Al Tech Specialty Steel Corp. v. U.S., Slip Op. 05-30.

• Decision Date: 09 March 2005
• Docket Number: Slip Op. 05-30.,Court No. 98-10-03061.
• Citation: 366 F.Supp.2d 1236
• Parties: AL TECH SPECIALTY STEEL CORP., Carpenter Technology Corp., Republic Engineered Steels, Talley Metals Technology, Inc. and United Steelworkers of America, AFL-CIO/CLC, Plaintiffs, v. UNITED STATES of America, Defendant. Acciaierie Valbruna S.R.L. and Acciaierie di Bolzano S.p.A., Plaintiffs, v. United States of America, Defendant.
• Court: U.S. Court of International Trade

366 F.Supp.2d 1236

AL TECH SPECIALTY STEEL CORP., Carpenter Technology Corp., Republic Engineered Steels, Talley Metals Technology, Inc. and United Steelworkers of America, AFL-CIO/CLC, Plaintiffs, v. UNITED STATES of America, Defendant.

Acciaierie Valbruna S.R.L. and Acciaierie di Bolzano S.p.A., Plaintiffs, v. United States of America, Defendant.

Slip Op. 05-30.

Court No. 98-10-03061.

United States Court of International Trade.

March 9, 2005.

Collier Shannon Scott, PLLC (David A. Hartquist, Laurence J. Lasoff, and R. Alan Luberda), Washington, DC, for Plaintiffs/ Defendant-Intervenors AL Tech Specialty Steel Corporation et al.

White & Case LLP (Walter J. Spak, Gregory J. Spak, and Richard J. Burke), Washington, DC, for Plaintiffs/Defendant-Intervenors Acciaierie Valbruna S.r.l. et al.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, and Jeanne E. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Stephen C. Tosini); Robert E. Nielsen, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant United States of America, of counsel.

OPINION

RIDGWAY, Judge.

In these consolidated actions, both the domestic parties (hereinafter collectively "AL Tech")¹ and two Italian producers/exporters of stainless steel wire rod have challenged various aspects of a Final Determination rendered by the U.S. Department of Commerce ("Commerce"), which found that the Government of Italy, the Province of Bolzano, and the European Union ("EU") provided countervailable subsidies to the two Italian producers — Acciaierie Valbruna S.r.l. ("Valbruna") and Acciaierie di Bolzano S.p.A. ("Bolzano") (hereinafter collectively "Valbruna/Bolzano"),² and which resulted in the imposition of a countervailing duty order.³ See Certain Stainless Steel Wire Rod from Italy, 63 Fed.Reg. 40,474 (Dep't Commerce July 29, 1998) ("Final Determination"); Stainless Steel Wire Rod from Italy, 63 Fed.Reg. 49,334 (Dep't Commerce Sept. 15, 1998) (countervailing duty order).

As explained in AL Tech I, Commerce's original investigation identified 10 types of government action considered to confer "subsidies," which collectively resulted in a calculated subsidy rate of 1.28% — a rate only marginally above the statutory de minimis one percent threshold.⁴ Valbruna/Bolzano here challenged Commerce's determinations as to six of the 10 alleged subsidies, emphasizing that its success in even a single one of its six challenges⁵ could potentially shave off enough to drop the subsidy rate below the de minimis threshold, rendering the countervailing duty order, in essence, void ab initio.⁶ See AL Tech Specialty Steel Corp. v. United States, 28 CIT ___, ___, 2004 WL 2011471 at *1 ("AL Tech I").⁷

Two of Valbruna/Bolzano's six challenges disputed aspects of Commerce's analysis of the adequacy of the remuneration paid as rent for the Bolzano Industrial Site under Valbruna's Lease Agreement with the Province of Bolzano. The other four challenges disputed Commerce's determination that countervailable subsidies were conferred by assistance received under three government programs — Law 25/81, Law 193/84, and the European Social Fund.⁸

AL Tech I sustained Commerce's determination that the Province of Bolzano's purchase of the Bolzano Industrial Site did not confer a subsidy, as well as Commerce's decision to use a nationwide (rather than a region-specific) benchmark to measure the adequacy of the rent paid under Valbruna's Lease Agreement with the Province of Bolzano. Commerce's determination that its "tying" practice was inapplicable to plant closure assistance provided under Law 193/84 was similarly upheld.⁹

However, a number of other issues were remanded to Commerce for the agency's further consideration. Now pending before the Court are Commerce's Final Results of Redetermination on Remand ("Remand Results"), together with the comments of all parties. See Valbruna's Comments on Department of Commerce Final Results of Redetermination on Remand Pursuant to Slip Op. 04-114 ("Valbruna Comments"); Comments of AL Tech Specialty Steel Corp. Et Al. on the Final Results of Redetermination on Remand ("AL Tech Comments"); Defendant's Response to Plaintiffs' Comments Concerning the Remand Results ("Gov't Response").

