The Mosaic Co. v. United States
| Decision Date | 02 September 2022 |
| Docket Number | 21-00117,Slip Op. 22-103 |
| Parties | THE MOSAIC COMPANY, Plaintiff, v. UNITED STATES, Defendant, PHOSAGRO PJSC, JSC APATIT, Consolidated Plaintiff, INDUSTRIAL GROUP PHOSPHORITE LLC, Consolidated Plaintiff and Consolidated Plaintiff-Intervenor, THE MOSAIC COMPANY, Consolidated Defendant, PHOSAGRO PSJC, JSC APATIT, INDUSTRIAL GROUP PHOSPHORITE LLC, Defendant-Intervenor |
| Court | U.S. Court of International Trade |
Commerce's final determination in the countervailing duty investigation of phosphate fertilizers from the Russian Federation is partially sustained and partially remanded for reconsideration consistent with this opinion.
Patrick James McLain, David J. Ross, and Stephanie Ellen Hartmann, Wilmer, Cutler, Pickering, Hale and Dorr LLP, of Washington, DC, argued for Plaintiff The Mosaic Company. With them on the brief were Alexandra S. Mauer, Eliot Kim, and Natan Pinchas Lyons Tubman.
Meen Geu Oh, Commercial Litigation Branch, U.S. Department of Justice, of Washington, DC, argued for the Defendant. With him on the brief was Ebonie I. Branch. Of counsel on the brief was Jared Michael Cynamon, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.
Jonathan Thomas Stoel and Cayla Danielle Ebert, Hogan Lovells U.S. LLP, of Washington, DC, argued for Defendant-Intervenors PhosAgro PJSC and JSC Apatit. With them on the brief were Harold Deen Kaplan, Jared Rankin Wessel, Maria Alejandra Arboleda Gonzalez, and Nicholas R. Sparks.
Peter J. Koenig, Squire Patton Boggs (US) LLP, of Washington, DC argued for Defendant-Intervenor Industrial Group Phosphorite LLC. With him on the brief was Jeremy William Dutra.
Before: Jane A. Restani, Judge.
This action is a challenge to the final determination made by the United States Department of Commerce ("Commerce") in the countervailing duty ("CVD") investigation of phosphate fertilizers from the Russian Federation ("Russia") covering the period from January 1, 2019, through December 31, 2019.
Plaintiffs, Consolidated Plaintiffs, and Consolidated Plaintiff-Intervenors request that the court hold aspects of Commerce's final determination unsupported by substantial evidence or otherwise not in accordance with law. The United States ("Government") asks that the court sustain Commerce's final determination.
The Mosaic Company ("Mosaic") filed a CVD petition on June 26, 2020, concerning imports of phosphate fertilizers from Russia. Petitions for Imposition of Countervailing Duties: Phosphate Fertilizers from Morocco and Russia, P.R. 1-8, C.R. 1-8 (June 26, 2020). Commerce initiated the CVD investigation on July 23, 2020. Phosphate Fertilizers From the Kingdom of Morocco and the Russian Federation: Initiation of Countervailing Duty Investigations, 85 Fed.Reg. 44,505 (Dep't Commerce July 23, 2020). On August 4, 2020, the U.S. International Trade Administration selected LLC Industrial Group Phosphorite ("EuroChem") and PhosAgro-Cherepovets ("PhosAgro") as mandatory respondents ("Plaintiffs") in this review. See Countervailing Duty Investigation of Phosphate Fertilizers from Russia: Respondent Selection, P.R. 55, C.R. 23 (Aug. 4, 2020).
Commerce published its preliminary results on November 30, 2020, see Phosphate Fertilizers From the Russian Federation: Preliminary Affirmative Countervailing Duty Determination, 85 Fed.Reg. 76,524 (Dep't Commerce Nov. 30, 2020), along with the accompanying Decision Memorandum for the Affirmative Preliminary Determination of the Countervailing Duty Investigation of Phosphate Fertilizers from the Russian Federation, C-821-825, POR 1/1/2019-12/31/2019 (Dep't Commerce Nov. 23, 2020) ("PDM").
Commerce published its final determination on April 7, 2021. See Phosphate Fertilizers From the Kingdom of Morocco and the Russian Federation: Countervailing Duty Orders, 86 Fed.Reg. 18,037 (Dep't Commerce Apr. 7, 2021) ("Final Results"); see also Issues and Decision Memorandum for the Final Affirmative Determination of the Countervailing Duty Investigation of Phosphate Fertilizers from the Russian Federation, C-821-825, POR 1/1/2019-12/31/2019 (Dep't Commerce Feb. 8, 2021) ("IDM"). Commerce determined the countervailable subsidy rate to be 47.05 percent for EuroChem and 9.19 percent for PhosAgro. Final Results, 86 Fed.Reg. at 18,038. Relevant here, Commerce found subsidies based on the government of Russia's ("GOR") provision of natural gas for less than adequate remuneration ("LTAR"). IDM at 8-9. Additionally, as relevant here, Commerce found that a subsidy for phosphate mining rights for LTAR did not yield a measurable benefit. Id. at 10. Mosaic, EuroChem, and PhosAgro raise challenges to the final determination.
