
§ 1675(a)(2)(A)(ii); 19 U.S.C. § 1677b(a). Commerce found “GVN is the sole exporter of OCTG
produced by MSL and JPL, and GVN only exports OCTG produced by MSL and JPL,” which
Commerce found demonstrates “a close supplier relationship and a significant volume of
interparty transactions.” Prelim. Decision Memo at 8. In other words, because GVN lacked sales
in the Indian market, collapsing it with its affiliated producers, MSL and JPL, permitted Commerce
to use sales of MSL and JPL for the normal value portion of its dumping calculation.
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(Dec. 23, 2004), available at http://ia.ita.doc.gov/frn/summary/brazil/04-28110-1.pdf (last
visited Apr. 17, 2016) (“Shrimp From Brazil I&D Memo”). 	In outlining its practice of
collapsing exporters with affiliated producers, 23 Commerce noted that
[w]hile 19 C.F.R. 351.401(f) applies only to producers, the Department has
found it to be instructive in determining whether non-producers should be
collapsed and used the criteria outlined in the regulation in its analysis.
. . .
Accordingly, 	we 	have 	looked 	to 	the 	criteria 	articulated 	in 	section
351.401(f)(2) in determining whether to treat these affiliates as a single
entity.
Shrimp From Brazil I&D Memo at 14. 	Therefore, Commerce’s practice for collapsing
exporters with affiliated producers is to look solely at the second requirement under its
regulation that the relationship between the affiliated companies raises “a significant
potential for manipulation of price or production.” See Shrimp From Brazil I&D Memo at
14; see also 19 C.F.R. § 351.401(f)(1).
In assessing whether such significant potential for manipulation of price or
production exists, Commerce has incorporated the criteria from 19 C.F.R § 351.401(f)(2),
as well as other criteria Commerce finds indicate “a significant potential for manipulation.”
See Shrimp From Brazil I&D Memo at 14. 	For Commerce’s collapsing determination to
be supported by substantial evidence, the evidence must be sufficient that a reasonable
mind might accept the evidence as adequate to support its conclusion while considering
23 Since only affiliated entities are collapsed under either the regulation or Commerce’s practice,
Commerce must also find that any entities it collapses are affiliated. See Shrimp From Brazil I&D
Memo at 14; see also 19 C.F.R. § 351.401(f)(1). Commerce found that GVN, MSL, and JPL are
“affiliated through the common control of the Jindal family.” Final Decision Memo at 22; see also
19 U.S.C. § 1677(33). Since U.S. Steel does not challenge Commerce’s finding of affiliation, the
court does not address the reasonableness of this finding. See U.S. Steel Br. 45.
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contradictory evidence. 	See Consol. Edison Co. of New York v. N.L.R.B., 305 U.S.
197,229 (1938); see also Suramerica de Aleaciones Laminadas, C.A. v. United States,
44 F.3d 978, 985 (Fed. Cir. 1994). 	Since the structure of the regulation, which is
incorporated in Commerce’s practice, makes clear that Commerce need not consider all
of the §351.401(f)(2) factors, Commerce need not conclude on the basis of any one factor
listed in the regulation alone that the potential for manipulation of price or production was
significant. See Shrimp From Brazil I&D Memo at 14 (adopting a practice based upon 19
C.F.R. § 351.401(f)(2)).
Commerce’s collapsing determination is supported by substantial evidence. First,
although Commerce recognized that the D.P. Jindal family’s ownership in GVN is “less
than majority ownership, it is considerable, particularly given GVN’s otherwise diffused
ownership by corporate entities with numerous layers of cross-ownership.” Final Decision
Memo at 24. The level of common ownership supported Commerce’s finding that there
was a significant potential for manipulation because the family held significant majority
holdings 	in 	both 	MSL 	and 	JPL, 	[[ 	]] 	GVN’s 	[[ 	]] 	suppliers 	of 	subject
merchandise. Id. Commerce cited the companies’ sharing of sales information and price
coordination 	to 	support 	its 	conclusion 	that 	the 	companies’ 	intertwined 	operations
indicated a significant potential for manipulation. 	Id. at 25. 	Commerce found that MSL
was involved in GVN’s pricing decisions. 	Commerce based this finding on evidence it
obtained at verification that
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the company has internal price guidelines that are based on market price
and demand, and are set by the heads of GVN, MSL and JPL on an ad hoc
basis. MSL is the driver of the price determination discussion because it is
the company that is actually producing the merchandise. MSL has limited
capacity, and must decide how much to sell to each market on a monthly
basis. . . . If GVN needs to go below the lowest price set in the price list,
they must seek approval from MSL.
Verification 	of 	the 	Sales 	Response 	of 	GVN 	Fuels 	Ltd 	in 	the 	Antidumping 	Duty
Investigation of Oil Country Tubular Goods from India at 9, CD 340, bar code 3200010-01
(May 5, 2014) (“GVN Sales Verification Report”).
U.S. Steel seeks to undermine Commerce’s finding that the companies are
involved in each other’s pricing decisions by pointing out that GVN plays no role in the
domestic sales of MSL or JPL. See U.S. Steel Br. 50; see also Shrimp From Brazil I&D
Memo at 14; 19 C.F.R. § 351.401(f)(2)(iii). Yet, nothing in Commerce’s practice requires
Commerce to find that the involvement in production or pricing decisions must flow in both
directions in order to collapse affiliated companies. See Shrimp From Brazil I&D Memo
at 14; 19 C.F.R. § 351.401(f)(2)(iii). 	Moreover, given GVN’s reported role as the export
arm of MSL and JPL, see GVN Sales Verification Report at 3, it is unsurprising that GVN
is not involved in the domestic sales of MSL and JPL. 	Although the sharing of sales
information 	and 	GVN’s 	markup 	could 	have 	been 	a 	reflection 	of 	a 	market-based
commission for a sales agent, trading company, or distributor, Commerce’s conclusion to
the contrary was not unreasonable in light of its separate finding that the companies
coordinated pricing and that MSL drove the pricing discussion. 	See GVN Sales
Verification Report at 9.
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Second, Commerce relied in part upon the fact that the companies shared the
same chart of accounts to conclude the companies shared sales information. See Final
Decision Memo at 25. 	Although Commerce acknowledged that GVN used a different
accounting system from MSL and JPL, Commerce concluded that the companies still
shared sales information because GVN said it shared such information with MSL at
verification, and Commerce determined that GVN and JPL used identical product codes.
See GVN Sales Verification Report at 11. 	Commerce’s finding that MSL drove GVN’s
sales price determinations, particularly in light of the fact that it found MSL decides what
types of products it will produce, GVN Sales Verification Report at 9, reasonably indicated
that MSL was involved in GVN’s pricing decisions and potentially influenced by GVN’s
customer expectations in the export market. Further, Commerce relied upon the fact that
the companies had significant transactions among them and that GVN did not produce
merchandise but exported for both MSL and JPL. See Final Decision Memo at 24–25.
Third, Commerce also found that MSL and JPL shared a chairman of the board in
Mr. D.P. Jindal. Id. at 24. Further, Commerce concluded that MSL and GVN shared at
least one employee based upon an adjustment in GVN’s accounting records for an
employee working for GVN, but paid by MSL. 	Id. 	In addition, Commerce found the
companies shared facilities and employees because the companies share marketing
offices throughout India, including a shared corporate office in Gurgaon, India, where
verification took place. 	Id. 	Moreover, record evidence indicates that Mr. D.P. Jindal
handles “strategic direction of corporate policies, . . . all activities relating to Finance (long
term 	& 	short 	term), 	corporate 	[a]ccounts, 	[m]arketing 	([d]omestic 	& 	[e]xport) 	and
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[s]trategic sourcing (indigenous & import)” from the companies’ shared marketing office.
Response Pertaining to GVN Supplemental Sections A–C Response at Ex. S1-32, PD
229–236, bar codes 3175712-01–08 (Jan. 23, 2014) (“GVN Supp. Sections A–C
Resp.”).24 It was reasonable for Commerce to conclude that the shared corporate office
in Gurgaon, which housed the office of the chairman of both MSL of JPL who handled a
broad portfolio of issues that affected all of the companies, created at least the potential
for manipulation of price or production. 25
24 In its Final Decision Memo, Commerce sometimes conflates the three indicia of price
manipulation set forth under 19 C.F.R. § 351.401(f)(2): level of common ownership, sharing of
managerial and board members and intertwining of operations. Commerce notes the sharing of
managerial employees between GVN and MSL and that employees of the three companies work
together at shared corporate offices in Gurgaon. 	See Final Decision Memo at 24. 	Although,
Commerce cites this evidence when discussing shared board members, it is actually relevant to
the companies’ intertwined operations. 	See id. 	Likewise, although Commerce found that Mr.
