United States Court of International Trade

Court Sustained Countervailing Duty Subsidy Decision

In SolarWorld Americas Inc. v. United States, Slip Op. 15-137, Court No. 13-7 (December 14, 2015), plaintiff SolarWorld Americas Incorporated (“SolarWorld”) challenged the United States Department of Commerce’s (“Commerce”) determination, during the countervailing duty (“CVD”) investigation of crystalline silicon photovoltaic cells (“solar cells”) from the People’s Republic of China (“PRC” or “China”), to defer examination of two subsidy allegations until a subsequent administrative review. Here, SolarWorld argued that Commerce unreasonably decided to defer until the next administrative review its investigations into the Chinese government’s alleged provision of aluminum extrusions and rolled glass to producers of subject merchandise for less than adequate remuneration even when its allegations satisfied the statutory requirements and Commerce was required to initiate investigations into these allegations.

Here, Commerce determined that SolarWorld failed to satisfy the requirements for initiation pursuant to 19 U.S.C. § 1671a(b)(1) because there was no “supporting documentation onthe record for the alleged price differential,” nor any other record evidence “which indicates that aluminum extrusions are being sold at low prices in the PRC.”  Slip Op. pg. 20 According to the court, SolarWorld’s allegation provided nosources for either the average U.S. export price or the average Chinese import price alleged, nor was specific information provided regarding aluminum extrusion pricing in the POI and thus SolarWorld did not support the allegations adequately. With regard to glass, while Commerce did find support to initiate an investigationunder section 1671a(b) for float glass, it found with respect to non-float glass, that SolarWorld did not allege and document sufficient information to initiate an investigation at this time.  Because there was no time to re-file allegations, Commerce deferred these petitions for the next administrative review.

For these reasons, Commerce did not initiate an investigation as to non-float glass and aluminum extrusions, and the court sustained Commerce’s reasoning.

Court Sustained Redetermination Regarding Corroboration Methodology

Before the court in Tai Shan City Kam Kiu Aluminium Extrusion Co. v. United States, Court No. 14-16, Slip Op. 15-138 (December 14, 2015) was the U.S. Department of Commerce’s (“Commerce” or “Department”) remand redetermination filed pursuant to the court’s decision in Tai Shan City Kam Kiu Aluminium Extrusion Co. v. United States, 39 CIT __, 58 F. Supp. 3d 1384 (2015) (“Tai Shan”). See generally Final Results of Redetermination Pursuant to Court Remand, Aug. 13, 2015, ECF No. 60-1–3 (“Remand Results”). The court in Tai Shan remanded Commerce’s final determination in the first administrative review of the countervailing duty (“CVD”) order covering certain aluminum extrusions from the People’s Republic of China (“PRC” or “China”) for Commerce to reconsider its corroboration methodology in calculating Plaintiff Tai Shan City Kam Kiu Aluminium Extrusion Co. Ltd.’s (“Kam Kiu”) adverse facts available (“AFA”) rate.  While all parties asked for the remand results to be sustained, Commerce did so under protest.

To calculate a CVD rate based on AFA, Commerce may not rely on information provided by the uncooperative respondent, and looks to other sources of secondary information in calculating an AFA rate.  Although Commerce has discretion to employ AFA in certain situations, its rate must be supported by substantial evidence. 

After reviewing the Final Results, the court in Tai Shan held that Commerce reasonably resorted to AFA to calculate Kam Kiu’s CVD rate, but failed to explain how the location-specific subsidies attributed to Kam Kiu usingindependent sources and evidence reasonably at  Commerce’s disposal. See Tai Shan, 39 CIT at __, 58 F. Supp. 3d at 1392, 1394. Thus, the court found Commerce’s methodological approach to corroboration as applied to Kam Kiu was incomplete because Commerce did not ensure that the rate reasonably estimated “Kam Kiu’s ‘actual rate, albeit with some built-in increase intended as a deterrent to non-compliance.’” See id. at __, 58 F. Supp. 3d at 1395.  On remand, after evaluating the evidence at its disposal, Commerce, under protest, adjusted its methodology “for purposes of this remand only” and attributed to Kam Kiu the location-specific subsidies available to companies in the area immediate to Kam Kiu’s mailing address within Guangdong Province.  Commerce limited the number of location-specific subsidies to those near to Kam Kiu as a result of the remand. According to the court, Kam Kiu’s mailing address, as evidenced in its Q&V questionnaire response, demonstrates that the location-specific programs attributed to it are reliable and relevant to it. It was reasonable for Commerce to infer that Kam Kiu is the type of company to benefit from these subsidies because the subsidies were available to companies operating in the aluminum extrusion industry within Guangdong Province. Kam Kiu is a company that operates in the aluminum extrusion industry located in Tai Shan City, Guangdong Province. The reasonableness of Commerce’s inference is reinforced by the fact that Commerce limited its inference to only those location-specific subsidies in the immediate area encompassing Kam Kiu’s mailing address within Guangdong Province.

The court considered Commerce’s protest to this methodology and stated, “Commerce’s response illustrates a methodology that effectively implements a rebuttable presumption that the uncooperative company has availed itself of all identified location specific subsidies, unless it is apparent that the industry in which the company operates or a respondent could not benefit from such a program.”  Slip Op. pg.17.  Thus, the court held that Commerce effectively shifted the burden on the respondent to show why a certain location specific subsidy did not apply.  This reasoning does not coincide with the Congressionally mandated corroboration requirement. According to the court, “Commerce’s obligation to corroborate requires it simply to put forth probative evidence indicating the company potentially benefitted from the subsidy program, see 19 C.F.R. § 351.308(d), not “dispositive” or “determinative” evidence that the company in fact did not benefit.” Slip Op. pg. 18 citing Remand Results 13, 16. Moreover, such a methodology will not incentivize respondents not to cooperate with the AFA rate is sufficiently higher than rates applied to cooperative mandatory respondents.  Because the remand results are supported by substantial evidence they were sustained.

As for the Export Rebate Program, the court held in Tai Shan, that Commerce had not corroborated the application of the program in the AFA. In the Remand Results, Commerce complied with the court’s order in Tai Shan and corroborated that Kam Kiu could have benefitted from the Export Rebate Program by relying upon the fact that Kam Kiu was a producer of subject merchandise located in Guangdong Province. Here, Commerce relied upon information taken from the underlying CVD investigation and another CVD proceeding involving the PRC and applied the adverse inference that Kam Kiu availed itself of the Export Rebate Program to the fullest extent.  Thus, the court sustained Commerce’s decision regarding the Export Rebate Program as well.  Finally, Commerce corroborated the aggregate AFA rate here through corroboration of the individual programs included within Kam Kiu’s rate, and as a result, the court sustained the AFA rate.