Non-Application of Previously Withdrawn Regulatory Provisions Governing Targeted Dumping in Antidumping Duty Investigations, 22371-22378 [2014-08186]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 79, Number 77 (Tuesday, April 22, 2014)]
[Rules and Regulations]
[Pages 22371-22378]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08186]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 130917809-4303-02]
RIN 0625-AA96


Non-Application of Previously Withdrawn Regulatory Provisions 
Governing Targeted Dumping in Antidumping Duty Investigations

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

ACTION: Final rule.

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SUMMARY: Enforcement and Compliance (formerly Import Administration), 
International Trade Administration, Department of Commerce (the 
Department), hereby publishes this Final Rule not to apply the 
previously withdrawn regulatory provisions governing targeted dumping 
in less-than-fair-value investigations. Following the Court of 
International Trade's decision in Gold East (Jiangsu) Paper Co. v. 
United States, 918 F. Supp. 2d 1317 (Ct. Int'l Trade 2013), the 
Department sought clarification of the status of the previously 
withdrawn targeted dumping regulations and input on whether to 
reinstate the regulations or to continue to treat them as withdrawn. 
The Department has considered the comments received and, as explained 
below, determines to continue not to apply the withdrawn targeted 
dumping regulations in less-than-fair-value investigations. Rather, the 
Department will continue to determine whether to apply an alternative 
comparison method as appropriate based upon the particular facts in 
each case.

DATES: This Final Rule is effective May 22, 2014, and will apply to all 
less-than-fair-value investigations initiated on or after May 22, 2014.

FOR FURTHER INFORMATION CONTACT: James Maeder (202) 482-3330; Charles 
Vannatta (202) 482-4036; or Melissa Brewer (202) 482-1096.

SUPPLEMENTARY INFORMATION:

Background

    On October 1, 2013, the Department published its proposed 
rulemaking and request for comments regarding the Department's proposal 
not to apply the previously withdrawn regulatory provisions governing 
targeted dumping in less-than-fair-value investigations.\1\ In

[[Page 22372]]

light of the Court of International Trade's decision in Gold East 
(Jiangsu) Paper Co. v. United States, 918 F. Supp. 2d 1317 (Ct. Int'l 
Trade 2013) (Gold East Paper), in which the Court ordered the 
Department, on remand, to reconsider its final determination with 
respect to respondent Gold East and to apply the withdrawn regulations, 
the Department requested comments from parties to clarify the status of 
the previously withdrawn regulatory provisions as they applied to less-
than-fair-value investigations and to determine whether to reinstate 
the regulations or to continue to treat them as withdrawn.\2\ The 
Department also requested comment on the effect of the proposed 
rulemaking on recent modifications to the regulations concerning the 
calculation of the weighted-average dumping margins and assessment 
rates in certain antidumping proceedings.\3\ The Department received a 
number of comments on the Proposed Rule and has addressed those 
comments below. The Proposed Rule, comments received, and this Final 
Rule can be accessed using the Federal eRulemaking portal at https://www.regulations.gov under Docket Number ITA-2013-0002.
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    \1\ Non-Application of Previously Withdrawn Regulatory 
Provisions Governing Targeted Dumping in Antidumping Duty 
Investigations, 78 FR 60240 (Oct. 1, 2013) (Proposed Rule).
    \2\ See 19 CFR 351.414(f) and (g); 19 CFR 351.301(d)(5) (2007) 
(regulatory provisions governing targeted dumping); see also 
Withdrawal of the Regulatory Provisions Governing Targeted Dumping 
in Antidumping Duty Investigations, 73 FR 74930 (Dec. 10, 2008) 
(withdrawing the regulatory provisions governing targeted dumping) 
(2008 Withdrawal Notice).
    \3\ Antidumping Proceedings: Calculation of the Weighted-Average 
Dumping Margin and Assessment Rate in Certain Antidumping Duty 
Proceedings; Final Modification, 77 FR 8101 (Feb. 14, 2012) (2012 
Final Modification).
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    After analyzing and carefully considering all of the comments the 
Department received in response to the Proposed Rule, the Department 
has adopted the approach proposed in the Proposed Rule. The Department 
will continue not to apply the withdrawn targeted dumping regulations 
in less-than-fair-value investigations based upon this Final Rule. As a 
result of this Final Rule, the Department is not modifying 19 CFR 
351.414 or 19 CFR 351.301, the sections of the Department's regulations 
that previously included the withdrawn targeted dumping regulations.
    As explained in the Proposed Rule, in less-than-fair-value 
investigations, the Department calculates dumping margins by one of two 
methods: (1) By comparing the weighted average of the normal values to 
the weighted average of the export prices (or constructed export 
prices) for comparable merchandise (known as the average-to-average 
method); or (2) by comparing the normal values of individual 
transactions to the export prices (or constructed export prices) of 
individual transactions for comparable merchandise (known as the 
transaction-to-transaction method). Section 777A(d)(1)(A) of the Tariff 
Act of 1930, as amended (the Act). The statute also provides for an 
exception to these two comparison methods when the Department finds 
that there is a pattern of export prices or constructed export prices 
for comparable merchandise that differ significantly among purchasers, 
regions, or periods of time, and where such differences cannot be taken 
into account using one of the comparison methods described above. 
Section 777A(d)(1)(B) of the Act. When these criteria are satisfied, 
the Department may compare the weighted average of the normal values to 
the export price (or constructed export price) of individual 
transactions for comparable merchandise (known as the average-to-
transaction method).
    Following the withdrawal of the regulations governing targeted 
dumping in 2008, the Department continued to develop its practice with 
respect to the use of an alternative comparison method on a case-by-
case basis. The withdrawal allowed the Department to continue to refine 
its practice based upon its experiences and to analyze the comments 
received from parties in the course of proceedings based upon the facts 
on the record of a particular case. Last year, the Department 
introduced a differential pricing analysis to determine whether the use 
of an alternative comparison method is appropriate.\4\ In this Final 
Rule, the Department is adopting the approach from the Proposed Rule 
not to apply the previously withdrawn targeted dumping regulations in 
less-than-fair-value investigations, which will enable the Department 
to continue to develop its approach as it gains greater experience in 
this area.
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    \4\ See, e.g., Xanthan Gum from the People's Republic of China: 
Final Determination of Sales at Less Than Fair Value, 78 FR 33,350 
(June 4, 2013), and accompanying issues and decision memorandum at 
Comment 3 (Xanthan Gum from China).
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Comments and Responses

