Commerce Properly Grouped Public and Captive Power Plants in Specificity Analysis, US Says

The United States said Sept. 30 that an Indian aluminum exporter was trying to “artificially separate two similar industries” in its attempt to avoid being assessed a countervailing duty for the provision of coal for less-than-adequate remuneration (Hindalco Industries Limited v. U.S., CIT # 23-00260).

Exporter Hindalco brought its complaint to the Court of International Trade in January, arguing that the Commerce Department had wrongly grouped two industries in a de facto specificity finding regarding those industries' use of an Indian subsidy (see 2401080067). In that complaint, and in a June motion for judgment, it argued that the primary recipient of the government’s subsidized coal was public utility electricity generators, and that those public electricity generators weren’t the same thing as captive electricity generators owned by companies such as Hindalco (see 2406260046).

But the U.S. responded on Sept. 30 that Commerce was right to group the public utility sector and captive power sector into “power generating industries,” resulting in a finding that each entity in the group was a de facto recipient of the subsidy.

The statute governing countervailing duty reviews allows Commerce to group industries “so long as there is a basis to do so,” it claimed. Looking to Coal India Limited's "internal industry classifications," Commerce discovered that both industries used the same input, non-coking coal, for the same use, producing electricity, it said.

“Hindalco claims that these industries cannot be grouped for purposes of the specificity analysis because they do not share similar process and output, and the provision of coal for less than adequate remuneration is not de facto specific,” it said.

But this wasn’t true, it said, as, “contrary to Hindalco’s argument,” power generators that didn’t sell electricity to a grid were still power generators.

The government also pointed to a submission by the Indian government for the review that noted “non-coking coal ... is mainly used for power generation,” and that “69.9% of the total electricity generation” in the country was based on coal.

And in previous review, this one on uncoated paper from China, the department reached a similar determination, holding that a paper manufacturer “was a part of the power generating industry” because it owned a captive power plant that, likewise, didn’t sell energy to a grid.

The U.S. also pushed back on the exporter’s claim that Commerce should have adjusted the U.N. Comtrade data it used to calculate a world benchmark price for the coal by datasets from a monthly publication, India Coal Market Watch, and data compiled by McCloskey Thermal Coal Research. The former included export prices of “various grades” of coal from Indonesia, South America and Australia, it said.

But neither dataset sufficiently explains how it reaches its reported prices, nor does either contain value and quantity data, it said. That means that the department can’t calculate weighted averages for the benchmarks, it explained. It said Commerce prefers weighted averages to ensure “high prices from countries with low-volume exports do not skew the benchmarks upward.”

Neither dataset covers all of the many coal grades Hindalco bought during the period of review, either, the government noted. And, finally, “Commerce’s practice is not to use data from single or limited country sources when reliable data from a broad set of countries is available and reflective of world prices,” it said.