Georgetown Steel Corp. v. US

• Decision Date: 23 December 1992
• Docket Number: Court No. 91-07-00496.
• Citation: 16 CIT 1084,810 F. Supp. 318
• Parties: GEORGETOWN STEEL CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and Saudi Iron and Steel Company (Hadeed), Defendant-Intervenor. SAUDI IRON AND STEEL COMPANY (Hadeed), Plaintiff, v. UNITED STATES, Defendant, and Georgetown Steel Corp., et al., Defendants-Intervenors.
• Court: U.S. Court of International Trade

810 F. Supp. 318

16 CIT 1084

GEORGETOWN STEEL CORP., et al., Plaintiffs, v. UNITED STATES, Defendant, and Saudi Iron and Steel Company (Hadeed), Defendant-Intervenor.

SAUDI IRON AND STEEL COMPANY (Hadeed), Plaintiff, v. UNITED STATES, Defendant, and Georgetown Steel Corp., et al., Defendants-Intervenors.

Court No. 91-07-00496.

United States Court of International Trade.

December 23, 1992.

Wiley, Rein & Fielding, Charles Owen Verrill, Jr., Eileen P. Bradner, John R. Shane, Washington, DC, for Georgetown Steel Corp., et al.

Miller & Chevalier, Chartered, Homer E. Moyer, Jr., Stuart E. Benson, Catherine Curtiss, Kathryn Bucher, Claire S. Wellington, Washington, DC, for Saudi Iron and Steel Co. Hadeed.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, A. David Lafer, Dean A. Pinkert, Atty.-Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, of counsel, for defendant.

Before: DiCARLO, Chief Judge.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

Domestic producers, Georgetown Steel Corp., North Star Steel Texas, Inc., and Raritan River Steel Co., and foreign manufacturer, Saudi Iron and Steel Company (Hadeed), filed actions challenging the final results of countervailing duty administrative review in Carbon Steel Wire Rod from Saudi Arabia, which found the countervailable bounty or grant to be at a de minimis level during the period of review. See 56 Fed.Reg. 26,652 (Dep't Comm.1991). The actions were consolidated, and plaintiffs move pursuant to Rule 56.1 of the Rules of this court for judgment on the agency record. The court has jurisdiction under 19 U.S.C. §§ 1516a(a)(2)(A) & (B)(iii) (1988) and 28 U.S.C. § 1581(c) (1988).

Plaintiffs raise two issues: (1) whether the methodology used by the Department of Commerce calculating the bounty or grant conferred by the Saudi government's Public Investment Fund (PIF) was supported by substantial evidence; and (2) whether Hadeed's challenge requires the court to render an advisory opinion when countervailable bounty or grant was at de minimis level during the review period.

Background

The government of Saudi Arabia provides the PIF loans to finance enterprises in which the Saudi government has some share of the equity. R. 316 (Verification Report 9). Commerce found in 1986 that Hadeed received countervailable bounty or grant and imposed countervailing duty of 5.48% ad valorem. Countervailing Duty Order; Carbon Steel Wire Rod From Saudi Arabia, 51 Fed.Reg. 4,206 (Dep't Comm.1986). Commerce conducted an administrative review pursuant to 19 U.S.C. § 1675 (1988) for the 1987 calendar year and found that the PIF loan program conferred benefits to a specific group of enterprises and that the bounty or grant was 0.43% ad valorem. Because the rate of countervailing duty was at de minimis level, see 19 C.F.R. § 355.7 (1992), Commerce did not impose a countervailing duty on merchandise entered during 1987, and waived cash deposits of estimated countervailing duties until publication of the final results of the next administrative review. See 56 Fed.Reg. at 26,655-56.

Discussion

The court shall hold unlawful any determination which is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1988). "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Substantial evidence is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Matsushita Elec. Indus. Co., Ltd. v. United States, 3 Fed. Cir. (T) 44, 51, 750 F.2d 927, 933 (1984) (citations omitted).

