Asociación De Exportadores E Industriales De Aceitunas De Mesa v. United States

• Decision Date: 17 January 2020
• Docket Number: Court No. 18-00195,Slip Op. 20-8
• Citation: 429 F.Supp.3d 1325
• Parties: ASOCIACIÓN DE EXPORTADORES E INDUSTRIALES DE ACEITUNAS DE MESA, Aceitunas Guadalquivir, S.L.U., Agro Sevilla Aceitunas S. Coop. And., and Angel Camacho Alimentación, S.L., Plaintiff, v. UNITED STATES, Defendant, and Coalition for Fair Trade in Ripe Olives, Defendant-intervenor.
• Court: U.S. Court of International Trade

429 F.Supp.3d 1325

ASOCIACIÓN DE EXPORTADORES E INDUSTRIALES DE ACEITUNAS DE MESA, Aceitunas Guadalquivir, S.L.U., Agro Sevilla Aceitunas S. Coop. And., and Angel Camacho Alimentación, S.L., Plaintiff,

v.UNITED STATES, Defendant,andCoalition for Fair Trade in Ripe Olives, Defendant-intervenor.

Slip Op. 20-8

Court No. 18-00195

United States Court of International Trade.

January 17, 2020

Matthew P. McCullough, Curtis Mallet-Prevost, Colt & Mosle LLP, of Washington, DC, argued for plaintiff. With him on the joint brief were Christopher A. Dunn and Tung Nguyen.

Tara K. Hogan, Assistant Director, and Sonia W. Murphy, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With them on the brief were Joseph H. Hunt, Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel was Saad Y. Chalchal, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

David J. Levine and Raymond Paretzky, McDermott Will & Emery LLP, of Washington, DC, argued for defendant-intervenor.

OPINION

Katzmann, Judge:

This case presents two issues of first impression under Sections 771 and 771B of the Tariff Act of 1930,¹ respectively: (1) the interpretation and application of the term "expressly limits" in the countervailable domestic subsidy provision, 19 U.S.C. § 1677(5A)(D)(i) (" Section 1677(5A)"); and (2) the interpretation and application of the term "substantially dependent" in the agricultural countervailable subsidies provision, 19 U.S.C. § 1677-2 (" Section 1677-2").² The case involves a claim from the U.S. domestic olive industry that the governments of the European Union ("EU") and Spain unfairly subsidized Spanish olives that were then imported into the U.S. to the detriment of the U.S. industry. See Petition for Imposition of AD and CVD Duties, Vol. I (June 21, 2017), P.R. 7 ("Pet. Vol. I"). Based on a petition filed by the Coalition for Fair Trade in Ripe Olives ("Coalition" or "Defendant-Intervenor"), the Department of Commerce ("Commerce") initiated an investigation into subsidies received by the Spanish olive industry. Commerce's investigation resulted in a determination that subsidies given to growers of raw olives were de jure specific to olive growers under Section 1677(5A) and those subsidies were attributable to downstream processors of those raw olives into ripe olives under Section 1677-2. Therefore, using information collected from interested parties during its investigation, Commerce calculated countervailing duties ("CVDs") for imports of ripe olives from Spain. See Ripe Olives From Spain: Amended Final Affirmative Countervailing Duty Determination and Countervailing Duty Order, 83 Fed. Reg. 37,469 (Dep't Commerce August 1, 2018), P.R. 1417 ("Amended Final Determination").

Asociación de Exportadores e Industriales de Aceitunas de Mesa ("Asemesa"),³ Aceitunas Guadalquivir, S.L.U. ("Guadalquivir"), Agro Sevilla Aceitunas S. Coop. And. ("Agro Sevilla"), and Angel Camacho Alimentación, S.L. ("Angel Camacho") (collectively, "Plaintiffs"), major producers and/or exporters of ripe olives from Spain, brought this action against the United States ("the Government") in opposition to Commerce's CVD determination and moved for judgment on the agency record pursuant to Rule 56.2 of the Rules of the Court of International Trade. The court grants, in part, Plaintiffs' motion for judgment on the agency record.

BACKGROUND

I. Legal and Regulatory Framework for Countervailing Duty Determinations

To empower Commerce to offset economic distortions caused by countervailable subsidies and dumping, Congress enacted the Tariff Act of 1930. Sioux Honey Ass'n v. Hartford Fire Ins., 672 F.3d 1041, 1046–47 (Fed. Cir. 2012) ; ATC Tires Private Ltd. v. United States, 42 CIT ––––, ––––, 322 F. Supp. 3d 1365, 1366 (2018). Under the Tariff Act's framework, Commerce may -- either upon petition by a domestic producer or of its own initiative -- begin an investigation into potential countervailable subsidies and, if appropriate, issue orders imposing duties on the subject merchandise. Sioux Honey, 672 F.3d at 1046–47 ; ATC Tires, 322 F. Supp. 3d at 1366–67 ; 19 U.S.C. §§ 1671, 1673. A subsidy is countervailable if the following elements are satisfied: (1) a government or public authority has provided a financial contribution; (2) a benefit is thereby conferred upon the recipient of the financial contribution; and (3) the subsidy is specific to a foreign enterprise or foreign industry, or a group of such enterprises or industries. 19 U.S.C. § 1677(5). Specific subsidies are also referred to as "coupled" subsidies. "Decoupled" refers to the fact that a subsidy does not encourage production of a specific agricultural product, i.e. is not a specific subsidy. At issue here, a domestic subsidy is de jure specific "[w]here the authority providing the subsidy, or the legislation pursuant to which the authority operates, expressly limits access to the subsidy to an enterprise or industry." 19 U.S.C. § 1677(5A)(D)(i).

