Slip Op. 17-52

UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Leo M. Gordon, Judge

Court No. 14-00202

OPINION [Remand results sustained.]

William D. Kramer an d Martin Schaefermeier, DLA Piper LLP (US), of Washington, DC for Plaintiffs CC Metals and Alloys, LLC and Globe Specialty Metals, Inc. Peter A. Gwynne, Trial Attorney, Commerc ial Litigation Branch, Civil Division, U.S. Department of Justice, of Wa shington, DC for Defendant United States. With him on the brief were Benjamin C. Mize r, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Devin S. Sikes, Senior A ttorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement and Compliance of Washington, DC. Sydney H. Mintzer and Jing Zhang, Maye r Brown LLP, of Washington, DC for Defendant-Intervenors Kuznetsk Ferroalloys OA O, Chelyabinsk Electro-Metallurgical Plant OAO and RFA International LP, Calgary (Kanada) Schaffausen. Dated: April 28, 2017 Gordon, Judge: The U.S. D epartment of Commerce has filed its Final Results of Redetermination (“Remand Results”), ECF No . 61, pursuant to CC Metals and Alloys, LLC v. United States, 40 CI T ___, 145 F. Supp. 3d 1299 (2016) (“CC Metals”). The court

in CC Metals sustained most of the issues Plaintiffs raised, but remanded two minor

issues for Commerce to address: (1) Commerce’s treatment of certain post-sale home CC METALS AND ALLOYS, LLC, AND GLOBE SPECIALTY METALS, INC., Plaintiffs,

v. UNITED STATES,

Defendant.Court No. 14-00202 Page 2

market warehousing expenses and revenue, CC Metals, 40 CIT at ___, 145 F. Supp. 3d at 1308; and (2) Commerce’s possible error us ing a simple, as opposed to a weighted, average in calculating home ma rket imputed credit expenses, id., 40 CIT at ___, 145 F. Supp. 3d at 1311.

The court notes that it e rred in remanding these issues to Commerce without first ascertaining whether either issue had a mate rial effect on the le ss than fair value determinations. As Commerce explains in t he Remand Results, neither issue does, and any error was therefore harmless. It was ther efore a waste of administrative resources for the court to require a rem and in this case. The court bel ow briefly reviews Plaintiffs’ challenges to the Remand Results, fa miliarity with which is presumed.

Treatment of Home Market Warehousing Expenses And Revenue Commerce provides a detailed explanation in the Remand Re sults that its narrative description in the final determi nation was not consistent with its actual treatment of home market warehousing expenses and revenue in the margin calculation program, and that despite the error in its narrative , it did in fact account for those items lawfully under the statute, as well as under it s regulations and practice. Remand Results at 7-13, 16-19. Commerce does identify one immaterial wrinkle: the inability to dist inguish on-site and off-site warehousing revenue reported in one fi eld of the margin pr ogram. Id. at 11-12. Commerce explains that this issue had no materi al effect on the margin (and also provides

an alternative calculation as further su pport of the issue’s immateriality). Id. Although Plaintiffs note that on-site and off-site warehous ing revenue are not separatelyCourt No. 14-00202 Page 3

distinguished in the margin program, they proffer no alte rnative calculations that demonstrate a material effect on the margin. 1 Plaintiffs instead argue t hat the only way to addre ss the issue of on-site warehousing is for Commerce to adjust for it as a miscellaneous income item, but Plaintiffs fail to provide any authority for th is proposed treatment. Inst ead, they argue that on-site warehousing has to be treated the sa me as sizing revenue. Commerce, however, reasonably explained in the Re mand Results why similar treatment was unwarranted. See Remand Results at 18 (“[W]e treated sizing as an o ffset to cost because we considered it to be a step in the manufacturing process, rather than a service or expense for finished merchandise.”) (citing Issues an d Decision Memorandum at 25)). The court

therefore sustains Commerc e’s treatment of warehous ing expenses and revenue. Imputed Credit Expenses In the Remand Results Commerce explained t hat it “inadvertently applied a simple average of the short-term intere st rates, rather than a wei ghted-average of the short-term interest rates,” and Commerce corrected the calculation. Remand Results at 13. Commerce calculates the weighted-average in terest rate for credit expenses based on the weighted-average interest rate paid by the respondent for short-term loans in the currency of sale. If “the respondent (the selle r) has short-te rm borrowings in the same

