United States Court of International Trade

Final Results Remanded to Commerce

In Zhaoqing Tifo New Fibre Co. v. United States et al., Court No. 13-44, Slip Op. 15-31(April 9, 2015), the court reviewed the fourth administrative review of the antidumping duty order covering polyester staple fiber from the People’s Republic of China  (See Notice of Antidumping Duty Order: Certain Polyester Staple Fiber from the People’s Republic of China, 72 Fed. Reg. 30,545, 30,546 (June 1, 2007)).  Before the court was Plaintiff’s Motion for Judgment on the Agency Record, in which Zhaoqing Tifo contended that the antidumping margin calculated by Commerce in the Final Results “double counts” certain energy costs and is therefore too high. The central issue in the pending motion was whether certain energy costs were embedded (specifically those for coal inputs) in the surrogate financial ratios that Commerce used in the Final Results here that are also (in effect) captured elsewhere in the agency’s antidumping calculations, resulting in the double counting of energy costs (and thus inflating Zhaoqing Tifo’s antidumping margin).

The Government opposed Zhaoqing Tifo’s motion, arguing that the company failed to both relied on the financial statements of P.T. Tifico and included coal in the costs in the Final Results is supported by substantial evidence and otherwise in accordance with law.  The Defendant-Intervenor – DAK Americas LLC – similarly contended that Zhaoqing Tifo’s motion was barred by the doctrine of exhaustion, and that there was no double counting.

Because the court found that Commerce both relied on the financial statements of P.T. Tifico and included coal in the factors of production database, double counting could have occurred at the Final Result stage, but not at the Preliminary Result stage where there were separate line items for energy inputs.  Although the financial statements of P.T. Tifico do not include separate line items for energy inputs (unlike the statements of P.T. Asia Pacific used in the preliminary results), the Final Results left coal in the factors of production database, and excluded only electricity and water.  For these reasons, the case was remanded to Commerce and the court found no merit to Defendant and Defendant-Intervenor’s exhaustion of remedies argument, where Zhaoqing Tifo could not have raised objections at the preliminary stage and could not have foreseen the potentiality of Commerce double counting energy inputs.

Motion for Judgment on Agency Record Denied; Final Results Supported by Substantial Evidence

In Fengchi Import and Export of Haicheng City Co., Ltd. and Fedmet Resources Corporation v. United States et al., Court No.13-166, Slip Op. 15-32 (April 13, 2015), Fengchi Import and Export of Haicheng City Co., Ltd. (“Fengchi”) and Fedmet Resources Corporation (collectively “Plaintiffs”) moved for judgment on the agency record contesting defendant United States Department of Commerce’s (“Commerce”) determination in Certain Magnesia Carbon Bricks From the People’s Republic of China: Final Results and Final Partial Rescission of Countervailing Duty Administrative Review, 78 Fed. Reg. 22,235 (Apr. 15, 2013) (“Final Results”). Plaintiffs contested the following aspects of the Final Results: Commerce’s request for sales information on magnesium alumina carbon bricks (MACBs); Commerce’s application of AFA; and Commerce’s selection of 262.80% as the AFA rate.

Here, Commerce issued the scope ruling on MACBs 245 days after initiating the administrative review at issue. Commerce requested information on Fengchi’s MACB sales shortly after issuing the scope ruling, but Fengchi declined to provide the information, insisting that Commerce’s request was improper.  Commerce insisted that its request was consistent with section 351.225(l)(4) because the regulation does not prohibit  Commerce from soliciting information on products that are subject to a scope ruling issued over ninety days after the review begins. Rather, according to Commerce, the regulation permits Commerce to decline to collect information in such situations and instead consider sales of the product on the basis of non-adverse facts available.  The court agreed with Commerce, as the language in the statute is permissive and does not state that Commerce may not request information on the product and can only consider data regarding sales of the product if the scope ruling was issued 90 days after the initiation of the review. The court held that section 351.225(l)(4) does not proscribe Commerce’s power to collect information on a respondent’s sales of a product subject to a scope ruling issued over ninety-days after the initiation of the review, so long as it is practicable to do so.  It does, however, permit Commerce to decline to collect such information and instead rely on non-adverse facts available.

