As we have been reporting, four cases scheduled for oral argument at the Federal Circuit this month attracted amicus briefs. One of these cases is Marmen Inc. v. United States. In this case, Marmen appeals a judgment of the Court of International Trade, which sustained a final antidumping duty determination that assigned a dumping margin on Marmen, a Canadian wind tower producer. This is our argument preview.
In its opening brief, Marmen argued that the Department of “Commerce’s conclusions in the Final AD Determination regarding cost smoothing, Marmen Inc.’s cost reconciliation, and differential pricing, and the CIT’s decisions sustaining Commerce’s conclusions,” merit reversing the CIT’s decision on the three issues of the case.
On the first issue, Marmen asserted, “Commerce’s decision to average or ‘smooth’ Marmen’s reported product-specific plate costs was arbitrary, unsupported by substantial evidence, and otherwise not in accordance with law.” Marmen explained that “Commerce arbitrarily disregarded its standard ‘cost-smoothing’ practice without explanation” and failed “to examine whether Marmen’s reported plate costs differed significantly among nearly identical or similar products.” On the second issue, Marmen alleged that “Commerce rejected a minor correction to one line of a cost reconciliation worksheet for specious reasons and without evidentiary support.” On the third issue, Marmen argued that Commerce is statutorily permitted to apply the average-to-transaction comparison method only if “there is a pattern of export prices . . . for comparable merchandise that differ significantly among purchasers, regions, or periods of time.” But here, Marmen contended, Commerce relied on unsatisfactory assumptions for the relevant test and the test “falsely attributed significance to price differences of less than one percent.”
In its response brief, the United States argued the determinations of the Department of Commerce are both supported by substantial evidence and lawful. First, the government argued that the Department of Commerce “lawfully weight-averaged or ‘smoothed’ Marmen’s disparate steel plate costs.” It explained the evidence supports the “finding that significant differences in Marmen’s steel plate costs” resulted “primarily from factors unrelated to differences in the physical characteristics of the wind tower products.” The government suggested “the timing of the steel plate purchases was the significant factor driving the steel plate cost differences between finished wind towers” and that “weight-averaging or ‘smoothing’ the costs was appropriate.”
Second, the government argued, the Department of Commerce “lawfully rejected the additional adjustment included in Marmen’s revised cost reconciliation” because the “new reconciliation item . . . adjusts for amounts already reflected in the costs” and “was otherwise unreliable.”
Third, the government argued, the Department of Commerce “lawfully relied on its differential pricing analysis” in determining the use of “an average-to-transaction method to calculate Marmen’s dumping margin.” Commerce explained that “statistical assumptions of normality and roughly equal variance are not relevant to Commerce’s application” of the Cohen’s d test, the relevant test. As a result, the government contended, the “differential pricing analysis and use of the Cohen’s d test were both reasonable and lawful.”
In its own separate response brief, the Wind Tower Trade Coalition argued that Marmen’s three challenges to aspects of Commerce’s final determination are “unpersuasive.” First, in response to Marmen’s argument that “Commerce erred in adjusting the reported costs for steel plat used in producing wind towers sold to U.S. customers”, WTTC defended “Commerce’s decision to adjust the reported input costs” because it was “perfectly in keeping with its practice.”
Second, in response to Marmen’s claim that “Commerce inappropriately refused to give effect to a line item included in the company’s revised cost reconciliation”, WTTC argued the “new line item would in fact distort” instead of correct “the original reconciliation.”
Third, in response to Marmen’s argument that conducting differential pricing analysis with the “Cohen’s d coefficient produces ‘false positives'”, WTTC argued these “claims are unconvincing” given “Commerce’s use of the complete population of relevant data” and “the multi-part nature of its differential pricing analysis.”
In its reply brief, Marmen reinforced its assertion that Commerce’s conclusions “are unsupported by substantial evidence on the record and otherwise not in accordance with law.” First, on the issue of smoothing, Marmen argued that “Commerce disregarded its standard practice without explanation and made findings belied by the record evidence.” Further, Marmen maintained that WTTC’s response “misread precedent,” “reiterate[d] Commerce’s flawed logic,” and “ignore[d] significant contradictory evidence.” On the second issue, Marmen maintained that “Commerce unreasonably – and without substantial evidentiary support – rejected a minor correction to one line of a cost reconciliation worksheet.” On the third issue, Marmen argued that WTTC and Commerce “fail to demonstrate that Commerce reasonably determined . . . that Marmen’s U.S. price differences of less than one percent establish a pattern of significant price differences.”
The Government of Canada; Canfor Corporation; Canadian Forest Products, Ltd.; Canfor Wood Products Marketing, Ltd.; Resolute FP Canada Inc.; Tolko Industries Ltd.; Tolko Marketing and Sales Ltd.; and West Fraser Mills Ltd. filed an amicus brief in support of reversal. They expressed concern over the differential pricing analysis and argued that the Department of Commerce treats “the outputs of the Cohen’s d formula as having fixed and immutable meaning, regardless of the nature of the inputs,” which they claimed “is unreasonable and yields results that are arbitrary and capricious.”
Oral argument is scheduled to be heard on Monday, January 13. We will keep track of this case and report on any developments.