Slip Op. 06-172
United States Court of International Trade
MAGNOLA METALLURGY, INC.,
Plaintiff,
v. Before: Pogue, Judge
Court No. 05-00617
UNITED STATES,
Defendant,
U.S. MAGNESIUM LLC,
Defendant-Intervenor.
[Magnola’s USCIT R. 56.2 motion for judgment on the agency record
denied; judgment entered for the Defendant.]
Decided: November 20, 2006
Baker & Hostetler, LLP (Elliot Jay Feldman, John J. Burke)for
Plaintiff.
Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Jeanne E. Davidson, Deputy Directory, Stephen Carl
Tosini, Attorney, Civil Division, Commercial Litigation Branch,
U.S. Department of Justice; and Office of Chief Counsel for Import
Administration, Department of Commerce (Ada E. Bosque), of counsel,
for Defendant.
King & Spalding, LLP (Stephen Andrew Jones, Jeffrey Mark Telep,
Joseph W. Dorn)for Defendant-Intervenor US Magnesium LLC.
OPINION
Pogue, Judge: This is an action for judicial review of the
decision of the Department of Commerce (“Commerce”) in Pure
Magnesium and Alloy Magnesium From Canada, 70 Fed. Reg. 54,367
(Dep’t Commerce Sept. 14, 2005)(final results of 2003
Court No. 05-00617 Page 2
countervailing duty administrative reviews)(“2003 Final Results”).
Plaintiff, Magnola Metallurgy, Inc. (“Magnola”), a Canadian
producer of alloy magnesium, seeks to challenge Commerce’s
imposition of countervailing duties (“CVD”) on its merchandise.
More specifically, Magnola moves for judgment on the agency record
pursuant to USCIT R. 56.2, asserting that Commerce’s imposition of
duties was based on an incorrect finding that the Gouvernement du
Quebec’s (“GDQ”) manpower training program provided a de facto
specific subsidy to Magnola because of the “disproportionately
large” amount of funds Magnola received from the program.
For the reasons that follow, the court denies Magnola’s motion
and, in accordance with USCIT R 56.2(b), grants judgment for the
Defendant.
Background
Commerce imposed countervailing duties on pure and alloy
magnesium from Canada in 1992. See Pure Magnesium and Alloy
Magnesium from Canada, 57 Fed. Reg. 30,946, 30,948 (Dep’t Commerce
July 13, 1992) (final affirmative countervailing duty
determinations) ("1992 CVD Determination"). About a decade later,
Magnola, as a new shipper, sought and received, review of its U.S.
sales of alloy magnesium during calendar year 2001. See Alloy
Magnesium from Canada, 68 Fed. Reg. 4175 (Dep’t Commerce Jan. 28,
2003) (preliminary results of countervailing duty new shipper
review). In the final results of that new shipper review, Commerce
Court No. 05-00617 Page 3
concluded that the GDQ’s manpower training measure program (“MTM”)
provided a de facto specific subsidy to Magnola, and reiterated its
finding from the preliminary determination that:
Because the grants Magnola received were disproportionately
large when compared to other companies, we . . . find them
de facto specific on a company basis under section
771(5A)(D)(iii)(III) of the Act [19 U.S.C. § 1677
(5A)(D)(iii)(III)]. In conducting our disproportionality
analysis, for the years in which Magnola received grants, we
calculated Magnola's share of total MTM grants on a
percentage basis and compared Magnola's share to the
percentage shares of all other MTM beneficiaries. In so
doing, we found that Magnola received a disproportionate
percentage of MTM benefits because, as the second largest
recipient overall, its percentage share was nearly three
times higher than the next highest recipient. Furthermore,
Magnola's grant was greater than the grants received by 99
percent of all the beneficiaries and over ninety times
larger than the typical grant amount. Magnola's grant was
vastly larger than the typical grant, regardless of whether
we included or excluded small-scale recipients from our
analysis. In other words, were we to exclude small-scale
recipients, Magnola still received a disproportionately
large amount of subsidy.
