Saarstahl Ag v. U.S., Slip Op. 97-147.

• Decision Date: 05 November 1997
• Docket Number: Court No. 93-04-00219.,Slip Op. 97-147.
• Citation: 984 F.Supp. 616
• Parties: SAARSTAHL AG, Plaintiff, v. UNITED STATES, Defendant, and Inland Steel Bar Co., Defendant-Intervenor.
• Court: U.S. Court of International Trade

Page 616

984 F.Supp. 616

SAARSTAHL AG, Plaintiff, v. UNITED STATES, Defendant and Inland Steel Bar Co., Defendant-Intervenor.

Slip Op. 97-147.

Court No. 93-04-00219.

United States Court of International Trade.

November 5, 1997.

LeBoeuf, Lamb, Leiby & MacRae, Pierre F. de Ravel d'Esclapon, Mary Patricia Michel, Washington, DC, Grunfeld, Desiderio, Lebowitz & Silverman, Max F. Schutzman, David L. Simon, Jeffrey S. Grimson, New York City, deKieffer & Horgan, J. Kevin Horgan, Marc E. Montalbine: on Saarstahl's Comments on Final Results of Redetermination, Washington, DC, for plaintiff.

Frank W. Hunger, Assistant Attorney General of the United States, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, (A. David Lafer, Jeffrey M. Telep); Marguerite Trossevin, Attorney-Advisor, Office

of Chief Counsel, for Import Administration, United States Department of Commerce, of counsel, for defendant.

Wiley, Rein & Fielding, Charles Owen Verrill, Jr., Alan H. Price, Willis S. Martin III, Brian E. Rosen, Washington, DC, Dewey Ballantine, Michael Stein, Washington, DC, Skadden, Arps, Slate, Meagher & Flom, Robert E. Lighthizer, Washington, DC, for defendant-intervenor.

OPINION

CARMAN, Chief Judge.

Before the Court is the Department of Commerce's ("Department" or "Commerce") Final Results of Redetermination Pursuant to Court Remand Regarding the Privatization in Germany, Saarstahl AG v. United States, Consol. Ct. No. 93-04-00219 ("Final Results"). The Final Results address the issue of whether Saarstahl Volkingen GmbH ("Saarstahl" or "Saarstahl SVK") was creditworthy in 1989, a year in which the company benefitted from government and private bank debt forgiveness.

Plaintiff argues the Department's decision in the Final Results is unsupported by substantial evidence on the record and is not otherwise in accordance with law. Neither defendant nor defendant-intervenor filed comments on the Department's Final Results. The Court has jurisdiction over the matter pursuant to 28 U.S.C. § 1581(c) (1988).

BACKGROUND

As the Department noted in its Final Results, both the parties and the Court have described the detailed procedural and factual history of this proceeding extensively elsewhere, and the Court will not repeat that history again in this opinion. See Saarstahl AG v. United States, 967 F.Supp. 1311, 1313-17 (CIT 1997) ("Saarstahl IV") (providing detailed description of this matter's procedural and factual history).

In Saarstahl IV, this Court reviewed Commerce's Final Affirmative Countervailing Duty Determination: Certain Hot Rolled Lead and Bismuth Carbon Steel Products From Germany, 58 Fed.Reg. 6,233 (Dep't Comm.1993) ("Final Affirmative Determination" or "Certain Hot Rolled Lead") as modified by Remand Determination: Certain Hot Rolled Lead and Bismuth Steel Products From Germany (dated Oct. 12, 1993) ("Remand Determination"), and sustained Commerce's determination on all issues with the exception of Commerce's calculation of an uncreditworthy discount rate for Saarstahl in 1989. See Saarstahl IV, 967 F.Supp. at 1322. The Court found defendant's arguments advocating a remand on this issue were reasonable and granted defendant's request to remand this issue. This Court specifically ordered Commerce to "reconsider the issue of Saarstahl's creditworthiness and make a finding as to whether a risk premium should be included in the calculation of a discount rate" and to "recalculate the countervailing duties due, if any, as a result of the discount rate determination." Id. at 1322. Pursuant to the Court's remand, in the Final Results, Commerce followed the Court's instructions and stated:

We have recalculated the benefit provided to Saarstahl from the government and private bank debt forgiveness using the same methodology and discount rate we used in our preliminary determination.... Because we have determined that Saarstahl was uncreditworthy in 1989, the discount rate employed includes a risk premium.

Final Results at 4.

