AG der Dillinger Huttenwerke v. United States

Slip Op. 21-101
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Leo M. Gordon, Judge
Consol. Court No. 17-00158
OPINION and ORDER
[Commerce’s Final Determination remanded in part.]
Dated: August 18, 2021
Marc E. Montalbine, Gregory S. Menegaz, and Alexandra H. Salzman, deKieffer
& Horgan, PLLC of Washington, D.C. for Plaintiff AG der Dillinger Hüttenwerke.
Robert 	L. 	LaFrankie, 	Crowell 	& 	Moring 	LLP, 	of 	Washington, 	D.C. 	for
Plaintiff-Intervenor thyssenkrupp Steel Europe AG.
AG DER DILLINGER HÜTTENWERKE,
Plaintiff,
and
ILSENBURGER GROBBLECH GMBH, SALZGITTER
MANNESMANN GROBBLECH GMBH, SALZGITTER
FLACHSTAHL GMBH, SALZGITTER MANNESMANN
INTERNATIONAL GMBH, and FRIEDR. LOHMANN
GMBH,
Consolidated Plaintiffs,
and
THYSSENKRUPP STEEL EUROPE AG,
Plaintiff-Intervenor,
v.
UNITED STATES,
Defendant,
NUCOR CORPORATION and
SSAB ENTERPRISES LLC,
Defendant-Intervenors.
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Kelly Ann Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice of Washington, D.C. for Defendant United States. 	On the
brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, Tara K. Hogan, Assistant Director, and Vito S. Solitro, Trial Attorney. Of counsel
were Natan P. L. Tubman and Ayat Mujais, Attorneys, U.S. Department of Commerce,
Office of Chief Counsel for Trade Enforcement and Compliance of Washington, D.C.
Alan H. Price, Christopher B. Weld, and Stephanie M. Bell, Wiley Rein LLP of
Washington, D.C. for Defendant-Intervenor Nucor Corporation.
Gordon, 	Judge: 	This 	consolidated 	action 	involves 	a 	challenge 	to 	the 	final
determination in the antidumping duty investigation conducted by the U.S. Department of
Commerce 	(“Commerce”) 	of 	certain 	carbon 	and 	alloy 	steel 	cut-to-length 	plate
(“CTL plate”) from the Federal Republic of Germany. See Certain Carbon and Alloy Steel
Cut-to-Length Plate from the Federal Republic of Germany, 82 Fed. Reg. 16,360 (Dep’t
of Commerce Apr. 4, 2017) (“Final Determination”), and accompanying Issues and
Decision 	Memorandum, 	A-428-844 	(Mar. 	29, 	2017),
http://enforcement.trade.gov/frn/summary/germany/2017-06628-1.pdf 	(last 	visited 	this
date) (“Decision Memorandum”).
Before the court are the motions for judgment on the agency record of Plaintiff
AG der 	Dillinger 	Hüttenwerke 	(“Dillinger”) 	and 	Consolidated 	Plaintiffs 	Ilsenburger
Grobblech GMBH, Salzgitter Mannesmann Grobblech GMBH, Salzgitter Flachstahl
GMBH, 	and 	Salzgitter 	Mannesmann 	International 	GMBH 	(collectively 	“Salzgitter”).
See Pl. Dillinger Mem. in Supp. of Rule 56.2 Mot. for J. on the Agency R., ECF No. 40 1
(“Dillinger Br.”); Salzgitter Consol. Pls.’ Rule 56.2 Mot. for J. on the Agency R.,
1 All citations to the parties’ Rule 56.2 briefs and the agency record are to their confidential
versions unless otherwise noted.
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ECF No. 43 (“Salzgitter Br.”); Def.’s Mem. Opp. Pls.’ Rule 56.2 Mots. for J. on the Admin.
R., ECF No. 55 (“Def.’s Resp.”); Def.-Int. Nucor Corporation Resp. Br., ECF No. 58; Reply
Br. of Pl. Dillinger, ECF No. 62 (“Dillinger Reply”); Reply in Supp. of Consol. Pls.’ Rule
56.2 Mot. for J. on the Agency R., ECF No. 64 (“Salzgitter Reply”). 	Plaintiff-Intervenor
thyssenkrupp Steel Europe AG (“thyssenkrupp”) also filed a brief in support of Plaintiff
Salzgitter’s Rule 56.2 Motion. 	See Pl.-Int.’s Memorandum of Law in Support of Pl.
