                                        Slip Op. 01-87

               UNITED STATES COURT OF INTERNATIONAL TRADE

____________________________________
                                    :
ALLEGHENY LUDLUM CORP., et al., :
                                    :
            Plaintiffs,              :
                                    :              Before: WALLACH, Judge
      v.                            :              Court No.: 99-06-00362
                                    :
UNITED STATES,                      :
                                    :              PUBLIC VERSION
            Defendant,               :
                                    :
      and                            :
                                    :
ALZ N.V.,                           :
                                    :
            Defendant-Intervenor.    :
____________________________________:


[The Department of Commerce's Remand Determination is Affirmed.]

                                                          Decided: July 18, 2001

Collier Shannon Scott, PLLC (David A. Hartquist, Paul C. Rosenthal, R. Alan Luberda, Lynn
Duffy Maloney, and John M. Herrmann), for Plaintiffs.

Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director; U.S.
Department of Justice, Civil Division, Commercial Litigation Branch (Michele D. Lynch and
Lucius B. Lau); Arthur D. Sidney, Office of the Chief Counsel for Import Administration, U.S.
Department of Commerce, Of Counsel, for Defendant.

O'Melveny & Myers LLP (Peggy A. Clarke), for Defendant-Intervenor.




                                               1
                                                 I

                                       INTRODUCTION


        Plaintiffs dispute the United States Department of Commerce International Trade

Administration's ("Commerce" or "the Department") finding in the Final Results of

Redetermination Pursuant to Court Remand, Allegheny Ludlum Corp., et al. v. United States

(Dep't Commerce 2000) ("Remand Determination") that certain programs or transactions did not

confer countervailable subsidies upon a Belgian producer of stainless steel coiled plate.

Plaintiffs' challenge follows the court remand of Commerce's decision in Final Affirmative

Countervailing Duty Determination; Stainless Steel Plate in Coils from Belgium, 64 Fed. Reg.

15567 (1999) ("Final Determination"). See Allegheny Ludlum Corp. v. United States, 112 F.

Supp. 2d 1141(CIT 2000). Familiarity with the court's earlier opinion is presumed.

       The court finds that Commerce has remedied the defects in its earlier decision by

specifically articulating the basis for not including the Government of Belgium's 1984 purchase

of stock in the Belgian steel company Siderurgie Maritime SA ("Sidmar") in its countervailing

subsidy investigation, and affirms the Department's Remand Determination.



                                                II

                                  STANDARD OF REVIEW



       In reviewing Commerce's determination, the court “shall hold unlawful any

determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the

record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B) (1994). "As long

as the agency's methodology and procedures are reasonable means of effectuating the statutory

                                                 2
purpose, and there is substantial evidence in the record supporting the agency's conclusions, the

court will not impose its own views as to the sufficiency of the agency's investigation or question

the agency's methodology." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-5,

636 F. Supp. 961, 966 (1986), aff'd, 810 F.2d 1137 (Fed. Cir. 1987). "Substantial evidence is

something more than a 'mere scintilla,'" and must be enough evidence to reasonably support the

Department's conclusion. Id. at 405, 636 F. Supp. at 966.


                                                   III

                                          BACKGROUND


        On March 31, 1998, Plaintiffs filed a countervailing duty petition with Commerce that

alleged a Belgian producer of stainless steel plate in coils, ALZ N.V. ("ALZ"), received an unfair

benefit from various subsidies provided by the Government of Belgium ("GOB"), the regional

Government of Flanders ("GOF") and the European Commission ("EC"). See Initiation of

Countervailing Duty Investigations: Stainless Steel Plate in Coils from Belgium, Italy, the

Republic of Korea, and the Republic of South Africa, 63 Fed. Reg. 23272 (Dep't Commerce

1998) (“Initiation Notice”). In Plaintiffs' initial petition, Plaintiffs also alleged that Belgian steel

company Sidmar received subsidies from the GOB that were attributable to ALZ.

        However, in the initial petition, Plaintiffs did not specifically identify the GOB's 1984

investments in Sidmar as a subsidy, and only made reference to them in a discussion of the

overall Belgian Steel Industry. Commerce did not list these investments as subject to

investigation in its Initiation Notice of April 28, 1998. See Initiation Notice, 63 Fed. Reg. at

23273. Moreover, Plaintiffs did not challenge or comment upon Commerce's failure to

investigate these investments until just prior to the verification, when they requested that


                                                   3
Commerce examine the terms of the 1984 debt-to-equity conversion stock purchase (the

"infusion") and verify the methodology used by the GOB to arrive at the value per share. See

Letter from Petitioners to Commerce of November 6, 1998 at 9-10.

       On August 28, 1998, Commerce issued its Preliminary Determination.1 It issued its Final

Determination on March 19, 1999 and declined to investigate that question because, it said, the

infusion was brought to its attention following the statutory deadline and therefore untimely. See

Final Determination, 64 Fed. Reg. at 15584 (finding the countervailable subsidy rate for ALZ to

be 1.82 percent, ad valorem). However, based on Plaintiffs' challenge, the court concluded that

the Final Determination was materially flawed in several respects and remanded it back to

Commerce with specific instructions to cure these defects. See Allegheny Ludlum Corp., 112 F.

