Comm. Overseeing Action for Lumber Int'l Trade Investigations or Negotiations v. United States

Citation535 F.Supp.3d 1336
Decision Date18 August 2021
Docket NumberConsol. Court No. 19-00122,Slip Op. 21-104
Parties COMMITTEE OVERSEEING ACTION FOR LUMBER INTERNATIONAL TRADE INVESTIGATIONS OR NEGOTIATIONS, Plaintiff, and Fontaine Inc., et al., Consolidated Plaintiffs, v. UNITED STATES, Defendant, and Fontaine Inc., et al., Defendant-Intervenors.
CourtU.S. Court of International Trade

Lisa W. Wang, Andrew W. Kentz, David A. Yocis, Nathanial M. Rickard, Whitney M. Rolig, Sophia J.C. Lin, and Zachary J. Walker, Picard Kentz & Rowe LLP, of Washington, DC, for Plaintiff Committee Overseeing Action for Lumber International Trade Investigations or Negotiations.

Joanne E. Osendarp, McDermott Will & Emery LLP, of Washington, DC, for Consolidated Plaintiff/Defendant-Intervenor Government of Canada.

Matthew J. Clark, Arent Fox LLP, of Washington, DC, for Consolidated Plaintiff/Defendant-Intervenor Government of Québec.

Elliot J. Feldman, Baker & Hostetler, LLP, of Washington, DC, for Consolidated Plaintiff/Defendant-Intervenor Fontaine Inc.

John R. Magnus, TradeWins LLC, of Washington, DC, for Consolidated Plaintiff/Defendant-Intervenor Mobilier Rustique (Beauce) Inc.

Stephen C. Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Nikki Kalbing, Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Stephan E. Becker, Pillsbury Winthrop Shaw Pittman LLP, of Washington, DC, for Defendant-Intervenor Government of New Brunswick.

Yohai Baisburd, Cassidy Levy Kent (USA) LLP, of Washington, DC, for Defendant-Intervenor Scierie Alexandre Lemay & Fils Inc.

Edward M. Lebow, Haynes and Boone, LLP, of Washington, DC, for Defendant-Intervenors Les Produits Forestiers D&G Ltée and Marcel Lauzon Inc.

Richard L.A. Weiner, Sidley Austin LLP, of Washington, DC, for Defendant-Intervenors North American Forest Products Ltd., Parent-Violette Gestion Ltée, and Le Groupe Parent Ltée.

OPINION

Barnett, Chief Judge:

In this consolidated action, Plaintiff, Committee Overseeing Action for Lumber International Trade Investigations or Negotiations ("Plaintiff" or "the Coalition"), challenged the U.S. Department of Commerce's ("Commerce" or "the agency") authority to promulgate a regulation establishing an expedited review process to determine individual countervailing duty ("CVD") rates for exporters not individually examined in an investigation.1 See Compl. ¶¶ 15–16, ECF No. 2. Plaintiff disputed the lawfulness of the regulation, 19 C.F.R. § 351.214(k), as part of its challenge to Commerce's final results in the CVD expedited review of certain softwood lumber products from Canada. See Compl. ¶¶ 2, 14–22; see also Certain Softwood Lumber Products From Canada , 84 Fed. Reg. 32,121 (Dep't Commerce July 5, 2019) (final results of CVD expedited review) (" Final Results of Expedited Review "), ECF No. 99-5, and accompanying Issues and Decision Mem. ("I&D Mem."), C-122-858 (June 28, 2019), ECF No. 99-6.2 Plaintiff alleged that Commerce's reliance on section 103(a) of the Uruguay Round Agreements Act ("URAA" or "the Act"), Pub. L. No. 103-465, 108 Stat. 4809 (1994), as authority for its regulation was misplaced and, thus, that Commerce's promulgation of the regulation and issuance of the Final Results of Expedited Review exceeded Commerce's statutory authority. See Compl. ¶¶ 15–16.

In due course, the Coalition filed a motion for judgment on the agency record pursuant to U.S. Court of International Trade ("USCIT" or "CIT") Rule 56.2 incorporating the foregoing claim. See Conf. Pl.’s Rule 56.2 Mot. for J. on the Agency R. and accompanying Conf. Mem. in Supp. of Pl.’s Rule 56.2 Mot. for J. on the Agency R. ("Pl.’s Mem."), ECF No. 101. Defendant, United States ("Defendant" or "the Government"), and several Defendant-Intervenors consisting of Canadian softwood lumber producers and governmental entities, defended the lawfulness of 19 C.F.R. § 351.214(k) and the underlying proceeding. Conf. Def.’s Resp. [to] Pls.’ Mots. For J. on the Agency R., ECF No. 110; Joint Br. of Def.-Ints. Gov't of Can. and Gov't of Que. in Opp'n to Pl.’s Mot. for J. on the Agency R. ("Jt. Canada Br."), ECF No. 120; [Resp.] of Def.-Ints. Les Produits Forestiers D&G Ltée and Marcel Lauzon Inc. in Opp'n to Pl.’s Mot. for J. on the Agency R., ECF No. 117; Resp. of Def.-Int. Scierie Alexandre Lemay & Fils Inc. in Opp'n to Pl.’s Mot. for J. on the Agency R., ECF No. 119.3

