OCTG From Argentina Investigation Never Should Have Started, US Producer Argues at CIT

Although using data from the most recently completed calendar year is Commerce’s standard practice, that year saw a collapse in demand for oil and gas, which is the key driver for OCTG demand, Tenaris said. The same year saw "historic prices" for hot-rolled coil, the primary input for producing welded OCTG, along with plant closures and associated production shortages. The period relied upon to calculate industry support included the "once-in-a-lifetime confluence of global market conditions affecting" the OCTG market in 2020 that fundamentally differed from the market when the petition was filed the following year. The year 2021 saw increased demand for OCTG and the restart of mills producing inputs.

Commerce used data from 2018 and 2019 to fill holes in the record. Tenaris argued that due to the unique circumstances of 2020, gap-filling with data from other years merely compounded the issues with using 2020 data in the first place.

In addition, Tenaris argued that Commerce failed to poll the domestic industry or seek actual production data. The statute, 19 U.S.C. § 1673a(c)(4)(D)(i), mandated polling, because, the petition showed, the qualifying conditions: the support of domestic producers accounting for less than 50% of the total production of the domestic like product and the "unquestionably" unique circumstances in 2020, Tenaris said. The company said that it repeatedly asked Commerce to exercise its statutory authority to poll but Commerce declined. Commerce itself confirmed it relied on “estimated production” without taking a full accounting of production in the U.S. The department's refusal to poll while relying on "unclear" levels of industry support meant that initiation under those circumstances was an abuse of discretion, Tenaris said.

Contrary to arguments by U.S. Steel in its September brief (see 2309280051), if the petition lacked industry support, Commerce couldn't have treated it as "self-initiated," Tenaris said. The petitioners have argued that the validity of the investigations could be retroactively justified because Commerce has the authority to initiate AD investigations under its own authority. However, Tenaris argued that Commerce may initiate an investigation based on petition only if that petition has the requisite level of industry support. Commerce’s determination that the petition was filed “by or on behalf of the industry" had no legal basis because it could not establish the required level of support on the record, Tenaris said.

The cases cited by the petitioners are unconvincing because they are based on provisions that predate the Uruguay Round Agreements Act, Tenaris said. Unlike today, at the time of the decisions cited, petitioners were not required to establish that it had the support of a majority of a particular industry. Finally, even assuming that Commerce “could have” self-initiated an investigation of OCTG from Argentina, it didn't, Tenaris said. "There is nothing in the statute or regulations to suggest that Commerce may arbitrarily switch legal bases to initiate, and in any event, it did not self-initiate the underlying investigation."