The Palladium Fight Is Over Which Adverse-Facts Rate Commerce Selected
A June 10 letter from Khanna and Moolenaar has been read as a claim that Commerce dropped adverse facts available against a noncooperating Russian respondent. Commerce applied AFA throughout the palladium case and held a 132.83 percent dumping rate and a 109.10 percent subsidy rate through the final determinations. The contested question is the level of the rate, which sat well below the 828.09 percent petition allegation. With the Commission negative injury vote removing any order, the case survives as a marker on how Commerce selects AFA rates.
Written byTRAVERSE Research
Primary lensAFA rate selection
Evidence base9 records used
Use caseSaved scope review
Commerce applied adverse facts in the palladium case, and the live dispute is over the rate it chose
The letter that Ranking Member Ro Khanna and Chairman John Moolenaar sent to Commerce Secretary Howard Lutnick on June 10, 2026 has been read in some quarters as a claim that Commerce stopped using adverse facts available against a noncooperating Russian respondent. The record does not support that reading. Commerce used adverse facts available, known in practice as AFA, in both its preliminary and final determinations. The contested question is narrower. When a respondent declines to participate at all, Commerce still has to put a number on the AFA rate, and the dispute is over the number Commerce chose.
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What the letter actually asks
The letter is written in conditional terms. It states that recent proceedings may signal a departure from longstanding practice and asks Commerce to confirm whether any policy change exists. It asks whether Commerce has adopted new guidance on how it selects AFA rates, what legal basis supports a rate below the petition rate when a respondent fails to cooperate at all, and whether a reduced AFA margin still serves the deterrent purpose Congress built into the statute. The letter stops short of asserting that a change has occurred. It raises the possibility and asks Commerce to answer.
What Commerce did on the palladium record
The matter is the antidumping and countervailing duty investigation of unwrought palladium from Russia, brought by Stillwater Mining Company and the United Steelworkers in a petition filed on July 30, 2025. No Russian producer participated. On the antidumping track Commerce announced a preliminary rate on February 10, 2026 and published it on February 19. It announced the final determination on April 28 and published it on May 1. The Russia-wide rate was 132.83 percent, and Commerce stated that it relied solely on adverse facts available for that entity. Because no party commented on the preliminary determination, the final adopted it unchanged. The countervailing track ran in parallel. Commerce announced a preliminary subsidy rate of 109.10 percent in March and held the rate at 109.10 percent in the final published on May 22, also on a facts-available-with-adverse-inferences basis.
Much of the confusion around this case traces to the 828.09 percent figure, which is the dumping margin alleged in the petition. Commerce never calculated it, preliminarily or finally. Several trade and market reports have nonetheless described 828 percent as a Commerce preliminary margin, and that description is inaccurate. Anyone modeling this case should drop the figure as a Commerce output.
Why 132.83 percent is itself an AFA rate
The framing that Commerce acted without adverse facts runs together two separate decisions, the decision to apply AFA and the decision about the level of the AFA rate. When a respondent refuses to cooperate, Commerce may adopt the rate alleged in the petition, or it may build a rate from other information on the record, such as a comparison of subject-country export prices against other export prices. Commerce took the second path and arrived at 132.83 percent, which is an AFA rate in its own right, just a lower one than the petitioner asked for. The grievance in the letter is about that gap rather than about any absence of adverse facts.
What the 2015 statute changed
The letter grounds itself in the 2015 amendments to 19 U.S.C. 1677e, enacted in the Trade Preferences Extension Act. Those amendments expanded Commerce discretion. Commerce no longer has to corroborate a margin drawn from a separate segment of the same proceeding when it relies on secondary information, and it no longer has to tie the rate to an estimate of what the respondent would have done had it cooperated. It may reach for the highest qualifying rate. But the amendments lifted a ceiling without installing a floor. Nothing in the 2015 law requires Commerce to select the petition rate, or the highest available rate, in every case of total noncooperation. Commerce retains discretion to choose a rate it considers more defensible on the record. The palladium determinations are not facially inconsistent with that discretion. The dispute is therefore less about whether Commerce had authority to select a lower AFA rate and more about how Commerce should use that discretion and how predictable that use will be.
Why the China framing outruns the record
The letter is written with China in mind. It notes that China is subject to more than 270 antidumping and countervailing duty orders and warns that any softening of AFA practice would weaken a frontline tool against Chinese producers. The documented case behind the letter involves Russia. Russia carries its own set of variables that may bear on a palladium determination, including the concentration of global supply, the position of Nornickel, and the sanctions environment. Reading a Russian palladium outcome as evidence about how Commerce will set AFA rates in Chinese cases is an inference, and the letter does not close that gap with record evidence. The China concern is politically substantive, but this single Russian case does not establish it.
What the negative injury vote means for the stakes
A later development changed the practical stakes, though it leaves the legal debate intact. On May 29, 2026, the International Trade Commission reached a negative final injury determination. Because the Commission found no injury, Commerce will not issue antidumping or countervailing duty orders on Russian palladium. The rates that drew the congressional letter will never operate as duties under an order in this case. What the investigation leaves behind is an interpretive and political marker on AFA rate selection rather than an operative duty order.
What practitioners should take from this
The narrow and defensible lesson is that AFA rate selection is now a contested variable rather than a settled default. For teams modeling exposure in pending cases, the habit of assuming that total noncooperation converts the petition rate into the cash-deposit rate deserves a second look. The palladium case does not prove a new policy, and a single proceeding could not. It does show that Commerce can exercise judgment about the level of an AFA rate, and that this choice now draws congressional attention.
Respondents should be careful about overreading the result. Commerce still applied adverse facts available. The antidumping rate was still 132.83 percent and the subsidy rate still 109.10 percent, so noncooperation remained expensive. The accurate takeaway is only that the ceiling does not apply automatically.
Petitioners should treat rate selection as something to win on the record rather than something that follows from noncooperation. The case-brief stage is where a petitioner builds the argument that a particular rate is probative, adverse, and able to survive review at the Court of International Trade and the Federal Circuit. A rate that is high but poorly supported is a litigation liability, which is part of why Commerce may prefer a lower rate it can defend.
Importers should separate investigation risk from order risk. Here the Commission vote ended the order risk. The rate selection question still matters because the methodology can shape cash-deposit exposure after a preliminary affirmative determination and before the final injury vote is known, and because it sets expectations for other proceedings.
Bottom line
Commerce applied adverse facts available in the palladium case and chose a rate well below the petition allegation. That choice is not facially inconsistent with the statute as amended in 2015, which widened Commerce discretion without compelling the highest rate. The congressional letter raises a real question about how that discretion will be used and whether it signals a broader shift, but it documents one Russian case, and the Commission negative vote has already removed any order from that case. The live issue for practitioners is that AFA rate selection has moved from a background assumption into open dispute.
Caveats
The claim that Commerce has changed its AFA policy has not been established. It rests on a single proceeding and on conditional language in the letter, and the final determinations in that proceeding held the AFA rates rather than lowering them. The reported February message from the former United Steelworkers president to Commerce is sourced to trade press reporting and has not been confirmed against a primary record. The precise content of the January 28, 2026 normal-value memorandum that the letter cites is known only through the letter characterization, and the memorandum should be pulled from the agency docket before any account relies on what it requested. The final subsidy rate is stated here as holding at 109.10 percent based on the Commerce final fact sheet and the Federal Register notice.