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Commerce Set 'Onerous Level of Certification' Regarding China's EBCP, Trade Court Rules

The Commerce Department imposed an "onerous level of certification" on countervailing duty respondent Risen Energy Co. regarding its supposed use of China's Export Buyer's Credit Program, the Court of International Trade ruled in a Nov. 17 opinion. Judge Jane Restani said that all the factors considered together, which included the provision of non-use certificates from Risen's U.S. buyers and government intrusion into these companies' financial records regarding years-old transactions, resulted in an "unnecessary level of verification."

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The court, ruling on the 2017 CVD review of solar cells from China, also sent back Commerce's land benchmark formula, which the agency came up with on remand, for violating the remand order's scope. Finding it "particularly inappropriate to start this case again," the judge ordered Commerce to adhere to its first remand results, in which it used a 2010 Coldwell Banker Richard Ellis (CBRE) land report to set the benchmark. In the opinion, the judge sustained Commerce's ocean freight benchmark -- an issue all parties agreed had been settled.

“We are pleased that the Court recognized after many years of investigation and rounds of remand there simply is no evidence that US buyers are receiving Export Buyers Credit Program Lending from Chinese State banks," said Greg Menegaz, counsel for Risen, in an email.

Restani's opinion marks the third time the court has sent back the EBCP issue to Commerce. In its second remand order, the judge told Commerce to attempt to verify Risen's non-use of the EBCP. The agency started the verification process but stopped when one of Risen's customers declined to participate in on-site verification, telling the court that verification was impossible given that the unverified information it had would leave an insurmountable gap in the record.

The court first noted that the use of AFA that "collaterally impacts a cooperating party is disfavored," adding that AFA shouldn't be used simply to punish a non-cooperative party -- which in this case was originally the Chinese government and is now one of Risen's customers. In all, Risen submitted non-use certifications from its customers along with financial data from them, all showing non-use of the EBCP. It's expensive and time-consuming for a private entity with no legal obligation to comply to engage in verification, and Restani said the demands of Commerce went too far.

"When the process of verification itself becomes the source of new non-compliance, courts should consider whether the process, as laid out by Commerce, is reasonably necessary or whether it has become so onerous as to impede good faith efforts by respondents to comply," the opinion said. "Non-use certificates and supporting records followed by requests for in-person visits of several days and government intrusion into all financial records on the premises of U.S. customer companies, all taking place six years after the POR, nearly four years after submission of the certificates, and in a world in which no verification efforts have ever produced evidence of the use of this program" all show an unneeded level of verification.

Restani also remanded the land benchmark, though the judge did find that Commerce's second remand results did succeed in justifying its position in the first remand results, where the agency modified its land benchmark by simple averaging of 2021 Malaysian data with its original data, the 2010 CBRE report on Thai land. After Commerce remanded this average, however, the agency came up with a new method for calculating the benchmark. Respondent JA Solar said this went beyond the scope of Restani's second remand, which asked Commerce to either justify or drop its use of the 2010 CBRE data in favor the Malaysian data.

The court agreed, though it found that in its defense of its new formula, Commerce justified the use of the 2010 CBRE data. "Looking at the record through the lens of Commerce’s latest explanation, the court can now glean that the range of years contained within the 2010 CBRE data and the Malaysian data when combined together made the data set as a whole a more accurate representation of the range of purchase dates at issue in this case," the opinion said.

As a result, Commerce should now apply its first remand results to the case, the court ordered, seeing as Commerce went beyond the previous order. "Commerce could have sought a new remand here that allowed it to 'deal with the problem afresh,'" but it's too late in litigation to allow for this, the court held.

(Risen Energy Co. v. United States, Slip Op. 23-161, CIT Consol. # 20-03912, dated 11/17/23; Judge: Jane Restani; Attorneys: Gregory Menegaz and deKieffer & Horgan for plaintiff Risen Energy Co., Ltd.; Jeffrey Grimson of Mowry & Grimson for consolidated plaintiff JingAo Solar Co.; Craig Lewis of Hogan Lovells for plaintiff-intervenor Shanghai BYD Co.; Jonathan Freed of Trade Pacific for plaintiff-intervenor Trina Solar Co.; and Joshua Kurland for defendant U.S. government)