Ag Der Dillinger Huttenwerke v. U.S., SLIP OP. 04-9. No. 00-09-00437.

Citation310 F.Supp.2d 1347
Decision Date29 January 2004
Docket NumberSLIP OP. 04-9. No. 00-09-00437.
PartiesAG DER DILLINGER HÜTTENWERKE, EKO Stahl GmbH, Salzgitter AG Stahl und Technologie, Stahl Werke Bremen GmbH, and Thyssen Krupp Stahl AG, Plaintiffs, v. THE UNITED STATES, Defendant, v. International Steel Group, Inc., and United States Steel LLC, Defendant-Intervenors.
CourtU.S. Court of International Trade

deKieffer & Horgan (Marc E. Montalbine, Merritt R. Blakeslee, and Wakako O. Takatori) for plaintiffs.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Jeanne E. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Ada E. Bosque), Augusto Guerra, Office for the Chief Counsel for Import Administration, United States Department of Commerce, for defendant, of counsel.

Stewart and Stewart, Washington, DC (Terence P. Stewart) for defendant-intervenor International Steel Group, Inc. Dewey Ballantine LLP (John A. Ragosta and John W. Bohn) for defendant-intervenor United States Steel LLC.

OPINION

RESTANI, Chief Judge.

This matter comes before the court following its decision in AG der Dillinger Hüttenwerke v. United States, No. 00-09-00437, 2002 WL 31008985 (CIT Sept. 5, 2002) ("Dillinger II"), in which the court remanded the Results of Redetermination Pursuant to Court Remand (Dep't Commerce Apr. 30, 2002) on Certain Corrosion-Resistant Carbon Steel Flat Products; Cold-Rolled Carbon Steel Flat Products; and Cut-to-Length Carbon Steel Plate Products from Germany, 65 Fed.Reg. 47,407 (Dep't Commerce Aug. 2, 2000) (final determ. upon sunset review) to the United States Department of Commerce, International Trade Administration ("Commerce" or "the Department"). In Dillinger II, the court instructed Commerce to, inter alia: (1) calculate the net countervailable subsidy rates likely to prevail if the countervailing duty ("CVD") orders on corrosion-resistant flat products and cut-to-length carbon steel plate products ("CTL plate") were revoked, Slip Op. 02-107, at 13, 25; (2) make a "good cause" determination before relying upon the Domestic Producers'"vague, unsupported" allegations of new subsidy programs for the German steel industry,1 id. at 14-15; and (3) reconsider its likelihood determination in light of significant changes in international law that may have affected certain subsidy programs, id. at 21-22, 25-26. The court now reviews the Final Results of Redetermination Pursuant to Court Remand (Dep't Commerce July 14, 2003) [hereinafter Second Remand Determination ], in which the Department continued to find that the continuation or recurrence of countervailable subsidies is likely if the CVD order on corrosion-resistant steel were revoked, because substantial countervailable benefits will exist beyond the sunset review period. Id. at 7. With respect to the CVD order on CTL plate, however, the Department made a negative likelihood determination upon second remand, having found that all programs related to that order had either terminated or provided only de minimis benefits beyond the sunset review period. Id.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000). The court will uphold Commerce's determinations in CVD investigations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (2000).

BACKGROUND

The factual and procedural history of Commerce's initial Sunset Determination and the first Remand Determination are fully explained in the court's two prior opinions in this matter. See Dillinger II, 2002 WL 31008985; AG der Dillinger Hüttenwerke v. United States, 193 F.Supp.2d 1339, 1342-45 (CIT 2002) ("Dillinger I" ). Upon the court's second remand, Commerce conducted broad additional fact-finding by sending a questionnaire to the German Producers of subject merchandise, the Government of Germany ("GOG"), and the European Commission ("EC") requesting further information on four subsidy programs: Aid for Closure of Steel Operations, ECSC Redeployment Aid under Article 56(2)(b), Joint Scheme, and Upswing East. Second Remand Determ. at 8. Specifically, Commerce requested information on the German Producers' total sales and benefits received in the year 2000 and the termination of each program. Id. Pursuant to the court's instructions, the German Producers were also given the opportunity to submit argument and evidence regarding changes in law that may have had an impact on the status of these programs. Id. Commerce then sent verification outlines to the GOG and three of the German Producers of subject merchandise,2 and a team traveled to Germany to conduct a verification of information submitted. Id.

