Commerce Practice of Not Calculating Conversion Costs Quarterly Reasonable, US Says

A Belgium citric acid exporter isn’t alleging any flaw in its treatment in a review -- it’s just trying to challenge the settled, and reasonable, Commerce Department practice of never using quarterly cost allocation analyses for conversion costs in review, the U.S. said Sept. 27 (Citribel v. U.S., CIT # 24-00010).

This practice has been in use for more than a decade and has been repeatedly supported by the courts, it said.

Conversion costs, “which can include bonuses, insurance, depreciation, energy, and other expenses, are incurred erratically throughout a given year,” it said in the brief. As a result, it said, annualizing the costs across the years leads to “a more accurate dumping margin.”

Citribel argues that this is a case of statutory ambiguity that, under Loper Bright, means Commerce’s interpretation can be reviewed by the court under a lower standard of deference (see 2407160051). The U.S. disagreed. It argued that the statute instead had intended to “give Commerce considerable discretion” in determining the definition of the word “period.”

“Citribel claims that Commerce erroneously used a presumption that conversion costs must be annualized,” it said. “What Citribel calls a ‘presumption' is no more than Commerce’s normal practice for determining to use its alternative quarterly cost methodology.”

The government also said that Citribel was well aware that this was Commerce’s standard policy and that it had the chance to seek a different result; in one questionnaire prompt, the department told Citribel that "in recognition that during periods of high inflation, it may be necessary to use an alternative, monthly indexation methodology to account for the effects of high inflation when computing an annual weighted average cost."

But Citribel said this didn't apply to it, the U.S. said.