Allegheny Ludlum Corp. v. U.S., Slip Op. 00-66.

• Decision Date: 07 June 2000
• Docket Number: No. Slip Op. 00-66.,Court No. 99-06-00362.,Slip Op. 00-66.
• Citation: 112 F.Supp.2d 1141
• Parties: ALLEGHENY LUDLUM CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and ALZ N.V., Defendant-Intervenor.
• Court: U.S. Court of International Trade

Page 1141

112 F.Supp.2d 1141

ALLEGHENY LUDLUM CORP., et al., Plaintiffs, v. UNITED STATES, Defendant and ALZ N.V., Defendant-Intervenor.

No. Slip Op. 00-66.

Court No. 99-06-00362.

United States Court of International Trade.

June 7, 2000.

Collier, Shannon, Rill & Scott, PLLC, Washington, DC (David A. Hartquist, Paul C. Rosenthal, Kathleen W. Cannon, R. Alan Luberda, Lynn Duffy Maloney, and John M. Herrmann), for Plaintiffs.

David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director; U.S. Department of Justice, Civil Division, Commercial Litigation Branch (Michele D. Lynch); Myles S. Getlan, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Of Counsel, for Defendant.

OPINION

WALLACH, Judge.

I INTRODUCTION

This case comes before the Court on Plaintiffs' Rule 56.2 Motion For Judgment Upon The Agency Record ("Plaintiffs' Motion"), challenging the decision of the International Trade Administration of the U.S. Department of Commerce ("Commerce" or "the Department") in Final Affirmative Countervailing Duty Determination; Stainless Steel Plate in Coils from Belgium, 64 Fed.Reg. 15567 (1999) ("Final Determination"). Plaintiffs dispute Commerce's finding in this investigation that certain programs or transactions did not confer countervailable subsidies upon a Belgian producer of stainless steel coiled plate, and question whether the Department accurately measured the subsidies that it found had been conferred.

Counsel have presented well-briefed and ably argued claims concerning the various points in dispute. Upon consideration of these arguments, the Court finds that a remand is necessary so that Commerce may (a) evaluate whether it erred in not investigating the Government of Belgium's ("GOB") 1984 purchase of stock in the Belgian steel company Siderurgie Maritime SA ("Sidmar"), and (b) consider record evidence which appears to undermine its conclusion that no subsidy was conferred though the GOB's participation in a joint venture with Sidmar. In all other respects, the Final Determination is affirmed.

II BACKGROUND

On March 31, 1998, Plaintiffs filed a countervailing duty petition with Commerce alleging that a Belgian producer of stainless steel plate in coils, ALZ N.V. ("ALZ"), had benefitted from numerous types of subsidies provided by the GOB, the regional Government of Flanders ("GOF") and the European Commission ("EC"). See Initiation of Countervailing Duty Investigations: Stainless Steel Plate in Coils from Belgium, Italy, the Republic of Korea, and the Republic of South Africa, 63 Fed.Reg. 23272 (1998) ("Initiation Notice"). Based upon this information, on April 28, 1998, Commerce initiated a countervailing duty investigation concerning the subject merchandise, identifying fourteen programs operated by the GOB and the GOF, and five programs operated by the EC, that potentially provided countervailable subsidies¹ to the Belgian stainless steel coiled plate industry. Id. at 23273. Besides subsidies that were allegedly provided directly to ALZ, Commerce also investigated whether certain subsidies provided to Sidmar should be attributed to ALZ, on account of Sidmar's ownership interests in ALZ. See id.

On August 28, 1999, Commerce issued its Preliminary Determination² and, after conducting verification and considering the parties' case and rebuttal briefs, issued its Final Determination on March 31, 1999. See Final Determination, 64 Fed.Reg. at 15584 (finding the countervailable subsidy rate for ALZ to be 1.82 percent, ad valorem). Four aspects of this determination are relevant to Plaintiffs' challenge and are discussed in the respective sections below.

III ANALYSIS

A STANDARD OF REVIEW

In reviewing Commerce's determination, the Court "shall hold unlawful any determination, finding, or conclusion 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) (1994). "As long as the agency's methodology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-5, 636 F.Supp. 961, 966 (1986), aff'd, 810 F.2d 1137 (Fed.Cir.1987). "Substantial evidence is something more than a `mere scintilla,'" and must be enough evidence to reasonably support the Department's conclusion. Id. at 405, 636 F.Supp. at 966.

B

REMAND IS NECESSARY SO THAT COMMERCE MAY EITHER RECONSIDER OR ELABORATE UPON ITS DECISION NOT TO INVESTIGATE THE GOB'S 1984 EQUITY INFUSION INTO SIDMAR.

