Court Opinion

ID: 9962052
Source: CourtListenerOpinion
Date Created: 2024-04-22 16:03:01.465928+00
Date Added: 2024-06-11T08:19:44.045776
License: Public Domain

Slip Op. 24-50

                 UNITED STATES COURT OF INTERNATIONAL TRADE

 COMMITTEE OVERSEEING ACTION
 FOR LUMBER INTERNATIONAL TRADE
 INVESTIGATIONS OR NEGOTIATIONS,

                  Plaintiff,

          and

 FONTAINE INC., ET AL.,

                  Consolidated Plaintiffs,
                                               Before: Mark A. Barnett, Chief Judge
                                               Consol. Court No. 19-00122
            v.

 UNITED STATES,

                  Defendant,

          and

 FONTAINE INC., ET AL.,

                  Defendant-Intervenors.

                                 OPINION AND ORDER

[Sustaining in part and remanding in part the U.S. Department of Commerce’s final
results in the countervailing duty expedited review of certain softwood lumber products
from Canada.]

                                                              Dated: April 22, 2024
1Sophia J.C. Lin and Jessica M. Link, Picard Kentz & Rowe LLP, of Washington, DC,

argued for Plaintiff Committee Overseeing Action for Lumber International Trade

1 The briefs relevant to the issues addressed herein were filed in 2019 and 2020.    With
the passage of time, certain attorneys listed on those briefs are no longer with the firm
involved or the firm itself is no longer involved in the action. Certain government
attorneys have left government service or now occupy new positions. For the sake of
Consol. Court No. 19-00122                                                           Page 2

Investigations or Negotiations. On the brief were Lisa W. Wang, Andrew W. Kentz,
David A. Yocis, Nathanial M. Rickard, Whitney M. Rolig, Heather N. Doherty, and
Zachary J. Walker.

Alan G. Kashdan, Blank Rome, LLP, of Washington, DC, argued for Consolidated
Plaintiff/Defendant-Intervenor Government of Canada. On the brief were Joanne E.
Osendarp, Dean A. Pinkert, Lynn G. Kamarck, Daniel M. Witkowski, Julia K. Eppard,
and Stephen R. Halpin III, Hughes Hubbard & Reed LLP, of Washington, DC.

Nancy A. Noonan, ArentFox Schiff LLP, of Washington, DC, argued for Consolidated
Plaintiff/Defendant-Intervenor Government of Québec. On the brief were Matthew J.
Clark and Aman Kakar.

Mark B. Lehnardt, Law Offices of David L. Simon, PLLC, of Washington, DC, argued for
Consolidated Plaintiff/Defendant-Intervenor Fontaine Inc. On the brief was Elliot J.
Feldman, Baker Hostetler, LLP, of Washington, DC.

John R. Magnus, TradeWins LLC, of Washington, DC, argued for Consolidated
Plaintiff/Defendant-Intervenor Mobilier Rustique (Beauce) Inc.

Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, argued for Defendant United States.
On the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, and Stephen C. Tosini, Senior Trial
Counsel. Of counsel at the hearing was Jesus N. Saenz, Attorney, Office of the Chief
Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, DC.

Aaron R. Hutman, Pillsbury Winthrop Shaw Pittman LLP, of Washington, DC, argued for
Defendant-Intervenor Government of New Brunswick. On the brief were Stephan E.
Becker and Moushami P. Joshi.

Edward M. Lebow, Haynes and Boone, LLP, of Washington, DC, argued for Defendant-
Intervenors Les Produits Forestiers D&G Ltée and Marcel Lauzon Inc.

Rajib Pal, Richard L.A. Weiner, and Alex L. Young, Sidley Austin LLP, of Washington,
DC, for Defendant-Intervenors North American Forest Products Ltd, Parent-Violette
Gestion Ltée, and Le Groupe Parent Ltée.

accuracy, the court lists the attorneys included on the last merits brief filed and their
respective firms or positions as of the time of filing.
Consol. Court No. 19-00122                                                          Page 3

Yohai Baisburd, Jonathan M. Zielinski, and James E. Ransdell, Cassidy Levy Kent
(USA) LLP, of Washington, DC, for Defendant-Intervenor Scierie Alexandre Lemay &
Fils Inc.

       Barnett, Chief Judge: In 2019, the U.S. Department of Commerce (“Commerce”

or “the agency”) issued its final results in the countervailing duty (“CVD”) expedited

review of certain softwood lumber products from Canada. See Certain Softwood

Lumber Prods. From Can., 84 Fed. Reg. 32,121 (Dep’t Commerce July 5, 2019) (final

results of CVD expedited review) (“Final Results”), ECF No. 99-5, and accompanying

Issues and Decision Mem., C-122-858 (June 28, 2019) (“I&D Mem.”), ECF No. 99-6. In

Committee Overseeing Action for Lumber International Trade Investigations or

Negotiations v. United States (Coalition IV), 45 CIT __, 535 F. Supp. 3d 1336 (2021),

this court vacated prospectively Commerce’s Final Results, finding an absence of

statutory authority for Commerce to conduct CVD expedited reviews. The matter

returns to the court for resolution of the parties’ substantive claims following the U.S.

Court of Appeals for the Federal Circuit’s (“Federal Circuit”) reversal, holding that

Commerce has statutory authority to conduct CVD expedited reviews. Comm.

Overseeing Action for Lumber Int’l Trade Investigations or Negots. v. United States

(Coalition V), 66 F.4th 968, 979 (Fed. Cir. 2023). For the reasons discussed herein,

Commerce’s Final Results will be remanded in part and sustained in part.2

2 The administrative record is divided into a Public Administrative Record (“PR”), ECF

No. 99-2, and a Confidential Administrative Record (“CR”), ECF Nos. 99-3, 99-4.
Parties submitted joint appendices containing record documents cited in their briefs and
requested by the court. Public J.A. (“PJA”), ECF No. 148; Confid. J.A. (“CJA”), ECF No.
149; [Public] Correction to J.A. (“Rev. PJA”), ECF No. 230 (correct version of PJA Tab
Consol. Court No. 19-00122                                                         Page 4

                                       BACKGROUND

  I.      Commerce’s Authority to Conduct CVD Expedited Reviews

       CVD expedited reviews are principally a creature of Commerce’s regulations,

specifically provided for in 19 C.F.R. § 351.214(k)(2020). 3 In the decision memorandum

accompanying the Final Results, Commerce relied on section 103(a) of the Uruguay

Round Agreements Act (“URAA” or “the Act”), 19 U.S.C. § 3513(a), as authority for the

promulgation of 19 C.F.R. § 351.214(k). I&D Mem. at 19. Commerce stated that 19

C.F.R. § 351.214(k) is intended “[t]o implement Article 19.3 of the [Subsidies and

Countervailing Measures (“SCM”)] Agreement” in CVD investigations in which

Commerce limits the number of individually examined respondents pursuant to 19

U.S.C. § 1677f-1(e)(2)(A). I&D Mem. at 19–20 & n.124 (first alteration in original)

66); Rev. and Add. to [PJA], ECF Nos. 239, 239-1, 239-2; Rev. and Add. to [CJA] (“1st
Suppl. CJA”), ECF Nos. 240, 240-1, 240-2 (complete versions of Tabs 47 and 50, and
new Tabs 67 and 68); Submission of Admin. R. Doc. Referenced at the Feb. 14, 2024
Hr’g, ECF No. 243; Submission of R. Doc. Following Oral Arg., ECF Nos. 244 (confid.),
245 (public). The court references the confidential version of record documents when
available unless otherwise specified.
3 The court cites to the 2020 edition of the Code of Federal Regulations unless

otherwise specified. On October 20, 2021, subsection (k) was redesignated as
subsection (l) without material change. See Regulations to Improve Admin. and
Enforcement of Antidumping and Countervailing Duty Laws, 86 Fed. Reg. 52,300,
52,371, 52,373–74 (Dep’t Commerce Sept. 20, 2021). For consistency with prior
proceedings in this case, the court refers to 19 C.F.R. § 351.214(k). Broadly speaking,
19 C.F.R. § 351.214 governs new shipper reviews. However, subsection (k) of the
regulation provides for an administrative procedure referred to as a CVD expedited
review. Subsection (k) permits a respondent that was not “select[ed] for individual
examination” or “accept[ed] as a voluntary respondent” in a CVD investigation in which
Commerce “limited the number of exporters or producers to be individually examined” to
“request a review . . . within 30 days of the date of publication in the Federal Register of
the [CVD] order.” 19 C.F.R. § 351.214(k)(1).
Consol. Court No. 19-00122                                                          Page 5

(quoting Antidumping Duties; Countervailing Duties, 61 Fed. Reg. 7,308, 7,318 (Dep’t

Commerce Feb. 27, 1996) (notice of proposed rulemaking and request for public

comments)). Commerce asserted that section 103(a) of the URAA afforded the agency

“the authority to promulgate regulations to ensure that remaining obligations under the

URAA which were not set forth in particular statutory provisions were set forth in the

Code of Federal Regulations.” Id. at 19.

       In this lead case, Plaintiff, Committee Overseeing Action for Lumber International

Trade Investigations or Negotiations (“Plaintiff” or “the Coalition”), challenged

Commerce’s authority to promulgate 19 C.F.R. § 351.214(k) pursuant to section 103(a)

of the URAA. See Compl. ¶¶ 15–16, ECF No. 2.4 The Act, which became effective on

January 1, 1995, amended the domestic antidumping and countervailing duty laws in

connection with the Uruguay Round Agreements, which included the SCM Agreement.

See 19 U.S.C. §§ 3511(a)(1), (d), & 3501(7). 5 Section 103(a) of the URAA delegated

4 The Coalition is an association of domestic manufacturers, producers, and

wholesalers of softwood lumber products. Compl. ¶ 9.
5 Article 19.3 of the SCM Agreement states, inter alia:

       When a countervailing duty is imposed in respect of any product, such
       countervailing duty shall be levied, in the appropriate amounts in each
       case, on a non-discriminatory basis on imports of such product from all
       sources found to be subsidized and causing injury, except as to imports
       from those sources which have renounced any subsidies in question or
       from which undertakings under the terms of this Agreement have been
       accepted. Any exporter whose exports are subject to a definitive
       countervailing duty but who was not actually investigated for reasons other
       than a refusal to cooperate, shall be entitled to an expedited review in
       order that the investigating authorities promptly establish an individual
       countervailing duty rate for that exporter.
Consol. Court No. 19-00122                                                            Page 6

authority to “appropriate officers” to promulgate regulations “necessary to ensure that

any provision of this Act, or amendment made by this Act, . . . is appropriately

implemented.” 19 U.S.C. § 3513(a)(2).

        In reviewing Plaintiff’s claim, this court held “that Commerce exceeded its

authority to the extent that it promulgated 19 C.F.R. § 351.214(k) pursuant to URAA

§ 103(a).” Coalition III, 483 F. Supp. 3d at 1263–64. The court grounded its holding

primarily in the plain language of section 103(a), which only grants Commerce authority

to issue regulations necessary to implement enacted provisions of the URAA. Id. at

1264.

