Ipsco, Inc. v. US

• Decision Date: 04 May 1988
• Docket Number: Court No. 86-07-00853.
• Citation: 687 F. Supp. 614,12 CIT 359
• Parties: IPSCO, INC. and IPSCO Steel, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Lone Star Steel Co., Defendant-Intervenor.
• Court: U.S. Court of International Trade

687 F. Supp. 614

12 CIT 359

IPSCO, INC. and IPSCO Steel, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Lone Star Steel Co., Defendant-Intervenor.

Court No. 86-07-00853.

United States Court of International Trade.

May 4, 1988.

COPYRIGHT MATERIAL OMITTED

Barnes, Richardson & Colburn, Rufus E. Jarman, Jr., Matthew J. Clark and Karin M. Burke, New York City, for plaintiffs.

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Platte B. Moring, III, Civil Div., U.S. Dept. of Justice, Washington, D.C., for defendant.

Dewey, Ballantine, Bushby, Palmer & Wood, Michael H. Stein, Washington, D.C., for defendant-intervenor.

OPINION AND ORDER

RESTANI, Judge:

Plaintiffs challenge the final affirmative countervailing duty determination of the United States Department of Commerce, International Trade Administration (ITA) in Oil Country Tubular Goods from Canada, 51 Fed.Reg. 15,037 (Apr. 22, 1986). Plaintiffs' challenges generally concern ITA's exclusion of other investigated firms from the determination of net subsidy rates, its choice of certain methodologies and incorporation of industry wide data in calculating the net subsidy, the validity and effect of the Subsidies Appendix, and whether certain subsidies are generally available.

BACKGROUND

This action concerns certain steel products from Canada, known as oil country tubular goods (OCTG),¹ which were alleged to be receiving subsidies from the Canadian government and the Province of Saskatchewan. There are 11 known firms producing or exporting OCTG from Canada. ITA sent questionnaires to these firms, as well as to Canada and Saskatchewan. Timely requests for exclusion were received from all 11 companies. One of those firms, however, withdrew its request for exclusion and did not submit a response to ITA's questionnaire. ITA verified that eight of the responding firms received no benefits, and that a ninth, Algoma, a plaintiff-intervenor herein, was subsidized at the rate of 0.05 percent, which ITA found to be de minimis. These nine firms were excluded from ITA's countervailing duty determination and order. IPSCO, a plaintiff herein, and the other non-excluded firm were found to have received net countervailable subsidies at the rate of 0.72 percent, which was based on IPSCO's rates of subsidization. ITA directed Customs to collect cash deposits of 0.72 percent on all entries of Canadian OCTG, except for entries from the nine excluded firms.

I. ITA'S EXCLUSION OF A MAJORITY OF THE INVESTIGATED FIRMS

Plaintiffs argue that ITA improperly excluded nine of the eleven Canadian OCTG firms from its determination of net subsidization. Essentially, plaintiffs' position is that had ITA averaged IPSCO's net subsidy rate of 0.72 percent with firms receiving no subsidies, the resulting rate would have been de minimis, and consequently, ITA would have issued a negative determination of countervailing duties. They argue that ITA's failure to combine IPSCO's rate with the zero or de minimis rates of excluded firms amounts to error since: (1) the exclusion of firms leads to absurd results, manipulation and uncertainty; (2) Congress intended, and ITA has established a practice, that countervailing duty rates would apply on a country-wide, rather than company specific, basis; (3) ITA's regulations provide for excluding firms from countervailing duty "orders," not from countervailing duty "determinations;" and (4) the de minimis rate of 0.05 percent, attributed to an excluded firm, was not materially different from IPSCO's 0.72 percent rate.

A. UNFAIR AND ABSURD RESULTS.

Plaintiffs argue that ITA's actions in this case were arbitrary, capricious, and have resulted in "a strange paradox." Plaintiffs' Brief at 18. Plaintiffs explain the paradox as follows:

If the non-beneficiary and de minimis companies request exclusion (as they did) they are excluded for all purposes, and will never need to pay duties under the order. However, if they do not request exclusion, then there will be no order from which to be excluded. From their point of view, it makes no difference. Only the fate of IPSCO rides on whether its competitors do or don't request exclusion. This demonstrates the capricious nature of the ITA position in this regard.

Id.

The court finds nothing capricious about the outcome in this case. ITA determined that IPSCO applied for and received certain benefits from subsidy programs that are countervailable. Based upon the benefits IPSCO received from these countervailable programs, ITA determined a subsidy rate and ordered cash deposits to be posted upon IPSCO's entries of OCTG at that same rate.

