Slip Op. 03-97

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,

Defendant,

and

BETHLEHEM STEEL CORPORATION and

UNITED STATES STEEL CORPORATION,

Defendant-Intervenors.

Court No. 00-00127

[The U.S. Department of Commerce's countervailing duty

determination is sustained in part, and remanded for further

calculations in accordance with this Opinion.]

 Dated: July 29, 2003

Hunton & Williams (William Silverman and Richard P. Ferrin) for

plaintiffs ILVA Lamiere e Tubi S.r.l. and ILVA S.p.A.

Peter D. Keisler, 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 United States.

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. 00-00127 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.

OPINION

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. Plaintiffs ILVA Lamiere e Tubi

S.p.A. (“ILT”) and ILVA S.p.A. (“New ILVA”) also challenge the

Department’s decision to impose countervailing duties on early

retirement benefits provided by the Government of Italy. 

I. Facts

The following facts are taken from the Department’s original

determination in this case. Final Affirmative Countervailing

Duty Determination: Certain Cut-to-Length Carbon-Quality Steel

Plate From Italy, 64 Fed. Reg. 73,244 (Dec. 29, 1999)

(“Determination”). Before describing the history of the

Plaintiffs, New ILVA and ILT, in greater detail, it is helpful to

have a general understanding of the key predecessors to the New

ILVA and ILT. In the 1980s and early 1990s, several Italian

producers of carbon steel plate were owned by the Italian

government’s holding company, Istituto per la Ricostruzione

Industriale (“IRI”). In 1988, ILVA S.p.A. (“Old ILVA”) was

formed to replace prior producers of carbon steel plate. In

1993, a subsidiary of Old ILVA was created to produce the carbon
Court No. 00-00127 Page 3

steel plate, named ILVA Lamiere e Tubi (“ILT”). Later in 1993,

ILVA Laminati Piani (“ILP”) was formed to replace Old ILVA. On

April 28, 1995, IRI sold ILP, and consequently its subsidiary

ILT, to a group of private investors led by Riva Acciaio S.p.A.

(“RIVA”). The RIVA consortium reinstated the name ILVA S.p.A.

(“New ILVA”) in place of “ILP” in 1997.

The following is a more detailed history of New ILVA and

ILT. Prior to 1981, Finsider S.p.A. (“Finsider”) was a

subsidiary wholly owned by the Italian government’s holding

company, IRI. Finsider’s subsidiary Italsider produced the

subject merchandise, carbon steel plate. Determination at

73,245. 

In 1981, Italy sought and gained approval from the European

Commission for a plan to restructure Finsider. Id. Finsider was

restructured, and most of Italsider’s assets were transferred to

Nuova Italsider. Italsider became a holding company, with Nuova

Italsider’s stock as its primary asset. Nuova Italsider became

the producer of the subject merchandise. In 1987, due to

restructuring by Finsider, Nuova Italsider spun-off its assets to

Italsider. Id. Italsider reclaimed its position as the producer

of the subject merchandise. Nuovo Italsider ceased to exist. 

In 1988, Finsider was reorganized again, with the approval

of the European Commission. Determination at 73,245. The 1988

reorganization resulted in the closure of many of Finsider’s
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facilities and the placement of some assets and liabilities in

the newly formed company, Old ILVA. The remaining liabilities

and assets remained with Finsider. When Finsider’s assets were

sold, the excess debt was assumed by IRI. Determination at

73,250. Production of the subject merchandise was transferred

from Italsider to Old ILVA. 

In 1992, a wholly-owned subsidiary of Old ILVA was created,

ILT, to produce carbon steel plate. Old ILVA, together with all

of its subsidiaries, was wholly-owned by IRI. After becoming

insolvent in 1993, Old ILVA entered into liquidation. Also in

1993, the Government of Italy sought the European Commission’s

approval for restructuring and privatizing Old ILVA. 

Determination at 73,251. The Government of Italy planned to

absorb the bulk of Old ILVA’s debt. As a condition of approval,

the European Commission required Italy to reduce steel

production. Since a decrease in production would necessarily

lead to workforce reductions, the European Commission authorized

Italy to implement early retirement benefits under Law 451/94. 

Id. at 73,253. Under Law 451/94, up to 17,100 Italian steel

workers from 1994 to January of 1997 were allowed to take early

retirement. The benefits would continue to each employee until

that employee reached his or her natural retirement age. 
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1 The Department considered the benefits under Law 451/94

as "recurring grants expensed in the year of receipt." 