        Before the court, Defendant United States (“the U.S. Government” or “the United

States”) and certain Canadian parties appearing as Defendant-Intervenors with respect

to this issue “offered various post hoc justifications for Commerce’s regulation and the

agency’s administration of CVD expedited reviews.” Id. at 1271–72. Those

justifications included Commerce’s authority to issue interim regulations regarding the

URAA, Commerce’s authority to reconsider prior decisions, and various other statutory

provisions in which the Canadian parties had identified gaps for Commerce to fill using

SCM Agreement, Annex 1A, art. 19.3, Marrakesh Agreement Establishing the World
Trade Org., Apr. 15, 1994, 1869 U.N.T.S. 14. The court did not find it necessary or
appropriate to construe the intent of this provision because it is not self-executing and
has legal force only insofar as there is implementing legislation. See Comm.
Overseeing Action for Lumber Int’l Trade Investigations or Negots. v. United States
(Coalition III), 44 CIT __, __, 483 F. Supp. 3d 1253, 1266 (2020).
Consol. Court No. 19-00122                                                         Page 7

the CVD expedited review procedure. See id. 6 In light of these post hoc justifications,

the court remanded the matter for the agency to address the alternatives and provide

the explanation necessary for judicial review. See id. at 1272–73.

       On remand, Commerce reviewed the statutory provisions, including 19 U.S.C.

§§ 1671d, 1675(a),(b), and 1677f-1, 7 and found that none of them explicitly or implicitly

authorized Commerce to conduct CVD expedited reviews. Final Results of

Redetermination Pursuant to Ct. Remand (“Remand Results”) at 10–12, 19–21, ECF

No. 173-1. Additionally, after considering the court’s prior holdings on alternative

justifications, Commerce concluded that it “lack[ed] the statutory authority” to

promulgate 19 C.F.R. § 351.214(k) or conduct CVD expedited reviews. Id. at 12. 8

Finding that Commerce had discharged its duty to consider the alternatives and upon

agreeing with the agency’s interpretation of the provisions not to confer authority for the

6 No parties argued, nor did the court find, that these statutory provisions were plain in

this regard. Rather, the parties argued as to whether Congress left gaps for Commerce
to fill, and whether Commerce’s CVD expedited review procedure reflected a
permissible method of doing so. See, e.g., Joint Br. of Def.-Ints. Gov’t of Can. and
Gov’t of Que. in Opp’n to Pl.’s Mot. for J. on the Agency R. at 15–18, 22–27, ECF No.
120.
7 Section 1671d governs Commerce’s final determinations following a CVD

investigation. Section 1675(a) and (b) governs administrative reviews and changed
circumstances reviews, respectively. Section 1677f-1, as will be discussed herein, sets
forth the procedures for Commerce’s use of sampling and averaging to determine
antidumping or countervailing duties.
8 In the Remand Results, Commerce relied on Coalition III to “presume” that URAA

section 103(a) did not authorize the regulation, Remand Results at 10, but did not state
that the agency considered the alternative theories under protest, see id.; Viraj Grp.,
Ltd. v. United States, 343 F.3d 1371, 1376 (Fed. Cir. 2003) (a decision adopted by
Commerce “under protest” and subsequently sustained places the U.S. Government in
the position of the non-prevailing party for purposes of preserving its right to appeal).
Consol. Court No. 19-00122                                                        Page 8

regulation, the court sustained Commerce’s Remand Results. Coalition IV, 535 F.

Supp. 3d at 1349–50, 1364. 9 The court vacated 19 C.F.R. § 351.214(k) and vacated

prospectively Commerce’s Final Results. Id. at 1352–64.

       Certain Canadian parties appealed the court’s decision to the Federal Circuit.

See Coalition V, 66 F.4th at 976–77. The United States did not participate in the

Canadian parties’ appeal until, following oral argument, the Federal Circuit ordered the

U.S. Government to file an amicus brief. See id. In that brief, the U.S. Government, for

the first time, adopted the argument that 19 U.S.C. § 1677f-1(e) authorized CVD

expedited reviews. Id. at 976–77.

       Section 1677f-1(e) sets forth a general rule that when Commerce is “determining

countervailable subsidy rates under section 1671b(d), 1671d(c), or 1675(a) of this title,

the [agency] shall determine an individual countervailable subsidy rate for each known

exporter or producer of the subject merchandise.” 19 U.S.C. § 1677f-1(e)(1). The

statute also provides certain exceptions, such that if Commerce “determines that it is

not practicable to determine individual countervailable subsidy rates under paragraph

(1) because of the large number of exporters or producers involved in the investigation

or review,” Commerce may instead “determine individual countervailable subsidy rates

for a reasonable number of exporters or producers by limiting its examination to . . . a

9 Insofar as Commerce disclaimed authority to conduct CVD expedited reviews

pursuant to the considered provisions, Remand Results at 11–12, 19–21, there was no
agency decision that interpreted those sections to provide such authority and as to
which Commerce could have sought judicial deference for its interpretation of statutory
ambiguities.
Consol. Court No. 19-00122                                                           Page 9

sample of exporters or producers” or the “exporters and producers accounting for the

largest volume of the subject merchandise from the exporting country that [Commerce]

determines can be reasonably examined.” Id. § 1677f-1(e)(2)(A). 10 Section 1677f-1(e)

thus operates in service of agency determinations issued pursuant to the specified

statutory provisions.

       In considering this issue, the Federal Circuit stated that “the question of whether

there is statutory authority for [section] 351.214(k) . . . presents an issue of law, decided

de novo, requiring no exercise of discretion that belongs to the agency under [the

Chenery line of cases].” 11 Coalition V, 66 F.4th at 976. With the Chenery reference

indicating that the appellate court found the statute plain and providing no discretion to

10 Commerce may also determine a single country-wide subsidy rate to be applied to all

exporters and producers. 19 U.S.C. § 1677f-1(e)(2)(B).
11 Those cases consist of Securities and Exchange Commission v. Chenery Corp.

(Chenery I), 318 U.S. 80 (1943), and Securities and Exchange Commission v. Chenery
Corp. (Chenery II), 332 U.S. 194 (1947). Chenery II states the general rule that “a
reviewing court, in dealing with a determination or judgment which an administrative
agency alone is authorized to make, must judge the propriety of such action solely by
the grounds invoked by the agency.” 332 U.S. at 196. When, however, “the sole issue
is one of statutory construction,” the court does not intrude on the agency’s discretion
insofar as “the plain language of the statute compels [a particular] conclusion.” Koyo
Seiko Co. v. United States, 95 F.3d 1094, 1101 (Fed. Cir. 1996). Nevertheless,
Chenery II precludes a court from “affirm[ing] on a basis containing any element of
discretion—including discretion to find facts and interpret statutory ambiguities—that is
not the basis the agency used, since that would remove the discretionary judgment from
the agency to the court.” Id. (citation omitted); see also Women Involved in Farm
Econs. v. U.S. Dept. of Agric., 876 F.2d 994, 998 (DC Cir. 1989) (noting that Chenery I
“ordinarily prevents agency counsel from proffering alternative theories—not explicitly
embraced by a department or agency head—to support a challenged regulation”
because to do so “risks judicial ‘intru[sion] upon the domain which Congress has
exclusively entrusted to an administrative agency’” (quoting Chenery I, 318 U.S. at 88)
(alterations in original)).
Consol. Court No. 19-00122                                                        Page 10

Commerce, the Federal Circuit located “statutory authority for the expedited-review

process . . . in the URAA’s enactment of [section] 1677f-1(e) to favor individual-

company determinations and the URAA’s grant of regulatory-implementation power to

Commerce in [section] 3513(a).” Id. at 977. 12

       While Commerce, thus, may conduct CVD expedited reviews pursuant to section

1677f-1(e), that provision is not among the determinations listed in 19 U.S.C.

§ 1516a(a)(1) that are judicially reviewable pursuant to 28 U.S.C. § 1581(c).

Accordingly, Commerce’s CVD expedited review determinations are reviewable

pursuant to 28 U.S.C. § 1581(i). 13 See Comm. Overseeing Action for Lumber Int’l

Trade Investigations or Negots. v. United States (Coalition II), 43 CIT __, 413 F. Supp.

12 The Federal Circuit based its conclusion on language in the Statement of

Administrative Action accompanying the URAA and set forth various reasons why CVD
expedited reviews may be necessary to the implementation of “the individualized-
determination preference of § 1677f-1(e).” Coalition V, 66 F.4th at 977–78. The
appellate court also found support in 19 U.S.C. § 1677m, which permits Commerce to
select voluntary respondents in investigations or administrative reviews that timely
submit the necessary information. Id. at 978. Lastly, the appellate court acknowledged
that CVD expedited reviews “do not occur during a CVD investigation, but only after
publication of a CVD order,” but did not find the timing material to its construction of the
statute. See id. at 978–79.
13 In 2020, section 1581(i)(4) was redesignated as section 1581(i)(1)(D) without material

change. See 28 U.S.C. § 1581(i)(1)(D) (2018 & Supp. II 2020). Section 1581(i)(1)(D)
provides the court with exclusive jurisdiction over a civil action commenced against the
United States “that arises out of any law . . . providing for” the “administration and
enforcement with respect to the matters referred to in subparagraphs (A) through (C) of
[paragraph (1)] and subsections (a)-(h) of this section.” 28 U.S.C. § 1581(i)(1)(D).
Subsection (i) cannot confer jurisdiction over an antidumping or countervailing
determination that is judicially reviewable pursuant to 19 U.S.C. § 1516a (2018) (which
does not include CVD expedited reviews). 28 U.S.C. § 1581(i)(2)(A). Judicial review of
those determinations is reserved to 28 U.S.C. § 1581(c).
Consol. Court No. 19-00122                                                            Page 11

3d 1334 (2019) (finding jurisdiction pursuant to 28 U.S.C. § 1581(i)(4)(2018)); Coalition

V, 66 F.4th at 976 n.4 (finding “no reversible error” in this exercise of jurisdiction). 14

 II.       Commerce’s Final Results and Procedural Posture 15

       With the statutory authority addressed, the court reviews the parties’ substantive

challenges to the Final Results. In that determination, issued on July 5, 2019,

Commerce announced the results of expedited reviews requested by eight Canadian

producers and their affiliates that were not selected for individual examination during the

investigation and had been assigned the “all-others” rate of 14.19 percent. See

generally Certain Softwood Lumber Prods. From Can., 83 Fed. Reg. 347, 348–49 (Dep’t

Commerce Jan. 3, 2018) (am. final affirmative CVD determination and CVD order)

(“CVD Order”); Certain Softwood Lumber Prods. From Can., 83 Fed. Reg. 9,833, 9,833

(Dep’t Commerce March 8, 2018) (initiation of expedited review of the [CVD Order])

(“Initiation Notice”). 16 For those companies, Commerce determined reduced or de

minimis rates as follows: (1) Les Produits Forestiers D&G Ltée and its cross-owned

affiliates (“D&G”): 0.21 percent; (2) Marcel Lauzon Inc. and its cross-owned affiliates

14 Prior to resolving the court’s jurisdiction, this court issued an opinion vacating a

temporary restraining order requested by Plaintiff barring U.S. Customs and Border
Protection (“CBP”) from liquidating unliquidated entries of softwood lumber produced or
exported by Canadian companies that received reduced or de minimis rates in the Final
Results and denying the Coalition’s corresponding request for a preliminary injunction.
Comm. Overseeing Action for Lumber Int’l Trade Investigations or Negots. v. United
States (Coalition I), 43 CIT __, 393 F. Supp. 3d 1271 (2019).
15 When necessary, additional background specific to each claim accompanies the

court’s analysis of the claim.
16 The period of review (“POR”) for the CVD expedited review was January 1, 2015,

through December 31, 2015, the same as the period of investigation for the
investigation. Initiation Notice, 83 Fed. Reg. at 9,833.
Consol. Court No. 19-00122                                                        Page 12

(“MLI”): 0.42 percent; (3) North American Forest Products Ltd. and its cross-owned

affiliates (“NAFP”): 0.17 percent; (4) Roland Boulanger & Cie Ltée and its cross-owned

affiliates (“Roland”): 0.31 percent; (5) Scierie Alexandre Lemay & Fils Inc. and its cross-

owned affiliates (“Lemay”): 0.05 percent; (6) Fontaine Inc. and its cross-owned affiliates

(“Fontaine”): 1.26 percent; (7) Mobilier Rustique (Beauce) Inc. and its cross-owned

affiliates (“Rustique”): 1.99 percent; and (8) Produits Matra Inc. and Sechoirs de Beauce

Inc. and their cross-owned affiliate (“Matra”): 5.80 percent. Final Results, 84 Fed. Reg.

at 32,122.