Salzgitter’s Rule 56.2 Mot., ECF No. 41 (“thyssenkrupp Br.”). The court has jurisdiction
pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C.
§ 1516a(a)(2)(B)(i) (2018), 2 and 28 U.S.C. § 1581(c) (2018).
The court previously addressed Dillinger and Salzgitter’s claims regarding the
application of partial adverse facts available by Commerce for certain home market CTL
plate sales made by Dillinger and Salzgitter’s respective affiliates. See AG der Dillinger
Huttenwerke v. United States, 43 CIT ___, 399 F. Supp. 3d 1247 (2019) (“Dillinger I”).
Subsequently, the court remanded the action to Commerce. 	See Remand Order, ECF
No. 83. Before the court are Commerce’s Final Results of Redetermination Pursuant to
Court Remand (“Remand Results”), ECF No. 85-1, filed pursuant to Dillinger I and the
Remand Order. See Def.-Int. SSAB Enter. LLC’s Comments Opposing Remand Results,
ECF No. 96; Def.-Int. Nucor Corp.’s Revised Comments on Remand Determ., ECF
No. 100; Def.’s Resp. to Comments on Remand Redeterm., ECF No. 104; Consol. Pls.’
Resp. Comments in Support of Remand Determ., ECF No. 106.
2 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2018 edition.
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The court again remands the Final Determination to Commerce for reconsideration
of Dillinger’s challenges to non-prime CTL plate cost shifting, application of the major
input rule, treatment of certain general and administrative (“G&A”) expenses, and the AFA
issue. 	The court, in a separate opinion, see AG der Dillinger Huttenwerke v. United
States, 45 CIT ___, Slip Op. 21-102 (Aug. 18, 2021), sustains the Final Determination as
to Dillinger’s challenges on differential pricing and adjustment of interest expenses to
include a portion of Dillinger’s parent holding company’s interest expense.
I. Standard of Review
The court sustains Commerce’s “determinations, findings, or conclusions” unless
they are “unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). 	More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole. Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1350–51 (Fed. Cir. 2006). 	Substantial
evidence has been described as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,
407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Substantial evidence has also been described as “something less than
the weight of the evidence, and the possibility of drawing two inconsistent conclusions
from the evidence does not prevent an administrative agency’s finding from being
supported by substantial evidence.” 	Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
(1966). 	Fundamentally, though, “substantial evidence” is best understood as a word
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formula connoting reasonableness review. 	3 Charles H. Koch, Jr., Administrative Law
and Practice § 9.24[1] (3d ed. 2021). Therefore, when addressing a substantial evidence
issue raised by a party, the court analyzes whether the challenged agency action
“was reasonable given the circumstances presented by the whole record.” 	8A West’s
Fed. Forms, National Courts § 3.6 (5th ed. 2021).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984), governs judicial review of
Commerce’s interpretation of the antidumping statute. See United States v. Eurodif S.A.,
555 U.S. 305, 316 (2009) (Commerce’s “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”).
II. Discussion
A. Cost Shifting (Non-Prime Plate Adjustment)
Dillinger challenges Commerce’s cost of production (“COP”) determination for its
prime and non-prime plates. Dillinger Br. at 33–37; see also 19 U.S.C. § 1677b(e) &
19 U.S.C. § 1677b(f)(1)(A). 	Commerce found that Dillinger uses an internal “factory
results report” to “value[ ] non-prime products at their likely selling price, and uses this
value as an offset to prime production.” Decision Memorandum at 90 (footnote omitted).
Commerce considered it reasonable to rely on this report to reallocate cost between prime
and non-prime plates. 	Id. at 89–90. 	Dillinger argues that this reallocation contravened
the statute and applicable case law. See Dillinger Br. at 33–37.
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The U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) has held that
Commerce’s decision to rely on information reflecting a respondent’s “likely selling price,”
rather than actual cost data, violates the requirements of § 1677b(f). 	Dillinger France
S.A. v. United States, 981 F.3d 1318, 1321–24 (Fed. Cir. 2020) (“Dillinger France II”).
Accordingly, 	the 	court 	remands 	this 	issue 	to 	Commerce 	to 	reconcile 	its 	COP
determination with the Federal Circuit’s decision in Dillinger France II.
