Trade Court Says Commerce's AFA Methodology Manipulated Evidence

The Court of International Trade in a May 1 decision made public May 9 upheld the Commerce Department's decision to use adverse facts available against mandatory respondent Risen Energy Co., though it remanded the methodology used to come up with the AFA rate. Judge Claire Kelly said that Commerce failed to pick from facts available and "instead created facts by manipulating evidence on the record."

The methodology the agency used to account for missing factors of production data saw Commerce average quantities from three separate groups of input data. Risen said Commerce should have just adjusted the reported factors of production quantity as it had done in the past.

Kelly said Commerce's method cuts against law and is unsupported by evidence. "Even if the statute were capacious enough to allow Commerce to derive facts by manipulating factual information, the random manipulation of data to construct an adjustment ratio cannot be considered a derivation under 19 U.S.C. § 1677e(b)(2)," the judge said. "Commerce offers no explanation of why it grouped various inputs together or why it chose the formula it did.”

The court said "Commerce created three categories of inputs and manipulated the consumption ratios for the inputs in the categories to arrive at a consumption adjustment rate." Even if the agency could say it appropriately took this rate from the facts on the record, "it fails to explain why its methodology in doing so is reasonable or promotes accuracy."

Kelly only arrived at this discussion after first finding that Commerce could use AFA against Risen. The exporter had argued that “market realities” barred it from getting the input data despite multiple overtures to unaffiliated producers. The U.S. said the company failed to act to the best of its ability since it chose to do business with previously uncooperative suppliers.

The court found Risen’s claim that it “used maximum market leverage” to induce cooperation by threatening to end business relationships “rings hollow.” By claiming that it wasn’t a viable business option to simply stop buying cells from uncooperative suppliers, “Risen essentially concedes that its attempts to induce its suppliers’ participation in this review amounted to empty threats.”

The exporter could have tried to secure compliance before doing business with the suppliers, the judge suggested, adding that even if the company “had no retroactive market leverage over uncooperative suppliers in past reviews,” it “certainly had leverage over suppliers that had previously been found uncooperative.”

While Risen says it can’t sever relationships with every noncooperative supplier, “it certainly could sever relationships with some. Risen could undertake efforts to incentivize compliance with suppliers.” Kelly said it’s not the court’s role to imagine efforts Risen could have taken to secure compliance, but “it is not hard to imagine efforts that could have been taken. Risen offers nothing.”

The court also remanded Commerce’s surrogate values for solar glass and air freight, though it sustained the surrogate values for electricity, ocean freight, backsheet and ethylene vinyl acetate.

Pertaining to the air freight surrogate, Jinko said Commerce should use data from the International Air Transport Association since it’s publicly available and route specific. Commerce rejected this submission since parts of it were not on the public record of the review, using Freightos data instead.

Kelly questioned this decision, seeing as the point of the agency’s preference for publicly available data is “to foster accuracy, fairness, and predictability.” She said it’s “unclear why ‘publicly available’ reasonably means ‘on the public record.’”

If the agency is concerned with verifying the accuracy of the data, “it can do so with reference to the confidential data. Thus, Commerce should further consider or explain how publicly available information on the confidential record fails to promote accuracy, fairness and predictability.”

Regarding solar glass, Commerce used Romanian Harmonized Tariff Schedule subheading 7007.19.80, instead of Malaysian HTS subheading 7007.19.90, despite finding that Malaysia was the primary surrogate country. Kelly first sustained Commerce’s rejection of exporter Jinko’s submission of the European tariff schedule as untimely, ruling that the court need not take judicial notice of the submission. She said the federal rules of evidence don’t apply where the court conducts the review of an agency proceeding with its own record.

While Commerce ostensibly rejected the Malaysian subheading data for a lack of a conversion methodology for the data, the judge found that Commerce failed to acknowledge Jinko’s proposed conversion methodology, which “could establish reliable conversions using Malaysian data.”

(Jinko Solar Import and Export Co. v. United States, Slip Op. 24-53, CIT Consol. # 22-00219, dated 05/09/24; Judge: Claire Kelly; Attorneys: Ned Marshak of Grunfeld Desiderio for plaintiffs led by Jinko Solar; Robert Gosselink of Trade Pacific for consolidated plaintiffs led by Trina Solar; Jeffrey Grimson of Mowry & Grimson for consolidated plaintiffs led by JA Solar Technoloyg Yangzhou Co.; Craig Lewis of Hogan Lovells for plaintiff-intervenor BYD (Shangluo) Industrial Co.; Gregory Menegaz of deKieffer & Horgan for consolidated plaintiff-intervenor Risen Energy; Joshua Kurland for defendant U.S. government; Timothy Brightbill of Wiley Rein for defendant-intervenor American Alliance for Solar Manufacturing)