### Slip Op. No. 23-120 

### UNITED STATES COURT OF INTERNATIONAL TRADE
BONNEYFORGE CORPORATION and UNITED STEEL, PAPERAND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSRIALAND SERVICE WORKERS INTERNATIONAL UNION, 

### Plaintiffs,

v. 

### UNITED STATES, 

### Defendant, and SHAKTI FORGE INDUSTRIES PVT. LTD., 

### Defendant-Intervenor.
OPINION Before: StephenAlexanderVaden, Judge CourtNo. 1:20-cv-03837

[Remanding to Commerce to consider reliance interests and alternatives.] Dated: August 21, 2023 

### William Fennell, Schagrin Associates, ofWashington, DC, for Plaintiffs. With him on the briefwas

### RogerB. Schagrin. Kara M. Westercamp, TrialAttorney, Commercial Litigation Branch, Civil Division, U.S. DepartmentofJustice, ofWashington, DC, for Defendant. Withher onthe brief were 

### Brian M. Boynton, Principal Deputy Assistant Attorney General, 

### Jeanne E. Davidson, Director, Commercial Litigation Branch, 

### Claudia Burke, Assistant Director, Commercial Litigation Branch, and 

### JonZachary Forbes, Office of Chief Counsel for Trade Enforcement and Compliance, U.S. Department ofCommerce.Court No. l:20-cv-03837 Page 2



### AqmarRahman, Trade Pacific PLLC, ofWashington, DC, for Defendant-Intervenor. With him onthe briefwas

### Robert G. Gosselink. Vaden, Judge: Following this Court's remand order, 

### see Bonney Forge Corporation v. United States, 560 F. Supp. 3d 1303 (CIT 2022) 

### (Bonney Forge[), the Department of Commerce (Commerce) reconsidered its actions in the underlying proceeding. Commerce attempted to heed this Court's remand order and follow one ofthe two paths offered by the Supreme Court in

### Department of Homeland Security
v. Regents ofthe University ofCalifornia (Regents). 140 S. Ct. 1891, 1907-08 (2020). Commerce chose the second path and sought to "'deal with the problem afresh' by taking 

### new agency action." 

### Id. at 1908; Final Results ofRedetermination Pursuant to Court Remand (Remand Results) at 2, ECF No. 61. The new agency action Commerce tookwas determining "thatthepost-preliminary questionnaires issuedby Commerce satisfy Commerce's verification requirements under section 782(i) ofthe Act." Remand Results at 2, ECF No. 61. Unfortunately, Commerce fell short of fulfilling all of

### Regents' requirements. Specifically, the agency failed to consider (1) the reliance interests implicatedbyits change ofpolicyregardingverification and (2) alternative options to further verify the information on the record under current conditions. Therefore, the determinationis

### REMANDED to Commerce for itto again reconsider its decision. 

### See Regents, 140 S. Ct. at 1912-15.Court No. l:20-cv-03837 Page 3



### BACKGROUND The Court presumes familiarity with 

### Bonney Forge I but briefly summarizes the relevant facts. 

### See 560 F. Supp. 3d at 1305-09. Commerce chose not to perform any kind ofverificationbecause ofthe constraints ofthe COVID-19 pandemic. 

### Id. at 1307. Bonney Forge had suggested that Commerce perform a "virtual verification" in place of a traditional on-site verification. 

### Id. Commerce did not respond to this suggestion. 

### Id. at 1312. Instead, Commerce issued a series of supplemental questionnaires to respondent ShaktiForge. 

### Id. at 1308. Commerce then determined that, although it could not verify Shakti's information, it would use the information Shaktiprovided as "facts available." 

### Id.; see 19 U.S.C. 

### § 1677e. Commerce relied on this unverified information in its determination. 

### BonneyForge I, 560 F. Supp. 3d at 1308. The Court remandedthe decision to Commerce with instructions:



### Id. at 1316. Onremand, Commerce may assess the current state ofthe COVID-19 pandemic, consider whether a virtual verification is possible, and act accordingly. Should Commerce determine that no verification method

- virtual or otherwise

- is possible, it must at a bare minimum explain on the record why it is not an abuse of discretion for the Government to determine that senior officials may galivant around the globe in-person but civil servants cannot even perform their statutory responsibilities virtually.