Memorandum from Susan H. Kuhbah, Acting Deputy Assistant Secretary
Group I Import Administration, to Joseph A. Spetrini, Acting
Assistant Secretary for Import Administration, Issues and Decision
Memorandum for the Final Results of the Countervailing Duty New
Shipper Review of Alloy Magnesium from Canada at 14, Dep’t of
Commerce (April 21, 2003) available at http://ia.ita.doc.gov/
frn/summary/canada/ 03-10369-1.pdf; see also Final Results of Pure
Magnesium from Canada, 68 Fed. Reg. 22,359 (Dep’t Commerce Apr. 28,
2003) (note of final results of countervailing duty new shipper
Court No. 05-00617 Page 4
review) (“New Shipper Review”).1
Subsequently, pursuant to 19 U.S.C. § 1675(a), Magnola sought
a “periodic” or “administrative” review2 of the countervailing duty
order for the 2003 calendar year.3 See Pure Magnesium and Alloy
Magnesium from Canada, 70 Fed. Reg. 24,530, 24,530 (Dep’t Commerce
May 10, 2005) (preliminary results of countervailing duty
administrative reviews) (“2003 Preliminary Results”).
1
Commerce’s determination, including the finding of a de
facto specific subsidy to Magnola, was upheld upon appeal to a
NAFTA panel. See Alloy Magnesium from Canada: Final Results of
U.S. Department of Commerce Countervailing Duty New Shipper
Review, Secretariat File No. USA-CDA-2003-1904-02, Article 1904
binational panel review pursuant to NAFTA (Sept. 9, 2005)
available at
http://www.nafta-sec-alena.org/app/DocRepository/1/Dispute/englis
h/NAFTA_Chapter_19/USA/Ua03020e.pdf.
2
All references to the U.S.C. are to the 2000 edition.
3
The purpose of periodic or administrative review is to
provide an opportunity to make adjustments to the duties provided
for in AD/CVD orders, based on actual experience. “Unlike the
systems of some other countries, the United States uses a
‘retrospective’ assessment system under which final liability for
antidumping and countervailing duties is determined after
merchandise is imported.” 19 C.F.R. § 351.212 (2003).
If Commerce finds that dumping or subsidization has
occurred, and the ITC finds that dumping or
subsidization causes, or threatens to cause, material
injury to a domestic industry, interested parties may,
each year, upon the anniversary of the original
findings, request a [periodic] review to adjust the
dumping or countervailing duty in light of the
importers’ actual then current conduct.
Ontario Forest Indus. Ass’n v. United States, 30 CIT __, __, 444
F. Supp. 2d 1309, 1311-12 (2006) (citing 19 U.S.C. § 1675).
Court No. 05-00617 Page 5
In conducting the 2003 administrative review of Magnola’s
countervailing duties, Commerce made the following determination:
In the New Shipper Review, the Department found that
the MTM program assistance received by Magnola,
constituted countervailable benefits within the meaning
of section 771(5) of the Act. The assistance is a
direct transfer of funds from the [GDQ] bestowing a
benefit in the amount of the grants. We also found
Magnola received a disproportionately large share of
assistance under the MTM program and, on this basis, we
found the grants to be limited to a specific enterprise
or industry, or group of enterprises or industries,
within the meaning of section 771(5A)(D)(iv) of the
Act.
2003 Preliminary Results, 70 Fed. Reg. at 24,532.
It is the Department's policy not to revisit
specificity determinations absent the presentation of
new facts or evidence (see, e.g., Pure and Alloy
Magnesium From Canada: Final Results of the First
(1992) Countervailing Duty Administrative Reviews, 62
FR 13857 (March 24, 1997); Carbon Steel Wire Rod From
Saudi Arabia; Final Results of Countervailing Duty
Administrative Review and Revocation of Countervailing
Duty Order, 59 FR 58814 (November 15, 1994)). In this
review, no new facts or evidence has [sic] been
presented which would lead us to question that
determination.
