Transfer of Manufacturing Facilities Doesn't Make Buyer a Successor Company, Gov't Says in CVD Case

A Canadian softwood lumber producer cannot claim to be a successor-in-interest to another lumber company still in existence, the government argued in a Sept. 6 brief at the Court of International Trade (GreenFirst Forest Products, v. United States, CIT # 22-00097)

The case concerns the countervailing duty order on softwood lumber from Canada. GreenFirst, a Canadian lumber company, challenged the Commerce Department’s decision to not conduct a successor-in-interest changed circumstances review after the company acquired lumber mills from Rayonier A.M. Canada (RYAM). GreenFirst claimed that it is the successor-in-interest to RYAM for the purpose of assigning CVD cash deposit rates and requested that Commerce assign GreenFirst the “non-selected” cash deposit rate that had been assigned to RYAM (a 7.42% CVD cash deposit rate instead of the 14.19% “all-others” rate). Commerce denied the request (see 2203280058).

GreenFirst filed suit at CIT in March, arguing that because GreenFirst acquired all of RYAM's lumber and newsprint operations, it was the successor to RAYM's non-selected company rate (see 2203280058). In August, GreenFirst filed a motion for judgment, arguing that Commerce improperly applied the "significant change" standard in rejecting GreenFirst's CCR request and that the company continues to suffer "real harm" (see 2208010051). Since it won't be combined for respondent selection purposes, GreenFirst will have less of a shot of being individually examined and possibly receiving a lower CVD rate, the company said.

The government argued that the move is simply an "attempt to obtain RYAM’s lower cash-deposit rate" and that GreenFirst is not a successor to RAYM, as RAYM is still in operation, noting that in March, GreenFirst and RYAM jointly requested an administrative review of the Lumber from Canada Order and that "GreenFirst did not claim that it acquired RYAM, that RYAM no longer exists, or that GreenFirst was actually the same entity." Commerce correctly determined that, "GreenFirst’s acquisition involved the purchase of assets, as opposed to the purchase of a firm, and that RYAM continues to operate," the government said in its response motion.

In addition, the government argued that GreenFirst's judgment request, if granted, would essentially prevent Commerce from denying a CCR request "whenever the original company was not individually examined in a previous administrative review and/or the requesting company is unlikely to be individually examined in the next administrative review." Such a criteria, the government said, would strip Commerce of its ability to decline CCR requests. The government also noted that the "successor-in-interest analysis" was not created by statute or by regulation and that the court previously has recognized that it is simply an agency practice. Commerce has wide discretion when to grant CCR requests, and the consideration is not a right afforded by law, the government said.