Supp. 2d 1141, and Order of June 7, 2000 ("the Order").2 For purposes of Plaintiffs' current


       1
         Preliminary Affirmative Countervailing Duty Determination and Alignment of Final
Countervailing Duty Determination With Final Antidumping Duty Determination: Stainless
Steel Plate in Coils From Belgium, 63 Fed. Reg. 47239, 47245 (1998) ("Preliminary
Determination").
       2
           In relevant part, the Order directed Commerce to:

(1)    either conform its decision not to accept Plaintiffs' new subsidy allegation (concerning the
       1984 equity infusion in Siderurgie Maritime SA ("Sidmar")) with its prior decision to
       investigate untimely allegations concerning the Government of Belgium's 1987 and 1993
       sales of ALZ stock to Sidmar, or explain on the record the reasons for this apparent
       inconsistency. To ensure consistency with other investigations, Commerce is also
       instructed to explain how its decision on remand comports with other instances where it
       has used its discretion to similarly reject or accept untimely allegations;

(2)    examine the record evidence concerning the 1984 equity infusion in Sidmar that it
       collected (or was put before it) during its investigation in this matter and, in light of 19
       U.S.C. § 1677d (1994) and 19 C.F.R. § 351.311 (2000), discuss whether it had an
       obligation to investigate this transaction as a potential subsidy for the Final
       Determination. Should it find in the affirmative, Commerce is instructed to reopen its
       investigation, determine whether this transaction constitutes a countervailable subsidy,

                                                  4
challenge, the critical error identified upon remand was Commerce's failure to explain or justify

its unwillingness to investigate the GOB's 1984 purchase of stock in Sidmar, despite an apparent

statutory obligation to do so under 19 U.S.C. § 1677d. See Allegheny Ludlum, 112 F. Supp. 2d

at 1149-51.

       On September 5, 2000, Commerce issued its Remand Determination in which it

addressed each of the instructions. However, Plaintiffs object to Commerce's response to the

court's first and second instructions, which concern the infusion. In short, Plaintiffs claim that

Commerce failed to abide by the terms of the Order and that a further remand is necessary.




       and (to the extent it does) adjust ALZ's net countervailable subsidy rate accordingly;

(3)    consider the significance of the statement in Sidmar's 1994 Financial Statement that
       Sidfin International ("Sidfin") "is administered by our group only" and determine
       whether, or how, this affects its conclusion that no countervailable benefit was conferred
       to Sidmar through the creation of Sidfin. In so doing, Commerce shall examine this
       statement in light of Sidmar's subsequent explanation (noted in Sidmar's Verification
       Report at 6) that this statement was "perhaps a slight exaggeration intended to strengthen
       Sidmar's company image," as well as any other relevant record evidence;

(4)    clarify its methodology for determining whether a benefit was conferred to Sidmar through the
       creation of, and its participation in, Sidfin. Specifically, Commerce is instructed to state why it
       examined "ownership," "control," and "profit" in determining whether a countervailing
       benefit had been conferred, and clarify the relative importance that it attributed to each of
       these or other factors. Should Commerce determine upon remand that Sidmar actually
       controlled Sidfin, Commerce shall also discuss, in light of its methodology, whether (and
       if so, how) Sidmar's control affects its determination that a benefit had not been conferred
       upon Sidmar; and

(5)    should Commerce reverse its prior finding on remand and decide that a financial
       contribution was conferred to Sidmar through the Sidfin joint venture, examine and
       decide upon the propriety of using Plaintiffs' suggested share valuation methodology for
       (a) deciding whether a "benefit" was conferred for purposes of 19 U.S.C. § 1677(5)(E)(i)
       (1994); and; (b) if applicable, valuing the amount of subsidy conferred by Gimvindus[.]

                                                    5
                                                 IV
                                          ARGUMENTS


                                                 A
   Plaintiffs Argue Commerce Has Not Complied with the Court's Remand Order or the
                                              Statute.


       Plaintiffs argue that "Commerce's analysis and conclusion" in the Remand Determination

"are erroneous because they ignore the two-pronged nature of the Court's remand instructions."

Plaintiffs' Response to the Commerce Department's Final Results of Redetermination Pursuant to

Court Remand ("Plaintiffs' Response") at 2. The Plaintiffs assert that Commerce was instructed

to engage in a two step analysis, which first required Commerce to determine whether it was

obligated under 19 U.S.C. §1677d to examine the infusion. If this threshold question was

answered in the affirmative, Commerce was then required to reopen its investigation to include

the infusion. Therefore, Plaintiffs argue that Commerce improperly reached a conclusion

regarding the existence of a subsidy through its "threshold inquiry into whether it had a statutory

obligation, under the facts and circumstances presented, to include a 'possible subsidy' in its

investigation." Id. Plaintiffs object to Commerce's conclusion that it was not obligated to reopen

its investigation under § 1677d based on its view that since the infusion did not confer a benefit it

could not possibly be a subsidy. Plaintiffs aver that this conclusion was based on a "backwards,

result-oriented approach to the issue of Commerce's basic, threshold obligation to investigate a


                                                 6
potential subsidy practice [that] contravenes the very essence of the Court's remand instructions. .

. ." Id. at 5 (emphasis in original).

        Plaintiffs also argue that because Commerce determined there does not appear to be a

possible subsidy in the absence of a benefit, Commerce has tacitly admitted that it "had an

obligation to investigate this subsidy practice." Id. at 6. Plaintiffs cite several aspects of the

Remand Determination in support of this argument. For example, plaintiffs refer to the Remand

Determination's listing of record evidence regarding the infusion and argue that while such

evidence is "directly relevant to the initial inquiry into whether to investigate," id., it is not a

sufficient basis for Commerce to conclude that there was no subsidy practice at all. Rather,

Plaintiffs concede that such a conclusion could be reached, but only, they say, after a complete §

1677d investigation. Moreover, the Plaintiffs argue that Commerce evaluated the evidence on

the merits as it would in a final determination and that "very approach . . . shows that the record

evidence should have caused Commerce to include the subsidy in its investigation." Id. at 7.

        Plaintiffs' final argument is that Commerce's analysis improperly "raise[s] the bar" by

making it more difficult to initiate a subsidy investigation and therefore circumvents the language

of § 1677d. Plaintiffs maintain that Commerce's analysis unduly requires the petitioners to

affirmatively establish a case for countervailability at the time the subsidy is alleged. Id.

Plaintiffs further assert Commerce's position that "unless evidence indicated that the earlier

finding regarding Sidmar's equityworthiness was in error, the Department had no basis to

investigate the GOB's purchase of common shares," Remand Determination at 36, is unfounded

given Plaintiffs' submission of evidence and discussion of Geneva Steel v. United States, 20 CIT

1083, 937 F. Supp. 946 (1996) to the contrary. Plaintiffs' Response at 8-9. Plaintiffs stress that

this reasoning is improper insomuch as it requires an "affirmative showing of benefit from the


                                                    7
outset." Id. at 9.

