[Federal Register Volume 79, Number 250 (Wednesday, December 31, 2014)]
[Proposed Rules]
[Pages 78742-78744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-30664]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 140929814-4814-01]
RIN 0625-AB02


Modification of Regulations Regarding Price Adjustments in 
Antidumping Duty Proceedings

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

ACTION: Proposed rule and request for comments.

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SUMMARY: The Department of Commerce (``the Department'') proposes to 
modify two regulations pertaining to price adjustments in antidumping 
duty proceedings and is seeking comments from parties. These 
modifications, if adopted, are intended to clarify that the Department 
generally will not consider a price adjustment that reduces or 
eliminates a dumping margin unless the party claiming such price 
adjustment demonstrates, to the satisfaction of the Department, through 
documentation that the terms and conditions of the adjustment were 
established and known to the customer at the time of sale.

DATES: To be assured of consideration, written comments must be 
received no later than January 30, 2015.

ADDRESSES:  All comments must be submitted through the Federal 
eRulemaking Portal at http://www.regulations.gov, Docket No. ITA-2014-
0001, unless the commenter does not have access to the internet. 
Commenters that do not have access to the internet may submit the 
original and one electronic copy of each set of comments by mail or 
hand delivery/courier. All comments should be addressed to Paul 
Piquado, Assistant Secretary for Enforcement & Compliance, Room 1870, 
Department of Commerce, 14th Street and Constitution Ave. NW., 
Washington, DC 20230. Comments submitted to the Department will be 
uploaded to the eRulemaking Portal at www.Regulations.gov.
    The Department will consider all comments received before the close 
of the comment period. All comments responding to this notice will be a 
matter of public record and will be available on the Federal 
eRulemaking Portal at www.Regulations.gov. The Department will not 
accept comments accompanied by a request that part or all of the 
material be treated confidentially because of its business

[[Page 78743]]

proprietary nature or for any other reason.
    Any questions concerning file formatting, document conversion, 
access on the Internet, or other electronic filing issues should be 
addressed to Moustapha Sylla, Enforcement and Compliance Webmaster, at 
(202) 482-4685, email address: [email protected].

FOR FURTHER INFORMATION CONTACT: Jessica Link at (202) 482-1411 or 
Melissa Skinner at (202) 482-0461.

SUPPLEMENTARY INFORMATION: 

Background

    In general terms, section 731 of the Tariff Act of 1930, as amended 
(the Act) provides that when a company is selling foreign merchandise 
into the United States at less than fair value, and material injury or 
threat of material injury is found by the International Trade 
Commission, the Department shall impose an antidumping duty. An 
antidumping duty analysis involves a comparison of the company's sales 
price in the United States (known as the export price or constructed 
export price) with the price or cost in the foreign market (known as 
the normal value). See 19 CFR 351.401(a); see also section 772 of the 
Act (defining export price and constructed export price); section 773 
of the Act (defining normal value). The prices used to establish export 
price, constructed export price, and normal value involve certain 
adjustments. See, e.g., 19 CFR 351.401(b). In its May 19, 1997 final 
rulemaking, the Department promulgated regulatory provisions governing 
the use of price adjustments in the calculation of export price, 
constructed export price, and normal value in antidumping duty 
proceedings. Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296 (May 19, 1997) (``Final Rule''). In particular, the Department 
promulgated the current regulation at 19 CFR 351.102(b)(38), which 
provides a definition of ``price adjustment''. In providing this 
definition, the Department stated that ``{t{time} his term is intended 
to describe a category of changes to a price, such as discounts, 
rebates and post-sale price adjustments, that affect the net outlay of 
funds by the purchaser.'' Id., 62 FR at 27300.
    The Department also enacted 19 CFR 351.401(c), which explains how 
the Department will use a price net of price adjustments. In the Final 
Rule, the Department explained that 19 CFR 351.401(c) was intended to 
``restate{{time}  the Department's practice with respect to price 
adjustments, such as discounts and rebates.'' Final Rule, 62 FR at 
27344.
    The Department also addressed the following comment on the proposed 
rulemaking, regarding whether ``after the fact'' price adjustments, 
that were not contemplated at the time of sale, would be accepted under 
19 CFR 351.401(c):