D.P. Jindal was the chairman of the board of both MSL and JPL, a role which Commerce found
gave him the capacity to “direct or restrain decisions relating to the production, pricing, or cost of
the subject merchandise” of GVN as a result of the D.P. Jindal Family Group’s control over GVN,
Commerce did not find that any member of GVN’s board sat on the board of MSL or JPL. See
id. D.P. Jindal’s role on the boards of MSL and JPL, by itself, is not relevant to collapsing GVN
with MSL and JPL, but it does support a finding that the operations of the companies are
intertwined. 	See id. 	Although Commerce’s explication of the basis for its decision could have
been clearer, its path is reasonably discernable.
25 	U.S. Steel also disputes Commerce’s finding that the three companies share facilities or
employees in the form of marketing offices “throughout India.” 	See id. at 49. Nothing in
Commerce’s practice or its regulation indicates that the sharing of facilities must be widespread
or that one shared facility is insufficient to support a finding that operations are intertwined.
Moreover, in light of the record evidence indicating the key role of the Gurgaon office, see GVN
Supp. Sections A–C Resp. at Ex. S1-32, that GVN, MSL, and JPL, the fact that the companies
did 	not 	literally 	share 	many 	marketing 	offices 	all 	over 	India 	does 	not 	undermine 	the
reasonableness of Commerce’s conclusion that the shared corporate office in Gurgaon created
a potential for manipulation of price or production.
U.S. Steel also argues that the fact that MSL pays the salary of an employee working for
GVN “does not show that the single GVN employee on MSL’s payroll is a director or managerial
employee that has the ability to manipulate prices or production as claimed by Commerce.” U.S.
Steel Br. at 48–49. 	Even if Commerce’s findings that the companies’ shared employees were
(footnote continued)
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Together, Commerce made findings supported by substantial evidence that GVN,
MSL, and JPL were affiliated because of common control by the D.P. Jindal Group, and
that the companies possessed: (1) a shared level of common ownership by the D.P. Jindal
family in all three entities; (2) intertwined operations; and (3) shared employees and
facilities. 	The court concludes that Commerce reasonably determined, in spite of the
detracting evidence, that the collective weight of the potential for manipulation was
significant.
U.S. Steel’s arguments disputing the reasonableness of Commerce’s decision and
its consistency with past practice are unavailing. 	U.S. Steel argues that Commerce
lacked substantial evidence to conclude that the level of common ownership of the three
companies by the D.P. Jindal family demonstrated a significant potential for manipulation.
See U.S. Steel Br. 47; see also Shrimp From Brazil I&D 14; 19 C.F.R. § 351.401(f)(2)(i).
U.S. Steel argues the D.P. Jindal family members’ minority stake in GVN is held in a
“diffuse manner,” and at best there is an abstract possibility to exert control. 	U.S. Steel
Br. at 47–48.
U.S. Steel’s arguments improperly discount the significance of GVN’s indirect
shareholdings in JPL. See id. at 48. Yet, nothing in Commerce’s practice of collapsing,
which incorporates 19 C.F.R. § 351.401(f)(2), indicates that indirect ownership among
affiliated entities may not support collapsing affiliated producers with exporters. 	See
limited, Commerce’s findings of shared facilities, when viewed together with MSL’s and JPL’s
involvement in pricing decisions of GVN, were significant enough to support a reasonable
inference that these arrangements at least gave rise to the potential for manipulation of price or
production. 	Therefore, Commerce reasonably concluded that GVN, MSL, and JPL’s shared
facilities and employees created a potential for manipulation of price or production.
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Shrimp From Brazil I&D Memo at 14; 19 C.F.R § 351.401(f)(2). 	Moreover, Commerce
recognized that the D.P. Jindal family’s holdings amounted to less than a majority stake,
but nonetheless concluded that the D.P. Jindal family’s control was more active than that
of other shareholders. 26 See Final Decision Memo at 24; see also GVN Sales Verification
Report at 8–10. In light of Commerce’s finding that GVN, MSL and JPL were under the
common control of the D.P. Jindal family, which U.S. Steel does not dispute, together with
its other findings, it was reasonable for Commerce to conclude that the level of common
ownership was also sufficient to create a significant potential for manipulation of price or
production.
Next, U.S. Steel argues that the record does not support Commerce’s conclusion
because the companies did not share managerial employees or board members. 	See
U.S. Steel Br. 48–50; see also Shrimp From Brazil I&D Memo at 14; 19 C.F.R.
§ 351.401(f)(2)(ii). 	Sharing managerial employees or board members may support
Commerce’s collapsing determination if Commerce concludes that either creates a
significant potential for the manipulation of price or production. See Shrimp From Brazil
I&D Memo at 14; 19 C.F.R. § 351.401(f)(2). However, Commerce need not find all of the
factors in the regulation present to find a significant potential for manipulation of price or
production. 	Commerce’s findings on other factors were sufficient to reasonably find a
26 Commerce noted in particular the family’s significant majority ownership of MSL and JPL and
those companies’ involvement in the pricing and sales decisions of GVN. 	See Final Decision
Memo at 24; see also GVN Sales Verification Report at 8–10.
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significant potential for manipulation of price or production. 	Its collapsing determination
was therefore also supported by substantial evidence.
Next, U.S. Steel argues that Commerce lacked substantial evidence to conclude
that GVN, MSL, and JPL have sufficiently intertwined operations to create a significant
potential for manipulation of price or production. See U.S. Steel Br. 50; see also Shrimp
From Brazil I&D Memo at 14; 19 C.F.R. § 351.401(f)(2)(iii). Specifically, U.S. Steel argues
that the sharing of sales information was nothing more than ordinary discussions
regarding product specifications and commission rates. 	U.S. Steel Reply Br. 14. 	Yet,
U.S. Steel’s assertion that the sales information may have been shared for a purpose
other than manipulation of price or production is not supported by any record evidence.
Moreover, 	it 	cites 	no 	record 	evidence 	that 	renders 	Commerce’s 	conclusion 	that
information was shared between the three companies unreasonable. 	While U.S. Steel
points to practical difficulties to the three companies sharing of sales information 27 and
evidence undermining Commerce’s conclusion that the parties share the same chart of
accounts, 28 Commerce’s conclusions on this issue did not rely exclusively upon its
27 For instance, U.S. Steel argues GVN could not have shared sales information with MSL and
JPL because the companies used different accounting systems. U.S. Steel Br. 51–52.
28 U.S. Steel points to discrepancies between the charts of accounts of GVN as compared to
those of MSL and JPL. 	U.S. Steel Br. 52. 	U.S. Steel relies upon a comparison of line item
descriptions in the respective charts of accounts of GVN, MSL and JPL to support its claims that
the companies do not share a chart of accounts. U.S. Steel Br. 51–52; U.S. Steel Reply 14 (citing
Response Pertaining to GVN at Exs. G-8, M-8, J-5, PD 107–133, bar codes 316044-01–27 (Oct.
25, 2013) (“GVN Section A Response”). Commerce did conclude that the companies share the
same charts of accounts, see Final Decision Memo at 25, but Commerce could not have meant
that the names of accounts were entirely coextensive since Commerce found that GVN operates
(footnote continued)
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findings about shared accounting systems or charts of accounts. 	As discussed above,
Commerce found that the operations of GVN, MSL, and JPL were intertwined because
MSL drove GVN’s price determinations for GVN’s sales. 	Consequently, none of the
evidence relied upon by U.S. Steel renders Commerce’s conclusion that the companies
shared sales information unreasonable based upon the record before it.
U.S. Steel also disputes Commerce’s conclusion that the companies jointly make
export pricing decisions. See U.S. Steel Br. at 51. 	U.S. Steel claims that the sharing of
sales information involves merely commonplace discussions of product specifications
and commissions. See U.S. Steel Br. 51; U.S. Steel Reply Br. 14; see also Shrimp From
Brazil I&D Memo at 14; 19 C.F.R. § 351.401(f)(2)(iii). 	Yet, U.S. Steel cites no record
evidence to support these assertions. 	In fact, GVN’s supplemental questionnaire
response cited by U.S. Steel, see U.S. Steel Br. 51, supports Commerce’s finding that
MSL and JPL were involved in pricing decisions of GVN because GVN indicated in its
questionnaire response that
GVN has a price list (received from MSL) for exports based on which GVN
negotiates with its U.S. customers. However, MSL or JPL does not have a
price list of sales made to GVN, as the price that is to be charged to GVN
is based on the price at which GVN sales to it[s] U.S. customer. Thus the
price which GVN charges to its customer is known to MSL.
as the export arm MSL and JPL, see id. at 24; GVN Sales Verification Report at 8, and that GVN
had no involvement in home market sales whereas MSL and JPL did. See GVN Sales Verification
Report at 6–8. 	The descriptions contained in GVN’s charts of accounts contain descriptions
pertaining to JPL and MSL without any entries reflecting transactions. 	See GVN Section A
Response at Ex. G-8. Likewise, the descriptions contained in each of MSL’s and JPL’s charts of
accounts contain descriptions pertaining to GVN. See id. at Exs. M-8, J-8. Therefore, the record
evidence relied upon by U.S. Steel is not sufficiently detailed to render Commerce’s conclusion
that the parties share some charts of accounts unreasonable based upon the record evidence.
