CIT Remands Parts, Upholds Parts of Russian Phosphate Fertilizers CVD Investigation

The Court of International Trade remanded parts and sustained parts of the Commerce Department's countervailing duty investigation of phosphate fertilizers from Russia. CIT Judge Jane Restani in a July 11 opinion upheld Commerce's tier-three benchmark calculation for natural gas, which included the import-specific 20% value-added tax and 5% import duty, along with the agency's decision to countervail phosphate rock mining licenses issued by the Russian government to exporters EuroChem and PhosAgro. Restani remanded Commerce's decision to use a "profit before tax" figure to account for exported phosphate rock prices when calculating PhosAgro's profit ratio, as well as Commerce's reliance on PhosAgro's cost information and its explanation for why it found EuroChem's cost information supported.

The regulations do not compel any specific methodology for Commerce to follow for a tier-three benchmark. Because the pipelines flowed away from Russia, Russia could not import natural gas and so Commerce could not construct a world market tier-two price and had to rely on the tier-three benchmark, the court said.

Before the first remand in September (see 2209020061) Commerce had declined to countervail several of the licenses for phosphate rock mining rights issued by the Russian government, explaining it was unable to measure subsidies prior to April 1, 2002, when Russia was designated a market economy. On remand, Commerce determined not to apply the cut-off date methodology under "unexplained" protest. The court said cut-off dates are appropriate if Commerce can identify specific economic reforms that made each subsidy identifiable, which it did not do in this case.

Commerce did not adequately support its decision to use the "Profit Before Tax" method when calculating the profit ratio, Restani said. Commerce adopted the methodology only after plaintiff The Mosaic Company's comments on the draft remand results. PhosAgro argued a gross profit methodology would have been more accurate because it included additional expenses, such as administrative and selling expenses, that are considered when calculating price but are not part of the cost of sales. The court said Commerce failed to explain its reasoning and PhosAgro never had an opportunity to argue for using the gross profit method because the agency did not make the change until the remand results.

Commerce previously reconsidered its calculation of the total sales for EuroChem, its calculation of the natural gas benchmark and its analysis of mining rights for less than adequate remuneration. Commerce revised its subsidy rate calculations for EuroChem from 47.05% to 23.77%, for PhosAgro from 9.19% to 14.3%, and the "all others" rate from 17.2% to 16.3% in its December remand results (see 2212190047).

(The Mosaic Company v. U.S., Slip Op. 23-99, CIT # 21-00117, dated 07/11/23; Judge: Jane Restani; Attorneys: Patrick McLain of WilmerHale for plaintiff The Mosaic Company; Ebonie Branch for defendant U.S. government)