Canadian Lumber Producer Can't Claim Successor Status Solely on Purchased Mills, DOJ Argues

GreenFirst Forest is not the successor to Rayonier A.M. Canada (RYAM) for the purposes of countervailing duty calculation because RYAM still exists, DOJ said in its May 3 response brief at the Court of International Trade. DOJ asked the court to sustain Commerce’s remand redetermination on softwood lumber products from Canada (GreenFirst Forest Products v. U.S., CIT # 22-00097).

Successorship is a finding that a respondent is "the same subsidized entity for CVD cash deposit purposes as the predecessor company" and Commerce will make such a finding “where there is no evidence of significant changes in the respondent’s operations, ownership, corporate or legal structure during the relevant period," DOJ said. GreenFirst is not the same company as RYAM because both companies continue to exist with different legal structures and operations, DOJ said. GreenFirst did not argue it satisfied the successorship test and instead tried to "drastically curtail the applicability of the test itself" so that it would not apply to the majority of CVD assignments, DOJ said.

Because the successorship test derived from circumstances in which the alleged predecessor company was individually examined, CIT had remanded the matter to Commerce to reconsider its determination that its "significant changes" practice applied.

On remand, Commerce had said the CVD successor-in-interest methodology is "not whether the predecessor company was individually examined but whether the successor company underwent significant changes" so as to no longer be the same entity. Commerce said it is not appropriate for the requesting company to inherit the cash deposit rate of essentially a different company regardless of whether the predecessor company participated in the investigation or an administrative review.

The “successor-in-interest" analysis is an agency practice and was not created by statute. CIT should not direct Commerce on how to create methodology that it is tasked with applying, only decide whether it is reasonable, DOJ said.

GreenFirst, a Canadian lumber firm, asked the court to remand the matter to Commerce with instructions to initiate the requested changed circumstances review. GreenFirst bought lumber mills from RYAM and argues that this caused it to be a successor-in-interest, which would confer RYAM's "non-selected" countervailing duty rate rather than the 14.19% all-others rate (see 2304040038). In its remand results, Commerce refused to initiate a CCR (see 2302170042).