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Response Pertaining to GVN Second Supplemental Sections A–C Response at 7, PD
288–297, bar codes 3186433-01–08 (Mar. 6, 2014).
U.S. Steel points to the lack of a written agreement “governing the sales
relationship between the parties,” to undermine Commerce’s finding that the significant
transactions between the companies created a significant potential for manipulation of
price or production. 	U.S. Steel Br. 50. 	However, the lack of a written agreement does
not render Commerce’s conclusion unreasonable, particularly given that Commerce
found that “GVN . . . only exported subject merchandise produced by MSL and JPL” and
that GVN actually operates as the export arm for both MSL and JPL. See Final Decision
Memo at 24–25; see also GVN Sales Verification Report at 2–3.
U.S. Steel argues that the court previously “has rejected Commerce’s collapsing
determinations 	where 	the 	agency 	presented 	‘no 	evidence 	that 	there 	was 	actual
manipulation of prices.’” U.S. Steel Br. 46 (citing Hontex Enter., Inc. v. United States, 27
CIT 272, 299, 248 F. Supp. 2d 1323, 1346 (2003)). U.S. Steel argues Commerce cited
no evidence of actual manipulation between the three companies. See id. at 51, 52; U.S.
Steel Reply Br. 14. However, contrary to U.S. Steel’s claims, the court in Hontex did not
require Commerce to find evidence of actual manipulation of price or export decisions in
order for a collapsing decision to be supported by substantial evidence. See Hontex, 27
CIT at 299, 248 F. Supp. 2d at 1346. Rather, the court emphasized that Commerce must
find “evidence that there is more than the ‘mere possibility’ that significant potential for
manipulation could occur.” 	Id. at 298, 248 F. Supp. 2d at 1345 n.19 (citing U.S. Steel
Grp. v. United States, 25 CIT 1293, 1298, 177 F. Supp. 2d 1325, 1331 (addressing the
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statutory basis for disregarding sales due to a reasonable suspicion of price manipulation
pursuant to 19 U.S.C. § 1677b(a), not the standard for collapsing)).
Further, in Hontex, Commerce’s collapsing determination relied exclusively on the
fact that the companies shared one employee whose relationship to the companies did
not sufficiently demonstrate that the operations of the companies were intertwined. See
id. at 299, 248 F. Supp. 2d at 1346. 	Here, Commerce’s collapsing determination was
based upon a level of common ownership and intertwined operations that were supported
by substantial evidence of sharing of sales information, MSL’s involvement in pricing
decisions of GVN, and the companies’ shared corporate headquarters. Here, Commerce
found more than a mere possibility of manipulation; it reasonably found a significant
potential for manipulation of price or production.
U.S. Steel argues that Commerce’s past practice is not to collapse “affiliated
parties even where there was a robust level of common ownership, shared managerial
employees and directors, and evidence of intertwined operations.” 	See U.S. Steel Br.
53–55. Yet, with the exception of the Shrimp From Brazil I&D, all of the proceedings cited
by U.S. Steel involve collapsing affiliated producers under Commerce’s regulation, not
Commerce’s practice of collapsing exporters with affiliated producers. See U.S. Steel Br.
53–55 (citing Stainless Steel Bar From Germany, 67 Fed. Reg. 3,159 (Dep’t Commerce
Jan. 23, 2002) (notice of final determination of sales at less than fair value) and
accompanying Issues and Decision Memorandum for the Antidumping Duty Investigation
of Stainless Steel Bar from Germany; Final Determination at Comment 15, A–428–830,
(Jan. 15, 2002), available at http://ia.ita.doc.gov/frn/summary/germany/02-1657-1.txt (last
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visited Apr. 17, 2016); see also Shrimp From Brazil I&D at 15; Stainless Steel Sheet and
Strip Coils From Taiwan, 67 Fed. Reg. 6,682 (Dep’t Commerce Feb. 13, 2002) (final
results 	and 	partial 	rescission 	of 	antidumping 	duty 	administrative 	review) 	and
accompanying Issues and Decision Memorandum for the Final Results of Antidumping
Administrative Review of Stainless Steel Sheet and Strip in Coils From Taiwan at
Comment 	16, 	A–583–831, 	(Feb. 	12, 	2002), 	available 	at
http://ia.ita.doc.gov/frn/summary/taiwan/02-3540-1.txt (last visited Apr. 17, 2016); Chia
Far Indus. Factory Co. v. United States, 28 C.I.T. 1337, 1366–67, 343 F. Supp. 2d 1344,
1371–73 (affirming Commerce’s determination in Stainless Steel Sheet and Strip in Coils
From Taiwan not to collapse three affiliated companies). Consequently, their applicability
is limited to the context of collapsing affiliated producers.
U.S. Steel argues that although Commerce’s practice permits it to collapse
producers with non-producers, “it still considers the possibility of shifting production to
non-producers as part of its collapsing analysis.” 	U.S. Steel Br. 54 (citing Shrimp From
Brazil I&D Memo at 15). 	While the exporter collapsed in the Shrimp From Brazil I&D
Memo did have production facilities, see Shrimp From Brazil I&D Memo at 15, as already
discussed, Commerce did not adopt the substantial retooling prong of 19 C.F.R.
§ 351.401(f)(1). 	See id. at 14. 	Rather, it found the criteria in 19 C.F.R. § 351.401(f)(2)
(i.e., significant potential for manipulation of price or production) instructive in determining
whether to collapse exporters with affiliated producers. 	See id. 	In that proceeding, the
companies collapsed were on the same premises. 	See id. 	Commerce also found that
the companies were principally owned by the father of the persons who controlled and
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managed both entities, that the companies shared board members, and that “the
management of [the producer] is largely controlled by the two individuals who own and
manage the [exporter].” See id. Commerce only analyzed the fact that both companies
had production facilities because the facilities of the producer were on the same premises
as the exporter. See id. However, Commerce’s articulation of its practice indicates that
such a finding was not necessary to its collapsing analysis. See id.
Lastly, U.S. Steel argues that Commerce’s application of its practice with respect
to GVN conflicts with its application of the same practice with regard to Jindal SAW. See
U.S. Steel Br. 55. 	It argues that Commerce’s disparate treatment of Jindal SAW in its
affiliation determination and GVN in its collapsing determination are irreconcilable. 	See
id. However, the affiliation criteria are wholly distinct from the collapsing criteria. See 19
U.S.C. § 1677(33); 19 C.F.R. § 351.401(f). 	Although affiliation is a condition precedent
to collapsing, there is no dispute as to GVN’s affiliation with MSL and JPL. 	Moreover,
Commerce’s collapsing analysis focused on a significant potential for manipulation of
price or production, while its affiliation analysis focused on indicia of common control.
Therefore, the parallel drawn between the two determinations by U.S. Steel is inapposite.
B. 	Commerce’s Determination that GVN’s Home Market Sales Were at
One Level of Trade
U.S. Steel argues that Commerce erred by failing to properly compare GVN’s U.S.
sales and MSL’s home market sales at the comparable levels of trade (“LOT”). U.S. Steel
Br. 57–58. U.S. Steel argues that Commerce’s conclusion that MSL’s home market sales
consist of one LOT ignores evidence that the selling activities between CHANNELH1 and
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CHANNELH2 substantially differed. 29 Id. at 57–61. 	Defendant argues that Commerce
reasonably determined that there was only one LOT, and, therefore, its decision is in
accordance with law and supported by substantial evidence. See Def.’s Resp. Br. 39.
To determine whether merchandise is being sold in the United States at less than
fair value and, if so, to calculate the ADD rate for the individually examined exporters and
producers, Commerce must compare normal value to the export price of each entry of
subject merchandise. 19 U.S.C. § 1677b(a)(1)(B)(i). The statute requires that Commerce
compare
the price at which the foreign like product is first sold . . . for consumption in
the exporting country, in the usual commercial quantities and in the ordinary
course of trade and, to the extent practicable, at the same level of trade as
the export price or constructed export price.
Id. 	However, the statute does not indicate how Commerce is to find matching levels of
trade. See generally 19 U.S.C. § 1677b(a).
