159 F.Supp.2d 730 (CIT. 2001), 99-08-00525, Bethlehem Steel Corp. v. United States

Docket Nº:Court No. 99-08-00525.
Citation:159 F.Supp.2d 730
Party Name:BETHLEHEM STEEL CORPORATION, U.S. Steel Group, a Unit of USX Corporation, Ispat Inland Inc., LTV Steel Company, Inc. and National Steel Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Usinas Sider
Case Date:August 03, 2001
Court:Court of International Trade
 
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Page 730

159 F.Supp.2d 730 (CIT. 2001)

BETHLEHEM STEEL CORPORATION, U.S. Steel Group, a Unit of USX Corporation, Ispat Inland Inc., LTV Steel Company, Inc. and National Steel Corporation, Plaintiffs,

v.

UNITED STATES, Defendant,

and

Usinas SiderÚrgicas De Minas Gerais S/A, Companhia Siderrgica Paulista and Companhia Siderrgica Nacional, Defendant-Intervenors.

Slip Op. 01-93.

Court No. 99-08-00525.

United States Court of International Trade.

Aug. 3, 2001

Page 731

Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan, Ellen J. Schneider, Stephen J. Narkin, and Worth S. Anderson) and Dewey Ballantine LLP (Alan Wm. Wolff and Michael H. Stein), for Plaintiffs.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Lucius B. Lau, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Terrence J. McCartin, Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant, of counsel.

Willkie Farr & Gallagher (Christopher A. Dunn, Christopher S. Stokes, Robert L. LaFrankie, and Karl von Schriltz), for Defendant-Intervenors.

OPINION

RIDGWAY, Judge.

[Determination of U.S. Department of Commerce's International Trade Administration on countervailing duty suspension agreement remanded for action consistent with this opinion.]

This action challenges a July 1999 agreement between the U.S. Department of Commerce ("Commerce") and the Government of Brazil, suspending at the eleventh hour the investigation into alleged countervailable subsidies received by three Brazilian steel exporters ("Brazilian Exporters") 1 from the Brazilian Government. See Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Brazil, 64 Fed. Reg. 38,797 (Dept. Commerce 1999) (suspension of countervailing duty investigation and entry of suspension agreement) (Public Administrative Record Document ("P.R. Doc.") No. 173) ("Suspension Determination" or "Suspension Agreement" or "Agreement"). 2 That investigation was initiated at the behest of, among others, the plaintiff domestic steel producers here ("Domestic Producers"). 3 See Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Brazil, 63 Fed. Reg. 56,623 (Dep't Commerce 1998) (initiation of countervailing duty investigation) (P.R. Doc. No. 33).

As the Domestic Producers have observed, a suspension agreement is essentially a unique form of settlement agreement: a settlement agreement to which the complainant--that is, the domestic industry-

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--is not a signatory. Tr. at 5; 4 see also 125 Cong. Rec. 20,168 (1979). 5 While Congress has authorized Commerce to enter into suspension agreements, Congress has emphasized the limited circumstances in which such agreements are appropriate, and has established rigorous procedural safeguards to ensure that they are not abused to the detriment of domestic interests. 6

The law on suspension agreements requires, among other things, that Commerce afford the domestic industry the opportunity to review and comment on any proposed agreement. 19 U.S.C. § 1671c(e) (1994). The Domestic Producers here argue that "there is no indication that anyone at the Department read [their comments]. Indeed, there is substantial evidence that they did not." See Plaintiffs' Reply Brief in Support of Motion for Judgment Under Rule 56.2 ("Reply Memo") at 35. The Domestic Producers further assert that, under the facts of this case, Commerce cannot make the substantive determinations required to justify the Suspension Agreement. Id. passim.

Pending before the Court is Plaintiffs' Motion for Judgment Upon the Agency Record (filed under USCIT Rule 56.2), in which the Domestic Producers seek an order directing Commerce to terminate the Suspension Agreement and to issue a countervailing duty order on the subject merchandise. Plaintiffs' motion is opposed by Defendant, the United States ("the Government"), as well as the Brazilian Exporters, who argue that Commerce's determination to suspend the countervailing duty investigation should be sustained in all respects. 7

Plaintiffs' motion is granted in part. Whether or not Commerce read the comments filed by the Domestic Producers and other petitioners, the record indicates that those comments were not given adequate consideration. Accordingly, for the reasons discussed more fully below, this case is remanded to the Department of Commerce to enable it to comply with the applicable notice, comment and consultation requirements of the statute, and to reconsider its determination in light of all comments and consultation. 8

