CIT Says Commerce's Conduct in Spat on Verification Violates SCOTUS' Regents Ruling

The Commerce Department can't "short circuit the procedural requirements for new agency action" by declaring that a questionnaire can take the place of on-site verification in an antidumping duty proceeding after initially saying that it can't, the Court of International Trade ruled in an Aug. 11 opinion. The agency's change of heart, issued on remand, cuts against the Supreme Court of the U.S. finding in Dept. of Homeland Secuity v. Regents of the Univ. of California, in which the court said that on remand an agency can either take new agency action or further explain its position.

Judge Stephen Vaden said Commerce took new agency action without taking the proper steps to legitimize that action. The Supreme Court decision said if the agency is to take new action, it must make it "afresh" and explain why the prior questionnaire it sent was sufficient and no new information was needed during the remand period. The judge added that Commerce also failed to discuss why its departure from its past practice involving on-site verification didn't harm petitioner Ellwood City Forge's "reliance interests" or why the agency rejected other alternatives.

On remand in the case on the AD investigation on forged steel fluid end blocks from India, Commerce dropped its use of facts available and found that the questionnaire it issued in lieu of a site visit during the COVID-19 pandemic satisfied the verification requirement in the statute for sole mandatory respondent Bharat Forge Limited (see 2201130042). The agency initially said it needed more information after issuing the questionnaire and calculated a de minimis rate for the exporter. On remand, it found the questionnaire satisfactory and stuck with the de minimis rate.

In his opinion, Vaden noted how Commerce's position that it hadn't taken a new agency action is "the exact opposite of its position in another case" before the trade court on the same issue, Bonney Forge Corp. v. U.S. In that matter, Commerce said it did take new agency action when it said it "complied with the verification requirement." The judge ultimately held that the agency's position in the present case violates the Regents decision. If the agency simply gave a fuller explanation of its original decision as it claims, it is "guilty of an 'impermissible post hoc rationalization,'" the decision said.

Vaden added that the agency's decisions have "greatly complicated its legal position." Instead of initially defending its decision, Commerce asked for a remand, allowing it to assert an argument it could have otherwise waived: "that the verification process was insufficient." The agency reversed course but "ignored this Court’s admonition to follow" the Regents decision. Commerce can't make the switch without explaining why it now chooses not to do on-site verification, the "range of other alternatives the agency considered" and why it rejected them, and why its use of questionnaires only didn't "violate any legitimate reliance interests on Plaintiffs' part."

(Ellwood City Forge Co. v. United States, Slip Op. 23-113, CIT # 21-00007, dated 08/11/23; Judge: Stephen Vaden; Attorneys: Jack Levy of Cassidy Levy for plaintiffs led by Ellwood City Forge Co.; Sarah Kramer for defendant U.S. government; Lizbeth Levinson of Fox Rothschild for defendant-intervenor Bharat Forge Ltd.)