        As a result of this allegedly flawed approach, Plaintiffs claim that the second prong of the

court's instruction regarding the infusion was improperly ignored, and that had Commerce

properly engaged in the initial threshold inquiry regarding its duty to investigate the infusion, it

would have necessarily conducted a § 1677d investigation. See id. at 9-11. As such, Plaintiffs

aver that "Commerce's discussion of whether a benefit existed under the 1984 transaction

attempts to analyze several important issues that must be addressed in a further remand." Id. at

10.



                                                  B
 Defendant Maintains that its Previous Decision is Supported by the Record Evidence and
                                            the Statute.


        Commerce maintains that it rendered its decision in compliance with the Order's

instructions. Specifically, Commerce asserts that it "analyzed the 'information and

argumentation' that were in the record in light of 19 U.S.C. § 1677d and 19 C.F.R. § 351.311 and

explained 'why this evidence would not have triggered inclusion of this potential subsidy in [its]

investigation.'" Defendant's Rebuttal Comments to the Plaintiffs' Response to the Final Results

of Redetermination Pursuant to Court Remand ("Defendant's Rebuttal") at 5 (quoting Remand

Determination at 16). Moreover, Commerce acknowledges "that where there is evidence of a

possible subsidy, it has a statutory obligation to investigate that subsidy pursuant to 19 U.S.C. §

1677d." Id. at 4 (citing Remand Determination at 33).

        As a result, Commerce asserts that it declined to reopen its investigation based on record

evidence which indicates the "1984 investments do not appear to be possible subsidies." Id. at 7.

                                                  8
In addition, Commerce asserts that in so declining, it did not "raise the bar" for initiating an

investigation of a potential countervailable subsidy as Plaintiffs argue. Rather, Commerce says

that the evidence of a countervailing subsidy was simply insufficient to initiate an investigation.

Moreover, Commerce claims that Plaintiffs' interpretation of its position is erroneous. Id. at 7-8.

Specifically, Commerce stresses that under the record evidence it found, although there was

clearly a financial contribution, "there was no evidence that Sidmar received a benefit from that

financial contribution" and "[w]ithout a benefit, the practice cannot be considered a subsidy."

Remand Determination at 31.



                                                  V
                                            ANALYSIS


       Although Commerce arrived at a conclusion regarding the potential subsidy, without

engaging in a § 1677d investigation, its conclusion was warranted under the record evidence and

in compliance with the statute and the Order. As the Order stated, Commerce is obligated to

adhere to the scheme articulated in 19 U.S.C. § 1677d and 19 C.F.R. § 351.311 and had to

       examine the record evidence concerning the 1984 equity infusion in Sidmar that it
       collected (or was put before it) during its investigation in this matter and, in light
       of 19 U.S.C. § 1677d (1994) and 19 C.F.R. § 351.311 (2000), discuss whether it
       had an obligation to investigate this transaction as a potential subsidy for the Final
       Determination. Should it find in the affirmative, Commerce is instructed to
       reopen its investigation, determine whether this transaction constitutes a
       countervailable subsidy, and (to the extent it does) adjust ALZ's net
       countervailable subsidy rate accordingly.

June 7, 2000 Order, paragraph (2).

        Thus, Commerce was instructed to determine if the record evidence, when analyzed,

gave rise to an obligation to reopen their previous investigation to include the 1984 Sidmar

                                                   9
infusion. In relevant part, 19 U.S.C. § 1677d provides as follows:

       If, in the course of a proceeding under this subtitle, the administering authority
       discovers a practice which appears to be a countervailable subsidy, but was not
       included in the matters alleged in a countervailing duty petition . . . then the
       administering authority--
         (1) shall include the practice, subsidy, or subsidy program in the proceeding if
       the practice, subsidy, or subsidy program appears to be a countervailable subsidy
       with respect to the merchandise which is the subject of the proceeding . . . .


19 U.S.C. § 1677d (1994) (emphasis added). In turn, 19 C.F.R. § 351.311 ("Countervailable

subsidy practice discovered during investigation or review") states in relevant part:


         (b) Inclusion in proceeding. If during a countervailing duty investigation or a
       countervailing duty administrative review the Secretary discovers a practice that
       appears to provide a countervailable subsidy with respect to the subject
       merchandise and the practice was not alleged or examined in the proceeding . . .
       the Secretary will examine the practice, subsidy, or subsidy program if the
       Secretary concludes that sufficient time remains before the scheduled date for the
       final determination or final results of review.
         (c) Deferral of examination. If the Secretary concludes that insufficient time
       remains before the scheduled date for the final determination or final results of
       review to examine the practice, subsidy, or subsidy program described in
       paragraph (b) of this section, the Secretary will:
                (1) During an investigation, allow the petitioner to withdraw the petition
               without prejudice and resubmit it with an allegation with regard to the
               newly discovered practice, subsidy, or subsidy program; or
                (2) During an investigation or review, defer consideration of the newly
               discovered practice, subsidy, or subsidy program until a subsequent
               administrative review, if any.
         (d) Notice. The Secretary will notify the parties to the proceeding of any
       practice the Secretary discovers . . . .

19 C.F.R. § 351.311 (2000) (emphasis added).

       Since the plain language of the statute and regulation only require Commerce to

investigate where there is a practice that "appears to be" or "appears to provide" a



                                                10
countervailable subsidy, it follows that Commerce must first determine whether that threshold is

met. On this point, the parties appear to agree. However, the parties disagree on the scope of

the actual inquiry in which Commerce is obligated to engage.

