Slip Op. 02-32
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD W. GOLDBERG, SENIOR JUDGE
ILVA LAMIERE E TUBI S.R.L.
and ILVA S.P.A.,
Plaintiffs,
v.
UNITED STATES and THE UNITED Court No. 00-03-00127
STATES DEPARTMENT OF
COMMERCE,
Defendants,
and
BETHLEHEM STEEL CORPORATION and
UNITED STATES STEEL CORPORATION,
Defendant-Intervenors.
[Plaintiff’s Motion for Judgment Upon an Agency Record granted in
part and remanded.]
Dated: March 29, 2002
Hunton & Williams (William Silverman and Richard P. Ferrin) for
plaintiffs ILVA Lamiere e Tubi S.r.l. and ILVA S.p.A.
Stuart E. Schiffer, Acting Assistant Attorney General, David M.
Cohen, Director, Michael S. Dufault, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice;
Office of the Chief Counsel for Import Administration, United
States Department of Commerce (John F. Koeppen), of counsel, for
defendant.
Dewey Ballantine LLP (John A. Ragosta, John R. Magnus, and Hui
Yu) for defendant-intervenors Bethlehem Steel Corporation and
United States Steel Corporation.
Collier Shannon Scott, PLLC (Paul C. Rosenthal, Kathleen W.
Cannon, Lynn D. Maloney, and Eric R. McClafferty) for amici
curiae Allegheny Ludlum Corporation, AK Steel Corporation, J&L
Court No. 00-03-00127 Page 2
Specialty Steel, Inc., Lukens, Inc., North American Stainless,
Butler Armco Independent Union, Zanesville Armco Independent
Union, and the United Steelworkers of America, AFL-CIO/CLC.
MEMORANDUM OPINION AND ORDER
GOLDBERG, Senior Judge: At issue in this case is the method
employed by the U.S. Department of Commerce (the “Department”) to
calculate subsidies in countervailing duty investigations of
newly privatized companies. This case is before the Court
pursuant to Plaintiffs’ USCIT R. 56.2 Motion for Judgment Upon an
Agency Record. Plaintiffs challenge the Department’s Final
Results of Redetermination Pursuant to Court Remand: ILVA Lamiere
e Tubi S.p.A. v. United States, Court No. 00-03-00127 (December
28, 2000) (“Redetermination”), which modified the Department’s
decision in Final Affirmative Countervailing Duty Determination:
Certain Cut-to-Length Carbon-Quality Steel Plate From Italy, 64
Fed. Reg. 73,244 (Dec. 29, 1999) (“Determination”), and Notice of
Countervailing Duty Orders: Certain Cut-to-Length Carbon-Quality
Steel Plate From France, India, Indonesia, Italy and the Republic
of Korea, 65 Fed. Reg. 6587 (February 10, 2000).1 This Court
issued a remand order on August 30, 2000, instructing the
Department to determine the applicability of the Federal
Circuit’s opinion in Delverde SrL v. United States, 202 F.3d 1360
1
Plaintiffs also challenge the Department’s decision to
impose countervailing duties on pre-privatization early
retirement benefits under Law 451/94. This Court will not
address that issue until the Department redetermines the issue of
privatization in this remand order.
Court No. 00-03-00127 Page 3
(Fed. Cir. 2000), reh’g denied, Ct. No. 99-1186 (June 20, 2000)
(“Delverde III”), to the Determination. Two recent Court of
International Trade opinions are directly on point, Allegheny
Ludlum Corp. v. United States, 26 CIT __, 182 F. Supp. 2d 1357
(2002) (“Allegheny”), and GTS Industries S.A. v. United States,
26 CIT __, 182 F. Supp. 2d 1369 (2002) (“GTS”). This Court finds
the reasoning of Allegheny and GTS persuasive, and therefore
remands the Redetermination to the Department for redetermination
consistent with this Opinion. This Court exercises jurisdiction
pursuant to 28 U.S.C. § 1581(c) (1994).
I. Standard of Review
This Court reviews the Redetermination to determine if it is
supported by substantial evidence on the record or otherwise in
accordance with law. See 19 U.S.C. § 1516a(b)(1)(B) (1994). To
determine if the Department’s interpretation of the statute is in
accordance with law this Court “must determine whether Congress’s
purpose and intent on the question at issue is judicially
ascertainable.” Timex V.I. v. United States, 157 F.3d 879, 881
(Fed. Cir. 1998). The expressed will or intent of Congress on a
specific issue is dispositive. See Japan Whaling Ass’n v. Am.
Cetacean Soc’y, 478 U.S. 221, 233-237 (1986).
II. Summary of the Facts
Since this Court is only considering whether the Department
erred as a matter of law in its Redetermination, this Court will
Court No. 00-03-00127 Page 4
only briefly recount the relevant facts as stated in the
Redetermination. According to the Department, ILVA S.p.A.
(“ILVA”), an Italian steel manufacturer, was privatized in 1995
through a sale of shares to a consortium. Redetermination at 15.
The Department concluded that pre-sale ILVA was subsidized by the
Italian government through debt forgiveness, equity infusions,
and corporate restructuring from 1984 to 1994, except in 1987.