In proposing that the Department base a POR-specific de
facto specificity finding on the amounts of benefits
from non-recurring grants allocated to the POR, the
respondent appears to be confusing the initial
specificity determination based on the action of the
granting authority and other circumstances at the time
of bestowal with the allocation of the benefit over
time. These are two separate issues. We agree with the
petitioner that once a determination has been made
regarding whether a non-recurring subsidy was specific
(or not) at the time of bestowal, then that finding
holds for the duration of the subsidy benefit barring
any new facts or evidence pertaining to the
circumstances of the subsidy's bestowal. In the
original determination, we considered each of the
Court No. 05-00617 Page 6
claims raised by Magnola; the bases of the original
specificity determination are still valid. Since no new
evidence has been presented which would cause us to
revisit the original specificity determination, we
continue to find assistance under the MTM Program to be
specific and, therefore, countervailable.
Memorandum from Barbara E. Tillman, Acting Deputy Assistant
Secretary for Import Administration, to Joseph A. Spetrini, Acting
Assistant Secretary for Import Administration, Issues and Decisiom
Memorandum for the Final Results of the 2003 Administrative Reviews
for the Countervailing Duty Orders of Pure Magnesium and Alloy
Magnesium from Canada, at 14, Dep’t of Commerce (Sept. 7, 2005)
available at http://ia.ita.doc.gov/frn/summary/canada/E5-5018-1.pdf
(“Sept. 7, 2005 Issues & Decision Mem.”); see also 2003 Final
Results, 70 Fed. Reg. at 54,367.4
In the action presently before the court, Magnola, as is its
right, seeks judicial review, under 19 U.S.C.
§ 1516a(a)(2)(B)(iii), of the 2003 Final Results. In such an
action, the party seeking review of an agency determination may
contest “any factual findings or legal conclusions upon which the
4
In the 2003 Final Results, Commerce adopted the Issues and
Decision Memorandum, thereby incorporating it into its final
determination: “All issues raised in the case and rebuttal
briefs by parties to these administrative reviews are addressed
in the September 7, 2005, Issues and Decision Memorandum for the
2003 Countervailing Duty Administrative Reviews of Pure Magnesium
and Alloy Magnesium from Canada ("Decision Memorandum") to Joseph
Spetrini, Acting Assistant Secretary for Import Administration,
which is hereby adopted by this notice.” 2003 Final Results, 70
Fed. Reg. at 54,367.
Court No. 05-00617 Page 7
determination is based,” 19 U.S.C. § 1516a(a)(2)(A), and “[t]he
court shall hold unlawful any determination, finding, or conclusion
found . . . to be arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law . . . .” 19 U.S.C. §
1516a(b)(1)(B).
The court has jurisdiction under 28 U.S.C. § 1581(c).
DISCUSSION
The statute governing Commerce’s administrative reviews
provides, in relevant part, as follows:
Administrative review of determinations
(a) Periodic review of amount of duty
(1) In general
At least once during each 12-month period beginning on
the anniversary of the date of publication of a
countervailing duty order under this subtitle or under
section 1303 of this title, an antidumping duty order under
this subtitle or a finding under the Antidumping Act, 1921,
or a notice of the suspension of an investigation, the
administering authority, if a request for such a review has
been received and after publication of notice of such review
in the Federal Register, shall--
(A) review and determine the amount of any net
countervailable subsidy . . . .
19 U.S.C. § 1675. Thus the statute requires that Commerce, upon
request, conduct an administrative review and determine the amount
of Magnola’s subsidy. The statute does not, however, specify the
precise process and scope of the proceedings necessary to determine
the amount of Magnola’s subsidy. However, as Congress has
Court No. 05-00617 Page 8
authorized agencies to do, Commerce filled the gap in the statute
by promulgating regulations that outline the procedures required in
an administrative review. See 5 U.S.C. § 301;5 19 CFR Part 351:
Countervailing Duties (notice of proposed rulemaking and request
for public comments) 62 Fed. Reg. 8818 (Dep’t Commerce Feb. 26,
1997).