In analyzing the issue of creditworthiness in the Final Results, Commerce explained "[w]hen the Department examines whether a company is creditworthy, it is essentially attempting to determine if the company in question could obtain commercial financing." Id. at 1-2. Commerce continued to explain "[t]he analysis of whether a company is creditworthy examines whether the company received comparable commercial loans and, if necessary, the overall financial health and future prospects of the company." Id. at 2.

After determining Saarstahl had not received any commercial financing in 1989, Commerce turned to an analysis of other indicators of Saarstahl's overall financial health and concluded Saarstahl was not "a financially healthy enterprise," after experiencing substantial financial difficulties in 1986, 1987 and 1988. Id. Commerce particularly noted Saarstahl's inability to make debt payments out of earnings and its inability to cover interest expenses from current earnings over the period in question. Commerce explained that "[t]his inability to cover interest expense from current earnings meant the company's financial condition was significantly deteriorating; when a company cannot meet its debt payments from current earnings, it must reduce its asset base or seek out new capital to finance its interest payments." Id. at 3. As a result of this analysis, Commerce concluded "Saarstahl was uncredit-worthy in 1989." Id. at 4.

After determining Saarstahl was uncredit-worthy in 1989, Commerce next recalculated the benefit provided to Saarstahl from the government and private bank debt forgiveness using the same methodology and discount rate it had used in the Preliminary Determination and included a risk premium in the discount rate. See id. at 4 (citing Preliminary Affirmative Countervailing Duty Determination: Certain Hot Rolled Lead and Bismuth Carbon Steel Products from Germany, 57 Fed.Reg. 42,971, 42,972 (Dep't Comm.1992)). Commerce's Final Results are now before this Court for review.

STANDARD OF REVIEW

The appropriate standard for the Court's review of a final determination by Commerce is whether the agency's determination 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 that which "`a reasonable mind might accept as adequate to support a conclusion.'" Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (citation omitted), quoted in Matsushita Elec. Indus. Co., Ltd. v. United States, 3 Fed Cir. (T) 44, 51, 750 F.2d 927, 933 (1984).

The Court must accord substantial weight to an agency's interpretation of a statute it administers. See e.g., American Lamb Co. v. United States, 4 Fed. Cir. (T) 47, 54, 785 F.2d 994, 1001 (1986) (citation omitted). While Commerce has discretion in choosing one interpretation over another, "[t]he traditional deference courts pay to agency interpretation is not to be applied to alter the clearly expressed intent of Congress." Board of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 368, 106 S.Ct. 681, 686, 88 L.Ed.2d 691 (1986). See also Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F.Supp. 961, 966 (1986) ("[T]his Court will not allow an agency, under the guise of lawful discretion, to contravene or ignore the intent of the legislature or the guiding purpose of the statute."), aff'd, 5 Fed. Cir. (T) 77, 810 F.2d 1137 (1987). The Court is not to substitute its own determination for the agency's but rather is to determine whether Commerce's determination is supported by substantial evidence on the record and is otherwise in accordance with law. See, e.g., Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966) (noting "the possibility of drawing two inconsistent conclusions from the evidence does not permit an administrative agency's finding from being supported by substantial evidence"); Universal Camera Corp., 340 U.S. at 488, 71 S.Ct. at 465, 95 L.Ed. at 467-68 (reviewing court may not "even as to matters not requiring expertise ... displace the [agency's] choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo").

DISCUSSION

Saarstahl first argues that in determining its creditworthiness in 1989, the year in which Saarstahl was determined to have obtained countervailable subsidies by the abandonment of the RZVs¹ by the governments of Germany and Saarland, "Commerce erred by limiting its inquiry to financial information from the years 1986-1988" and "specifically refused to consider any of [Saarstahl's] financial information for 1989 or its future financial prospects." (Pl.'s Comments to Final Results of Redetermination ("Pl.'s Comm.") at 1.) Saarstahl maintains consideration of DHS's² financial information from 1989 would have lead to "vastly improved financial ratios." (Id. at 3.) Saarstahl contends because the conduct found to be countervailable occurred well into 1989, Commerce should have considered financial information pertaining to 1989. Saarstahl also adds because Saarstahl's "net worth rose from DM 1.87 million at the beginning of 1989," to over DM 920 million at the end of 1989 and to more than DM 1 billion in 1990 and because the 1989 financial information shows that the company was healthy, "a consideration of its 1989 financial information leads inevitably to the conclusion that [Saarstahl] was creditworthy in 1989. Accordingly, Commerce's remand determination must be reversed." (Id. at 1.)

Plaintiff further maintains "[t]he fact that [Saarstahl] did not take out any commercial loans in 1989 does not mean that its credit was not good enough to do so. It means that its financial condition was so good that it did not need to borrow any funds." (Id. at 4 (footnote...