Commerce returned its Remand Results to the Court on June 30, 2022. Remand Results, ECF No. 61. In the Remand Results, Commerce stated ittook new agency action: Itfoundthatthe questionnaires itissuedandthe responses itreceivedCourt No. 1:20-cv-03837 Page 4

sufficiently verified Shakti's information. 

### Id. at 2. Commerce additionally offered a "fuller explanation as to the option of a remote, real-time verification, and why a verification conducted inreal time was not plausible during the investigation." 

### Id. After recounting the situation in India and the United States in the summer of2020, Commerce respondedto Bonney Forge's objections. First, Commerce argued that Plaintiffs raised the option ofa virtual verification on August 11, 2020, which
was too late for Commerce to acquiesce, id. at 13, and that Plaintiffs did not explain what a virtual verificationwas. 

### Id. at 14. Second, Commerce noted that "alternative
means of conducting verification under exceptional circumstances" have been approvedby prioropinions ofthe Court ofinternationalTrade. 

### Id. at 19. Commerce concluded that "the Post-Preliminary Questionnaires and responses thereto were a reasonable alternative to in-person, on-site verification or real-time, remote verification given the unique conditions caused by the COVID-19 pandemic, as well
as other barriers specific to the case which impeded such means of virtual verification." 

### Id. at 21. The agency explained that India had internal and international travel restrictions in 2020, making an on-site verification impossible. 

### Id. at 13. With respect to virtual verification, Commerce noted that, during the investigation, (1) many employees of Shakti were confined to their homes without reliable internet access; (2) Shakti's accounting consultant could not travel to the company'sfacilitiesbecauseofindian COVID restrictions; (3) mostofShakti'srecordsCourt No. l:20-cv-03837 Page 5

were only in paper form; and (4) the significant time difference between India and the United States made scheduling a real-time teleconference difficult. 

### Id. at 15. Plaintiffs filed comments on the Remand Results with the Court on August 5, 2022, arguing that (1) Commerce's refusal to conduct on-site or virtual verification is contrary to law and the remand order; (2) Commerce's determination that itverified Shakti's information is unsupported by substantial evidence; and (3) Commerce's determinationthat Shakti's submittedcost informationis accurate is unsupportedby substantial evidence. Pls.' Br. on Remaining Issues (Pls.' Br.) at 2-14, ECF No. 78. Defendant Commerce and Defendant-Intervenor Shakti Forge responded to Plaintiffs' comments on September 6, 2022. Def.'s Resp. to Pls.' Br. on Remaining Issues, ECF No. 73; Def.-Int.'s Resp. to Pls.' Comments on RemandResults, ECF No. 72. In its response, Commerce argues that it complied with the remand order and that its decision is supportedby substantial evidence. Def.'s Resp. at 7-12, ECF No. 73. Shakti Forge argues that Commerce complied with the remand order and that Commerce's actions in other investigations are not relevant toits actions here. Def.- Int.'s Resp. at 2-10, ECF No. 72. The Courtheldoral argumenton October 25, 2022, see ECFNo. 80, and asked the Government where Commerce considered Plaintiffs' reliance interests in its decision. OralArg. Tr. (Tr.) at43: 12-16,ECFNo. 82. Counselpointedtothe agency's discussion ofwhy the record informationwas sufficient to constitute verification. 

### Id. at 43:17-48:8. The Court also inquired whether the agency considered alternativesCourt No. l:20-cv-03837 Page 6

in the Remand Results, as requiredby

### Regents. Id. at 35: 17-36:5. The Government explained that doing a virtual or on-site verification "would be superfluous or that would be almost like a second verification because again what it had already done and considered constitutedverification." 

### Id. at 37:18-20. Thus, Commerce's answer to whether it had followed the necessary procedures on remand was to highlight its determination on the merits. 

