CIT Dismisses Claims on Transactions Disregarded Rule, Scrap Offset for Lack of Standing

The Court of International Trade in a Sept. 12 opinion dismissed two claims in an antidumping duty review case, saying success on the arguments would not lead to a changed dumping margin for respondents HiSteel Co. and Dong-a-Steel Co. The claims challenged the Commerce Department's use of the transactions disregarded rule applied to HiSteel's reported costs of slitting services and its adjustment of HiSteel's reported scrap offset. Judge Gary Katzmann said HiSteel's alleged injuries are more "conjectural or hypothetical" than "actual or imminent."

The judge dismissed the challenges for lack of standing, ruling the alleged harm of potentially miscalculated adjustments to normal value amounts to a "bare procedural violation" and does not "entail a degree of risk sufficient to meet the concreteness requirement." The judge then stayed the case pending the resolution of the Stupp Corp. v. U.S. case at the U.S. Court of Appeals for the Federal Circuit, since HiSteel also contests the use of the Cohen's d test to root out masked dumping.

"We are gratified by the judge’s decision to focus on the issues that matter to conserve both parties’ and the court’s resources," said Robert DeFrancesco, counsel for petitioner Nucor Tubular Products.

In the review, Commerce applied the transactions disregarded rule to HiSteel's reported costs to show the higher market price of slitting services received from an affiliated supplier. The rule removes transactions between an exporter and an affiliate when calculating constructed value to make sure the dumping calculation reflects the actual value of the input being sold between the parties. The agency also adjusted HiSteel's reported scrap offset to account for sales to an affiliated customer that Commerce said weren't made at arm's length prices. The result was a 1.61% margin for Dong-a-Steel and a 10.24% margin for HiSteel.

At the trade court, Nucor moved to dismiss the challenges to the transactions disregarded rule and the scrap offset, claiming that should the exporters succeed, there would be no change to the dumping margin. Katzmann agreed with the petitioner.

HiSteel did not contest the math underlying Nucor's arguments, but instead focused its claim on its challenge to the Cohen's d test -- a tool that determines if there are questionable pricing patterns across different factors, including geographic and temporal groups. The exporter said that Commerce could change its method on remand to use a different cutoff in the Cohen's d test, which would, in effect, reverse the adjustments to HiSteel's costs and scrap offset, and that this revised margin "could move the needle."

Katzmann said this claim "appears to bootstrap standing" to a "hypothetical victory" on the Cohen's d test claim. However, to obtain injunctive relief, "the risk of harm must be 'sufficiently imminent and substantial' in order to establish standing," the judge said. "HiSteel has not made the showing, nor can it, that Commerce is imminently implementing a change in its differential pricing analysis that would allow the alleged errors in Counts 2 and 3 to affect the antidumping margin," the opinion said. HiSteel's basis for success is achieving success on a different count in the case, which if achieved would not even guarantee a lower margin.

Addressing HiSteel's remaining claim, on the Cohen's d test, Katzmann stayed the proceeding pending resolution of Stupp, which is the lead case challenging this statistical tool (see 2308020027). The judge said the litigation in Stupp "is likely to affect the analysis and disposition" of HiSteel's claim. Refuting the exporter's argument that Commerce's final determination in the review didn't rely on the justifications used by the agency in Stupp, Katzmann said that if the government succeeds at the Federal Circuit, HiSteel's claims could be rendered moot. Even if the U.S. loses, the "parties will have the benefit of updated, on-point authority."

(HiSteel Co. v. U.S., Slip Op. 23-131, CIT # 22-00142, dated 09/12/23; Judge: Gary Katzmann; Attorneys: Jeffrey Winton of Winton & Chapman for plaintiff HiSteel; Kara Westercamp for defendant U.S. government; Robert DeFrancesco of Wiley Rein for defendant-intervenor Nucor Tubular Products)