Commerce Right to Calculate Respondent's Energy Costs Separately, US Says
The U.S. defended its decision to calculate energy costs for a review's mandatory respondent directly rather than as part of the respondent's selling, general and administrative costs, in a Feb. 27 motion, saying that the calculation was made more accurate because the Commerce Department had been given better information from a surrogate than it had ever received before (Neimenggu Fufeng Biotechnologies Co. v. U.S., CIT # 23-00068).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
In its motion, DOJ asked to dismiss one count for lack of standing and reject motions for judgment regarding the rest that appeared in a complaint contesting the results of the 2020-2021 antidumping duty review on xantham gum from China.
For the review’s final results, Commerce calculated surrogate energy values for sole mandatory respondent Fufeng “directly, rather than as a part of SG&A” as it had done for the preliminary results. This made Fufeng’s AD margin jump from zero percent in the preliminary results to 17.36%. That higher rate was also applied to consolidated plaintiff Meihua, a non-individually examined respondent to the review. Both exporters brought suits to the Court of International Trade; Fufeng in particular included seven counts in its complaint that challenged decisions the department made, ranging from its application of the Cohen’s d test to its constructed normal value calculations using surrogate values.
Substantial evidence supports Commerce’s decisions to calculate Fufeng’s energy costs as factors of production rather than SG&A expenses and to deduct Section 301 tariffs from Fufeng’s normal price, DOJ said.
Commerce changed its energy cost calculation method because the surrogate financial info Commerce used in this review broke out its SG&A expenses differently than in previous records, “which enabled Commerce to directly value energy more precisely than in past reviews and to avoid double-counting,” the government said.
This information, available to the department for the first time, resulted in a more accurate cost calculation, DOJ said. It argued this accuracy was especially warranted because the xanthan gum’s manufacturing process is very energy-intensive. The new method also allowed the department to rely on Fufeng's own reported energy input costs.
Fufeng argues the revised calculation is inconsistent with past practice but “neglects the factual distinctions between Commerce’s past proceedings and the underlying review,” the government said. Even if the calculation is a deviation from standard procedure, Fufeng hasn't explained why it is unreasonable, it said.
The government also said that Commerce’s decision to deduct Section 301 tariffs from Fufeng’s normal price was likewise supported by substantial evidence and not “double remedies,” as the exporter alleges. Fufeng misinterprets section 301 duties, which are supposed to be assessed on top of CVD/AD, DOJ said.
Finally, the government argued that Fufeng hadn't exhausted administrative remedies with respect to Commerce’s surrogate value selections for the company’s coal inputs, a matter disputed in another of the seven charges brought by the exporter.
“Commerce granted Fufeng several opportunities to comment on or provide argument regarding the HTS number used to value coal,” but Fufeng didn't raise any challenges on that point until its administrative rebuttal brief, when it should have done so in an administrative case brief if it wanted Commerce to consider those claims, DOJ said.
It disagreed with Fufeng that those claims were brought up in a petitioner’s brief following the review’s preliminary determination that asked Commerce to value Fufeng’s energy directly. Those issues are distinct, it said.
DOJ also asked the court to dismiss Fufeng’s Cohen’s d test charge. Fufeng can’t litigate Commerce’s choice to use the Cohen’s d test since the exporter can’t prove it was harmed, the department said, because although Commerce did attempt to use the test, the test “resulted in no meaningful difference to Fufeng’s dumping margin.”