B. Major Input Rule (re: Blast Furnace Coke)
Dillinger describes itself as an “integrated” steel mill, meaning that it performs all
steps necessary for producing steel internally from raw materials, such as iron ore and
blast furnace coke, to the finished rolled steel product. 	Dillinger Br. at 37. 	During the
period of investigation (“POI”), Dillinger obtained pig iron, a major raw material input used
to 	produce 	CTL 	plate, 	from 	its 	affiliated 	producer, 	Rogesa 	Roheisengesellschaft
(“Rogesa”). 	Rogesa obtained blast furnace coke, a major raw material input used to
produce pig iron, from an affiliated producer, Zentralkokerei Saar Gesellschaft (“ZKS”).
See Decision Memorandum at 90.
Dillinger 	challenges 	Commerce’s 	use 	of 	Rogesa’s 	affiliated 	and 	unaffiliated
consumption values in applying the major input rule. See Dillinger Br. at 39–44; Dillinger
Reply 	at 	18–19; 	see 	also 	19 	U.S.C. 	§ 	1677b(f)(3) 	(major 	input 	rule); 	19 	C.F.R.
§ 351.407(b). 	Dillinger argues that Commerce deviated from the requirements of the
applicable regulation, 19 C.F.R. § 351.407(b), when it selected Rogesa’s reported
consumption values instead of Rogesa’s spot purchases of coke from unaffiliated
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suppliers as the basis for determining the value of coke under the major input rule.
See Dillinger Br. at 38–39; Dillinger Reply at 17–20. The court does not agree.
19 C.F.R. § 351.407(b) provides that Commerce “normally” will determine the
value of a major input purchased from an affiliated person based on the “higher” of the
price paid to an affiliated party, the amount usually reflected in sales of the major input,
or the affiliate’s cost of producing the input. The regulation does not “require” Commerce
to use unaffiliated purchase prices as the basis for the valuation. 	Here, Commerce
explained that the Rogesa’s consumption values were usable as opposed to most
companies Commerce deals with that typically “co-mingle the physical inventory and
records for purchases of raw materials from differing suppliers, and thus are not able to
provide consumption value information by input and supplier.” 	Decision Memorandum
at 93. 	Commerce preferred the reported Rogesa consumption values for coke as more
accurate than the recorded purchase prices because the consumption values reflected
both affiliated and unaffiliated suppliers (enabling a comparison) and because ZKS also
reported its COP information on a consumption-value basis. 	See id. 	Since Rogesa
provided consumption values for its coke by supplier, Commerce reasonably decided to
use those values in applying the major input rule. Accordingly, the court is not persuaded
by 	Dillinger’s 	argument 	that 	Commerce 	contravened 	§ 	351.407(b) 	by 	selecting
consumption values over purchase prices for determining coke value under the major
input rule.
Dillinger 	next 	argues 	that 	Commerce’s 	use 	of 	coke 	consumption 	values
unreasonably distorted the coke value calculations because Commerce’s comparison of
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affiliated 	and 	unaffiliated 	consumption 	values 	failed 	to 	properly 	account 	for
(1) contemporaneity, (2) freight expenses, (3) a certain credit note that ZKS issued to
Rogesa, and (4) G&A and interest expenses. See Dillinger Br. at 39–42; Dillinger Reply
at 22–25.
Dillinger notes that the recorded consumption values reflect the value of coke
purchased “in large part prior to the POI.” Dillinger Br. at 40. 	Dillinger also notes that
Rogesa’s purchases of blast furnace coke during the POI from unaffiliated suppliers
involved different countries and significantly lower prices than purchases prior to the POI.
Id. Dillinger argues that because Rogesa’s consumption values reflect the value of coke
purchased prior to the POI “at a time when market prices were considerably higher and
are obviously influenced by higher freight costs,” the consumption values “cannot
reasonably be used as an indicator of what the transfer price of ZKS’ coke sales during
the POI would have been had it not been affiliated with R[ogesa].” Id. Defendant notes
that “[n]othing in the regulation places a temporal limitation on the data that Commerce
may 	use.” 	Def.’s 	Resp. 	at 	36. 	Defendant 	adds 	that 	“Commerce’s 	selection 	of
consumption values from Rogesa’s records, some of which were during the [POI],
ensured that the transfer prices reflected the market under consideration, of which
Rogesa was indisputably a participant.” 	Id. 	These two responses, although true in the
abstract, do not address the issue Dillinger is arguing—that the consumption values
selected distort the input calculation. The regulation, of course, has an implicit temporal
limitation on the data Commerce selects, and it is foolish for Commerce to contend
otherwise. 	Likewise, saying that some of the records were during the POI does not
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respond to Dillinger’s contention that most (or “in large part”) were not. The upshot is that
the 	court 	cannot 	sustain 	this 	aspect 	of 	Commerce’s 	decision 	as 	reasonable.