Commerce’s regulations provide that, the basis for identifying LOT and differences
in those levels is “(i) [i]n the case of export price, the starting price; . . . (iii) [i]n the case
of normal value, the starting price or constructed value.” 30 19 C.F.R. § 351.412(c)(1)(i),
29 MSL, the producer of most of GVN’s subject merchandise, reported three channels of
customers: exploration and production (“E&P”) public sector, E&P private sector, and original
equipment manufacturer (“OEM”) sector. See GVN Sales Verification Report at 6. The channel
of distribution referred to as “CHANNELH1” includes home market sales to both public and private
sector E&P purchasers. The home market channel of distribution referred to as “CHANNELH2”
includes sales to OEM purchasers.
30 The “starting price” is the price to the unaffiliated purchaser that is a component of export price
and normal value before any adjustments to either that may be applicable under 19 U.S.C.
§ 1677a(c)–(d) or 19 U.S.C. § 1677b(a)(6)–(7), respectively. 	See Final Rule on Antidumping
Duties; Countervailing Duties, 62 Fed. Reg. 27,296, 27,411 (Dep’t Commerce May 19, 1997)
(final rule revising Commerce’s regulations on antidumping and countervailing duty proceedings
to conform to the Uruguay Round Agreements Act).
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(iii). Further, Commerce “will determine that sales are made at different levels of trade if
they are made at different marketing stages (or their equivalent).” Id. § 351.412(c)(2). In
promulgating its regulation, Commerce clarified that in order to consider sales to occur at
different LOT,
[e]ach more remote level must be characterized by an additional layer of
selling activities, amounting in the aggregate to a substantially different
selling function. Substantial differences in the amount of selling expenses
associated with two groups of sales also may indicate that the two groups
are at different levels of trade.
Final Rule on Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296, 27,371
(Dep’t Commerce May 19, 1997) (“Final Rule ADD; CVD”). Commerce also clarified that
[a]lthough the type of customer will be an important indicator in identifying
differences in levels of trade, the existence of different classes of customers
is not sufficient to establish a difference in the levels of trade. 	Similarly,
while 	titles, 	such 	as 	“original 	equipment 	manufacturer,” 	“distributor,”
“wholesaler,” and “retailer” may actually describe levels of trade, the fact
that two sales were made by entities with titles indicating different stages of
the marketing process is not sufficient to establish that the two sales were
made at different levels of trade.
Id.
The regulations also provide that “[s]ubstantial differences in selling activities are
a necessary, but not sufficient, condition for determining that there is a difference in the
stage of marketing. 	Some overlap in selling activities will not preclude a determination
that two sales are at different stages of marketing.” 19 C.F.R. § 351.412(c)(2). The SAA
explains that a difference in the level of trade is where “there is a difference between the
actual functions performed by the sellers at the different levels of trade in the two
markets.” 	SAA, H.R. Rep. No. 103-316, vol. 1 at 829, 1994 U.S.C.C.A.N. at 4,168.
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However, Commerce explained in the course of promulgating its regulations that “the
statute uses the term ‘level of trade’ as a concept distinct from selling activities.” See id.
Commerce emphasized that
in situations where some differences in selling activities are associated with
different sales, whether that difference amounts to a difference in the levels
of trade will have to be evaluated in the context of the seller’s whole scheme
of marketing.
Final Rule ADD; CVD, 62 Fed. Reg. at 27,371. Therefore, the statute and the regulations
permit Commerce to find more than one level of trade when it finds sales are made at
different marketing stages, which may be evidenced by different selling activities as well
as other facts. See generally 19 U.S.C. § 1677b(a); 19 C.F.R. § 351.412(c)(2).
Commerce reasonably found that MSL’s home market channels of distribution did
not evidence an additional layer of selling activity or function because Commerce
reasonably determined: (1) the selling expenses in each channel of distribution were
substantially similar; and (2) in the context of MSL’s marketing scheme there was no
significant difference in the breadth and intensity of selling functions performed in each
channel of distribution. 	In its final determination, Commerce acknowledged that GVN’s
officials stated there were two channels of distribution in its home market. 	See Final
Decision Memo at 26. 	However, evaluating the selling functions at issue in this
investigation, after weighing the differences in each channel of distribution, Commerce
found that they did “not warrant two LOTs.” 	Id. at 28. 	The court finds Commerce’s
conclusion reasonable.
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Commerce compared the selling activities and sales functions MSL performed in
the CHANNELH1 and CHANNELH2 sales and concluded that they were not significantly
different. See id. at 26. Specifically, Commerce “noted minor differences between sales
to public sector and private sector [exploration and production (“E&P”)] customers, but
[Commerce concluded] GVN had no major changes to its degree of selling activities in
any of its channels of distribution.” 31 	Id.; see also GVN Sales Verification Report 9–10.
Commerce based this determination on its evaluation of each selling activity/function and
noting 	“each 	line 	item’s 	intensity 	level,” 	qualitatively 	categorizing 	each 	selling
activity/function as being performed “always,” “frequently,” “sometimes,” or “never.” See
GVN Sales Verification Report at 9; see also Sales Verification Exhibits of GVN Fuels
Limited (“GVN”) at Exhibit 5, CD 297–312, bar codes 3191526-01–10 (Mar. 28, 2014).
Based upon this broad evaluation, Commerce found no discrepancies in either the range
or intensity of selling functions between CHANNELH1 and CHANNELH2 customers. 32
See GVN Sales Verification Report at Exhibit 5.
Commerce also compared the selling expenses associated with the two groups of
sales and concluded that “there are no differences in inventory maintenance, and
warehousing practices, and only minimal difference in freight, and insurance practices,
31 Public and private sector E&P customers together make up the CHANNELH1 channel of
distribution. See GVN Sales Verification Report at 9.
32 Commerce acknowledged that there may have been a difference in the intensity in the
procurement/sourcing service selling function between public and private sector E&P customers.
See GVN Sales Verification Report at 9. However, this difference in intensity between public and
private sector E&P customers, which both occurred within CHANNELH1, is not relevant to
Commerce’s LOT analysis because no party argues that public sector and private sector E&P
end user customers represented different LOTs.
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resulting in minimal differences in the selling expenses between the two home market
channels.” 	See Final Decision Memo at 26. 	Although Commerce acknowledged a
difference in the length of the sales process between CHANNELH1 and CHANNELH2
sales, Commerce concluded that the different length was a result of “awaiting a decision
from the public sector customer.” Id. at 27. Commerce also concluded that there was no
significant discrepancy between the selling expenses MSL incurred to provide third party
inspections in each of its channels of distribution. Id. Further, Commerce concluded that
the 	differences 	in 	inland 	freight 	services 	between 	sales 	in 	CHANNELH1 	versus
CHANNELH2 were not significant because it concluded that “for over 99 percent of the
sales made in CHANNELH1, the customer either paid the freight directly, or MSL paid the
freight and charged the customer for the freight as a separate line item on the invoice. In
fact, in CHANNELH1, there was only one sale for which MSL provided freight services.”
Id. at 28 (internal quotations omitted). Commerce therefore reasonably concluded that a
majority of sales through CHANNELH1 and all sales in CHANNELH2 included the same
expenses for inland freight and inland insurance. See id.
Lastly, Commerce acknowledged that CHANNELH1 customers were different
types than those in CHANNELH2, but it implicitly concluded on the basis of its comparison
of selling functions, activities, and expenses, that the similarities between MSL’s channels
of distribution outweighed any label placed upon the customer types in each channel of
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distribution. 33 	See id. 	Although the court would prefer that Commerce had explicitly
engaged in such a weighing, Commerce’s path was reasonably discernible.
U.S. 	Steel 	unpersuasively 	argues 	Commerce 	disregarded 	additional 	selling
activities and functions performed in CHANNELH1 without sufficient explanation. 	See
U.S. Steel Br. 58–60. 	U.S. Steel specifically argues that Commerce disregarded
differences in the length and complexity of the sales process. See id. 58, 60–61. Yet, as
discussed above, Commerce explicitly considered and explained the lengthy decision
process in some CHANNELH1 sales. See Final Decision Memo at 27. U.S. Steel cites
no record evidence that undermines the reasonableness of Commerce’s explanation.
Likewise, although U.S. Steel attaches great significance to activities that MSL’s
sales team must perform to monitor offer announcements and submit bids, U.S. Steel
cites no record evidence that such activities translate to increased selling expenses,
which might indicate an additional layer of selling activities. 	See U.S. Steel Br. 58–59.
U.S. Steel stresses that MSL pays facilitators a monthly retainer unique to CHANNELH1
sales. 	U.S. Steel Reply Br. 29 (citing GVN Supp. Sections A–C Resp. at 11–12).