Determination at 73,254.

Benefits could not be received for more than ten years.1 Id. at

73,253. 

Pursuant to the reorganization and privatization plan, on

December 31, 1993, ILP and Acciai Speciali Terni were formed from

the main productive assets and some of the liabilities of Old

ILVA. ILT was transferred to ILP as its wholly-owned subsidiary. 

“The remainder of [Old ILVA’s] assets and existing liabilities,

along with much of the redundant workforce, was placed in ILVA

Residua (a.k.a., ILVA in Liquidation).” Id. at 73,245. 

A competitive public tender by IRI in 1995 resulted in the

sale of 100 percent of ILP to a consortium of investors led by

RIVA. All shares of ILP were transferred to the consortium on

April 28, 1995. After that date, the Government of Italy no

longer had any ownership interest in ILP or any of ILP’s owners. 

On January 1, 1997, RIVA changed the name of ILP to “ILVA

S.p.A.” (“New ILVA”). New ILVA then owned ILT. The subject

merchandise is produced at ILT’s Taranto Works facility. In

1998, RIVA owned 82 percent of New ILVA, and two foreign

investment companies owned the remaining 18 percent. 

II. Procedural Background

In 1999, the Department issued its original determination. 

Determination. The Department found that countervailable
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2 The statute to determine whether a prior subsidy

continues to be countervailable to the new owner of a company

reads as follows:

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

change of ownership is accomplished through an arm’s

length transaction. 

19 U.S.C. § 1677(5)(F). 

subsidies continued to flow to New ILVA during the 1998 calendar

year, the period of review for the investigation. The

countervailable subsidies included debt forgiveness and equity

infusions given to New ILVA’s predecessors prior to the

privatization sale to RIVA. Additionally, the Department

determined that the Government of Italy’s pre-privatization early

retirement benefits were countervailable subsidies.

While the Determination was on appeal to the Court of

International Trade, the Federal Circuit issued Delverde SrL v.

United States, 202 F.3d 1360 (Fed. Cir. 2000) (Delverde III). 

The Federal Circuit in Delverde III determined that Congress’s

intent under 19 U.S.C. § 1677(5)(F)2 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. In light of the Federal
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3 For ease of reference, “pre-sale ILVA” refers to ILP

prior to its sale to RIVA. “Post-sale ILVA” includes both New

ILVA and ILP after its sale to RIVA.

4 The Department has recently published its modified

change-in-ownership methodology. The Department has abandoned

its "same-person" methodology found in the First Redetermination. 

Instead, the Department has adopted the following analysis:

The methodology is based on certain rebuttable

presumptions . . . [t]he 'baseline presumption' is that

non-recurring subsidies can benefit the recipient over

a period of time . . . normally corresponding to the

average useful life of the recipient's assets. 

However, an interested party may rebut this baseline

Circuit’s decision in Delverde III, the Court remanded the

Determination to the Department. See Order of Aug. 30, 2000

(granting the Department’s motion for voluntary remand) (ILVA I). 

The result of ILVA I was 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 (Dec. 28, 2000)

(“First Redetermination”). 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.3

 During the Court’s review of the First Redetermination,

Plaintiffs moved for summary judgment, asking the Court to remand

the First Redetermination to the Department. The Court concluded

that the Department’s “same-person” test failed to take into

account the facts and circumstances of the sale, as directed in

Delverde III.

4 Accordingly, the Court granted Plaintiffs'
Court No. 00-00127 Page 8

presumption by demonstrating that, during the

allocation period, a privatization occurred in which

the government sold its ownership of all or

substantially all of a company or its assets, retaining

no control of the company or its assets, and that the

sale was an arm's-length transaction for fair market

value.

Notice of Final Modification of Agency Practice Under Section 123

of the Uruguay Round Agreements Act, 68 Fed. Reg. 37,125 (June

23, 2003).

motion, and remanded the First Redetermination to the Department. 

ILVA Lamiere e Tubi S.p.A. v. United States, 196 F. Supp. 2d 1347

(CIT 2002) (“ILVA II”). The Court instructed the Department to

examine the facts and circumstances of the sale to determine

whether the post-sale ILVA received a financial contribution and

a benefit from the Government of Italy. ILVA II at 1351; see

also Delverde III at 1364. The Department reluctantly complied,

and issued the Results of Redetermination Pursuant to Court

Remand: ILVA Lamiere e Tubi S.r.L. and ILVA S.p.A. v. United

States, Court No. 00-03-00127, Remand Order (CIT March 29, 2002)

(July 2, 2002)(“Second Redetermination”). 