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I. Background

A. The Suspension Agreement Statute

The statutory provisions authorizing suspension agreements in countervailing duty cases were added to the Tariff Act of 1930 as part of the Trade Agreements Act of 1979 (the "Act"). Prior to the Act, the Secretary of the Treasury--who was then responsible for implementing the antidumping and countervailing duty laws--had the authority to waive the imposition of countervailing duties after an investigation was concluded, where the Secretary found that "adequate steps" had been taken to reduce substantially or eliminate the adverse effect of a "bounty or grant." S. Rep. No. 96-249 at 50-51 (1979), reprinted in 1979 U.S.C.C.A.N. 381 at 436-37. Domestic industries generally were highly critical of the Secretary's exercise of waiver authority. See, e.g., 125 Cong. Rec. 20,161-62 (1979) (Memorandum of Ad Hoc Subsidies Coalition asserting, in relevant part, "5. Treasury Has Stretched the Authority of the Trade Act of 1974 With Regard to the Granting of Waivers"). 9

The suspension agreement provisions of the Act were adopted to impose "strict limits on discontinuing or suspending investigations pursuant to deals with foreign governments or producers." 125 Cong. Rec. 20,163 (1979). The provisions on suspension of countervailing duty investigations effected "a major change in ... [the then-existing] law," eliminating waiver authority and instead "authorizing the suspension of investigations based on agreements with the exporters or the government of the country in which the subsidy practice is alleged to occur." H. Rep. No. 96-317 (1979) at 53.

In authorizing the use of suspension agreements in appropriate countervailing duty cases, Congress recognized their "importance ... to both importers and domestic industry as a means of achieving the remedial purposes of the law in as short a time as possible and with a minimum expenditure of resources by all parties involved." H. Rep. No. 96-317 at 53. Accord, S. Rep. No. 96-249 at 54, 1979 U.S.C.C.A.N. at 440 (suspension agreements "permit rapid and pragmatic resolutions of countervailing duty cases"). 10

But Congress was equally mindful of the potential for abuse of suspension agreements. To ensure that such agreements are not entered into to the disadvantage of a petitioning domestic industry (for foreign policy or other political reasons), the statute is replete with stringent requirements that must be met before an agreement can be concluded. Congress emphasized that "the authority to suspend

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investigations [is to] be exercised within the carefully circumscribed limits" set forth in the law. H. Rep. No. 96-317 at 53-54; see also S. Rep. No. 96-249 at 54, 1979 U.S.C.C.A.N. at 440 (to ensure that suspension agreements are used only in those cases where they "serve[] the interest of the public and the domestic industry affected," agency authority to suspend investigations is "narrowly circumscribed"); 125 Cong. Rec. 20,168-69 (1979) (Senator Heinz's understanding that suspension agreements permitted only "under certain narrowly constrained circumstances" confirmed by bill managers Senators Ribicoff and Roth). Congress further cautioned that "suspension is an unusual action which should not become the normal means of disposing of [countervailing duty] cases." S. Rep. No. 96-249 at 54, 1979 U.S.C.C.A.N. at 440.

There are essentially two distinct types of suspension agreements in countervailing duty cases--so-called "subsection (b) agreements" and "subsection (c) agreements." Subsection (b) agreements eliminate or offset completely a countervailable subsidy, or cease exports of the subject merchandise. 19 U.S.C. § 1671c(b). In contrast, subsection (c) agreements do not cease exports; nor do they completely eliminate or offset countervailable subsidies. Rather, they eliminate only the exports' injurious effect. 19 U.S.C. § 1671c(c).

Prior to accepting either a subsection (b) or (c) agreement, Commerce must find both that "suspension of the investigation is in the public interest," and that "effective monitoring of the agreement by the United States is practicable." 19 U.S.C. § 1671c(d). Commerce also is required to notify petitioners of, and consult with them concerning, its intention to suspend the investigation. In addition, Commerce must provide petitioners with a copy of the proposed agreement, and accord them an opportunity to comment. 19 U.S.C. § 1671c(e).

But there are additional requirements for subsection (c) agreements. Because such agreements, by definition, allow some subsidy practices to continue, Congress restricted subsection (c) agreements to cases involving "extraordinary circumstances"--cases where the suspension of the investigation is more beneficial to the domestic industry than its continuation, and where the investigation is "complex." See S.Rep. No. 96-249 at 51 (discussing the extraordinary circumstances requirement set out in 19 U.S.C. § 1671c(c)(4)).

Moreover, while all subsection (c) agreements require findings of "extraordinary circumstances" and...

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