Tenaris has lost a Federal Circuit challenge to the industry-support calculation that allowed the US Commerce Department to open an antidumping investigation into oil country tubular goods from Argentina, after the appeals court found that concerns about possible double counting were not backed by evidence that it had actually occurred.
The precedential ruling leaves intact Commerce's determination that the petition had enough backing from US producers to satisfy the statutory thresholds for launching the investigation. That investigation subsequently resulted in antidumping duties on Argentine oil country tubular goods, or OCTG, although the appeal did not concern Commerce's ultimate determination that the imports were sold in the US at less than fair value. Instead, the dispute concerned an earlier question with significance for companies contesting trade cases: what an opponent must put into the administrative record when challenging the production figures used to establish industry support.
Under US antidumping law, Commerce cannot initiate an investigation from an industry petition without determining that the petition was filed "by or on behalf of the industry." That requires two production tests: producers or workers supporting the petition must account for at least 25% of total domestic production of the relevant product and more than 50% of the production represented by producers and workers expressing either support for or opposition to the petition.
The production attributable to supporters forms the numerator in both calculations, but the denominator changes. The 25% test uses total domestic production, while the 50% test looks at production among those expressing a position.
The petition at issue was filed in October 2021 by four domestic OCTG producers and a union. Because total 2020 domestic OCTG production figures were not available, the petitioners estimated industry-wide production using domestic shipment figures adjusted by a historical production-to-shipments ratio.
Tenaris Bay City opposed the petition and challenged the reliability of the industry-support calculations, including the treatment of OCTG production and finishing operations. Commerce nevertheless determined that the statutory support requirements were satisfied and initiated the investigation on October 26, 2021.
Tenaris subsequently challenged the initiation decision before the US Court of International Trade. The CIT identified a potential problem in the record because some US companies both manufacture and finish OCTG, creating the possibility that the same pipe could be counted when manufactured and again when subjected to finishing operations. The court therefore sent the issue back to Commerce for further explanation or reconsideration.
Commerce maintained its conclusion after examining the record on remand, finding no evidence that US producers supplying actual production figures had counted individual tonnes of pipe twice. The agency also addressed two companies associated with the double-counting concern.
It found that PTC Liberty Tubulars was principally an OCTG producer with finishing capabilities, rather than simply a processor of pipe manufactured by another domestic producer. Commerce separately found that Borusan's US processing facility finished imported pipe rather than pipe manufactured by another US producer.
The agency therefore concluded that the double-counting concern was not supported by the record, and the CIT subsequently sustained Commerce's remand determination.
The Federal Circuit has now affirmed, but it did not hold that double counting is irrelevant to an industry-support calculation. Commerce's determination must still be supported by substantial evidence, requiring the agency to examine the record, explain its decision and account for evidence that fairly detracts from its conclusion. That requirement was why the CIT had ordered Commerce to address the double-counting issue.
The difficulty for Tenaris was evidentiary. The Federal Circuit said Tenaris had identified circumstances in which double counting was possible but had not identified actual evidence that it occurred.
Tenaris argued that Commerce should have done more to investigate the potential problem. The appeals court rejected the proposition that the agency was required to search for evidence to disprove theoretical concerns that Tenaris had not substantiated in the administrative record.
Commerce had questioned the petitioners during the initial review and later reconsidered the evidence bearing on double counting during the remand. What it was not required to do, the Federal Circuit concluded, was independently find evidence to supplement the record and disprove the hypothetical problems raised by Tenaris. The court relied on the established principle that the burden of creating an adequate administrative record rests with interested parties rather than Commerce.
The statutory timetable formed part of the Federal Circuit's reasoning about that allocation of responsibility. Commerce generally must determine within 20 days of receiving a petition whether it alleges the elements necessary for antidumping duties and satisfies the applicable requirements, although the statutory process permits an extension in specified circumstances.
The Federal Circuit noted that requiring Commerce to investigate every hypothetical problem raised by an interested party would add to the agency's investigative burden during that short pre-initiation period. That does not allow Commerce simply to accept industry-support evidence at face value, as the agency must still examine the record and account for evidence detracting from its conclusion.
The distinction in Tenaris's case was between evidence suggesting an actual problem and a theory about how a problem might occur. After the earlier remand, Commerce addressed the evidence bearing on double counting and explained why it did not support Tenaris's inference.
The Federal Circuit also upheld the CIT's treatment of more specific arguments Tenaris developed later in the proceedings. One concerned whether Commerce had understated domestic production in the denominator by failing properly to account for processors, while another concerned whether production supporting the petition could have been overstated by counting threading operations as production.
The CIT found those arguments had not been properly exhausted during the administrative process, and the Federal Circuit found no abuse of discretion. Tenaris had made broader objections to the reliability of the sources used in the industry-support calculation, but the Federal Circuit concluded those submissions had not presented Commerce with the more specific theories subsequently advanced.
The ruling reinforces the importance of putting specific objections before Commerce during the administrative process rather than relying on broader concerns that are developed into different arguments during subsequent litigation.
The immediate consequence is that Commerce's original industry-support determination remains in place following the Federal Circuit appeal. The underlying investigation ultimately produced a determination that OCTG from Argentina was being sold in the US at less than fair value and resulted in an antidumping duty order.
The Federal Circuit's ruling does not independently determine whether those imports were dumped or reconsider the level of the duties. Its focus is narrower: whether Commerce lawfully concluded that sufficient domestic-industry support existed to initiate the investigation.
For companies contesting future antidumping petitions, the precedential decision provides guidance on the evidentiary burden involved in attacking an industry-support calculation. A potential defect in production figures can require Commerce's attention, but identifying a theoretical route to error does not itself establish that Commerce's determination lacks substantial evidence.
Tenaris's challenge ultimately failed because, after Commerce examined the double-counting issue on remand, the administrative record did not establish the double counting on which the challenge depended.