       The rates calculated for D&G, MLI, NAFP, Roland, and Lemay are considered de

minimis; 17 therefore, Commerce stated it would instruct CBP “to discontinue the

suspension of liquidation and the collection of cash deposits of estimated countervailing

duties on all shipments of softwood lumber produced and exported by” those companies

that were entered on or after July 5, 2019; “liquidate, without regard to countervailing

duties, all suspended entries of shipments of softwood lumber produced and exported

by” those companies; and “refund all cash deposits of estimated countervailing duties

collected on all such shipments.” Id. As to the companies receiving a lower—but not de

minimis—rate (Fontaine, Rustique, and Matra), Commerce stated it would instruct CBP

17 For ease of reference, the court refers to D&G, MLI, NAFP, Roland, and Lemay

collectively as the de minimis companies.
Consol. Court No. 19-00122                                                         Page 13

“to collect cash deposits of estimated countervailing duties” at the lower rates calculated

in the Final Results. Id. 18

       Plaintiff commenced this action on July 15, 2019. Summons, ECF No. 1. After

ruling on jurisdiction, Coalition II, 413 F. Supp. 3d 1334, the court consolidated Court

Nos. 19-00154, 19-00164, 19-00168, and 19-00170 under this lead action. Order (Nov.

12, 2019), ECF No. 93. 19 The court heard oral argument on the merits claims on

February 14, 2024. Docket Entry, ECF No. 241.

       The following table lists the filings before the court pertinent to the remaining

claims:

18 In Coalition IV, the court ordered Commerce to reinstate the de minimis companies in

the CVD Order prospectively and, for the remaining companies, to “impose a cash
deposit requirement based on the all-others rate from the investigation or the company-
specific rate determined in the most recently completed administrative review in which
the company was reviewed.” 535 F. Supp. 3d at 1363. Following Coalition V, the court
granted the de minimis companies’ motion (with the exception of Roland, which did not
participate in the litigation) to reinstate their exclusion from the CVD Order. See
generally Comm. Overseeing Action for Lumber Int’l Trade Investigations or Negots. v.
United States (Coalition VI), 47 CIT __, __, 665 F. Supp. 3d 1347, 1355 (2023).
19 The consolidated actions were filed by Fontaine, Rustique, the Government of

Québec (“GOQ”), and the Government of Canada (“GOC”). Various Canadian parties
intervened on the plaintiff or defendant side of the respective actions; their filings are
reflected in the table of briefs.
Consol. Court No. 19-00122                                                            Page 15

 Consol. Pl. [GOC’s] Rule 56.2 Mot. for J. on the Agency R., ECF No. 105, and
 accompanying Confid. Consol. Pl. [GOC’s] Mem. in Supp. of Rule 56.2 Mot. for J. on
 the Agency R., ECF No. 156 (“GOC Mem.”).

 Consol. Pl. [GOQ’s] Rule 56.2 Mot. for J. on the Agency R., ECF No. 106, and
 accompanying Consol. Pl.’s Mem. in Supp. of Mot. for J. on the Agency R., ECF No.
 145 (“GOQ Mem.”).

 Consol. Pl.-Int.’s [GOC’s] Mem. in Supp. of Rule 56.2 Mots. for J. on the Agency R.
 Submitted by [Fontaine], [Rustique], and the [GOQ] (“GOC Int. Mem.”), ECF No. 108.
                                    Response Briefs

 Confid. Def.-Int. [Coal.’s] Resp. to Rule 56.2 Mots. for J. on the Agency R. Submitted
 by [Fontaine], [Rustique], the [GOC], and the [GOQ] (“Coal. Resp.”), ECF No. 114.

 U.S. Resp.
                                         Reply Briefs

 Consol. Pl. [Rustique’s] Reply Mem. in Supp. of Rule 56.2 Mot. for J. on the Agency R.
 (“Rustique Reply”), ECF No. 126.

 Confid. Corrected Reply Br. of [Fontaine] in Supp. of its Rule [56.2] Mot. for J. on the
 Agency R. (“Fontaine Reply”), ECF No. 152.

 Consol. Pl. [GOC’s] Reply Mem. in Supp. of Rule 56.2 Mot. for J. on the Agency R.
 (“GOC Reply”), ECF No. 132.

 Confid. Revised Consol. Pl. [GOQ’s] Reply to Resp. of Def. United States and Def.-Int.
 [Coal.] to Rule 56.2 Mots. for J. on the Agency R. Submitted by [Fontaine], [Rustique],
 the [GOC], and the [GOQ] (“GOQ Reply”), ECF No. 146.

 Consol. Pl.-Int. [GOC’s] Reply Mem. in Supp. of Rule 56.2 Mots. for J. on the Agency
 R. Submitted by [Fontaine], [Rustique], and the [GOQ] (“GOC Int. Reply”), ECF No.
 136. 22

22 In its capacity as consolidated plaintiff-intervenor, the GOQ filed letters in lieu of briefs

supporting the arguments made by consolidated plaintiffs. Consol. Pl.-Int. [GOQ’s]
Letter in Lieu of Mot. for J. on the Agency R., ECF No. 107; Consol. Pl.-Int. [GOQ’s]
Letter in Lieu of Reply Br., ECF No. 135.
Consol. Court No. 19-00122                                                         Page 16

                           JURISDICTION AND STANDARD OF REVIEW

         As noted, the court exercises jurisdiction pursuant to 28 U.S.C. § 1581(i)(1)(D).

The court reviews an action commenced pursuant to 28 U.S.C. § 1581(i) in accordance

with the standard of review set forth in the Administrative Procedure Act (“APA”), 5

U.S.C. § 706, as amended. See 28 U.S.C. § 2640(e). Section 706 directs the court,

inter alia, to “hold unlawful and set aside agency action, findings, and conclusions found

to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law.” 5 U.S.C. § 706(2)(A). “An abuse of discretion occurs where the decision is

based on an erroneous interpretation of the law, on factual findings that are not

supported by substantial evidence, or represents an unreasonable judgment in weighing

relevant factors.” Star Fruits S.N.C. v. United States, 393 F.3d 1277, 1281 (Fed. Cir.

2005).

                                         DISCUSSION

  I.        The Coalition’s Claims

         The Coalition challenges three aspects of the Final Results: Commerce’s

treatment of the de minimis companies, Commerce’s decision not to attribute supplier

subsidies to the CVD expedited review respondents, and Commerce’s adjustment to the

benchmark used to calculate the benefit from the Government of New Brunswick’s

property tax program. Coal. Mem. at 32–47; Coal. Reply at 12–24. The U.S.

Government and several Defendant-Intervenors responded in support of Commerce’s
Consol. Court No. 19-00122                                                      Page 17

determinations. U.S. Resp. at 14–31; CGP Resp. at 31–44; D&G/MLI Resp. at 2–5;

NAFP Resp. at 14–23; GNB Resp. at 9–14.

      The court will sustain Commerce’s treatment of the de minimis companies and

benchmark adjustment but will remand Commerce’s decision not to attribute subsidies

received by suppliers to the respondents.

          A.     Commerce’s Treatment of the De Minimis Companies

      The Coalition contends that Commerce violated 19 C.F.R. § 351.214(k)(3)(iii)

when it instructed CBP to liquidate entries from the de minimis companies “without

regard to countervailing duties” and to refund cash deposits paid on those entries.

Coal. Mem. at 32–33. That regulation states that a determination pursuant to

subsection (k) “will not be the basis for the assessment of countervailing duties.” 19

C.F.R. § 351.214(k)(3)(iii). The Coalition points out language in the liquidation and cash

deposit instructions regarding “the assessment of countervailing duties,” which it claims

is inconsistent with the regulation. Coal. Mem. at 33 (citing CBP Message No. 9234309

(Aug. 22, 2019) (“Liquidation Instructions”), PR 776, CJA Tab 65; CBP Message No.

9288315 (Oct. 15, 2019) (“Cash Deposit Instructions”), PR 784, Rev. PJA Tab 66); see

also Coal. Reply at 13.

      Regulations, like statutes, must be “read as a whole.” Apex Frozen Foods

Private Ltd. v. United States, 862 F.3d 1322, 1336 (Fed. Cir. 2017). The regulation here

goes on to state that, subject to verification requirements, Commerce “may exclude

from the countervailing duty order in question any exporter for which the [agency]

determines an individual net countervailable subsidy rate of zero or de minimis.” 19
Consol. Court No. 19-00122                                                         Page 18

C.F.R. § 351.214(k)(3)(iv). In directing CBP to exclude the de minimis companies from

the CVD Order, Commerce adhered to the plain language of the regulation and

Commerce’s prior interpretation of the provisions. As Commerce explained in the

preamble accompanying the regulation:

      The objective [of a CVD expedited review] is to provide a noninvestigated
      exporter with its own cash deposit rate prior to the arrival of the first
      anniversary month of the order, at which point the exporter may request
      an administrative review. In this regard, in paragraph (k)(3)(iii) we have
      clarified that the final results of a paragraph (k) review will not be the basis
      for the assessment of countervailing duties, except, of course, under the
      automatic assessment provisions of § 351.212(c).

      Finally, because the [agency] will be reviewing the original period of
      investigation, we have provided in paragraph (k)(3)(iv) for the exclusion
      from a CVD order of a firm for which the [agency] determines an individual
      countervailable subsidy rate of zero or de minimis.

Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296, 27,321 (Dep’t

Commerce May 19, 1997) (final rule) (“Preamble”) (emphases added).

      “Assessment,” for these purposes, refers to the “‘retrospective’ assessment

system” used in the United States “under which final liability for antidumping and

countervailing duties is determined after merchandise is imported.” 19 C.F.R.