        While Plaintiffs argue that Commerce has exceeded the bounds of the threshold inquiry

that § 1677d and the Order required of it, they do not attack the substance of Commerce's

analysis. Rather, they contend this analysis is faulty only insomuch that it assessed the merits of

the record evidence before Commerce. In other words, Plaintiffs claim that Commerce

conducted its analysis in reverse, arguing that Commerce should have reached a conclusion only

following a full § 1677d investigation. Plaintiffs stress that "the statute only requires Commerce

to include a practice that 'appears' to be a subsidy, rendering Commerce's analysis on remand

contrary to both the Court's instructions and the express statutory language." Plaintiffs'

Response at 6. As Plaintiffs view the situation, "[u]nder Commerce's logic, because the agency

affirmatively found that no subsidy existed, it had no obligation to examine an 'apparent' subsidy

practice in its investigation." Id. at 5.

        Although Plaintiffs assert the standard to determine if the infusion conferred a benefit is

whether there is a "reasonable basis to believe or suspect" that such a benefit exists, through the

course of their argument, they in essence interpret the term "appears" in both 19 U.S.C. § 1677d

and C.F.R. § 351.311 to mean immediately appears from the evidence in the record, without

further analysis or consideration. See Plaintiffs' Supplemental Memorandum Regarding the

Commerce Department's Final Results of Redetermination Pursuant to Court Remand

("Plaintiffs' Supplemental Brief") at 2 (citing Countervailing Duties: Notice of Proposed


                                                11
 Rulemaking and Request for Public Comments, 54 Fed. Reg. 23366 (Dep't Commerce 1989)

 ("1989 Proposed Regulations") (proposed 19 C.F.R. § 355.44(e)(3)) and 19 C.F.R. §

 351.507(a)(7)). Therefore, the Plaintiffs fault Commerce for assessing the record evidence

 beyond its immediate suggestion of an apparent subsidy. Under this reasoning, Commerce's

 analysis, which dispels any appearance that a subsidy existed, is an admission that the subject

 practice "appears" to be a subsidy.3



                                                     A
 The Bounds of Commerce's § 1677d Threshold Inquiry Cannot be as Narrowly Defined as
                                            Plaintiffs Suggest.



            Both the controlling statute and its implementing regulation are silent as to the level of

 inquiry required to determine whether the term "appears" is satisfied and the court is not aware

 of any case law or legislative history that discusses the term in this context. For example, the

 Senate Report on the relevant section provides:

        Section 283(b) amends section 775 of the 1930 Tariff Act to provide that, where
        Commerce discovers during an investigation or review that a subsidy is in
        violation of Article 8, or appears to be countervailable despite not having been
        included in the countervailing duty petition, it shall include the subsidy in the
        investigation.

Sen. Rep. No. 103-412 at 106 (1994); see also H.R. Rep. No. 103-826 at 127 (1994). Hence the




        3
          Indeed, under this line of reasoning, it would follow that if Commerce is obligated to terminate
its threshold inquiry following any possibility that an equity infusion is a countervailable subsidy, any
further inquiry necessarily "raises the bar."

                                                    12
court is left to interpret this term against the overall statutory scheme.

       In that context, the court concludes that the term "appears" cannot be construed as broadly

as Plaintiffs demand. Plaintiffs' argument regarding the permissible scope of Commerce's initial

inquiry is unpersuasive. Endorsing Plaintiffs' interpretation would force Commerce to engage in

a complete countervailing duty investigation in any instance where there is even the slightest

suggestion that a certain business practice is a countervailable subsidy.

       This court is guided by the Federal Circuit's decision in American Lamb Co. v. United

States, in which the court determined that the International Trade Commission ("ITC") is

permitted to weigh "all evidence in applying the 'reasonable indication' standard of 19 U.S.C. §

1673b(a) in a preliminary investigation." American Lamb Co. v. United States, 785 F.2d 994,

997 (Fed. Cir. 1986). In American Lamb, the petitioners sought to have the ITC reconsider its

decision not to conduct an antidumping investigation based on a negative preliminary

determination. The controlling statute, 19 U.S.C. § 1673b, requires the ITC to conduct a full

antidumping investigation where there is a "reasonable indication" of injury based on a

preliminary investigation4. The lower court concluded that the ITC should have initiated an


       4
           19 U.S.C. § 1673b provides, in relevant part:

(a) Determination by Commission of reasonable indication of injury.
  (1) General rule. Except in the case of a petition dismissed by the administering authority under
section 1673a(c)(3) of this title, the Commission, within the time specified in paragraph (2), shall
determine, based on the information available to it at the time of the determination, whether there
is a reasonable indication that--
     (A) an industry in the United States--
       (i) is materially injured, or
       (ii) is threatened with material injury, or
     (B) the establishment of an industry in the United States is materially retarded,

                                                  13
investigation if the petition adequately demonstrated a "mere possibility" that an injury was

sustained. American Lamb, 785 F.2d at 1001. In addition, the lower court concluded that the

ITC was barred from weighing any negative evidence, thereby requiring "an affirmative

preliminary determination . . . whenever information accompanying a petition raises the mere

'possibility' of material injury, regardless of any contrary evidence." Id. at 1001. In reversing the

lower court's decision, the Federal Circuit looked to the legislative history of the statute and the

costly nature of antidumping investigations, stating:

       [T]he notion that allegations in a petition found unsupportable because of
       overwhelming contradictory evidence should nonetheless result in a full
       investigation and potential imposition of provisional remedies is directly contrary
       to Congress' intent, as above indicated, of eliminating "unnecessary and costly
       investigations" and the "impediment to trade" that would reside in an unwarranted
       imposition of provisional remedies. Considering and weighing, under ITC's
       guidelines, all evidence gathered within the 45 days available for conducting a
       preliminary investigation, on the other hand, effectuates that legislative intent.

Id. at 1004.

       Although the Federal Circuit was guided by statutory language and legislative history that

are absent from the current scenario, the underlying logic is applicable. Countervailing duty

investigations, like antidumping investigations, are costly and time consuming. Surely, they

warrant a sufficient factual basis for their initiation. Although § 1677d offers a petitioner the

opportunity to call Commerce's attention to a potentially countervailable subsidy that was

discovered during the course of an ongoing countervailing duty investigation, it does not force


by reason of imports of the subject merchandise and that imports of the subject merchandise are
not negligible. If the Commission finds that imports of the subject merchandise are negligible or
otherwise makes a negative determination under this paragraph, the investigation shall be
terminated.