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2)(B)(i). The court will uphold Commerce's determinations in a CVD proceeding unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law[.]" 19 U.S.C. § 1516a(b)(1)(B)(i).
In the final determination, Commerce applied adverse facts available ("AFA") to determine that Rosneft is a government authority such that its provision of natural gas to a cross-owned affiliate of EuroChem was a countervailable financial contribution. See IDM at 6, 9, 35-37. EuroChem challenges this determination.[1]
During the investigation, Commerce issued a questionnaire requesting that the GOR provide an Input Producer Appendix for any company or enterprise that is wholly or partially owned by the GOR, whether directly or indirectly. See Letter from USDOC to Embassy of Russian Federation Pertaining to GOR Initial Questionnaire, P.R. 56 (Aug. 4, 2020) ("Initial Qnaire to GOR"). In its initial questionnaire response, the GOR provided an appendix for Gazprom and PJSC Novatek. Response from Mayer Brown, LLP to Sec of Commerce Pertaining to Ministry, Initial QR at 41, P.R. 131, C.R. 305 (Sept. 25, 2020) ("GOR IQR"). EuroChem, however, reported that its cross-owned affiliate, Nak Azot purchased natural gas from Russian corporation Rosneft. Response from Squire Patton Boggs (US) LLP to Sec of Commerce Pertaining to EuroChem Supp QR at 12-13, P.R. 229, C.R. 437 (Oct. 26, 2020) ("EuroChem 1st SQR"). It is undisputed that Rosneft's main shareholder, Rosneftegaz JSC ("Rosneftegaz"), is 100 percent owned by the GOR. Id. at 13, Ex. SQ-16.2. Commerce requested that the GOR provide an Input Producer Appendix for both Rosneft and Rosneftegaz, but the GOR declined, stating that neither entity was a vested government authority in the Russian natural gas market. See Letter from USDOC to Mayer Brown Pertaining to GOR 2nd Sec II Suppl Qnaire, P.R. 282 (Nov. 3, 2020) ("Suppl. 2d Qnaire to GOR"); Response from Mayer Brown, LLP to Sec of Commerce Pertaining to Ministry 2nd Suppl QR at 1-2, P.R. 300, C.R. 418 (Nov. 13, 2020) ("GOR 2d SQR"). Following the preliminary determination, Commerce again requested the Input Producer Appendices for Rosneft and Rosneftegaz from the GOR, but the GOR did not submit the requested information. See Letter from Mayer Brown, LLP Pertaining to GOR 2nd Supp Qnaire, P.R. 317, C.R. 489 (Nov. 25, 2020) (" "); Response from Mayer Brown, LLP to Sec of Commerce Pertaining to Ministry 3rd Suppl QR at 6-7, P.R. 331, C.R. 502 (Dec. 8, 2020) ("GOR 3rd SQR").
A subsidy is countervailable if the following elements are satisfied: (1) an authority has provided a financial contribution directly or entrusts a private entity to make a financial contribution; (2) a benefit is thereby conferred on a recipient of the financial contribution; and (3) the subsidy is specific to a foreign enterprise or foreign industry, or a group of such enterprises or industries. See 19 U.S.C. § 1677(5)(A)-(B), (D)-(E), (5A). Normally, information from the foreign government is necessary for Commerce to make a reasonable determination about whether an entity is a government authority. See Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365, 1369-70 (Fed. Cir. 2014) ("Fine Furniture"). If the record is missing necessary information to an investigation, Commerce may use facts otherwise available to fill in any gaps that are necessary to find that the elements of the CVD statute have been satisfied. See 19 U.S.C. § 1677e(a) (2015); see also Changzhou Trina Solar Energy Co. v. United States, 43 CIT__,__, 359 F.Supp.3d 1329, 1325 (2019).
19 U.S.C. § 1677e specifically provides two avenues to fill in the gap for the missing information: "facts otherwise available" and "facts otherwise available" with "adverse inferences." See 19 U.S.C § 1677e(a)-(b). Accordingly, the court has interpreted the two subsections in the statute to have slightly different purposes. See Mueller Commercial de Mexico v. United States, 753 F.3d 1227, 1232 (Fed. Cir. 2014). Facts otherwise available shall be used when necessary information is not available on record, or if an interested party or any other person fails to satisfactorily respond to Commerce's requests for "necessary information" by: (1) withholding requested information, (2) failing to provide information by the submission deadlines or in the form or manner requested, (3) significantly impeding a proceeding, or (4) providing information that cannot be verified. Id. § 1677e(a)(1)-(2). Separately, pursuant to § 1677e(b), Commerce is authorized to use an adverse inference when selecting from available facts if an interested party "has failed to cooperate by not acting to the best of its ability to comply with a request for information." Id. § 1677e(b). For the following reasons, the court holds that Commerce satisfied...
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