### STANDARD OF REVIEW Although the scope ofissues Commerce may reconsider on remand is broad, Supreme Courtprecedentlimitsthe range ofavailable actionsitmaytake. Anagency has two options onremand: First, the agency can offer a "fuller explanation of the agency's reasoning 

### at the time ofthe agency action"
.... This route has important limitations. When an agency's initial explanation "indicate[s] the determinative reason for the final action taken," the agency may elaborate later on that reason (or reasons) but may not provide new ones. Alternatively, the agency can "deal with the problem afresh"bytaking

### new agency action. Anagencytakingthis route is not limited to its prior reasons but must comply with the proceduralrequirements for new agency action. 

### Regents, 140 S. Ct. at 1907-08 (internal citations omitted); 

### accord SKF USA Inc. u. United States, 254F.3d 1022, 1028 (Fed. Cir. 2001) ("Inthe second situation, inwhich the agency seeks to defend its decision on grounds not previously articulatedby the agency .... we generally decline to consider the agency's new justification for the agency action[.]"); 

### Timken Co. u. United States, 894 F.2d 385, 389 (Fed. Cir. 1990)Court No. 1:20-cv-03837 Page 7

("[A]gency action cannot be sustained on

### post hoc rationalizations supplied during judicialreview.") (citations omitted). "The court reviews remand determinations for compliance with the court's order." 

### Nahornthai Strip Mill Public Co. Ltd. v. United States, 32 CIT 1272, 1274 (2008) (citations omitted); 

### accord Ad Hoc Shrimp Trade Action Comm. v. United States, 992 F. Supp. 2d 1285, 1290 (CIT 2014), 

### af/'d, 802 F.3d 1339 (Fed. Cir. 2015). "Deviation from the court's remand order in the subsequent administrative proceedings is itself legal error, subject to reversal on further judicial review." 

### Sullivan v. Hudson, 490 U.S. 877, 886 (1989). The Court may also issue a further remand orderwhen the remand results are not supportedby substantial evidence or otherwise in accord with the law. 

### See Nippon Steel Corp. v. ITC, 494F.3d 1371, 1379 (Fed. Cir. 2007). DISCUSSION Commerce Failed to Comply with the Procedural Requirements ofNew Agency Action Commerce acknowledges that it has a consistent past practice ofperforming in-person, on-site verificationwheneverpossible. 

### SeeRemandResults at 20, ECFNo. 61 (noting that "Commerce has a documented history ofverifying information to the fullest extentpossible"); 

### see also id. at 19 (detailing Commerce's actions inthreeother
cases with substantial verification hurdles where Commerce arranged in-person verification at alternative locations); 

### id. at 7 nn.35-36 (citing instances in which inperson, on-site verification was impossible so that substitute procedures were usedCourtNo. 1:20-cv-03837 Page 8

but none in which in-person, on-site verification was possible but was not done). In the Remand Results, Commerce explained its view of why in-person, on-site verificationinIndia was notpossible during the originalinvestigation in 2020. 

### Id. at 3-4. Commerce has also now explained its view ofwhy a virtualverificationwas not possible in 2020, filling the gap identified by this Court in its prior decision. 

### Id. at 13-15;

### see BonneyForge I, 560 F. Supp. 3d at 1316 ("Record review requires a record. Because Commerce has failed to make one concerning its decision not to engage in verification, virtual or otherwise, its decision may not stand."). Commerce did a thoroughjob explaining the conditions in the United States and India in 2020 and how those conditions made on-site verification as well as an alternative virtual verification impractical. 

### See Remand Results at 3-11, 14-15, ECF No. 61. Unlike the previous examples Plaintiffs cite

- where world events impacted only travel to the foreign company and Commerce could designate an alternative in-person verification site

- pandemic travel restrictions made travel difficult regardless of location. 

