Alz N.V. v. U.S.
| Decision Date | 11 July 2003 |
| Docket Number | Slip Op. 03-81.,Court No. 01-0834. |
| Citation | 283 F.Supp.2d 1302 |
| Parties | ALZ N.V., Plaintiff, v. UNITED STATES, Defendant, and Zanesville Armco Independent Organization, et al., Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Shearman & Sterling, Washington, DC (Thomas B. Wilner and Christopher Ryan), for Plaintiffs.
Robert D. McCallum, Jr., Assistant Attorney General, Civil Division, United States Department of Justice; David M. Cohen, Director, Commercial Litigation Branch, Civil Division; A. David Lafer, Senior Trial Counsel; John C. Einstman, Trial Attorney; Arthur D. Sidney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for Defendant, of counsel.
Collier Shannon Scott, PLLC (Lynn Duffy Maloney), for Defendant-Intervenors.
This action comes before the court on Plaintiff ALZ N.V.'s ("ALZ") Motion for Judgment Upon the Agency Record, which contests certain aspects of the United States Department of Commerce, International Trade Administration's ("Commerce") determination in Stainless Steel Plate in Coils From Belgium: Final Results of Countervailing Duty Administrative Review, 66 Fed.Reg. 45,007 (Aug. 27, 2001) ("Final Results").1
For the reasons set forth below, the court remands this matter to Commerce with instructions to conduct further proceedings in conformity with this opinion.
On June 7, 2000, Commerce published a notice initiating an administrative review of the countervailing duty order on stainless steel plate in coils from Belgium for the period of review from September 4, 1998 through December 31, 1999. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, Requests for Revocation in Part and Deferral of Administrative Reviews, 65 Fed. Reg. 64,662 (Oct. 30, 2000).
On July 26, 2000, Allegheny Ludlum Corp., Armco, Inc., Lukens, Inc., and United Steelworkers of America, AFL-CIO/CLC (collectively "petitioners") submitted new allegations and requests concerning alleged subsidies provided by the Government of Belgium ("GOB"). Petitioners alleged, among other things, that the GOB's purchase of Sidmar N.V.'s ("Sidmar") common and preference shares in 1984 provided a countervailable subsidy to Sidmar. Petitioners also requested that Commerce reinvestigate the GOB's purchase of ALZ common and preference shares in 1985, as well as Sidmar's debt-to-equity conversion in 1985. See Letter from Lynn Duffy Maloney, Collier Shannon Scott, PLLC, to Secretary of Commerce, U.S. Dep't of Commerce, Stainless Steel Plate in Coils from Belgium: Questionnaire Modifications and New Subsidy Allegations at 1(July 26, 2000); Appendix Accompanying the Memorandum of Law in Support of Plaintiff's Motion for Judgment on the Agency Record ("App.") Tab 2. Both of these transactions were found not to provide a countervailable benefit in Commerce's original investigation into the programs. See Final Affirmative Countervailing Duty Determination; Stainless Steel Plate in Coils from Belgium, 64 Fed. Reg. 15,567 (Mar. 31, 1999) ("Original Determination"). Petitioners did not submit new information to support their allegations; instead, they relied exclusively on information provided by ALZ and the GOB in the original determination.
ALZ opposed the petitioners' request that Commerce reinvestigate the equity programs. On October 19, 2000, however, Commerce determined to initiate a review of the three equity infusions. See Memorandum from Team to Richard W. Moreland, Deputy Assistant Secretary for AD/CVD Enforcement, Countervailing Duty Administrative Review of Stainless Steel Plate in Coils from Belgium (Oct. 19, 2000) at 4-7 ("New Subsidy Allegations"); App. Tab 4.
On April 23, 2001, Commerce published the preliminary results of its countervailing duty administrative review. See Stainless Steel Plate in Coils from Belgium: Preliminary Results of Countervailing Duty Administrative Review, 66 Fed. Reg. 20,425 (Apr. 23, 2001) ("Preliminary Results"). Commerce preliminarily determined that the three equity programs examined in the review ((1) the GOB's purchases of Sidmar's common and preference shares in 1984, (2) the GOB's purchases of ALZ's common and preference shares in 1985, and (3) the GOB's 1985 debt-to-equity conversion) all constituted countervailable subsidies. Id. at 20,428-20,432. Commerce further preliminarily determined that ALZ and Sidmar had benefitted by an amount equal to the entire amount of the GOB's investments. Id. at 20,433. Commerce also determined that because ALZ is a fully consolidated subsidiary of Sidmar, any united subsidies provided to Sidmar were attributable to ALZ. Id. at 20,427.
