CAFC Says Commerce Properly Deducted Tradeable Tax Credits From Export Price in AD Case

The U.S. Court of Appeals for the Federal Circuit in an Aug. 8 opinion held that tradeable tax credits fall within the regulatory definition of a "price adjustment," meaning the Commerce Department properly deducted the credits from respondent LDC Argentina's export price. Judges Kimberly Moore, Richard Taranto and Todd Hughes also ruled that Commerce's use of an international market price for soybeans in its constructed value calculation for biodiesel does not count as a double remedy, even though the U.S. imposed countervailing duties on Argentine soybeans.

The case concerns the antidumping duty investigation of biodiesel from Argentina, in which LDC served as a mandatory respondent and was assigned a 60.44% dumping margin. The exporter then launched a challenge at the Court of International Trade contesting, among other things, Commerce's adjustment to LDC's export price that neutralized the value of renewable identification numbers (RINs) reflected in prices for U.S. biodiesel sales. A RIN is a tradeable tax credit issued by the EPA created by the import and domestic production of renewable fuels.

The trade court first remanded this adjustment but then sustained Commerce's decision to neutralize the differences in value between the U.S. and foreign market biodiesel sales due to the premiums placed on RIN-eligible U.S. sales. The agency did so by dropping U.S. prices by the estimated value for RINs. Commerce found support for this move by arguing that an RIN is a "price adjustment" as defined by its regulations since the invoice price does not reflect the true starting price of biodiesel or the price at which the biodiesel is first sold since it includes the value of the RIN. LDC contested this point at the Federal Circuit.

To weigh these claims, Hughes, the author of the opinion, looked at the regulatory definition of a "price adjustment." According to Commerce, a price adjustment is a change in the price charged for subject merchandise or foreign like product such as a discount, rebate or other adjustment, including a change made after the time of sale reflected in the buyer's net outlay. The agency's regulations also say that in calculating export price, the secretary will use a price that is net of price adjustments that are reasonably attributable to the subject merchandise. Finding that the RINs fit this definition, Hughes ruled that Commerce properly made the deduction.

"RINs from the sale of biodiesel into the United States are similar [to rebates]," the opinion said. "The importer receives a fungible credit affecting its 'net outlay' for the biodiesel, and the importer and exporter do not expressly negotiate what the price would have been without the credit. Given the similarities between RINs and rebates, the non-limiting language of the regulation, and the fact that Commerce’s calculation affects the overall statutory scheme, the regulation unambiguously permits Commerce to subtract the RINs values."

LDC argued that Commerce's regulations require a starting price actually paid by a customer and an adjusted price agreed between the buyer and seller. "We see no requirement that an unadjusted starting price be a price 'actually paid,'" the opinion said. "To the contrary, a discount applied before payment is still a discount. We also see no requirement that the buyer and seller expressly state or negotiate an adjusted price." LDC further argued that Commerce did not cite any evidence in using the value of separated RINs which is different than the value of attached RINs in making the deduction. But the court held that the agency did cite evidence that the value of separated RINs on the spot market is an accurate estimate of the value of attached RINs.

LDC further argued against Commerce's constructed value calculation for soybeans -- the main input of biodiesel. Argentina imposes high export taxes on soybeans, lowering their cost domestically. In a separate investigation, Commerce imposed countervailing duties on Argentine soybeans. In the present investigation, the agency adjusted the price of the soybeans to account for the subsidy. The respondent said the agency illegally did this, imposing a double remedy by making this adjustment. Commerce said it need not measure any double remedy and that the effect of the subsidy was not "passed through" to lower the biodiesel export price since the record shows that the respondents price their U.S. sales by reference to American market prices.

The court agreed with Commerce, finding that the agency adjusted the CV upward to match the value of biodiesel "in the ordinary course of trade, using the clear statutory authority of 19 U.S.C. § 1677b(e). As a result of its particular market situation adjustment, Commerce arrived at a constructed value that approximates normal value based on sales of biodiesel in the ordinary course of trade. And use of this constructed value resulted in an adequate remedy for dumping, which is not duplicative of the countervailing duty remedy."

(Vicentin S.A.I.C. v. United States, Fed. Cir. #21-1988, dated 08/02/22, Judges Kimberly Moore, Richard Taranto and Todd Hughes. Attorneys: Gregory Spak of White & Case for plaintiff-appellant LDC; Joshua Kurland for defendant-appellee U.S. government; Myles Getlan of Cassidy Levy for defendant-appellee National Biodiesel Board Fair Trade Coalition)