Requirements for Adverse Facts Selection Up for Debate in CIT Oral Arguments

The Commerce Department drew impossible conclusions with its adverse facts used in the antidumping duty investigation on carbon and alloy steel cut-to-length plate from France, relying on likely sales prices in place of production costs, counsel for Dillinger France said during May 10 oral arguments at the Court of International Trade (Dillinger France v. U.S., CIT # 17-00159).

"Under the statute, we have a definition of what production costs are," Marc Montalbine said for Dillinger. Even when using AFA, Commerce still needed to "stay in the universe of the statutory definition for what costs of production are," Montalbine said. The department can't say that "instead we're going to use sales value ... ." Dillinger's books, while in accordance with French Generally Accepted Accounting Principles, assigned costs to the non-prime products based on their "likely selling prices," rather than reporting the cost of the goods.

Montalbine went on to argue that Commerce's responsibility, even when using AFA, is to try to arrive at the "most probative facts" of the actual cost of production. Instead, he said, Commerce chose "an outlier" that was "out of the universe of what's possible as facts available." Montalbine said it was "very telling" that Commerce doesn't have a way of tying in how the estimated sales value it used for non-prime merchandise has any relationship to the cost of production, as defined by the statute. "In all the remand determinations, they've never tried to even approach that topic," he said.

In response, DOJ attorney Kara Westercamp argued that Commerce is not required to use the best alternative information. When Commerce uses facts available to fill gaps in the record, proving that the facts selected are the best available would require comparison with the missing information, "which obviously cannot be done," Westercamp said.

Dillinger repeatedly attempted to force Commerce to use cost of production information, which Dillinger admitted are estimates, instead of the information that Congress selected as facts available, which was the likely selling price of the non-prime products, she said. Westercamp said cost of production and facts available requirements operate under independent statutes and there's no constraint about what may be used as facts available.