Usinor Sacilor v. U.S.

• Decision Date: 10 January 1997
• Docket Number: Court No. 93-04-00230.,Slip Op. 97-5.
• Parties: USINOR SACILOR, Unimétal, and Ascométal, Plaintiffs, v. UNITED STATES, Defendant, and Inland Steel Bar Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

955 F.Supp. 1481

USINOR SACILOR, Unimétal, and Ascométal, Plaintiffs, v. UNITED STATES, Defendant and Inland Steel Bar Company, Defendant-Intervenor.

Slip Op. 97-5.

Court No. 93-04-00230.

United States Court of International Trade.

January 10, 1997.

COPYRIGHT MATERIAL OMITTED

Weil, Gotshal & Manges, New York City (M. Jean Anderson, Stuart M. Rosen, Mark B. Friedman, Diane M. McDevitt, David W. Oliver, and Jonathan Bloom), Washington, DC, for Usinor Sacilor, Unimétal, and Ascométal, plaintiffs.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Reginald T. Blades, Jr., Jeffrey M. Telep); Office of Chief Counsel for Import Administration, United States Department of Commerce (Terrence J. McCartin, of counsel), for defendant.

Wiley, Rein & Fielding (Charles Owen Verrill, Jr., Alan H. Price, Peter S. Jordan and Carlos M. Nalda), Washington, DC, for Inland Steel Bar Company, defendant-intervenor.

MEMORANDUM and OPINION

GOLDBERG, Judge:

This matter is before the Court after the International Trade Administration, U.S. Department of Commerce ("Commerce"), issued its final results of redetermination on October 24, 1995 ("Redetermination"). Commerce issued its Redetermination pursuant to this Court's remand in Usinor Sacilor v. United States, 19 CIT ___, 893 F.Supp. 1112 (1995) ("Usinor Sacilor I"). In Usinor Sacilor I, the Court reviewed Commerce's initial determination in Certain Hot Rolled Lead and Bismuth Carbon Steel Products From France, 58 Fed.Reg. 6221 (Jan. 27, 1993) ("Initial Determination"). This case involves an investigation of subsidies provided by the French government to Usinor Sacilor for the period of calendar year 1991. Initial Determination, 58 Fed.Reg. at 6222. The facts underlying this case are more completely set forth in Usinor Sacilor I, 19 CIT at ___, 893 F.Supp. at 1118-20.

In Usinor Sacilor I, the Court remanded the case to Commerce and ordered it to further consider three issues: (1) its use of the Internal Revenue Service's ("IRS") amortization tables to determine how long Usinor Sacilor benefited from countervailable non-recurring grants and equity infusions; (2) its decision to calculate the countervailing duty using domestic prodUction levels for the sales denominator instead of worldwide production levels; and (3) its decision to analyze the specificity of loans made by Crédit National to Usinor Sacilor based on the period in which the loans were consolidated by the lender in 1991 rather than based on the time period in which the loans were issued originally. 19 CIT ___, 893 F.Supp. 1112.

Revisiting these three issues today, the Court affirms the Redetermination with respect to issues one and three. The Court again remands with respect to issue two. The Court exercises jurisdiction under 28 U.S.C. § 1581(c) (1988).

STANDARD OF REVIEW

When reviewing an agency's interpretation of statutory law, the Court must accord substantial weight to the agency's interpretation of the statute that it administers. American Lamb Co. v. United States, 4 Fed. Cir. (T) 47, 54, 785 F.2d 994, 1001 (1986) (citations omitted). Thus, an agency's "interpretation of the statute need not be the only reasonable interpretation or the one which the court views as the most reasonable" for the Court to uphold the agency's interpretation. Consumer Prod. Div., SCM Corp. v. Silver Reed America, 3 Fed. Cir. (T) 83, 90, 753 F.2d 1033, 1039 (1985) (emphasis in original).

If the statute is silent or ambiguous with respect to the specific issue, the question for the Court to decide is whether the agency's interpretation is based on a permissible construction of the statute. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984) (footnote omitted). However, the Court will not uphold an agency's interpretation which "contravene[s] or ignore[s] the intent of the legislature or the guiding purpose of the statute." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F.Supp. 961, 966 (1986) (citations omitted), aff'd, 5 Fed. Cir. (T) 77, 810 F.2d 1137 (1987).

When reviewing an agency's factual findings, the Court must uphold the agency if its findings are supported by substantial evidence. 19 U.S.C. § 1516a(b)(1)(B) (1988). "Substantial evidence is something more than a `mere scintilla,' and must be enough reasonably to support a conclusion." Ceramica Regiomontana, 10 CIT at 405, 636 F.Supp. at 966 (citations omitted). In applying this standard, the Court affirms agency factual determinations that are reasonable and supported by the record when considered as a whole, even though there may be evidence that detracts from the agency's conclusions. Atlantic Sugar, Ltd. v. United States, 2 Fed. Cir. (T) 130, 138, 744 F.2d 1556, 1563 (1984).