§ 351.212(a). Pursuant to this retrospective system, “[g]enerally, the amount of duties

to be assessed is determined in a review of the order covering a discrete period of

time,” id.; in CVD cases, those reviews consist of administrative reviews and new

shipper reviews, see id. § 351.212(b)(2). Thus, 19 C.F.R. § 351.214(k)(3)(iii) confirms

that the final results of a CVD expedited review do not trigger the assessment provision
Consol. Court No. 19-00122                                                        Page 19

in 19 C.F.R. § 351.212(b)(2). 23 Read together, 19 C.F.R. § 351.214(k)(iii) and (iv)

demonstrate that entities that receive a zero or de minimis rate in a CVD expedited

review are to be excluded from the underlying order, much as they would have been

had they received that rate during the original investigation. Entities that receive an

above-de minimis rate, however, are not, at the time, assessed duties based on the

results of the expedited review but are assigned a new cash deposit rate based on

those results pending assessment pursuant to a subsequent administrative review. 24

       Exclusion from the order from the time of its issuance is further confirmed by the

reference to 19 C.F.R. § 351.204(e)(1) in 19 C.F.R. § 351.214(k)(3)(iv). Section

351.204(e)(1) states that Commerce “will exclude from an affirmative final determination

. . . or an order . . . any exporter or producer for which the [agency] determines an

individual weighted-average dumping margin or individual net countervailable subsidy

rate of zero or de minimis.” 19 C.F.R. § 351.204(e)(1). As such, the exclusion

23 The reference in 19 C.F.R. § 351.212(b)(2) to assessment based on new shipper

reviews does not specify any particular subsection of 19 C.F.R. § 351.214; thus, the
specific language of 19 C.F.R. § 351.214(k)(iii) makes plain that CVD expedited reviews
are not covered by the assessment provision of 19 C.F.R. § 351.212(b)(2) applicable to
new shipper reviews.
24 The Coalition’s assertion that “Commerce asked CBP to conduct the ‘assessment of

countervailing duties . . . on entries of this merchandise,’” Coal. Mem. at 33 (emphasis
added), mischaracterizes Commerce’s instructions. The Liquidation Instructions and
Cash Deposit Instructions merely observe that “[t]he assessment of countervailing
duties by CBP on entries of this merchandise is subject to the provisions of Section 778
of the Tariff Act of 1930, as amended,” and provide further instructions for CBP’s
treatment of interest for overpayments or underpayments of estimated duties, as the
case may be. Liquidation Instructions ¶ 6; see also Cash Deposit Instructions ¶ 4.
Commerce’s inclusion of the term “assessment” in the instructions does not constitute a
regulatory violation when the substantive aspects of Commerce’s instructions are
entirely consistent with the governing regulation.
Consol. Court No. 19-00122                                                         Page 20

referenced in section 351.214(k)(3)(iv) appears intended to function in the same way as

an exclusion based on section 351.204(e)(1). This interpretation is consistent with the

coincident periods of investigation and review, see id. § 351.214(k)(3)(i), and the

purpose of the CVD expedited review to provide an exporter with an individual rate

before the first administrative review, see Preamble, 62 Fed. Reg. at 27,321. 25

       Commerce’s instructions were therefore necessary to implement the results of

the CVD expedited review with respect to the de minimis companies because the CVD

Order no longer provided a basis for the suspension of liquidation of those companies’

entries or the collection or retention of cash deposits. Accordingly, the Coalition’s

challenge fails.

          B.       Supplier Subsidies

                   1.   Additional Background

       Information placed on the record of the CVD expedited review demonstrated that

Rustique, D&G, and D&G’s affiliate, Portbec, purchased subject merchandise from

unaffiliated suppliers and either further processed the merchandise prior to exportation

to the United States as subject merchandise or resold the merchandise without further

processing. Rustique reported that it “[o]ccasionally . . . buys sawn white cedar

softwood from Canadian producers that is then further processed in Rustique’s factory

25 At oral argument, the Coalition argued that 19 C.F.R. § 351.214(k)(3)(iv) does not

contemplate exclusion from a CVD order from the time of issuance but instead refers to
prospective exclusion. Oral Arg. 2:27:00–2:30:00 (time stamp from the recording),
https://www.cit.uscourts.gov/sites/cit/files/20240214_19-00122_MAB.mp3. For the
reasons stated, the Coalition’s argument lacks merit.
Consol. Court No. 19-00122                                                         Page 21

into finished merchandise for sale in Canada or in the United States.” [Rustique] Apr.

12 Questionnaire Resp. (Apr. 12, 2018) (“Rustique IQR”) at 8, CR 114, PR 238, CJA

Tab 11. Portbec reported that it “exported (and on those sales also served as an

importer of record) . . . a limited volume of subject merchandise produced by other

companies in Canada.” Resps. of [D&G] to the [CVD] Questionnaire (Apr. 12, 2018) at

ECF p. 58, CR 99, PR 223, CJA Tab 10a. Portbec “also served in a limited capacity as

a remanufacturer whereby it purchased lumber in Canada and cut that lumber down to

thin widths for resale.” Id.

       In light of this information, the Coalition urged Commerce to attribute subsidies

received by unaffiliated suppliers of subject merchandise to Rustique and D&G/Portbec.

See [The Coal.’s] Case Br. (Mar. 11, 2019) (“Coal. Case Br.”) at 19–34, CR 900, PR

717 1st Suppl. CJA Tab 47. The Coalition argued that, for any respondents acting as

resellers, Commerce should establish combination rates pursuant to 19 C.F.R.

§ 351.107(b) or cumulate subsidies pursuant to Commerce’s trading company

regulation, 19 C.F.R. § 351.525(c). Id. at 24–29. As for subject merchandise further

processed by Rustique or D&G/Portbec, the Coalition first averred that there is “no

question of ‘upstream subsidies’ or ‘passthrough’ . . . raised by the situation of the

‘independent remanufacturer’” because the supplier subsidies are provided with respect

to the “manufacture [or] production” of subject merchandise, not inputs into “the

production or manufacture of subject merchandise.” Id. at 30 n.85 (alteration in

original). The Coalition thus argued that Commerce should likewise calculate

combination rates that include the all-others rate from the investigation applied to the
Consol. Court No. 19-00122                                                         Page 22

producer and the subsidy rate specific to the expedited review respondent. Id. at 29–

34. For this latter scenario, the Coalition relied on an earlier softwood lumber

proceeding in which Commerce included sales of “remanufactured lumber” (i.e.,

“softwood lumber that undergoes some further processing”) in the subsidy calculations.

Id. at 31 & n.87 (citing Issues and Decision Mem. for Certain Softwood Lumber Prods.

from Can., C-122-839 (Dec. 5, 2005) at 5, 20, 38; 26 Issues and Decision Mem. for

Certain Softwood Lumber Prods. From Can., C-122-839 (Mar. 21, 2002) at 25 (“Lumber

IV Mem.”)). 27

       Commerce disagreed on all points. First, the agency, unlike Plaintiff,

characterized lumber that underwent further processing as “inputs to the respondents’

exports to the United States.” I&D Mem. at 38. 28 Noting that the Coalition had not

submitted an upstream subsidy allegation, Commerce stated that it “did not investigate

upstream subsidies” and therefore “lacked a basis to attribute subsidies” provided to the

“unaffiliated suppliers.” Id. Commerce did not address the Coalition’s reliance on

Lumber IV. See id.

26 Commerce’s decision memoranda are publicly available at https://access.trade.gov/

public/FRNoticesListLayout.aspx, with separate links for pre- and post-June 2021
memoranda.
27 The Lumber IV Memorandum is dated March 21, 2001, which appears to be a

typographical error given that the associated Federal Register notice is dated April 2,
2002. See Certain Softwood Lumber Prods. From Can., 67 Fed. Reg. 15,545 (Dep’t
Commerce Apr. 2, 2002) (notice of final affirmative CVD determination and final neg.
critical circumstances determination).
28 Commerce asserted that the Coalition failed to submit an upstream subsidy allegation

consistent with the requirements of 19 C.F.R. § 351.523(a). I&D Mem. at 38. That
regulation defines “input product” to “mean[] any product used in the production of the
subject merchandise.” 19 C.F.R. § 351.523(b).
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      Next, Commerce rejected the Coalition’s reliance on 19 C.F.R. § 351.107(b) and

19 C.F.R. § 351.525(c). Id. 38–39. Commerce found that “the record does not contain

information pertaining to subsidies that each unaffiliated producer/supplier received”

and the agency therefore was unable to apply 19 C.F.R. § 351.525(c). Id. at 39.

      With respect to combination rates pursuant to 19 C.F.R. § 351.107(b),

Commerce further explained that the agency has “refrained from examining whether a

producer of subject merchandise (whose merchandise is resold by the respondent)

received subsidies when the amount of such resales is small relative to the

respondent’s overall sales.” Id. at 39 & n.247 (citing Certain Seamless Carbon and

Alloy Steel Standard, Line, and Pressure Pipe From the People’s Republic of China, 75

Fed. Reg. 9,163, 9,170 (Dep’t Commerce Mar. 1, 2010) (prelim. affirmative CVD

determination, prelim. affirmative critical circumstances determination) (“Pipe From

China”)). Commerce found that “only a relatively small proportion of D&G/Portbec’s

business involves sales of merchandise from Canada to the United States” and that “the

vast majority of D&G/Portbec’s transactions involve purchasing Canadian lumber on a

duty paid basis in the United States and reselling the lumber to buyers in the United

States.” Id. at 39. Commerce also found that, “for Rustique, its purchases of rough-

hewn lumber actually represent a very small percentage of its wood fiber inputs.” Id.

                 2.     Analysis

      The Coalition challenges Commerce’s interpretation of the upstream subsidy

provision to preclude consideration of subsidies to suppliers of lumber purchased and

further processed by the respondents absent an upstream subsidy allegation, and
Consol. Court No. 19-00122                                                       Page 24

Commerce’s decision otherwise not to apply the combination rate or trading company

regulations. Commerce must further explain or reconsider its decisions.

                     a.      The Upstream Subsidy Provision

       Consistent with the agency’s analysis, the court addresses first Commerce’s

decision, based on the absence of an upstream subsidy allegation, not to attribute

subsidies received by unaffiliated suppliers of lumber that Rustique and D&G/Portbec

purchased and further processed. See I&D Mem. at 38. 29 From Commerce’s decision

to require an upstream subsidy allegation, the court discerns a corresponding

determination to treat the so-called respondent-remanufacturers as the producers and

exporters of this merchandise. See id. (referring to “further manufacturing on lumber

acquired from unaffiliated suppliers”). 30

       In reaching this decision, Commerce failed to engage with the Coalition’s

arguments concerning remanufacturing and, in particular, the type of “minor” activities

that may constitute “remanufacturing.” See Coal. Case Br. at 29–30. This omission is

material because suppliers of lumber that would otherwise be covered by the CVD

29 While Commerce discusses certain respondents’ manufacture of lumber from logs,

I&D Mem. at 38, the Coalition’s challenge is directed solely at respondents’ purchases
of lumber (subject merchandise) from unaffiliated suppliers, see Coal. Case Br. at 19;
Coal. Mem. at 41.
30 Part of the court’s difficulty in discerning Commerce’s position on this issue is based

on Commerce’s discussion of Rustique’s purchases of rough-hewn lumber (that were
further processed) in its discussion of the respondents’ reselling activities. See I&D
Mem. at 39. However, at oral argument, the Government confirmed Commerce’s
position that the respondent-remanufacturers are the producers of the subject
merchandise while noting that further explanation for this decision could be provided on
remand. Oral Arg. 0:11:50–0:12:25.
Consol. Court No. 19-00122                                                        Page 25

Order and subject to a higher rate would appear to be able to escape duties by selling

merchandise through a “remanufacturer” with a more favorable rate. See Coal. Mem. at

40; Coal. Reply at 20. 31

       If, on remand, Commerce continues to find that the respondent-remanufacturers

are the producers of the subject merchandise, Commerce must reconsider or further

explain its determination to require an upstream subsidy allegation for purchases of

lumber that is within the class or kind of covered merchandise. Commerce explained its

decision by way of reference to the agency’s finding that “logs and lumber are inputs to

the respondents’ exports to the United States.” I&D Mem. at 38. However, Commerce

provided no discussion of the agency’s reasons for interpreting section 1677-1(a)(1) to

include subject merchandise in the statutory definition of an upstream product.