    The Department received nine comments on the Proposed Rule. 
Summaries of these comments are presented below and are grouped by the 
issues raised in the submissions. The Department's response follows 
immediately after each comment.

1. Effective Date

    With respect to the effective date of the Proposed Rule, one 
commenter argued that the Department should reinstate the withdrawn 
targeted dumping regulations because it failed to properly withdraw the 
targeted dumping regulations in 2008 and now failed to provide a 
reasoned explanation for the withdrawal of the targeted dumping 
regulations in the Proposed Rule. If the Department subsequently 
decides to withdraw the targeted dumping regulations, the Department 
can provide notice of its intention not to apply the targeted dumping 
regulations and the effective date of that proposed rule should be 30 
days after the adoption of a final regulation that addresses when and 
how the average-to-transaction comparison method will be used as an 
alternative comparison method.
    Another commenter argued that new administrative proceedings are 
not affected by the status of the 2008 withdrawal of the targeted 
dumping regulations, because they are subject to the regulations as 
modified in the 2012 Final Modification, and, therefore, the Proposed 
Rule should be effective upon its final publication. One commenter 
argued that because there is good cause to waive the APA's 30-day 
waiting period for the effective date of a final rule, the effective 
date of the Proposed Rule should be December 10, 2008, the effective 
date of the Department's notice of withdrawal of the targeted dumping 
regulations. Another commenter argued that the effective date should be 
December 10, 2008, because a retroactive effective date is permissible 
in particular circumstances pursuant to the three-factor test 
established in Princess Cruises, Inc. v. United States, 397 F.3d 1358 
(Fed. Cir. 2005). Other commenters argued that because Gold East Paper 
was wrongly decided, the effective date of the withdrawn regulations 
should continue to be December 10, 2008. In the alternative, one 
commenter argued that the effective date of the withdrawn regulations 
should be no later than April 16, 2012, the effective date of the 2012 
Final Modification, in which the Department promulgated a new 
regulation in 19 CFR 351.414 that did not include the withdrawn 
regulations.
The Department's Response
    Based upon section 553(d) of the APA, the Department has concluded 
that the appropriate effective date for this Final Rule is for 
investigations

[[Page 22373]]

initiated 30 days after its publication.\5\ As explained above and in 
the Proposed Rule, the Department continues to defend its position that 
the withdrawal of the targeted dumping regulations in the 2008 
Withdrawal Notice was proper. Accordingly, the withdrawn regulations 
have not been operative since December 10, 2008. However, for purposes 
of this separate rulemaking, the Department finds that it would not be 
appropriate to use the effective date of the 2008 interim final rule, 
nor to waive the 30-day waiting period for the effective date of the 
final rule. As explained above, the Court of International Trade's 
decision in Gold East Paper, which prompted the Department to conduct 
this rulemaking, found that the 2008 withdrawal of the regulations was 
invalid. The Department finds that an effective date which is 30 days 
after publication of this Final Rule, rather than a retroactive 
effective date, comports with the APA's requirements and is 
appropriate.
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    \5\ See 5 U.S.C. 553(d).
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    The Department agrees with one commenter that the 2012 Final 
Modification promulgated a new regulation in 19 CFR 351.414 (2012) that 
did not include a portion of the withdrawn targeted dumping 
regulations. Thus, the Department agrees that following the effective 
date of the 2012 Final Modification, the withdrawn regulations 
continued to be non-operative in antidumping proceedings. However, 
there is not necessarily a link between the procedure implementing the 
2012 Final Modification and this rulemaking such that it would be 
appropriate to use the effective date of the 2012 Final Modification as 
the effective date of this rulemaking. Therefore, as stated, for 
purposes of this rulemaking the Department continues to find that an 
effective date of 30 days after the publication of this Final Rule 
comports with the APA requirements.

