PPG Industries, Inc. v. U.S.

• Decision Date: 03 November 1992
• Docket Number: No. 89-1520,89-1520
• Citation: 978 F.2d 1232
• Parties: PPG INDUSTRIES, INC., Plaintiff-Appellant, v. The UNITED STATES, and Vitro Flotado, S.A. and Vidrio Plano De Mexico, S.A., Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1232

978 F.2d 1232

14 ITRD 1715

PPG INDUSTRIES, INC., Plaintiff-Appellant, v. The UNITED STATES, and Vitro Flotado, S.A. and Vidrio Plano

De Mexico, S.A., Defendants-Appellees.

No. 89-1520.

United States Court of Appeals, Federal Circuit.

Nov. 3, 1992.

Terence P. Stewart, Stewart & Stewart, Washington, D.C., argued, for plaintiff-appellant. Of counsel, was David Scott Nance.

Jane E. Meehan, Atty., Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued, for defendant-appellee U.S. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen. and David M. Cohen, Director. Also on the brief, were Wendell Willkie, II, Gen. Counsel, Stephen J. Powell, Chief Counsel for Import Admin. and Diane M. McDevitt, Atty., Advisor, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, D.C.

David R. Amerine, Brownstein Zeidman & Schomer, Washington, D.C., argued, for defendants-appellees Vitro Flotado, S.A. and Vidrio Plano De Mexico, S.A. With him on the brief, was Irwin P. Altschuler.

Before MICHEL, LOURIE and CLEVENGER, Circuit Judges.

MICHEL, Circuit Judge.

PPG Industries, Inc. appeals the judgment of the United States Court of International Trade holding (1) that substantial evidence supports the United States International Trade Administration's (ITA) determination that the parties to the suspension agreement did not receive prohibited countervailable Certificados de Devolucion de Impuesto (CEDIs) during the period of review, (2) that Fidelicomiso para la Cobertura de Riesgos Cambiarios (FICORCA) is not a countervailable program because its benefits are not provided to a specific enterprise or industry, or group of enterprises or industries, and (3) that no grounds were shown that the suspension agreement must be terminated. PPG Indus., Inc. v. United States, 712 F.Supp. 195 (CIT 1989) [hereinafter PPG II ]. Because the Court of International Trade and the ITA did not erroneously construe applicable law, the findings of the ITA are supported by substantial evidence, and the ITA did not abuse its discretion, we affirm.

I. BACKGROUND

On September 16, 1983, PPG filed a petition with the ITA alleging that the Mexican government subsidized the production and export of float glass manufactured in Mexico. See Unprocessed Float Glass From Mexico, 48 Fed.Reg. 47,039 (Dep't Comm.1983) (initiation of investigation). In its petition, PPG identified six programs, including FICORCA ¹ and CEDI, ² which are at issue in this case, as providing subsidies with respect to Mexican float glass. Id. at 47,040.

The FICORCA program is

a trust fund set up by the Mexican government and the Bank of Mexico operating through the country's credit institutions. All Mexican firms with registered debt in foreign currency and payable abroad to Mexican credit institutions or to foreign financial entities or suppliers may purchase, at a controlled rate, the amount in dollars necessary to pay principal on the loan. All loans which are covered by the program must be long-term or be restructured on a long-term basis. The program was terminated December 20, 1982.

Unprocessed Float Glass From Mexico, 49 Fed.Reg. 23,097, 23,099 (Dep't Comm.1984) (final affirmative countervailing duty determination). Despite the termination of the program, those Mexican companies with foreign debt incurred before December 20, 1982 are eligible to draw from the fund.

The CEDI program issues "CEDIs" which are

tax certificate[s] issued by the government of Mexico in an amount equal to a percentage of the f.o.b. value of the exported merchandise or, if national insurance and transportation are used, a percentage of the c.i.f. value of the exported product. The CEDIs are nontransferable and may be applied against a wide range of federal tax liabilities (including payroll taxes, value-added taxes, federal income taxes, and import duties) over a period of five years from the date of issuance.

Unprocessed Float Glass From Mexico, 48 Fed.Reg. 56,095, 56,097 (Dep't Comm.1983) (preliminary affirmative countervailing duty determination).

The ITA conducted a countervailing duty investigation and preliminarily determined that the Mexican government had bestowed certain countervailable subsidies upon defendant Mexican float glass manufacturers. Id. at 56,095. With respect to FICORCA, the ITA preliminarily determined that the program was not used during the period of investigation, and with respect to CEDI, the ITA preliminarily determined that the Mexican government had suspended the program. Id. at 56,096.