### Id. at 19-21. There was no clear alternative location where both parties could meet. 

### Compare Polyethylene Terephthalate Resin from Pahistan: Final Determination ofSales at Less Than Fair Value, 83 Fed. Reg. 48,281, 48,282 (Sept. 24, 2018) (conducting a verification with representatives ofa Pakistani company in Washington, DC, when Commerce determined that travel in Pakistan was not possible because ofa State Departmenttravel advisory), 

### with Remand Results at 20, ECFNo. 61 (explainingthat"in2020, therewere globaltravelbansinplace, includingCourt No. l:20-cv-03837 Page 9

a ban on travel to India by U.S. citizens and travel to the United States by Indian nationals"). Shakti faced many hardships from India's lockdown policies, which prevented its employees from accessing its facilities and left them with irregular online access, makingvirtual verification difficult. 

### Id. at 15. Despite this explanation, two flaws mar Commerce's redetermination. First, Commerce denied the legitimacy of Bonney Forge's reliance interests, which are rooted in Commerce's consistent past practice of performing on-site or in-person verifications. 

### See id. at 26 (claiming that all that mattered was whether Commerce
was satisfied that the information was accurate). Second, the agency refused to address whether any additional steps were warranted to verify the information on the record given current conditions. 

### See id. at 22 ("We disagree with the petitioners that an analysis ofverification possibilities under current conditions is required to complywiththe

### Remand Order."). Regents gives anagency twopaths onremand: (1) the agency can offer a fuller explanation of its reasoning at the time it made the decision in question; or (2) the agency can take new agency action and provide new reasoning for that action. 140 S. Ct. at 1907-08. Whentaking new agency action, an agency "is not limited to its prior reasons but must comply with the procedural requirements for new agency action." 

### Id. at 1908. For example, "when an agency rescinds a priorpolicy its reasoned analysis mustconsiderthe 'alternative[s]'that are 'within the ambit ofthe existing [policy]."' 

### Id. at 1913 (quoting 

### Motor Vehicle Mfrs. Assn. ofUnited States, Inc. v. StateFarm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983))CourtNo. 1:20-cv-03837 Page 10

(alterationsinoriginal). Andwhendeviating from a consistentpastpractice orpolicy,
an agency "must be cognizant that longstanding policies may have 'engendered serious reliance interests that must be taken into account.'" 

### Id. (quoting 

### Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2126 (2016) (quoting 

### FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009))). Given its admitted past practice of on-site or in-person verification and the deviation from that practice in the Remand Results, Commerce was obligated to acknowledge Bonney Forge's reliance interests and explainwhy this departure from past practice would not unduly harm those interests. No such discussion can be found. The agency never uses the term "reliance interests" once. When pressed at oral argument to show where in the Remand Results the agency consideredreliance interests, the Government pointed to the Remand Results' discussion of why the questionnaire was sufficient to fulfill Commerce's statutory mandate to gather accurate and reliable information. 

### See Tr. at 43:17-48:8, ECF No. 82; Remand Results at 26-28, ECF No. 61. However, Commerce's discussion effectively denied the existence of Bonney Forge's reliance interests. According to Commerce, "the purpose of verification is to corroborate information reported by the respondents earlier in the proceeding, and establish, 

### to Commerce's satisfaction, that such information is accurate and reliable for purposes ofmaking a final determination." Remand Results at 26, ECF No. 61 (emphasis in original). Bonney Forge's relianceCourtNo. 1:20-cv-03837 Page 11

interests are irrelevant because the agency's satisfaction with the verification procedure is all that matters. But Commerce may not ignore Bonney Forge's legitimate reliance interests engendered by Commerce's consistent policy of conducting on-site or in-person verifications. 

### See Regents, 140 S. Ct. at 1913 (holding that reliance interests "must be taken into account") (citations omitted). The agency tries to dodge this responsibilitybyexplainingthatitsRemandResults areinlinewitha two-yearpolicy during the pandemic ofusing questionnaires in lieu ofon-site verification. Remand Results at 23-24, ECF No. 61. Citing an expired pandemic policy is insufficient to avoid Commerce's obligationto acknowledge BonneyForge's reliance interests inthe priorpolicy ofon-site or in-person verification. Although agencies have flexibility to change policy, they "must be cognizant that longstanding policies may have 'engenderedserious reliance interests that mustbe takeninto account."'