    One commenter suggested that, at least for purposes of normal 
value, the regulations should clarify that the only rebates Commerce 
will consider are ones that were contemplated at the time of sale. 
This commenter argued that foreign producers should not be allowed 
to eliminate dumping margins by providing ``rebates'' only after the 
existence of margins becomes apparent.
    The Department has not adopted this suggestion at this time. We 
do not disagree with the proposition that exporters or producers 
will not be allowed to eliminate dumping margins by providing price 
adjustments ``after the fact.'' However, as discussed above, the 
Department's treatment of price adjustments in general has been the 
subject of considerable confusion. In resolving this confusion, we 
intend to proceed cautiously and incrementally. The regulatory 
revisions contained in these final rules constitute a first step at 
clarifying our treatment of price adjustments. We will consider 
adding other regulatory refinements at a later date.

    Since enacting these regulations, the Department has consistently 
applied its practice of not granting price adjustments where the terms 
and conditions were not established and known to the customer at the 
time of sale (sometimes referred to as determining the ``legitimacy'' 
of a price adjustment) because of the potential for manipulation of the 
dumping margin through so-called ``after-the-fact'' adjustments. See, 
e.g., Certain Oil Country Tubular Goods From Taiwan: Final 
Determination of Sales at Less Than Fair Value, 79 FR 41979 (July 18, 
2014) and accompanying Issues and Decision Memorandum, Cmt. 3; 
Lightweight Thermal Paper From Germany: Notice of Final Results of the 
First Antidumping Duty Administrative Review, 76 FR 22078 (April 20, 
2011) (Lightweight Thermal Paper from Germany) and accompanying Issues 
and Decision Memorandum, Cmt. 3; Canned Pineapple Fruit from Thailand: 
Final Results and Partial Rescission of Antidumping Duty Administrative 
Review, 71 FR 70948 (Dec. 7, 2006) and accompanying Issues and Decision 
Memorandum, Cmt. 1; Ball Bearings and Parts Thereof from France, 
Germany, Italy, Japan, and the United Kingdom: Final Results of 
Antidumping Duty Administrative Reviews, 71 FR 40064 (July 14, 2006) 
and accompanying Issues and Decision Memorandum, Cmt. 19.
    On March 25, 2014, the Court of International Trade issued 
Papierfabrik August Koehler AG v. United States, 971 F. Supp. 2d 1246 
(Ct. Int'l Trade 2014) (Koehler AG), remanding the Department's 
decision in Lightweight Thermal Paper from Germany, noted above. The 
Court ordered the Department to reconsider Papierfabrik August Koehler 
AG's rebate program. The Court disagreed with the Department's 
determination that the regulations permitted it to disregard certain 
price adjustments, the terms and conditions of which were not 
established or known to the customer at the time of sale, stating that 
``the regulations set forth a broad definition of price adjustment 
encompassing `any change in the price charged for . . . the foreign 
like product' that `are reflected in the purchaser's net outlay.' '' 
971 F. Supp. 2d at 1251-52 (quoting 19 CFR 351.102(b)(38)) (emphasis 
added by Court). In accordance with the Court's order, on remand, under 
protest, the Department granted an adjustment for the rebates at issue. 
See Final Results of Redetermination Pursuant to Court Remand, 
Lightweight Thermal Paper from Germany, Papierfabrik August Koehler AG 
v. United States, Court No. 11-00147, Slip Op. 14-31 (Ct. Int'l Trade 
March 25, 2014), dated June 20, 2014.
    The Department continues to defend its regulatory interpretation of 
disallowing price adjustments the terms and conditions of which were 
not contemplated and known to the customer at the time of sale. 
However, the Department recognizes that the Court of International 
Trade in Koehler AG disagrees with its interpretation. Therefore, 
without prejudice to the United States Government's right to appeal 
Koehler AG, or to argue that the Department's current interpretation of 
its regulations is correct, the Department is issuing this proposed 
rule to modify the regulations at issue pursuant to Administrative 
Procedure Act (5 U.S.C. 553) notice and comment procedures; we invite 
comments from all interested parties.