Commerce explicitly recognized the use of facilitators, which Commerce noted are used
in both the home market and the U.S. market, but Commerce reasonably concluded that
33 Commerce and MSL officials acknowledged that sales denominated CHANNELH2 sales were
made to a sector labeled “original equipment manufacturer (OEM) sector.” 	See GVN Sales
Verification Report at 6. Commerce compared these OEM sector sales to those to E&P private
sector companies, and noted these sales were similar except that these sales did not require
performance bank guarantees. 	See id. at 8. 	However, Commerce separately concluded that
such bank guarantees were only requested by some customers. Id. at 7
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their use does not indicate complexity of the sales process in either market. 	See Final
Decision Memo at 27.
U.S. Steel also argues that Defendant ignores differences in marketing stages that
are key to identifying levels of trade, and instead “focuses almost exclusively on
differences in selling expenses between levels of trade.” 	See U.S. Steel Reply Br. 25–
26. 	However, as the preamble to Commerce’s regulations recognizes, substantial
differences in the amount of selling expenses associated with two groups of sales may
indicate differences in selling activities. 	See Final Rule ADD; CVD, 62 Fed. Reg. at
27,371. Such differences in selling activities may, in turn, amount to differences in selling
functions evaluated within the context of the seller’s marketing scheme. Here, Commerce
reasonably relied upon its finding that the selling activities and functions in each of GVN’s
channels of distribution were not significantly different. Commerce also concluded on the
basis of its comparison of selling functions, activities, as well as selling expenses, that the
similarities between MSL’s channels of distribution outweighed any label placed upon the
customer types in each channel of distribution.
U.S. Steel also contrasts the provision of performance bank guarantees in some
CHANNELH1 	sales 	while 	it 	argues 	“[t]here 	are 	no 	guarantee 	or 	earnest 	money
requirements for CHANNELH2 sales.” U.S. Steel Br. 60. However, U.S. Steel does not
highlight any record evidence indicating that the provision of bank guarantees results in
higher selling expenses or higher prices to customers. 	Moreover, U.S. Steel does not
even argue that guarantees or earnest money requirements are not provided for
CHANNELH2 sales, but rather, merely that they are not required.
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Next, U.S. Steel argues that Commerce disregarded the fact that “MSL arranges
and pays for freight for a [[ 	]] portion of CHANNELH1 sales,” whereas “MSL
provided or arranged freight for [[ 	]] sales during the POI.” See id.
at 62. These assertions are directly at odds with Commerce’s findings that:
the home market sales listing reveals that for over 99 percent of the sales
made in CHANNELH1, the customer either paid the freight directly, or MSL
paid the freight and charged the customer for the freight as a separate line
item on the invoice. 	In fact, in CHANNELH1, there was only one sale for
which MSL provided freight services.
Final Decision Memo at 28 (internal quotations omitted). 	However, U.S. Steel’s
characterization of the breadth of MSL’s arrangement for freight services rests on its
assumption that MSL incurs significant freight expenses despite the fact that customers
ultimately reimburse it. See U.S. Steel Reply Br. 31. Indeed, U.S. Steel alleges only that
MSL arranged for freight services for a [[ 	]] number of CHANNELH1 sales but
acknowledges that MSL does not absorb much of those costs itself. 	See id. 	As U.S.
Steel also acknowledges, to the extent that MSL does incur costs for arranging freight for
customers who later reimburse it for those costs, those costs are limited to credit
expenses necessary to cover such costs until MSL receives payment from customers.
See U.S. Steel Br. 62. 	Commerce reasonably concluded that reimbursed freight
expenses were not significant selling expenses that indicated an additional layer of selling
activity.
U.S. Steel objects that Commerce used these freight expenses to reduce MSL’s
normal 	value 	in 	conducting 	its 	dumping 	margin 	calculations 	while 	ignoring 	those
expenses in its level of trade analysis. U.S. Steel Br. 60. Commerce properly adjusted
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GVN’s normal value to reflect “an imputed credit expense for the freight revenue due,”
see GVN Fuels Limited Preliminary Determination Analysis Memoranda at 6, CD 225, bar
code 3183289-01 (Feb. 14, 2014), to exclude selling expenses that were not present in
GVN’s U.S. sales transactions to ensure an accurate comparison. 	Nothing about this
adjustment is inconsistent with Commerce’s conclusion that these expenses were not
significant enough to create an additional layer of selling activity. Nor does the fact that
Commerce made this adjustment to GVN’s normal value indicate that it considered
arranging 	for 	such 	services 	a 	significantly 	different 	selling 	activity. 34 	Therefore,
Commerce’s determination that MSL’s advancement of freight costs and arrangement of
freight services did not indicate a second level of trade is not unreasonable.
Next, U.S. Steel argues that “MSL provides both third party inspections and inland
freight insurance for a [[ 	]] portion of its sales to [[ 	]] customers,” whereas for
CHANNELH2 sales, “MSL does not [[ 	]]” and [[
]] provide inland freight insurance [[ 	]]. See U.S. Steel Br. 60–61. In
support of this argument, U.S. Steel submits a synthesis of sales data drawn from MSL’s
home market database indicating that MSL provided inland insurance to [[ 	]]% and
third party inspections to [[ 	]]% of sales in CHANNELH1, respectively, while MSL
provided 	these 	services 	to 	[[ 	]] 	sales 	and 	[[ 	]]% 	of 	sales, 	respectively, 	in
CHANNELH2.
34 At oral argument, U.S. Steel argued that Commerce would not have made any adjustment to
GVN’s normal value to reflect freight expenses if the activity of arranging freight on behalf of
customers did not amount to a separate selling function. See Conf. Oral Arg. 01:52:35–01:52:56.
U.S. Steel offered no support for this assertion.
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Citing GVN’s rebuttal case brief, Commerce found that “record evidence indicates
that third party inspections were not significantly different between the various channels.”
Final Decision Memo at 27 (citing Rebuttal Brief of GVN Fuels Limited (“GVN”) and its
Affiliates Maharashtra Seamless Limited (“MSL”) and Jindal Pipes Limited (“JPL”) at 21–
22, CD 351, bar code 3206629-01 (June 2, 2014) (“GVN Administrative Rebuttal Brief”)).
Commerce’s reliance on GVN’s Administrative Rebuttal Brief provides no further clarity
as to the source of the discrepancy between Commerce’s characterization and the facts
relied upon by U.S. Steel. 	GVN argues that “[t]he home market sales database shows
that third party inspections were done for [[ 	]] percent of sales to CHANNELH2.” See
GVN Administrative Rebuttal Brief at 21. Defendant’s response to U.S. Steel’s argument
is merely to recite Commerce’s finding that the differences were minimal. 	See Def.’s
Resp. Br. 44. The discrepancy in the parties’ statistics is apparent.
However, arranging for inland insurance and third party inspections, like arranging
for inland freight, involves contacting a third party, not the provision of those services by
the company itself. Therefore, although Commerce did not address these differences in
arranging for these services, its explanation is reasonably discernible from the way it
addressed inland freight expenses. 	The magnitude of the differences in arranging for
inland insurance and third party inspections is not the critical evaluation for Commerce in
determining whether there is a separate level of trade. 	Under Commerce’s regulation,
the key consideration is whether the service represented a substantially different selling
function. 	Like in arranging for inland insurance, it was not unreasonable for Commerce
to conclude that arranging for inland insurance or inspections by a third party does not
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represent a substantially different selling function. 	See 19 C.F.R. § 351.412(c)(2). 	The
fact that these expenses may be incurred is not determinative under Commerce’s
regulation.
Next, 	U.S. 	Steel 	argues 	that, 	under 	Commerce’s 	practice 	and 	regulations,
CHANNELH2 sales to intermediary parties should be considered a different level of trade
“than sales to end users made through CHANNELH1.” 	U.S. Steel Br. 61. 	U.S. Steel
relies upon Glycine From India, 72 Fed. Reg. 62,827, 62,832 (Dep’t Commerce Nov. 7,
2007) (notice of preliminary determination of sales at LTFV), to support its position.
Although Commerce noted that customers in one channel of distribution were end-users
but traders in the other, Commerce did not rely exclusively upon that fact to preliminarily
find two distinct levels of trade in both the home market and the U.S. market in that case.
See id. 	Rather, Commerce analyzed the sales functions and marketing process, and
Commerce noted the degree of freight and delivery services provided was higher for
traders than for end users. 	See id. 	Moreover, as already discussed, Commerce does
not consider titles such as “end users” dispositive of a level of trade determination. See
Final Rule on ADD; CVD, 62 Fed. Reg. at 27,371. 	Instead, Commerce’s regulation
focuses on selling functions and selling activities. 	Id. 	Here, Commerce properly
considered the selling functions performed by GVN in each channel of distribution
together with the different customer characteristics and it found the similarities in selling
functions outweighed any difference in where the customers fell in the supply chain.
