CIT Sustains Changed Circumstances Review in CVD Case on Argentine Biodiesel
The Court of International Trade said the Commerce Department had sufficient evidence in its changed circumstances review that found that the situation had not changed regarding countervailable subsidies for Argentina's biodiesel industry. Judge Gary Katzmann, in a Sept. 21 opinion, also held that Commerce, which originally found changed circumstances but later switched back to a finding of no changed circumstances, acted in accordance with the law.
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The review followed a countervailing duty investigation into biodiesel from Argentina and Indonesia wherein Commerce found that Argentina placed a 30% higher export tax on soybeans than on biodiesel, designed to benefit biodiesel producers. A 72.28% CVD rate was put in place based on this tax differential.
The Argentine government subsequently requested a CCR, declaring that the export taxes on soybeans and biodiesel had converged. In its preliminary determination, Commerce agreed, slashing the CVD rate to 0.19%. But, after a new government was elected in Argentina, the situation changed. New information was added to the record, showing that Argentina's export tax regime was changed seven times. In the final results, Commerce found the export tax regime to be in “flux,” and thus maintained the original CVD rate.
Argentina and consolidated plaintiff LDC Argentina, S.A., then challenged this finding, arguing that Commerce could not reverse its initial decision and that this finding wasn't backed by substantial evidence. Katzmann ruled against the plaintiffs, saying that since the statute is silent on the substantive analysis required by Commerce in a CCR, the agency is entitled to Chevron deference. Also, because the preliminary results were not final agency action, Commerce can change its mind, Katzmann held.
"[Defendant-intervenor National Biodiesel Board's] Fair Trade Coalition and members are grateful that the Department of Commerce stood by U.S. biodiesel producers and made the right decisions to maintain fair trade conditions," NBB's VP of Federal Affairs Kurt Kovarik said in a press release. "NBB participated throughout the review to ensure the evidentiary record was current and complete. We are pleased that the court's review supports the outcome of that process."
The judge also said that the final results were backed by substantial evidence. The new government changed the export tax regime, thus throwing off any determinations that could be made on any previous tax regime changes. “Commerce found that 'there [were] no longer clear cut and discrete changes to examine' based on the seven times since the underlying CVD investigation in 2016 that Argentina’s export tax regime had changed,” Katzmann said.
The Argentine government and LDC also argued that the original CVD rate was based on the export tax differential between soybeans and biodiesel, not the individual export taxes for the two goods. Not true, Katzmann said. “Plaintiffs rely too heavily on the export tax differential between soybeans and biodiesel,” the opinion said. “While the consistent export tax differential between soybeans and biodiesel may detract from Commerce’s final negative CCR determination, the numerous changes to Argentina’s export tax regime and the draft bill stating that export duties would be reduced for goods that added value through their production detract from a conclusion that the countervailable subsidies found in the underlying investigation were no longer in place.”
The plaintiffs also argued that the final results were based on speculation on the direction of the export tax regime. “Although Commerce based its conclusions in part on predictions about Argentina’s export tax regime in the immediate future, these predictions were based on trends established by substantial record evidence and existing circumstances,” Katzmann countered. Finally, the plaintiffs argued against the perceived untimeliness of the final results because they were issued after 270 days from the initiation of the CCR, due to the government shutdown in 2019. But they didn't raise this issue administratively, so couldn't raise it before the court, Katzmann said.
(Government of Argentina, et al. v. United States, Slip Op. 21-124, CIT Consol. # 20-00119, dated 09/21/21, Judge Gary Katzmann. Attorneys: Frank Morgan of Trade Law Defense for plaintiff Government of Argentina; Jessica Lynd of White & Case for consolidated plaintiff LDC Argentina, S.A.; Joshua Kurland for defendant U.S. government)