Allegheny Ludlum Corp. v. U.S.

• Decision Date: 04 January 2002
• Docket Number: No. 99-09-00566.,SLIP OP. 02-01.,99-09-00566.
• Citation: 182 F.Supp.2d 1357
• Parties: ALLEGHENY LUDLUM CORP., et al., Plaintiffs, v. UNITED STATES, Defendant and Usinor, Ugine S.A., and Uginox Sales Corporation, et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

182 F.Supp.2d 1357

ALLEGHENY LUDLUM CORP., et al., Plaintiffs, v. UNITED STATES, Defendant and Usinor, Ugine S.A., and Uginox Sales Corporation, et al., Defendant-Intervenors.

SLIP OP. 02-01.

No. 99-09-00566.

United States Court of International Trade.

January 4, 2002.

Collier Shannon Scott, PLLC, Washington, DC, Paul C. Rosenthal, Kathleen W. Cannon, Lynn Duffy Maloney,(John M. Herrmann), for Plaintiffs.

Robert D. McCallum, Jr., Assistant Attorney General, United States Department of Justice; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Thomas B. Fatrouros); Michele D. Lynch, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Counsel, for Defendant.

Weil, Gotshall & Manges LLP, New York City, (Stuart Rosen), Jonathan Bloom, Jennifer J. Rhodes, for Defendant-Intervenors.

MEMORANDUM OPINION AND ORDER

BARZILAY, Judge.

I. INTRODUCTION

In this case, the court is asked, yet again, to review the subsidy calculation methodology employed by the Department of Commerce ("Commerce") during countervailing duty investigations and reviews to determine under what circumstances a privatized company is the recipient of a benefit pursuant to United States law. This case comes before the court pursuant to Plaintiffs' and Defendant-Intervenors' USCIT R. 56.2 Motions for Judgment Upon an Agency Record. Plaintiffs and Defendant-Intervenors challenged certain aspects of the final determination of the Department of Commerce International Trade Administration's countervailing duty investigation of stainless steel sheet and strip from France.¹ See Final Affirmative Countervailing Duty Determination: Stainless Steel Sheet and Strip in Coils from France, 64 Fed.Reg. 30,774 (1999) ("Final Determination"). While this case was pending before the court, the Federal Circuit issued its opinion in Delverde SrL v. United States, 202 F.3d 1360 (Fed.Cir. 2000) reh'g denied, Ct. No. 99-1186 (June 20, 2000) ("Delverde III"). On February 29, 2000, Usinor filed, and the court granted, a motion to amend its complaint to add a claim based upon the Federal Circuit's ruling in Delverde III. On July 13, 2000, the United States requested a remand to Commerce to consider the impact of the Federal Circuit's holding in Delverde III to the facts of this case. The subsequent remand order instructed Commerce to "issue a determination consistent with United States law, interpreted pursuant to all relevant authority, including the decision of the Court of Appeals for the Federal Circuit in Delverde SrL v. United States 202 F.3d 1360 (Fed.Cir.2000)." Remand Order (August 15, 2000). The court now reviews Commerce's Final Results of Redetermination Pursuant to Court Remand: Allegheny-Ludlum Corp., et al v. United States, No. 99-09-00566 (December 20, 2000). ("Remand Determination").² The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994) which provides for judicial review of a final determination by the Department of Commerce in accordance with the provisions of 19 U.S.C. § 1516a(a)(2)(B)(i) (1994).

II. BACKGROUND

On July 13, 1998, Commerce initiated countervailing duty investigations to determine whether manufacturers, producers or exporters of stainless steel sheet and strip from France, Italy and the Republic of Korea were receiving countervailable subsidies. See Initiation of Countervailing Duty Investigations: Stainless Steel Sheet and Strip in Coils From France, Italy and the Republic of Korea, 63 Fed.Reg. 37,539 (July 13, 1998). The period of investigation was calender year 1997. Id. Commerce issued its preliminary affirmative determination on November 17, 1998 and its final affirmative determination on June 8, 1999, finding that the total estimated net countervailable subsidy ("CVD") rate was 5.38% ad valorem for Usinor and all others. See Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination: Stainless Steel Sheet and Strip in Coils from France, 63 Fed.Reg. 63,876 (Nov. 17, 1998) ("Preliminary Determination"); Final Determination, 64 Fed.Reg. 30,790. During the investigation, the Government of France ("France" or "French Government") identified a division of Usinor as the sole French producer of the subject merchandise that was exported to the United States during the period of investigation. The French Government was the majority owner of Usinor and Sacilor, another steel producer, until the mid-1980s. Final Determination, 64 Fed.Reg. at 30,776. After a capital restructuring in 1986, France was the sole owner of both companies. Id. In 1987, France placed Usinor and Sacilor under the ownership of a holding company, with the holding company retaining Usinor as its name. Remand Determination at 17. In 1991, Credit Lyonnais, a government-owned bank, purchased 20% of Usinor. Final Determination, 64 Fed.Reg. at 30,776. Beginning in the summer of 1995 and continuing through 1996 and 1997, the French Government privatized Usinor through a public stock offering. Id. By the end of 1997, approximately 82% of Usinor's shares were owned by private shareholders, with the remaining shares owned by employees and "stable shareholders."³ Remand Determination at 17.

