Post Hoc Rationalization Not Legal Because Commerce, Not DOJ, Offered It, Appellants Tell CAFC
The U.S. cannot rely on the Commerce Department's post hoc rationalization of its decision to countervail glass subsidies in a countervailing duty review, plaintiff-appellants, led by Guangzhou Jangho Curtain Wall System Engineering Co., argued in a Dec. 5 reply brief at the U.S. Court of Appeals for the Federal Circuit. The appellants also said that the government did not take new agency action in making its determination, showing a "kind of bait and switch decision-making" decried in a key Supreme Court case (Taizhou United Imp. & Exp. Co. v. United States, Fed. Cir. 22-2000).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The case concerns the 2013 administrative review of the countervailing duty order on aluminum extrusions from China. The trade court initially sustained Commerce's position on nearly all the contested issues. Judge Leo Gordon, however, remanded the agency's decision to countervail subsidized purchases of glass and aluminum extrusions. On remand, Commerce continued to find that the glass purchases are countervailable, even though they weren't used in the subject aluminum extrusions. Gordon upheld that position in February (see 2202180042).
In response, five of the plaintiff-intervenors filed for relief from judgment and for rehearing on claims that Jangho says the court didn't address (see 2203070030). Jangho argued that even if Commerce can countervail glass, the record doesn't support Commerce's finding that the suppliers are government entities, a benefit was provided or any benefit was specific in nature. Gordon ruled against Jangho in May (see 2205100076).
Appealing to the Federal Circuit, Jangho argued that CIT illegally let Commerce make a post hoc rationalization as the basis for countervailing glass subsidies (see 2210070077). On remand, the agency for the first time said that it based its decision on a finding that the subsidy was not tied to aluminum extrusions even though Commerce originally said that the alleged subsidy was tied to aluminum extrusions since it is an input to the extrusions. Commerce said in its defense that this was permissible since it was Commerce and not DOJ that made this post hoc rationalization.
In their reply, the appellants said that this claim flies in the face of the Supreme Court's decision in DHS v. Regents of the University of California, which says that an agency must give reasoned analysis for its actions. The U.S. said that Jangho did not cite the Regents decision at CIT nor develop its claim with any legal support, waiving this argument. In response, the appellants said they couldn't address the issue previously because it was CIT's decision itself that for the first time said the post hoc rationalization was permissible because it was given by Commerce rather than DOJ.
"It is not difficult to see why the Government is loath to defend its determination on the merits," the brief said. Commerce initially countervailed the glass subsidies based on the idea that glass was an input of aluminum extrusions. On remand, it said glass was not an input but didn't need to be in order to be countervailed. "The difference in Commerce’s analysis could not be more stark," the brief said. "Commerce’s remand analysis is just the kind of bait and switch decision-making that Regents condemns because it upsets 'the orderly functioning of the process of review… .'"
Jangho argued against the U.S.'s claim that Regents does not apply since Commerce took new agency action. "Commerce is not dealing with the problem afresh by taking new agency action," the appellants said. "Commerce admittedly offered a new rationale for its original determination. Commerce itself submits in the first pages of the Remand Results that it is merely offering a further explanation to clarify its original determination."