The fact that other responding firms did not make use of these programs does not alter the essential nature of the programs, or the benefits they provide to IPSCO. At most, this fact could trigger a technical threshold that, under certain circumstances, would enable ITA to disregard the overall effect of the programs as insignificant. The court's sense of fairness is not offended, however, by the fact that this technical threshold has not been triggered in this case or by the fact that IPSCO will be required to post cash deposits on its entries of OCTG at a rate which offsets the actual rate of subsidization that the Canadian governments have bestowed upon them.

If ITA's policy of exclusion may give rise to paradoxical results, it has not done so in this case. The fact that ITA was presented with exclusion requests from all known firms, and that ITA was able to grant exclusions to each firm that demonstrated entitlement, instills confidence in the fairness and accuracy of ITA's ultimate determination. See Fabricas El Carmen, S.A. v. United States, 11 CIT ___, 672 F.Supp. 1465, 1478-79 (1987), remand order vacated as moot, 12 CIT ___, 680 F.Supp. 1577 (1988). For such firms to have failed to seek and obtain exclusion — risking a potential assessment of countervailing duties for no purpose other than to allow competitors receiving subsidies to compete in the U.S. market, without having the amount of those subsidies offset by U.S. countervailing duties — would have been more disturbing.²

B. COUNTRY-WIDE VERSUS COMPANY SPECIFIC RATES.

Plaintiffs are not aided by the fact that ITA has a practice of favoring country-wide, over company specific countervailing duty rates, or that Congress has declared that countervailing duty orders "shall presumptively apply to all merchandise of such class or kind exported from the country investigated...." 19 U.S.C. § 1671e(2) (Supp. IV 1986).³ As Congress noted in enacting § 1671e(a)(2), the purpose of the country-wide presumption is "to lessen the administrative burden on the administering authority stemming from implementing of company specific rates." H.Conf.Rep. No. 1156, 98th Cong., 2d Sess. 179-80 (1984), 1984 U.S.Code Cong. & Admin.News, pp. 4910, 5296-97. In any event, ITA has done nothing in this case which is inconsistent with either the statute, legislative intent, or ITA's own practice. Although ITA's net subsidy determination was, in fact, based upon the experience of the only responding Canadian OCTG producer that was not granted an exclusion from ITA's countervailing duty order, that rate was presumptively applied on a country-wide basis. ITA directed Customs to "require a cash deposit or bond for each such entry of this merchandise equal to 0.72 percent ad valorem except for OCTG from the nine excluded companies. ..." 51 Fed.Reg. at 15,045 (final determination). Accordingly, this rate would be applied to entries of OCTG from Canada, regardless of whether they were attributable to IPSCO, to the one known producer that did not respond to ITA's questionnaire, or to any new, or presently unknown, producers or exporters of OCTG from Canada. Given the limited number of known producers and the fact that there was only one determinable non de minimis rate from which to choose, this was not an unreasonable way of establishing a country-wide rate.

C. EXCLUSION OF FIRMS FROM "DETERMINATIONS" AS WELL AS "ORDERS."

Plaintiffs make much of the fact that ITA's regulations provide for the exclusion of firms from countervailing duty "orders," but not from the underlying countervailing duty "determinations" upon which those orders are based. See 19 C.F. R. § 355.38 (1987).⁴ Although plaintiffs do not challenge the propriety of ITA's decision to exclude nine firms from the scope of its countervailing duty "order," they assert that ITA acted prematurely in excluding those firms from ITA's countervailing duty "determination."

Defendant responds, in part, by noting that plaintiffs' position is based on a "highly technical, but inaccurate, reading of the regulation on exclusion," Defendant's Brief at 13, and by arguing that this reading

distorts the clear intent of the regulation, as the explanation set forth by Commerce at the time of its promulgation reveals:

Ordinarily, firms wishing to be considered for exclusion from any possible affirmative determination should submit an application for exclusion, together with all necessary supporting documentation, no later than 30 days after the date of publication of the Notice of Initiation of Countervailing Duty Investigation.

45 Fed.Reg. 4936 (January 22, 1980) (emphasis added). Clearly, the regulation was intended to allow firms to request exclusion shortly after the initiation of an investigation so that Commerce could investigate and verify the data supplied by those companies prior to the issuance of a preliminary or final determination.

Defendant's Brief at 14.

As the agency which promulgated this regulation, ITA's interpretation of its scope and purpose is entitled to substantial weight. Pistachio Group of the Ass'n of Food Indus. v. United States, 11 CIT ___, 671 F.Supp. 31, 37 (1987). Julius Goldman's Egg City v. United States, 697 F.2d 1051, 1055 (Fed.Cir.1983) cert. denied, 464 U.S. 814, 104 S.Ct. 68, 78 L.Ed.2d 83 (1983). In this case, ITA's...