Tembec, Inc. v. U.S.

• Decision Date: 21 July 2006
• Docket Number: Slip Op. 06-109. Court No. 05-00028.
• Citation: 441 F.Supp.2d 1302
• Parties: TEMBEC, INC., Plaintiff, and Government of Canada, Gouvernement Du Quebec, Government of Ontario, Government of Alberta, Government of British Columbia, Canadian Lumber Trade Alliance, and Abitibi—Consolidated, Inc., Plaintiff—Intervenors, v. UNITED STATES, Defendant, and Coalition for Fair Lumber Imports Executive Committee, Defendant—Intervenor.
• Court: U.S. Court of International Trade

441 F.Supp.2d 1302

TEMBEC, INC., Plaintiff, and Government of Canada, Gouvernement Du Quebec, Government of Ontario, Government of Alberta, Government of British Columbia, Canadian Lumber Trade Alliance, and Abitibi—Consolidated, Inc., Plaintiff—Intervenors, v. UNITED STATES, Defendant, and Coalition for Fair Lumber Imports Executive Committee, Defendant—Intervenor.

Slip Op. 06-109. Court No. 05-00028.

United States Court of International Trade.

July 21, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Baker & Hostetler, LLP (Elliot Jay Feldman, Bryan Jay Brown, John Burke, Robert Lewis LaFrankie), Washington, DC, for Plaintiff Tembec, Inc.

Arnold & Porter, LLP (Michael Tod Shor), Washington, DC, for Plaintiff-Intervenor Abitibi-Consolidated, Inc.

Steptoe & Johnson, LLP (Mark Astley Moran, Alice Alexandra Kipel, Sheldon E. Hochberg, Michael Thomas Gershberg), Washington, DC, for Plaintiff-Intervenor Canadian Lumber Trade Alliance Executive Committee.

Arent Fox Kintner Plotkin & Kahn, PLLC (Matthew J. Clark, Keith Richard Marino), Washington, DC, for Plaintiff-Intervenor Gouvernement du Quebec.

Hogan & Hartson, LLP (Mark S. McConnell, Craig Anderson Lewis, Harold Deen Kaplan, Jonathan Thomas Stoel), Washington, DC, for Plaintiff-Intervenor Government of Ontario.

Akin, Gump, Strauss, Hauer & Feld, LLP (Spencer Stewart Griffith, Bernd G. Janzen, Anne K. Cusick, Jason Alexander Park), Washington, DC, for Plaintiff-Intervenor Government of British Columbia.

Weil, Gotshal & Manges, LLP (M. Jean Anderson, Washington, DC, Amy Tross Dixon, Arlington, VA, Gregory Husisian, Jahna Hartwig, John Michael Ryan, J. Sloane Strickler); Wilmer, Cutler, Pickering, Hale & Dorr, LLP (Randolph Daniel Moss, Washington, DC) for Plaintiff-Intervenor Government of Canada.

Arnold & Porter, LLP (Claire Elizabeth Reade), Washington, DC, for Plaintiff-Intervenor Government of Alberta.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; (Jeanne E. Davidson), Deputy Director; (Stephen Carl Tosini), Commercial Litigation Branch, Civil Division, United States Department of Justice; Dean Pinkert, Senior Attorney, Office of the Chief Counsel for Import Administration, Department of Commerce; Theodore R. Posner, Associate General Counsel, Office of the United States Trade Representative for Defendant United States.

Dewey Ballantine, LLP (Kevin M. Dempsey, Alan William Wolff, Harry Lewis Clark, David Adrian Bentley), Washington, DC, for Defendant-Intervenor Coalition for Fair Lumber Imports Executive Committee.

Before RESTANI, C.J., and BARZILAY and EATON, JJ.

OPINION

PER CURIUM.

The Canadian lumber industry, the Canadian federal government, and several of Canada's provincial governments seek to invalidate the action of the United States Trade Representative ("USTR") ordering implementation of an International Trade Commission ("ITC") determination finding an affirmative threat of material injury arising from imports of Canadian softwood lumber into the United States. Plaintiff Tembec, Inc. ("Tembec"), Plaintiff-Intervenor Canadian Lumber Trade Alliance ("CLTA"), and Plaintiff-Intervenors the Governments of Canada¹ (collectively "Plaintiffs") allege' that the United States has illegally continued to enforce antidumping ("AD") and countervailing duty ("CVD") orders following the illegal implementation of an affirmative injury determination issued by the ITC pursuant to section 129 of the Uruguay Round Agreements Act ("URAA").² Defendant United States and Defendant-Intervenor Coalition for Fair Lumber Imports Executive Committee ("CFLI") (collectively "Defendants") move to dismiss pursuant to UCIT Rules 12(b)(1), for lack of subject matter jurisdiction, and 12(b)(5), for failure to state a claim upon which relief can be granted. See Def.'s Mem. Supp. Mot. Dismiss 1 ("Def.'s Mem."); Def.-Intervenor's Mem. Law Supp. Mot. Dismiss 1 ("Def.-Int.'s Mem."). Plaintiffs cross-move for summary judgment. The court grants Plaintiffs' motions in part and finds that the USTR improperly interpreted and applied section 129. The court reserves decision on the remedy to be imposed.