U.S. Steel claims Commerce should have calculated a dumping margin by
comparing GVN’s U.S. sales to home market sales in CHANNELH2 and its points to
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perceived similarities between CHANNELH2 sales and GVN U.S. Sales. See U.S. Steel
Br. at 65. 	Since the court has already found that Commerce’s evaluation of the selling
activities and functions performed in each channel of distribution was not significantly
different, any similarities between CHANNELH2 sales and GVN’s U.S. sales would apply
equally to CHANNELH1 sales. 	Therefore, as already discussed, Commerce acted in
accordance with 19 U.S.C. § 1677b(a)(1)(B)(i) and 19 C.F.R. § 351.412(c)(2) in utilizing
all of GVN’s home market sales for its dumping margin calculations.
C. 	Granting GVN a Duty Drawback Adjustment Under the Advance
License Program
U.S. Steel argues that Commerce erred in granting GVN a duty drawback
adjustment for benefits received under the ALP, an export incentive program established
by the Government of India (“GOI”). 	See U.S. Steel Brief 40–41. 	Defendant responds
that “Commerce reasonably determined that GVN demonstrated a direct link between the
duty drawback received for this sale and the quantity of inputs imported.” Id. at 50. The
court finds that Commerce’s determination is supported by substantial evidence.
The statute provides that the export price shall be increased by “the amount of any
import duties imposed by the country of exportation which have been rebated, or which
have not been collected, by reason of the exportation of the subject merchandise to the
United States.” 19 U.S.C. § 1677a(c)(1)(B). The Court of Appeals for the Federal Circuit
has explained that
when a duty drawback is granted only for exported inputs, the cost of the
duty is reflected in NV but not in EP. 	The statute corrects this imbalance,
which could otherwise lead to an inaccurately high dumping margin, by
increasing EP to the level it likely would be absent the duty drawback.
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Saha Thai Steel Pipe (Public) Co. v. United States, 635 F.3d 1335, 1338 (Fed. Cir. 2011).
To determine whether a party claiming a duty drawback adjustment is entitled to such
adjustment, that party must establish that:
(1) the import duty paid and the rebate payment are directly linked to, and
dependent upon, one another (or the exemption from import duties is linked
to exportation); and (2) there were sufficient imports of the imported raw
material to account for the drawback received upon the exports of the
manufactured product.
Antidumping Methodologies: Market Economy Inputs, Expected Non–Market Economy
Wages, Duty Drawback; and Request for Comments, 71 Fed. Reg. 61,716, 61,723 (Dep’t
Commerce Oct. 19, 2006).
Here, substantial evidence supported Commerce’s decision to grant a duty
drawback adjustment to GVN. 	Commerce found in its preliminary determination and
reiterated in its final determination, that
quantities of imported materials and exported finished products are linked
through standard input-output norms established by the GOI. The exporter
is only allowed a drawback upon exportation for duties paid on the imported
inputs. 	GVN provided a reconciliation of the quantities of inputs imported
and the drawback received.
Final Decision Memo at 15 (citing Prelim. Decision Memo at 14). Commerce noted that
“GVN provided the license number, a copy of the license, and the U.S. sales that were
tied to this license, including copies of the associated commercial invoices and customs
documentation.” 	Id. 	At verification, Commerce reviewed the license. 	See GVN Sales
Verification Report at 21. 	With regard to the imported material, Commerce noted that
“[t]he [harmonized tariff schedule (“HTS”)] number for import covers hot rolled coil, which
company officials explained was used for subject and non-subject merchandise.” 	Id.
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Commerce verified from review of supporting documents that GVN imported [[ 	]]
megatons (“MT”) of hot rolled coil (i.e., an input for subject merchandise) under the
license. See id. Therefore, Commerce’s finding that the import duty paid by GVN for its
inputs are directly linked to, and dependent upon one another, was supported by
substantial evidence.
With regard to exported merchandise, Commerce noted a discrepancy between
subject merchandise and the HTS number for the product permitted to be exported under
GVN’s license. See id. Commerce noted that GVN clarified the discrepancy by explaining
that Indian government regulations required it to ship its subject merchandise under this
HTS number or else apply for a special license. 	See id. 	Commerce implied that GVN
claimed it could export its OCTG under the license placed on the record despite the fact
the license appeared to cover non-subject merchandise. See id. Commerce verified the
existence of the regulation cited by GVN, and Commerce further verified that, although
the HTS number associated with exports under GVN’s license “is not listed in the scope
of the investigation,” Commerce reviewed “all commercial exports under this license, and
found that the item description for all exports was for OCTG.” 	Id. 	Commerce further
verified that all GVN’s sales were reported in its latest U.S. market sales database. 	Id.
Therefore, Commerce’s finding that GVN had attributed the imports it received when it
exported manufactured products was supported by substantial evidence. See id. at 15.
U.S. Steel argues that Commerce’s finding was not supported by substantial
evidence because record evidence indicates GVN’s license, which covers imports of
[[ 	]] and not [[ 	]], does not cover inputs for subject
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merchandise and covers exports of only non-subject merchandise. See U.S. Steel Reply
Br. 17. 	With regard to imports, U.S. Steel cites record evidence that GVN’s advance
license covers imports of [[ 	]] because the Indian Trade Clarification
Harmonized System (“ITCHS”) Code on the license was listed as [[ 	]], which
corresponds to the ITCHS [[ 	]] heading [[
]]. See id. (citing GVN Supp.
Sec. A–C Questionnaire Response at S1-25(d), CD 193–207, bar codes 3175629-01–15
(Jan. 23, 2014) (“GVN Supp. A–C Resp.”); U.S. Steel Pre-Preliminary Comments re: GVN
at Ex. A, CD 214, bar code 3179318-01 (Feb. 4, 2014) (“U.S. Steel Pre-Prelim. Comm.
Re: GVN”)). 	U.S. Steel argues, and Defendant does not contest, that [[
]] is not an input used to manufacture OCTG. See id.; Def.’s Resp. Br. 40. The
basis for U.S. Steel’s claim that GVN’s license covers imports that cannot be used to
make subject merchandise is that the ITCHS Code on the license pertains to [[
]],
see GVN Supp. A–C Resp. at S1-25(d); U.S. Steel Pre-Prelim. Comm. Re: GVN at Ex.
A, whereas the “Import Item Name” on the “DES Import Item List” of the advance license
placed on the record by GVN indicates [[ 	]]. See U.S. Steel
Reply Br. at 18; see also GVN Supp. A–C Resp. at Ex. S1–25(d). Although Commerce
did not note this specific discrepancy on the face of the license at verification, Commerce
verified with supporting documents that GVN’s imports under its advance license were
[[ 	]] MT of hot rolled coil, which is used to make subject merchandise. 	See GVN
Sales Verification Report at 21. Therefore, Commerce reasonably concluded on the basis
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of this supporting documentation, not based upon the license itself, that GVN imported
inputs for subject merchandise under its advance license.
U.S. Steel also argues Commerce’s decision to grant the duty drawback was not
supported by substantial evidence because GVN’s “advance license provides only for the
export of nonsubject merchandise, i.e., [[ 	]] and not OCTG.” See
U.S. Steel Reply Br. 17 (citing GVN Supp. A–C Resp. at Ex. S1-25(d)). 	However,
Commerce 	directly 	addressed 	this 	discrepancy 	at 	verification, 	crediting 	GVN’s
explanation that it was able to export its subject merchandise under the license it put on
the record, which it conceded covered non-subject merchandise. 35 	See GVN Sales
Verification Report at 21. 	Commerce reached this conclusion by verifying GVN’s claim
that an Indian regulation would have required it to obtain a special license to export
merchandise declared to be OCTG. 	See id. 	Although Commerce could have explicitly
noted that the “special license” for exporting OCTG would have increased GVN’s cost of
exporting subject merchandise, it is reasonably discernible that the government credited
GVN’s 	explanation 	because 	GVN’s 	actions 	appeared 	to 	be 	driven 	by 	business
considerations, not by deceiving Commerce. See id. Likewise, Commerce reviewed “all
commercial invoices for exports under this license, and found that the item description for
all exports was for OCTG,” and Commerce determined that there were no unreported
35 U.S. Steel argues that “inconsistencies in the commercial invoices and customs invoices
provided by GVN cast doubt on the reliability of [the records of GVN’s transactions under the ALP
to support its duty drawback determination].” U.S. Steel Reply Br. 19. However, this discrepancy
is not surprising given GVN’s claim, which Commerce reasonably credited, that it shipped its
subject merchandise under an HTS number that did not pertain to OCTG to avoid applying for a
special license.
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sales in GVN’s sales database. 	See id. 	Therefore, Commerce reasonably determined
on the basis of the documentation, not the face of the license, that subject merchandise
was exported under the license.
Next, U.S. Steel argues that GVN’s
suggestion that the Indian government permitted [it] to export OCTG under
the ALP using the tariff code for [[ 	]] even though they
were “not listed in the scope of the investigation” . . . simply confirms that
the ALP does not actually link imported raw materials to exported subject
merchandise.
