# United States **Court of Appeals**  **for the Federal Circuit**

______________________ ESSAR STEEL, LIMITED , Plaintiff

- Appellant,

v.

UNITED STATES, Defendant

- Appellee,

AND

UNITED STATES STEEL CORPORATION, Defendant

- Appellee.

______________________

2013

- 1416

______________________ Appeal from the United States Court of International Trade in No. 09

- CV

- 0197, Senior Judge Judith M. Barz ilay.

______________________

Decided: June 12, 2014

______________________

D ANIEL M ORRIS , Dentons US LLP, of Washington, DC, argued for plaintiff

- appellant. With him on the brief was M ARK P. L UNN

.

D AVID D’A LESSANDRIS , Trial Attorney, Commercial Litigation Branch, Civil Division, United States Depar tment of Justice, of Washington, DC, argued for defendant

-ESSAR STEEL LIMITED v. US 2

appellee United States. With him on the brief were S TUART F. D ELERY , Assistant Attorney General, J EANNE E. D AVIDSON , Director, and P ATRICIA M. M C C ARTHY , Assistant Director. Of counsel on the brief was N ATHANIEL H ALVORSON , Attorney, International Trade, Office of the Chief Counsel for Trade Enforcement & Compliance, United States Department of Commerce, of Washington, DC.

N ATHANIEL B. B OLIN , Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, DC, argued for defendantappellee United States Steel Corporation. With him on the brief were R OBERT E. L IGHTHIZER and J EFFREY D. G ERRISH . Of counsel were J AMES C. H ECHT , of Washin gton, DC

, and S TEPHEN J. N ARKIN , of Palo Alto, California.

______________________

Before N EWMAN , L OURIE , and T ARANTO , Circuit Judges.

L OURIE , Circuit Judge

. Essar Steel Ltd. (“Essar”) appeals from the decision of the United States Court of International Trade (the “T rade C ourt”) affirming the United States Department of Commerce’s (“Commerce”) corroboration of the adverse fact s available (“AFA”) rate from the fifth administrative review of the countervailing duty order covering certain hot

- rolled carbon steel flat products from India. See Essar Steel Ltd. v. United States

, 908 F. Su pp. 2d 1306 (Ct. Int’l Trade 2013). Because we agree with the Trade Court that Commerce corroborated the AFA rate to the extent pract icable , we affirm.

B ACKGROUND Essar is an Indian steel manufacturer with a facility in the state of Chhattisgarh, India that imports hot -rolled carbon steel flat products into the United States. In 2008, Commerce initiated an investigation to assess whether Essar received countervailable subsidies for its iron oreESSAR STEEL LIMITED v. US 3

products in India for the period of rev iew from January 1, 2007 through December 31, 2007. See Initiation of Ant idumping and Countervailing Duty Administrative R eviews and Request for Revocation in Part , 73 Fed. Reg. 4829 (Jan. 28, 2008).
Commerce investigated Essar’s receipt of benefits from nine separate subsidies provided under the Chhattisgarh Industrial Program ( “ CIP ” ) administered by the s tate g overnment of Chhattisgarh

. Essar , 908 F. Supp. 2d at 1310

– 11. In response to Commerce’s requests for information on its use of and benefit from the CIP subsidies, Essar repeatedly denied receiving any CIP subsidies based on a claim that Essar d id not have any manufacturing facilities in Chhattisgarh. Essar Steel Ltd. v. United States , 678 F.3d 1268, 1275 (Fed. Cir. 2012)

. Commerce found, however

, that Essar’s claims were contradicted by other information that Essar itself had placed on the record. Id. at 1274

– 79

. During the fifth administrative review, the g overnment of India and the

s tate g overnment of Ch ha t tisgarh also failed to respond to Co mmerce’s requests for information on the CIP subs idies. Essar , 908 F. Supp. 2d at 1312.

Commerce therefore applied adverse facts in its May 2009 final results and concluded that Essar did benefit from the CIP. Essar

, 678 F.3d at 1271. Essar appealed Commerce’s final results to the Trade Court, and after

numer ous proceedings before the court and a remand back to Commerce, the United States government and United States Steel Corporation ( “ U.S. Steel ” ) appealed Essar’s use of and benefit from the CIP subsidies

. Id. at 12 71

– 72. We upheld Commerce’s decision to apply AFA with respect to Essar’s use of and benefit from the CIP subsidies , noting “Essar’s dishonest denials of a facility in Chhattisgarh .” Id. at 1274

– 79

. Essar then “contacted the [ Trade C ourt ] for guidance” with regard to corroboration of the AFA rate , which was an issue that was previously raised before the Trade Court but never resolved

. EssarESSAR STEEL LIMITED v. US 4

Steel Ltd. v. United States , 880 F. Supp. 2d 1327, 1328

– 29 (Ct. Int’l Trade 2012). Th e Trade Court then remanded the case to Commerce with instructions to explain how it corroborated the AFA rate assigned to Essar for its parti cipation in the CIP or why corroboration was not practic able. Id. at 1332.