As for AFA and the applied rate, because it was practicable to consider Fengchi’s MACBs sales at the time of the MACB Scope Ruling, Commerce reasonably requested that data during the review.  Fengchi’s refusal to provide information on its MACB sales demonstrated a failure to comply with Commerce’s request for information, and Commerce reasonably applied AFA. The court was not persuaded by Plaintiffs’ argument that Commerce chose a rate that was unreasonable, overly punitive, and not reflective of Fengchi’s commercial reality. In this case, Commerce assigned Fengchi a rate of 262.80% which reflected the sum of rates assigned for 22 programs that Commerce found countervailable in the investigation. Since both Fengchi and the PRC failed to respond to Commerce’s questionnaire, Commerce made the adverse inference that Fengchi had facilities and/or cross-owned affiliates that received subsidies under all of the sub-nationalprograms which Commerce determined countervailable in the investigation.   On the issue of corroboration, the court found that Commerce corroborated Fengchi’s AFA rate to the extent practicable under 19 U.S.C. § 1677e(c).  However, because both Fengchi and the PRC refused to provide any information during the administrative review regarding their use of countervailable subsidies, Commerce’s ability to corroborate its secondary information was limited by Fengchi’s lack of cooperation. The court further determined that the rates were reliable and relevant because they were calculated in recent CVD final investigations and reviews, and were based upon information in similar programs.  Because of Fengchi’s failure to cooperate and based on the reasonably accurate nature of the secondary information that Commerce used under § 1677e(b), Commerce satisfied the requirement of corroborating the 262.80% AFA rate “to the extent practicable.”

United States District Court

Customs Justified in Seizing Vehicles that Did Not Comply with EPA Rules

The wheels of justice may grind slowly, but not so slowly that seized merchandise will be allowed to age its way into an exemption from Federal Regulations, the Federal District Court for the Eastern District of North Carolina recently ruled.

In United States v. Land Rover Vehicles, No. 5: 14-CV-34F (March 31, 2015), a Federal Judge denied claimants’ motion to dismiss an action brought to forfeit a large number of Land Rover vehicles which were imported under cover of false statements regarding compliance with Environmental Protection Agency (EPA) and Department of Transportation (DOT) safety requirements. The importers had claimed that the vehicles were more than 21 years old, and exempt from EPA safety requirements and/or move than 25 years old, and exempt from the DOT requirements. Customs inspectors, however, determined that the vehicles either were not from the model years stated on the declarations, or contained features that were newer, and subject to EPA requirements. The agency worked with Jaguar Land Rover USA to verify that the vehicles were not so old as to be exempt from the EPA and DOT requirements. Seizures followed, and the claimants move to dismiss the government’s forfeiture action.

The District Court denied the motion to dismiss, finding that the government had adequately pleaded facts which, if taken as true, created a plausible likelihood that the violations in question had been committed.  Next, the Court found that the forfeiture action was not barred by the 19 U.S.C. §1621 statute of limitations which bars actions “unless such suit or action is commenced within five years after the time when the alleged offense was discovered, or in the case of forfeiture, within 2 years after the time when the involvement of the property in the alleged offense was discovered, whichever was later.” The Court held that Customs was allowed to take advantage of the longer statute of limitations, even in the case of a forfeiture action.

Finally, the court rejected a novel argument that, even if the vehicles were not old enough for the EPA and DOT exemptions at the time they were imported, some of them had become old enough while the seizure and forfeiture action was pending.  Rather, the court, reasoned, compliance with the law must be determined at the time of importation. Under the claimants’ theory, the court reasoned, a non-compliant new vehicle could be imported without certificates, sit in a Customs impound lot for 25 years, and then be released.  The claimants’ reasoning, the court said, would prompt a surge in imports of non-conforming vehicles in the hope that Customs would not discover the violations until 25 years had passed.  The court therefore allowed the forfeiture action to proceed to trial on the merits.