19 U.S.C. § 1673b (1994).

                                                 14
Commerce to fully investigate any subsidy. Rather, Commerce must review the record evidence

to determine whether the business practice "appears" to be a countervailable subsidy. See 19

U.S.C. § 1677d; 19 C.F.R. § 351.311. This review must logically afford Commerce sufficient

latitude to weigh and analyze both negative evidence and positive evidence. Moreover if, as

Plaintiffs argue, Commerce's determination of whether a benefit was conferred is governed by

the "reasonable basis to believe or suspect" standard5, see Plaintiffs' Supplemental Brief at 2, then

the above discussion of American Lamb is even more compelling.


          5
              The 1989 Proposed Regulations provide, in relevant part:

                    §§ 355.44 Existence of a countervailable benefit.
                    ...

                    (e)(3) The Secretary will not investigate an equity infusion in a firm absent
                    a specific allegation by the petitioner which is supported by information
                    establishing a reasonable basis to believe or suspect that a firm has
                    received an equity infusion which provides a countervailable benefit
                    within the meaning of paragraph (e)(1) of this section.

          54 Fed Reg. at 23380-81. (emphasis added).

           Similarly, the Countervailing Duties: Final Rule, 63 Fed. Reg. 65348 (Dep't Commerce
          1998) provides, in relevant part:

                    §§ 351.507 Equity.
                    ...

                    (a)(7) Allegations. The Secretary will not investigate an equity infusion in
                    a firm absent a specific allegation by the petitioner which is supported by
                    information establishing a reasonable basis to believe or suspect that the
                    firm received an equity infusion that provides a countervailable benefit
                    within the meaning of paragraph (a)(1) of this section.

          63 Fed. Reg. 65348, 65411; see 19 C.F.R. § 351.507(a)(7) (2000). (emphasis
added).



                                                      15
        The Plaintiffs misconstrue the actual nature of Commerce's analysis. Commerce,

contrary to Plaintiffs' characterization, did not require an affirmative showing of a

countervailable subsidy. Indeed as Plaintiffs state "nowhere does Commerce indicate that

plaintiffs failed to 'allege' the elements of a subsidy (i.e., financial contribution, benefit, and

specificity) with respect to the 1984 equity infusion, nor that this allegation was not supported by

'reasonably available' information. . . . Commerce itself provides a litany of all the reasonably

available information that accompanied plaintiffs' argument concerning the 1984 infusion."

Plaintiffs' Response at 8 (citing Remand Determination at 16-19).

        Commerce, in fact, considered all the implications that sprang from the record evidence

in support of, as well as against, finding a countervailable subsidy. See generally Remand

Determination. For "while there was evidence of a financial contribution there was no evidence

that Sidmar received a benefit from that financial contribution" and "[w]ithout a benefit, the

practice cannot be considered a subsidy." Remand Determination at 31. Thus while a financial

contribution occurred, that contribution did not appear to be a countervailable subsidy when the

record evidence was analyzed, revealing the absence of a benefit.

        The court does not concur with Plaintiffs that Commerce's analysis unfairly bypasses the

second prong of the Order. Although Commerce engaged in analysis of the record evidence that

arrived at a final conclusion, it was not the kind of "substantive analysis reserved for final

determinations." Plaintiff's Response at 9. In fact, this analysis was significantly short of that

reserved for final determinations. This, however, does not damage the credibility of the

conclusion it reached. Rather, the fact that the above analysis is not as intensive as those


                                                   16
reserved for final determinations and yet manages to counter the appearance of a countervailable

subsidy is indicative of the weak nature of that appearance.

                                                  B
Commerce Properly Abided by the Order and 19 U.S.C. § 1677d in Declining to Reopen its
                       Investigation to Include the 1984 Equity Infusion.



       Commerce enumerates the specific evidence relied upon within the record in determining

whether the infusion was a possible subsidy practice and provides a thorough analysis of that

evidence as well. See Remand Determination at 16-20. However Commerce also cautions that

although it "attempts to be as inclusive as possible regarding potential subsidy practices which

[it] learn[s] about during the course of an investigation . . . this does not mean that the

Department goes on 'fishing expeditions,' investigating any and all government practices that

might affect the respondents." Id. at 12-13. Rather, "the Department pursues those practices

where the basic initiation threshold is met, i.e., there must be evidence on the record indicating

that the elements necessary for the imposition of countervailing duties are present." Id. at 13. As

such, Commerce concluded that the evidence on the record failed to satisfy the elements of a

possible subsidy. In other words, the infusion did not appear to be a countervailable subsidy

practice.



                                                   1

                                      Equityworthy Analysis

       The key characteristic of a countervailable purchase of shares is that such a purchase is


                                                  17
inconsistent with "commercial considerations." Remand Determination at 21. The original

measure of what is consistent with commercial considerations is derived from the 1989 Proposed

Countervailing Duty Regulations. See 1989 Proposed Regulations, 54 Fed. Reg. 23366. Those

regulations directed Commerce, in the absence of publically traded shares with a corresponding

market valuation for comparison, to simply make an "equityworthy" determination to establish

whether the given share purchase was "consistent with commercial considerations." Remand

Determination at 20-21. See also 1989 Proposed Regulations 54 Fed. Reg. at 23371 §

355.44(e)(1)(ii) ("If there is no market-determined price for a firm's shares (e.g., the firm's shares

are not publicly traded), paragraph [§ 355.44(e)(1)(ii)] provides that a government equity

infusion constitutes a countervailable benefit if the firm was not equityworthy (i.e., from the

standpoint of a reasonable private investor, the firm was not a reasonable investment) and there is

a rate of return shortfall within the meaning of § 355.49(e)."). Thus, the purchase of common

shares in an equityworthy firm is consistent with commercial considerations.6

       However, following the court's decisions in Aimcor v. United States, 18 CIT 1117, 1124,

871 F. Supp. 447, 454 (1994) ("[W]here a company is equity-worthy, as here, it does not

necessarily follow that the purchase of stock from that company will be consistent with

commercial considerations."), Aimcor v. United States, 19 CIT 1497, 912 F. Supp. 549 (1995),


       6
         As Commerce's states in its Final Affirmative Countervailing Duty Determination;
Stainless Steel Plate in Coils from Belgium, "[p]ursuant to the Department's equity methodology,
a finding of equityworthiness means that the Department need not inquire further regarding the
commercial soundness of a government's purchase of common shares. Hence, we determine that
the GOB's 1985 purchase of common shares was consistent with the usual investment practice of
private investors in Belgium." 64 Fed. Reg. 15567, 15570 (Dep't Commerce 1999).