More explanation is needed. The court will therefore remand this issue to Commerce for
further analysis and explanation, and if necessary, reconsideration.
As for freight expenses (and potential distortions), Commerce acknowledged that
it was necessary to adjust Rogesa’s coke consumption values to ensure that those values
were on the same basis as unaffiliated consumption values. See Decision Memorandum
at 93. Commerce explained:
Rogesa’s coke consumption values from ZKS are freight
exclusive (because both companies are located on the same
factory premises), while the unaffiliated coke consumption
values are freight inclusive. 	As a result, to ensure that the
comparison 	between 	the 	affiliated 	and 	unaffiliated
consumption values is on the same basis, we adjusted the
unaffiliated consumption values to reflect freight-exclusive
values. 	Therefore, for the final determination, we adjusted
Rogesa’s reported coke cost to reflect the higher of …
Rogesa’s consumption value of coke from its affiliate, ZKS,
Rogesa’s 	adjusted 	consumption 	value 	of 	coke 	from
unaffiliated suppliers, or the reported COP of coke.
Id.
Dillinger contends that Commerce did not have information on the historic
inventory values Commerce was using net of freight expenses because it never
requested such information, having changed its methodology for the final determination.
Dillinger Br. at 40. 	Dillinger explains that Rogesa’s inventory of unaffiliated coke
purchases made prior to the POI came from different countries than its unaffiliated
purchases of coke during the POI, and thus they involved significantly different per ton
freight costs. 	See id. at 41. 	Dillinger highlights that Commerce calculated an average
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per ton freight cost based upon purchases of blast furnace coke from unaffiliated suppliers
during the POI. See id. at 40–41. Therefore, according to Dillinger, Commerce’s freight
adjustment to Rogesa’s unaffiliated consumption values unreasonably assumes that the
freight expense for its pre-POI inventory is the same as that for unaffiliated purchases of
coke during the POI. 	See id. 	Adjusting consumption values to ensure either a freight
inclusive or freight exclusive comparison does seem reasonable. The court remands this
issue 	to 	Commerce 	to 	for 	further 	analysis 	and 	explanation, 	and, 	if 	necessary,
reconsideration.
Dillinger also argues that Commerce erred in multiplying the freight cost per-ton by
the quantity of coke on a dry basis and should have adjusted for the fact that the freight
factor used by Commerce was based on the wet weight of coke. 	Dillinger Br. at 42;
Dillinger Reply at 22. Commerce did not address this issue below, believing it was moot
because Commerce used reported coke consumption values that were on the same
weight basis, rather than purchase prices that may have reflected either a dry-weight or
wet-weight basis. 	See Decision Memorandum at 93. 	Commerce though does need to
address the potential unreasonableness of using a wet-weight basis freight factor for the
adjustment of dry-weight basis consumption values. 	Therefore, the court remands this
issue 	to 	Commerce 	for 	further 	analysis 	and 	explanation, 	and 	if 	necessary,
reconsideration.
As for the credit note (and its potential distortionary effect), Commerce reduced
the reported affiliated coke consumption values used in applying the major input rule by
the credit note issued by ZKS to Rogesa. 	See id. 	Dillinger challenges this adjustment,
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which resulted in an additional cost to ZKS’s reported cost of manufacture. See Dillinger
Br. at 41–42; Dillinger Reply at 24. 	Defendant explains that to the extent Commerce’s
methodology resulted in a larger adjustment associated with ZKS’s coke sales to Rogesa,
it nevertheless more accurately reflects the average unit consumption values. 	Def.’s
Resp. at 39. This though is a post hoc rationale that the court cannot sustain. See Motor
Vehicle Mfrs. Ass’n v. State Farm Ins., 463 U.S. 29, 50 (1983) (“courts may not accept
appellate counsel’s post hoc rationalizations for agency action” (citing Burlington Truck
Lines, Inc. v. United States, 371 U.S. 156, 168 (1962))). 	Commerce should have
requested a remand to address this issue directly in the first instance (if in fact it has a
material effect on the margin). 	Accordingly, the court remands this issue to Commerce
for further analysis and explanation, and if necessary, reconsideration.
