Court Opinion

ID: 9407255
Source: CourtListenerOpinion
Date Created: 2023-07-06 15:02:07.621584+00
Date Added: 2024-06-11T17:20:36.822144
License: Public Domain

Slip Op. 23-96

          UNITED STATES COURT OF INTERNATIONAL TRADE

 GREENFIRST FOREST PRODUCTS,
 and GREENFIRST FOREST
 PRODUCTS (QC) INC.,

       Plaintiffs,                            Before: Claire R. Kelly, Judge

 v.                                           Court No. 22-00097

 UNITED STATES

       Defendant.

                             OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s denial of plaintiffs’ request for a
changed circumstances review.]

                                                                 Dated: July 6, 2023

Yohai Baisburd, Sarah E. Shulman, and Jonathan Zielinski, Cassidy Levy Kent
(USA) LLP, of Washington, D.C., for plaintiffs GreenFirst Forest Products Inc. and
GreenFirst Forest Products (QC) Inc.

Bret R. Vallacher, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., for defendant United States. On the
brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia
M. McCarthy, Director, and Claudia Burke, Deputy Director. Of counsel was Jesus
N. Saenz, Attorney, Office of the Chief Counsel for Trade, Enforcement and
Compliance, U.S. Department of Commerce, of Washington, D.C.

      Kelly, Judge: Before the Court is the U.S. Department of Commerce’s

(“Commerce”) remand redetermination pursuant to the Court’s order in GreenFirst

Forest Prods. v. United States, 604 F. Supp. 3d 1368 (Ct. Int’l Trade 2022)

(“GreenFirst I”) remanding Commerce’s refusal to conduct a changed circumstances
Court No. 22-00097                                                         Page 2

review for further explanation or reconsideration. Plaintiffs GreenFirst Forest

Products Inc. and GreenFirst Forest Products (QC) Inc. (collectively, “GreenFirst”)

challenge the results of Commerce’s remand redetermination.       The Court again

remands to Commerce for further explanation or reconsideration.

                                BACKGROUND

      The Court presumes familiarity with the facts of this case from this Court’s

previous opinion in GreenFirst I, 604 F. Supp. 3d 1368, and now recounts only the

facts relevant to the Court’s review of the Remand Results. On November 8, 2017,

Commerce issued its final determination that the Canadian government provided

countervailable subsidies for certain softwood lumber products from Canada. See

Certain Softwood Lumber Products from Canada, 82 Fed. Reg. 51,814 (Dep’t

Commerce Nov. 8, 2017). Rayonier A.M. Canada G.P. (“RYAM”) was a Canadian

softwood lumber producer subject to the countervailing duty (“CVD”) order, and

GreenFirst acquired RYAM’s entire lumber and newsprint business on August 28,

2021. 1 Compl. ¶¶ 2–3, Mar. 25, 2022, ECF No. 2. On October 4, 2021, GreenFirst

requested that Commerce conduct a changed circumstances review (“CCR”) to

determine that it was RYAM’s successor-in-interest. Id. ¶¶ 4, 13, Attach. A. On

1Specifically, Commerce determined that GreenFirst purchased six lumber mills and
one newsprint mill from RYAM, and that the purchase involved a change in
ownership structure such that RYAM continues to operate as a business and now
partially owns GreenFirst’s parent company. See Compl., Attach. A, Mar. 25, 2022,
ECF No. 2.
Court No. 22-00097                                                            Page 3

November 16, 2021, Commerce denied GreenFirst’s request to initiate a CCR. Id. ¶¶

5, 14, Attach. A.

      On March 25, 2022, GreenFirst challenged Commerce’s refusal to initiate a

CCR as arbitrary and capricious, and moved for judgment on the agency record. See

Compl. ¶¶ 24, 27; Pl.’s Mot. J. Agency R., July 29, 2022, ECF No. 22. This Court held

that Commerce had not adequately explained its refusal to conduct a CCR, and

remanded Commerce’s determination for further explanation or consideration. See

GreenFirst I, 604 F. Supp. 3d at 1373. On February 4, 2023, Commerce released the

final results of its remand redetermination. See Final Results of Remand Redeterm.

Purs. Ct. Remand, Feb. 16, 2023, ECF No. 29-1 (“Remand Results”). In its remand

results, Commerce again determined that it would not conduct a successor-in-interest

CCR for GreenFirst. Id. at 15–16. GreenFirst submitted comments on the remand

results, and Defendant replied to GreenFirst’s comments. See GreenFirst’s Cmts.

