United States Court of International Trade

Court Sustained Remand Results

In Fengchi Import Export Co., Ltd., et al. v. United States, et al., Court No. 13-186, Slip Op. 15-86 (August 13, 2015), the court sustained the Department of Commerce’s (“Commerce”) remand results.  In the underlying administrative review of the antidumping order on certain magnesia carbon bricks (“MCBs”) from China, Commerce applied a total adverse facts available (“AFA”) to Fengchi as a consequence of Fengchi’ s refusal to respond to Commerce’s request for certain sales  information. See Certain Magnesia Carbon Bricks From the People’s Republic of China: Final Results and Final Partial Rescission of Antidumping Duty Administrative Review; 2010-2011, 78 Fed. Reg. 22,230 (Apr. 15, 2013) (“Final Results”); see also Certain MCBs from the PRC: Issues and Decision Memorandum for the Final Results of the 2010-2011 Administrative Review, (Apr. 9, 2013) PR 148 at 1-2 (“IDM”).  Commerce assigned Fengchi a weighted-average dumping margin of 236% based on the petition rate from the investigation.  In Fengchi I, although the Court determined that Commerce properly relied on AFA in assigning Fengchi’s weighted-average dumping margin, as a consequence of the Federal Circuit’s holding in Fedmet Resources Corp. v. United States, 755 F.3d. 912, (Fed. Cir. 2014), the court became “concerned with Commerce’s potentially unreasonable use of out of scope MACB sales to corroborate the AFA rate.” Id. At Slip Op. 15-23 at 21-22. Therefore, the court remanded the decision so that Commerce could have the opportunity to address this concern at the administrative level. 

However, because Fengchi refused to cooperate with the review, Commerce was precluded from identifying the exact nature of the entries and determining whether they were non-subject MACBs pursuant to Fedmet. Commerce examined the CBP entry documentation for the five sales at issue and found that the documentation described the merchandise as MACBs, but did not contain any additional details regarding the merchandise’s alumina content, which was necessary to distinguish MACBs from MCBs.  Thus, there was nothing in the data which would indicate that the merchandise was out of scope, and thus Commerce reasonably concluded that the five sales used to corroborate the AFA were subject merchandise.  Although Commerce identified additional record evidence, Fengchi failed to comment leaving the record to prices identified by CBP as pertaining to subject merchandise.  While plaintiffs argued that Commerce had to identify the non-subject merchandise, given the circumstances and that Fengchi provided no evidence that the alumina content in MACBs was out of scope, Commerce may only corroborate what was practicable. Remand results were sustained accordingly.

Court Remanded Third Administrative Review Results

In RZBC Group Shareholding Co., Ltd., et al. v. United States et al., Court No. 14-41, Slip Op. 15-83 (Decided August 5, 2015 and Published on August 13, 2015), the court remanded Commerce’s Final Results in regards to averaging benchmarks for subsidy pricing.  This case concerned the third administrative review of a countervailing duty order on citric acid and certain citrate salts from the People’s Republic of China (“China” or “the PRC”). See Citric Acid and Certain Citrate Salts from the People’s Republic of China, 79 Fed. Reg. 108 (Dep’t Commerce Jan. 2, 2014) (final admin. review) (“Final Results”) (covering imports from January 1 to December 31, 2011). Plaintiffs, the RZBC Group Shareholding Co. and related companies (“RZBC” or “Plaintiffs”) sued to reduce the final countervailing duty rate imposed on them by the U.S. Department of Commerce (“Commerce” or “the agency”).

Generally, calcium carbonate (CaCO3), is a versatile commercial compound. It comes in two main forms: ground calcium carbonate and precipitated calcium carbonate. Ground calcium carbonate (“GCC”) is made of crushed limestone, and it’s often used in industrial and pharmaceutical applications. When employed as a purifying agent, GCC may be called limestone flux. Precipitated calcium carbonate (“PCC”) bears the same chemical signature as GCC (CaCO3), but it is created by a chemical process that yields a fine-textured powder. PCC is especially useful in the production of paper.

