Russian Fertilizer Exporter Says Commerce Violated CVD Statute in Specificity Finding

Russian exporter Industrial Group Phosphorite told the U.S. Court of Appeals for the Federal Circuit that the Commerce Department contradicted the countervailing duty statute in finding that the Russian government's provision of natural gas was de facto specific. Filing a reply brief on Aug. 7, the exporter said Commerce can't find that the agrochemical industry is the "predominant user of natural gas" by only comparing its usage among a subset of natural gas users as opposed to all natural gas users (The Mosaic Co. v. United States, Fed. Cir. # 24-1593).

Industrial Group Phosphorite said the agency failed "to engage in any statutory analysis supporting its position. And it cannot do so because its approach is unmoored from the statutory text."

The statute allows Commerce to find de facto specificity if an enterprise or industry is a predominant user of the subsidy. The exporter said usage by the industry at issue "must be compared against something, and Commerce does not -- and cannot -- cite any statutory language that permits it to evaluate" usage by "artificially narrowing the comparison to a subset of subsidy users within the subject country economy."

In the CVD investigation on Russian phosphate fertilizers, Commerce compared natural gas usage among industrial users and the agrochemical industry. The exporter said Commerce "ignores that the 'predominant use' factor for determining de facto specificity must be read within the context of the entire statutory provision addressing specificity."

Commerce must have reviewed whether the Russian fertilizer industry was the main user of natural gas as compared to all natural gas consumers in Russia. The agency "makes no effort to address, let alone refute, this reading of the statute," the brief said. The agency says it has "substantial discretion" in finding what companies are "predominant users," but the Court of International Trade improperly deferred to the agency's reading of the statute.

"As the Supreme Court recently emphasized, it is the obligation of the judiciary to interpret a statute and decide whether the executive agency complied with the statute," the brief said. "Properly framed, there is no dispute -- nor could there be any dispute -- that the agrochemical industry’s 4.7% usage of natural gas in 2019 does not make it a predominant user of natural gas within Russia," the exporter claimed.