989 F.Supp. 218 (CIT. 1997), 96-08-01997, Delverde, SrL v. United States

Docket Nº:Court No. 96-08-01997.
Citation:989 F.Supp. 218
Party Name:DELVERDE, SrL and Delverde USA, Inc., Plaintiffs, v. The UNITED STATES, Defendant, and Borden, Inc., Hershey Foods Corp., Gooch Foods, Inc., and Barilla Alimentare S.p.A., Defendant-Intervenors. Slip Op. 97-163.
Case Date:December 02, 1997
Court:Court of International Trade

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989 F.Supp. 218 (CIT. 1997)

DELVERDE, SrL and Delverde USA, Inc., Plaintiffs,


The UNITED STATES, Defendant,


Borden, Inc., Hershey Foods Corp., Gooch Foods, Inc., and Barilla Alimentare S.p.A., Defendant-Intervenors.

Slip Op. 97-163.

Court No. 96-08-01997.

United States Court of International Trade.

Dec. 2, 1997

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[Copyrighted Material Omitted]

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McKenna & Cuneo, L.L.P., Washington, DC (Lawrence J. Bogard, Andrew E. Bej, and Malaika D. Carter), for plaintiff.

Mound, Cotton & Wollan, New York City (Constantino P. Suriano), co-counsel for plaintiff.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Cynthia B. Schultz and David Ross), Terrence J. McCartin, Attorney-Advisor, Office of Chief Counsel for Import Administration, of counsel, United States Department of Commerce, Washington, DC, for defendant.

Collier, Shannon, Rill & Scott PLLC, Washington, DC (Paul C. Rosenthal, Lynn E. Duffy, and Laura A. Svat), for defendant-intervenors Borden, Inc., Hershey Foods Corp., and Gooch Foods, Inc.

O'Melveny & Myers L.L.P., Washington, DC (Peggy A. Clarke, Gary N. Horlick, and Lisa H. Marino) for defendant-intervenor Barilla Alimentare S.p.A.



This matter is before the court on motions for judgment based upon the agency record pursuant to USCIT Rule 56.2. The motions have been brought by certain respondents in a countervailing duty investigation, Delverde, SrL and Delverde USA, Inc. (collectively "Delverde"), and petitioners on behalf of the domestic industry in the countervailing duty investigation, Borden, Hershey Foods, and Gooch Foods (collectively "Borden"). The parties challenge aspects of the final affirmative countervailing duty determination of the Department of Commerce ("Commerce") in Certain Pasta from Italy, 61 Fed.Reg. 30,288 (Dep't. Commerce 1996) [hereinafter " Final Determination "].

Commerce opposes the motions, except that it requests remand of its decision with regard to its net subsidy calculation for "Law 64" grants. Its determination was not explained in a way which would provide opportunity for challenge. Thus, remand for this purpose will be permitted. The court will first address Borden's remaining challenges, followed by that of Delverde. The facts relating to each challenge will be stated separately.

Standard of Review and Applicable Law

In reviewing final determinations in countervailing duty investigations, this court will

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hold unlawful those determinations of Commerce found to be "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i) (1994). 1 " 'Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' " Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938)).

The countervailing duty laws of the United States, as amended by the Uruguay Round Agreements Act, Pub.L. No. 103-465, 108 Stat. 4809 (1994) ("URAA"), were applied by Commerce to the underlying investigation and govern this action.

I. Commerce's Decision not to Investigate Certain Programs

On May 12, 1995, Borden filed a petition requesting Commerce to initiate a countervailing duty investigation of nineteen separate subsidy programs allegedly benefitting pasta exporters or producers in Italy. Certain Pasta from Italy and Turkey, 60 Fed.Reg. 30,280, 30,281-82 (Dep't Commerce 1995) (notice of initiation of countervailing duty investigation)[hereinafter " Initiation Notice "]. Commerce issued a notice initiating an investigation of twelve of the nineteen programs. Not included were Law 46/82 research and development grants 2 ("Law 46 grants" or "Law 46") and European Investment Bank Loans 3 ("EIB loans" or "EIB"). Id. Commerce declined to initiate investigation of Law 46 grants and EIB loans because petitioners (1) did not allege that the programs had changed since Commerce found them non-specific in previous investigations 4 and (2) did not establish that pasta producers had received a disproportionate share of benefits under the programs. Id. at 30,282.