Plaintiffs argued that the petition for the CVD was too specific to trigger an investigation. although the text of the petition alleged a general calcium carbonate subsidy, one of the exhibits estimated benefit using export data for PCC. RZBC argued that this exhibit narrowed the scope of the petition from calcium carbonate in both its forms (including GCC and PCC) to PCC only. And because it used GCC to produce citric acid, Plaintiffs say the petition was ill-suited to propose an investigation. However, the court found that the petition was targeted at calcium carbonate generally, with no distinction towards PCC or GCC.

The Government of China (GOC) further argued that it did not have an opportunity to provide specific data regarding whether the calcium carbonate subsidy was specific.  Commerce justifiably used facts available to decide specificity. On two occasions, the agency asked the GOC for specific statistical data regarding the use and purchases of calcium carbonate by Chinese industry. On two occasions, Plaintiff-Intervenor responded that it kept no relevant statistics, and instead, the GOC supplied information having no meaningful analytical content. Because the specificity inquiry demanded some mathematical rigor—and because the GOC gave no data to populate the analysis—Commerce reasonably invoked facts available to decide the matter.

After invoking facts available to decide specificity, Commerce inferred that the subsidies were specific to the chemicals industry. The inference selected was adverse to the GOC’s interest because the GOC had not spent best efforts to supply information. Clearly, the agency made plain in prior reviews of the citric acid order that it needed statistics to decide specificity, and yet no information was provided.

Another GOC argument was that the decision to countervail coal and sulfuric acid inputs was contrary to law, because Commerce never established a “causation connection” between the government’s contribution to the traders and the benefit received by RZBC. The court disagreed.  It was reported that the traders bought the inputs from state authorities, which it then transferred to RZBC; thus Commerce was able to create a causation connection and rightfully countervailed these inputs.

Furthermore, during the review period, Plaintiffs purchased the rights to three plots of land for below market value. RZBC did not use the land to manufacture citric acid, but Commerce countervailed the subsidies anyway. Because the law does not preclude subsidies not used to make the subject merchandise, Commerce was correct in countervailing such land use subsidies without deciding its price effect on the subject goods.

As for freight rates, plaintiffs argued that the rates included irrelevant charges, and that the agency could not use rates from countries with no benchmark data.  Before calculating benefit, Commerce increased the calcium carbonate benchmarks by the sum an importer would pay to ship its inputs in flat-rack collapsible containers. However, the court disagreed with plaintiffs’ arguments where it provided no evidence to the contrary. Commerce asked the parties to suggest international freight rates for calcium carbonate and other items. Only the petitioners responded for calcium carbonate, and thus Commerce adopted those rates under plaintiffs’ objections. Moreover, there was no evidence that freight costs from countries with benchmark data are any different than prices from countries without them. RZBC could have submitted such evidence had it been diligent, but it neglected to do so. Absent proof to the contrary, Commerce reasonably averaged freight costs using prices from countries without calcium carbonate, sulfuric acid, and steam coal benchmarks.

Finally, the court remanded Commerce’s methods and data to create input benchmarks for steam coal, sulfuric acid, and calcium carbonate. They argued, among other things, that it was unlawful to average prices to create benchmarks; that it was error to exclude information from countries that shipped to China; and that the combination of simple averages and aberrant price data yielded unrealistic benchmarks. Commerce derives benefit by subtracting the price paid for the subsidized item from the item’s price on the open market. See 19 U.S.C. § 1677(5)(E)(iv). The agency must determine “the adequacy of remuneration . . . in relation to prevailing market conditions for the good or service being provided . . . in the country which is subject to the investigation or review.” The real complications arise before the subtraction, when Commerce estimates the subsidized item’s price on the open market. In ordinary cases, Commerce lifts this number from “actual transactions in the county in question.” 19 C.F.R. § 351.511(a)(2)(i) (2015). If there are no useable market prices for the input, however, then Commerce moves to its second, or “tier two” methodology. In this case, Commerce invoked its tier-two method to construct benchmarks for the steam coal, sulfuric acid, and calcium carbonate subsidies. While the court did not question the “tier two” methodology it did question the simple averaging of prices instead of weighted averaging prices which would favor prices from large quantity shipments. Moreover, Commerce never explained why it used simple averaging for benchmarks for sulfuric acid and calcium carbonate subsidies.  The Court ordered Commerce to reconsider using weighted averaging for sulfuric acid and calcium carbonate, and in regards to steam coal it should reconsider simple averaging in calculating world prices since some data sets were missing information. For these reasons, Commerce’s decision was remanded.