In relevant part, Subpart B of Commerce’s Regulations
governing Antidumping and Countervailing Duty Procedures provides
that: “[t]he procedures for reviews are similar to those followed
in investigations.” 19 C.F.R. § 351.221(a).6 With exceptions not
applicable here, however, the regulations do not further specify
the scope of the proceedings in the administrative review.
Accordingly, in the proceeding at issue here, Commerce was required
to interpret its own regulation in deciding the scope of the
particular administrative review at issue.
In Magnola’s 2003 Countervailing Duty Administrative Review,
5
This provision reads:
The head of an Executive department or military
department may prescribe regulations for the government
of his department, the conduct of its employees, the
distribution and performance of its business, and the
custody, use, and preservation of its records, papers,
and property. This section does not authorize
withholding information from the public or limiting the
availability of records to the public.
5 U.S.C. § 301.
6
All references to the Code of Federal Regulations are to
the 2003 edition.
Court No. 05-00617 Page 9
Commerce determined the scope of the review by relying on “the
Department's policy not to revisit specificity determinations
absent the presentation of new facts or evidence.” Sept. 7, 2005
Issues & Decision Mem. at 14. More specifically, Commerce
implicitly interpreted its own regulation governing the review, 19
C.F.R. § 351.221, as not requiring Commerce to reopen the
specificity determination absent the presentation of new facts or
evidence.7
Defendant is therefore correct that the issue presented in
this action is:
[w]hether Commerce may decline to reopen the record of a
closed new shipper review during a subsequent administrative
review, to revisit a countervailability determination for a
nonrecurring subsidy, that was addressed during the new
shipper review and subsequently sustained by a North
American Free Trade Agreement (“NAFTA”) binational panel.
Def.’s Resp. Magnola’s Mot. J. Admin. R. 2 (“Def.’s Resp.”).
Accordingly, the court must determine whether the agency’s
interpretation of its regulation to permit it to refrain from re-
opening a specificity determination in a prior review, absent new
evidence, is in accordance with law.
As a general matter, courts will find an agency’s
7
Magnola does not claim that its submission relied on any
new facts or evidence. See Sept 7, 2005 Issues & Decision Mem. at
14 (“In this review, no new facts or evidence has [sic] been
presented which would lead us to question that determination”);
Br. Supp. Magnola Metallurgy Inc.’s Mot. J. Agency. R. 33-34
(“Pl.’s Br.”) (failing to contest the assertion that no new facts
had been presented during the review).
Court No. 05-00617 Page 10
interpretation of its own regulations to accord with law unless
that interpretation is unreasonable. Martin v. Occupational Safety
& Health Review Comm'n, 499 U.S. 144, 150 (1991)(“[i]t is well
established 'that an agency's construction of its own regulations
is entitled to substantial deference.'")(quoting Lyng v. Payne, 476
U.S. 926, 939 (1986)); Dofasco Inc. v. United States, 28 CIT __,
__, 326 F. Supp. 2d 1340, 1350-51 (2004); see also Mittal Canada,
Inc. v. United States, 30 CIT __, __, Slip Op. 06-143 at 16-17
(Sept. 22, 2006) (discussing the factors “affecting deference to
agencies’ regulatory interpretations”). Here, the court cannot
conclude that the agency’s policy resulting from Commerce’s
interpretation of its regulation is unreasonable.
First, in the absence of new facts or evidence, there is no
reason for the court to believe that the agency’s prior
determination, which was itself subject to appeal, would be
inconsistent with the statutory objective of achieving accuracy in
the calculation of antidumping and countervailing duty rates.
Second, the agency’s policy serves the interest of efficiently
using the agency’s resources. Cf. Barnhart v. Thomas, 540 U.S. 20,
28-29 (2003) (describing the size of the Social Security system and
stating that “[t]he need for efficiency is self-evident”)(quoting
Heckler v. Campbell, 461 US 458, 461, n.2 (1983); see also
Torrington Co. v. United States, 68 F. 3d 1347, 1351 (Fed. Cir.
