The United States Court of Appeals for the Federal Circuit has partially sided with AG der Dillinger Hüttenwerke (Dillinger), a German steel manufacturer, in a long-running dispute with the U.S. Department of Commerce regarding antidumping duties. The court affirmed a lower court’s decision on one issue but reversed it on another, sending the case back for further review.
The case centers on an investigation into whether certain steel products from Germany were being sold in the United States at less than fair value, a practice known as “dumping.” If dumping is found, the government can impose duties to offset the price difference and protect domestic producers.
Background of the Dispute
The core of the case involves two main issues: (1) whether the Department of Commerce (Commerce) correctly rejected Dillinger’s proposed adjustments to how the agency categorized similar steel products (model-match methodology), and (2) whether Commerce was justified in using the “likely selling price” of certain steel products as a proxy for their production costs.
The investigation began with Commerce requesting information from Dillinger, including production costs. Dillinger had trouble providing this data for “non-prime plate,” which is steel that doesn’t meet the highest customer specifications but can still be sold. Dillinger reported the average cost of all plate to Commerce, which disagreed with the approach.
Model-Match Methodology Dispute
Dillinger requested that Commerce split the category covering steel used to transport petroleum products into two separate categories. One of the categories was to cover “sour service” petroleum transport plate. According to Dillinger, this type of steel requires special production methods because it is used to transport “sour crude oil” which is highly corrosive to standard steel.
Dillinger also requested that the category covering steel for pressure vessel plate be split into two categories. Dillinger asserted that its proposed code for sour pressure vessel plate was “analogous” to the sour transport plate.
Commerce rejected Dillinger’s request to separate these categories. The appeals court agreed with the lower court, upholding Commerce’s decision to reject Dillinger’s proposed adjustments to the model-match methodology. The court found that Dillinger’s proposal was made too late in the process, making it untimely. The court reasoned that Dillinger had the necessary information to propose the adjustments earlier but chose not to, and provided no explanation for the delay.
Cost of Production Dispute
The second major issue involved Commerce’s use of “likely selling price” as a stand-in for the actual cost of producing non-prime plate. Dillinger argued that this approach was incorrect and that Commerce should have used the actual average cost of production for all steel plate.
The appeals court sided with Dillinger on this point, reversing the lower court’s decision. The court found that using likely selling price as a proxy for production costs was unreasonable, especially given that Dillinger provided the necessary information to calculate the actual costs. The court cited a previous ruling, *Dillinger France*, which established that using likely selling price did not reasonably reflect the cost of production. The appeals court concluded that the approach violated the legal requirements for determining production costs in antidumping investigations.
The court vacated the lower court’s decision and sent the case back to the lower court to instruct Commerce to determine Dillinger’s cost of production.
Legal Reasoning
The court’s decision hinged on the interpretation of U.S. law regarding antidumping duties, specifically 19 U.S.C. § 1673(1), 19 U.S.C. § 1677b(b), and 19 U.S.C. § 1677e(a). The court emphasized that when Commerce uses “facts otherwise available” to fill gaps in information, those facts must still be reasonable and based on what is most relevant to the issue at hand. In this case, the relevant issue was the actual cost of production.
The court also cited *Dillinger France* and *IPSCO, Inc. v. United States* to support its conclusion that using likely selling price does not reasonably reflect the cost of production.