As a result of its reconsideration of certain issues (summarized below), Commerce recalculated the ad valorem net subsidy rate for Valbruna/Bolzano. The revised net subsidy rate is 0.65%, which is de minimis. See Remand Results at 10. Commerce therefore plans to revoke the countervailing duty order with respect to Valbruna/Bolzano effective as of the date of publication of that order — i.e., September 15, 1998. See Remand Results at 9.¹⁰

As discussed more fully below, the Remand Results filed by Commerce comply with AL Tech I. The Remand Results are therefore sustained.

I. Analysis

Seven discrete issues were remanded to Commerce in AL Tech I. Commerce's redetermination on just two of those seven issues — specifically, the two-year rent abatement and aid paid under Law 25/81 — sufficed to lower the original net subsidy rate (1.28%) to a revised rate of 0.65%.

A. The Two-Year Rent Abatement and Aid Under Law 25/81

As explained in AL Tech I, Commerce's original Final Determination in this matter found that the two-year rent abatement which the Province granted to Valbruna under their Lease Agreement constituted a subsidy, resulting in a subsidy rate of 0.38%. Valbruna/Bolzano disputed the agency's determination, maintaining that the rent abatement was part of a "bargained-for exchange" in which Valbruna agreed to assume the Province's responsibility for certain specific, urgent, initial extraordinary maintenance and environmental remediation projects related to the buildings that it leased from the Province. See generally AL Tech I, 28 CIT at ___, 2004 WL 2011471 at *15-18.

AL Tech I also considered Valbruna/Bolzano's protest of Commerce's decision to treat as a countervailable subsidy (with a calculated subsidy rate of 0.28%) certain restructuring assistance and long-term, low interest loans made to Bolzano under Provincial Law 25/81.¹¹ Although Commerce itself conceded that Falck had repaid the aid at issue (as ordered by the European Commission), Commerce's original countervailing duty analysis ignored that repayment, reasoning that — because Falck had appealed the European Commission's order — the repayment was not legally final. See generally AL Tech I, 28 CIT at ___, 2004 WL 2011471 at *21-23.

On remand, Commerce reevaluated the record and reversed its determination on the two-year rent abatement. Specifically, Commerce concluded "that the balance of the record evidence indicates that the Province of Bolzano was legally obligated to undertake ... [certain] initial, extraordinary maintenance and environmental remediation projects," which Valbrunain turn — agreed to assume under its Lease Agreement with the Province as quid pro quo for a two-year rent abatement. Accordingly, Commerce determined on remand that "the two-year lease abatement was a bargained-for exchange of obligation[s] for consideration and, therefore, does not constitute a countervailable subsidy." As a result of its redetermination, Commerce revised the subsidy rate associated with the rent abatement from 0.38% to 0%. As the Remand Results observe, the effect of that change alone suffices to reduce the total net subsidy rate to 0.90% — which is, as Commerce noted, "a rate that is below the statutory de minimis one percent threshold." See Remand Results at 2-3.

In the course of the remand, Commerce also reevaluated its treatment of the Law 25/81 aid paid to Falck, revising its position on that issue as well. With all of Falck's avenues of appeal exhausted (and the repayment thus final), Commerce made adjustments to its calculations, to exclude all post-1985 grants.¹² The effect was to drop the subsidy rate associated with the Law 25/81 aid from 0.28% to 0.03%. See Remand Results at 5-6.

B. The Five Remaining Issues

Because its revised determination on the treatment of Valbruna's two-year rent abatement (as well as its revised determination on the Law 25/81 aid) rendered the overall total subsidy rate de minimis, Commerce found it unnecessary to reach the merits of the five remaining issues that AL Tech I had remanded to the agency.¹³

As to each of those five issues, Commerce concluded that the issue was moot, since — no matter how the particular issue was resolved — the overall total net subsidy rate would nevertheless remain de minimis. See generally Remand Results at 9 ("even if [Commerce] decided each of the remaining five issues against Valbruna, the net subsidy rate would be de minimis and, therefore, [Commerce] need not address the issues"). See also Remand Results at 3-4 (finding no need to reconsider whether the national benchmark rate of return of 5.7% used by the agency to evaluate the adequacy of the remuneration paid as rent by Valbruna to the Province assumed that responsibility for extraordinary maintenance was borne by lessor, or by lessee); id. at 4-5 (finding no need to reconsider whether depreciation of buildings should have been factored into the agency's analysis of the adequacy of the remuneration paid by Valbruna under the Lease Agreement); id. at 6 (finding no need to reconsider the methodology for application of the "small grants" test used in analyzing certain grants under Law 193/84); id. at 7 (finding no need to reconsider whether EU/European Social Fund ("ESF") Objective 4 funding was regionally specific to Italy); id. at 8 (finding no need to reconsider whether Italian ESF Objective 4 funding was regionally specific to the Province of Bolzano).¹⁴

C. The Parties' Comments on the Remand Results

Valbruna/Bolzano endorses Commerce's revised determinations on both the rent abatement issue and the Law 25/81 issue, and concurs that — in light of those...