British Steel PLC v. U.S., s. 96-1401
| Decision Date | 24 October 1997 |
| Docket Number | 96-1402,96-1405 and 96-1406,Nos. 96-1401,96-1404,s. 96-1401 |
| Citation | 127 F.3d 1471 |
| Parties | BRITISH STEEL PLC, Plaintiff-Appellant, and Government of the United Kingdom of Great Britain and Northern Ireland, Plaintiff, v. UNITED STATES, Defendant/Cross-Appellant, v. BETHLEHEM STEEL CORPORATION, Inland Steel Industries, Inc., and U.S. Steel Group--A UNIT of USX Corporation, Defendants-Appellees, and Geneva Steel, Gulf States Steel Inc. of Alabama, Lukens Steel Co., and Sharon Steel Corporation, Defendants. USINAS SIDERURGICAS DE MINAS GERAIS, S.A., Plaintiff, and Companhia Siderurgica Nacional, Plaintiff, v. UNITED STATES, Defendant/Cross-Appellant, BETHLEHEM STEEL CORPORATION, AK Steel Corporation, Inland Steel Industries, Inc., LTV Steel Company, Inc., National Steel Corporation, and U.S. Steel Group--A Unit of USX Corporation, Defendants-Appellees, and Gulf States Steel, Inc. of Alabama, Geneva Steel, Lukens Steel Co., and WCI Steel Inc., Defendants. ALTOS HORNOS DE MEXICO, S.A. DE C.V., Plaintiff-Appellant, v. UNITED STATES, Defendant/Cross-Appellant, v. BETHLEHEM STEEL CORPORATION, AK Steel Corp., Inland Steel Industries, Inc., LTV Steel Company, Inc., National Steel Corporation, and U.S. Steel Group--A Unit of USX Corporation, Defendants-Appellees, and Lukens Steel Company, Gulf States Steel Inc., of Alabama, Sharon Steel Corporation, WCI Steel Inc., and Geneva Steel, Defendants. |
| Court | U.S. Court of Appeals — Federal Circuit |
Richard O. Cunningham and Peter Lichtenbaum, Steptoe & Johnson LLP, Washington, DC, argued for plaintiff-appellant British Steel PLC. With them on brief were Sheldon E. Hochberg and William L. Martin, III.
A. David Lafer, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, DC, argued for defendant/cross-appellant United States. With him on brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director. Of counsel on brief were Stephen J. Powell, Chief Counsel, John D. McInerney, Senior Counsel, Elizabeth C. Seastrum Senior Counsel, Robert E. Nielsen, Senior Attorney, and David J. Ross, Attorney-Adviser, Office of the Chief Counsel for Import Administration, Department of Commerce, Washington, DC
Stephen J. Narkin, Skadden, Arps, Slate, Meagher & Flom LLP, Washington DC, and John A. Ragosta, Dewey Ballantine, Washington, DC, argued for defendants-appellees Bethlehem Steel Corporation, et al. With them on brief were Robert E. Lighthizer and John J. Mangan, Skadden, Arps, Slate, Meagher & Flom LLP; and Michael H. Stein, Guy C. Smith, and John R. Magnus, Dewey Ballantine. Of counsel were Michael R. Geroe and David S. da Silva Cornell, Dewey Ballantine; and D. Scott Nance, Skadden, Arps, Slate, Meagher & Flom LLP.
Kermit W. Almstedt, O'Melveny & Myers LLP, Washington, DC, for Altos Hornos de Mexico, S.A. de C.V. Of counsel was Michael A. Meyer. On brief was Jeffrey M. Winton, Shearman & Sterling, of Washington, DC.
Before MAYER, RADER, and SCHALL, Circuit Judges.
Altos Hornos de Mexico, S.A. de C.V. ("AHMSA"), British Steel plc ("BS plc"), and the United States appeal the judgment of the Court of International Trade, Consol. Court Nos. 93-09-00550, 93-09-00558, and 93-09-00570 (April 2, 1996), British Steel plc v. United States, 924 F.Supp. 139 (C.I.T.1996) ("British Steel II "), affirming the final determination of the United States Department of Commerce ("Commerce") in Certain Steel Products from the United Kingdom, 58 Fed.Reg. 37,393 (July 9, 1993) (), as modified on remand in Remand Determination: Certain Steel Products from the United Kingdom (July 17, 1995); in Certain Steel Products from Brazil, 58 Fed.Reg. 37,295 (July 9, 1993) (), as modified on remand in Remand Determination: Certain Steel Products from Brazil, (July 17, 1995); and in Certain Steel Products from Mexico, 58 Fed.Reg. 37,352 (July 9, 1993) () ("Mexico Determination "), as modified on remand in Remand Determination: Certain Steel Products from Mexico (July 17, 1995). Appellants also contest various aspects of the Court of International Trade's February 9, 1995, order, British Steel plc. v. United States, 879 F.Supp. 1254 (C.I.T.1995) ("British Steel I "), remanding the final determinations to Commerce. * We reverse in part because the Court of International Trade erred in sustaining Commerce's Remand Determinations, affirm in part because it correctly sustained Commerce's use of the mortgage-based loan methodology, and remand the case for a determination of whether Commerce correctly applied its repayment methodology in the initial final determinations.
