[Federal Register Volume 87, Number 222 (Friday, November 18, 2022)]
[Proposed Rules]
[Pages 69234-69235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25216]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 221115-0239]
RIN 0625-AB23


Determining the Existence of a Particular Market Situation That 
Distorts Costs of Production

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

ACTION: Advanced notice of proposed rulemaking.

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SUMMARY: Enforcement and Compliance (E&C), of the Department of 
Commerce (Commerce), administers the antidumping duty (AD) and 
countervailing duty (CVD) AD/CVD trade remedy laws of the Tariff Act of 
1930, as amended (the Act). Section 773(e) of the Act provides for 
Commerce to address, in its antidumping calculations, the existence of 
a particular market situation (PMS), such that the cost of materials 
and fabrication do not accurately reflect the cost of production in the 
ordinary course of trade. Commerce seeks public comments as it 
considers revisiting its PMS methodology and issuing a new regulation 
that would identify information that Commerce should take into 
consideration and should not take into consideration in determining 
whether a PMS exists that distorts the cost of production. Commerce 
also seeks comments as it considers adjustments to calculations when 
the amount of distortion in the cost of production caused by a PMS 
cannot be quantified based on the record before it.

DATES: Comments must be received no later than December 18, 2022.

ADDRESSES: Submit electronic comments only through the Federal 
eRulemaking Portal at https://www.Regulations.gov, Docket No. ITA-2022-
0012. Comments may also be submitted by mail or hand delivery/courier, 
addressed to Lisa W. Wang, Assistant Secretary for Enforcement and 
Compliance, Room 18022, Department of Commerce, 1401 Constitution Ave. 
NW, Washington, DC 20230. An appointment must be made in advance with 
the APO/Dockets Unit at (202) 482-4920 to submit comments in person by 
hand delivery or courier. All comments submitted during the comment 
period permitted by this document will be a matter of public record and 
will generally be available on the Federal eRulemaking Portal at 
https://www.Regulations.gov. Commerce will not accept comments 
accompanied by a request that part or all of the material be treated 
confidentially because of its business proprietary nature or for any 
other reason. Therefore, do not submit confidential business 
information or otherwise sensitive or protected information.
    Any questions concerning the process for submitting comments should 
be submitted to Enforcement & Compliance Communications office at (202) 
482-0063 or [email protected].

FOR FURTHER INFORMATION CONTACT: Scott McBride at (202) 482-6292 and 
Hendricks Valenzuela at (202) 482-4750.

SUPPLEMENTARY INFORMATION:

Background on Particular Market Situation

    In 2015, pursuant to the Trade Preferences Extension Act (TPEA), 
section 771(15) of the Act was amended to provide that Commerce 
consider sales to be outside the ``ordinary course of trade'' when 
there are situations in which Commerce ``determines that the particular 
market situation prevents a proper comparison with the export price or 
constructed export price.'' Further, section 773(e) of the Act was 
amended to provide that in determining the ``costs of material and 
fabrication or other processing of any kind employed in producing the 
merchandise, during a period which would ordinarily permit the 
production of the merchandise in the ordinary course of trade,'' for 
determining constructed value, ``if a particular market situation 
exists such that the cost of materials and fabrication or other 
processing of any kind does not accurately reflect the cost of 
production in the ordinary course of trade,'' Commerce ``may use 
another calculation methodology under this subtitle or any other 
calculation methodology.'' The Act does not (1) define a particular 
market situation (``PMS''), (2) identify the information which Commerce 
should consider in determining the existence of a PMS that ``does not 
accurately reflect the costs of production in the ordinary course of 
trade,'' or (3) provide Commerce with guidance as to the information 
which Commerce should consider in determining if a market situation is, 
or is not, ``particular.''
    The legislative history of the cost-based particular market 
situation reflects that Congress intended for Commerce to not only 
identify such situations, but to also effectively address them in its 
calculations. For example, in advocating for the TPEA language, one

