                                     Slip Op. 17-52

               UNITED STATES COURT OF INTERNATIONAL TRADE

CC METALS AND ALLOYS, LLC, AND
GLOBE SPECIALTY METALS, INC.,
                                                   Before: Leo M. Gordon, Judge
                       Plaintiffs,
                                                   Court No. 14-00202
                  v.

UNITED STATES,

                       Defendant.


                                        OPINION

[Remand results sustained.]

      William D. Kramer and Martin Schaefermeier, DLA Piper LLP (US), of Washington,
DC for Plaintiffs CC Metals and Alloys, LLC and Globe Specialty Metals, Inc.

       Peter A. Gwynne, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC for Defendant United States. With him on the
brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E.
Davidson, Director, Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief
was Devin S. Sikes, Senior Attorney, U.S. Department of Commerce, Office of the Chief
Counsel for Trade Enforcement and Compliance of Washington, DC.

       Sydney H. Mintzer and Jing Zhang, Mayer Brown LLP, of Washington, DC for
Defendant-Intervenors Kuznetsk Ferroalloys OAO, Chelyabinsk Electro-Metallurgical
Plant OAO and RFA International LP, Calgary (Kanada) Schaffausen.

                                                                    Dated: April 28, 2017

      Gordon, Judge: The U.S. Department of Commerce has filed its Final Results of

Redetermination (“Remand Results”), ECF No. 61, pursuant to CC Metals and Alloys,

LLC v. United States, 40 CIT ___, 145 F. Supp. 3d 1299 (2016) (“CC Metals”). The court

in CC Metals sustained most of the issues Plaintiffs raised, but remanded two minor

issues for Commerce to address: (1) Commerce’s treatment of certain post-sale home
Court No. 14-00202                                                                   Page 2


market warehousing expenses and revenue, CC Metals, 40 CIT at ___, 145 F. Supp. 3d

at 1308; and (2) Commerce’s possible error using a simple, as opposed to a weighted,

average in calculating home market imputed credit expenses, id., 40 CIT at ___, 145 F.

Supp. 3d at 1311.

       The court notes that it erred in remanding these issues to Commerce without first

ascertaining whether either issue had a material effect on the less than fair value

determinations. As Commerce explains in the Remand Results, neither issue does, and

any error was therefore harmless. It was therefore a waste of administrative resources

for the court to require a remand in this case. The court below briefly reviews Plaintiffs’

challenges to the Remand Results, familiarity with which is presumed.

         Treatment of Home Market Warehousing Expenses And Revenue

       Commerce provides a detailed explanation in the Remand Results that its narrative

description in the final determination was not consistent with its actual treatment of home

market warehousing expenses and revenue in the margin calculation program, and that

despite the error in its narrative, it did in fact account for those items lawfully under the

statute, as well as under its regulations and practice. Remand Results at 7-13, 16-19.

Commerce does identify one immaterial wrinkle: the inability to distinguish on-site and

off-site warehousing revenue reported in one field of the margin program. Id. at 11-12.

Commerce explains that this issue had no material effect on the margin (and also provides

an alternative calculation as further support of the issue’s immateriality). Id.

Although Plaintiffs note that on-site and off-site warehousing revenue are not separately
Court No. 14-00202                                                                    Page 3


distinguished in the margin program, they proffer no alternative calculations that

demonstrate a material effect on the margin.1

       Plaintiffs instead argue that the only way to address the issue of on-site

warehousing is for Commerce to adjust for it as a miscellaneous income item, but

Plaintiffs fail to provide any authority for this proposed treatment. Instead, they argue that

on-site warehousing has to be treated the same as sizing revenue. Commerce, however,

reasonably explained in the Remand Results why similar treatment was unwarranted.

See Remand Results at 18 (“[W]e treated sizing as an offset to cost because we

considered it to be a step in the manufacturing process, rather than a service or expense

for finished merchandise.”) (citing Issues and Decision Memorandum at 25)). The court

therefore sustains Commerce’s treatment of warehousing expenses and revenue.