2. Comments Concerning Gold East Paper Co. v. United States Litigation

    Several commenters argued that the U.S. Court of International 
Trade's decision in Gold East Paper, while subject to appeal, 
invalidates the Department's withdrawal of the targeted dumping 
regulations, and, thus, the targeted dumping regulations remain in 
force. For this reason, the commenters claimed that the Proposed Rule 
to continue not to apply the withdrawn regulations is impermissible.
    One commenter stated its view that the Gold East Paper decision was 
wrongly decided, and will likely be reversed on appeal. Two other 
commenters noted their recognition of, and support for, the 
Department's decision to continue to litigate the Court of 
International Trade's decision in Gold East Paper.
The Department's Response
    As explained in the Proposed Rule, the Department continues to 
defend its position that the withdrawal of the targeted dumping 
regulations in the 2008 Withdrawal Notice was proper and that the 
withdrawn regulations are not operative. However, the Department 
recognizes that the Court of International Trade ruled in Gold East 
Paper that there was a procedural defect in the rulemaking process that 
withdrew the targeted dumping regulations, which prompted the 
Department to publish the Proposed Rule to seek comment on and clarify 
the status of the withdrawn regulations.
    The Department disagrees that the Proposed Rule is impermissible. 
The Department's intent in this rulemaking is (1) to clarify the status 
of the withdrawn targeted dumping regulations as a result of the Court 
of International Trade's decision in Gold East Paper, which held that 
the Department did not provide the requisite notice and opportunity to 
comment pursuant to the APA; and (2) to seek comment on whether to 
reinstate the regulations or to continue to treat them as withdrawn. 
The framework of the APA requires that an agency publish a proposed 
rulemaking and provide the public notice of the proposal and the 
opportunity to comment on the proposal.\6\ By publishing the Proposed 
Rule, providing the public the opportunity to comment on the 
Department's proposed course of action, and considering the comments 
raised, the Department has complied with the APA's requirements. The 
commenters point to no case law or other principles of law to support 
the assertion that this rulemaking is impermissible. Although the 
commenter cites to the general notice and comment provisions of the 
APA, specifically 5 U.S.C. 533(b) and (c), those subsections do not 
support the argument that this rulemaking is impermissible. Rather, 
they support the Department's action here, which was to publish a 
proposed rule and allow the public the opportunity to comment. Thus, 
the Department disagrees that it has not complied with the requirements 
of the APA such that this rulemaking is impermissible.
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    \6\ See 5 U.S.C. 533(b) and (c).
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3. Effect of the 2012 Final Modification on This Rulemaking

    One commenter argued that because the Department's withdrawal of 
the targeted dumping regulations is invalid, the regulations remain in 
force, and do not conflict with the modifications made to 19 CFR 
351.414 in the 2012 Final Modification. According to this commenter, 19 
CFR 351.414(f) and (g) and 19 CFR 351.301(d)(5) (2007) and the current 
versions of 19 CFR 351.414 (2012) and 351.301 (2013) may be read 
harmoniously because the two versions of the regulations are not 
inconsistent; however, the codification numbering would need to be 
revised.
    Another commenter argued that the 2007 version of the targeted 
dumping regulations and the 2008 withdrawal of these regulations have 
no effect on agency determinations (whether investigations or reviews) 
subject to the 2012 Final Modification because the changes to the 
regulations made the 2012 Final Modification supersede the provisions 
of 19 CFR 351.414(f) and (g) and 19 CFR 351.301(d)(5) (2007). Finally, 
another commenter contended that even if the ``Limiting Rule'' had been 
in place after the 2008 withdrawal of the targeted dumping regulations, 
it was superseded when the Department did not include the ``Limiting 
Rule'' in the 2012 Final Modification, which fully conformed to the 
APA's notice and comment requirements.
The Department's Response
    The 2012 Final Modification was published on February 14, 2012, and 
applies to all preliminary determinations or preliminary results of 
review issued after April 16, 2012. The 2012 Final Modification 
modified the regulations governing the comparison methods applied in 
less-than-fair-value investigations and reviews under 19 CFR 351.213, 
214, 215 and 218, and supersedes prior versions of 19 CFR 351.414. 
Thus, any such investigation or review with a preliminary determination 
or preliminary results of review issued after April 16, 2012, is 
subject to the regulations as modified by the 2012 Final Modification. 
The rulemaking process which resulted in the 2012 Final Modification 
was also done in full compliance with the APA.
    As noted in the Proposed Rule, the 2012 Final Modification complied 
with the APA's notice and comment procedures and provided parties with 
an opportunity to comment on the Department's proposed course of 
action. The 2012 Final Modification, which codified the Department's 
changes to 19 CFR 351.414, did not include the

[[Page 22374]]

previously withdrawn regulations and superseded the prior section 
351.414. Further, the Department notes that, although the 2012 Final 
Modification adopts the average-to-average comparison method as the 
default method in certain reviews, the Department still may determine 
that it is appropriate to use an alternative comparison method based 
upon the facts of a particular segment. As with the withdrawn targeted 
dumping regulations and the revised 19 CFR 351.414 resulting from the 
2012 Final Modification, the method by which the Department determines 
whether it is appropriate to use the average-to-average method is not 
specified except for the requirements provided in section 777A(d)(1)(B) 
of the Act. Although this provision of the statute specifically 
references only less-than-fair-value investigations, the Department has 
found it reasonable to follow the same approach in reviews. The 
analysis used by the Department to evaluate these requirements depends 
on the Department's growing experience and further research into the 
possible approaches to implement section 777A(d)(1)(B) of the Act. The 
Department's approach to implement section 777A(d)(1)(B) of the Act may 
continue to evolve as the Department further develops its analysis in 
this area.
    The Department disagrees with one commenter's view that the 
withdrawn regulation and the 2012 Final Modification can be read 
harmoniously. As an initial matter, the 2012 Final Modification 
modified 19 CFR 351.414, the section of the CFR where the withdrawn 
targeted dumping regulations were originally codified, and the new rule 
did not include those withdrawn regulations. Second, the withdrawn 
targeted dumping regulations applied only to less-than-fair-value 
investigations, not reviews.\7\ Therefore, the withdrawn regulations 
had no bearing on the Department's conduct in reviews and did not apply 
in that context. In light of that, if the withdrawn regulations were 
reinstated, it would create a potentially significant incongruity in 
the remedy for masked dumping in investigations, as compared to 
reviews. This is contrary to the aim of the 2012 Final Modification, 
which was to modify the approach in reviews to parallel, as closely as 
possible, ``the WTO-consistent methodology that the Department applies 
in original investigations.'' \8\ Because the Department hereby adopts 
the approach in the Proposed Rule, it is not reinstating the withdrawn 
regulations as a modification to 19 CFR 351.414 (2012).
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    \7\ See 19 CFR 351.414(f) and (g); 19 CFR 351.301(d)(5) (2007).
    \8\ 2012 Final Modification, 77 FR 8101.
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4. Validity of the Department's Withdrawal of the Targeted Dumping 
Regulations