Dillinger also maintains that to have a comparison on the same basis, Commerce
must use the “full value including G&A and INTEX (interest expenses) in analyzing
whether the affiliated transfer price is below comparable market value.” Dillinger Br. at 41.
Defendant responds that Commerce’s use of consumption values as a basis for
comparison obviated the need to make Dillinger’s suggested adjustments to G&A and
interest expenses, Def.’s Resp. at 39, but here again, this is post hoc rationalization of
agency counsel, and the court will therefore remand this issue to Commerce for further
consideration.
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C. Expenses for Inputs & Services Provided to Affiliates
Commerce adjusted the COP of the inputs and services that Dillinger provided to
Rogesa 	and 	ZKS 	to 	include 	a 	portion 	of 	Dillinger’s 	G&A 	expenses. 	Decision
Memorandum at 96. Commerce explained:
Because the G&A expense ratio is calculated using Dillinger’s
unconsolidated 	financial 	statements, 	the 	transactions
between Dillinger and its affiliates, Rogesa and ZKS, have not
been eliminated from these financial statements. 	Thus,
Dillinger’s cost of goods sold includes both the cost of the
inputs and services that Dillinger sold to Rogesa and ZKS, as
well as the cost of the CTL plate that Dillinger sold to third
parties. 	In producing CTL plate, Dillinger consumes inputs
produced by Rogesa and ZKS (e.g., pig iron); thus, embedded
in the cost of the CTL plate Dillinger sold is also the cost the
inputs provided by Rogesa and ZKS, including the inputs and
services that Rogesa and ZKS obtained from Dillinger.
Therefore, in calculating the G&A expense ratio, we have
essentially 	included 	the 	cost 	of 	the 	inputs 	and 	services
provided to Rogesa and ZKS in the denominator twice; once
when they were sold to the affiliates, and again when Dillinger
consumed the inputs provided by Rogesa and ZKS.
Based on this calculation, in order to account for all of
Dillinger’s G&A expenses, it is appropriate to apply Dillinger’s
G&A expense ratio to both the costs of: 1) the CTL plate; and
2) the inputs and services. 	As a result, we disagree with
Dillinger that application of the G&A expense ratio to the cost
of the inputs and services Dillinger provided to its affiliates
results in the double counting of Dillinger’s G&A expenses.
Id.
Dillinger provided the labor to Rogesa and ZKS for production of blast furnace coke
and pig iron. Commerce found that the provision of these services by Dillinger, and the
cross-charges for them by Dillinger to its affiliates and from its affiliates to Dillinger, is
ultimately both cost and income to Dillinger. 	Dillinger argues that “any increase in the
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transfer price would merely result in other income being realized by Dillinger” and
“[t]herefore it makes no sense to increase G&A expenses at one level and offset them by
income at another level.” Dillinger Br. at 43. Dillinger points to Commerce’s long-standing
practice of using “other income” to offset to G&A expenses. 	See Circular Welded Non-
Alloy Steel Pipe from the Republic of Korea, 79 Fed. Reg. 37,284 (Dep’t of Commerce
July 1, 2014) (Final Results), and accompanying Issues and Decision Memorandum
at cmts. 3 & 4.
Commerce, 	however, 	explained 	that 	its 	determination 	to 	rely 	on 	Dillinger’s
unconsolidated financial statements as the basis for the G&A expense ratio is consistent
with its past practice. See Decision Memorandum at 96 & n.279 (citing Large Residential
Washers from the Republic of Korea, 77 Fed. Reg. 75,988 (Dep’t of Commerce Dec. 26,
2012), and accompanying Issues and Decision Memorandum (“Korean Washers IDM”)
at cmt. 7)). 	Commerce’s “methodology is to calculate the rate based on the company-
wide G&A costs incurred by the producing company allocated over the producing
company’s company-wide cost of sales, and not on a consolidated, divisional, or product-
specific basis.” 	Korean Washers IDM at 44. 	When relying on unconsolidated financial
statements as the basis of the G&A expense ratio, Commerce must account for
transactions between affiliates that otherwise are not eliminated from those statements.
Decision Memorandum at 96 & n.280.
