Commerce Says Successor-in-Interest CVD CCR Need Not Be Limited to Individually Examined Firms
The Commerce Department gave a further explanation as to why its significant changes practice pertaining to successorship applies in a countervailing duty changed circumstances review where the predecessor company was not individually examined. Submitting remand results on Feb. 16 to the Court of International Trade, Commerce cited its standard established in the 2009 Pasta from Turkey CVD CCR to claim that it will make an affirmative successorship finding "only where there is no evidence of significant changes in the requesting party's operations, ownership, corporate or legal structure." This was not the case with plaintiff GreenFirst Forest Products' acquisition of Rayonier A.M. Canada's (RYAM's) lumber mills, the agency said (GreenFirst Forest Products v. United States, CIT # 22-00097).
The remand submission comes in a case over the countervailing duty order on softwood lumber from Canada. GreenFirst, a Canadian lumber firm, challenged Commerce's decision not to conduct a successor-in-interest CCR after the company bought lumber mills from RYAM. GreenFirst said it was the successor-in-interest to RYAM, and as such should get the 7.42% "non-selected" CVD cash deposit rate that had been assigned to RYAM. The plaintiff sought this rate instead of the 14.19% all-others rate.
Commerce denied this request, prompting the legal challenge from GreenFirst. The trade court, in a November 2022 decision, remanded the agency's decision, calling into question Commerce's application of its significant changes practice as used in CVD successor-in-interest queries since RYAM was never individually examined (see 2211180047).
As it had previously before the court, Commerce again explained how its CVD successor-in-interest practice works. As established in Pasta from Turkey, the agency said that it will not consider a company to be the successor-in-interest for CVD cash deposit purposes when the company "has undergone significant changes that would require Commerce to fully assess the company’s level of subsidization to determine the effects of the changes." This practice established a non-exhaustive list of the changes it deems significant, which include changes in ownership, corporate mergers and acquisitions, and purchases or sales of significant production facilities.
"This is a distinct issue from whether or not the predecessor company was individually examined," Commerce said. "The crux of the CVD successor-in-interest methodology is not whether the predecessor company was individually examined but whether the successor company underwent significant changes in ownership, structure, and productive facilities, such that it is not the same entity as the predecessor company." Nothing in the Pasta from Turkey proceeding, which did involve an individually examined company, "expressly limits" the successor-in-interest CCRs to cases in which the company was individually examined.
Reestablishing its practice, Commerce then shifted the question to whether GreenFirst is the same company as RYAM, finding that it is not since a significant change occurred in its corporate structure. For starters, GreenFirst only bought RYAM's lumber mills and not the entire company. "Furthermore, Commerce found that RYAM, for which GreenFirst claims to be the successor-in-interest, continues to operate," the brief said. "Indeed, RYAM now partially owns the parent company, GreenFirst Forest Products."