Trade Court Says Commerce Legally Used Questionnaire Instead of On-Site Verification in CVD Case

The Court of International Trade on March 16 upheld the use of a questionnaire instead of on-site verification in the Commerce Department's countervailing duty investigation on aluminum sheet from Turkey. Judge M. Miller Baker said that Commerce "easily" defeated respondent Teknik Aluminyum Sanayi's challenge because Teknik cited no authority requiring the agency to carry out a certain verification procedure during a global pandemic.

"We are very pleased with Judge Baker’s decision, which supports the Department of Commerce’s discretion to conduct verifications by remote means when circumstances like the Covid-19 pandemic make on-site verifications impracticable," said Elizabeth Johnson, counsel for the CVD petitioner. "We are also glad to see the Court’s confirmation that it is Commerce -- not a respondent -- who dictates the form and type of information the agency needs in foreign subsidy cases."

Baker also upheld Commerce's use of partial adverse facts available over the respondent's failure to submit screenshots of audited financial statements and ledgers, finding that Teknik's failure to submit certain information in the form and manner requested justified the use of AFA.

In the investigation, the agency hit Teknik with a 4.34% partial AFA CVD rate over its failure to submit screenshots of ledgers and trial balance information from the financial accounting systems that support sales reconciliations. The agency said it needed the screenshots to confirm whether the reconciliations corroborated entries in the respondent's financial systems or statements. Instead, the exporter said it filed complete accounting ledgers in a different format. Teknik also argued Commerce's use of a questionnaire was not an "interactive exercise," unlike the on-site verifications the agency usually conducts.

Baker ruled that the court "easily rejects Teknik’s challenge to Commerce’s decision to conduct verification by questionnaire rather than on site," given the lack of authority to "employ any verification procedure under the circumstances of a global pandemic, much less any authority for the proposition that verification must be an 'interactive exercise' in which respondents can supplement their information upon request."

Teknik also had argued that Commerce's failure to issue a verification report was illegal, claiming that this barred Teknik from commenting on the alleged deficiencies with its accounting information.

However, Baker said Teknik had every chance "to defend its failure to submit screenshots to the Department." Teknik said that it also had a right to fix any deficiencies during verification, though the court ruled that "the Department simply did not have time to allow Teknik an opportunity to correct the deficiency."

(Teknik Aluminyum Sanayi v. United States, Slip Op. 23-33, CIT #21-00251, dated 03/16/23, Judge M. Miller Baker. Attorneys: Kristin Smith of Sandler Travis for plaintiff Teknik; Kyle Beckrich for defendant U.S. government; Elizabeth Johnson of Kelley Drye for defendant-intervenors Aluminum Association Common Alloy Aluminum Sheet Trade Enforcement Working Group and Its Individual Members)