In Committee Overseeing Action for Lumber Int'l Trade Investigations or Negotiations v. United States (" Lumber III "), the court held, inter alia , that "Commerce exceeded its authority to the extent that it promulgated 19 C.F.R. § 351.214(k) pursuant to URAA § 103(a)." 44 CIT ––––, ––––, 483 F. Supp. 3d 1253, 1263–64 (2020).4 The court remanded the Final Results of Expedited Review for Commerce to consider various post hoc justifications for the regulation offered by Defendant and the Governments of Canada and Québec and declined to vacate the regulation pending Commerce's remand redetermination. See id. at 1272–73.

The matter is now before the court following Commerce's redetermination upon remand. See Final Results of Redetermination Pursuant to Court Remand ("Remand Results"), ECF No. 173-1. On remand, Commerce addressed two issues: (1) whether any statutory authority existed for the agency's promulgation of 19 C.F.R. § 351.214(k) ; and (2) in the absence of such authority, what actions Commerce should take with respect to entries of subject merchandise exported or produced by companies subject to the CVD expedited review (collectively referred to as "the subject companies") in the event the court annuls the Final Results of Expedited Review . See generally id.

As will be discussed in further detail below, Commerce concluded that it could not identify an explicit or implicit statutory basis for its regulation that would be consistent with the court's opinion in Lumber III . See id. at 9–12, 19–25. Commerce further indicated that it intended to follow the procedure set forth in 19 U.S.C. § 1516a(c)(1) with respect to the subject companies, such that "the effect of this decision would be prospective" and "the rates established as a result of the [CVD] expedited review would cease to apply 10 days after publication of [a] Notice of Court Decision Not in Harmony in the Federal Register. " Id. at 28 & n.124 (citation omitted).5

The Coalition filed comments opposing Commerce's decision to follow 19 U.S.C. § 1516a(c)(1) and arguing that the court should instead vacate 19 C.F.R. § 351.214(k) and annul the Final Results of Expedited Review . See Pl.’s Cmts. on [Remand Results] ("Pl.’s Opp'n Cmts."), ECF No. 182. Defendant-Intervenors (collectively referred to herein as "the Canadian Parties") filed comments arguing that Commerce's analysis of its statutory authority for the regulation was perfunctory and deficient; considerations of equity preclude rescission of the Final Results of Expedited Review ; and, to the extent the Final Results of Expedited Review are rescinded, any revised rates should be prospective only. See Consol. Def.-Ints.’ Cmts. in Resp. to [Commerce's] February 17, 2021 [Remand Results] ("Def.-Ints.’ Opp'n Cmts"), ECF No. 183.

The Government filed comments arguing that Commerce's Remand Results comply with the court's directive in Lumber III to consider alternative legal bases for the regulation; Commerce is not precluded from relying on 19 U.S.C. § 1516a(c)(1) to implement the court's judgment; and any equitable remedy lies solely within the court's—not the agency's—discretion. See Def.’s Resp. to the PartiesRemand Cmts. ("Def.’s Reply Cmts."), ECF No. 186. The Canadian Parties filed comments in reply to the Coalition's opposition comments. See Consol. Def.-Ints.’ Cmts. in Resp. to Pl.’s March 19, 2021 Cmts. on [Remand Results] ("Def.-Ints.’ Reply Cmts."), ECF No. 187. The Coalition likewise filed comments in reply to the Canadian Parties’ opposition comments. See Pl.’s Cmts. in Supp. Of [Remand Results] ("Pl.’s Reply Cmts."), ECF No. 188.

For the reasons discussed herein, the court will sustain Commerce's Remand Results and vacate 19 C.F.R. § 351.214(k) and the Final Results of Expedited Review .

The court further orders prospective application of its judgment in this case.

BACKGROUND

The URAA amended the domestic antidumping ("AD") and CVD laws in connection with several international trade agreements referred to as the Uruguay Round Agreements. See 19 U.S.C. §§ 3511(a)(1), (d), & 3501(7).6 One such agreement is the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"). Id. § 3511(d)(12) ; see generally Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1869 U.N.T.S. 14, Annex 1A, SCM Agreement. Pursuant to Article 19.3 of the SCM Agreement:

When a countervailing duty is imposed in respect of any product, such countervailing duty shall be levied, in the appropriate amounts in each case, on a non-discriminatory basis on imports of such product from all sources found to be subsidized and causing injury, except as to imports from those sources which have renounced any subsidies in question or from which undertakings under the terms of this Agreement have been accepted. Any exporter whose exports are subject to a definitive countervailing duty but who was not actually investigated for reasons other than a refusal to cooperate, shall be entitled to an expedited review in order that the investigating authorities promptly establish an individual countervailing duty rate for that exporter.

SCM Agreement, art. 19.3 (emphasis added).

The Statement of Administrative Action ("SAA") accompanying the URAA explains that "Article 19.3 of the [SCM] Agreement provides that any exporter...

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