                                                  18
and Geneva Steel, 20 CIT 1083, 937 F. Supp. 946, where special conditions are imposed upon

the purchased shares, Commerce could no longer simply conclude its analysis upon finding the

target company was equityworthy. Rather, a separate and more exhaustive analysis has to be

conducted in order to determine whether the purchase of such shares qualifies as a

countervailable subsidy.

       Commerce maintains that it assessed the equityworthiness of Sidmar well prior to the

instant action in Final Affirmative Countervailing Duty Determinations: Certain Steel Products

From Belgium, 58 Fed. Reg. 37273 (Dep't Commerce 1993) ("Belgian Certain Steel"). There, in

support of their argument that certain practices involving Sidmar and several other companies

were in fact countervailable subsidies, the petitioners attacked the equityworthiness of Sidmar

during 1984. See Id. at 37275.



                                                 i
 Given the Higher Initiation Threshold for Equityworthiness Investigations and Given the
 Fact Commerce's Previous Finding that Sidmar is Not Unequityworthy is Supported and
     Uncontested, Commerce Had Sufficient Information Before it to Consider Sidmar
         Equityworthy for the Limited Purpose of Buttressing its § 1677d Analysis.



       However, upon closer examination, the fact Commerce did not actually conduct an

investigation to determine whether Sidmar was equityworthy is revealed. In fact, with regard to

Sidmar's equityworthiness during 1984, Commerce stated in Belgian Certain Steel:


       Equityworthiness


                                                19
       Petitioners have alleged that Sidmar was unequityworthy in 1984[.] . . . We did not
       initiate an investigation on petitioners' allegation that Sidmar was unequityworthy
       because the petition did not contain sufficient evidence to support the allegation. . .
       .Therefore, we have not made an equityworthiness determination for [this
       company].

Belgian Certain Steel, 54 Fed. Reg. at 37275.

       Since Commerce saw, for the three years prior to 1984 (focusing on a three year window

is Commerce's standard practice, see 1989 Proposed Regulations, 54 Fed. Reg. at 23381, §

355.44(e)(2)), improving rates of return on both equity and return on investment, as well as

improving profits and ability to cover costs, it regarded the evidence in support of petitioners'

allegations that Sidmar was unequityworthy as insufficient.7


       7
         The General Issues Appendix to Belgian Certain Steel further explains Commerce's
decision not to initiate an equityworthiness investigation of Sidmar:

       Comment 14 (Belgium): Petitioners argue that there is sufficient information on
       the record to justify findings of uncreditworthiness and unequityworthiness for
       Sidmar as well.

       Sidmar contends that petitioners' allegations concerning Sidmar's creditworthiness
       and equityworthiness are incorrect. Sidmar notes that the Department determined
       at initiation that it was creditworthy and equityworthy. Further, any new allegation
       contained in a case brief is untimely. According to the Department's regulations
       at 19 CFR 355.31(c), the Secretary will not consider any subsidy allegation
       submitted later than 40 days prior to the scheduled date of the preliminary
       determination.

       DOC Position: Evidence on the record shows that in the three years prior to 1984,
       when Sidmar's debt was converted to equity, the company realized improving
       rates of return on both equity and return on investment. Profits also improved
       during this period. Additionally, the company was also generating sufficient
       revenue to meet its costs and fixed financial obligations. In view of this
       performance, the Department determined not to initiate on petitioners'
       uncreditworthiness and unequityworthiness allegations. Information supplied in
       the case brief on these allegations was essentially the same as that supplied in the

                                                 20
       Although this was not a formal equityworthiness investigation, Commerce did rely

heavily on two of the four recommended indicators of equityworthiness listed in the 1989

Proposed Regulations.8 Specifically, "[t]he principal criterion is whether a reasonable private



       petition. A small portion of the information in the case brief was new
       information, which we regarded as untimely. Therefore, we must affirm our
       determination at initiation that the petition did not provide good cause to initiate
       an investigation of Sidmar's unequityworthiness or uncreditworthiness.

Belgian Certain Steel, 54 Fed Reg. at 37248.

       8
        Under the 1989 Proposed Regulations investigations of a company's equityworthiness
was guided by four factors:

        If there is no market-determined price for a firm's shares (e.g., the firm's shares
       are not publicly traded), paragraph (e)(1)(ii) provides that a government equity
       infusion constitutes a countervailable benefit if the firm was not equityworthy
       (i.e., from the standpoint of a reasonable private investor, the firm was not a
       reasonable investment) and there is a rate of return shortfall within the meaning of
       § 355.49(e). Paragraph (e)(2) sets forth the basic criteria the Secretary will use in
       determining whether a firm is or is not equityworthy. The principal criterion is
       whether a reasonable private investor could expect from the firm a reasonable rate
       of return within a reasonable period of time. Subsidies Appendix at 18020.
       Factors that the Secretary may use to determine whether a firm can generate a
       reasonable rate of return include: (1) current and past indicators of a firm's
       financial health (e.g., current ratio, cash flow, debt-equity ratio), adjusted for
       generally accepted accounting principles where appropriate, see, e.g., Structural
       Shapes and Cold-Rolled Carbon Steel Flat-Rolled Products from Korea, 49 FR
       47284 (1984); Certain Steel Products from South Africa, 49 FR 32426 (1984));
       (2) future financial prospects, see, e.g., Certain Carbon Steel Products from
       Brazil, 52 FR 829 (1987); Stainless Steel Plate from the United Kingdom, 51 FR
       44656 (1986); (3) recent rate of return on equity, see, e.g., Certain Carbon Steel
       Products from Brazil, 49 FR 17988 (1984); and (4) participation by private
       investors, compare, Carbon Steel Wire Rod from Trinidad and Tobago, 49 FR 480
       (1984), with Fresh Atlantic Groundfish from Canada, 51 FR 10041 (1986). In this
       regard, the Department intends to continue its practice of assessing the firm as a
       whole, rather than a particular product line, because a private investor would
       consider the firm as a whole in making an investment decision. See, e.g., Fuel

