OPINION
This matter returns to the court following a decision by the Court of Appeals for the Federal Circuit affirming in part and reversing in part this court’s decision in
Essar Steel Ltd. v. United States,
The Federal Circuit, however, in its decision affirming Commerce’s application of AFA, observed that “the countervailing duty imposed for Essar’s participation in the CIP
was on par with similar subsidy programs and therefore not punitive.
Commerce did not err in its application of adverse facts, and no party argues that the application of adverse facts based on the record before the remand was punitive.”
Essar,
I. STANDARD OF REVIEW
When reviewing Commerce’s countervailing duty determinations under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c), the U.S. Court of International Trade sustains Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is “reasonable and supported by the record as a whole.”
Nippon Steel Corp. v. United States,
II. DISCUSSION
This case involves an administrative review of a countervailing duty order covering Certain Hot-Rolled Carbon Flat Products from India. See Final Result, 74 Fed. Reg. 20,923. In the Final Results, Commerce found that Essar had failed to cooperate by not acting to the best of its ability to comply with a request for information about its participation in the CIP programs, justifying application of adverse facts available. See Decision Memorandum at 6. Although Commerce attempted to calculate an individual rate for Essar based on the benefit received from the CIP programs, it was unable gather the necessary information from respondents, and therefore relied on secondary information to derive a rate. See id. Specifically, Commerce used the highest above de minimis subsidy rate calculated for similar programs (from prior proceedings) involving grants, the provision of goods for less than adequate remuneration (LTAR), and indirect taxes. See id. at 22-26. Commerce explained its methodology for calculating the AFA rate assigned to Essar for its participation in the CIP programs but did not discuss the specific issue of corroboration. See id. at 3, 6, 22-26.
Essar claims that Commerce failed to corroborate the AFA rate that it calculated for Essar’s participation in the CIP programs. PI. Br. 33; PI. Reply 10. Specifically, Essar argues that Commerce failed to establish the relevance of the rate assigned to Essar as a reasonably accurate estimate of its actual rate. PI. Br. 36-37 (citing
Fujian Lianfu Forestry Co. v. United States,
33 CIT -, -,
In
Fujian Lianfu Forestry Co., Ltd. v. United States,
33 CIT -, -,
When applying a total AFA rate, Commerce shall, “to the extent practicable,” corroborate that rate “from independent sources that are reasonably at [its] disposal.” 19 U.S.C. § 1677e(c). The statute does not prescribe any methodology for corroborating a total facts available rate, but the regulations state that corroborate “means that the Secretary will examine whether the secondary information to be used has probative value.” 19 C.F.R. § 351.308(d) (parroting Uruguay Round Agreements Act Statement of Administrative Action, H.R.Rep. No. 103-316, vol. 1 at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 4199). A total facts available proxy rate should therefore have probative value of a “reasonably accurate estimate of the respondent’s actual rate, albeit with some built-in increase intended as a deterrent to noncompliance.” De Ceceo,216 F.3d at 1032 . As a general matter, Commerce assesses the probative value of secondary information by examining its reliability and relevance. See Ball Bearings and Parts Thereof from France, Germany, Italy, Japan,Singapore, and the United Kingdom, 70 Fed.Reg. 54, 711, 54,712-13 (Sept. 16, 2005) (final results). For specific secondary information like a total facts available proxy, the corroboration analysis therefore depends on whether the proxy is a reliable and relevant indicator that satisfies the De Ceceo standard.
Id.
The
Fujian
court, albeit in the context of an antidumping proceeding, issued a remand because Commerce’s “attempted corroboration never explains whether the selected proxy is a reliable and relevant indicator of a ‘reasonably accurate estimate of [respondent’s] actual rate, albeit with some built-in increase intended as a deterrent to noncompliance.’ In short Commerce never ties the rate to [respondent].”
Id.
at 1336 (quoting
F.lli De Ceceo Di Filippo Fara S. Martino S.p.A. v. United States,
Although this action involves a CVD proceeding, the corroboration requirement applies equally to both,
see
19 U.S.C. 1677e(c). When Commerce resorts to secondary information (in either a CVD or antidumping proceeding), Commerce must corroborate that information, or explain why such corroboration is not practicable.
See id.
Here, although Commerce used secondary information to calculate Essar’s AFA rate, Commerce did not discuss corroboration.
See Decision Memorandum
at 3, 6, 22-26. Counsel for Defendant provides some explanation as to why Commerce’s AFA calculation was properly corroborated, Def. Br. 27-33, but these are
post hoc
rationalizations of agency counsel to which the court may not defer.
See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
• For over a decade the court has applied the
De Ceceo
standard to review the reasonableness of Commerce’s AFA rate choices in antidumping proceedings. Under that standard the court reviews whether Commerce chose a reasonably accurate estimate of the respondent’s actual dumping rate with some built-in increase to deter non-compliance.
See DeCecco,
Bear in mind that the court is not rejecting the notion that Commerce may have selected a reasonable AFA rate, but to sustain such a rate the court needs Commerce to explain (1) how it corroborated the AFA rate assigned to Essar,
or
(2) why corroboration is not practicable.
See
19 U.S.C. § 1677e(c);
see also Sodium Nitrite From the People’s Republic of China: Final Affirmative Countervailing Duty Determination,
73 Fed. Reg. 38,981,. 38,-983 (Dep’t Commerce 2008) (“Unlike other types of information, such as publicly available data on the national inflation rate of a given country or national average interest rates, there typically are no independent sources for data on company-specific bene
Essar also challenges Commerce’s AFA rate calculation as punitive. PI. Br. 39. The court, however, does not believe this issue has merit. Essar specifically argues that the AFA rate is punitive “considering that in past reviews Commerce never found Essar to have used the [CIP] program at issue.” Pl. Br. 39 (citing
Am. Silicon Tech. v. United States,
Again, the central issue here is corroboration. Commerce must corroborate Essar’s AFA rate or explain why corroboration is not practicable. See 19 U.S.C. § 1677e(c).
III. CONCLUSION
The court cannot sustain Commerce’s AFA rate calculation in its current posture. Accordingly, the court remands to Commerce to address the corroboration requirement under 19 U.S.C. § 1677e(c). It is hereby
ORDERED that this action is remanded to Commerce to address the issue of corroboration; it is further
ORDERED that Commerce is to file its remand results on or before December 14, 2012; and it is further
ORDERED that the parties are to file their comments (limited to 10 pages), if necessary, no later than 45 days after Commerce files its remand results with the court.
Notes
. The CIP provides incentives to accelerate the process of industrialization in the state. It is a subsidy that Commerce has deemed countervailable.
See Certain Hot-Rolled. Carbon Steel Flat Products from India,
74 Fed. Reg. 20,923 (Dep’t Commerce May 6, 2009) (final results CVD review)
(“Final Results")', see also Issues and Decision Memorandum: Final Results and Partial Rescission of Countervailing Duty Administrative Review, Certain