Pursuant to 19 U.S.C. § 1671c(b), the ITA and the two Mexican manufacturers and exporters of float glass to the United States, Vitro Flotado, S.A. (Flotado) and Vidrio Plano de Mexico, S.A. (Plano), entered into a suspension agreement ³ in which the Mexican companies agreed to renounce all countervailable benefits from the Mexican government, including any direct or indirect CEDI benefits. Unprocessed Float Glass From Mexico, 49 Fed.Reg. 7264, 7267 (Dep't Comm.1984) (notice of suspension of countervailing duty investigation).

The suspension agreement includes provisions to assist the ITA in monitoring the Mexican companies' compliance with the agreement. These provisions require the float glass companies to provide the ITA with any information and documentation the ITA deems necessary to demonstrate compliance. Id. at 7268. The agreement also requires the Mexican companies to file certificates of compliance on a regular basis with the ITA. Id.

At the request of PPG, the ITA continued its countervailing duty investigation despite the suspension agreement. See 19 U.S.C. § 1671c(g) (1988). In its final determination, the ITA concluded, inter alia, that FICORCA was not countervailable. Unprocessed Float Glass From Mexico, 49 Fed.Reg. at 23,099. The ITA further determined that Mexico had suspended the CEDI program and that the float glass companies did not use any CEDIs during the period of investigation. Id. at 23,100. Additionally, in response to an allegation by PPG that an "extra-CEDI" program existed, the ITA verified that the float glass companies did not receive any such "extra-CEDIs" and concluded that no such program existed. Id. at 23,099.

PPG appealed the ITA's final countervailing duty determination and the execution of the Mexican float glass suspension agreement to the U.S. Court of International Trade, which upheld the decision of the ITA. PPG Indus., Inc. v. United States, 662 F.Supp. 258, 260 (CIT 1987). PPG then appealed portions of the Court of International Trade's decision relating to the ITA's final countervailing duty determination to this court. Although a member of the panel dissented regarding the countervailability of a program not in issue in this appeal, ⁴ the panel unanimously agreed that FICORCA is not countervailable. PPG Indus., Inc. v. United States, 928 F.2d 1568, 1578 (Fed.Cir.1991) [hereinafter PPG I ].

In addition to appealing the ITA's final countervailing duty determination and the suspension agreement, PPG also requested the ITA to review compliance with the suspension agreement. As a part of its investigation to determine compliance, the ITA submitted several questionnaires to the Mexican government and to the signatories. In response to the questionnaires, the Mexican government indicated that the CEDI program had been suspended on August 25, 1982, and had not been reactivated. The Mexican government also indicated that Fomento de Comercio Exterior (FCE), an export consortium belonging to the Vitro group of companies, did not sell or trade internationally any product, including float glass. The Mexican government further responded that neither Plano nor Flotado had dealings with FCE in connection with sales to the United States.

The ITA later verified these responses by visiting the Mexican agencies responsible for administering these programs, the two signatory companies, and their parent company, Vitro, S.A. The ITA reviewed the financial records and accounts, tax returns and import and export records of both signatory companies, and Vitro, S.A.'s audited financial statements which contained the consolidated records of all firms in the Vitro group of companies. Additionally, the ITA verified that the signatories to the suspension agreement did not receive any pass-through CEDI benefits from FCE by confirming that the business relationship between FCE and Flotado and Plano was terminated prior to the signing of the suspension agreement.

During the period of investigation, PPG also requested the ITA to reevaluate the countervailability of the FICORCA program in light of new information it submitted. The new information submitted concerned the number of Mexican firms which participated in the FICORCA program. PPG alleged that the new information established that the FICORCA program was countervailable because the Mexican government limited eligibility for the FICORCA program to companies with long term foreign debt incurred before December 20, 1982, and that, as a result of these eligibility requirements, only a small portion of Mexican companies was eligible to participate in the program.

Based on its investigation and verification, the ITA finally determined that the Mexican signatories had complied with the suspension agreement. ⁵ Unprocessed Float Glass From Mexico, 51 Fed.Reg. 44,503 (Dep't Comm.1986) (final results of countervailing duty administrative review). Specifically, the ITA found that neither Flotado nor Plano benefitted from CEDIs directly. Additionally, because the float glass producers had ended their relationship with FCE in January 1984, the signatories did not receive any pass-through CEDI benefits from FCE. Id. at 44,504. The ITA also rejected PPG's assertion that the new evidence submitted by PPG required Commerce to reach a different conclusion regarding the countervailability of the FICORCA program. The ITA again concluded that the FICORCA program is not...