Beijing Tianhai Industry Co. v. United States, 106 F. Supp. 3d 1342

Background

Commerce investigated alleged targeted dumping of high pressure steel cylinders from the PRC; Beijing Tianhai Industry Co. (Tianhai) was a mandatory respondent for POI Oct 1, 2010–Mar 31, 2011.
Commerce applied the two-step “Nails” targeted-dumping test, found a time-period pricing pattern, and used the average-to-transaction (A-T) methodology (with zeroing) to calculate a 6.62% dumping margin; A-A produced a de minimis margin.
Tianhai challenged Commerce’s Final Determination; the Court earlier (BTIC I) remanded, directing Commerce to explain why A-A or T-T could not account for the identified pattern before invoking A-T per 19 U.S.C. § 1677f-1(d)(1)(B)(ii).
On remand Commerce explained T-T was unavailable (nonmarket-economy POI and normal value based on factors of production using surrogate values) and justified A-T because it produced a margin above de minimis while A-A did not.
The Court finds Commerce’s T-T explanation reasonable but holds Commerce’s A‑T justification (relying on the fact that A‑T produced a larger margin than A‑A) is legally inadequate under § 1677f‑1(d)(1)(B)(ii).
The Court upholds Commerce’s use of zeroing in this A‑T investigation and its authority to apply an A‑T–derived margin to all sales, but remands for Commerce to provide a proper statutory explanation for using A‑T if it persists.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Commerce adequately explained why A‑A or T‑T cannot account for the pricing pattern, permitting use of A‑T under 19 U.S.C. § 1677f‑1(d)(1)(B)(ii)	Tianhai: Commerce must explain (with record support) why A‑A/T‑T cannot account for differences; bare assertion that A‑T yields higher margin is insufficient	Commerce: A‑T appropriate because A‑T revealed dumping (crossing statutory de minimis) while A‑A did not; T‑T infeasible in NME investigation	Court: Remanded — T‑T explanation adequate; A‑T justification (based solely on larger margin) insufficient under statute; Commerce must explain why A‑A/T‑T cannot account for the pattern
Whether Commerce must consider non‑dumping commercial reasons for the observed pattern	Tianhai: Commerce should assess whether pattern was caused by legitimate commercial reasons (which would preclude A‑T)	Commerce/Intervenor: Statute does not require assessing intent or alternative commercial explanations	Court: Rejects Tianhai based on controlling Federal Circuit precedent; Commerce not required to consider alternate commercial explanations
Whether zeroing is permissible with A‑T in investigations	Tianhai: Zeroing is impermissible in investigations or at least needs independent justification	Commerce: Zeroing is reasonable with A‑T because individual transaction comparisons can reveal masked dumping; Union Steel allows zeroing in some A‑T contexts	Court: Upholds Commerce’s use of zeroing here as reasonable and consistent with Federal Circuit precedent
Whether applying an A‑T–derived margin to all sales is arbitrary when only a small subset were targeted	Tianhai: Applying a margin derived from ~5% targeted sales to 100% of sales is illogical and arbitrary	Commerce: Statute and legislative history are silent; agency policy filling that gap is entitled to deference; applying to all sales is permissible	Court: Commerce’s broad application is reasonable given statutory silence and Chevron deference; upheld though agency could justify limiting application if it chose

Key Cases Cited

JBF RAK LLC v. United States, 790 F.3d 1358 (Fed. Cir. 2015) (statute does not require Commerce to determine reasons for a pricing pattern)
Union Steel v. United States, 713 F.3d 1101 (Fed. Cir. 2013) (upheld Commerce’s continued use of zeroing in certain A‑T contexts despite WTO decision limiting A‑A zeroing in investigations)
U.S. Steel Corp. v. United States, 621 F.3d 1351 (Fed. Cir. 2010) (discusses A‑T as available where patterns differ among purchasers, regions, or time periods)
Corus Staal BV v. Dep't of Commerce, 395 F.3d 1343 (Fed. Cir. 2005) (earlier Federal Circuit treatment of zeroing and antidumping methodology)
Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) (framework for judicial deference to reasonable agency interpretations)