Borden contests Commerce's decision not to investigate Law 46 and EIB loans as unsupported by substantial evidence on the record and not in accordance with law. Borden argues that (1) the statute does not require petitioners at the initiation stage to establish that the benefits received by Italian pasta producers under Law 46 and EIB loans were specific countervailable subsidies, 5 i.e., to provide evidence of changed circumstances because the programs previously were found to be widely available and non-countervailable, or establish that this industry received a disproportionate share of benefits, and (2) Commerce erroneously decided that Borden did not meet its initiation burden on the ground that information provided in the petition in support of Borden's allegations failed to satisfy the "reasonably available" test pursuant to 19 U.S.C. § 1671a(b)(1). For the following reasons this court affirms Commerce's decision.

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A. Commerce's requirement that petitioners provide in the petition evidence that circumstances have changed or the industry under investigation may have received a disproportionate share of the benefits, is in accordance with law.

Section 702(c)(1)(A) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1671a(c)(1)(A), provides that Commerce shall initiate a countervailing duty proceeding as long as the petition (1) alleges a sufficient statutory basis for countervailability, (2) contains information "reasonably available" to the petitioner supporting the allegation, and (3) is filed by an interested party on behalf of a domestic industry. See also 19 C.F.R. § 351.103(a) (1997). When allegations concern a program previously held non-countervailable, however, Commerce requires a petition to contain evidence of changed circumstances or provide a sufficient basis to believe that producers receive a disproportionate share of the benefits under these programs before an investigation is initiated. Initiation Notice, 60 Fed.Reg. at 30,280-82.

Borden first argues that Commerce's requirement is inconsistent with congressional intent that the initiation threshold be low. See S.Rep. No. 96-249, at 47 (1982), reprinted in 1979 U.S.C.C.A.N. 381, 449 (stating that Commerce shall initiate an investigation unless "the petition and supporting information fail to state a claim upon which relief can be granted"); Torrington Co. v. United States, 15 CIT 456, 460, 772 F.Supp. 1284, 1288 (1991) ("Congress intended that Commerce decline to initiate investigations only where they are 'clearly frivolous' or where the petitioner has not provided information reasonably available to it.") (citations omitted); Countervailing Duties, 62 Fed.Reg. 8818, 8824 (Dep't Commerce 1997) (proposed rules) (Commerce's initiation threshold is "sufficient to ensure that all potentially countervailable subsidies are investigated."). Commerce agrees with Borden that the initiation standard is low but argues that Commerce's requirement is consistent with that standard and prior practice and is well within its authority.

The statute and legislative history are silent as to the initiation standard with regard to programs that previously have been found non-countervailable. Thus, for reasons of administrative efficiency, Commerce may seek to limit reinvestigations of certain facts. See Monsanto Co. v. United States, 12 CIT 937, 947, 698 F.Supp. 275, 283 (1988) (noting Commerce has discretionary authority to determine the extent of investigation and information it needs in order to determine whether program is countervailable). Furthermore, in Can-Am Corp. v. United States, 11 CIT 424, 428, 664 F.Supp. 1444, 1449 (1987), the court ruled that Commerce's decision not to reinvestigate a program previously found non-countervailable was reasonable, as the petition did not contain new facts to justify a review of the earlier finding. Id. Borden argues that Can-Am does not establish that a petitioner must allege evidence of changed circumstances when requesting review of a previously investigated subsidy; rather, the court merely deferred to Commerce's decision under the particular facts of that case. Borden's argument is not persuasive, as the court in Can-Am deferred to Commerce's decision not to reinvestigate, which was based on petitioner's failure to meet the requirement of providing evidence that the program had changed since the finding of non-countervailability.

Borden also argues that the previous finding did not amount to a finding of non-countervailability as a matter of law but only lack of de facto specificity. In support, Borden relies on British Steel v. United States, 879 F.Supp. 1254, 1324 (C.I.T. 1995), in which the court stated that a case-by-case analysis is needed to determine if a subsidy or grant has been provided to a specific enterprise or industry. Plaintiffs, however, misapply British Steel. If an entire program previously has been found non-countervailable as a matter of fact, a case-by-case factual analysis normally is needed only to determine if the petitioner has presented evidence of changed circumstances or disproportionality warranting an investigation. The record reveals that Commerce acted accordingly and did not assume the GOES or 1993 Belgian Steel findings

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of non-countervailability precluded investigation. See Final Determination, 61 Fed.Reg. at 30,307. Commerce analyzed the evidence...

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