RZBC Group Shareholding Co. v. United States
100 F. Supp. 3d 1288
Ct. Intl. Trade2015Background
- This case is a challenge to Commerce’s third administrative review of countervailing duties on citric acid and certain citrate salts from the PRC (covering 2011); Commerce imposed a 35.87% total CVD rate on RZBC based on subsidies for inputs (steam coal, sulfuric acid, calcium carbonate), land-use, and other measures.
- Petitioners alleged calcium carbonate subsidies (did not specify PCC vs GCC); Commerce investigated and ultimately measured benefit using GCC (limestone flux) data and found a countervailable subsidy.
- Commerce sought statistics from the GOC on calcium carbonate consumption by industry to determine specificity; the GOC failed to provide the requested volume/value data, and Commerce applied adverse facts available (AFA) to find the subsidy specific.
- Commerce countervailed inputs purchased by RZBC from private trading companies (steam coal and sulfuric acid) on the theory that government contributions to traders conferred downstream benefits to RZBC.
- Plaintiffs challenged Commerce’s world-market benchmark calculations for steam coal, sulfuric acid, and calcium carbonate, principally because Commerce used simple (unweighted) averages that gave undue effect to small, high‑price, low‑quantity transactions; the court remanded benchmarks for reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether petition supported investigation of calcium carbonate subsidy | RZBC: petition misidentified the type used (PCC vs GCC) so investigation was improper | Commerce/Government: petition adequately alleged subsidy with reasonably available info | Held: Petition sufficient; Commerce properly investigated and used correct tariff subheading (GCC/limestone flux) |
| Whether GOC’s failure to provide consumption data justified AFA and finding of specificity | GOC: it cooperated and lacked the requested statistics; AFA improper | Commerce: GOC failed to provide volume/value data or timely request assistance; adverse inference warranted | Held: Commerce properly used facts available and drew an adverse inference; specificity finding sustained |
| Whether inputs sold through private trading companies are countervailable | GOC: no demonstrated causal link from government contribution to benefit received by RZBC | Commerce: subsidy can pass through intermediaries; traders’ discounted purchases can confer benefit to downstream users | Held: Commerce lawfully countervailed inputs purchased via traders; no requirement that government directly order trader sales |
| Whether Commerce’s world-market benchmarks (steam coal, sulfuric acid, calcium carbonate) were lawfully calculated | RZBC/GOC: simple averaging distorted benchmarks by over-weighting small, high-price shipments; Commerce should use weighted averages or justify simple averages; also challenged exclusion of China-bound shipments and regionality of data | Commerce: averaging is permissible under tier-two; excluded China-bound shipments to avoid distortions; included mixed data sources for robustness | Held: Tier-two method lawful and data use generally acceptable, but Commerce must reassess whether to use weighted vs. simple averages because simple averages caused distortions from small-quantity, high-price transactions; remand ordered to recalc benchmarks and CVD rate |
Key Cases Cited
- Delverde, S.r.l. v. United States, 202 F.3d 1360 (Fed. Cir.) (subsidy may be found where government contribution confers a benefit directly or indirectly)
- Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716 F.3d 1370 (Fed. Cir.) (Commerce determinations sustained unless unsupported by substantial evidence or not in accordance with law)
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir.) (standards for "best of one's ability" in cooperating with Commerce)
- AK Steel Corp. v. United States, 192 F.3d 1367 (Fed. Cir.) (analysis of whether private financial actions were government-directed for CVD purposes)
- Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330 (Fed. Cir.) (agency need not give formal deficiency notice where party indicates it will not provide information)
- Burlington Truck Lines, Inc. v. United States, 371 U.S. 156 (U.S.) (agency must articulate basis for discretionary decisions)
- SEC v. Chenery Corp., 318 U.S. 80 (U.S.) (courts may not accept post-hoc rationalizations for agency decisions)
- Beijing Tiankai Industrial Co. v. United States, 52 F. Supp. 3d 1351 (CIT) (subsidies can be countervailed even when contribution and benefit are received by different entities)