    Several commenters argued that the withdrawn targeted dumping 
regulations were based on sound policies, including predictability, 
transparency and avoiding a punitive methodology, were promulgated with 
reasoned analysis, and were thoroughly vetted through the APA's notice 
and comment requirements. For example, one commenter stressed that the 
limitation that targeted dumping normally would only be examined when 
described in an allegation filed by the petitioner no later than 30 
days before the date of the preliminary determination in an 
investigation was based on valid considerations that continue to apply 
today. These commenters argued that the Department's withdrawal of the 
targeted dumping regulations disregarded the well-founded basis for the 
regulations, and failed to provide reasoned analysis or evidence to 
support the withdrawal of the regulations. Two commenters argued that 
the Department's only attempt at providing reasoned analysis for 
withdrawing the targeted dumping regulations was the claim that the 
regulations ``may have established thresholds or other criteria that 
may have prevented the use of this comparison methodology to unmask 
dumping.'' The commenters contended that this claim was speculative and 
unsupported by evidence. Another commenter argued that the Department 
must provide a substantive rationale for continuing not to apply the 
withdrawn regulation.
    Two commenters further argued that the Department should continue 
to apply the withdrawn regulations until it provides a reasoned 
justification for the withdrawal of the targeted dumping regulations. 
These commenters argued that the Department has changed its targeted 
dumping methodology numerous times and is now making such 
determinations on an ad hoc, undefined basis that lacks parameters, 
principles, transparency, and predictability. Further, one commenter 
observed that the ad hoc application of targeted dumping will result in 
ceaseless litigation in the courts, and that without general guidelines 
like those in the withdrawn regulations or a specific methodology, the 
remedial purpose of the antidumping law has become punitive.
    Another commenter argued that the Department may not withdraw the 
targeted dumping regulations until it properly promulgates a new 
regulation addressing targeted dumping. This commenter argued that it 
is improper for the Department to act through adjudication by handling 
targeted dumping on a case-by-case basis rather than promulgating a 
regulation which governs all proceedings.
    In support of the Proposed Rule, another commenter argued that 
relying on case-by-case adjudication allows the Department to unmask 
dumping more effectively, because, for example, under the withdrawn 
regulations, the Department was limited in its ability to unmask 
dumping due to the normal practice of limiting the average-to-
transaction method to only sales that were found to be targeted, rather 
than applying the average-to-transaction method to all sales. The 
commenter stressed that the statute does not require this limitation on 
the Department's ability to apply the average-to-transaction method to 
all sales.
    Another commenter disagreed, and argues that limiting the average-
to-transaction method to only those sales that are found to be targeted 
is consistent with the statute and avoids applying the methodology in a 
punitive manner. In addition, the commenter stressed that there is no 
rational reason for the Department to apply the average-to-transaction 
comparison method to sales that are not targeted, and that the 
Department has failed to articulate any such reason. The commenter 
argued that the Department's concern about masked dumping is alleviated 
by relying on the average-to-transaction method without granting 
offsets for only those sales found to be targeted.
The Department's Response
    The Department believes it provided a reasoned justification for 
its decision to withdraw the targeted dumping regulations that allowed 
it to introduce further refinements to its approach to implement 
section 777A(d)(1)(B) of the Act. As the Department stated in the 2008 
Withdrawal Notice, ``[t]he Department believes that withdrawal of the 
provisions will provide the agency with an opportunity to analyze 
extensively the concept of targeted dumping and develop a meaningful 
practice in this area as it gains experience in evaluating such 
allegations.'' \9\ Further, the Department observed that the withdrawal 
of the targeted dumping regulations and case-by-case adjudication would 
allow the

[[Page 22375]]