       Section 1671 provides:

       (e) Upstream subsidies

       Whenever the administering authority has reasonable grounds to believe
       or suspect that an upstream subsidy, as defined in section 1677-1(a)(1) of
       this title, is being paid or bestowed, the administering authority shall
       investigate whether an upstream subsidy has in fact been paid or

31 At the hearing, Rustique suggested that it would be impossible to separate the

allegedly small volume of subject merchandise for which Rustique acted as a
remanufacturer from the entries for which Rustique did not. Oral Arg. 32:00–33:25.
Rustique also suggested that any adjustment to its rate to account for supplier subsidies
would amount to a “rounding error.” Id. at 33:40–34:00. The court is unable to discern
whether such concerns formed the basis for Commerce’s reference to Rustique’s input
purchases in its discussion of reselling activities. See I&D Mem. at 39 (“Similarly, for
Rustique, its purchases of rough-hewn lumber actually represent a very small
percentage of its wood fiber inputs.”). If, in fact, Commerce’s decision on this issue
turns on considerations other than the agency’s interpretation of the upstream subsidy
provision, Commerce must explain that decision in the first instance with sufficient
clarity to enable judicial review.
Consol. Court No. 19-00122                                                        Page 26

       bestowed, and if so, shall include the amount of the upstream subsidy as
       provided in section 1677-1(a)(3) of this title.

19 U.S.C. § 1671(e) (footnotes omitted). 32 Section 1677-1(a)(1), in turn, states that an

“‘upstream subsidy’ means any countervailable subsidy, other than an export subsidy,

that—(1) is paid or bestowed by an authority . . . with respect to a product (hereafter in

this section referred to as an ‘input product’) that is used in the same country as the

authority in the manufacture or production of merchandise which is the subject of a

countervailing duty proceeding.” 19 U.S.C. § 1677-1(a)(1).

       The U.S. Government and CGP’s respective arguments on this issue focus, as

Commerce did, on whether the purchased lumber may be characterized as an input.

See U.S. Resp. at 24; CGP Resp. at 35, 37. 33 Those arguments, however, are

32 The U.S. Code contains two footnotes concerning errors in the original such that the

reference to section 1677-1(a)(1) “[p]robably should be ‘section 1677-1(a)’” and the
reference to section 1677-1(a)(3) “[p]robably should be section 1677-1(c).’” 19 U.S.C.
§ 1671(e) nn.1–2.
33 The CGP also rely on Canadian Meat Council v. United States, 11 CIT 362, 661 F.

Supp. 622 (1987), to argue that the court has rejected the premise of the Coalition’s
argument, namely, that inputs that otherwise are subject merchandise may not be
considered “upstream” to the subject merchandise pursuant to section 1677-1(a)(1).
CGP Resp. at 35–36. Canadian Meat Council is largely inapposite. The underlying
agency determination involved live swine and fresh, chilled, and frozen pork products
from Canada. Canadian Meat Council, 11 CIT at 363, 661 F. Supp. 3d at 623.
Commerce had concluded, without conducting an upstream subsidies investigation, that
subsidies on live swine benefitted pork producers. Id. at 363, 365, 661 F. Supp. 3d at
623, 624. The disagreement centered, however, on Commerce’s narrow interpretation
of the term “input” that led the agency to determine that live swine was not an input into
the subject pork products and, thus, disregard the upstream subsidy provision prior to
finding a pass-through of benefits. Id. at 364–72, 661 F. Supp. at 624–29. The
Canadian Meat Council court did not squarely address the meaning of the term
“upstream” or whether the statute requires an upstream subsidy allegation when the
input is within the class or kind of covered merchandise. Furthermore, the court later
Consol. Court No. 19-00122                                                          Page 27

nonresponsive to the question whether inputs that otherwise are subject merchandise

may be considered “upstream” to the subject merchandise exported to the United

States; in other words, whether the statutory language “a product . . . that is used . . . in

the manufacture or production of merchandise which is the subject of a countervailing

duty proceeding” should be interpreted broadly, as Commerce did, to include subject

and nonsubject inputs, or narrowly, as the Coalition suggests, such that it captures only

nonsubject inputs used to produce subject merchandise.

       In light of the sparsity of Commerce’s explanation of its statutory interpretation

and the limited briefing on the salient issues, the court will remand this issue for

Commerce to provide its explanation, and for the parties to fully brief their respective

views. 34 In providing this explanation, Commerce should reconcile its position with

seemingly inconsistent earlier agency statements. See Live Swine From Can., 59 Fed.

Reg. 12,243, 12,255 (Dep’t Commerce Mar. 16, 1994) (final results of CVD admin.

vacated its opinion and dismissed the action when the U.S. International Trade
Commission’s negative injury determination became final. See Canadian Meat Council
v. United States, 12 CIT 108, 111–12, 680 F. Supp. 390, 393 (1988).
34 At the hearing, the court directed the U.S. Government to the legislative history

accompanying the Trade and Tariff Act of 1984, which discussed upstream subsidies in
reference to “a product subsequently used to manufacture or produce in that country
merchandise which itself becomes the subject of either a CVD or [antidumping]
investigation[].” H.R. REP. 98-1156, at 171 (1984) (Conf. Rep.), as reprinted in 1984
U.S.C.C.A.N. 5220, 5288 (emphases added); see also id. (comparing the “intermediate
product” to the “final merchandise”). Section 1677-1 was first enacted as part of the
Trade and Tariff Act of 1984, Pub. L. 98-573, Title VI, § 613(a), 98 Stat. 2948. While
the above-quoted sentence was contained in the document in reference to the House
bill, the definition contained in the Senate bill was the same except for the omission of
the need to investigate or assess upstream subsidies in antidumping cases. See H.R.
REP. 98-1156, at 171, as reprinted in 1984 U.S.C.C.A.N. at 5288.
Consol. Court No. 19-00122                                                         Page 28

review) (stating generally that “[a]n upstream subsidy analysis is concerned with

determining the effect of benefits received by producers of a product which itself is not

subject to a countervailing duty investigation or order, but which is an input into the

subject merchandise”) (emphasis added); cf. Lumber IV Mem. at 16 (declining to require

an upstream subsidies allegation to investigate subsidies received by producers of

dimension lumber and remanufactured products, since both are considered subject

merchandise); 35 Ball Bearings and Parts Thereof From Thai., 62 Fed. Reg. 728, 730

(Dep’t Commerce Jan. 6, 1997) (final results of CVD admin. review) (stating that the

statute “expressly excludes export subsidies from its coverage (based on the

presumption that an export subsidy paid on a nonsubject input product benefits the

exportation of that product, not the downstream product)” (emphasis added)). 36

35 The CGP argue that this determination is inapposite because Commerce conducted

the investigation on an aggregate basis, not a company-specific basis. CGP Resp. at
37. While Commerce relied on the aggregate nature of the investigation to reject
arguments that certain respondent-remanufacturers did not benefit from stumpage
programs, Commerce rejected the argument that an upstream subsidy allegation was
necessary because “[b]oth dimension lumber and the remanufactured products covered
by the scope are of necessity the same class or kind of merchandise.” Lumber IV Mem.
at 16.
36 In response to the Coalition’s argument that 19 U.S.C. § 1671(a)(1) required

Commerce to account for supplier subsidies, the CGP rely on Delverde, SrL v. United
States, 202 F.3d 1360 (Fed. Cir. 2000), to argue that “Commerce may not presume that
the purchaser benefitted from any subsidies previously bestowed on the seller of the
asset.” CGP Resp. at 34; see also Coal. Mem. at 33–34. Delverde involved the sale of
assets, rather than subject merchandise, and the Federal Circuit’s opinion relied on its
interpretation of the “Change in Ownership” provision of the statute, 19 U.S.C.
§ 1677(5)(F), which is inapposite here.
Consol. Court No. 19-00122                                                      Page 29

                    b.     Commerce’s Regulations

      The issue of upstream subsidies aside, the court next turns to Commerce’s

regulations. The element common to Commerce’s combination rate and trading

company regulations is the presence of an exporter that is not the producer.

      Section 351.107(b)(1)(i) provides:

      (b) Cash deposit rates for nonproducing exporters—
      (1) Use of combination rates—(i) In general. In the case of subject
      merchandise that is exported to the United States by a company that is
      not the producer of the merchandise, the [agency] may establish a
      ‘combination’ cash deposit rate for each combination of the exporter and
      its supplying producer(s).

      Section 351.525(c) provides:

      (c) Trading companies. Benefits from subsidies provided to a trading
      company which exports subject merchandise shall be cumulated with
      benefits from subsidies provided to the firm which is producing subject
      merchandise that is sold through the trading company, regardless of
      whether the trading company and the producing firm are affiliated.

      For subject merchandise potentially covered by these regulations, Commerce

first relied on the absence of company-specific information for the producer/suppliers.

I&D Mem. at 38–39. 37 Contrary to Commerce’s explanation, the administrative record

37 Commerce appeared to rely on this rationale specifically in connection with the

trading company regulation. See I&D Mem. at 39 (stating that the agency “cannot apply
19 CFR 351.525(c)” because of the lack of record information regarding subsidies
received by unaffiliated suppliers). Later, in discussion of this analysis, Commerce
states that “the petitioner’s arguments regarding the combination rate and trading
company provisions are unfounded,” id., suggesting that the rationale also applies to
Commerce’s analysis of its combination rate regulation.
Consol. Court No. 19-00122                                                          Page 30

contains company-specific information for one of the suppliers. 38 See Coal. Case Br. at

20 & n.50. 39

       For the remaining suppliers, Commerce explained that it declines to examine

suppliers for receipt of subsidies when the “amount of such resales is small relative to

the respondent’s overall sales.” I&D Mem. at 39 & n.247 (citing Pipe From China, 75

Fed. Reg. at 9,170). The rationale for Commerce’s approach appears to be the

administrative burden in conducting an analysis of the supplier akin to that of a

mandatory respondent. Id. at 38–39 (explaining the steps involved to cumulate

benefits); see also, e.g., Prelim. Decision Mem. for Cast Iron Soil Pipe Fittings From

China, C-570-063 (Dec. 11, 2017) at 26 (explaining the analysis necessary to apply the

trading company regulation). 40

38 The identity of the supplier is treated as business proprietary information by the

parties. While this supplier sold lumber to Rustique, Coal. Case Br. at 20, which did not
act as a pure reseller of the subject merchandise but instead performed further
processing on all purchased lumber inputs, see Rustique IQR at 8, the court considers
this issue here in the event it is relevant to Commerce’s redetermination on remand.
39 The U.S. Government argues that “there would be no need for Commerce to capture

[the] subsidies” received by this individually examined producer because “that company
is already being assessed duties for exports of subject merchandise.” U.S. Resp. at 27.
While that may be the case for subject merchandise produced and exported by that
company, the U.S. Government’s assertion was not part of the grounds advanced by
Commerce and may not account for lumber purchased from that company and exported
under Rustique’s rate based on the finding that Rustique is the producer of
remanufactured merchandise.
40 The CGP contend that the trading company regulation applies solely to companies

that do not produce any subject merchandise and is therefore inapplicable here. CGP
Resp. at 39. Commerce did not adopt that rationale in the decision memorandum
despite arguments advanced by the GOC, see I&D Mem. at 36 & n.231 (citing Rebuttal
Br. of the [GOC] (Mar. 18, 2019) at 24, CR 908, PR 733, 1st Suppl. CJA Tab 67),
perhaps because the agency has not limited its application of the trading company
Consol. Court No. 19-00122                                                        Page 31

       There are two problems with this explanation. First, Commerce’s practice did not

account for the unusual circumstances of CVD expedited reviews. The POR for the

Final Results is the same as the period of investigation for the original determination.