Despite the public stock offering that privatized Usinor, Commerce concluded in the Remand Determination that Usinor was the "same person" after the privatization and, since it had already determined that Usinor had previously received subsidies, it did not have to analyze whether the past subsidies were extinguished by the change in ownership transaction. In making its "same person" finding Commerce used principles of United States law "in the general corporate context." Remand Determination at 10. Additionally, Commerce used a 14-year average useful life (AUL) to allocate the benefits bestowed by nonrecurring subsidies.⁴ Based upon its findings, Commerce recalculated Usinor's CVD rate to be 7.72% ad valorem.

III. STANDARD OF REVIEW

The court must evaluate whether the remand findings are supported by substantial evidence on the record or otherwise in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B). "Substantial evidence is more than a mere scintilla;" it is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. of New York v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938); Matsushita Elec. Indus. Co., Ltd. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984). To determine if the agency's interpretation of the statute is in accordance with law "we must first carefully investigate the matter to determine whether Congress's purpose and intent on the question at issue is judicially ascertainable." Timex V.I. v. United States, 157 F.3d 879, 881 (Fed.Cir.1998). The expressed will or intent of Congress on a specific issue is dispositive. See Japan Whaling Association v. American Cetacean Society, 478 U.S. 221, 233-237, 106 S.Ct. 2860, 92 L.Ed.2d 166 (1986). If the court determines that the statute is silent or ambiguous, the question to be asked is whether the agency's construction of the statute is permissible. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). This deference is due when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. United States v. Mead Corp. 533 U.S. 218, 121 S.Ct. 2164, 1271, 150 L.Ed.2d 292 (2001). This is not limited to notice and comment rulemaking but is given to those "statutory determinations that are articulated in any `relatively formal administrative procedure.'" Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1380 (Fed.Cir.2001). Therefore, statutory interpretations articulated by Commerce during antidumping proceedings are entitled to judicial deference under Chevron. Id. at 1382. Essentially, this is an inquiry into the reasonableness of Commerce's interpretation. See Fujitsu General Ltd. v. United States, 88 F.3d 1034, 1038 (Fed.Cir.1996).

IV. DISCUSSION

A. History of the Issue

A brief history of the privatization subsidy issue is appropriate. The applicable law attempts to level the playing field by imposing a countervailing duty on subsidized imported goods sold in the United States which materially injure a domestic industry. A subsidy is a financial benefit conferred on a natural or legal person (usually the producing company) by a government entity or agent. See 19 U.S.C. § 1677(5)(B)

In the past twenty years many countries have moved to privatize state-owned enterprises and thereby shift major manufacturing activity from public to private entities. Thus many plants formerly run entirely or mostly under government finance and control are now under the control of private shareholders. The question then becomes: if the plant received non-recurring financial benefits when it was government owned and operated, do those benefits survive the privatization and are the new owners, therefore, subject to countervailing duties on products they export to the United States?

Commerce first confronted this issue in 1989 when it decided that no benefits had passed to the recently privatized firm under review because the sale was for full market value and at arm's length. See Lime from Mexico; Preliminary Results of Changed Circumstances Countervailing Duty Administrative Review, 54 Fed.Reg. 1,753, 1,754-55 (Jan. 17, 1989). By 1993, however, Commerce had changed its views in the context of steel countervailing duty investigations. Commerce ignored the change of ownership at fair market value, which it had found significant in Lime from Mexico, and held that the previously bestowed subsidies survived such a sale and thus...