Court Granted Stay in 1581(c) Case

In Deacero S.A. de C.V and Deacero USA v. United States et al., Court No. 14-205, Slip Op. 15-87 (August 17, 2015), Plaintiffs Deacero S.A. de C.V. and Deacero USA, Inc.(collectively, “Deacero”)  argued against the U.S. Department of Commerce’s (“Commerce”) continuation of the antidumping duty order on carbon and certain alloy steel wire rod from Mexico following five-year review. Carbon and Certain Alloy Steel Wire Rodfrom Brazil,Indonesia, Mexico, Moldova, and Trinidad and Tobago, 79 Fed. Reg. 38,008 (Dep’t Commerce July 3, 2014) (continuation of antidumping & countervailing duty orders) (“Continuation Notice”). Deacero claimed that, in the Continuation Notice, Commerce was required by law to expressly confine the scope of the antidumping duty order to wire rod with an actual diameter above 5.00 mm.  Commerce’s position that 4.75 mm wire rod was within the Order’s scope and Commerce’s initial Circumvention Determination is nowbefore the Federal Circuit on appeal (hereinafter the “Federal Circuit appeal”.) Before the court was Arcelormittal’s motion for dismissal under USCIT Rule 12(b)(l), arguing that the court lacks jurisdiction to hear Deacero’s claim under 28 U.S.C. § 1581(c) (2012) and§ 1581(i)(4), the two jurisdictional bases asserted by Deacero. Alternatively, Arcelormittal asked that the court stay this case pending the Federal Circuit’s decision in the appeal of a related lawsuit. The court held that it has jurisdiction under§ 158l(c) but that a stay is proper.  In regards to the lack of jurisdiction, Arcelormittal argued that Deacero did not participate in the proceeding resulting in the Continuation Notice, and therefore no final decision was issued that could claim the court’s jurisdiction under 1581(c).  However, Deacero did “actively participate[]” in the “segment[ s] of [the] proceeding” relevant to Deacero’s claim-at least to the extent that it had the opportunity. Id. As Arcelormittal conceded, Deacero participated in the lTC ‘s five-year injury determination, the proceeding that, according to Deacero, mismatches Commerce’s Continuation Notice. However, there was no procedure for Deacero to participate in the continuationof the Order (or subsequent publication of the Continuation Notice). Commerce’s five-year review of an antidumping duty order concludes when Commerce either revokes or continues an order under§ 1675(d)(2). When Commerce revokes or continues an order, 19 U.S.C. § 1677f(i)(1) provides that Commerce “shall publish the facts and conclusions supporting th[ e] determination, and shall publish notice of th[ e] determination”-in other words, Commerce shall publish a revocation or continuation notice–“in the Federal Register.” After publication of the notice, there were no further actions for Commerce to take. See id. §§ 1675(d)(2), 1677f(i)(1). Because publication of the revocation or continuation notice was Commerce’s last step in five-year review, it also culminated Commerce’s final determination under§ 1675.  Cases cited by Deacero were not controlling here, and therefore the court found jurisdiction under 1581(c).

