Fabrique De Fer De Charleroi, Sa v. U.S.

• Decision Date: 06 June 2001
• Docket Number: No. 99-04-00219.,SLIP OP. 01-68.,99-04-00219.
• Citation: 166 F.Supp.2d 593
• Parties: FABRIQUE DE FER DE CHARLEROI, SA, Plaintiff, v. UNITED STATES of America, Defendant, and U.S. Steel Group, a Unit of USX Corporation and Bethlehem Steel Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

166 F.Supp.2d 593

FABRIQUE DE FER DE CHARLEROI, SA, Plaintiff, v. UNITED STATES of America, Defendant, and U.S. Steel Group, a Unit of USX Corporation and Bethlehem Steel Corporation, Defendant-Intervenors.

SLIP OP. 01-68.

No. 99-04-00219.

United States Court of International Trade.

June 6, 2001.

Barnes, Richardson & Colburn (Gunter von Conrad and Michael J. Chessler), Washington, D.C., for plaintiff.

Stuart E. Schiffer, Acting Assistant Attorney General of the United States; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Michele D. Lynch, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice; Myles S. Getlan, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for defendant, of Counsel.

Dewey Ballantine LLP (John A. Ragosta, Jennifer Danner Riccardi, and Hui Yu), Washington, D.C., for defendant-intervenors.

OPINION

CARMAN, Chief Judge.

Plaintiff, Fabrique de Fer de Charleroi, S.A. (Fafer), a Belgian manufacturer/exporter of cut-to-length carbon steel plate moves for judgment upon the agency record challenging the United States Department of Commerce's (Commerce) final results and amended final results of the 1996 countervailing duty administrative review of cut-to-length carbon steel plate from Belgium. See Certain Cut-to-Length Carbon Steel Plate From Belgium; Final Results of Countervailing Duty Administrative Review, 64 Fed.Reg. 12,982 (March 16, 1999) (Final Results); Cut-to-Length Carbon Steel Plate From Belgium; Amended Final Results of Countervailing Duty Administrative Review, 64 Fed.Reg. 18,001 (April 13, 1999) (Amended Final Results). In the Final Results, Commerce found a de minimis countervailing duty margin of 0.35% based on Fafer's subsidies as well as subsidies of two affiliated companies, S.A. Charleroi Deroulage (CD) and Parachevement at Finitions de Metaux (PFM). The subsidies derived from Belgium's Economic Expansion Law of December 30, 1970, a program found countervailable in the original countervailing duty investigation. See Final Results, 64 Fed.Reg. at 12,991, 12,993. In the Amended Final Results, Commerce claimed it made a ministerial error in the Final Results by failing to apply the 0.5% test¹ to subsidies received by PFM. Applying the test, Commerce found the grants were less than 0.5% of the total sales and expensed the grant. Commerce then amended Fafer's CVD margin to 0.69% ad valorem, subjecting Fafer to countervailing duties. Amended Final Results, 64 Fed.Reg. at 18,002-003. Plaintiff asks this Court (1) to vacate the Amended Final Results; (2) to instruct Commerce to recalculate Fafer's countervailing duty margin to exclude any alleged subsidies made to affiliated companies or, alternatively, to instruct Commerce to reinstate the allocation methodology used in the Final Results (amortization); and (3) to instruct Commerce to have Customs apply a zero countervailing duty rate to the subject merchandise.

Defendant, United States, and Defendant-Intervenors, U.S. Steel Group, a Unit of USX Corporation and Bethlehem Steel Corporation, (collectively "Defendants"), oppose Plaintiff's motion arguing Commerce's decision to include subsidies received by two of Fafer's subsidiaries in its calculation of the countervailing duty margin is supported by substantial evidence and is otherwise in accordance with law. Defendants also argue that Commerce's decision to amend the countervailing duty margin based on ministerial error is supported by substantial evidence and is otherwise in accordance with law. The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994).

I. BACKGROUND

On August 17, 1993, Commerce issued a countervailing duty order on cut-to-length carbon steel plate from Belgium to which Plaintiff was subject. See Countervailing Duty Order and Amendment to Final Affirmative Countervailing Duty Determination: Certain Steel Products From Belgium, 58 Fed.Reg. 43,749 (Aug. 17, 1993) (CVD Order). On September 25, 1997, Commerce initiated an administrative review of the CVD Order pursuant to requests by Plaintiff and Petitioners.² This review covered imports of subject merchandise entered into the United States during the period of January 1, 1996 through December 31, 1996.