1. Whether Commerce's methodology of calculating bounty or grant was supported by substantial evidence on the record.

In calculating bounty or grant, Commerce constructed a composite benchmark to determine what Hadeed would have had to pay for a comparable loan in the absence of the PIF loans. 56 Fed.Reg. at 26,655. The methodology was the same as that used in the original investigation. See Saudi Iron and Steel Co. v. United States, 11 CIT 880, 675 F.Supp. 1362 (1987). Commerce found that the PIF loans provided sixty percent of the Hadeed's total project cost. As a comparable long-term loan available in Saudi Arabia, Commerce used another government loan program, Saudi Industrial Development Fund (SIDF). The SIDF provided loans to private industries and the loans were extended for up to fifty percent of the cost of the project. Consequently, the composite benchmark comprised five sixths of the flat two percent rate of interest applied to the SIDF loans and one sixth of Hadeed's average commercial borrowing rates during the review period.

Domestic producers claim that Commerce's composite benchmark is not supported by substantial evidence because it was not representative of what Hadeed would have had to pay in the absence of PIF financing. Since Hadeed's questionnaire response stated that there is "a cap of SR 400 million per project", R. 90 (Hadeed's questionnaire response 35), the domestic producers argue that the portion of the SIDF loans in the benchmark exceeded the 400 million Saudi Riyals (SR) cap imposed on the SIDF loans. They contend that the SIDF component of the composite benchmark should have been limited to SR 400 million, and the remainder should have been based on the interest rates of commercial bank loans. If this methodology was used, the total bounty or grant would have reached a level of 4.7% ad valorem exceeding the de minimis 0.5% level.

First, the government and Hadeed deny the SIDF loan program has a SR 400 million cap. The Loans Division Manager of the SIDF stated while the loans had never been extended for "more than 400 million at one time", the SIDF extended loans for more than SR 400 million to several companies. R. 324 (Verification Report 17) (emphasis added). Given the conflicting statements between Hadeed which is not a recipient of the SIDF and the Saudi government official who administers the SIDF program, the court finds it reasonable for Commerce to rely on the statement by the official. There is more than "mere scintilla" of evidence to support Commerce's finding that SR 400 million cap on the SIDF loans was not enforced.

Second, the government and Hadeed contend that, assuming arguendo SR 400 million cap existed, domestic producers' proposed benchmark using a larger proportion of commercial bank loan rates is unrepresentative of what Hadeed would have had to pay in the absence of the PIF financing. They argue that commercial lending is not available in Saudi Arabia for the amount of the fifteen-year PIF loans Hadeed received. The record shows that Saudi commercial banks provide primarily short-term loans of one year or less. Medium-term loans by commercial banks, which extend from one to eight years, are restricted in practice to no more than SR 300 million to 400 million. R. 326 (Verification Report 19). The government and Hadeed argue because there also exists a cap of SR 300 million to 400 million for mid-term commercial lending in Saudi Arabia, the domestic producers' suggested benchmark using a larger proportion of commercial bank loan rates would not represent what Hadeed would have had to pay. Commerce also found that Saudi commercial banks do very little long-term lending because the payment of interest is unenforceable in a Saudi court. See 56 Fed.Reg. at 26,655.

Domestic producers claim that the composite benchmark they suggested and the one Commerce used are subject to the same duration and funding limitations. See Georgetown's Reply Br. at 6. If that is the case, "the decision to select a particular methodology rests solely within Commerce's sound discretion. As long as there is `substantial evidence on the record' to support the choice, the court will sustain the methodology chosen by Commerce." Hercules, Inc. v. United States, 11 CIT 710, 726, 673 F.Supp. 454, 469 (1987); see also National Knitwear & Sportswear Ass'n v. United States, 15 CIT ___, ___, 779 F.Supp. 1364, 1369 (1991). If similar limitations were imposed on both methodologies, Commerce's choice of the composite benchmark was within...