Bethlehem Steel Corp. v. U.S.

• Decision Date: 08 August 2001
• Docket Number: No. 00-03-00116.,SLIP OP. 01-95.,00-03-00116.
• Citation: 162 F.Supp.2d 639
• Parties: BETHLEHEM STEEL CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendants, and Pohang Iron & Steel Co., Defendant-Intervenor.
• Court: U.S. Court of International Trade

162 F.Supp.2d 639

BETHLEHEM STEEL CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendants, and Pohang Iron & Steel Co., Defendant-Intervenor.

SLIP OP. 01-95.

No. 00-03-00116.

United States Court of International Trade.

August 8, 2001.

COPYRIGHT MATERIAL OMITTED

Dewey Ballantine (John A. Ragosta, Navin Joneja), Washington, DC, for Plaintiffs.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director; A. David Lafer, Senior Trail Counsel; William Olsen, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Michele D. Lynch, Office of the Chief Counsel for Import Administration, United States Department of Commerce, Washington, D.C., for Defendant.

OPINION

CARMAN, Chief Judge.

This action challenges the United States Department of Commerce's (Commerce) Remand Determination Pursuant to Bethlehem Steel Corp. v. United States (Remand Determination) issued on May 25, 2001. Familiarity with the underlying facts and issues in this case as set forth in the prior opinion is presumed. For the reasons stated below, Commerce's Remand Determination is sustained in part and remanded in part.

BACKGROUND

On April 4, 2001, this Court remanded to Commerce four issues stemming from its Final Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea, 64 Fed.Reg. 7,316 (December 29, 1999). See Bethlehem Steel Corp. v. United States, 140 F.Supp.2d. 1354 (CIT 2001) (Bethlehem Steel I). Commerce was instructed to: (1) properly address and set forth its reasoning for determining that the infrastructure subsidies received by the Pohang Iron & Steel Co. (POSCO) at Asan Bay were non-countervailable; (2) properly address and set forth its reasoning for determining that the waiver or reduction of import duties on steel making equipment imported by the Korean steel industry were non-countervailable; (3) investigate the potential countervailability of the Korean government's waiver or reduction of import duties on slab; and (4) determine whether the rebate of money to the Dongkuk Steel Mill Company in connection with its purchase of land at Asan Bay constituted a countervailable subsidy. Id. at 1370.

On May 25, 2001, Commerce filed its Remand Determination. Commerce affirmed its decision not to countervail either the alleged infrastructure subsidies received by the POSCO at Asan Bay or the waiver or reduction of import duties on steel making equipment imported by the Korean steel industry. Additionally, the agency reiterated its position that the Korean government's waiver or reduction of import duties on slab was non-countervailable because the import duties were eligible for duty drawback. Finally, Commerce reversed its position and concluded that the rebate of money paid in the purchase of land at Asan Bay to Donkuk Steel Mill was a countervailable subsidy.

On June 13, 2001, Plaintiffs filed response papers with the Court challenging: (1) Commerce's failure to fully and adequately explain why it did not countervail the infrastructure subsidy benefits received by POSCO at Asan Bay; (2) Commerce's explanation for refusing to investigate the waiver or reduction of import duties on steel-making equipment; and (3) Commerce's refusal to investigate the reduction of import duties on slab.

DISCUSSION

On remand, Commerce was tasked with investigating, explaining and/or determining four discrete issues. As in the underlying proceeding, when Commerce's remand determinations or explanations are challenged, the Court is bound to apply the "substantial evidence" and "otherwise not in accordance with law" standard. 19 U.S.C. § 1516a(b)(1)(B)(i) (1995). See Laclede Steel Co. v. United States, 125 F.Supp.2d 525, 530 (CIT 2000) (noting that the Court applies the same standard of review to remand determinations as to the original proceedings). Accordingly, the Court will not disturb Commerce's factual determinations where they are supported by substantial evidence, or its legal conclusions where they are a reasonable interpretation of the agency's statutory mandate.

For the reasons stated below, the Court finds Commerce's explanation for refusing to investigate the waiver or reduction of import duties on steel-making equipment to be supported by substantial evidence. The Court, however, cannot sustain Commerce's explanation of why the infrastructure provided by the Korean government at Asan Bay was non-countervailable. Commerce failed to address the issues specified by the Court in the remand order and ignored the crux of Plaintiffs' allegations. Additionally, the Court cannot accept Commerce's continued refusal to investigate the reduction of import duties on slab. On remand, the agency ignored the Court's directive and did little more than restate its original position that it would not investigate the alleged subsidy.