On August 27, 2001, Commerce issued the Final Results that ALZ challenges in this action, determining the three equity programs under investigation to be countervailable subsidies and finding a final net subsidy rate of 3.25 percent ad valorem for the period September 4, 1998 through January 1, 1999, and 1.78 percent ad valorem for the period May 11, 1999 through December 31, 1999. Final Results, 66 Fed.Reg. at 45,009. Commerce established a cash deposit rate of 1.78 percent ad valorem for all entries of subject merchandise on or after August 27, 2001. Id.
The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c) (1994) and 19 U.S.C. § 1516a(a)(2)(A)(i)(I) (1999).
In reviewing a challenge to Commerce's final determination in a countervailing duty administrative review, the court will uphold Commerce's determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law...." 19 U.S.C. § 1516a(b)(1)(B)(i) (1999). Substantial evidence is Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)).
Commerce's interpretation of the countervailing duty statute is "in accordance with law" if it comports with Congress's intention on the precise question at issue. Timex V.I., Inc. v. United States, 157 F.3d 879, 881-882 (Fed.Cir.1998). If Congress's intention is not judicially ascertainable, this Court must consider whether Commerce's interpretation of the statute is reasonable in light of the overall statutory scheme. See Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
Applicable Legal Background
To ascertain whether Commerce's determination is in accordance with law, this court first examines the law as set forth in the statute. The countervailing duty statute provides that Commerce must impose countervailing duties if it determines that a "government ... or any public entity ... is providing, directly or indirectly, a countervailable subsidy with respect to the manufacture, production, or export of a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States...." 19 U.S.C. § 1671(a)(1) (1999).
A countervailable subsidy is conferred when a foreign government provides a financial contribution, for instance, an equity infusion, and a benefit is thereby conferred. See 19 U.S.C. § 1677(5)(B), (D) (1999). "A benefit shall normally be treated as conferred where there is a benefit to the recipient, including ... in the case of an equity infusion, if the investment decision is inconsistent with the usual investment practice of private investors, including the practice regarding the provision of risk capital, in the country in which the equity infusion is made." 19 U.S.C. § 1677(5)(E)(i).
Commerce's regulations, mirroring the countervailing duty statute, provide that "[i]n the case of a government-provided equity infusion, a benefit exists to the extent that the investment decision is inconsistent with the usual investment practice of private investors, including the practice regarding the provision of risk capital, in the country in which the equity infusion is made." 19 C.F.R. § 351.507(a)(1) (2002).2
The regulations go on to provide Commerce with a methodology for determining when a government-provided equity infusion is inconsistent with usual investment practice. If private investor prices are available, an equity infusion is considered inconsistent with usual investment practice if the price paid by the government for newly issued shares is greater than the price paid by private investors for the same or similar form of newly issued shares. Id. at § 351.507(a)(2).
If, however, private investor prices are unavailable, Commerce is confronted with an entirely different set of considerations. Commerce acknowledges that undertaking an analysis of government-provided equity infusions in situations in which there is no market benchmark price is one of the most difficult methodological problems the agency must confront in its administration of the countervailing duty law. See Countervailing Duties, 63 Fed.Reg. 65,348, 65,373 (Nov. 25, 1998) ("Preamble"). Since 1982, Commerce has dealt with this problem by categorizing firms as either "equityworthy" or "unequityworthy." Id. An equityworthy firm was one that showed "an ability to generate a reasonable rate of return within a reasonable period of time," while an unequityworthy firm failed to show such an ability. Id. If Commerce found a firm equityworthy, it would declare a government-provided equity infusion in the firm to not be countervailable; conversely, if Commerce found a firm unequityworthy, it would declare a government-provided equity infusion in the firm to be counter-vailable without further analysis. Id.
When it codified its new regulations, Commerce declared: "[W]e have retained the...
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