Initiation Notice, 83 Fed. Reg. at 9,833. Thus, for this POR, Commerce has subsidy

rates for every producer in Canada—either an individually determined rate or the all-

others rate. See CVD Order, 83 Fed. Reg. at 348–49. Commerce’s reliance on its

practice failed to account for the period-specific information the agency has at its

disposal.

       Second, in explaining its decision not to apply 19 C.F.R. § 351.525, Commerce

did not address whether it was appropriate to disregard any subsidies to the

respondents’ suppliers based on asserted small volumes when accounting for such

subsidies might otherwise be the difference between zero or de minimis subsidy rates

and subsidy rates above de minimis. Commerce has recognized that otherwise small

changes may nevertheless be considered significant when they can cause such a

change in the subsidy rate. See 19 C.F.R. § 351.224(g)(2) (defining a “significant

ministerial error” to include one that would make the difference between a de minimis

rate and a non-de minimis rate, or vice versa).

regulation to “pure resellers,” see, e.g., Prelim. Decision Mem. for Steel Concrete
Reinforcing Bar from the Republic of Turk., C-489-830 (Sept. 6, 2019) at 6 (stating the
agency would cumulate any subsidies received by a producer and exporter with
subsidies received by an unaffiliated subcontractor/toller “in a manner similar to the
attribution of a trading company’s subsidies to an unaffiliated producer” because “such a
determination is consistent with the general understanding of attribution of subsidies”)
(unchanged for the final determination). As such, the court need not further address the
CGP’s post hoc argument.
Consol. Court No. 19-00122                                                        Page 32

       With respect to 19 C.F.R. § 351.107(b), Commerce exercised its discretion not to

use combination rates because only subject merchandise that is produced and exported

by the de minimis companies is excluded from the payment of duties. I&D Mem. at 40.

Commerce further stated that “the unaffiliated producers that elected to export subject

merchandise produced by a respondent, such as D&G, and claim a zero cash deposit

rate would be unable to circumvent the payment of duties, as the merchandise would

nonetheless be subject to the all-others rate.” Id.

       Commerce frames the issue backwards: the issue is not the unaffiliated

producers exporting merchandise produced by the de minimis companies, but, rather,

the issue lies in the respondents exporting merchandise produced by unaffiliated

suppliers that would otherwise be subject to a higher rate. To that end, Commerce’s

instructions to CBP require application of the all-others rate (or the producer’s own rate,

as appropriate) to subject merchandise produced by an unaffiliated supplier and

exported by one of the de minimis companies. Liquidation Instructions ¶ 3; see also

Final Results, 84 Fed. Reg. at 32,122 (“Merchandise which [the de minimis companies]

export[] but does not produce . . . remains subject to the CVD order.”). While

Commerce’s instructions therefore effectuate a combination rate with respect to

merchandise produced by an unaffiliated supplier and exported by D&G/Portbec, the

situation with Rustique is less clear.

       Rustique obtained an above-de minimis rate pursuant to the Final Results. 84

Fed. Reg. at 32,122. Rustique did not, however, act as a pure reseller for any subject

merchandise. See Rustique IQR at 8. Accordingly, as discussed above, Commerce
Consol. Court No. 19-00122                                                        Page 33

presently appears to consider Rustique to be the “producer” for all of Rustique’s exports

to the United States. Thus, there does not, at present, appear to be any basis for

Commerce to apply the combination rate regulation to Rustique. Because the court is

instructing Commerce to reconsider its determination that respondent-remanufacturers

constitute the producers of such merchandise, on remand, Commerce may also need to

reconsider its position with respect to the application of the combination rate regulation

to Rustique.

       Commerce’s determination not to attribute subsidies received by the unaffiliated

suppliers of lumbers to the respondents lacks clear, affirmative statements regarding

the agency’s views on respondent-remanufacturers and respondent-resellers, as well as

the agency’s reasons for interpreting and applying the relevant legal principles in the

chosen manner. Commerce’s determination will therefore be remanded for

reconsideration or further explanation consistent with the foregoing.

          C.     New Brunswick Property Tax Assessment Program

                 1. Additional Background

       Property owners in New Brunswick typically pay property taxes based on an

assessment of the “real and true value” of the land.” I&D Mem. at 85. However, “land

classified as freehold timberland” is assessed property taxes at a rate of 100 Canadian

dollars per hectare. Id. Commerce concluded that this tax program is countervailable.

Id.

       To calculate the benefit conferred on NAFP from this program, Commerce first

had to construct a benchmark for the “real and true value” of the land owned by NAFP.
Consol. Court No. 19-00122                                                     Page 34

Id. at 90. For the preliminary results of the CVD expedited review, Commerce used

“private sales of timberland in the province during the POR.” Id. While Commerce

continued to use private sales for the Final Results, Commerce agreed with NAFP and

GNB that Commerce should adjust the benchmark to “remove the value of standing

timber on this land.” Id. Commerce explained that the relevant tax laws defined “real

property” to exclude “growing or non-harvested crops in or on land” such that “the value

of the trees” should not be included in the benchmark. Id. at 90–91.

      To determine the value of the land minus the standing timber, Commerce used a

ratio derived from information contained in an opinion issued by the Court of Queen’s

Bench of New Brunswick, titled Higgins and Tuddenham v. Province of N.B., which

concerned compensation for appropriated land. Id. at 91 & n.598 (citing Rebuttal Cmts.

to NAFP’s Sept. 6, 2018 Suppl. Questionnaire Resp. (Sept. 17, 2018), Ex. 5 ¶¶ 17, 45,

PR 602, CJA Tab 31a). While the Coalition had placed the Higgins and Tuddenham

opinion on the record, see id., NAFP subsequently relied on that opinion to advocate for

the ratio referenced therein, see NAFP’s Case Br. (Mar. 11, 2019) at 31, CR 903, PR

721, CJA Tab 51. Commerce agreed and applied a ratio of approximately 22 percent to

the total land value including stumpage to determine the land value without stumpage.

Final Results Calculations for [NAFP] (June 28, 2019), Attach 2, CR 912, PR 755, CJA

Tab 58; see also I&D Mem. at 91 & nn.596–98.

                 2.    Analysis

      The Coalition seeks to challenge Commerce’s reliance on Higgins and

Tuddenham to determine the appropriate methodology for adjusting the benchmark to
Consol. Court No. 19-00122                                                         Page 35

remove the value of standing timber. Coal. Mem. at 46. The U.S. Government, NAFP,

and GNB each contend that the Coalition failed to exhaust its administrative remedies

with respect to this argument. U.S. Resp. at 18–20; NAFP Resp. at 3, 15–16; GNB

Resp. at 9–10. The Coalition, replying primarily to the U.S. Government, argues that

the United States has conflated the issues of benchmark selection with Commerce’s

adjustment to the benchmark, Coal. Reply at 20, and asserts that it was not required to

exhaust arguments regarding any adjustment because Commerce did not decide to

remove the value of standing timber until the agency issued the Final Results, id. at 22.

Thus, the Coalition contends, it “had no opportunity” to present arguments regarding

any adjustment to the benchmark. Id. at 23.

       “[T]he Court of International Trade shall, where appropriate, require the

exhaustion of administrative remedies.” 28 U.S.C. § 2637(d). 41 The statute “indicates a

congressional intent that, absent a strong contrary reason, the court should insist that

parties exhaust their remedies before the pertinent administrative agencies.” Corus

Staal BV v. United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007). The doctrine of

administrative exhaustion is well-settled and requires a party to raise issues with

specificity and “at the time appropriate under [an agency’s] practice.” United States v.

L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 36–37 (1952). Doing so both “protect[s]

41 The Coalition does not dispute the applicability of the doctrine of administrative

exhaustion given that this case is governed by the APA. In any event, the court has
recently addressed and rejected this contention, finding that the APA does not bar the
court from applying prudential exhaustion pursuant to 28 U.S.C. § 2637(d). See
Ninestar Corp. v. United States, Slip Op. 24-24, 2024 WL 864369, at *9–11 (CIT Feb.
27, 2024).
Consol. Court No. 19-00122                                                        Page 36

administrative agency authority and promot[es] judicial efficiency.” Corus Staal BV, 502

F.3d at 1379 (quoting McCarthy v. Madigan, 503 U.S. 140, 145 (1992)).

       Here, administrative exhaustion required the Coalition to present relevant

arguments in its administrative case and rebuttal briefs before raising those issues

before this court. Cf. Dorbest Ltd v. United States, 604 F.3d 1363, 1375 (Fed. Cir.

2010). 42 Contrary to the Coalition’s suggestion, exhaustion in this case did not require

“clairvoyance.” Coal. Reply at 23. Instead, exhaustion required the Coalition to

respond substantively to the issues NAFP explicitly raised in its administrative case

brief. See NAFP’s Case Br. at 31 (proposing various methods for Commerce to adjust

the benchmark, including by using the ratio from Higgins and Tuddenham). While the

Coalition argued that Commerce should not remove the value of standing timber from

the land value, Plaintiff failed to address NAFP’s specific proposals for doing so in the

event Commerce agreed that an adjustment was warranted. See Rebuttal Br. (March.

19, 2019) at 40, CR 909, PR 734, CJA Tab 54 (asserting generally (and inaccurately)

that Commerce “would not have an objective or reasonable way to [adjust the

benchmark]” because “[t]he Canadian Parties have not proposed any methodology to

separate the value of standing timber from the bare land” (emphasis added)). 43

42 While Dorbest addressed a case arising under the court’s jurisdiction pursuant to 28

U.S.C. § 1581(c) and involving 19 C.F.R. § 351.309(c)–(d), exhaustion is similarly
appropriate here given that the court reviews Commerce’s decision on the record
developed before the agency, and that process included the opportunity to file case and
rebuttal briefs. Cf. L.A. Tucker Truck Lines, Inc., 344 U.S. at 36–37.
43 At oral argument, the Coalition attempted to characterize its assertion regarding the

lack of an “objective or reasonable way” method for performing the adjustment as
Consol. Court No. 19-00122                                                        Page 37

       “[P]arties having notice of an issue may not withhold pertinent arguments at the

administrative level, seeking a new ‘bite at the apple’ before the courts.” Calgon Carbon

Corp. v. United States, 44 CIT __, __, 443 F. Supp. 3d 1334, 1353–54 (2020) (citation

omitted). The Coalition was on notice that Commerce might consider both benchmark

selection and adjustments to the benchmark, including using the Higgins and

Tuddenham data, prior to the Final Results, and the Coalition was required to exhaust

relevant arguments accordingly. Because the Coalition failed to exhaust its arguments

before the agency, the court will not now consider them in the first instance.