1995) (“agencies with statutory enforcement responsibilities enjoy
Court No. 05-00617 Page 11
broad discretion in allocating investigative and enforcement
resources”); Alberta Pork Producers' Mktg. Bd. v. United States, 11
CIT 563 (1987). Third, the regulation specifically provides that
in a specified other review the agency will, without requiring the
submission of new evidence, affirmatively investigate changes in
the subsidy programs made by the government of the affected country
that affected the estimated countervailable subsidy. See, 19
C.F.R. § 351.221(c)(7).8 This language would be unnecessary if the
8
That provision provides as follows:
(7) Countervailing duty review at the direction of the
President. In a countervailing duty review at the
direction of the President under section 762 of the Act
and § 351.220, the Secretary will:
(i) Include in the notice of initiation of
the review a description of the merchandise,
the period under review, and a summary of the
available information which, if accurate,
would support the imposition of
countervailing duties;
(ii) Notify the Commission of the initiation
of the review and the preliminary results of review;
(iii) Include in the preliminary results of
review the countervailable subsidy, if any,
during the period of review and a description
of official changes in the subsidy programs
made by the government of the affected
country that affect the estimated
countervailable subsidy; and
(iv) Include in the final results of review
the countervailable subsidy, if any, during
the period of review and a description of
official changes in the subsidy programs,
made by the government of the affected
country not later than the date of
publication of the notice of preliminary
results, that affect the estimated
(continued...)
Court No. 05-00617 Page 12
agency were mandated to investigate such potential changes, absent
the submission of new facts or evidence, in every review. The
agency’s policy is therefore consistent with commonly accepted
canons of interpretation. See TRW Inc. v. Andrews, 534 U.S. 19, 31
(2001) (The “cardinal principle of statutory construction” is that
“a statute ought, upon the whole, to be so construed that, if it
can be prevented, no clause, sentence, or word shall be
superfluous, void or insignificant.”) (quoting Duncan v. Walker,
533 U.S. 167, 174 (2001); see also Hamdan v. Rumsfeld 126 S. Ct.
2749, 2765 (2006) (“A familiar principle of statutory construction
. . . is that a negative inference may be drawn from the exclusion
of language from one statutory provision that is included in other
provisions of the same statute.”).
In addition, “the ITA has a longstanding administrative
practice of not reinvestigating a program determined not to be
countervailable unless the petitioner presents new evidence
justifying reconsideration of a prior finding.” PPG Indus., Inc.
v. United States, 978 F.2d 1232, 1242 (Fed. Cir. 1992). That
practice has been upheld as reasonable by the Court of Appeals for
the Federal Circuit. Id. Because PPG Industries addresses
programs determined not to be countervailable, it does not mandate
8
(...continued)
countervailable subsidy.
19 C.F.R. § 351.221(c)(7)
Court No. 05-00617 Page 13
approval of a rule against the reinvestigation of a program
determined to be countervailable in the absence of new evidence;
PPG Industries does, however, give support to the conclusion that
such a reciprocal or inverse rule is reasonable, that is, that a
finding of a de facto specific countervailable subsidy holds absent
the presentation of new evidence.
In the face of this authority, Magnola argues that its request
for review of the 2003 Final Results does not constitute a request
to reopen the New Shipper Review determination. Rather, Magnola
claims, Commerce itself made a determination of countervailability
in the 2003 Final Results by relying on the determination from the
New Shipper Review. Magnola’s argument, however, is unpersuasive.
See Reply Br. Supp. Magnola Metallurgy Inc.’s Mot. J. Agency R. 4
(“Pl.’s Reply Br.”)(“Commerce made a determination of
countervailability, including a finding of de facto specificity, in
the 2003 administrative review.”).
It is well-established law that the court reviewing an agency
decision “must judge the propriety of such [agency] action solely
by the grounds invoked by the agency.” SEC v. Chenery Corp., 332
U.S. 194, 196 (1947). Accordingly, Chenery requires that the
agency’s stated finding or legal conclusion is that which we must
review. Here, as noted above, the agency’s specific finding or
legal conclusion, as a result of its regulations and interpretation
of its regulations, was that it is “the Department's policy not to
Court No. 05-00617 Page 14
revisit specificity determinations absent the presentation of new
facts or evidence.” Sept. 7, 2005 Issues & Decision Mem., at 14.
