Ipsco, Inc. v. U.S.
| Decision Date | 03 April 1990 |
| Docket Number | No. 89-1486,89-1486 |
| Citation | 899 F.2d 1192 |
| Parties | IPSCO, INC., and Ipsco Steel, Inc., Plaintiffs-Appellants, v. The UNITED STATES, Defendant-Appellee, Lone Star Steel Company, Defendant. |
| Court | U.S. Court of Appeals — Federal Circuit |
Rufus E. Jarman, Jr., Barnes, Richardson & Colburn, New York City, with whom Josephine Belli was on brief, argued for plaintiffs-appellants.
Jeanne E. Davidson, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for defendant-appellee. Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director and Platte B. Moring, III, Atty., Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., were on the brief for defendant-appellee. Also on the brief were Wendell L. Willkie, III, Gen. Counsel and Stephen J. Powell, Chief Counsel for Import Admin., of counsel.
Before NEWMAN and MAYER, Circuit Judges, and DUMBAULD, Senior District Judge. *
Ipsco, Inc. and Ipsco Steel, Inc. (Ipsco) appeal the judgment of the United States Court of International Trade, Ipsco, Inc. and Ipsco Steel, Inc. v. United States, 710 F.Supp. 1581 (Ct. Int'l Trade 1989) (Ipsco III ), affirming the second remand determination of the International Trade Administration of the Department of Commerce (ITA) that countervailable subsidies are being provided to Canadian manufacturers, producers and exporters of oil country tubular goods and that the net subsidy is 0.66 percent ad valorem for all companies not excluded from the countervailing duty determination.
On July 22, 1985, the Lone Star Steel Company and CF & I Steel Corp., producers of oil country tubular goods (OCTG) in the United States, filed a petition with the ITA alleging that manufacturers and exporters of OCTG in Canada directly or indirectly receive subsidies and that imports of these products materially injure or threaten to materially injure a United States industry. See 19 U.S.C. Sec. 1671 (1988); 19 C.F.R. Sec. 355.26 (1988). The ITA initiated a countervailing duty investigation on August 12, 1985. 50 Fed.Reg. 33383. A questionnaire directed to the petitioners' allegations was presented to the government of Canada. Responses were received from it as well as from the provincial governments of Alberta, Ontario and Saskatchewan, and from producers that account for nearly all exports of OCTG from Canada to the United States.
Each of the eleven known Canadian producers and exporters of OCTG filed timely requests for exclusion under 19 C.F.R. Sec. 355.38 (1988). Detailed questionnaires were sent to these companies, and ten of them, including Ipsco, responded. Eight firms reported that they received no benefits and one, Algoma Steel Corp. Ltd., said it did but the ITA determined they were below the de minimis rate of 0.50 percent. Therefore, these nine firms were excluded from the preliminary determination issued on December 19, 1985. 50 Fed.Reg. 53172, 53173. The ITA determined from Ipsco's response that it received countervailable benefits above the de minimis level. Id. The responses were verified. Using the data submitted by Ipsco, the ITA preliminarily determined that the estimated net subsidy for OCTG was 0.72 percent ad valorem. Id.
The ITA's conclusions remained unchanged in its final affirmative countervailing duty determination issued on April 16, 1986. 51 Fed.Reg. 15037. The above rate applied to all companies except those specifically excluded from the determination. Id. Therefore, the rate applied to Ipsco and Siegfried Kreiser Pipe and Tube which did not respond to the ITA's questionnaire. On June 9, 1986, after receiving notice of the International Trade Commission's determination that imports of OCTG from Canada were materially injuring a United States industry, the ITA issued a countervailing duty order. Id. at 21783.
The ITA determined that countervailable subsidies were being provided under an investment tax credit program, a regional development incentive program and a general development agreement, and that Ipsco and Algoma received benefits under these programs. 50 Fed.Reg. 15038-40. The benefit was calculated for each company by determining the amount of the tax credit or grant allocable to the review period (calendar year 1984) and dividing that amount by each company's total sales during that period. Grants received by Ipsco for use in its iron and steel production facilities were apportioned between OCTG and other products according to the sales value of the products. Non-de minimis one-time grants were allocated using the declining balance method over the average useful life of equipment in the steel industry according to Internal Revenue Service tables, 15 years.
Ipsco objected to the countervailing duty determination, because the ITA (1) incorrectly determined that the country-wide rate was the rate found for Ipsco, the only non-excluded company that responded to the ITA questionnaire, when it should have divided the total subsidies provided to all companies by the total sales of all companies, (2) should have apportioned the grants according to the weight of steel in each product rather than according to sales value, and (3) should have amortized the grants over 25 years, which Ipsco uses in its own financial reporting, rather than over 15 years. Ipsco challenged the determination in the Court of International Trade, which upheld ITA's methods of calculating the country-wide rate and apportioning grants among Ipsco's products, but remanded the determination for an explanation of the basis for the choice of a 15-year amortization period. Ipsco, Inc. and Ipsco Steel, Inc. v. United States, 687 F.Supp. 614 (Ct. Int'l Trade 1988) (Ipsco I ). In its first remand determination, the ITA reaffirmed that its use of a 15-year period was appropriate, and in Ipsco, Inc. and Ipsco Steel, Inc. v. United States, 701 F.Supp. 236 (Ct. Int'l Trade 1988) (Ipsco II ), the court remanded the determination again, holding that the 15 year period is not supported by substantial evidence nor in accordance with law. In its second remand determination, the ITA calculated a 21-year amortization period by dividing the total value of Ipsco's depreciable physical assets by the net depreciation charged per year. Using this allocation period, the net subsidy was determined to be 0.66 percent ad valorem. The Court of International Trade affirmed this determination.
Ipsco argues that the trial court erred in upholding the ITA's determination because it excluded those Canadian producers of OCTG that received no countervailable benefits or de minimis benefits from the calculation of a country-wide rate. It maintains that proper adherence to the statutes and regulations governing countervailing duty determinations requires that an average country-wide rate be calculated by dividing the total benefit received by the Canadian industry by the industry's total sales. We agree. We do not agree, however, with Ipsco's other two objections: that the court erred in sustaining the ITA's method of apportioning grants among Ipsco's products and its use of a 21-year amortization period.
In reviewing the trial court's affirmance of the ITA's countervailing duty determination, we must decide whether it correctly concluded that the ITA's methodology is in accordance with law and its conclusions are supported by substantial evidence. We give due weight to the agency's interpretation of the statute it administers, and we accept that interpretation if it is "sufficiently reasonable." Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978) (quoting Train v. Natural Resources Defense Council, 421 U.S. 60, 75, 95 S.Ct. 1470, 1479, 43 L.Ed.2d 731 (1975)); Industrial Fasteners Group, Am. Importers Ass'n v. United States, 710 F.2d 1576, 1580 (Fed.Cir.1983). On the other hand, we cannot sustain the ITA's exercise of administrative discretion if it contravenes statutory objectives. "Expert discretion is the lifeblood of the administrative process, but 'unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion'." Motor Vehicle Mut. Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48, 103 S.Ct. 2856, 2869, 77 L.Ed.2d 443 (1983) ().
Section 701 of the Trade Agreements Act of 1979 is the statutory basis for all countervailing duty determinations for countries like Canada that are signatories of the GATT Subsidies Code. Section 701(a) provides in pertinent part:
then there shall be imposed upon such merchandise a countervailing duty, in addition to any other duty imposed, equal to the amount of the net subsidy.
19 U.S.C. Sec. 1671(a) (1988). "Subsidy" is defined in subsection 771(5) of the Act:
(i) Any export...
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