CP Kelco US, Inc. v. United States
2017 CIT 18
| Ct. Intl. Trade | 2017Background
- Commerce conducted an antidumping investigation of xanthan gum from China and selected Ajinomoto (Thailand) financial statements over Thai Fermentation for surrogate financial ratios.
- Commerce initially discarded Thai Fermentation because parts were untranslated, without finding the missing portions were "vital."
- Thai Ajinomoto statements, which Commerce favored, showed evidence of countervailable subsidies.
- The court remanded twice, instructing Commerce to better justify choosing Ajinomoto over Thai Fermentation or to find the missing Thai Fermentation information "vital."
- On second remand, Commerce announced a new practice: reject any incomplete financial statements unless no other statements exist, and again chose Ajinomoto without a side-by-side, reasoned comparison.
- The court found Commerce’s new blanket practice unreasonable and its selection unsupported by substantial evidence, and again remanded for a reasoned determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce may adopt and apply a new policy rejecting all incomplete financial statements retroactively | CP Kelco argued Commerce’s application here was improper because it ignored record specifics and law requiring best available information | U.S. argued Commerce may change practices and can reject incomplete statements as a reasonable methodology | Court: Commerce may change policy, but must justify it; the new blanket practice is unreasonable in this case and not supported by substantial evidence |
| Whether Commerce properly rejected Thai Fermentation statements for partial untranslated footnote(s) | CP Kelco contended the untranslated portions were de minimis and Commerce failed to show they were "vital" | Commerce relied on its new practice and concerns about incomplete/translational gaps and potential gaming | Court: Commerce must either compare both statements side-by-side or show the missing Thai Fermentation information is factually "vital"; Commerce did neither, so rejection unsupported |
| Whether Commerce properly relied on Ajinomoto statements despite evidence of countervailable subsidies | CP Kelco argued Commerce failed to analyze how subsidies affect reliability and whether Ajinomoto remained the best source | Commerce treated Ajinomoto as "complete and reliable" and selected it over incomplete statements | Court: Commerce failed to analyze subsidy-related reliability concerns and did not support preferring Ajinomoto; selection unsupported |
| Standard for agency review when departing from prior practice | CP Kelco: departure must be shown reasonable and supported by substantial evidence | U.S.: agencies have discretion to change policies and may apply them retroactively if reasonable | Court: Agency must clearly explain and justify departures; here Commerce did not provide adequate, record-specific reasoning |
Key Cases Cited
- Shakeproof Assembly Components, Div. of Ill. Tool Works, Inc. v. United States, 268 F.3d 1376 (Fed. Cir.) (agency must use best available information to establish accurate margins)
- Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378 (Fed. Cir. 2014) (Commerce has broad discretion to determine best available information)
- FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (agency must provide reasoned justification when changing policy)
- Wheatland Tube Co. v. United States, 161 F.3d 1365 (Fed. Cir. 1998) (courts seek a reasoned analysis from agencies)
- Pakfood Pub. Co. v. United States, 753 F. Supp. 2d 1334 (Ct. Int’l Trade 2011) (agency may change policy but must act reasonably and consistently with statutory mandate)
- Goldlink Indus. Co. v. United States, 431 F. Supp. 2d 1323 (Ct. Int’l Trade 2006) (review asks whether a reasonable mind could conclude Commerce chose the best available information)