Final Results Redeterm Purs. Ct. Remand, April 3, 2023, ECF No. 32 (“Pl. Br.”); Def.’s

Resp. Pl.’s Mot. J. Agency R., May 3, 2023, ECF No. 33 (“Def. Br.”).

                JURISDICTION AND STANDARD OF REVIEW

      The Court has jurisdiction pursuant to 28 U.S.C. § 1581(i)(2), (4) (2018). The

Court reviews an action brought under 28 U.S.C. § 1581(i) under the same standards

as provided under § 706 of the Administrative Procedure Act, as amended. See 28

U.S.C. § 2640(e). Under the statute, the reviewing court shall:

      (1) compel agency action unlawfully withheld or unreasonably delayed;
      and
Court No. 22-00097                                                               Page 4

      (2) hold unlawful and set aside agency action, findings and conclusions
      found to be—

      (A) arbitrary, capricious, an abuse of discretion, or otherwise not in
      accordance with law

5 U.S.C. § 706(1)–(2)(A).

      Under the arbitrary and capricious standard, courts consider whether the

agency “entirely failed to consider an important aspect of the problem, offered an

explanation for its decision that runs counter to the evidence before the agency, or

[the decision] is so implausible that it could not be ascribed to a difference in view or

the product of agency expertise.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).

                                    DISCUSSION

      GreenFirst argues that Commerce again arbitrarily denied its CCR request

based on its inapposite Pasta from Turkey practice. Pl. Br. at 8. GreenFirst also

argues that Commerce ignored the Court’s instruction to further explain its practice

on remand. 2 Id. at 3–4. Defendant counters that Commerce complied with the

Court’s remand order, and adequately explained why it would not be appropriate to

2 GreenFirst also submitted supplemental authority showing that Commerce has
preliminarily determined it to be RYAM’s successor-in-interest in the context an
antidumping CCR. See Pls.’ Not. Supp. Authority, May 23, 2023, ECF No. 35.
However, GreenFirst acknowledges that the legal standards for antidumping and
CVD CCRs are different, and does not argue that Commerce must make an
affirmative successorship determination for CVD purposes because of the results of
its antidumping review. See id. Rather, GreenFirst has provided this information
“simply to make the Court aware” of the parallel proceeding. Id. at 2.
Court No. 22-00097                                                            Page 5

grant GreenFirst a CCR, based on its Pasta from Turkey practice. Def. Br. at 2, 10.

For the reasons that follow, the Court remands Commerce’s determination for further

explanation or reconsideration.

      Pursuant to § 751(b) of the Tariff Act of 1930, as amended, 19 U.S.C.

§ 1675(b)(1), 3 Commerce shall review an affirmative CVD determination whenever it

receives information from an interested party which shows “changed circumstances

sufficient to warrant a review of such determination.” Id. The statute does not define

“changed circumstances.” Id. Through practice, Commerce has established that

successor-in-interest companies may be entitled to a CCR. See, e.g., Heavy Walled

Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Turkey: Not.

of Initiation and Prelim. Results of [CVD CCR], 87 Fed. Reg. 10,772, 10,773 (Feb. 25,

2022) (finding a respondent was a successor-in-interest for CVD purposes).

Commerce has further established that it will not conduct a successor-in-interest

CCR when there is evidence of significant changes to a company. See Certain Pasta

from Turkey: Preliminary Results of [CVD CCR], 74 Fed. Reg. 47,225, 47,227 (Dep’t

Commerce Sept. 15, 2009) (Prelim. Results of [CVD CCR]), unchanged in Certain

Pasta from Turkey, 74 Fed. Reg. 54,022 (Dep’t Commerce Oct. 21, 2009) (Final

Results of [CVD CCR]) (“Pasta from Turkey”). The respondent in Pasta from Turkey

was individually examined in the prior administrative review. See Certain Pasta

3 Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2018 edition.
Court No. 22-00097                                                              Page 6

from Turkey: Final Results of [CVD] Admin. Rev., 71 Fed. Reg. 52,774, 52,774 (Sept.

7, 2006) (final determination of CVD rate for respondent).

      Commerce explained the rationale for its significant changes practice, stating

that it would generally find a successor company to be the same as a predecessor

company for cash deposit purposes “where there is no evidence of significant changes

in the respondent’s operations, ownership, corporate or legal structure during the

relevant period . . . that could have affected the nature and extent of the respondent’s

subsidy levels.” Pasta from Turkey, 74 Fed. Reg. at 47,227. Thus, in Pasta from

Turkey, Commerce concludes that a putative successor-in-interest company with

significant changes should not acquire the cash deposit rate of a predecessor

company, because the changes “could affect the nature and extent of the respondent’s

subsidization.” Id. at 47,228. Therefore, Commerce’s Pasta from Turkey practice

dictates that it will not conduct a CCR where it has evidence of significant changes

in the successor company. 4 Id. at 47,225, 47,227.