Department ``to exercise the discretion intended by the statute and, 
thereby, develop a practice that will allow interested parties to 
pursue all statutory avenues of relief in this area.'' \10\ Moreover, 
in the Proposed Rule, the Department specifically stated that ``in the 
{2008{time}  Withdrawal Notice, the Department explained that in 
promulgating the regulations that established criteria for analyzing 
this issue, it `may have established thresholds or other criteria that 
may have prevented the use of this comparison methodology to unmask 
dumping, contrary to the Congressional intent.' '' \11\
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    \9\ 2008 Withdrawal Notice, 73 FR 74930-31.
    \10\ Id. at 74391.
    \11\ Proposed Rule, 78 FR 60241 (citing 2008 Withdrawal Notice).
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    The Department also disagrees that it has failed to articulate a 
reason for withdrawing the targeted dumping regulations. In fact, this 
Final Rule and the Department's continued non-application of the 
targeted dumping regulations allows the Department to continue to 
develop its approach based upon its experience in implementing section 
777A(d)(1)(B) of the Act beyond the confines of the targeted dumping 
regulations. In the years following the 2008 Withdrawal Notice, the 
Department did just that by introducing a differential pricing 
analysis.\12\ The Department's experience in developing its practice in 
recent years since the 2008 withdrawal further underscores the 
Department's rationale in 2008 that the targeted dumping regulations 
were preventing the Department from improving its ability to identify 
and address masked dumping. Furthermore, the Department is able to 
consider the application of the alternative comparison method and, more 
specifically, the differential pricing analysis in the context of 
administrative reviews.
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    \12\ See, e.g., Xanthan Gum from China; Xanthan Gum from Austria 
(post-preliminary determination analysis memos).
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    Several commenters seemed to argue that the Department must explain 
why its preference to exercise its statutory authority on a case-by-
case basis is better than doing so under the restrictions of the 
withdrawn targeted dumping regulations. Such arguments are contrary to 
judicial precedent, which does not require an agency to explain why a 
new policy is better than a prior policy.\13\ Given this precedent, the 
Department need only explain, as it has here, that its approach is 
permissible under the statute and is reasonable for purposes of 
exercising its statutory authority on a case-by-case basis in this 
context.
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    \13\ See Mid Continent Nail Corp. v. United States, Slip. Op. 
2010-48 (Ct. Int'l Trade May 4, 2010) 2010 Ct. Int'l Trade LEXIS 48, 
*23-24 (2010) (Mid Continent Nail) (citing FCC v. Fox Television 
Stations, Inc., 129 S. Ct. 1800, 1811 (2009) (holding that an agency 
``need not demonstrate to a court's satisfaction that the reasons 
for the new policy are better than the reasons for the old one; it 
suffices that the new policy is permissible under the statute, that 
there are good reasons for it, and that the agency believes it to be 
better, which the conscious change of course adequately 
indicates'')).
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    The Department agrees with one commenter that case-by-case 
adjudication allows the Department to unmask dumping more effectively, 
and allows the Department to fully develop its methodology. Further, 
this case-by-case adjudication has allowed the Department to develop 
the newly-introduced differential pricing analysis which itself may be 
further modified given the specific evidence presented in a particular 
investigation or review. The Department's position is that the 
determination of which comparison method to apply is highly dependent 
upon the facts of the individual proceeding, but in all administrative 
proceedings, interested parties will have the opportunity to comment on 
whether an alternative comparison method is warranted.
    With respect to comments that the withdrawn targeted dumping 
regulations were based on sound policies that remain applicable to the 
calculation methodology today, the Department disagrees that 
refinements to its methodology invalidate previously applied analysis 
methods. As discussed above, the Department has explained (1) that 
there are good reasons for the application of the revised approach, (2) 
why it believes that the revised approach is better, and (3) that the 
revised approach is permissible under the law. The Department also 
finds that it has not disregarded the targeted dumping analysis, or any 
of its predecessors, and that it reasonably revised its analysis to 
fulfill its obligation when implementing section 777A(d)(1)(B) of the 
Act. The Department further notes that it will continue to develop and 
refine its implementation of section 777A(d)(1)(B) of the Act, as 
warranted.
    The Department disagrees that its approach in this respect is 
unpredictable and biased because it is not based upon basic guidelines 
or principles. Rather, withdrawing the unnecessarily restrictive 
targeted dumping regulations has permitted the Department to refine its 
methodology and continue to develop its analysis based on experience. 
In doing so, the Department has refined its analysis in recent years 
based on its growing experience in implementing section 777A(d)(1)(B) 
of the Act. When applying an alternative comparison method in a 
particular case, the Department has explained the developments in its 
analysis. Last year, the Department introduced a differential pricing 
analysis to determine whether use of an alternative comparison method 
is appropriate.\14\ In Xanthan Gum from China, the Department explained 
that ``it continues to develop its approach pursuant to its authority 
to address potential masked dumping.'' \15\ In proceedings in which the 
Department applied either the targeted dumping analysis or the 
differential pricing analysis, the Department provided parties the 
opportunity to comment on the Department's analyses.\16\ Thus, contrary 
to some commenters' claims, the Department's practice has not been 
unpredictable, but rather has been consistent and transparent.
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    \14\ See Xanthan Gum from China.
    \15\ Id. at Comment 3.
    \16\ See, e.g., Nails from China, and accompanying issues and 
decision memorandum at Comments. 1-8; Xanthan Gum from China, at 
Comment 3.
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    With respect to the commenters' arguments regarding the application 
of the average-to-transaction method to all U.S. sales rather than a 
subset of sales, the Department notes that the statute, for less-than-
fair-value investigations, is silent on whether the alternative 
comparison method applies to all sales or to only a subset of 
sales.\17\ Congress could have explicitly granted the Department 
certain authority in this context, but it chose to leave such a 
determination to the Department's discretion. Thus, the statute 
provides that the Department may employ an alternative comparison 
method when two criteria are satisfied, but does not dictate whether to 
apply that method to all sales or only to a subset of sales. When the 
Department withdrew the targeted dumping regulations in the 2008 
Withdrawal Notice, it explained that ``withdrawal of the provisions 
will provide the agency with an opportunity to analyze extensively the 
concept of targeted dumping and develop a meaningful practice in this 
area as it gains experience in evaluating such allegations.'' \18\ 
Since 2008, the Department has continued to develop its practice based 
on its case-by-case experience and, as a result of parties' comments in 
those proceedings, it has revised its approach in a reasoned and 
purposeful manner. Although not required by statute, the Department's 
recently employed differential pricing

[[Page 22376]]

analysis considers the proportion of a respondent's sales that are part 
of a pattern of prices that differ significantly when determining 
whether to use an alternative comparison method based on applying the 
average-to-transaction method to all U.S. sales or only to a subset of 
U.S. sales.\19\ In Xanthan Gum from China, the Department explained 
that in the differential pricing analysis ``there is a direct 
correlation between the U.S. sales that establish a pattern of export 
prices that differ significantly and to what portion of the U.S. sales 
the average-to-transaction method is applied.'' \20\ Thus, in 
developing its practice following the 2008 Withdrawal Notice, the 
Department has analyzed application of the average-to-transaction 
method and applies the remedy in a reasonable fashion based upon the 
facts on the record of a particular investigation or review.
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    \17\ See Section 777A(d)(1)(B) of the Act.
    \18\ Withdrawal Notice at 74930-31.
    \19\ See Xanthan Gum from China, at Comment 3.
    \20\ Id.
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5. Application of the Targeted Dumping Analysis

