Risen Energy Co. v. United States
Authored by: Jeremy J. Gustrowsky
In a recent decision, the Federal Circuit addressed how the U.S. Department of Commerce determines antidumping duties for Chinese solar cell exporters, focusing on the use of surrogate values from other countries and the calculation of manufacturing overhead. The case centered on Risen Energy Co., a Chinese exporter subject to antidumping duties, and whether Commerce properly valued certain inputs and overhead costs using data from Malaysia, a market economy.
The main issue was how Commerce selected the appropriate categories from the Malaysian Harmonized Tariff Schedule (HTS) to value Risen’s backsheet and ethyl vinyl acetate (EVA) inputs—key materials in solar cell manufacturing. Commerce chose to use the HTS categories for “sheet” rather than “film,” relying on industry standards that define these terms by thickness. The court found this approach reasonable, noting that industry standards are relevant in determining what products are covered by antidumping orders. Even though Risen argued for a different classification, the court agreed with Commerce that the ASTM standards provided the best available information.
However, the court took issue with Commerce’s calculation of the surrogate overhead ratio, which is used to estimate general manufacturing costs. Commerce relied on a Malaysian company’s financial statement and treated certain unidentified costs as overhead. The court found that Commerce’s explanation for this allocation was unclear and not supported by substantial evidence, especially since international accounting standards suggest that overhead should already be included in inventory costs. As a result, the court sent this part of the case back to Commerce for a better explanation or recalculation.
This decision highlights the importance of clear, evidence-based reasoning when government agencies make complex calculations affecting international trade. It also underscores the role of industry standards in classifying goods for trade remedies, and the need for transparency in financial analysis used to set duties.