Commerce appears to have first determined the difference between the transfer
price and market price for pig iron. 	Def.’s Resp. at 42 (citing Final Dillinger COP
Memorandum, CD 767, Attach. 3). 	Commerce then multiplied the above difference by
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the percentage of Rogesa’s operations related to the production of pig iron, and further
multiplied this by the percentage of pig iron used in the cost of manufacturing CTL plate
to calculate the total adjustment to add to Dillinger’s cost of manufacturing. 	Id. 	The
calculated total reflects only the percentage of Rogesa’s production pertaining to pig iron
used in the manufacture of CTL plate. Id. Commerce used the same methodology for its
calculations with respect to ZKS and coke. Id.
Defendant dismisses Dillinger’s argument that Commerce allegedly “treats the
entire absolute cost of manufacture (COM) of plate and then builds a ratio where the
denominator is limited only to COM of plate,” Dillinger Br. at 44, as lacking merit because
the contested increase was already calculated to pertain solely to the cost of pig iron and
coke used in manufacturing CTL plate. See Def.’s Resp. at 42 (citing Final Dillinger COP
Memorandum, CD 767, Attach. 3). 	Defendant maintains that Commerce thus built a
denominator likewise limited to the cost of manufacturing CTL plate.
Dillinger argues that Commerce ignores the fact that the same total increase in the
amount of the costs paid by the affiliates for Dillinger’s labor services would have resulted
in an equal amount of income to Dillinger for those services, and additional income to
Dillinger is used as an offset to G&A expenses under Commerce’s long-standing practice.
See Dillinger Br. at 43 (citing Circular Welded Non-Alloy Steel Pipe from the Republic of
Korea, 79 Fed. Reg. 37,284 (Dep’t of Commerce July 1, 2014) (Final Results), and
accompanying Issues and Decisions Memorandum at cmts. 3 & 4). 	Dillinger notes that
Commerce failed to address its “prior” (or current) practice of off-setting G&A expenses
with other income in its Decision Memorandum. 	Moreover, in its response brief,
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Defendant states only that “Dillinger’s earnings on other activities simply do not relate to
the cost of producing subject merchandise.” See Def.’s Resp. 41. Dillinger contends that
this statement has no support in the record and that the labor services provided by
Dillinger to Rogesa and ZKS are directly related to the production of pig iron and blast
furnace coke and have been included in Dillinger’s reported COPs. Therefore, Dillinger
argues that any income earned on providing these labor services to Rogesa and ZKS are,
by definition, activities directly related to the cost of producing subject merchandise.
Dillinger further contends that Commerce has provided no response to Dillinger’s
argument that Commerce’s adjustment results in an illogical multiplication of G&A
expenses by having Dillinger charge itself its own G&A expenses and then having these
expenses flow into the total cost of manufacture for the end product, which is again
charged with G&A expenses. 	See Dillinger Br. at 43. 	Dillinger insists that prior to
Commerce’s final adjustment there has been no double-counting of the cost of Dillinger’s
labor services to Rogesa and ZKS in the G&A expense ratio denominator. 	Dillinger
argues that the record shows pig iron produced by Rogesa was used in the production of
both subject and non-subject merchandise, and that the remaining pig iron was consumed
by a different company to make non-subject merchandise. 	Id. at 43–44. 	Defendant
dismisses Dillinger’s argument, contending that “Commerce took account of [the fact that
not all of the pig iron produced by Rogesa was consumed by Dillinger for subject
merchandise] by utilizing a methodology that only included pig iron used in the production
of CTL plate.” Def.’s Resp. at 43. Dillinger, however, rightfully highlights that Commerce’s
calculations for this adjustment on the record appear to be inconsistent with the agency’s
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purported acknowledgment that not all pig iron produced by Rogesa was consumed in
the production of subject merchandise. See Dillinger Reply at 27–28.
In support of its argument, Dillinger highlights that on the third line of Attachment
3 to the Cost Calculation Memorandum, Commerce lists a certain amount in Euros as the
adjustment for the labor services Dillinger provided to Rogesa, which is based upon 100%
of the labor services provided by Dillinger to Rogesa. Dillinger points out that the amount
is not in any way reduced to reflect the fact that more than half of Rogesa’s pig iron was
used in non-subject products. See id. Dillinger further notes that on the fourth line of the
same attachment, Commerce calculates a “Percentage of Operations Related to the
Production of Pig Iron,” but this percentage only shows that a certain percentage of
Rogesa’s total sales related to pig iron, with the rest relating to non-pig iron products or
other operating income. Id. at 28. Dillinger argues that this calculation does not take into
account the fact that of these pig iron sales, less than half were consumed in the
production of subject CTL plate. 	Further, Dillinger offers that the rate of the certain
percentage used by Commerce on the fifth line of Attachment 3 also does not adjust for
the fact that most of the pig iron was used in non-subject products, but rather indicates
the percentage of the total cost of CTL plate that is accounted for by pig iron. Id. Dillinger
contends that the calculation for ZKS follows the same pattern and does not adjust for the
pig iron and coke consumed in the production of non-subject merchandise. In summary,
Dilllinger argues that Commerce is simply taking the entire amount of the adjustment
related to pig iron sales and applying it exclusively to subject CTL plate. Id.