There are two remaining issues for the Court to decide. 

First, the Court must decide whether the Department followed the

Court’s instructions in the Second Redetermination. Plaintiffs

and the Department ask the Court to sustain the Second

Redetermination. Defendant-Intervenors Bethlehem Steel

Corporation and United States Steel Corporation (collectively,

“Domestic Producers”) have moved for summary judgment to remand
Court No. 00-00127 Page 9

the Second Redetermination. The Domestic Producers argue that

the Court should remand again to the Department, with revised

instructions on Delverde III’s application to the present case. 

Second, Plaintiffs had previously moved for summary judgment on

the Department’s decision to impose countervailing duties on preprivatization early retirement benefits provided by the

Government of Italy under Law 451/94. The Court did not resolve

that issue in ILVA II, and will do so now.

The Court exercises jurisdiction pursuant to 28 U.S.C. §

1581(c) (1994). 

III. Standard of Review

The Court reviews the Second 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). 

Substantial evidence “means such relevant evidence as a

reasonable mind might accept as adequate to support a

conclusion.” Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229
Court No. 00-00127 Page 10

(1938); accord Matsushita Elec. Indus. Co., Ltd. v. United

States, 3 Fed. Cir. (T) 44, 51, 750 F.2d 927, 933 (1984). “[T]he

possibility of drawing two inconsistent conclusions from the

evidence does not prevent an administrative agency’s finding from

being supported by substantial evidence.” Consolo v. Federal

Maritime Comm’n, 383 U.S. 607, 620 (1966) (citations omitted). 

IV. Discussion

A. The Department Followed the Court’s Instructions Regarding

Application of Delverde III in the Second Redetermination

The Court remanded the Department’s First Redetermination,

and directed the Department to “‘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.’” ILVA II at 1351

(quoting Delverde III, 202 F.3d at 1364). In the Department’s

Second Redetermination, the Department reluctantly followed the

Court’s instructions. 

The Department analyzed the following facts and

circumstances in its analysis:

We believe that the existence of an open selling

process resulting in numerous expressions of interest

and multiple bidders submitting offers for the company

provided a good indication that full value had been

paid. The information on the record of this proceeding

shows that IRI sought at the outset of the

privatization process to bring in many bidders for ILP. 

The announcement of its intent to sell ILP and its

solicitation of expressions of interest in the company

were widely publicized. There were no restrictions

placed on foreign ownership of ILP and IRI set no
Court No. 00-00127 Page 11

minimum bid price. Further, no level of investment in

ILP was stipulated by the [Government of Italy]. . . . 

[C]omparison of the price actually paid for ILP to

market valuations of the company show that full and

fair market value was paid for ILP.

Second Redetermination at 8-9. The Department concluded, after

analyzing the facts and circumstances of the sale and

privatization of pre-sale ILVA, that post-sale ILVA did not

receive a financial contribution or benefit from the Government

of Italy. Id. at 10.

The Domestic Producers argue that the Court should remand

the Second Redetermination to the Department, with new

instructions regarding Delverde III’s application to the

investigation of New ILVA. The Domestic Producers do not raise

any legal arguments in their motion for summary judgment that

were not already addressed in ILVA II. Additionally, the

Domestic Producers do not challenge any of the facts relied upon

by the Department in its Second Redetermination. Therefore, the

Domestic Producers motion for summary judgment is denied. 

Because the Department followed the Court’s instructions in ILVA

II, the Court sustains the Department’s Second Redetermination on

the issue of calculating subsidies in countervailing duty

investigations of newly privatized companies. See generally,

Allegheny Ludlum Corp. v. United States, 26 CIT __, 246 F. Supp.

2d 1304 (2002) (“Allegheny”), and GTS Industries S.A. v. United

States, 26 CIT __, 246 F. Supp. 2d 1311 (2002) (“GTS”) (the
Court No. 00-00127 Page 12

5 The applicable regulation, "Worker-related subsidies",

reads as follows:

(a) Benefit. In the case of a program that provides

assistance to workers, a benefit exists to the extent

that the assistance relieves a firm of an obligation

that it normally would incur.

(b) Time of receipt of benefit. In the case of

assistance provided to workers, the Secretary normally

will consider the benefit as having been received by

the firm on the date on which the payment is made that

relieves the firm of the relevant obligation.

(c) Allocation of benefit to a particular time period.