U.S. Steel Reply Br. 19 n.2 (internal citation omitted). 	However, the fact that GVN was
able 	to 	export 	subject 	merchandise 	under 	a 	license 	that 	did 	not 	cover 	subject
merchandise does not suggest that the advance license program itself does not require
the company to link imported raw materials to exported OCTG. 	Regardless of the
mechanics of how GVN received the rebate of import duties it paid, Commerce
reasonably found GVN’s record documentation supported all the necessary elements for
drawback eligibility.
D. 	Application of Facts Available to Fill a Gap in the Record for GVN’s
Dual-Grade Products
GVN Plaintiffs contest Commerce’s apparent application of facts available with an
adverse inference in determining costs for its N/L-80 grade products. GVN Plaintiffs Br.
10. 	Defendant contends that GVN Plaintiffs failed to exhaust administrative remedies.
See Def.’s Resp. Br. 55, and that Commerce used neutral facts available. See id. at 54.
The court finds GVN Plaintiffs are not barred from bringing their claim and remands the
matter to Commerce for further consideration and explanation.
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1. 	Exhaustion of Administrative Remedies
Defendant argues that GVN failed to raise any arguments at the administrative
level regarding the appropriate costs for its products. See Def.’s Resp. Br. 52. 	GVN
Plaintiffs respond that they argued that their goods should have been classified as N-80
grade as they were in Commerce’s preliminary determination, which implicated these
issues. Consolidated Pls.’ Reply Br. 10, Nov. 6, 2015, ECF No. 64. The court concludes
that the exhaustion doctrine should not bar judicial review.
In its initial questionnaire responses, GVN reported COP data for certain sales of
N/L-80 OCTG (i.e., “dual use products”), see GVN Sections B & C Questionnaire
Responses at C-11, CD 83–90, bar codes 3161960-01–08 (Nov. 4, 2013), as OCTG
grade N-80 based upon the invoices supplied by MSL. See GVN Plaintiffs Br. 4; see also
Final Decision Memo at 30. 	However, Commerce thereafter found that GVN’s N/L-80
product should have been reported and coded as L-80 product. See Final Decision Memo
at 30.
GVN Plaintiffs acknowledge that the result of this reassignment was that most of
the dual grade sales did not have COP information from MSL’s cost database. See GVN
Plaintiffs Br. 8. Consequently, as GVN Plaintiffs also acknowledge, “it was necessary for
Commerce to use facts available to create product costs to match” these CONNUMs.
See id. Therefore, citing its practice, Commerce assigned the N/L-80 dual grade product
costs associated with L-80, which has stricter performance requirements than N-80 grade
product. See id. Further, in assigning costs to GVN’s dual grade sales, Commerce used
“the highest cost assigned to a CONNUM with a grade characteristic of L-80.” See GVN
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Fuels Limited Final Determination Analysis Memoranda at 5, CD 356, bar code 3215344-
01 	(July 	10, 	2014) 	(“GVN 	Final 	Analysis 	Memo”). 	GVN 	Plaintiffs 	contend 	that
Commerce’s use of the highest cost assigned to a CONNUM with a grade characteristic
of L-80 represented an adverse inference and an application of AFA. See GVN Plaintiffs
Br. 10.
The statute provides that “the Court of International Trade shall, where appropriate,
require the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d). Exhaustion of
administrative remedies is a doctrine that holds “that no one is entitled to judicial relief for
a supposed or threatened injury until the prescribed administrative remedy has been
exhausted.” Consol. Bearings Co. v. United States, 348 F.3d 997, 1003 (Fed. Cir. 2003).
The court generally “takes a ‘strict view’ of the requirement that parties exhaust their
administrative remedies before [Commerce] in trade cases.” 	Corus Staal BV v. United
States, 502 F.3d 1370, 1379 (Fed. Cir. 2007). Commerce’s regulations require parties to
submit a case brief containing all their arguments. 	See id.; see also 19 C.F.R.
§ 351.309(c)(2). Therefore, the exhaustion requirement is “not simply a creature of court
decision, as is sometimes the case, but is a requirement explicitly imposed by the agency
as a prerequisite to judicial review.” Id.
The overarching purpose of the exhaustion doctrine is to “allow[] the agency to
apply its expertise, rectify administrative mistakes, and compile a record adequate for
judicial review–advancing the twin purposes of protecting administrative agency authority
and promoting judicial efficiency.” Carpenter Tech. Corp. v. United States, 30 CIT 1373,
1374–75, 452 F. Supp. 2d 1344, 1346 (2006) (citing Woodford v. Ngo, 548 U.S. 81, 88–
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Consol. Court No. 14-00263 	Page 69
90 (2006)). Nonetheless, even where exhaustion is implicated, the Court of Appeals for
the Federal Circuit has consistently held that the application of exhaustion principles in
trade cases is exercised with a measure of discretion by the Court. 	See, e.g., Corus
Staal, 502 F.3d at 1381; Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347, 1356
n.17 (Fed. Cir. 2006); Consol. Bearings, 348 F.3d at 1003.
Such discretion cautions against requiring exhaustion where doing so would
require a party to speculate as to one of many courses the agency may take. Requiring
such speculation would hinder the progress of the investigation and not serve the interest
of promoting administrative efficiency. 	Although U.S. Steel raised many of the issues
addressed by Commerce in its final determination and GVN could have addressed U.S.
Steel’s arguments in the alternative, GVN Plaintiffs were not required to predict that
Commerce would change course between its preliminary and final determinations. This
is particularly true given that Commerce gave no indication at the preliminary results stage
or at verification that it intended to reclassify GVN’s dual-use sales as L-80 grade sales.
See GVN Sales Verification Report at 20. 36 	Faced with a favorable determination in
Commerce’s preliminary determination where Commerce had assigned COP information
for N-80 grade products to the products in question, GVN Plaintiffs could not be expected
to predict Commerce’s change in its/their position under such circumstances.
36 At verification, when Commerce discussed its review of the sales in GVN’s cost database that
were reclassified as having N-80, not L-80 grades, it merely stated that it had “reviewed several
MSL invoices and mill test certificates for these reclassified sales, and noted that in each instance,
the documentation from MSL was clearly for N-80 graded products.” See GVN Sales Verification
Report at 20.
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2. 	Commerce’s Assignment of Highest Cost Assigned to L-80 Grade
Product for GVN’s Dual Grade Product
GVN Plaintiffs argue that, if Commerce had followed its practice of finding cost
matches for its dual use products, it “should have based its calculation of the missing
costs 	by 	using 	its 	standard 	model 	matching 	methodology 	to 	compare 	the 	newly
designated L-80 CONNUMs to the most similar grade L-80 CONNUM.” 	GVN Plaintiffs
Br. 16. 	According to GVN Plaintiffs, Commerce’s assignment of the highest costs
associated with L-80 products was, in effect, an adverse inference. 	See id. at 10–11.
Defendant denies that Commerce resorted to an adverse inference, and argues that
“Commerce relied on neutral facts available that it drew from the record.” Id. at 57.
According to the statute,
[c]osts shall normally be calculated based on the records of the exporter or
producer of the merchandise, if such records are kept in accordance with
generally accepted accounting principles of the exporting country . . . and
reasonably reflect the costs associated with the production and sale of the
merchandise.
19 U.S.C. § 1677b(f)(1)(A). 	If, however, Commerce determines that the records of the
respondent cannot properly form an accurate basis upon which to calculate that
respondent’s COP, Commerce may use facts otherwise available for calculating a
respondent’s COP under certain circumstances. See generally 19 U.S.C. § 1677e(a). 37
37 Commerce shall “use facts otherwise available in reaching the applicable determination” if:
(1) necessary information is not available on the record, or
(2) an interested party or any other person—
(A) withholds information that has been requested by [Commerce] . . .,
(B) fails to provide such information by the deadlines for submission of
information or in the form or manner requested . . .
(footnote continued)
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If Commerce “finds that an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information . . . [Commerce] may use an
inference adverse to the interests of that party in selecting from among the facts otherwise
available.” Id. § 1677e(b).38
Here, Commerce identified a gap in the record that prevented it from calculating
GVN’s COP for its N/L-80 products based upon its cost database, finding that “GVN
submitted data on the record for sales of N-80 grade OCTG, but it explicitly identified”
sales of N/L-80 grade product as N-80 grade product. 	See Final Decision Memo at 30.
Lacking COP data on the record for N/L-80 grade product, Commerce assigned the N/L-
80 dual grade product costs associated with L-80 grade product because it has the stricter
performance requirements. See GVN Final Analysis Memo at 5.