                                Imputed Credit Expenses

       In the Remand Results Commerce explained that it “inadvertently applied a simple

average of the short-term interest rates, rather than a weighted-average of the short-term

interest rates,” and Commerce corrected the calculation. Remand Results at 13.

Commerce calculates the weighted-average interest rate for credit expenses based on

the weighted-average interest rate paid by the respondent for short-term loans in the

currency of sale. If “the respondent (the seller) has short-term borrowings in the same



1
  Plaintiffs suggest it is possible to ascertain which portion of total reported revenue is
related to on-site warehousing and off-site warehousing, respectively, see
Pls.’ Comments at 4-5 n.3-4, ECF Nos. 65, 66, but for whatever reason plaintiffs chose
not to present these figures and argument to Commerce in the first instance during the
remand proceeding, and the court must therefore deem these arguments waived. See 28
U.S.C. § 2637(d); Dorbest Ltd. v. United States, 604 F.3d 1363, 1375 (Fed. Cir. 2010).
Court No. 14-00202                                                                    Page 4


currency as that of the transaction, [Commerce uses] the respondent’s own weighted-

average short-term borrowing rate realized in that currency to quantify the credit

expenses incurred.” Policy Bulletin 98.2: Imputed credit expenses and interest rates,

(“Policy    Bulletin     98.2”)     dated      February      23,     1998,      found      at:

http://enforcement.trade.gov/policy/bull98-2.htm (last visited on this date). If a respondent

has no short-term borrowings in the currency of the transaction, Commerce “will use

publicly available information to establish a short-term interest rate applicable to the

currency of the transaction.” Id. “Irrespective of whether the short term rate is derived from

a respondent's actual borrowing experience or from a published source, it is always

reflective of all short-term loans with maturities of one year or less.” Certain Oil Country

Tubular Goods from the Republic of Philippines, 79 Fed. Reg. 41,976 (Dep’t Commerce

July 18, 2014) (final determ.), Issues and Decision Memorandum at 18 (Comment 3)

(emphasis added).

       In the final determination Commerce used a “simple” average of short-term rates

derived from a small set of Chelyabinsk Electrometallurgical Integrated Plant Joint Stock

Company’s (“CHEMK”) factoring arrangements that Commerce examined at verification.

In the investigation Commerce had not specifically requested interest rate data for all of

CHEMK’s factoring arrangements during the period of investigation (“POI”). At verification

Commerce did, however, examine a small set of CHEMK’s factoring arrangements.

Commerce, in turn, used the rates from those verified transactions to derive the short-

term interest rate for imputed credit expense. As noted, Commerce inadvertently applied

a simple rather than a weighted-average in the calculation, an error it corrected in the
Court No. 14-00202                                                                    Page 5


Remand Results.

       Plaintiffs make a “legal” argument that Commerce’s use of the relatively small set

of CHEMK’s factoring arrangements to derive the weighted-average short term rate

violates Commerce’s interest rate selection practice because Commerce failed to use all

of CHEMK’s factoring arrangements during the POI. Plaintiffs instead prefer that

Commerce use ruble-denominated rates from published sources that were used in the

preliminary determination.

       Plaintiffs misunderstand Commerce’s practice. As noted above, Commerce

attempts to select an interest rate that is “reflective of” all short-term borrowings. In this

case CHEMK’s complete short-term borrowing data was (for a variety of non-nefarious

reasons) not on the record. Properly framed, the issue is simply which of the two proposed

rates best reflects CHEMK’s short-term borrowing. A reasonable mind could choose a

rate derived from CHEMK’s verified data as being more reflective of CHEMK’s borrowing

experience than a rate derived from published rates with no connection to CHEMK.

Accordingly, Commerce’s short-term borrowing rate selection is sustained.

                                        Conclusion

       For the foregoing reasons, the Remand Results are sustained. Judgment will enter

accordingly.

                                                              /s/ Leo M. Gordon
                                                            Judge Leo M. Gordon


Dated: April 28, 2017
       New York, New York