Commerce filed its remand results explaining how it corroborated, to the extent practicable, the AFA rate assigned to Essar give n that Essar , the s tate g overnment of Chhattisgarh, and the g overnment of India failed to cooperate during the fifth administrative review. Essar

, 908 F. Supp. 2d at 1309. Commerce explained that it applied a hierarchical methodology in selecting an AFA
rate. Commerce first “sought to apply, where available, the highest, above de minimis [AFA] rate calculated for the identical program from any segment of the pr ocee ding.” J .A. 114. Then, absent an above de minimis subsidy rate calculated for an identical program, Commerce sought an AFA rate “for a similar program.” Id.

Commerce then explained that there was no ind ependent information on the record regarding company

specific benefits under the CIP and that it therefore selected a n alternate rate by following its practice of identifying subsidy rates from “similar” programs. Essar

, 908 F. Supp. 2d at 131 0– 11

. Commerce originally ident ified nine CIP programs a s countervailable subsidies divided into three categories: grants, indirect tax benefits, and the provision of land at less than adequate remuner ation. Id

. Commerce calculated Essar’s AFA rate by aggregating nine calculated subsidy programs deemed simila r to the nine subprograms identified under the CIP using information provided by Essar and other Indian hot

- rolled steel producers in other investigations. Id.

For the four subprograms identified as providing ind irect tax benefits, Commerce assigned a net subsidy rate of 3.09% ad valorem

, which had previously been calculat edESSAR STEEL LIMITED v. US 5

for Essar under the Indian state of Gujarat tax i ncentives program during the second administrative review of the underlying countervailing du ty investigation of hot

- rolled carbon steel flat products from India

. Id. On remand, Comme rce explained that the Gujarat t ax incentives
program was an indirect tax program that was similar to the CIP tax program because it reflected the government of Ind ia’s behavior in implementing an indirect tax pr ogram. Id. at 1311.

For the four subprograms identified as providing be nefits in the form of a grant, Commerce assigned a net subsidy rate of 6.06% ad valorem , which was the subsidy rate calculated for the Steel Authority of India, Ltd. (“Steel Authority”) under a grant program also identified during the underlying countervailing duty investigation

. Id. On remand, Commerce explained that the subsidy rate calculated for the Steel Authority reflected the go vernment of India’s behavior in implementing a grant
program

. Id.

For the single subprogram identified as providing land for less than adequate remuneration, Commerce assigned a net subsidy rate of 18.08% ad valorem , which was the subsidy rate calculated for a program involving the captive mining of iron ore from the fourth administr ative review of the underlying countervailing duty invest igation

. Id. On remand, Commerce explained that the captive mining program was similar to the CIP progra m, and the captive mining program reflected the government of India’s behavior in implementing a program for provi ding a good for less than adequate remuneration

. Id. The sum of the combined subsidy rates was 54.68%, which was the AFA rate Commerce had assigned to Essar. Id.

Commerce reported its remand results to the Trade Court

, and Essar argued that although Commerce e xplain ed the methodology it used to determine the a ssigned AFA rate , Commerce failed to corroborate thatESSAR STEEL LIMITED v. US 6

rate

. Id. Essar also argued, inter alia , that Commerce (1) failed to consider whether Essar could have simultaneou sly benefited from all of the CIP programs at issue; (2) improperly applied the subsidy rate to the entire value of the finished merchandise ; (3) failed to consider that Essar was found to benefit from two programs that purportedly ha d mutually exclusive eligibility criteria; and ( 4 ) failed to consider the purported maximum benefits f or certain subsidy programs. Id.

