US Upholds Commerce’s Remand Redetermination on Moroccan Phosphate Fertilizer

The U.S. on March 13 responded to a petitioner’s remand redetermination comments after that petitioner directly told Court of International Trade Judge Timothy Stanceu he had been “misled” to issue an erroneous ruling (The Mosaic Company v. U.S., CIT Consol. # 21-00116).

Stanceu in September 2023 ordered a remand of the Commerce Department’s final determination in a countervailing duty investigation on Moroccan phosphate fertilizer so that the department could reconsider its exclusion of all of exporter OCP’s selling, general and administrative expenses from its normal value calculation; its profit calculation for OCP; and its finding that a Moroccan government subsidy was specific to the exporter (see 2309150066).

Both petitioner The Mosaic Company and OCP on Feb. 13 took issue with parts of Commerce’s subsequent redetermination (see 2401160060), with Mosaic arguing that Stanceu had made a mistake at one point (see 2402150040).

Responding to the parties’ comments, the government supported CIT’s remand ruling and Commerce’s redetermination.

First, it said the department was right to equate OCP’s “HQ, Support and Debt” costs with SG&A expenses because those costs were relevant to OCP’s phosphate production, even if they also supported some of the exporter’s other activities. Otherwise, Stanceu found in his ruling, the exporter would be represented as not having incurred any SG&A expenses at all, a result that would have been “per se unreasonable."

Mosaic argued that OCP’s new normal value calculation was a misrepresentation because the court had “incorrectly equated” two separate types of expenses, but the petitioner’s claim was both incorrect and irrelevant, the government said.

“Mosaic’s assertion does not negate Commerce’s finding, on remand, that OCP incurred HQ, support and debt costs in the production of phosphate rock,” it said. “Mosaic merely advances assertions based on its preferred interpretation of the factual record and how it believes Commerce should have treated the information before it on remand.”

Mosaic also claimed that OCP did incur SG&A expenses outside of its HQ, support and debt costs because the exporter still had indirect site-specific expenditures. This argument, however, “mistakenly conflates site-specific indirect expenses with corporate indirect expenses, which are two distinct types of expenses,” the government said.

Commerce was also right to reject the petitioner’s proposed alternative cost allocation method and rely on OCP’s instead, it said.

Mosaic had objected that the department had cited “lack of time” when it refused to use Mosaic’s method “despite having requested and received a 30-day extension” to submit its redetermination.

The department undertook a “thorough analysis” to ensure its use of OCP’s methodology was reasonable, the government said. Mosaic’s, on the other hand, relied on “several estimates of OCP’s reported costs … which Commerce was unable to fully analyze based on the record before it.”

The government also opposed OCP’s contention that Commerce’s profit rate calculation included nonsubject merchandise. The exporter explained that it didn't have a revenue figure for one of its local rock categories, so it had given Commerce a “detailed calculation” to estimate it. The department instead used an unrepresentative corporate revenue figure, saying that estimation was “inferior” even though it regularly uses estimates in its CVD proceedings, OCP said.

These were new arguments and thus shouldn’t be considered because OCP hadn't yet exhausted its administrative remedies regarding them, the government said.

However, “should the Court nevertheless entertain these arguments, they still fail” because Commerce has the discretion to choose how to calculate profit ratios so long as those ratios are reasonable. The ratio reached in the redetermination was reasonable, it said.

Finally, the government stood by Commerce’s de facto specificity finding regarding OCP’s reliance on a Moroccan tax and fees reduction program because the exporter received a share of reductions “roughly 82.87 times larger than the average amount.”

OCP argued that it uses the program so heavily because it itself is so large, representing “roughly 5% of Morocco’s GDP.” However, “neither [the Moroccan government] nor OCP provided information which would draw a correlation between a company’s size and the amount of tax fines and penalties it incurs,” the U.S. said.