When faced with no new evidence, Commerce was reasonable in finding
that it would not review a specificity determination that it had
previously made, and that had been reviewed and affirmed by a NAFTA
panel. The statute upon which Plaintiff sues provides the same
direction. See 19 U.S.C. § 1516a(a)(2)(A)(review of determination
available within thirty days of publication of countervailing duty
order). Magnola cites no authority directing the court to do
otherwise.
In the absence of new evidence that would upset or change the
specificity determination, Magnola avers that Commerce’s
specificity determination during the period of review in question
is unsupported by substantial evidence and not in accordance with
law.9 Pl.’s Reply Br. 14. Magnola claims that Commerce must
conduct a separate disproportionality analysis for the period of
9
Though a change in facts warrants a reconsideration of a
specificity determination, see Al Tech Specialty Corp. v. United
States, 28 CIT __,__ Slip Op. 04-114 at 57 (Sept. 8, 2004)
(“remand of repayment issue necessarily reopens the question of
whether [the program] conferred a subsidy” therefore “Commerce
will have the opportunity to reconsider its specificity
determination, in light of its redetermination on the repayment
issue . . . .”), a change in law could also necessitate such
reconsideration, cf. AG der Dillinger Huttenwerke v. United
States, 26 CIT 1091, 1103 (2002) (“Commerce was obligated to
address whether the change in law cited by the German Producers
has any impact on those programs.”). Here, the Plaintiff is also
not alleging any change in law that would give rise to a
revisitation of the specificity determination.
Court No. 05-00617 Page 15
review. Id. Magnola argues that 19 U.S.C. § 1677(5A)(D)(iii)10
requires that the longevity of the MTM be considered, and by
implication requires a separate finding of disproportionality for
each period. Id. While it is true that this provision does
require the length of a program to be taken into account while
considering de facto specificity, the means by which it is to be
evaluated is left ambiguous, through the use of the phrase “taken
into account.” As such, Commerce’s choice to make an initial
specificity determination, at the bestowal of the grant, that
considers and evaluates various factors with respect to whether or
not a grant is specific, is a reasonable interpretation of how
10
This provision reads:
Where there are reasons to believe that a subsidy may
be specific as a matter of fact, the subsidy is
specific if one or more of the following factors exist:
(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.
In evaluating the factors set forth in subclauses
(I), (II), (III), and (IV), the administering authority
shall take into account the extent of diversification
of economic activities within the jurisdiction of the
authority providing the subsidy, and the length of time
during which the subsidy program has been in operation.
19 U.S.C. § 1677(5A)(D)(iii).
Court No. 05-00617 Page 16
Commerce should take the length of a program into account.
Furthermore, Commerce has determined that the best way to
allocate the benefits of a countervailable subsidy is to do so over
time. See Sept. 7, 2005 Issues & Decision Mem., at 14 (“respondent
appears to be confusing the initial specificity determination based
on the action of the granting authority and other circumstances at
the time of bestowal with the allocation of the benefit over
time”). In so doing, Commerce is exercising its discretion as to
how to calculate specificity for each period of review, in the
absence of a specific statutory mandate. It is not the job of the
court to upset a determination made based on Commerce’s reasonable
exercise of its discretion. To the extent that Magnola is arguing
that Commerce’s allocation methodology is unreasonable, Magnola has
not demonstrated a legal basis for re-opening the determination.
Conclusion
Accordingly, the court concludes that it was appropriate for
Commerce, in the administrative review at issue here, to decline to
reopen the record of a closed new shipper review, in order to
revisit a countervailability determination for a nonrecurring
subsidy that was addressed during the new shipper review and
subsequently sustained by a North American Free Trade Agreement
(“NAFTA”) binational panel. Magnola’s motion is therefore denied,
and judgment is entered for the defendant.
SO ORDERED.
Dated: November 20, 2006
New York, N.Y.
/s/ Donald C. Pogue
Donald C. Pogue, Judge