Plaintiffs' first claim challenges Commerce's decision not to investigate the GOB's 1984 purchase of Sidmar's common and preferred shares (characterized by Plaintiffs as an "equity infusion").

In their initial petition to the Department, Plaintiffs alleged that five GOB programs provided subsidies specifically to ALZ, and that another three programs provided Sidmar subsidies "that are [a]ttributable to ALZ." Plaintiffs' Countervailing Duty Petition of 03/31/98 at iii and 33-42. Plaintiffs did not identify the GOB's 1984 investments in Sidmar as a subsidy "[a]ttributable to ALZ," although they did reference these investments in a separate section of the petition entitled "Overview of the Belgian Industry Producing Stainless Steel Plate in Coils and the Subsidies Alleged." Id. at iii and 28. In the overview section, Plaintiffs stated that "[i]n 1984 the GOB increased its ownership in Sidmar through a combination of debt to equity conversions and direct equity infusions ...." Id. at 30. As support, Plaintiffs cited and attached excerpts from a 1988 book which briefly described these transactions and noted that "[t]he [European] Commission indicated that in its view the Belgian government had overvalued the shares acquired in Sidmar, but was `prepared to consider that a higher price could be considered normal for the purchase of a blocking minority.'" Id. at Ex. B-8, p. 124. Apart from this one sentence statement, however, which was made in the course of a general discussion of the GOB's ownership interests in both ALZ and Sidmar, Plaintiffs petition did not address the 1984 equity infusion in Sidmar.³

Presumably because of this fact, Commerce did not list these investments as subject to investigation in its Initiation Notice of April 28, 1998. See Initiation Notice, 63 Fed.Reg. at 23273. Plaintiffs neither specifically challenged this action, nor commented on Commerce's failure to investigate these investments in the Preliminary Determination. Three days prior to the start of verification, however, Plaintiffs requested that Commerce examine the terms of the GOB's 1984 acquisition of Sidmar stock through a debt-to-equity conversion and verify the methodology used by the GOB to arrive at the value per share. See Letter from Petitioners to Commerce of 11/06/98 at 9-10. Plaintiffs followed up this request by arguing in their case brief, submitted following verification, that Commerce should countervail these transactions because the GOB failed to make an objective analysis of the commercial soundness of its investment in Sidmar. See Petitioners' Case Brief of 02/11/99 at 17-33; Final Determination, 64 Fed.Reg. at 15575.

In the Final Determination, Commerce declined to investigate these transactions, since it found that Plaintiffs "first made this allegation" after the regulatory deadline set out in 19 C.F.R. § 351.301(d)(4)(i)(A). Final Determination, 64 Fed.Reg. at 15575. In relevant part, 19 C.F.R. § 351.301(d)(4)(i) (2000)⁴ provides that "[a] countervailable subsidy allegation made by the petitioner or other domestic interested party is due no later than: (A) [i]n a countervailing duty investigation, 40 days before the scheduled date of the preliminary determination."

Plaintiffs advance both factual and legal arguments why this decision was in error. For the reasons stated below, the Court remands this issue to Commerce for further consideration. Commerce Did Not Mischaracterize Plaintiffs' Claim as a "New Subsidy Allegation."

Plaintiffs first argue that, rather than presenting a new subsidy allegation, their case brief "simply represented a legal theory about how to treat factual information already on the record." Memorandum Of Law In Support Of Plaintiffs' Motion For Judgment On The Agency Record ("Plaintiffs' Memorandum") at 8. Essentially, Plaintiffs claim that Commerce misconstrued record evidence in finding that the 1984 transactions were not already a part of the Department's investigation.

Pursuant to 19 U.S.C. § 1671a(b)(1) (1994) ("Petition requirements"), a proper subsidy allegation "alleges the elements necessary for the imposition of the duty imposed by section 1671(a) of [Title 19]."⁵ Section 1671(a) states that a countervailing duty shall be imposed if Commerce determines that a government is providing a "countervailable subsidy with respect to the manufacture, production, or export of a class or kind of merchandise imported ... into the United States." 19 U.S.C. § 1671(a) (1994). A subsidy, in turn, is deemed to be conferred when a government authority "provides a financial contribution," including an equity infusion, "to a person and a benefit is thereby conferred." 19 U.S.C. § 1677(5)(B) & (D) (1994). "Government provision of equity does not per se confer a countervailable benefit," however. Comeau Seafoods Ltd. v. United States, 13 CIT 923, 935, 724 F.Supp. 1407, 1417 (1989). Rather, 19 U.S.C. § 1677(5)(E) (1994) provides that, "in the case of an equity infusion," a benefit is generally conferred "if the investment decision is inconsistent with the usual investment practice of private investors."

In light of these requirements, it is clear that Plaintiffs did not properly allege, until submission of their case...