4 Under the statute, Commerce, may review a determination when it receives
information showing sufficiently changed circumstances. 19 U.S.C. § 1675(b). One
type of changed circumstance is a name change, which serves as the legal basis for
Commerce to revise its instructions to the U.S. Department of Customs and Border
Protection. See Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes
from the Republic of Turkey: Not. of Initiation and Prelim. Results of [CVD CCR], 87
Fed. Reg. 10,772, 10,773 (Feb. 25, 2022) (“Where Commerce makes an affirmative
CVD successorship finding, the successor’s merchandise will be entitled to enter
under the predecessor’s cash deposit rate”). A party might be able to argue that it
would be entitled to a different rate, i.e., circumstances had changed such that the

                                                                   (footnote continued)
Court No. 22-00097                                                               Page 7

      In GreenFirst I, 604 F. Supp. 3d 1368, this Court held that Commerce had not

adequately explained why its Pasta from Turkey practice applied when a predecessor

company had not been individually examined. Id. at 1373. The Court explained that

the purpose of a CVD CCR is to determine whether a successor company is the same

entity as a predecessor company for subsidization purposes.         Id. at 1372 (citing

Marsan Gida Sanayi Ve Ticaret A.S. v. United States, 35 CIT 222, 225, Slip Op. 2011-

20 (2011)). Therefore, if the company is the same, a CCR will allow it to obtain the

same rate; however, if the successor is different from its predecessor, it could have

different levels of subsidization, and inheriting a previously calculated rate would not

be appropriate. See id. The Court specified that in Commerce’s Pasta from Turkey

practice, the predecessor company had been individually examined, and received an

individual rate based on the actual level of that company’s subsidization. Id. at 1373.

Additionally, the Court was not persuaded by Defendant’s explanation that a CCR

determination should be modified because it had become the successor in interest to
a company that had a different rate assigned under the prior determination. See
Pasta from Turkey 74 Fed. Reg. at 47,226 (“the function of CCRs is to address the
effect of ‘changed circumstances’ on a final affirmative determination that resulted in
a CVD order.”) The changed circumstance would be that one company had become
another company (and thus should be entitled to that other company’s rate).
        In Pasta from Turkey, Commerce limited CCRs for successor-in-interest
changes to those cases where the successor company was essentially the same as the
predecessor because “if the company is not essentially the same, . . . the Department
should normally assign the successor company the ‘all others’ rate until an
administrative review is requested as the all others rate is the default rate for exports
that have not been investigated or subject to an administrative review.” Id. Thus, in
a successor-in-interest analysis Commerce contends under Pasta from Turkey there
can be no significant changes in the successor company as compared to the
predecessor in order to obtain a “changed circumstances” review.
Court No. 22-00097                                                                Page 8

“does not examine how a ‘significant change’ impacted subsidization levels of the

predecessor,” because this explanation did not address whether the practice itself was

reasonable. See id. (emphasis in original).

        On remand, Commerce again explains that its practice articulated in Pasta

from Turkey is to decline a CCR review for a company seeking to be considered a

successor-in-interest for cash deposit purposes if that company has “undergone

significant changes that would require Commerce to fully assess the company’s level

of subsidization.” Remand Results at 6. Commerce reiterates that purchase or sale

of significant productive facilities is considered to be “significant” for the purposes of

its practice, and that GreenFirst’s purchase of newsprint and saw mills from RYAM

therefore constituted a significant change. Id. at 6–7, 9.5 Commerce further explains

that:

        The crux of the CVD successor-in-interest methodology is not whether
        the predecessor company was individually examined but whether the
        successor company underwent significant changes in ownership,
        structure, and productive facilities, such that it is not the same entity
        as the predecessor company. In such circumstances where “significant
        changes” are present, it is not appropriate for the requesting company
        to inherit the cash deposit rate of essentially a different company.
        Rather, it is appropriate for the requesting company to be assigned the
        all-others rate from the investigation.