                                                21
investor could expect from the firm a reasonable rate of return within a reasonable period of

time." 1989 Proposed Regulations 54 Fed. Reg. at 23371 (citations omitted). The 1989 Proposed

Regulations provide four factors that Commerce may rely on in determining whether this criteria

is met, including 1) current and past indicators of a firm's financial health; 2) future financial

prospects; 3) recent rate of return on equity; and 4) participation by private investors. See supra

note 8. It should be noted that these factors were derived individually from separate Commerce

investigations and it appears that no one factor is afforded more weight than another. In Belgian

Certain Steel, Commerce therefore declined to engage in any further inquiry of Sidmar's

equityworthiness, having already assessed its equityworthiness against factor #1 (past indicators

of financial health) and factor #3 (return on equity).

       Although this is not, as Defendant-Intervenor argues, a situation where "the Department

had before it all the evidence it examines in making an equityworthiness determination",

Defendant-Intervenor's Supplemental Memorandum at 5, it is one in which Commerce possessed

a respectable body of evidence weighing in favor of an equityworthiness finding. And although

this is not equivalent to stating Sidmar is equityworthy,9 it is sufficient for purposes of supporting




       Ethanol from Brazil, 51 FR 3361 (1986).

1989 Proposed Regulations, 54 Fed. Reg. at 23371.
       9
         Defendant admits that "[b]ecause the insufficient allegations in Belgian Certain Steel
did not require that Commerce perform a full and complete investigation into Sidmar's
equityworthiness, Commerce cannot say that the finding in Belgian Certain Steel that Sidmar
was not unequityworthy would be tantamount to a finding that Sidmar was equityworthy in this
investigation." Supplemental Memorandum of the United States Responding to February 23,
2001 Court Order at 6.

                                                  22
Commerce's assertion that the subject equity infusion did not appear to be a countervailable

subsidy under 19 U.S.C. § 1677d.

       Given the higher initiation threshold for countervailing duty investigations in general, the

same initiation threshold logically must apply to equityworthiness investigations as well, since

the latter is really simply part of the former's overall investigative framework. Commerce's duty

to investigate a company's equityworthiness is triggered under § 1677d, as a result of discovering

a possible subsidy during the course of an investigation, and under the 1989 Proposed

Regulations, in response to an allegation raised by petitioner, sufficiently supported by evidence

of unequityworthiness. See 19 U.S.C § 1677d; 1989 Proposed Regulations, 54 Fed. Reg. at

23380-81, § 355.44(e)(3). In its Remand Determination, Commerce explained that

creditworthiness and equityworthiness investigations are governed by a higher initiation standard

to compensate for their laborious and difficult nature. Remand Determination at 11 ("both

creditworthiness and equityworthiness analyses were recognized by the Department as being

difficult. As a consequence, the Department set higher initiation thresholds for such

allegations."); see also 1989 Proposed Regulations, 54 Fed. Reg. at 23371 ("investigations of

equity infusions, like investigations of creditworthiness, add substantially to the work involved in

a CVD or review.").

       Given this higher initiation standard, Commerce must be allowed to rely on a previous

finding that a target company was not unequityworthy in the fashion it has here. Forcing

Commerce to engage in a complete equityworthiness investigation, after its previous finding that

Sidmar was not unequityworthy and the failure of the current and previous petitioners to offer


                                                23
evidence to the contrary, would effectively destroy the higher initiation standard. Such a course

of action would allow a petitioner to demand a complete equityworthiness investigation in every

instance where a § 1677d investigation might lie. This cannot be the result envisioned by either

the regulations or the statute. At the very least, Plaintiffs must offer evidence against

Commerce's finding in Belgian Certain Steel before demanding Commerce engage in a complete

equityworthiness investigation of Sidmar. Since they have not done so here and based on the

above analysis of Commerce's equityworthiness finding, the court concludes that Commerce may

rely on this finding in support of its decision not to engage in a full countervailing duty

investigation of the infusion.



                                                  2
                                         Common Shares


       Based on Commerce's original conclusion that Sidmar was equityworthy in 1984 as stated

in Belgian Certain Steel, Commerce concludes that it did not have to include the GOB's 1984

purchase of common shares in Sidmar in its investigation. Remand Determination at 24-25. As

discussed, this conclusion enjoys the support of both Commerce's own regulations, see 1989

Proposed Regulations, and the relevant case law. See Aimcor, 18 CIT at 1124, 871 F. Supp. at

454; Aimcor, 19 CIT 1497, 912 F. Supp. 549; Geneva Steel, 20 CIT 1083, 937 F. Supp. 946

(1996); Final Affirmative Countervailing Duty Determination; Stainless Steel Plate in Coils from

Belgium, 64 Fed. Reg. at 15570.




                                                 24
                                                 3
                                        Preferred Shares


       Despite its finding of equityworthiness, with respect to the GOB's purchase of preferred

shares, Commerce, as required, examines each restriction imposed on this class of shares and

adjusts the shares' purchase price accordingly. Indeed, Commerce discusses each restriction

individually and provides its rationale for any adjustment imposed or forgone. See Remand

Determination at 23-25. In addition, Commerce distances the purchase of the preference shares

from any acknowledged GOB steel industry restructuring initiative. As Commerce states, "[t]he

preference shares were purchased through a debt-to-equity conversion, with the GOB assuming

BF11,332,804,500 worth of Sidmar debt in exchange for 839,467 preferred shares valued at

BF13,500 per share. The preferred shares did not carry any voting rights." Remand

Determination at 16.