 II.      Consolidated Plaintiffs’ Claims

       Rustique, joined by the GOC and the GOQ, contends that Commerce erred in

countervailing certain federal and provincial tax credits. Rustique Mem. at 4–13;

Rustique Reply at 2–6; GOC Mem. at 11–18; GOC Reply at 2–10; GOQ Mem. at 4–11;

GOQ Reply at 3–9. Fontaine, also joined by the GOC and the GOQ, contends that

Commerce erred in using its fiscal year (“FY”) 2014 tax returns to determine the benefit

responsive to the NAFP’s proposals and sufficient to exhaust the arguments it now
seeks to assert. Oral Arg. 42:35–43:30. This argument fails because the Coalition’s
assertion, read together with the incorrect assertion regarding the absence of any
proposed methodology, suggests instead that the Coalition overlooked the proposals.
See id. at 41:00–42:30 (referring to the number of pages of argument to digest). Even if
the proposals were not overlooked, the Coalition must do more than offer mere
characterization of the proposals. Instead, the Coalition was required to present
arguments as to why Commerce should reach the same conclusion. “[A]dministrative
proceedings should not be a game or a forum to engage in unjustified obstructionism by
making cryptic and obscure reference to matters that ‘ought to be’ considered and then,
after failing to do more to bring the matter to the agency's attention, seeking to have that
agency determination vacated.” Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def.
Council, Inc., 435 U.S. 519, 553–54 (1978).
Consol. Court No. 19-00122                                                      Page 38

conferred by various tax programs during the 2015 POR. Fontaine Mem. at 10–18;

Fontaine Reply at 2–12; GOC Int. Mem. at 3–4; GOQ Mem. at 11–13; GOQ Reply at 9–

11. The U.S. Government and the Coalition responded in support of Commerce’s

determinations. U.S. Resp. at 31–46; Coal. Resp. at 4–8.

      The court will sustain Commerce’s determination as to Rustique’s challenge but

remands Commerce’s benefit determination with respect to Fontaine.

          A. The Federal Logging Tax Credit (“FLTC”) and Provincial Logging Tax
             Credit (“PLTC”)

                 1.     Additional Background

      Corporations in Québec that conduct logging operations must pay a ten percent

tax on logging income in addition to federal and provincial income taxes. See I&D Mem.

at 45–46. The GOC provides a tax credit equal to two thirds of the logging tax (the

FLTC) and the GOQ provides a tax credit equal to one third of the logging tax (the

PLTC), credits that logging companies claim on their federal and provincial tax returns,

respectively. See id. at 45, 48; Resp. of the [GOQ] to the Dep’t’s Apr. 13, 2018 Suppl.

Questionnaire Vol. II at QC-TAX-10–11, CR 288, PR 341, CJA Tab 18a.

      Commerce found that the FLTC and the PLTC 1) each constitute a financial

contribution in the form of revenue forgone that was otherwise due to the federal and

provincial governments; 2) are de jure specific; and 3) confer a benefit. I&D Mem. at

45–46. Commerce disagreed with the argument that a Canadian policy against double

taxation means that revenue is not forgone. Id. at 46. Commerce also addressed and

rejected the argument that the FLTC and the PLTC do not confer a net benefit, id. at
Consol. Court No. 19-00122                                                             Page 39

47–48, or that the credits “act as a transfer of funds from the federal to the provincial

government,” id. at 48. According to Commerce, “[a]ny arrangement” between the

federal and provincial governments, and “the purpose of such an arrangement, is

beyond the purview of what Commerce is able to consider under the [statute] and its

regulations.” Id. at 48–49. Lastly, Commerce concluded that the logging tax could not

be construed as an application fee or deposit paid to qualify for the FLTC and the PLTC.

Id. at 46–47 (discussing 19 U.S.C. § 1677(6)(A)).

                  2.      Analysis

       A countervailable subsidy “exists when . . . a foreign government provides a

financial contribution . . . to a specific industry” that confers “a benefit” to “a recipient

within the industry.” Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365,

1369 (Fed. Cir. 2014) (citing 19 U.S.C. § 1677(5)(B)). Section 1677(5) defines a

financial contribution to include, inter alia, “foregoing or not collecting revenue that is

otherwise due, such as granting tax credits or deductions from taxable income.” 19

U.S.C. § 1677(5)(D)(ii). “A benefit shall normally be treated as conferred where there is

a benefit to the recipient.” Id. § 1677(5)(E).

       Rustique and the GOQ each contend that Commerce erred in finding that

revenue was forgone by the federal and provincial governments. Rustique asserts that

Commerce must consider “the prevailing domestic standard and the normative

benchmark of the tax system in question,” which in this case, Rustique contends,

constitutes the 26.9 percent total tax rate (federal plus provincial) applicable to all

corporations. Rustique Mem. at 4–5; Rustique Reply at 3. According to Rustique, the
Consol. Court No. 19-00122                                                         Page 40

ten percent logging tax is simply “a mechanism for annual inter-governmental wealth

shifts,” Rustique Mem. at 6, 44 and the FLTC and the PLTC together prevent double

taxation of logging income, id. at 6–7. The GOQ similarly asserts that “[t]he logging tax

would not exist if the offsetting tax credits were not available.” GOQ Mem. at 8

(emphasis added). These arguments are dependent on the relationship between the

ten percent logging tax and the FLTC and the PLTC.

       Commerce was within its discretion to reject such arguments because the record

does not support the claim that the logging tax would not exist but for the credits

forgiving the tax. Documents submitted by the GOC and the GOQ do support that a

“policy rationale” behind the FLTC and the PLTC is to avoid double taxation. Resp. of

the [GOC] to the Dep’t’s Apr. 13, 2018 Suppl. Questionnaire (May 7, 2018) (“GOC

SQR”) at GOC-ER-20, CR, 231, PR 324, CJA Tab 17. The existence of a general

policy against double taxation does not, however, substantiate the assertion that the

logging tax and the tax credits must stand or fall together. Contrary to the GOQ’s

assertion that Commerce failed to consider the policy rationale for the tax credits, GOQ

Reply at 5–7, Commerce considered the rationale and concluded that a policy against

double taxation does not outweigh the evidence demonstrating that the FLTC and PLTC

are otherwise countervailable as programs by which the federal and provincial

governments, respectively, forgo revenue, I&D Mem. at 46. Commerce acknowledged

44 With respect to the FLTC, Rustique contends that although the GOC “does forego

some revenue,” that shortfall ends up with the GOQ such that there is no financial
contribution to the company. Rustique Mem. at 8; see also Rustique Reply at 4–5.
Consol. Court No. 19-00122                                                       Page 41

that the GOQ has never received the full ten percent logging tax but explained that was

because the provincial government elected to provide a tax credit in the form of the

PLTC and that such decision, even if intended to offset double taxation, remains

countervailable. Id. Mere disagreement with Commerce’s conclusions is not a

sufficient basis for a remand.

       A corollary to this argument is the proposition that Commerce should have

considered the logging tax and the tax credits to constitute a single subsidy program.

See GOC Mem. at 12; Rustique Mem. at 11–13 (arguing there was no benefit because

the logging tax and the tax credits effectively cancel each other out); Rustique Reply at

7 (asserting that the logging tax and tax credits “legally must be” considered a single

program). However, the parties identify no factual evidence calling into question

Commerce’s decision not to treat tax credits enacted by different government entities as

a single program, or any examples of Commerce doing so. 45 To that end, the GOC errs

in relying on Government of Sri Lanka v. United States, 42 CIT __, 308 F. Supp. 3d

1373 (2018) (“GOSL”), and Inland Steel Indus., Inc. v. United States, 21 CIT 553, 967 F.

45 The record suggests that the FLTC predates the enactment of the logging tax in

Québec and the enactment of the PLTC but does not indicate the temporal relationship
between the tax and the PLTC. See GOC SQR, Ex. FLTC-1, CR 233, PR 326, CJA
Tab 17a (documenting statements concerning the enactment of the FLTC and
supporting similar action at the provincial level to fully offset the logging tax then
enacted in the provinces of British Columbia and Ontario).
Consol. Court No. 19-00122                                                       Page 42

Supp. 1338 (1997), aff’d, 188 F.3d 1349 (Fed. Cir. 1999). GOC Mem. at 13–15; GOC

Reply at 3–5. As Commerce found, these cases are distinguishable. 46 I&D Mem. at 48.

       In GOSL, the court remanded Commerce’s benefit determination when the

agency countervailed payments made by the Government of Sri Lanka (“GSL”)

reimbursing tire manufacturers/rubber buyers for payments made to rubber

smallholders. GOSL, 308 F. Supp. 3d at 1379–84. The program examined in that case

involved an above-market “guaranteed price” to smallholders that rubber buyers were

required to pay, subject to reimbursement by the GSL for any difference between the

“market price” and the “guaranteed price,” i.e., the value of the guarantee to the

smallholders. Id. at 1379–80. The court concluded that Commerce erred in ignoring

evidence that the rubber buyers had effectively extended “interest-free loans” to the

GSL such that the “reimbursement payments” at issue were not properly considered a

benefit. Id. at 1382.

46 Rustique cites Hynix Semiconductor Inc. v. United States, 29 CIT 995, 1003, 391 F.

Supp. 2d 1337, 1345 (2005), for the proposition that the phrase “subsidy program” is
broadly interpreted to include various elements supporting a single governmental
purpose. Rustique Reply at 7. Rustique stretches the reasoning of Hynix too far. Hynix
addressed 19 U.S.C. § 1677(5)(B)(iii), which describes a subsidy whereby the authority
was “entrust[ing] or direct[ing] a private entity to make a financial contribution.” 29 CIT
at 998 n.3, 391 F. Supp. 2d at 1341 n.3 (citation omitted). Noting Commerce’s “case-
by-case discretion” to decide when the statute applies and congressional intent to “close
any loopholes which might enable governments to provide indirect subsidies,” the court
sustained Commerce’s decision to treat “a series of loans and equity infusions made by
multiple financial institutions” as “a single government program of direction.” Id. at
1003–04, 391 F. Supp. 2d at 1345–46. Hynix does not, as Rustique contends, require
Commerce “to consider the logging tax and the credits canceling it as component parts
of a single program.” Rustique Reply at 7.
Consol. Court No. 19-00122                                                        Page 43

       In Inland Steel, the Government of France (“GOF”) and Usinor Sacilor entered

into an agreement pursuant to which each would provide funds to regional development

companies and that “the GOF would transmit its share of the funds through Usinor

Sacilor, with Usinor Sacilor receiving the funds from the GOF as shareholders’

advances and then funneling those same funds to the [regional development

companies].” 21 CIT at 560, 967 F. Supp. at 1349. Commerce concluded that the

“agreement between Usinor Sacilor and the GOF did not relieve Usinor Sacilor of any

obligations it [previously] had” so Usinor Sacilor received no benefit from the

contributions that it “merely channeled” to the regional development companies. Id.

The court sustained this determination. See id. at 586, 967 F. Supp. at 1368.

       In each of these cases, record evidence documented the nature and purpose of

the program that effectively placed the respondent in the position of an intermediary in

order to effectuate the program’s purpose. In contrast, here, Commerce reasonably

concluded that “the logging tax credits are not flowing through an intermediary” to

effectuate a transfer of funds to the GOQ but are instead tax credits provided by the

federal and provincial governments to the respective companies. I&D Mem. at 48; see

also GOC SQR at GOC-ER-20 (explaining that the FLTC is intended to avoid double

taxation of the logging companies).