5As discussed, GreenFirst did not simply change its name, nor did it purchase the
entirety of RYAM— instead it purchased RYAM’s lumber and pulp mills, with RYAM
emerging from the transaction as the partial owner of GreenFirst’s parent company.
See Compl. at Attach. A.
Court No. 22-00097                                                             Page 9

Id. at 7–8. From this explanation, it is evident that Commerce focuses on whether a

company is essentially the same as its alleged predecessor when considering whether

to grant a CCR, and is not concerned with the company’s actual level of subsidization.

See Def. Br. at 6 (“Thus, the purpose of the rule is not to determine actual subsidy

rates . . . .”). However, this explanation does not address the question that the Court

posed in GreenFirst I concerning the reasoning behind Commerce’s practice, namely

why this practice is reasonable as applied to a non-examined company.              See

GreenFirst I, 604 F. Supp. 3d at 1373.

      Commerce offers no rationale explaining how its practice in Pasta from Turkey

extends beyond individually-examined respondents.         First, Commerce offers no

explanation as to why its determination is reasonable other than that its

determination in Pasta from Turkey was reasonable. See Remand Results at 7–9.

The respondent in Pasta from Turkey had been individually examined in the prior

administrative review, and Commerce relied upon that individual examination to

justify its determination that it would be “inappropriate to affirm a cash deposit rate

that had been calculated during a previous time.” Pasta from Turkey, 74 Fed. Reg.

at 47,227. That an individual rate had been calculated rendered Commerce’s decision

to deny a potentially preferential rate to a different company reasonable.         See

Marsan, 35 CIT at 232 (changed company not entitled to “a previously calculated

CVD cash deposit rate”). In contrast, RYAM’s rate was not “calculated” or based on

a “fact pattern,” such that the rate was unique to RYAM.           Rather, Commerce
Court No. 22-00097                                                            Page 10

determined RYAM’s rate by averaging the rates of non-selected companies. See

Certain Softwood Lumber Products from Canada, 83 Fed. Reg. 347, 348 (Dep’t

Commerce Jan. 3, 2018). Therefore, the reasoning behind Commerce’s determination

in Pasta from Turkey does not apply to GreenFirst’s CCR request, because GreenFirst

does not stand to inherit a “calculated” rate.

      Second, Commerce seems to assert that because Pasta from Turkey did not

expressly declare its rationale as limited only to situations where Commerce

individually examined a company, that the Court should accept its rationale as

reasonable under a different set of circumstances. See Def. Br. at 8; Remand Results

at 8 (“there is no language within Pasta from Turkey that expressly limits

Commerce’s successor-in-interest analysis”).      Regardless of whether Commerce

expressly articulated the limitations behind its Pasta from Turkey practice,

Commerce must nevertheless explain the reasoning behind its decision under the

present factual circumstances. See State Farm, 463 U.S. at 43 (“the agency must

examine the relevant data and articulate a satisfactory explanation for its action

including a ‘rational connection between the facts found and the choice made’”) (citing

Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962).

      If Commerce believes that it is inappropriate for a putative successor-in-

interest company to inherit a non-selected rate from a non-individually examined

company unless the successor-in-interest company is essentially the same as the non-

individually examined company previously assigned that rate, it must explain why
Court No. 22-00097                                                           Page 11

this specific transfer of a rate is inappropriate. 6   Commerce cannot justify its

determination with reasoning which is applicable to a different fact pattern without

explaining why the determination is nonetheless reasonable given the different fact

pattern.   On remand, Commerce must either reconsider or further explain its

determination that its Pasta from Turkey practice applies when a predecessor

company was not individually examined.

                                   CONCLUSION

      In accordance with the foregoing, it is

      ORDERED that Commerce’s determination is remanded for further

explanation or reconsideration consistent with this opinion; and it is further

      ORDERED that Commerce shall file its remand redetermination with the

Court within 90 days of this date; and it is further

      ORDERED that the parties shall have 30 days thereafter to file comments on

the remand redetermination; and it is further

      ORDERED that the parties shall have 30 days to file their replies to the

comments on the remand redetermination; and it is further

6 For example, if Commerce is concerned that highly-subsidized companies may be
able to receive the non-selected deposit rate through a CCR without volunteering for
individual review, or that allowing CCRs for companies with significant changes
would be administratively impracticable, it must specify the harms it wishes to avoid
in its redetermination.
Court No. 22-00097                                                              Page 12

      ORDERED that the parties shall file the joint appendix within 14 days of the

date of filing of responses to the comments on the remand redetermination; and it is

further

      ORDERED that Commerce shall file the administrative record within 14 days

of the date of filing of its remand redetermination.

                                                       /s/ Claire R. Kelly
                                                       Claire R. Kelly, Judge

Dated:       July 6, 2023
             New York, New York