I. Procedural History³

Softwood lumber has been a perennial sore-spot in trade relations between the United States and Canada.⁴ The U.S. softwood lumber industry has long maintained that Canadian softwood lumber exports are sold at "less than fair value" in the United States and that Canada subsidizes the Canadian softwood lumber industry, injuring the U.S. industry. For five years, litigation over Canadian softwood lumber imports was limited by a 1996 agreement governing the importation of softwood lumber from Canada. See Canadian Exports of Softwood Lumber, 61 Fed. Reg. 28,626 (U.S. Trade Rep. June 5, 1996) (notice of agreement; monitoring and enforcement pursuant to sections 301 and 306). That hiatus ended when the agreement expired on March 31, 2001. See Certain Softwood Lumber Products from Canada, 66 Fed.Reg. 21,328, 21,331 (Dep't Commerce Apr. 30, 2001) (notice of initiation of antidumping duty investigation). Following expiration of the agreement, on April 2, 2001, CFLI and several other U.S. entities filed a petition with U.S. Department of Commerce ("Commerce") and the ITC, alleging that an industry in the United States was materially injured and threatened with material injury by reason of subsidized and less-than-fair-value imports of softwood lumber from Canada.⁵ See Softwood Lumber from Canada, 66 Fed.Reg. 18,508 (Int'l Trade Comm'n Apr. 9, 2001) (institution of countervailing duty and antidumping investigations and scheduling of preliminary phase investigations). The ITC instituted investigations pursuant to that petition on April 9, 2001. Id.

On May 16, 2002, the ITC issued a final determination that the domestic industry was threatened with material injury by reason of imports of softwood lumber from Canada. Softwood Lumber from Canada, Inv. Nos. 701-TA-414, 731-TA-928 (Final), USITC Pub. 3509 (May 2002) ("May 16, 2002 Determination"). On May 22, 2002, Commerce issued AD and CVD orders on certain softwood lumber products from Canada. Certain Softwood Lumber Products from Canada, 67 Fed.Reg. 36,-068 (Dep't Commerce May 22, 2002) (notice of amended final determination of sales at less than fair value and notice of antidumping order); Certain Softwood Lumber Products from Canada, 67 Fed. Reg. 36,070 (Dep't Commerce May 22, 2002) (notice of amended final affirmative countervailing duty determination and notice of countervailing duty order) (collectively "May 22, 2002 Orders"). That day, CLTA and the Ontario Forest Industries Association filed petitions for binational panel review with the U.S. section of the North American Free Trade Agreement ("NAFTA") Secretariat, later followed by petitions from Tembec and the Ontario Lumber Manufacturers Association. See North American Free-Trade Agreement, Article 1904 NAFTA Panel Reviews, 67 Fed.Reg. 41,955 (Dep't Commerce June 20, 2002) (notice of first request for panel review). While the NAFTA Panel reviewed the ITC's May 16, 2002 Determination, in April 2003, the Canadian government requested the formation of a World Trade Organization ("WTO") panel to review the ITC's May 16, 2002 Determination for consistency with the WTO Antidumping and Subsidies agreements.⁶ See Pls.' J. Statement of Undisputed Facts ¶ 12. Thus, the ITC's May 16, 2002 Determination was concurrently subject to review in two separate fora, applying different bodies of law.

The NAFTA Panel issued its decision on September 5, 2003, finding that the ITC's injury determination was not supported by substantial evidence or in accordance with U.S. law. See In the Matter of Certain Softwood Lumber Products from Canada, USA-CDA-2002-1904-07, Panel Decision (Sept. 5, 2003) ("NAFTA First Remand"). The NAFTA Panel therefore remanded to the ITC with instructions to report back within one hundred days. Id. at 115. On December 15, 2003, the ITC issued its remand determination, again finding an affirmative threat of injury. See In the Matter of Certain Softwood Lumber Products from Canada, USA-CDA2002-1904-07, Remand Decision, at 3 (Apr. 19, 2004) ("NAFTA Second Remand"). On April 19, 2004, the NAFTA Panel issued its Second Remand report, finding that the ITC's remand determination was not supported by substantial evidence or in accordance with U.S. law. Id. at 51-52. The ITC was given 21 days in which to issue a second remand determination. Id. at 53.

Meanwhile, on March 22, 2004, the WTO Panel issued its decision finding that the ITC's affirmative determination was not consistent with the United States' WTO obligations. Panel Report, United States-Investigation of the International Trade Commission in Softwood Lumber from Canada, WT/DS277/R (Mar. 22, 2004) ("WTO Panel report"). On April 26, 2004, the Dispute Settlement Body ("DSB") of the WTO adopted the WTO Panel report. Rather than appeal to the WTO Appellate Body ("AB"), on June 14, 2004, the USTR sent a letter, pursuant to section 129(a)(1) of the URAA, to the ITC requesting an advisory report as to whether the ITC would be able to implement the WTO Panel report in accordance with Title VII of the Trade Act of 1930. See Letter from Robert B. Zoellick, USTR, to Deanna T. Okun, Chairman, ITC (June 14, 2004) AR2. On July 14, 2004, the ITC replied that it would be able to render its determination "not inconsistent" with the WTO Panel report under Title VII. See Letter from Stephen Koplan, Chairman, ITC, to Robert B. Zoellick, USTR (July 14, 2004) AR3. On July 27, 2004, the USTR requested that the ITC issue a determination pursuant to section 129(a)(4) of the URAA. See Letter from Robert B. Zoellick, USTR, to Stephen Koplan, Chairman, ITC (July 27, 2004) AR 4. In response, on August 5, 2004, the ITC published notice in the Federal Register that it was instituting a section 129(a)(4) proceeding. See Softwood Lumber from Canada, 69 Fed. Reg. 47,461 (Int'l Trade Comm'n Aug. 5,...