    Several commenters observed that targeted dumping is a reflection 
of normal commercial practices, and argue that the Department's refusal 
to consider legitimate commercial reasons for targeting is contrary to 
congressional intent, judicial precedent and administrative practice. 
Two commenters add that the Department's application of the average-to-
transaction method, without considering company-specific factors or 
reasons why prices may differ, ignores the express requirement in the 
Statement of Administrative Action (SAA) to proceed on a case-by-case 
basis, in light of differences in significance based on industry or 
type of product.
    Two commenters argue that the Department should reinstate the 
withdrawn targeted dumping regulations, including the ``normal rules'' 
that the average-to-transaction method applies only to sales that have 
been found to be targeted. The two commenters advocate reinstatement of 
the withdrawn regulations, but with added provisions that: (i) an 
affirmative finding of targeted dumping requires that the targeted 
sales actually be sold at dumped prices; (ii) the Department will 
consider all relevant facts and circumstances in determining whether 
dumped sales are targeted, including reasons for disparities in sale 
prices by purchaser, region or time period in light of normal 
commercial practices; and (iii) the average-to-transaction method 
should not apply if targeted sales are de minimis. These two commenters 
argue that a revised regulation that includes these additional 
provisions should be effective for all reviews and investigations whose 
results are not final, including segments of proceedings in which 
parties have challenged the Department's withdrawal of 19 CFR 
351.414(f) (2007) in court, and should be implemented through the 
issuance of a Policy Bulletin and Proposed Regulations, with 
opportunity for comment. One commenter also argued that the Department 
should modify its use of the Cohen's d test, as employed in the 
differential pricing analysis, to conform to the commenter's proposed 
changes to include regulatory provisions on targeted dumping.
    According to another commenter, targeted dumping is an unproven 
theoretical construct that cannot be proven through statistically valid 
techniques, and there is no evidence that targeted dumping is a 
``problem'' that needs to be unmasked. The commenter argues that the 
real difficulty is that sale prices may differ by purchaser, region or 
time period as a result of normal commercial practices. Further, the 
commenter contends that a pattern of prices that differ 
``significantly'' would occur in extraordinary circumstances, and 
targeted dumping as defined by the statute is not a usual or frequent 
occurrence.
The Department's Response
    As explained above, the Department has decided not to reinstate the 
previously withdrawn targeted dumping regulations or to promulgate 
revised regulations to implement 777A(d)(1)(B) of the Act. The 
Department explained that it withdrew the targeted dumping regulations 
in order to broaden its experience and consider potential approaches to 
fully address this issue. As a result of this increased experience and 
further research, the Department has developed and employed a 
differential pricing analysis to consider whether the average-to-
average method applied to all U.S. sales is an appropriate tool to 
determine the amount of dumping, if any, for a given respondent. In the 
differential pricing analysis, the Department considers, based upon the 
facts on the record, whether it is appropriate to apply the average-to-
transaction method to a portion, all, or none of a respondent's U.S. 
sales as an alternative comparison method to applying the average-to-
average method to all U.S. sales.\21\ As noted above, the Department 
will continue to refine its approach in implementing section 
777A(d)(1)(B) of the Act as it gains additional experience in its 
application of section 777A(d) of the Act and CFR 351.414 (2012). 
Further, the Department disagrees with the substance of the suggested 
modifications summarized above, whether codified in regulations or as 
part of the Department's practice. The Department disagrees that 
targeted sales, or sales which have been found to constitute a pattern 
of prices that differ significantly, must be sold at dumped prices. 
Section 777A(d)(1)(B)(i) refers to a pattern of export prices or 
constructed export prices and does not consider a comparison of such 
prices with normal values, and, therefore, there is no requirement that 
the sales which comprise such a pattern be dumped or not dumped. 
Indeed, all, some or none of the U.S. sales which are found to create a 
pattern of prices that differ significantly may be below their 
comparable normal value, but this is immaterial when addressing section 
777A(d)(1)(B)(i) of the Act. Accordingly, a determination of 
``dumping'' is not encompassed within the analysis that establishes 
whether a pattern of prices that differ significantly exists.
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    \21\ See Xanthan Gum from China, and accompanying Issues and 
Decision Memorandum at Comment 3.
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    The Department also disagrees that it must consider a party's 
explanations of their pricing behavior as part of the Department's 
analysis when determining whether to employ an alternative comparison 
method. As explained in past cases, the Department does not consider 
``why'' there exists a pattern of prices that differ significantly. The 
statute provides that the Department may apply an alternative 
comparison method if ``there is a pattern of export prices (or 
constructed export prices) for comparable merchandise that differ 
significantly among purchasers, regions, or periods of time'' and the 
Department explains why those differences cannot be taken into account 
using the normal method.\22\ The statute does not, however, direct the 
Department to consider the reason for the price differences or the 
motivations behind the respondent's pricing behavior. Rather, it 
provides that when there is a pattern of prices that differ 
significantly and the average-to-average method cannot account for such 
differences, then the Department may find that the average-to-average 
method is not the appropriate tool to determine the extent of a 
respondent's dumping and may apply an alternative comparison method. In 
recent determinations, the Department has