       Rustique’s argument that the FLTC and PLTC confer no benefit because

together they result in Rustique paying the same tax rate as non-logging corporations is

also misplaced. See Rustique Mem. at 10; Rustique Reply at 4. Commerce’s benefit

regulation, 19 C.F.R. § 351.509(a), directs the agency to determine whether “a benefit
Consol. Court No. 19-00122                                                           Page 44

exists to the extent that the tax paid by a firm as a result of the program is less than the

tax the firm would have paid in the absence of the program.” Each of the two programs

at issue here, the FLTC and the PLTC, lower Rustique’s tax burden. See I&D Mem. at

46. Commerce was not required to compare Rustique’s tax rate to non-logging

companies that are not subject to the logging tax and are ineligible for both the FLTC

and PLTC.

       Lastly, Commerce correctly rejected the GOC’s argument that Commerce should

treat the logging tax as a payment used to qualify for the FLTC and the PLTC such that

the amount of the tax should be deducted from any subsidy. See GOC Mem. at 17;

GOC Reply at 8–9; I&D Mem. at 47. Section 1677(6)(A) permits Commerce to “subtract

from the gross countervailable subsidy the amount of--(A) any application fee, deposit,

or similar payment paid in order to qualify for, or to receive, the benefit of the

countervailable subsidy.” 19 U.S.C. § 1677(6)(A). In its construction of the statute, the

GOC reads out the word “similar” preceding “payment.” GOC Mem. at 17 (stating that

“the tax was a ‘payment paid in order to qualify for, or to receive, the benefit’ of the

FLTC and PLTC” (quoting 19 U.S.C. § 1677(6)(A))). If this were true, then any tax for

which a government provides a corresponding credit could be deducted from the final

subsidy rate. While the GOC faults Commerce for failing to explain why the logging tax

does not fall within the category of “similar payment,” GOC Mem. at 18, nowhere does

the GOC explain why the logging tax should be considered a payment “similar” to an

“application fee” or “deposit” or why its interpretation of the term would not substantially

weaken the statute. See id.
Consol. Court No. 19-00122                                                          Page 45

       Because Commerce’s determinations regarding the FLTC and PLTC are

supported by substantial evidence, and in the absence of any detracting record

evidence that Commerce overlooked, the court will sustain Commerce’s determinations.

          B.      Date of Receipt of Tax Benefits

                  1.     Additional Background

       As previously noted, the POR for the CVD expedited review was January 1,

2015, through December 31, 2015. I&D Mem. at 27. Fontaine’s FY 2015 ended on

October 31, 2015. Id. at 94.

       Fontaine “is required by law to pay its federal and provincial taxes within sixty

days of the end of its fiscal year,” i.e., by December 31. Id.; 47 see also Verification of

the Questionnaire Resps. of Fontaine Inc. (Oct. 23, 2018) at 5–6, CR 844, PR 657, CJA

Tab 36 (verifying Fontaine’s payments of FY 2015 taxes within the POR). Consistent

therewith, the record shows that Fontaine’s FY 2014 federal tax return reflects

payments made during the 2014 calendar year with no balance owing in 2015.

Fontaine’s Resp. to Initial Questionnaire (Apr. 13, 2018) (“Fontaine IQR”), Ex. 5 at ECF

pp. 310, 317, CR 131–38, 144–50, 152, 154, 156, PR 254, CJA Tab 13a). For the

provincial tax return, Fontaine made payments in 2014 that exceeded the amount of

47 Corporations, such as Fontaine, must make periodic federal tax payments throughout

the year and any remaining federal taxes “on or before the balance-due day for the
year.” Resp. to the Second Suppl. Questionnaire to [Fontaine] (July 25, 2018)
(“Fontaine’s 2SQR”), Ex. A-4, [Federal] Income Tax Act ¶ 157 (ECF pp. 211–12), CR
701, PR 545, CJA Tab 25. The balance-due day “is two months after the day on which
the taxation year ends,” id. ¶ 248 (subpart (d)(ii)) (ECF pp. 227–29). Similar rules apply
to provincial tax payments. Id., Ex. A-4, [Provincial] Taxation Act ¶ 1 (ECF p. 231)
(defining “balance-due day” for a corporation).
Consol. Court No. 19-00122                                                        Page 46

total income tax payable and obtained a refund. Id. at ECF pp. 129, 829. For 2015, the

record likewise shows that December 31, 2015, represented Fontaine’s balance-due

date for federal and provincial taxes. See Fontaine’s 2SQR, Ex. A-4 at ECF pp. 227–

29, 231 (explaining balance-due dates). Fontaine’s FY 2015 federal and provincial tax

returns reflected the sum of installments made during the fiscal year and refunds owing

upon filing. See Fontaine IQR, Ex. 5 at ECF pp. 762, 829.

       For the preliminary results of the CVD expedited review, Commerce used

Fontaine’s FY 2014 tax return to calculate the benefit received for certain tax programs

because Fontaine filed that tax return in 2015. I&D Mem. at 93. Fontaine challenged

this decision before the agency, urging Commerce to use Fontaine’s FY 2015 tax

returns because Fontaine paid the taxes associated with those returns during the POR

even though Fontaine filed the FY 2015 tax returns in 2016. Id. at 93–94. Commerce

disagreed. Id. at 94.

       The relevant regulation states:

       (b) Time of receipt of benefit—(1) Exemption or remission of taxes. In the
       case of a full or partial exemption or remission of a direct tax, the
       Secretary normally will consider the benefit as having been received on
       the date on which the recipient firm would otherwise have had to pay the
       taxes associated with the exemption or remission. Normally, this date will
       be the date on which the firm filed its tax return.

19 C.F.R. § 351.509(b)(1).

       Commerce explained that its “goal is to equate the timing of receipt of the benefit

with the date the firm knew the amount of its tax liability, and thus the definitive amount

of its tax savings under any particular tax-related subsidy program.” I&D Mem. at 94.
Consol. Court No. 19-00122                                                                 Page 47

Commerce stated that, “[b]ased on our experience, the date on which [a firm] files its tax

return is the date on which a firm knows, definitively, the amount of its tax liability, and

thus any attendant savings realized under tax-related subsidy programs.” Id. at 94 &

n.626 (citing Countervailing Duties, 63 Fed. Reg. 65,348, 65,376 (Dep’t Commerce Nov.

25, 1998) (final rule) (“CVD Preamble”)).

       Applying this “definitive knowledge” standard, Commerce concluded that

“Fontaine makes estimated tax payments throughout the year prior to filing its tax

return, but it does not know the full extent of its tax liability until it files its tax return.” Id.

at 94. To support this finding, Commerce noted that Fontaine identified periodic

payments as “installments made” on its federal tax return and that Fontaine made

identical monthly installments throughout the year. Id. at 94 & nn.633–34 (citing

Fontaine IQR, Ex. 5).

                   2.      Analysis

       Fontaine challenges Commerce’s reliance on the company’s FY 2014 tax returns

because those returns reflect pre-POR liabilities. Fontaine Mem. at 10. Fontaine

contends that when the date of payment and date of filing differ, the date of payment is

the operative date. Id. at 12. Here, Fontaine argues, the date of payment fell in 2015

and Commerce therefore should have used its FY 2015 tax returns. Id. at 11. Fontaine

asserts that Commerce’s regulation does not impose a knowledge requirement and that

even if it did, Fontaine knew its tax liability when it made its final payment. Fontaine

Reply at 8–9. The GOQ and GOC advance similar arguments. GOQ Mem. at 11–13;

GOC Int. Mem. at 3–4; GOQ Reply at 9–11.
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       The United States argues that “Commerce’s focus on the date on which a firm

knew of its tax liability” reflects the agency’s “longstanding practice.” U.S. Resp. at 43.

The Coalition supports Commerce’s use of a “definitive knowledge” standard and

Fontaine’s FY 2014 tax returns. See Coal. Resp. at 8.

       A remand is required when an agency’s “decision is based on an erroneous

interpretation of the law, on factual findings that are not supported by substantial

evidence, or represents an unreasonable judgment in weighing relevant factors.” Star

Fruits, 393 F.3d at 1281. Commerce must reconsider or further explain its decision to

use Fontaine’s FY 2014 tax returns to determine the POR benefits.

       Ascertaining the appropriate date for calculating any benefit is a factual matter

specific to each case, and Commerce’s experience must yield to those facts. See I&D

Mem. at 94 (stating that, “[b]ased on our experience, the date on which it files its tax

return is the date on which a firm knows, definitively, the amount of its tax liability”). As

discussed above, the record shows that Fontaine made FY 2014 payments in 2014 and

FY 2015 payments in 2015. Thus, this case appears to be one in which the date of

payment (December 31, two months after the end of the fiscal year) and date of filing

(the following calendar year) do not align.

       Commerce’s focus on “definitive knowledge of the amount of or benefit from the

tax credits,” id., resulted in the agency’s failure to grapple with record evidence that
Consol. Court No. 19-00122                                                        Page 49

undermined its decision. 48 The outcome might be different if Fontaine’s FY 2015 tax

returns were not available for Commerce to use in ascertaining the relevant tax credits

received during the POR. However, those tax returns were available, and Commerce

has not explained why they do not contain the information the agency needs to

determine Fontaine’s benefit for the subsidy programs notwithstanding the aggregate

refunds reflected in the returns. Commerce has not identified substantial evidence or

provided a reasoned explanation to support its reliance on Fontaine’s FY 2014 tax

returns merely because those returns were filed in 2015 or the agency’s rejection of the

FY 2015 tax returns. Accordingly, this issue will be remanded for reconsideration or

further explanation.

48 Commerce’s reliance on the CVD Preamble fails to persuade the court to adopt the

agency’s interpretation. See I&D Mem. at 94 & n.624 (citing CVD Preamble, 63 Fed.
Reg. at 65,376). The CVD Preamble refers to a set of regulations proposed in 1997
and characterized those regulations as “propos[ing] to consider the benefit as having
been received on the date the firm knew the amount of its tax liability.” 65 Fed. Reg. at
65,376. The regulations proposed in 1997 did not explicitly evince a standard based on
knowledge (definitive or otherwise). Instead, Commerce proposed a standard based on
when “the recipient firm became capable of calculating the amount of the benefit” and
equated that date, “[n]ormally,” with “the date on which the firm filed its tax return.”
Countervailing Duties, 62 Fed. Reg. 8,818, 8,852 (Dep’t Commerce Feb. 26, 1997)
(notice of proposed rulemaking and request for public comments). Regardless, as the
CVD Preamble acknowledges, Commerce has adopted a standard based “on the date
on which the recipient firm would otherwise have had to pay the taxes associated with
the exemption or remission, which is usually the date it files its tax return.” 65 Fed. Reg.
at 65,376. It is that standard Commerce must apply.
Consol. Court No. 19-00122                                                       Page 50

                                  CONCLUSION AND ORDER

         In accordance with the foregoing, it is hereby

         ORDERED that Commerce’s Final Results are remanded in part and sustained

in part; it is further

         ORDERED that, on remand, Commerce shall reconsider or further explain its

determination not to account for subsidies received by suppliers of lumber to the CVD

expedited review respondents; it is further

         ORDERED that, on remand, Commerce shall reconsider or further explain its

determination to use Fontaine’s FY 2014 tax returns to perform benefit calculations for

the 2015 POR; it is further

         ORDERED that Commerce shall file its remand redetermination on or before July

22, 2024; it is further

         ORDERED that subsequent proceedings shall be governed by USCIT Rule

56.2(h); and it is further

         ORDERED that any comments or responsive comments must not exceed 5,000

words.

                                                  /s/   Mark A. Barnett
                                                  Mark A. Barnett, Chief Judge

Dated: April 22, 2024
       New York, New York