### Regents, 140 S. Ct. at 1913 (quoting

### EncinoMotorcars, 136 S. Ct. at 2126) (quoting

### Fox Television, 556 U.S. at 515). Commerce's Remand Results claim that it is only Commerce's interests that matter. 

### See Remand Results at 26, ECF No. 61 (stating that "the purpose of verification is to corroborate information reported by the respondents earlier in the proceeding, and establish, 

### to Commerce's satisfaction, that such information is accurate and reliable"). Because ignoring Plaintiffs' reliance interests ignores Supreme Court precedent, Commerce's determination must again return to the agency.Court No. l:20-cv-03837 Page 12

The Remand Results also fall short in their consideration of alternatives during the remand period. The agency explained why it could not perform on-site verification in 2020 andwhy virtual verification might not have been feasible during the pandemic. Remand Results at 3-4, 13-21, ECF No. 61. This was helpful; but there is no discussion ofwhy the agency refused to take further steps to verify the information during the remand period

- when the agency took 

### "new agency action." 

### Regents, 140 S. Ct. at 1908. The agency insisted that it need not consider doing anything further at all duringthe remandperiod, stating "{a}n attemptby Commerce to conduct additional verification ofShakti's responses via a virtual web conference
or other methodology the petitioners might have suggestedwould be unnecessary as theinformationhadalreadybeenverifiedunder section782(i)(l)oftheAct." Remand Results at 23, ECF No. 61 (alteration in original). Commerce's explanation is essentiallythat, because whatthe agency did in 2020 was sufficient, the agency need not consider doing anything further. 

### Id.; see also id. at 28 (explaining thatusing the questionnaire fulfilled manyofthe same functions as on-site verification). 

### Butsee id. at7 nn.35-36 (citing instances inwhichin-person, on-site verificationwas impossible
so that substitute procedures were used but none in which in-person, on-site verification was possible but was not done). Again, the agency conflates the merits questionwitha proceduralquestion. Commerce mustexplainwhatotherstepscloser to an on-site or in-person verification it has considered

- now and in 2020
- and why itrejected those alternatives in favor ofquestionnaires. 

### See Regents, 140 S. Ct.CourtNo. l:20-cv-03837 Page 13

at 1913 (requiring that an agency analyze the alternatives within the scope ofthe existingpolicy when changing longstandingpractices). As the

### Regents Court noted, Commerce has two options onremand. 140 S. Ct. at 1907-08. Itmay offer a fuller explanationofitsreasoning atthe time ofthe action it defends, or it may take new agency action. 

### Id. Commerce here correctly decided to take new agency action but failed to acknowledge Bonney Forge's reliance interests. 

### See id. at 1913. The agency also refused to explain why no alternative actions to verify Shakti's information were needed either in 2020 or during the remand period. To rectify these deficiencies, the case is 

### REMANDED to Commerce for further explanation. 

### CONCLUSION Past practice is not an inescapable straitjacket. Commerce may deviate from it, provided that it places a reasoned explanation on the record in compliance with 

### Regents. Because it has not done so, the Court must remand for further reconsideration. Accordingly: The Court 

### REMANDS the case for up to 150 days for Commerce to reconsider its decision on verification, consistent with this opinion, and place its reasons supporting its decision on the record; and it is 

### ORDERED that, at the conclusion of 150 days, Commerce should file its Second Remand Redetermination with the Court. It is alsoCourtNo. 1:20-cv-03837 Page 14



### ORDERED that Defendant shall supplement the administrative record with alldocumentsconsideredby Commerceinreachingitsdecisioninthe SecondRemand Redetermination; anditis further 

### ORDERED that Plaintiffs shall have 30 days from the filing ofthe Second Remand Redeterminationto submit commentsto the Court; 

### ORDEREDthatDefendantshallhave 15 days fromthedateofPlaintiffs'filing ofcommentsto submit a response; and 

### ORDERED that Defendant-Intervenor shall have 15 days from the date of Defendant's filing ofcomments to submit a response.



### S~ AJ!~

# !in, Judge Dated: 

# 0r:f: **J.J** 1 l.-v, 3 NewYork, NewYork