Commerce issued its Second Remand Determination on July 14, 2003. As it did in its first remand, Commerce used an eleven-year Average Useful Life ("AUL") to determine the rate of subsidization, if any, that would exist in the year 2000. Id. After analyzing the additional information gathered upon second remand, Commerce concluded that no benefits above de minimis extend beyond the sunset review period for the Aid for Closure of Steel Operations, ECSC Redeployment Aid under Article 56(2)(b), and Upswing East subsidy programs. Id. at 8-10, 12. With respect to the Domestic Producers' new subsidy allegations, Commerce determined that there was sufficient "good cause" to evaluate them, but nevertheless concluded that the evidence submitted by petitioners in the original sunset review did not merit the initiation of an investigation into those programs. Id. at 12-13. Accordingly, Commerce determined that revocation of the CVD order on CTL plate would not likely lead to the continuation or recurrence of subsidization and that the order should be revoked.3 See Second Remand Determ. at 7, 17.

Commerce continued to find, however, that the revocation of the CVD order on corrosion-resistant steel products would be likely to lead to the continuation or recurrence of countervailable subsidies. Id. at 1. Specifically, the Department found that the Joint Scheme economic assistance program is not terminated and is not likely to be terminated, and that the federal portion of its funding is "specific" to the steel industry and is therefore countervailable.4 Id. at 10-11. Despite a finding that government aid to the German steel industry is prohibited under a number of European Community decisions and directives, Commerce determined that subsidies under the Joint Scheme program were provided prior to the change in European law effective in 1997, "and thus the companies participating in this program continue to receive benefits ... from grants received before 1997. The EC decision did not negate the receipt of subsidies previously received or require repayment." Id.

Responding to the German Producers' argument that these subsidies were non-actionable "green light" subsidies,5 Commerce found that, "assuming arguendo that we would have treated these subsidies as non-countervailable under 19 U.S.C. § 1677(5B)(C), which we do not concede here, the statute provides that their non-countervailable status would have expired by June 1, 2000, which is prior to the end of the sunset reviews." Id. at 11 (citing 19 U.S.C. § 1677(5B)(G)(i)). Based on information submitted by the German Producers and verified by Commerce, the Department found that two companies, EKO and Salzgitter, received grants under the Joint Scheme program, but Commerce determined that only EKO would receive benefits above de minimis beyond the sunset review period. Id. Accordingly, Commerce found that, in terms of the corrosion-resistant steel products order, there is a likelihood that the Joint Scheme program would provide above de minimis subsidies beyond the sunset review period. Id.

The Second Remand Determination next addressed the countervailability of the privatization subsidies provided to EKO in 1994.6 Commerce recognized that, in light of recent circuit precedent, it must examine the particular facts and circumstances of the sale and determine whether EKO directly or indirectly received both a financial contribution and a benefit from the German government. Id. at 14 (discussing Delverde, SrL v. United States, 202 F.3d 1360 (Fed.Cir.2000) ("Delverde III")). To implement Delverde III, Commerce developed what it calls the "same person" privatization methodology, which it has applied on several occasions. Id.

Under this methodology, Commerce first determines whether the legal person (or entity) to which the subsidies were given was, in fact, distinct from the legal person that produced the subject merchandise exported to the United States. Id. at 15. In order to make this determination, Commerce considers factors such as whether there was: (1) continuity of general business operations, including whether the successor holds itself out as the continuation of the previous enterprise; (2) continuity of production facilities; (3) continuity of assets and liabilities; and (4) retention of personnel. Id. "[T]he Department will generally consider the post-sale person to be the same person as the pre-sale person if, based on the totality of the factors considered, we determine the entity in question can be considered a continuous business entity because it was operated in substantially the same manner before and after the change in ownership." Id. If the Department concludes that the original subsidy recipient and the current producer/exporter are the same legal person, then Commerce will presumptively find that both a "financial contribution" and a "benefit" have been received by the "person" under investigation, rendering that entity liable for the countervailing duties imposed to offset the subsidies. See id. But if, however, the Department determines that the two entities are distinct, then it will analyze whether a subsidy has been provided to the purchasing entity as...

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