The Trade Court found that Commerce had corrob orated Essar’s AFA rate to the extent practicable under 19 U.S.C. § 1677e(c) by utilizing calculated benefits from similar subsidy programs identified in the underlying countervailing duty investigation of hot

- rolled carbon steel flat products from India

. Id. at 13 13. The court found that Essar, the only respondent, failed to cooperate in the administra tive review in which it had the oppo rtunity to provide company

- speci fic information concerning the extent to which it had received benefits under the CIP. Id. at 1312. In addition, the court noted that t he “Indian government” also failed to cooperate with Co mmerce’s request for information about the CIP. Id. As a resul t, because Commerce did not calculate countervailing duty rates in a prior proceeding, the Trade Court foun d that Commerce had limited data available about the CIP and thus corroborated Essar’s AFA rate to the extent practicable

. Id. The Trade Court also found that Essar had not present ed its additional arguments to Commerce on remand, and the refore held that those arguments were waived. Id.
Essar timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).ESSAR STEEL LIMITED v. US 7

D ISCUSSION

I

We review decisions of the Court of International Trade without deference, applying the same substantial evidence standard of review that the Trade Court itself applies in reviewing Commerce’s determinations. Whea tland Tube Co. v. U nited States

, 161 F.3d 1365, 1369 (Fed. Cir. 1998) ; Atlantic Sugar, Ltd. v. United States , 744 F.2d 1556, 1559 n.10 (Fed. Cir. 1984).

Section 1677e covers determinations of a countervai ling duty on the basis of facts available. See 19 U.S.C. § 1677e

. The relevant cod e provision relating to selecting secondary information for calculating an adverse infe rence provides as follows : (b) Adverse inferences
If the administering authority or the Commission (as the case may be) finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from the administering authority or the Commi ssion, the administering authority or the Commi ssion (as the case may be), in reaching the applicable determination under t his subtitle, may use an inference that is adverse to the interests of that party in selecting from among the facts ot herwise available. Such adverse inference may i nclude reliance on information derived from – (1) the petition,
(2) a final determination in the investigation u nder this subtitle,
(3) any previous review under section 1675 of this title or determination under section 1675b of this title, orESSAR STEEL LIMITED v. US 8

(4) any other information placed on the record.
19 U.S.C. § 1677e(b) (emphasis ad ded) . The statute further provides for corroboration of th at secondary information:
(c) Corroboration of secondary information
When the administering authority or the Co mmission relies on secondary information rather than on information obtained in the co urse of an investigation or review, the administering autho rity or the Commission, as the case may be, shall, to the extent practicable , corroborate that info rmation from independent sources that are reaso nably at their disposal.

Id. § 1677e(c) (emphasis added)

. Essar argues that Commerce failed to corroborate the secondary information it used in calculating the AFA rate. Essar also argues that the Trade Court erred in ruling that Commerce’s obligation to corroborate secondary information was obviated as a result of this court’s acknowledgement of Essar’s “dishonest denials” in the prior appeal

. The United States and U.S. Steel respond that Commerce fully corroborated the AFA rate to the extent practicable, and

, due to the failure of Essar, the government of India, and the state of Chhattisgarh to respond to Commerce’s request for information, there was no independent information on the record regarding

company

- specific benefits under the CIP for Commerce to use to corroborate.
We agree with the United States and U.S. Steel that the Trade Court did not err in finding that Commerce’s corroboration of the AFA rate was supported by substa ntial evidence

. Commerce ’s ability to corroborate the secondary information under § 1677e(c) was limited by Essar’s lack of cooperation, and Commerce used a reaso nably accurate estimate of the subsidy rates in accordanceESSAR STEEL LIMITED v. US 9

with § 1677e(b) that were calculated for Essar or other

pro ducers of hot

- rolled carbon steel who were cooperating with Commerce in prior segments of the underlying investigation

. Under § 1677e(b) , if Commerce “ finds that an inte rested party has failed to cooperate by not acting to the best of its ability to comply with a request for information . . . . [Commerce] may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise availab le .” Id. § 1677e(b). That “adverse inference may include reliance on information derived from . . . any previous review under section 1675,” which covers administrative review of determinations. Id. § 167 7e(b)(3)

. The sources used to calculate an AFA rate

s hould “be a reasonably accurate estimate of the respon dent’s actual rate, albeit with some built

- in increase i ntended as a deterrent to noncompliance.” F.l li De Cecco Di Filippo Fara S. Martino S.p.A. v. United States , 216 F.3d 1027, 1032 (Fed. Cir. 2000)

. Commerce, applying its hierarchical methodology for selecting a n AFA rate for an uncooperative respondent, calculated the 54.68% AFA rate based on actual and verified subsidy data provided by Essar and other Indian hot -rolled steel producers for similar subsidy programs. Those similar programs included the Gujarat tax ince ntive program involved in the second administrative r eview , the grant program involving the Steel Authority previously identified during the underlying inve stigation