DISCUSSION

1. Company-Specific Average Useful Life of Assets Method

In Usinor Sacilor I, the Court instructed Commerce to reexamine its use of IRS amortization tables as a basis to measure the duration of countervailable benefits resulting from the non-recurring grants and equity infusions received by Usinor Sacilor. 19 CIT at ___, 893 F.Supp. at 1136-38. The Court directed Commerce to identify what evidence, if any, demonstrates that a fifteen-year amortization period reasonably reflects the duration of the commercial and competitive benefits that the subsidies provided to Usinor Sacilor, or to amend its determination accordingly. Id. at ___, 893 F.Supp. at 1137-38.

Pursuant to Usinor Sacilor I, Commerce abandoned its use of IRS amortization tables for calculating the duration of benefits associated with the subsidies. Commerce reopened the administrative record in order to request company-specific financial data from Usinor Sacilor. Using Usinor Sacilor's fixed asset ledgers and financial statements, Commerce then calculated the actual average useful life of Usinor Sacilor's renewable physical assets. Commerce determined that the average useful life ("AUL") of Usinor Sacilor's renewable physical assets is fourteen years. Redetermination at 24-31.

The Court now addresses two issues with respect to Commerce's findings concerning the duration of countervailable benefits: (1) whether the company-specific AUL method is based on a permissible construction of the statute; and (2) whether substantial evidence supports Commerce's factual finding that the average useful life of Usinor Sacilor's renewable physical assets is fourteen years.

The Court notes that the relevant statute is silent as to the duration over which subsidies must be allocated. 19 U.S.C. § 1671. Therefore, the Court must determine whether Commerce's interpretation of the statute is reasonable in light of the legislative intent of the statute. Chevron, 467 U.S. at 843, 104 S.Ct. at 2781.

Commerce justifies its application of a company-specific AUL methodology to measure the duration of benefits from subsidies on the grounds that the focus of the countervailing duty law is on the benefit to production. See 19 U.S.C. § 1671(a); British Steel Corp. v. United States, 9 CIT 85, 96, 605 F.Supp. 286, 295 (1985). Commerce argues that subsidies confer an advantage on a manufacturing firm because they provide additional capital to increase productive assets.

Usinor Sacilor argues that the AUL methodology does not reasonably reflect the commercial and competitive benefit of nonrecurring subsidies. According to Usinor Sacilor, the benefit of non-recurring subsidies is financial rather than related to the cost of plant or equipment. Subsidies constitute the receipt of money on terms inconsistent with commercial considerations. Hence, according to Usinor Sacilor, the best measure of the benefit received turns on the hypothetical cost of alternative financing obtained on arms-length commercial terms.

In reviewing Commerce's methodology, the Court notes that Commerce has used Usinor Sacilor's proposed alternative methodology in past cases, and that it has since rejected it. Absent statutory guidelines regarding the duration of benefits attributable to non-recurring subsidies, Commerce needs a point in time to truncate the allocation of benefits. This allocation must be supported on a rational basis. For this reason, Commerce has rejected plaintiffs' proposed use of an alternative cost of capital figure in order to allocate benefits because of the practical problems associated with accurately calculating the average life of long-term debt. Accurate calculation is difficult because firms do not raise long-term capital routinely or consistently. Stainless Steel Plate from the United Kingdom, 51 Fed.Reg. 44,656, 44,658-59 (Dec. 11, 1986). Commerce draws on Cold-Rolled Carbon Steel Flat-Rolled Products From Argentina, 49 Fed.Reg. 18,006, 18,017-18 (Apr. 26, 1984), for support of its proposed methodology. In that case, Commerce utilized a weighted cost of capital approach in order to calculate both the average cost of alternative financing and the duration of this financing. However, even then, Commerce noted the difficulty in collecting accurate data to support the alternative financing approach and warned that, in future cases, it may be forced to change its practice if data is systematically unavailable. Id.

Despite its experimentation with different methodologies, Commerce consistently has favored measuring the duration of a subsidy benefit based on the average useful life of a company's renewable physical assets. See General Issues Appendix, 58 Fed.Reg. 37,224, 37,227 (July 9, 1993). When Commerce has calculated the average useful life using company-specific data obtained from annual reports and other financial data, the Court of International Trade has also approved the methodology. See Ipsco, Inc. v. United States, 13 CIT 335, 710 F.Supp. 1581 (1989), aff'd in part, rev'd in part, 8 Fed. Cir. (T) 80, 88, 899 F.2d 1192, 1198 (1990); ...