[[Page 22377]]

declined to find that a party's explanation of its pricing justifies 
the presence of targeted sales.\23\
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    \22\ Section 777A(d)(1)(B) of the Act.
    \23\ See, e.g., Certain Steel Nails from the United Arab 
Emirates: Final Determination of Sales at Less than Fair Value, 77 
FR. 17029 (Mar. 23, 2012), and the accompanying Issues and Decision 
Memorandum at Comment 1; Circular Welded Carbon Steel Pipes and 
Tubes From Turkey; Final Results of Antidumping Duty Administrative 
Review; 2010 to 2011, 77 FR 72818 (Dec. 6, 2012) and the 
accompanying Issues and Decision Memorandum at Comment 1-C; 
Stainless Steel Plate in Coils From Belgium: Final Results of 
Antidumping Duty Administrative Review; 2011-2012, 78 FR 79662 (Dec. 
31, 2013), and the accompanying Issues and Decision Memorandum at 
Comment 5.
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    The Department believes that a determination whether to apply an 
alternative comparison method is best made on a case-by-case basis, 
rather than applying a rigid de minimis test. In recent cases, as the 
commenters acknowledge, the Department has considered the extent of the 
targeting when determining whether to apply the alterative comparison 
method.\24\ However, as previously explained, the withdrawal of the 
targeted dumping regulations allows the Department the necessary 
flexibility to develop its practice in this area. Indeed, when applying 
a differential pricing analysis, the Department takes into account the 
percentage of sales passing the Cohen's d test in determining whether 
to apply the alternative comparison method.\25\
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    \24\ See Polyethylene Terephthalate Film, Sheet, and Strip from 
India: Final Results of Review; 2010-2011, 78 FR 9670 (Feb. 11, 
2013); Ball Bearings and Parts Thereof from France, Germany, and 
Italy: Final Results of Review; 2010-2011, 77 FR 73415 (Dec. 10, 
2012).
    \25\ See Xanthan Gum from China, at Comment 3.
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    Further, the Department disagrees that there is no evidence that 
targeted or masked dumping is a ``problem'' that needs to be addressed. 
The Federal Circuit agreed with the Department that Congress, in the 
statute, specifically provides for the use of an alternative comparison 
method when certain prerequisite conditions are met in order for the 
Department to implement section 777A(d)(1)(B) of the Act.\26\ The 
Department believes that Congress's explicit provision in the statute 
for the use of an alternative comparison method in situations where 
certain facts are present demonstrates that the Department may consider 
whether and to what extent hidden or masked dumping exists and how best 
to address it.
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    \26\ United States Steel Corp. v. United States, 621 F.3d 1351, 
1363 (Fed. Cir. 2010) (``{T{time} he exception contained in 1677f-
1(d)(1)(B) indicates that Congress gave {the Department{time}  a 
tool for combating targeted or masked dumping by allowing {the 
Department{time}  to compare weighted average normal value to 
individual transaction values when there is a pattern of prices that 
differs significantly among purchasers, regions, or periods of 
time.'')
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6. Application of the Average-to-Transaction Method

    With respect to the withdrawn regulations' provision that the 
average-to-transaction method will be applied only to those sales found 
to be targeted, one commenter argues that if the Department determines 
to apply the withdrawn regulations in proceedings completed prior to 
the effective date of this Final Rule, it should do so consistent with 
how it applied the regulations prior to their withdrawal (and 
consistent with its approach in the differential pricing methodology), 
i.e. not offset dumping margins found for targeted sales with non-
dumped sales which were not targeted. The commenter further argues that 
if the specifics of the case at hand require, the Department should not 
apply the average-to-transaction method to only targeted sales where 
targeting is extensive or widespread, but instead should apply the 
average-to-transaction comparison method to all sales.
    Another commenter argues that the withdrawn regulations remain 
valid, in particular because applying the average-to-transaction method 
to all sales would be punitive given that offsets would be denied for 
all non-dumped sales. Two other commenters also argue that the 
Department's targeted dumping analysis effectively negates the 
Department's abandonment of denying offsets for non-dumped sales 
because, upon finding that targeted dumping has occurred, the 
Department applies the average-to-transaction method to all sales, 
including those that are not targeted. According to these two 
commenters, the effect is that offsets are denied for all non-dumped 
sales.
The Department's Response
    As noted above, the Department continues to find that the targeted 
dumping regulations, including 19 CFR 351.414(f)(2) (2007), the 
``Limiting Rule'', are inoperative. Under the Limiting Rule, the 
Department applied the average-to-transaction method to only those U.S. 
sales which were found to have been targeted. However, the Department 
believed that this did not adequately address the masked dumping 
presented by the results of the Nails test, as employed in the targeted 
dumping analysis. First, the Nails test only identified lower-priced 
sales to certain purchasers, regions or time periods specified in the 
petitioner's targeted dumping allegation. Pursuant to section 
777A(d)(1)(B)(i) of the Act, a pattern of prices that differ 
significantly is determined not only by considering lower priced sales 
but by comparison of those sales to other, higher priced sales. 
Therefore, the Department was not identifying all of the U.S. sales 
that constitute a pattern of prices that differ significantly. Without 
identifying all the sales that form the pattern, and by limiting the 
remedy to only those particular sales, the Department recognized that 
the remedy for addressing the scenario contemplated in section 
777A(d)(1)(B) of the Act could be inadequate.
    As a result, the Department withdrew the regulations governing 
targeted dumping, as described above and in the 2008 Withdrawal Notice, 
to allow it greater ability to develop more effective methods to 
implement section 777A(d)(1)(B) of the Act. Initially, this involved 
the targeted dumping analysis with the average-to-transaction method 
being applied to all U.S. sales but with added discretion as to whether 
this alternative comparison method was warranted.\27\ Subsequently, 
with the Department's publication of the 2012 Final Modification, the 
Department's approach in less-than-fair-value investigations began to 
be applied in administrative reviews.\28\ With the Department's growing 
experience in addressing the criteria set forth in section 
777A(d)(1)(B) of the Act, the Department introduced a differential 
pricing analysis in Xanthan Gum from China. In this approach, the 
potential alternative comparison method is determined according to the 
extent of the pattern of prices that differ significantly, and may 
include applying the average-to-transaction method to all, some, or 
none of the U.S. sales, depending upon the facts in each case.
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    \27\ See Certain Stilbenic Optical Brightening Agents from 
Taiwan: Final Determination of Sales at Less Than Fair Value, 77 FR 
17027 (Mar. 23, 2012).
    \28\ See 2012 Final Modification; Ball Bearings and Parts 
Thereof From France, Germany, and Italy: Final Results of Review; 
2010-2011, 77 FR 73415 (Dec. 10, 2012).
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    The Department disagrees with the argument that the application of 
the average-to-transaction method to all U.S. sales is punitive. The 
purpose of considering whether to apply an alternative comparison 
method is to determine whether the average-to-average method is an 
appropriate tool to measure the amount of dumping of a respondent. When 
the Department determines that an alternative comparison method is 
appropriate, it is based on a reasonable analysis supported by evidence 
on the record of the particular segment of the proceeding and is in 
accordance with the statute,

