CAFC Says 'Cross-Ownership' Regulation Requires Link Between Input and Downstream Product
The U.S. Court of Appeals for the Federal Circuit on Oct. 8 affirmed the Court of International Trade's rejection of the Commerce Department's application of its "cross-ownership regulation" to countervailing duty respondent Gujarat Fluorochemicals in the CVD investigation of polytetrafluoroethylene (PTFE) resin from India. In the investigation, Commerce attributed a subsidy received by Inox Wind to Gujarat, since Inox sold the respondent wind power that constituted only 1.03% of total power consumed by the company.
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Judges Jimmie Reyna, William Bryson and Kara Stoll held that Commerce's regulation, which focuses on whether the input is "primarily dedicated to production of the downstream product," requires "some level of connection (apart from primary, or sole, consumption) between" the input and the downstream product "for the input to be 'primarily dedicated to production of the downstream product.'" While the court said it wouldn't define the level of connection needed, Commerce didn't establish this connection here.
Bryson wrote a concurring opinion saying he would also reject the agency's decision on the ground that the input here, the wind power, wasn't "primarily dedicated to the production of the downstream product," the PTFE resin.