Royal Thai Government v. U.S.

• Decision Date: 27 July 2004
• Docket Number: SLIP OP. 04-91. Court No. 02-00026.
• Citation: 341 F.Supp.2d 1315
• Parties: ROYAL THAI GOVERNMENT, et al., Plaintiffs, v. UNITED STATES, Defendant, and United States Steel Corp., Defendant-Intervenor.
• Court: U.S. Court of International Trade

341 F.Supp.2d 1315

ROYAL THAI GOVERNMENT, et al., Plaintiffs, v. UNITED STATES, Defendant, and United States Steel Corp., Defendant-Intervenor.

SLIP OP. 04-91. Court No. 02-00026.

United States Court of International Trade.

July 27, 2004.

Willkie Farr & Gallagher LLP (Kenneth J. Pierce and Jaemin Lee) for Plaintiffs the Royal Thai Government and Sahaviriya Steel Industries Public Company Limited.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Thomas B. Fatouros); James K. Lockett, Office of Chief Counsel for Import Administration, United States Department of Commerce, for Defendant United States, of counsel.

Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC (John J. Mangan) for Defendant-Intervenor United States Steel Corporation.

OPINION

GOLDBERG, Senior Judge.

In this action, Plaintiffs the Royal Thai Government ("RTG") and Sahaviriya Steel Industries Public Company Limited ("SSI") (collectively "Plaintiffs") challenge the final affirmative countervailing duty determination reached by the U.S. Department of Commerce ("Commerce") in Certain Hot-Rolled Carbon Steel Flat Products From Thailand, 66 Fed.Reg. 50410 (Oct. 3, 2001) ("Final Determination"). Defendant-Intervenor United States Steel Corporation ("U.S.Steel") also challenges certain aspects of the Final Determination.¹ The period of investigation covers January 1, 1999 through December 31, 1999. Pursuant to USCIT Rule 56.2, both Plaintiffs and Defendant-Intervenor move for judgment on the agency record.

For the reasons that follow, the Court sustains in part and reverses and remands in part the Final Determination. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c).

I. STANDARD OF REVIEW

The Court will sustain the Final Determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B). To determine whether Commerce's construction of the statutes is in accordance with law, the Court looks to Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The first step of the test set forth in Chevron requires the Court to determine "whether Congress has directly spoken to the precise question at issue." Id. at 842, 104 S.Ct. 2778. It is only if the Court concludes that "Congress either had no intent on the matter, or that Congress's purpose and intent regarding the matter is ultimately unclear," that the Court will defer to Commerce's construction under step two of Chevron. Timex V.I., Inc. v. United States, 157 F.3d 879, 881 (Fed.Cir.1998). If the statute is ambiguous, then the second step requires the Court to defer to the agency's interpretation so long as it is "a permissible construction of the statute." Chevron, 467 U.S. at 842, 104 S.Ct. 2778. In addition, "[s]tatutory interpretations articulated by Commerce during its antidumping proceedings are entitled to judicial deference under Chevron." Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.Cir.2001) (interpreting United States v. Mead, 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)). Accordingly, the Court will not substitute "its own construction of a statutory provision for a reasonable interpretation made by [Commerce]." IPSCO, Inc. v. United States, 965 F.2d 1056, 1061 (Fed.Cir.1992).

II. DISCUSSION

A. Commerce's Determination that SSI's Debt Restructuring Was Not De Facto Specific Is Supported by Substantial Evidence and Otherwise in Accordance with Law.

The Asian financial crisis struck Thailand by July 1997, resulting in an overall contraction of Thailand's economy and severe depreciation of its currency, the baht. See Issues and Decision Memorandum in the Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products from Thailand (Sept. 21, 2001) ("Issues and Decision Memo") at 16. In an attempt to foster economic stability and protect against further bank failures, the RTG began to implement economic programs, including the Corporate Debt Restructuring Advisory Committee ("CDRAC"), which was established in June 1998 by the Bank of Thailand. Id. at 16-17. CDRAC established a voluntary framework for independent debt restructuring negotiations between private corporations and financial institutions. Id. This framework involved the Debtor-Creditor Agreement and the Inter-Creditor Agreement, which included: (1) the requirement that a debtor negotiate with all creditors at once; (2) the designation of an independent financial advisor to report on a debtor's financial condition; (3) the establishment of a time-bound process with consequences for any party that did not adhere to the procedures; and (4) the requirement that creditors reach a consensus on the debt restructuring. Id. at 17.