[[Page 22378]]

regulations, and Congressional intent to implement section 
777A(d)(1)(B) of the Act, where appropriate. Therefore, a determination 
to apply a particular comparison method to calculate a respondent's 
weighted-average dumping margin is not punitive, but rather a 
reflection of the respondent's own pricing behavior.
    The Department disagrees that the application of the average-to-
transaction method negates the Department's abandonment of denying 
offsets for non-dumped sales in investigations or reviews. In 2006, the 
Department came into compliance with certain WTO rulings and changed 
its practice to grant offsets for non-dumped comparison results when 
using the average-to-average method in less-than-fair-value 
investigations.\29\ With the 2012 Final Modification, the Department 
changed its practice in certain types of reviews, including 
administrative reviews, to follow its WTO-compliant practice in less-
than-fair-value investigations and to use the average-to-average method 
while granting offsets for non-dumped comparison results. The 
Department has not changed its approach with respect to the application 
of the average-to-transaction method, which includes the denial of 
offsets for non-dumped sales when aggregating the transaction-specific 
comparison results. This is based on the fundamental differences 
between the average-to-average method and the average-to-transaction 
method and has been upheld by the Federal Circuit.\30\
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    \29\ Antidumping Proceedings: Calculation of the Weighted-
Average Dumping Margin During an Antidumping Investigation; Final 
Modification, 71 FR 77722 (Dec. 27, 2006).
    \30\ Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. 
Cir. 2013).
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7. Other Comments

    Two commenters raise concerns with the Department's current 
approach, in particular the Department's use of the Cohen's d test. 
Specifically, these commenters contend that the Cohen's d test is not a 
recognized statistical measure for identifying targeted sales, and 
fails to account for directionality, i.e. it does not distinguish 
between positive and negative results. As a result, the test wrongly 
captures sales that are not targeted. Instead, these commenters argue 
that a pooled standard deviation should be based on a weighted average, 
rather than simple average variances, and the Department should control 
for more independent variables in each run, as well as apply additional 
filters before determining targeted sales.
The Department's Response
    In the Proposed Rule, the Department advised that it was ``seeking 
comments from parties to clarify the status of the previously withdrawn 
regulatory provisions with regard to antidumping duty investigations,'' 
and also invited comment on the effect of the Proposed Rule on recent 
modifications to the Department's methodology, i.e., the 2012 Final 
Modification.\31\ The Department further explained that it was inviting 
parties ``to comment on this proposed rulemaking and the proposed 
effective date. Further, any party may submit comments expressing its 
disagreement with the Department's proposal and may propose an 
alternative approach. If any party believes that the Department should 
reinstate the previously withdrawn regulations, that party should 
explain how to reinstate the withdrawn regulations and include 
suggestions on how to codify such reinstatement, as well as any 
suggestions on the effective date.'' \32\
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    \31\ Proposed Rule, at 60240.
    \32\ Id. at 60241.
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    The comments submitted with respect to the characteristics and 
application of the Cohen's d test are beyond the scope of the 
rulemaking, i.e., the Proposed Rule, and therefore, the Department need 
not reach consideration of these comments. The Department expects to 
request comments from parties on its current differential pricing 
analysis separately.

Classification

Executive Order 12866

    This rulemaking is not significant for purposes of Executive Order 
12866 of September 30, 1993 (``Regulatory Planning and Review'') (58 FR 
51735 (October 4, 1993)).

Paperwork Reduction Act

    This proposed rule contains no new collection of information 
subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

 Executive Order 13132

    This proposed rule does not contain policies with federalism 
implications as that term is defined in section 1(a) of Executive Order 
13132, dated August 4, 1999 (64 FR 43255 (August 10, 1999)).

Regulatory Flexibility Act

    The Chief Counsel for Regulation certified to the Chief Counsel for 
Advocacy of the Small Business Administration (``SBA'') at the proposed 
rule stage that this rule would not have a significant economic impact 
on a substantial number of small business entities under the provisions 
of the Regulatory Flexibility Act, 5 U.S.C. 605(b). For this reason, a 
Final Regulatory Flexibility Analysis is not required and one has not 
been prepared.

     Dated: April 7, 2014.
Paul Piquado,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2014-08186 Filed 4-21-14; 8:45 am]
BILLING CODE 3510-DS-P