On July 9, 1993, Commerce published its final affirmative determination in the countervailing duty investigations of certain steel products from various countries, including Brazil, Mexico, and the United Kingdom. Commerce determined that before USIMINAS, AHMSA, and BS plc were privatized, each company (or its corporate predecessor) received past non-recurring subsidies from the governments of Brazil, Mexico, and the United Kingdom, respectively. British Steel I, 879 F.Supp. at 1264, 1277, 1280. In each case, because the privatization transaction involved payments to the company's respective government, Commerce examined whether it could continue to consider the privatized company a recipient of a subsidy under the countervailing duty statute, 19 U.S.C. § 1671(a) (1988), ** or whether the privatization completely repaid the subsidies. General Issues Appendix, 58 Fed.Reg. 37,225 37,261 (July 9, 1993) ("General Issues Appendix ").
Commerce found that "privatization of a government-owned company, per se, does not and cannot eliminate [the] countervailability" of a subsidy provided before privatization, except to the extent that the sale included the subsidy's repayment. Id. at 37,263. In addition, Commerce developed a repayment methodology to determine the amount of the past non-recurring subsidies that the privatization transaction repaid. Under the repayment methodology, Commerce determines what percentage of the subsidized company's net worth is attributable to a past non-recurring subsidy and allocates, based on this percentage, a portion of the company's purchase price to subsidy repayment. Id. Commerce applied this methodology to the privatization of AHMSA, BS plc, and USIMINAS. Id. at 37,297, 37,355, 37,394.
On February 9, 1995, the Court of International Trade rejected Commerce's determination to the extent that it held that "subsequent to any privatization transaction, Commerce may countervail a privatized company for pre-privatization subsidies regardless of how privatization takes place." British Steel I, 879 F.Supp. at 1276. The Court of International Trade reasoned that because the recipient of a subsidy must be a person or corporate entity, the focus of the repayment inquiry should be whether the entity that received the subsidy survives the privatization. Id. at 1271-72. In the Court of International Trade's view:
[W]here a private investor pays fair market value in an arm's-length transaction based upon commercial considerations for an asset or assets of a corporation, "there is no benefit conferred to the purchaser and therefore, no countervailable subsidy within the meaning of 19 U.S.C. § 1677(5)." ... If, however, a purchaser buys into the subsidized corporate entity itself so that the subsidized entity continues in its corporate existence in whole or in part, Commerce may properly continue to countervail that entity in accordance with legislative intent.
Id. at 1274 (quoting Saarstahl AG v. United States, 858 F.Supp. 187, 193 (C.I.T.1994), rev'd, 78 F.3d 1539 (Fed.Cir.1996)). The Court of International Trade declined to rule on the issue of Commerce's repayment methodology and remanded the case instructing Commerce to determine whether the transaction was an asset or stock sale, and whether each privatization was at arm's length, for fair market value, and consistent with commercial considerations. The Court of International Trade also instructed Commerce to calculate any countervailing duties that were still warranted under the new standard. Id. at 1277, 1329.
Although Commerce disagreed with the court's instructions, it nevertheless made the requisite findings in its Remand Determinations (July 17, 1995) ("Remand Determinations "). In the Remand Determinations, Commerce found that it could properly countervail the exports of AHMSA, BS plc, and USIMINAS mainly because these companies were for "all intents and purposes" the same entities as the ones before privatization. British Steel II, 924 F.Supp. at 165-66, 174, 184. Commerce did not apply the repayment methodology, however, "in an attempt to follow the spirit of the Court's decision" in British Steel I. Remand Determinations at 7, n.7. In calculating the countervailing duty owed by AHMSA, Commerce amortized the amount of the subsidy by using a mortgage-based loan methodology instead of its customary declining balance (grant) and dollarization methodologies to account for Mexico's intermittent periods of hyperinflation. British Steel II, 924 F.Supp. at 166-67; see also Mexico Determination, 58 Fed.Reg. at 37,355.
The Court of International Trade sustained these aspects of the Remand Determinations as supported by substantial evidence and otherwise in accordance with law. British Steel II, 924 F.Supp. at 190-91. The court also held that Commerce had advanced a reasoned analysis for abandoning its customary grant and dollarization methodologies and that the mortgage-base loan methodology was based on substantial evidence and otherwise in accordance with law. Id. at 168. These appeals followed.
The first issue is whether the Court of International Trade correctly sustained Commerce's Remand...
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