Normally, the Secretary will allocate (expense) the

benefit from assistance provided to workers to the

yearin which the benefit is considered to have been

received under paragraph (b) of this section.

19 C.F.R. § 351.512.

Department’s determinations were sustained after the Department

analyzed the facts and circumstances of the privatization sales). 

B. The Department’s Determination to Countervail Early

Retirement Benefits was in Accordance with Law

Under 19 C.F.R. § 351.513 (2000), New ILVA received a

benefit to the extent that the early retirement benefits relieved

ILVA of an obligation it normally would incur.5 Plaintiffs argue

that the early retirement benefits are not an obligation that

ILVA would normally incur. Absent the European Commission’s

mandated production cutback in the steel industry, the Italian

government would not have needed to provide early retirement

benefits under Law 451/94. Plaintiffs also point out that the

Department has previously expressed unwillingness to countervail

benefits given to foreign producers that are provided to offset
Court No. 00-00127 Page 13

any industry-specific, increased legal requirements imposed by

the foreign government. 

The Department denies that Plaintiffs' characterization of

the Department's view is accurate: the Department does not view

benefits provided to offset increased legal requirements as not

countervailable. See Determination at 73,273. Regardless of

which view the Department has taken, it is clear that the

Department’s determination is in accordance with law and

supported by substantial evidence. The evidence shows that the

capacity reductions and resulting layoffs were merely conditions

placed upon pre-sale ILVA by the European Commission. 

Determination at 73,253. Pre-sale ILVA had to satisfy the

conditions to receive the European Commission’s approval for its

1993-94 reorganization plan. See Determination at 73,253-54,

73,272-73. Plaintiffs offer no evidence that the reorganization

plan approved by the European Commission was imposed upon presale ILVA outside of the Italian Government’s request to further

subsidize pre-sale ILVA in preparation for its privatization. 

Therefore, because the Department’s determination is supported by

substantial evidence and is in accordance with law, the

Department’s determination that Law 451/94 is countervailable is

sustained. 

Although the Department was correct that Law 451/94 is a

countervailable subsidy, the Department's current antidumping
Court No. 00-00127 Page 14

6 In its Determination, the Department had calculated new

ILVA's countervailable subsidy to be 0.66 percent ad valorem for

employees transferred to ILVA Residua. Determination at 73,254.

subsidy rate of 2.06 percent ad valorem under Law 451/94 cannot

stand. In its Second Redetermination, the Department failed to

recalculate the Law 451/94 countervailable subsidy. Since the

Second Redetermination concluded that subsidies to pre-sale ILVA

are not countervailable, and because many of the payments under

Law 451/94 were made to employees that retired prior to new

ILVA's privatization, a reassessment of the countervailable

subsidy is required. The following payments under Law 451/94 may

not be countervailed:

(1) Payments under Law 451/94 to employees that were

transferred to ILVA Residua in 1993 and 1994 are not

countervailable.6 When pre-sale ILVA was reorganized in

1993 and 1994, redundant employees were placed in ILVA

Residua. Determination at 73,254. The redundant employees

were not part of pre-sale ILVA when purchased by RIVA. 

Therefore, since the Department has determined that

subsidies to pre-sale ILVA did not benefit post-sale ILVA,

no payments to retired employees of ILVA Residua are

countervailable subsidies to the New ILVA.

(2) Payments made to employees who retired prior to the

share transfer on April 28, 1995, under Law 451/94, are not

countervailable subsidies. Because the Department has
Court No. 00-00127 Page 15

determined that subsidies to pre-sale ILVA do not benefit

New ILVA, no payments to employees who retired prior to the

privatization of pre-sale ILVA are countervailable.

Therefore, the Determination is remanded to the Department to

calculate the countervailable subsidies under Law 451/94. The

countervailable payments under Law 451/94 are payments to those

employees who retired from post-sale ILVA after April 28, 1995.

V. Conclusion

Thus, the Department’s Second Redetermination is in

accordance with law and supported by substantial evidence on the

issue of calculating subsidies in countervailing duty

investigations of newly privatized companies. The Domestic

Producers motion for summary judgment is accordingly denied. The

finding in the Determination that Law 451/94 is a countervailable

subsidy is in accordance with law and supported by substantial

evidence. However, this matter is remanded to the Department to

calculate the countervailable subsidy rate under Law 451/94 in

accordance with this Opinion. Therefore, the Department’s

Determination and Remand Determination are sustained in part and

remanded in part. 

 

 Senior Judge Richard W. Goldberg

Date: July 29, 2003

 New York, New York