[[Page 69235]]

member of the House of Representatives argued that the legislation 
would ``empower'' Commerce ``to be able to disregard prices or costs of 
inputs that foreign producers purchase if the Department of Commerce'' 
determined that those input values were ``subsidized'' or otherwise 
outside the ordinary course of trade.\1\ Likewise, on the United States 
Senate floor, a Senator explained that the proposed legislation would 
``guarantee that Americans can find a more level playing field as we 
compete in the world economy. . . .'' \2\ The Senator emphasized that 
this legislation would help stop United States workers and 
manufacturers from ``being cheated'' by foreign industries that were 
not playing fair and ``illegally subsidizing'' the production of 
certain products.\3\
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    \1\ See Congressional Record-House, H4666, H4690 (June 25, 
2015).
    \2\ See Congressional Record-Senate, S2899, S2900 (May 14, 
2015).
    \3\ Id.
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    Since the Act was amended, Commerce has in certain instances 
identified a PMS and adjusted its calculations in response, which has 
been challenged before both the U.S. Court of International Trade and 
the U.S. Court of Appeals for the Federal Circuit (CAFC). One matter 
which has been at issue before the courts is the information Commerce 
should consider in determining the existence of a PMS. That matter came 
before the CAFC this past year in Nexteel v. United States, in which 
the CAFC held that Commerce's finding that a PMS existed in Korea 
during the period of review was unsupported by substantial evidence.\4\ 
In analyzing Commerce's PMS determination, the CAFC appeared to reach 
at least four conclusions. First, a PMS which distorts costs, as 
referenced in the Act, must cause costs to deviate from what they would 
have otherwise been in the ordinary course of trade.\5\ Second, a PMS 
must be particular to certain producers or exporters, inputs, or the 
market where the inputs are manufactured.\6\ Third, if there is a claim 
of a subsidy or government interference, there should be evidence that 
the producer or seller of the input at issue received, or should have 
received, that subsidy or government assistance, and that there is some 
form of impact on the price of the input as a result of that subsidy or 
government interference.\7\ Finally, Commerce is not required to 
quantify a distortion in costs by the PMS to find the existence of a 
PMS, but if Commerce is able to quantify the distortion, such a 
quantification may help support a finding of the existence of a PMS.\8\
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    \4\ See Nexteel Co. v. United States, 28 F.4th 1226 (Fed. Cir. 
2022).
    \5\ Id. at 1234.
    \6\ Id. at 1234, 1236.
    \7\ Id. at 1235-36.
    \8\ Id. at 1234.
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    In light of the CAFC's holding and analysis in Nexteel, as well as 
our experience in administering the PMS provision over the past several 
years, we have determined it is appropriate to revisit Commerce's 
approach in certain instances to analyzing and determining the 
existence of a PMS that distorts costs of production. In revisiting 
Commerce's approach, we have considered that the public and Commerce 
may benefit from the issuance of a regulation that addresses the 
information which Commerce should consider, or need not consider, in 
determining if a PMS exists that distorts costs of production. We also 
believe that a regulation that addresses the adjustments Commerce may 
make to its calculations if it determines the existence of a PMS that 
distorts costs of production might prove beneficial. We are therefore 
soliciting public comments on certain aspects of our PMS analysis 
pursuant to that exercise.

Request for Comments

    We are issuing this advanced notice of proposed rulemaking to 
inform the public that Commerce is considering issuing a PMS regulation 
and to invite comments on that new regulation. Specifically, Commerce 
is inviting parties to provide comments on three issues: (1) identify 
information which they believe Commerce should consider in determining 
if a PMS exists which distorts the costs of production if that 
information is reasonably available and relevant to the PMS allegation; 
(2) identify information which they believe Commerce should not be 
required to consider when determining if a PMS exists, regardless of 
the PMS allegation; and (3) provide comments on adjustments which 
Commerce may make to its calculations when it determines the existence 
of a PMS, but the record before it does not allow for the 
quantification of cost distortions.

    Dated: November 15, 2022.
Lisa W. Wang,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2022-25216 Filed 11-17-22; 8:45 am]
BILLING CODE 3510-DS-P