, and the provision of land for less than adequate remune ration involving the captive ore mining program involved in the fourth administrative review

. Accordingly, t h e rates from those simi lar programs were calculated during a “previous review under section 1675,” namely

, the underlying countervailing duty investigation of hot

- rolled carbon steel flat products from India . 19 U.S.C. § 1677e(b)(3). Commerce’s calculation of an AFA rate wasESSAR STEEL LIMITED v. US 10

thus a reasonably accurate estimate of Essar’s actual ra te under § 1677e(b).
Section 1677e(c) requires that Commerce “ shall, to the extent practicable , corroborate that information from independent sources that are reasonably at their dispo sal .” 19 U.S.C. § 1677e(c) (emphasis added)

. Essar, the

s tate g overnment of Chhat t isgarh, and the g overnment of India failed to cooperate with Commerce and to provide

company

- specific benefits under the CIP , and the record lacked other independent information regarding company

specific benefits pursuant to the CIP. B ecause there were no other independent sources of data on company

- specific benefits, Commerce was limited in its ability to corrob orate the information used to calculate the AFA rate. Nonetheless, in light of the failure of Essar to cooperate and the reasonably accurate nature of the secondary information that Commerce used under § 1677e(b)

, Co mmerce satisfied the requirement of corroborating the 54.68% AFA rate “to the extent practicable.” Id.

There is also no indication that the Trade Court found that Commerce’s obligation to corroborate the secondary information was obviated as a result of our acknowledg ement of Essar’s “dishonest denials” in the first appeal. Thu s, the Trade Court did not err in finding that Co mmerce’s corroboration of the AFA was supported by su bstantial evidence

. II
Essar argues that the Trade Court abused its discr etion in refusing to hear additional ar guments including that Commerce (1) failed to consider whether Essar could have simultaneously benefited from all nine CIP pr og rams to achieve the aggregate AFA rate; (2) improperly applied the CIP subsidy rate to the finished goods when the subsidy would have benefited only an upstream component; and ( 3 ) failed to consider that certain CIP programs had maximum benefits. The Unit ed States andESSAR STEEL LIMITED v. US 11

U.S. Steel respond that Essar failed to exhaust its admi nistrative remedies regarding several new arguments on corroboration that Essar never raised to Commerce.
The law provides that the Trade Court “shall, where appropriate, require the exh austion of administrative remedies.” 28 U.S.C. § 2637(d). The d octrine of exhau stion provides “ that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed admi nistra tive remedy has been exhausted.” Sandvik Steel Co. v. United States, 164 F.3d 596, 599 (Fed. Cir. 1998). “Certain exceptions to the exhaustion requirement apply, such as where exhaustion would be a ‘useless formality,’ or where the party ‘had no opportunity’ to raise the issue before the agency .” Yangzhou Bestpak Gifts & Crafts Co., Ltd. v. United States , 716 F.3d 1370, 1381 (Fed. Cir. 2013) (quoting Jiaxing Brother Fastner Co. v. United States , 751 F. Supp. 2d 1345, 1355

– 66 (Ct. Int’l Trade 2010). We review the Trade Court ’s application of ex haustion of remedies for abuse of discretion. Corus Staal BV v. United States , 502 F.3d 1370, 1381 (Fed. Cir. 2007).
We agree with the United States and U.S. Steel that the Trade Court did not abuse its discretion in holding that Essar failed to exhaust i ts administrative remedies regarding the new arguments on corroboration. The record shows that Essar failed to raise any of the new arguments before Commerce , and it cannot therefore raise those arguments now on appeal. Sandvik, 164 F.3d at 599

. Those arguments were new when they were pr esented to the Trade Court

, and there is no indication that exhaustion would have be en a useless formality or that Essar lacked an opportunity to raise the argument before Commerce. Yangzhou Bestpak , 716 F.3d at 138 1. Accordingly, the Trade Court did not abuse its discretion in find ing that Essar failed to exhaust its administrative remedies.ESSAR STEEL LIMITED v. US 12

C ONCLUSION For the foregoing reasons, we conclude that the Court of International Trade did not err in holding that Co mmerce corr oborated the AFA rate from the fifth admini strative review of the countervailing duty order covering certain hot

- rolled carbon steel flat products from India to the extent practicable. We also conclude that the Trade Court did not abuse its discretion in finding that Essar failed to exhaust its administrative remedies. Accordin gly, the judgment of the Trade Court is affirmed.

AFFIRMED