Commerce could look to facts otherwise available under the statute because it
determined the necessary COP information for the dual-grade product was not available
on the record. 	See Final Decision Memo at 30; see also 19 U.S.C. § 1677e(a)(1). 	In
determining what record facts to look to in assigning COP to GVN’s dual-grade products,
(C) significantly impedes a proceeding under this subtitle, or
(D) provides such information but the information cannot be verified . . . .
19 U.S.C. § 1677e(a).
38 The statute provides that such adverse inference may include:
Reliance on information derived from—
(1) the petition,
(2) a final determination in the investigation under this subtitle,
(3) any previous review . . ., or
(4) any other information placed on the record.
Id.
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Commerce cited its practice that “when the customer orders a product to meet multiple
specifications and grades in order to be suitable for a variety of applications, the strictest
requirements of any of the standards must be satisfied.” See Final Decision Memo at 30
(citing Small Diameter Circular Seamless Carbon and Allow Steel Standard, Line, and
Pressure Pipe from Brazil, 70 Fed. Reg. 7,243 (Dep’t Commerce Feb. 11, 2005) (final
results 	of 	ADD 	administrative 	review) 	and 	accompanying 	Issues 	and 	Decision
Memorandum for the Eighth Administrative Review of Small Diameter Circular Seamless
Carbon and Alloy Steel Standard, Line and Pressure Pipe from Brazil; Final Results of
Antidumping Duty Administrative Review at 5, A-351-826, (Feb. 11, 2005), available at
http://ia.ita.doc.gov/frn/summary/brazil/E5-584-1.pdf (last visited Mar. 15, 2016) (“Pipe
From Brazil I&D”)).39 	Therefore, Commerce assigned GVN’s dual-grade product costs
associated with L-80 grade product because it met stricter performance requirements.
See id.
However, nothing in Commerce’s practice indicates that it selects the highest costs
associated with the product with the highest performance specifications where there are
multiple CONNUMs within that higher performance product category included with a
respondent’s COP database. 	See Pipe From Brazil I&D at 5. 	Commerce’s analysis of
its selection among facts otherwise available in its final determination focuses exclusively
39 In the Pipe From Brazil I&D, Commerce explained that “it is increasingly common for
distributors to order pipe that conforms to multiple specifications and grades of steel for
maximum flexibility in filling orders by end-users while controlling inventory levels.” See Pipe
From Brazil I&D at 5. Since a product that may be suitable for a variety of applications must
satisfy the strictest requirements of any of the requirements, Commerce chooses the product
with the higher performance requirements. See id.
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on its selection of cost information for higher performance L-80 grade product as opposed
to N-80 grade product. 	See generally Final Decision Memo at 30. 	Commerce only
mentions its decision to assign GVN’s dual grade products the highest cost associated
with CONNUMs with grade characteristic of L-80 in its GVN Final Analysis Memo. 	See
GVN Final Analysis Memo at 5. 	Commerce does not explain its decision to select the
highest cost data for products within the L-80 product grouping. 	It can be inferred from
Commerce’s discussion that there was varying cost information for L-80 products with
different physical characteristics. Commerce makes no effort to explain why GVN’s N/L-
80 were most similar to the highest cost L-80 products. 	Without such explanation,
Commerce’s selection of the highest cost information among L-80 products from GVN’s
cost database may only have been the product of an adverse inference that GVN’s dual
grade products were more cost-intensive than any other L-80 grade products in selecting
among facts otherwise available. 	Therefore, Commerce must either explain why
assigning the highest costs for L-80 products from GVN’s cost database to its dual use
products was reasonable in light of the characteristics of GVN’s dual-use products or
explain its application of an adverse inference by satisfying the legal prerequisites for
doing so under § 1677e(b).40
At oral argument, U.S. Steel cited several examples it argued supported the notion
that 	Commerce’s 	practice 	of 	assigning 	costs 	associated 	with 	higher 	performance
40 U.S. Steel speculates that Commerce’s decision was supported by substantial evidence
because N/L-80 products are in fact more expensive than either N-80 or L-80 grade products.
Conf. Oral Arg., 02:35:14–02:35:38. Commerce made no such finding, and therefore the Court
does not need to address these arguments.
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products also includes selecting the highest cost products from within the higher
performance product category. See Conf. Oral Arg., 02:31:35–02:33:45. However, these
proceedings in fact support only matching the higher performance products based upon
product characteristics that impact overall performance. See id. (citing e.g., Certain Small
Diameter Carbon and Alloy Seamless Standard, Line, and Pressure Pipe From Romania,
70 Fed. Reg. 7,237 (Dep’t Commerce Feb. 11, 2005) (final results of antidumping
administrative review and final determination not to revoke order in part) (“SSLPP From
Brazil”) 	and 	accompanying 	Issues 	and 	Decision 	Memorandum 	for 	the 	2002-03
Antidumping Duty Administrative Review: Certain Small Diameter Carbon and Alloy
Seamless Standard, Line, and Pressure Pipe from Romania at 5, A-485-805, (Feb. 4,
2005), available at http://ia.ita.doc.gov/frn/summary/romania/E5-586-1.pdf (last visited
Mar. 15, 2016) (“SSLPP From Brazil I&D”)).
In its issues and decision memorandum for SSLPP From Brazil, Commerce
explained that:
[i]n making [its] model-matching decisions, [it] look[s] at a combination of
product 	characteristics 	which 	are 	reflected 	ultimately 	in 	the 	overall
performance standard of the given specification and the intended end-uses
which are associated with the performance standards.
SSLPP From Brazil I&D at 36. 	The only product characteristics that U.S. Steel argues
impacted product performance were chemical composition and mechanical properties
(i.e., physical characteristics of the product). 	See U.S. Steel Resp. Br. 10. 	Commerce
did not find that these product characteristics contributed to the higher technical
specifications or that the dual grade product was most similar to the highest cost L-80
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product. 	Thus, Commerce’s practice of assigning the costs of higher grade product to
dual-grade product does not include selecting the highest costs within the higher grade
product grouping.
Lastly, U.S. Steel argues that Commerce reasonably assigned N/L-80 grade
OCTG the highest cost associated with L-80 grade products because “the record is clear
that the requirements of N/L-80 grade OCTG [[ 	]] those of L-80 grade
OCTG.” 	See id. 	At oral argument, U.S. Steel argued that the record fully justified
assigning GVN’s dual grade products the highest costs of L-80 grade products because
“GVN’s own questionnaire response shows that the N/L-80 product met or exceeded the
L-80 product specifications.” 	Conf. Oral Arg., 02:39:37–2:39:56. 	U.S. Steel argued
GVN’s questionnaire responses showed that “the N/L-80 products [[
]] of the L-80 products and [[
]] requirements.” Conf. Oral Arg., 02:34:25–02:34:36 (citing GVN Supplemental
Sections A–C Response at Ex. S1-14, CD 198, bar code 3175629-06 (Jan 23, 2014)
(“GVN Suppl. Secs. A–C Response”)).41
However, Commerce did not reference GVN’s questionnaire responses for the
proposition 	that 	the 	costs 	of 	N/L-80 	product 	were 	greater 	than 	all 	L-80 	product.
Commerce referenced GVN’s responses to explain its decision to assign dual-grade
products costs of the L-80 products with stricter requirements. See Final Decision Memo
at 30. Second, the exhibit cited by U.S. Steel merely indicates that the minimum tensile
41 U.S. Steel implied that Commerce relied upon these facts in its Final Decision Memo in citing
to this document at page 30, footnote 108. See id. at 02:34:37–02:34:49.
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strength for GVN’s N/L-80 product [[ 	]] than the minimum tensile strength
for GVN’s L-80 product. See GVN Suppl. Secs. A–C Response at Exhibit S1-14. It does
not indicate that there was a maximum tensile strength for its L-80 product, so there may
have been L-80 CONNUMs that met the tensile strength requirements of N/L-80 product
within GVN’s cost database. See id. Without further explanation, Commerce’s decision
to apply the highest cost for L-80 product to GVN’s dual-grade merchandise was not
supported by substantial evidence.
CONCLUSION
In accordance with the foregoing, it is hereby
ORDERED that Commerce’s Final Determination is sustained with respect to:
collapsing issues, level of trade issues, and duty drawback issues; and it is further
ORDERED that this action is remanded to Commerce to clarify or reconsider, as
appropriate, its application of the thresholds of the ratio test in this investigation, affiliation
issues between Jindal SAW, Limited, Jindal Steel and Pipes Limited and [[
]], yield loss data issues, and costs of production of dual use products issues; and
it is further
ORDERED that Commerce shall file its remand results within 60 days; and it is
further
ORDERED that the parties shall have 30 days thereafter to file comments; and it
is further
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ORDERED that the parties shall have 15 days thereafter to file their replies to
comments on the remand determination.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: May 5, 2016
New York, New York
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