Essar Steel Limited v. United States ( 2014 )

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. Barzi-
lay.
______________________
Decided: June 12, 2014
______________________
DANIEL MORRIS, Dentons US LLP, of Washington, DC,
argued for plaintiff-appellant. With him on the brief was
MARK P. LUNN.
DAVID D’ALESSANDRIS, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, argued for defendant-
2 ESSAR STEEL LIMITED v. US
appellee United States. With him on the brief were
STUART F. DELERY, Assistant Attorney General, JEANNE
E. DAVIDSON, Director, and PATRICIA M. MCCARTHY,
Assistant Director. Of counsel on the brief was
NATHANIEL HALVORSON, Attorney, International Trade,
Office of the Chief Counsel for Trade Enforcement &
Compliance, United States Department of Commerce, of
Washington, DC.
NATHANIEL B. BOLIN, Skadden, Arps, Slate, Meagher
& Flom LLP, of Washington, DC, argued for defendant-
appellee United States Steel Corporation. With him on
the brief were ROBERT E. LIGHTHIZER and JEFFREY D.
GERRISH. Of counsel were JAMES C. HECHT, of Washing-
ton, DC, and STEPHEN J. NARKIN, of Palo Alto, California.
______________________
Before NEWMAN, LOURIE, and TARANTO, Circuit Judges.
LOURIE, Circuit Judge.
Essar Steel Ltd. (“Essar”) appeals from the decision of
the United States Court of International Trade (the
“Trade Court”) affirming the United States Department of
Commerce’s (“Commerce”) corroboration of the adverse
facts 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. Supp. 2d 1306 (Ct. Int’l
Trade 2013). Because we agree with the Trade Court that
Commerce corroborated the AFA rate to the extent practi-
cable, we affirm.
BACKGROUND
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 ore
ESSAR STEEL LIMITED v. US 3
products in India for the period of review from January 1,
2007 through December 31, 2007. See Initiation of Anti-
dumping and Countervailing Duty Administrative Re-
views 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 state government 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 did 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 government of India and the
state government of Chhattisgarh also failed to respond to
Commerce’s requests for information on the CIP subsi-
dies. 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
numerous 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
1271–72. 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 Court] 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. Essar
4 ESSAR STEEL LIMITED v. US
Steel Ltd. v. United States, 880 F. Supp. 2d 1327, 1328–29
(Ct. Int’l Trade 2012). The Trade Court then remanded
the case to Commerce with instructions to explain how it
corroborated the AFA rate assigned to Essar for its partic-
ipation in the CIP or why corroboration was not practica-
ble. Id. at 1332.
Commerce filed its remand results explaining how it
corroborated, to the extent practicable, the AFA rate
assigned to Essar given that Essar, the state government
of Chhattisgarh, and the government 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 proceed-
ing.” 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 inde-
pendent information on the record regarding company-
specific benefits under the CIP and that it therefore
selected an alternate rate by following its practice of
identifying subsidy rates from “similar” programs. Essar,
908 F. Supp. 2d at 1310–11. Commerce originally identi-
fied nine CIP programs as countervailable subsidies
divided into three categories: grants, indirect tax benefits,
and the provision of land at less than adequate remunera-
tion. Id. Commerce calculated Essar’s AFA rate by
aggregating nine calculated subsidy programs deemed
similar 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 indi-
rect tax benefits, Commerce assigned a net subsidy rate of
3.09% ad valorem, which had previously been calculated
ESSAR STEEL LIMITED v. US 5
for Essar under the Indian state of Gujarat tax incentives
program during the second administrative review of the
underlying countervailing duty investigation of hot-rolled
carbon steel flat products from India. Id. On remand,
Commerce explained that the Gujarat tax incentives
program was an indirect tax program that was similar to
the CIP tax program because it reflected the government
of India’s behavior in implementing an indirect tax pro-
gram. Id. at 1311.
For the four subprograms identified as providing ben-
efits 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 gov-
ernment 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 administra-
tive review of the underlying countervailing duty investi-
gation. Id. On remand, Commerce explained that the
captive mining program was similar to the CIP program,
and the captive mining program reflected the government
of India’s behavior in implementing a program for provid-
ing 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 ex-
plained the methodology it used to determine the as-
signed AFA rate, Commerce failed to corroborate that
6 ESSAR STEEL LIMITED v. US
rate. Id. Essar also argued, inter alia, that Commerce (1)
failed to consider whether Essar could have simultaneous-
ly 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
had mutually exclusive eligibility criteria; and (4) failed to
consider the purported maximum benefits for certain
subsidy programs. Id.