1. Commerce's explanation for refusing to investigate the waiver or reduction of import duties on steel-making equipment is supported by substantial evidence and otherwise in accordance with law.

In its Remand Determination Commerce explains that it did not receive notice of the Korean government's waiver or reduction of import duties on steel making equipment until October 14, 1999 — almost three months after the preliminary determination and immediately prior to verification. Due to the lateness, Commerce determined that it did not have sufficient time to conduct an investigation into this alleged countervailable subsidy.

The Court finds Commerce's determination to be supported by substantial evidence and in accordance with law. Commerce's regulations establish guidelines governing the investigation of new subsidy allegations. Specifically, 19 C.F.R. § 351.301(d)(4)(i)(A) states that new subsidy allegations should be made at least forty days prior to the preliminary determination to ensure that the agency has sufficient time to investigate the allegation. Additionally, 19 C.F.R. § 351.311 places an independent obligation on Commerce to investigate newly discovered practices that reasonably appear to be countervailable if sufficient time remains before the scheduled date of the final determination. Here, the subsidy allegation was not made until after the preliminary determination was issued, clearly violating 19 C.F.R. § 351.401(d)(4)(i)(A). As Commerce reasonably points out, the lateness of this allegation constrained its ability to issue questionnaires to the relevant respondents, analyze their responses, submit supplemental questionnaires, and reschedule and complete verification prior to the scheduled date for the final determination. This Court has consistently held that Commerce must investigate only those "allegations that reasonably appear to be countervailable and are discovered within a reasonable time prior to the completion of the investigation." See Bethlehem Steel I, 140 F.Supp.2d at 1361, quoting, Allegheny Ludlum Corp. v. United States, 112 F.Supp.2d 1141, 1151 (CIT 2000) (emphasis added). The record reveals that this subsidy allegation was not discovered within a reasonable time prior to the completion of the investigation. Thus, although the independent obligation to investigate created by 19 C.F.R. § 351.311 was triggered because the alleged subsidy program appeared to be countervailable, Commerce appropriately exercised its discretion not to investigate this issue.

Where Commerce discovers a potentially countervailable practice too late to include in its investigation, 19 C.F.R. § 51.311(c)(2) provides that "Commerce may defer consideration of the newly discovered practice until a subsequent review." However, because Commerce was aware of the alleged subsidy program, the agency decided not to wait until a subsequent review and requested information on this program from the Korean government in connection with another countervailing duty investigation, Structural Steel Beams from the Republic of Korea. Ultimately, Commerce determined the program was non-countervailable. See Final Affirmative Countervailing Duty Determination: Structural Steel Beams from the Republic of Korea, 65 Fed.Reg. 41,051 (July 3, 2000). Based on the Structural Steel Beams finding, Commerce elected not to investigate this allegation on remand.

The merits of the Structural Steel Beam determination are not within the scope of the present case and the Court expresses no view on the issue. Commerce's Structural Beam determination, however, bears directly on this proceeding because the Court has consistently held that the agency "has discretion in deciding whether to reinvestigate a program previously found not countervailable in a final agency determination." Bethlehem Steel I, 140 F.Supp.2d, at 1363, quoting, PPG Industries, Inc. v. United States, 787 F.Supp. 215, 220 (CIT 1992). The decision to reinvestigate turns on whether the subsequent allegation contains evidence of changed circumstances or provides a sufficient basis of belief that specific producers receive a disproportionate share of the program's benefits. See id. See also Delverde SrL v. United States, 989 F.Supp. 218, 222 (CIT 1997), vacated on different grounds, 202 F.3d 1360 (Fed.Cir.2000). Nothing in the record is sufficient to overturn Commerce's determination that Plaintiffs presented no evidence of changed circumstances or the receipt of a disproportionate share of the program's benefits by the Korean steel industry. Accordingly, the Court finds Commerce's decision to be supported by substantial evidence and otherwise in accordance with law.

2. Commerce's failure to address whether the infrastructure provided by the Korean government at Asan Bay constitutes a countervailable subsidy is contrary to law.

The antidumping and countervailing duty laws are not punitive in nature, but rather are intended to remedy disparities in the value of imported and domestic merchandise created by impermissible international trade practices. One of...