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Commerce’s explanation in the Decision Memorandum does not reasonably
address 	or 	resolve 	Dillinger’s 	arguments. 	This 	issue 	therefore 	requires 	further
explanation or consideration, and accordingly is remanded.
D. Remand Results on Partial Adverse Facts Available
In Dillinger I, the court sustained Commerce’s application of partial AFA, but
remanded the Final Results for Commerce to review whether the same correction made
to partial AFA by Commerce in a parallel proceeding, Dillinger France S.A. v. United
States, 43 CIT ___, 350 F. Supp. 3d 1349 (2019) (“Dillinger France I”), involving the same
issue, “would have any material effect on the margins in this case, or if it would be
immaterial.” Dillinger I, 43 CIT at ___, 399 F. Supp. 3d at 1257. Commerce determined
that a similar correction as ordered in Dillinger France I would have a material effect, and
the court remanded to Commerce to recalculate the antidumping duty margin for
Salzgitter. See Remand Order.
On remand, Commerce, under protest, recalculated Salzgitter’s antidumping duty
margin. 	Commerce noted that “the Court’s order did not provide Commerce with the
opportunity to consider an alternative partial AFA methodology, in light of the factual
differences between the two cases.” See Remand Results at 4. Commerce observed:
[I]t is the role of Commerce to consider, in the first instance,
whether a particular AFA methodology complies with the
statute’s directive in any particular case. 	Pursuant to the
Court’s order, Commerce was unable to consider whether an
alternative methodology would have been more appropriate
in the instant case. 	Due to this limitation, Commerce further
agrees with Nucor that the Court’s order deprives Commerce
of the ability to further consider whether the purpose of section
776 of the Act, i.e., inducing cooperation, has been satisfied.
Accordingly, it is under respectful protest that Commerce has
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followed the Court’s instructions directing us to recalculate
Salzgitter’s 	margin 	utilizing 	the 	partial 	AFA 	methodology
discussed above.
Id. 	As the court explained in Dillinger I, “[r]easoned decision-making requires a certain
measure 	of 	consistency, 	which 	is 	not 	present 	across 	the 	French 	and 	German
investigations. 	As noted, the cases share near identical (almost verbatim) Issues and
Decision Memoranda on the AFA issue.” See Dillinger I, 43 CIT at ___, 399 F. Supp. 3d
at 1257. 	Commerce now argues in the Remand Results that the French and German
investigations are somehow factually distinguishable so that the AFA methodology
applied in the Dillinger France decisions may not be appropriate for the German
investigation. Given the remand for the other issues, the court will also remand the AFA
issue so that Commerce may explain why, if there were material factual differences
between the French and German investigations on the AFA issue, those differences were
not reflected in the decision memoranda or Commerce’s handling of AFA between the
cases, which the court noted were nearly identical (virtually verbatim). 	Commerce may
reconsider this issue and may explain why an alternative AFA methodology might be
appropriate, but Commerce must first provide a reasoned explanation for issuing virtually
identical decision memoranda and AFA treatment across the two investigations, and then
arguing on remand that there were material factual differences not previously identified
or 	explained 	that 	warrant 	differing 	AFA 	treatment 	across 	the 	two 	investigations.
If Commerce wishes to apply a different AFA approach in this proceeding than the one it
ultimately applied in the French investigation, the agency must explain why such a
disparate approach is reasonable.
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III. Conclusion
For the foregoing reasons, it is hereby
ORDERED that Commerce address the issues remanded above; and it is further
ORDERED that Commerce shall file its remand results on or before November 16,
2021; and it is further
ORDERED that, if applicable, the parties shall file a proposed scheduling order
with page limits for comments on the remand results no later than seven days after
Commerce files its remand results with the court.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: August 18, 2021
New York, New York
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