The Trade Court found that Commerce had corrobo-
rated 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 1313. The court
found that Essar, the only respondent, failed to cooperate
in the administrative review in which it had the oppor-
tunity to provide company-specific information concerning
the extent to which it had received benefits under the
CIP. Id. at 1312. In addition, the court noted that the
“Indian government” also failed to cooperate with Com-
merce’s request for information about the CIP. Id. As a
result, because Commerce did not calculate countervailing
duty rates in a prior proceeding, the Trade Court found
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 presented its additional arguments to Commerce
on remand, and therefore 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
DISCUSSION
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. Wheat-
land Tube Co. v. United 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 countervail-
ing duty on the basis of facts available. See 19 U.S.C.
§ 1677e. The relevant code provision relating to selecting
secondary information for calculating an adverse infer-
ence 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 Commis-
sion, the administering authority or the Commis-
sion (as the case may be), in reaching the
applicable determination under this subtitle, may
use an inference that is adverse to the interests of
that party in selecting from among the facts oth-
erwise available. Such adverse inference may in-
clude reliance on information derived from–
(1) the petition,
(2) a final determination in the investigation un-
der this subtitle,
(3) any previous review under section 1675 of this
title or determination under section 1675b of this
title, or
8 ESSAR STEEL LIMITED v. US
(4) any other information placed on the record.
19 U.S.C. § 1677e(b) (emphasis added). The statute
further provides for corroboration of that secondary
information:
(c) Corroboration of secondary information
When the administering authority or the Com-
mission relies on secondary information rather
than on information obtained in the course of an
investigation or review, the administering author-
ity or the Commission, as the case may be, shall,
to the extent practicable, corroborate that infor-
mation from independent sources that are reason-
ably 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 substan-
tial evidence. Commerce’s ability to corroborate the
secondary information under § 1677e(c) was limited by
Essar’s lack of cooperation, and Commerce used a reason-
ably accurate estimate of the subsidy rates in accordance
ESSAR STEEL LIMITED v. US 9
with § 1677e(b) that were calculated for Essar or other
producers 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 inter-
ested 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 available.” 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.
§ 1677e(b)(3). The sources used to calculate an AFA rate
should “be a reasonably accurate estimate of the respond-
ent’s actual rate, albeit with some built-in increase in-
tended as a deterrent to noncompliance.” F.lli 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 an 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 incen-
tive program involved in the second administrative re-
view, the grant program involving the Steel Authority
previously identified during the underlying investigation,
and the provision of land for less than adequate remuner-
ation involving the captive ore mining program involved
in the fourth administrative review. Accordingly, the
rates from those similar 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 was
10 ESSAR STEEL LIMITED v. US
thus a reasonably accurate estimate of Essar’s actual rate
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 dispos-
al.” 19 U.S.C. § 1677e(c) (emphasis added). Essar, the
state government of Chhattisgarh, and the government 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. Because there were
no other independent sources of data on company-specific
benefits, Commerce was limited in its ability to corrobo-
rate 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), Com-
merce 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 acknowledge-
ment of Essar’s “dishonest denials” in the first appeal.
Thus, the Trade Court did not err in finding that Com-
merce’s corroboration of the AFA was supported by sub-
stantial evidence.
II
Essar argues that the Trade Court abused its discre-
tion in refusing to hear additional arguments including
that Commerce (1) failed to consider whether Essar could
have simultaneously benefited from all nine CIP pro-
grams 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 United States and
ESSAR STEEL LIMITED v. US 11
U.S. Steel respond that Essar failed to exhaust its admin-
istrative 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 exhaustion of administrative
remedies.” 28 U.S.C. § 2637(d). The doctrine of exhaus-
tion provides “that no one is entitled to judicial relief for a
supposed or threatened injury until the prescribed admin-
istrative 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 exhaustion 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 its 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 pre-
sented to the Trade Court, and there is no indication that
exhaustion would have been a useless formality or that
Essar lacked an opportunity to raise the argument before
Commerce. Yangzhou Bestpak, 716 F.3d at 1381. Accord-
ingly, the Trade Court did not abuse its discretion in
finding that Essar failed to exhaust its administrative
remedies.
12 ESSAR STEEL LIMITED v. US
CONCLUSION
For the foregoing reasons, we conclude that the Court
of International Trade did not err in holding that Com-
merce corroborated the AFA rate from the fifth adminis-
trative 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. According-
ly, the judgment of the Trade Court is affirmed.
AFFIRMED