If Commerce determines that the government of a country is providing, directly or indirectly, a countervailable subsidy with respect to the manufacture, production, or export of a class or kind of merchandise imported, sold, or likely to be sold for import, into the United States, and the International Trade Commission ("ITC") determines that an industry in the United States is materially injured or threatened with material injury thereby, then Commerce shall impose CVD upon such merchandise equal to the amount of the net countervailable subsidy. See 19 U.S.C. § 1671(a). However, when the merchandise subject to investigation involves a processed agricultural product that meets the criteria under Section 1677-2, Commerce will include in its analysis countervailable subsidies received by producers or processors of the raw agricultural product and will deem such subsidies to be received by manufacturers, producers, and exporters of the processed product. See 19 U.S.C. § 1677-2. Because the Tariff Act is silent on the calculation methodology for imposing CVDs, Commerce calculates a duty rate by formulating a calculation methodology in line with the statutory language and purpose. See Solarworld Americas, Inc. v. United States, 40 CIT ––––, ––––, 182 F. Supp. 3d 1372, 1376 (2016).

II. Factual and Procedural History of This Case

On June 22, 2017, Commerce received a CVD petition, filed on behalf of Coalition, regarding imports of ripe olives from Spain. See Pet. Vol. I. Raw olives become edible and ready for consumers by either becoming table olives or olive oil. See Pet. Vol. I at 7. Ripe olives are one type of table olive, commonly referred to black olives.⁴ See Id. at 1–2; Agro Sevilla's Affiliations Questionnaire Response at 8 (August 18, 2017), P.R. 344. To produce ripe olives, raw olives "are cured for multiple days in a de-bittering solution, usually alkaline," then rinsed in water several times, followed by possible pitting, slicing, chopping, or wedging, as applicable. Pet. Vol. I at 7. Ripe olives are then packaged in a container and topped with salt brine. Id. In its petition, Coalition alleged that the EU through the Government of Spain provided countervailable subsidies to raw olive growers that must then be attributed to processors of ripe olives. Petition for the Imposition of Antidumping and Countervailing Duties, Vol. III at 10 (June 21, 2017), P.R. 58. Coalition claims these "subsidized imports of ripe olives ... from Spain have materially injured the U.S. domestic industry producing ripe olives and threaten to cause further material injury if remedial action is not taken." Pet. Vol. I at 1.

On July 12, 2017, based on Coalition's petition, Commerce initiated a CVD investigation on ripe olives from Spain. Ripe Olives from Spain: Initiation of Countervailing Duty Investigation 82 Fed. Reg. 33050 (Dep't Commerce July 19, 2017), P.R. 126. Commerce selected as mandatory respondents⁵ three producers that accounted for the largest volume of ripe olives during the period of investigation: Guadalquivir, Agro Sevilla, and Angel Camacho, all of which are plaintiffs in this action.⁶ Respondent Selection Memo at 1 (July 28, 2017), P.R. 132. Commerce then issued questionnaires to these respondents regarding their use of subsidy programs as well as information about their sources of raw olives that were used to produce ripe olives. Questionnaire on Sources of Raw and Ripe Olives Aceitunas Guadalquivir at 1 (August 4, 2017), P.R. 139 ("Guadalquivir Questionnaire"). Commerce simultaneously issued questionnaires to the European Commission and the Government of Spain regarding the subsidy programs applicable to respondents. Initial CVD Questionnaire to European Commission (Aug. 4, 2017), P.R. 160; Initial CVD Questionnaire to Spain Embassy (Aug. 4, 2017), P.R. 227. Commerce used the data and information collected through the questionnaire responses (1) in determining whether subsidies provided to imported Spanish olives were countervailable as de jure specific domestic subsidies under Section 1677-2 ; (2) in determining whether the subsidies could be attributed to ripe olives as the latter stage product; and (3) in calculating applicable duties under 19 U.S.C. § 1671(a). See Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Ripe Olives from Spain at 33 (Dep't Commerce June 11, 2018), P.R. 1300 ("IDM").

A. Commerce's Determination That EU Subsidy Payments Are De Jure Specific to Olive Growers.

In the investigation, Commerce examined the EU's Common Agricultural Policy ("CAP"),⁷ which includes the subsidy programs applicable to Plaintiffs, in order to determine whether these domestic subsidies were specific to the olive industry pursuant to Section 1677(5A). The Basic Payment Scheme ("BPS") is the most recent iteration of EU (and its predecessor the European...