Proposed Modification

    The Department proposes to modify 19 CFR 351.102(b)(38) and 19 CFR 
351.401(c) as indicated below. These modifications, if adopted, are 
intended to clarify that the Department generally will not consider a 
price adjustment that reduces or eliminates a dumping margin unless the 
party claiming such price adjustment demonstrates, to the satisfaction 
of the Department, through

[[Page 78744]]

documentation that the terms and conditions of the adjustment were 
established and known to the customer at the time of sale. This 
rulemaking would be effective for proceedings initiated on or after 30 
days following the date of publication of the final rule.
    The Department invites parties to comment on this proposed rule 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.

Classifications

Executive Order 12866

    It has been determined that this proposed rule is not significant 
for purposes of Executive Order 12866.

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 has certified to the Chief Counsel 
for Advocacy of the Small Business Administration under the provisions 
of the Regulatory Flexibility Act, 5 U.S.C. 605(b), that the proposed 
rule would not have a significant economic impact on a substantial 
number of small business entities. A summary of the need for, 
objectives of and legal basis for this rule is provided in the 
preamble, and is not repeated here.
    The entities upon which this rulemaking could have an impact 
include foreign exporters and producers, some of whom are affiliated 
with U.S. companies, and U.S. importers. Enforcement & Compliance 
currently does not have information on the number of entities that 
would be considered small under the Small Business Administration's 
size standards for small businesses in the relevant industries. 
However, some of these entities may be considered small entities under 
the appropriate industry size standards. Although this proposed rule 
may indirectly impact small entities that are parties to individual 
antidumping duty proceedings, it will not have a significant economic 
impact on any entities.
    The proposed action is merely a continuation of the Department's 
practice based on its interpretation of current Department regulations. 
If the proposed rule is implemented, no entities would be required to 
undertake additional compliance measures or expenditures. Rather, the 
regulations, both in their current form and in this proposed 
rulemaking, instruct the Department on what adjustments to make to 
export price or constructed export price and normal value under certain 
factual scenarios in the course of an antidumping duty proceeding. 
Because the proposed rule only impacts the way in which the Department 
makes certain calculations in antidumping duty proceedings, it does not 
directly impact any business entities. The proposed rule merely 
clarifies the regulations to better align with current Departmental 
practices. Therefore, the proposed rule would not have a significant 
economic impact on a substantial number of small business entities. For 
this reason, an Initial Regulatory Flexibility Analysis is not required 
and one has not been prepared.

List of Subjects in 19 CFR Part 351

    Administrative practice and procedure, Antidumping, Business and 
industry, Cheese, Confidential business information, Countervailing 
duties, Freedom of information, Investigations, Reporting and 
recordkeeping requirements.

    Dated: December 19, 2014.
Paul Piquado,
Assistant Secretary for Enforcement and Compliance.
    For the reasons stated, 19 CFR part 351 is proposed to be amended 
as follows:

PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES

0
1. The authority citation for 19 CFR part 351 continues to read as 
follows:


    Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.

0
2. In Sec.  351.102, revise paragraph (b)(38) to read as follows:


Sec.  351.102  Definitions.

* * * * *
    (b) * * *
    (38) Price adjustment. ``Price adjustment'' means a change in the 
price charged for subject merchandise or the foreign like product, such 
as a discount or rebate, including, under certain circumstances, a 
change such as a discount or rebate that is made after the time of sale 
(see Sec.  351.401(c)), that is reflected in the purchaser's net 
outlay.
* * * * *
0
3. In Sec.  351.401, revise paragraph (c) to read as follows:


Sec.  351.401  In general.

* * * * *
    (c) Use of price net of price adjustments. In calculating export 
price, constructed export price, and normal value (where normal value 
is based on price), the Secretary normally will use a price that is net 
of price adjustments, as defined in Sec.  351.102(b), that are 
reasonably attributable to the subject merchandise or the foreign like 
product (whichever is applicable). The Secretary generally will not 
consider a price adjustment that reduces or eliminates a dumping margin 
unless the party claiming such price adjustment demonstrates, to the 
satisfaction of the Secretary, through documentation that the terms and 
conditions of the adjustment were established and known to the customer 
at the time of sale.
* * * * *
[FR Doc. 2014-30664 Filed 12-30-14; 8:45 am]
BILLING CODE 3510-DS-P