Defendant’s Memorandum in Opposition to Plaintiff’s Motion for
Judgment Upon the Agency Record at 10. The pre-sale and post-
sale ILVA’s were both engaged in carbon steel plate operations.
Redetermination at 17. The Department concluded that the pre-
sale and post-sale ILVA’s were the same “person,” and thus the
post-sale ILVA received a financial contribution and benefit from
subsidies given to pre-sale ILVA.
III. Discussion
Under 19 U.S.C. § 1677(5) of the Tariff Act, a subsidy
occurs where an authority “provides a financial contribution
. . . to a person and a benefit is thereby conferred,” either
directly or indirectly. 19 U.S.C. § 1677(5) (1994). Section
1677(5)(F) is the specific provision addressing subsidies when a
change in ownership has occurred:
A change in ownership of all or part of a foreign
enterprise or the productive assets of a foreign
enterprise does not by itself require a determination
by an administering authority that a past
countervailable subsidy received by the enterprise no
longer continues to be countervailable, even if the
Court No. 00-03-00127 Page 5
change of ownership is accomplished through an arm’s
length transaction.
19 U.S.C. § 1677(5)(F). The Federal Circuit in Delverde III
determined that Congress’s intent under these portions of the
Tariff Act was for the Department to “examin[e] the particular
facts and circumstances of the sale and determin[e] whether [the
purchaser] directly or indirectly received both a financial
contribution and benefit from the government.” 202 F.3d at 1364.
Therefore, under Delverde III, the statute’s meaning is clear and
“[w]e need only determine whether Commerce’s methodology is in
accordance with the statute.” Id. at 1367.
In light of Delverde III, the Department’s Redetermination
established a two-part test to determine if the post-sale firm
received a financial contribution and benefit from the subsidy
given to the pre-sale firm. The first part of the test
determines whether the pre-sale firm is the same person as the
post-sale firm. See Redetermination at 6-7. If they are the
same person, then the post-sale firm received a financial
contribution and benefit from the subsidy given the pre-sale
firm, and the subsidies are countervailable. See id. If they
are not the same person, then the second part of the test looks
at the facts and circumstances of the sale to determine whether
the post-sale firm received a financial contribution and benefit
from the subsidy granted to the pre-sale firm. See id.
Court No. 00-03-00127 Page 6
As in Allegheny and GTS, this Court finds that the
methodology of the Department’s two-part test is inconsistent
with the intent of Congress under the Tariff Act. See 182 F.
Supp. 2d 1357; 182 F. Supp. 2d 1369. Instead of examining the
facts and circumstances of the sale, the Department ignores the
sale entirely and conducts a novel analysis of the “person”
before and after the sale. See Redetermination at 13; see also
Allegheny, 182 F. Supp. 2d at 1365-66; GTS, 182 F. Supp. 2d at
1377-78. The Department summarily concludes that if the
“original subsidy recipient and the current producer/exporter are
considered to be the same person, that person benefits from the
original subsidies, and its exports are subject to countervailing
duties to offset those subsidies.” Redetermination at 7
(emphasis added).
The Department’s “person” test fails to take into account
the facts and circumstances of the sale:
[T]he Department will generally consider the post-sale
entity to be the same person as the pre-sale entity if,
based on the totality of the factors considered, we
determine that the entity sold in the change-in-
ownership transaction can be considered a continuous
business entity because it was operated in
substantially the same manner before and after the
change in ownership.
Redetermination at 12-13. Under the Department’s “person”
analysis, it is likely that nearly every sale would result in the
same post-sale person as the pre-sale person. See Allegheny, 182
F. Supp. 2d at 1367; GTS, 182 F. Supp. 2d at 1379; Acciai
Court No. 00-03-00127 Page 7
Speciali Terni S.p.A. v. United States, 26 CIT __, 2002 WL
342659, Slip-Op. 02-10 at N.10 (February 1, 2002). Thus, the
Department continues to use what is essentially the per se test
that a change in ownership never extinguishes prior subsidies,
which was prohibited in Delverde III, and avoids the Court’s
mandate to consider the facts and circumstances of the sale. See
Allegheny, 182 F. Supp. 2d at 1367; GTS, 182 F. Supp. 2d at 1379.
On remand, the Department’s methodology shall “examin[e] the
particular facts and circumstances of the sale and determin[e]
whether [plaintiffs] directly or indirectly received both a
financial contribution and benefit from the government.”
Delverde III, 202 F.3d at 1364. This means that Commerce “must
look at the facts and circumstances of the TRANSACTION, to
determine if the PURCHASER received a subsidy, directly or
indirectly, for which it did not PAY ADEQUATE COMPENSATION.”
Allegheny, 182 F. Supp. 2d at 1367 (capitals in original); GTS,
182 F. Supp. 2d at 1378.
Court No. 00-03-00127 Page 8
IV. Conclusion
Therefore, the Court finds that the Final Results of
Redetermination Pursuant to Court Remand: ILVA Lamiere e Tubi
S.p.A. v. United States, Court No. 00-03-00127 (December 28,
2000), are not in accordance with law, and remands to the
Department of Commerce for review and action consistent with this
opinion.
SO ORDERED.
Senior Judge Richard W. Goldberg
Date: March 29, 2002
New York, New York