Commerce asked Plaintiff to submit information regarding any subsidies it may have received during the period of review. In response to a supplemental questionnaire issued by Commerce, Plaintiff indicated that two of its subsidiaries, S.A. Charleroi Deroulage (CD) and Parachevement et Finitions de Metaux (PFM), had received grants subsequent to the publication of the CVD Order. (Defendant's Exhibit 1 (Def.'s Exh.) at S-8.) Specifically, Plaintiff indicated (1) CD received a grant in March 1993 for investment in an uncoiling machine, and (2) PFM received a grant in May 1996 for investment in a painting machine and an uncoiling machine. (Id.) On September 9, 1998, Commerce published the preliminary results of the countervailing duty administrative review. See Cut-to-Length Carbon Steel Plate From Belgium; Preliminary Results of Countervailing Duty Review, 63 Fed.Reg. 48,188 (Sep. 9, 1998) (Preliminary Results). Commerce found a de minimis CVD margin of 0.37 percent ad valorem based on subsidies received by Fafer under Belgium's Economic Expansion Law of December 30, 1970. Id. at 48,191. Commerce did not countervail the cash grants received by CD or PFM and did not provide an explanation for this decision. Id.

Subsequent to the issuance of the Preliminary Results, interested parties were authorized to submit written comments pursuant to 19 C.F.R. § 351.309 (1998). Petitioners submitted comments arguing that Commerce must countervail the cash grants to CD and PFM if the equipment purchased with the grants could be used to process subject merchandise, even if the equipment was not used to process subject merchandise imported during period of review. (Petitioners' October 8, 1998 Administrative Brief, Def.'s Exh. 6 at 28.) (emphasis in original). Plaintiff responded by arguing that Commerce could only countervail the grants to CD and PFM if the "subject merchandise exported to the United States, and imported into the United States underwent or benefitted from uncoiling, painting, or sandblasting operations." (Plaintiff's February 12, 1999 Rebuttal Comments, Def.'s Exh. 7 at 3.) (emphasis in original). In November 1998, Commerce conducted verification at Fafer's facilities in Belgium. See Final Results, 64 Fed.Reg. at 12,983.

Based on comments received from interested parties, and upon request by Petitioners, Commerce held a public hearing on February 19, 1999 on the issue of whether CD's and PFM's facilities could be used to process the subject merchandise. Id. During the hearing Plaintiff suggested that CD and PFM are capable of producing merchandise subject to the scope of the order, albeit "[a] different and downstream cut-to-length plate in a much thinner format." (Def.'s Exh. 8, at 56, Public Hearing Transcript dated February 19, 1999.) Additionally, when asked if the merchandise that goes through PFM's process of unrolling, cutting and slitting coil produced by Fafer "would fit within the scope of this review," Fafer stated, "[w]ell, yes, well actually as the verification report correctly states, I think they're doing these things for Fafer ..." (Id. at 63.)

On March 16, 1999 Commerce issued the Final Results of the countervailing duty administrative review, making two determinations relevant to the instant case. See Final Results, 64 Fed.Reg. at 12,982. First, Commerce determined that "[o]n the basis of the fact that CD and PFM can, in their down-stream processing, produce merchandise which is covered by the scope of the [countervailing duty] order, ... the cash grants under the Law of 1970, a program previously found countervailable by the Department, are attributable to the total sales of Fafer, including its subsidiaries and thus benefitted the subject merchandise during the [period of review]." Id. at 12,984. Second, Commerce calculated the benefit for the CD and PFM grants by "employ[ing] the standard grant methodology outlined in the allocation section of the GIA (FR 37227). [Commerce] allocated the benefit from each grant received by CD and PFM over 26 years, Fafer's AUL [i.e., average useful life of fixed assets]." Id. Commerce calculated a de minimis net subsidy rate of 0.35 percent ad valorem. Id.

Subsequent to the issuance of the Final Results, Petitioners submitted a letter to Commerce alleging that Commerce had made a ministerial error in the calculation of the countervailing duty margin. (Def.'s Exh. 9, at 4, Petitioners' March 16, 1999 Ministerial Errors Letter.) Petitioners argued that while Commerce indicated its intent to utilize the standard grant methodology outlined in the General Issues Appendix (GIA) to calculate the CVD margin, it failed to follow the GIA's rules regarding when a grant is amortized and when a grant is expensed in the year of receipt. (Id. at 2-4.) Specifically, Petitioners asserted Commerce should have used the so-called "0.5 percent test". Petitioners contended the test mandates the expensing of non-recurring grants³ if the sum of grants provided under a particular program in a given year is less than 0.5 percent of a firm's total or export sales in the year in which the grant was received. (Id. at 3-4.)

Plaintiff then rebutted Petitioners' allegations, claiming Commerce had discretion over whether to apply the "0.5 percent test". Because of this discretion, Plaintiff argued, the alleged error was methodological, not ministerial pursuant to 19 C.F.R. § 351.224 (1998).⁴ Plaintiff urged Commerce to reject Petitioners allegation and retain the original countervailing duty margin. (Def.'s Exh. 10, at 2, Fafer March 22, 1999 Response to Ministerial Errors Letter.)

After reviewing the comments submitted by the parties,...