As for the stay, Arcelormittal argued that these proceedings should be stayed pending a decision in the Federal Circuit appeal, primarily for the sake of judicial economy. Because the injunction on liquidation will remain in place until the Federal Circuit appeal is resolved, Deacero can obtain no remedy in this case until that time. Put another way, staying this case puts Deacero in no different a situation than it is already in. A stay will not damage Deacero ‘s interests.  Thus the court ordered the stay.

Court Granted and Denied in Part Plaintiff’s Motion in 1582 Suit

In United States v. American Home Assurance Company, Court No. 09-403, Slip Op. 15-88 (August 19, 2015), the government sued for collection of interest on non-payment of duties.  For entries in which antidumping duties do not exceed the face value of the bonds (Court Nos. 09-00403 and 10-00343), the Government sought statutory pre-judgment interest under 19 U.S.C. § 1505(d) (“post-liquidation interest” or “1505(d) interest”) for non-payment of the duties. Over and above any antidumping duties and 1505(d) interest owed, the Government claimed statutory pre-judgment interest as an exaction pursuant to 19 U.S.C. § 580 (“580 interest”) for having to commence these four collection actions. The Government also sought equitable pre-judgment interest on any amounts in excess of the face amounts of the relevant bonds to compensate the Government for the loss of the time value of the funds owed. Finally, the Government maintained that it is entitled to post-judgment interest under 28 U.S.C. § 1961.

As to post liquidation interest, American Home Assurance Company  (“AHAC”) argued that Customs Border Protection’s (CBP) decision to seek 1505(d) interest was made post-liquidation, and therefore was not protestable under § 1514.  However, the court granted payment on post liquidation interest, where it held that such interest was protestable under 19 U.S.C. § 1514 as charges or exactions.  Moreover, the basic importation and entry bonds at issue statutorily and contractually include and cover the payment of “duties” and any attendant interest.  Because AHAC failed to contest its denied protests, CBP’s charge of 1505(d) interest is final and conclusive pursuant to § 1514. As a result, AHAC could not assert any defenses to its liability for 1505(d) interest.

As for 580 interest, the Federal Circuit held in a previous companion case, that such interest may be collected on duties and antidumping duties involving the same litigants, but different bonds. See United States v. Am. Home Assurance Co., 789 F.3d 1313, 1324-28 (2015) (“Am. Home Assurance I”). There the Federal Circuit held, “as a matter of law, that 19 U.S.C. § 580 provides for interest on bonds securing both traditional customs duties and antidumping duties.” Id. at 1324. Per this precedent, AHAC was therefore liable for statutory prejudgment interest on the unpaid antidumping duties secured by the subject bonds. In accordance with § 580, that interest will run at a rate of 6% per annum from the date the subject bonds became due, which is the date of the Government’s first formal demand for payment.

As to equitable prejudgment interest, AHAC contended that equitable considerations do not favor an award of prejudgment interest in this action where it did not engage in dilatory conduct by “unjustly withhold[ing] payment [of the dumping duties] after being notified of the default of the [bond] principal[s].” Slip Op. pg. 15 citing Def.’s Resp. Br. in Opp. to Pl.’s Mot. for Summ. J.  AHAC also asserted that the Government engaged in unnecessary delay by waiting until a few days prior to the expiration of the applicable statute of limitations to commence this action, and that its factual and legal positions in defending this action were reasonable. Lastly, AHAC argued that any award of equitable pre-judgment interest is precluded by the Continued Dumping and Subsidy Offset Act of 2000, 19 U.S.C. § 1675c (2000) (“CDSOA”).  While the court found no delay in the commencement of the action, and that AHAC never paid outstanding duties, with one exception, the court denied such award of interest. Because the 580 interest exceeds the amount for equitable interest, the equitable prejudgment interest would overcompensate the government in the circumstances. 

Finally, the court found for the government in regards to the allocation of the $500,000 partial duty payment towards interest, as well as the award of post judgment interest under 28 U.S.C. § 1961(a), where the suit on the bond resulted in a money judgment against AHAC.