In March 1999 CDRAC released a list of 351 companies ("351 list") it considered priority targets for debt restructuring; among those listed were SSI and its subsidiary, Prachuab Port Company ("PPC"). Id. at 17-18. CDRAC subsequently released a second list in April 1999 containing 316 companies, and a third list in the second half of 1999 naming an additional 1,027 companies for potential CDRAC participation. Id. The selection criteria used in creating these lists were: (1) debtors with sizeable credit outstanding; (2) debtors proposed by the Thai Bankers' Association, the Foreign Bankers' Association, the Association of Finance Companies, the Federation of Thai Industries, and the Board of Trade of Thailand; (3) debtors that expressed their intention to participate in the restructuring process; and (4) debt restructurings involving multiple creditors. Id.

However, SSI's debt restructuring did not take place under the CDRAC guidelines. Id. at 18. In fact, neither SSI nor PPC even signed a Debtor-Creditor Agreement. See Memorandum In Support Of The Determination Of The U.S. Department Of Commerce And In Opposition To National Steel Corp, et al.'s Rule 56.2 Motion For Judgment On The Agency Record at 13. Rather, SSI's debt restructuring occurred in accordance with its Credit Facilities Agreement between itself and its private creditors, accommodating all forms of SSI's debt: both short- and long-term debt, from both secured and unsecured lenders, in baht and foreign currency denominations, providing feasible repayment terms. Issues and Decision Memo at 17-18. U.S. Steel claims that SSI received a countervailable benefit by being placed on the 351 list, and that Commerce erred in finding that any benefit conferred on SSI in Thailand's 1999 debt restructuring response to the Asian financial crisis was nonspecific and does not amount to a countervailable subsidy. See National Steel Corporation, et al.'s Memorandum of Law in Support of Judgment on the Agency Record Pursuant to Rule 56.2 ("U.S. Steel Br.") at 10-11.² The Court finds U.S. Steel's argument unpersuasive.

A subsidy is de facto specific if it meets any one of the four criteria set forth in 19 U.S.C. § 1677(5A)(D)(iii):

(I) The actual recipients of the subsidy, whether considered on an enterprise or industry basis, are limited in number.

(II) An enterprise or industry is a predominant user of the subsidy.

(III) An enterprise or industry receives a disproportionately large amount of the subsidy.

(IV) The manner in which the authority providing the subsidy has exercised discretion in the decision to grant the subsidy indicates that an enterprise or industry is favored over others.

19 U.S.C. § 1677(5A)(D)(iii). 19 C.F.R. § 351.502 requires a sequential analysis of the foregoing factors. If any one factor warrants a finding of specificity, no further analysis is required. 19 C.F.R. § 351.502(a).

1. The Actual Recipients of the Subsidy Were Not Limited in Number.

"The specificity test [of 19 U.S.C. § 1677(5A)(D)(iii)] was intended to function as a rule of reason and to avoid the imposition of countervailing duties in situations where, because of the widespread availability and use of a subsidy, the benefit of the subsidy is spread throughout an economy." Uruguay Round Agreements Act, Statement of Administrative Action ("SAA"), H.R. Doc. No. 316, vol. 1, 103d Cong., 2d Sess. (1994) at 261. Expert opinions analyzed by Commerce concluded that the financial crisis was a systematic meltdown of the entire Thai economy, resulting in a fifty percent rate of non-performing loans. See Issues and Decision Memo at 21. As a result, the companies named on the 351 list as priorities for debt restructuring represented a wide spectrum of companies and industries, containing [ ] distinct industries, as classified by their International Standard of Industrial Classification Code. See Defendants' Memorandum in Opposition to Plaintiffs' Motion for Judgment on the Agency Record at 20; see also Memorandum for the File Through Barbara E. Tillman, Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Analysis of the List of 351 Firms ("351 List Memo") at 2. Further, only 32 of the 351 companies on the list are in the primary metal production sector. See Issues and Decision Memo at 19. Given the numerous and diverse industries represented on the 351 list, the Court finds that Commerce did not err in its finding that the 351 list was not limited in number based on industry or enterprise.

2. Neither SSI Nor the Steel Industry Were Predominant Users of the Subsidy, and They Did Not Receive a Disproportionately Large Amount of the Subsidy.

In its brief, U.S. Steel addresses the third prong of 19 U.S.C. § 1677(5A)(D)(iii), disproportion of benefits, as a separate "level of benefits analysis" discussion. See U.S. Steel Br. at 11-18. However, the Court finds that this analysis falls within the predominant user and proportion of benefits prongs of 19 U.S.C. § 1677(5A)(D)(iii)(III)...