1 Plaintiffs suggest it is possible to ascertai n which portion of total reported revenue is related to on-site warehousing and off- site warehousing, respectively, see Pls.’ Comments at 4-5 n.3-4, ECF Nos. 65, 66, but for what ever reason plaintiffs chose not to present these figures and argument to Commerce in the first instance during the remand proceeding, and the court must ther efore deem these arguments waived. See 28 U.S.C. § 2637(d); Dorbest Ltd. v. Unit ed States, 604 F.3d 1363, 1375 (Fed. Cir. 2010).Court No. 14-00202 Page 4

currency as that of the transaction, [Com merce uses] the respondent’s own weightedaverage short-term borrowing rate realized in that currency to quantify the credit expenses incurred.” Policy Bulletin 98.2: Im puted credit expenses and interest rates, (“Policy Bulletin 98.2”) dated February 23, 1998, found at: http://enforcement.trade.gov/pol icy/bull98-2.htm (last visited on this date). If a respondent has no short-term borrowings in the curren cy of the transaction, Commerce “will use publicly available information to establish a s hort-term interest rate applicable to the currency of the transaction.” Id. “Irrespective of whether the s hort term rate is derived from a respondent's actual borrowing experience or from a published sour ce, it is always

reflective of all short-term loans with maturiti es of one year or less. ” Certain Oil Country Tubular Goods from the Repub lic of Philippines, 79 Fed. Reg. 41,976 (Dep’t Commerce July 18, 2014) (final determ.), Issues and Decision Me morandum at 18 (Comment 3) (emphasis added).

In the final determination Commerce used a “simple” average of short-term rates derived from a small set of Chelyabinsk Electr ometallurgical Integrated Plant Joint Stock Company’s (“CHEMK”) factoring arrangements t hat Commerce examined at verification. In the investigation Commerce h ad not specifically requested in terest rate data for all of CHEMK’s factoring arrangements dur ing the period of investigati on (“POI”). At verification Commerce did, however, examine a small se t of CHEMK’s factoring arrangements. Commerce, in turn, used the rates from thos e verified transactions to derive the shortterm interest rate for imput ed credit expense. As noted, Co mmerce inadvertently applied a simple rather than a weight ed-average in the calculation, an error it corre cted in theCourt No. 14-00202 Page 5

Remand Results. Plaintiffs make a “legal” ar gument that Commerce’s use of the relatively small set of CHEMK’s factoring arrangements to deriv e the weighted-average short term rate

violates Commerce’s interest rate selecti on practice because Commerce failed to use all of CHEMK’s factoring arrangements during t he POI. Plaintiffs instead prefer that Commerce use ruble-denominated rates from pub lished sources that were used in the preliminary determination.

Plaintiffs misunderstand Commerce’s practice. As noted above, Commerce attempts to select an interest rate that is “r eflective of” all short-term borrowings. In this case CHEMK’s complete short-term borrowing data was (for a variet y of non-nefarious reasons) not on the record. Properly framed, t he issue is simply which of the two proposed

rates best reflects CHEMK’s short-term borrowing. A reasonable mind could choose a

rate derived from CHEMK’s verified data as being more reflective of CHEMK’s borrowing experience than a rate derived from published rates with no connection to CHEMK. Accordingly, Commerce’s short-term bo rrowing rate selection is sustained.

Conclusion For the foregoing reasons, the Remand Resu lts are sustained. Judgment will enter accordingly.

/s/ Leo M. Gordon Judge Leo M. Gordon

Dated: April 28, 2017 New York, New York