       Commerce begins with two reports prepared by the Commissare-Reviseur, "the statutory

auditor, the person responsible for determining and certifying that shares and contributions are

properly valued," ALZ August 3, 1998 Supplemental Questionnaire Response at 16. That report

established the purchase price for common shares of Sidmar at BF (Belgian Francs) 21,579,

based upon Sidmar's "substantial" value and its "profitability" or "yield" value. Id. at 16. See

Geneva Steel, 20 C.I.T. at 1085-86, 937 F. Supp. at 948 (Commerce, with court's approval, uses

common shares of target company as best alternative benchmark for assessing the preference

shares in the absence of publically traded shares.)


                                                 25
       Using this number "without objection" as the starting point for its analysis of the GOB's

purchase of Sidmar preference shares, Commerce adjusted that price downward to reflect the

inferior aspects of the preferred shares vis a vis the common shares. For example, while

Commerce takes note that the subject preferred shares had a dividend cap of 2%,10 while other

common and preferred shares potentially enjoyed greater dividends, it discounts the purchase

price by 3% to reflect the shares' absent voting rights as it considers that to be the "one clearly

inferior aspect" of the preferred shares.11 Remand Determination at 24.

       Nonetheless, on balance, Commerce recognized various other features of the subject

preferred shares entitled them to a higher valuation. See id. First, the subject shares had the

right to priority dividends, meaning that where profits are distributed, the subject preferred share


       10
          Commerce declined to adjust the purchase price to reflect the 2% dividend cap, because
the "[i]nformation on these dividend rights was taken from a 1985 agreement between the GOB
and Sidmar relating to the 1985 acquisition of Sidmar's PB's." Remand Determination at 24
(internal punctuation omitted). Commerce goes on to state that "[w]e note that it is the
Department's practice to consider information available at the time of the equity infusion." Id.
(citing 1989 Proposed Regulations, 54 Fed. Reg. at 23380-81, § 355.44(e)(2)). Moreover,
although Royal Decree No. 245 of December 1983 specified a minimum dividend of 2% prior to
the 1984 purchase, it does not necessarily follow that the GOB was aware of the maximum
dividend cap at the time of that purchase. Accordingly, the 2% minimum within Royal Decree
No. 245 was cast in terms of a benefit and could not have adversely impacted the GOB's
understanding of the infusion at the time of the transaction.
       11
          The preference share purchase was made pursuant to Royal Decree No. 245 of
December 31, 1983, which mandated the shares "(1) confer a preferred dividend of at least 2
percent of the nominal value (i.e., dividends of at least 2 percent would be paid on preference
shares before dividends would be paid on any other shares or profit-sharing bonds); (2) have a
preferred redemption/reimbursement status, and (3) receive voting rights in certain specified
situations. Among these situations, the preference shares would become voting shares after 20
years (unless redeemed)."

Remand Determination at 19 (citing Royal Decree No. 245).

                                                  26
holders receive their portion before the common share holders. Id. In addition, the GOB was

assured that regardless of price fluctuations in the common shares, the GOB could redeem its

preference shares for the original price paid, thereby insulating the GOB from any real risk and

assuring that it "would (at least) be made whole". Id.

       The court takes note of the fact that although the GOB was originally content with the

common share price of BF21,579 for the preference shares, that price was ultimately reduced

under review of the European Commission ("EC") to BF13,500 per share, as the EC had to

determine if the transaction had "elements of support." Id. at 18. In fact, the EC, before the

GOB purchase even ensued, adjusted the purchase price to reflect the inferior aspects of the

shares and to ensure "that no aid measures may be incorporated." Id. (quoting September 1984

Report of Commissaire-Reviseur at 11). Therefore "a minus-value of BF 8,079 per share was

assigned to the calculated economic value of BF21,579 per share." Id. Moreover, the EC noted

that this reduction "did not imply that the economic value of BF21,579 per share had been

dismissed." Id. Hence, the GOB ultimately, "[i]nstead of purchasing 525,178 shares at BF

21,579 per share . . . purchased 839,467 shares at a price of BF13,500 per share." Remand

Determination at 19.

       Despite the fact the preferred shares were limited by a dividend cap, the court finds

reasonable Commerce's determination that the purchase of these shares in an equityworthy

Sidmar was consistent with commercial considerations. Therefore, "it is evident that the price

paid per share by the GOB for Sidmar's preference shares in 1984 was significantly less than the

adjusted common share benchmark price." Id. at 24. This court finds compelling the GOB's


                                                27
assured priority dividends in conjunction with the assurance of a being made whole upon

redemption.12 Those facts, coupled with the EC's downward price adjustment provide sufficient

support for the conclusion that the purchase of these preference shares was consistent with

commercial considerations. Clearly an investment in an equityworthy company where, at the

very least, the investor is guaranteed to recover the initial investment, is not only consistent with

commercial considerations but in excess of that threshold.



                                                 VI

  The 1999 Regulations Do Not Apply to the Current Countervailing Duty Investigation.



       The parties each argue that a different set of regulations govern the current countervailing

duty investigation. Commerce argues that the current investigation, whose petition was filed

March 31, 1998, is governed by the 1989 Proposed Regulations, while Plaintiffs argue the

current 1999 Regulations13 apply.

       Prior to the implementation of the 1999 Regulations, the Proposed 1989 Regulations,



       12
          Plaintiffs argue the fact the GOB reaped only the net present value of the preference
shares upon redemption in 1991, based on a target redemption date of 2004, undercuts the value
of the preference shares' guaranteed minimum return. See Geneva Steel v. United States, 914 F.
Supp. 563, 600 (CIT 1996). The court does not concur. A reasonable time frame for redemption
does not detract from the guaranteed minimum value for the preference shares reflecting the
purchase price, irrespective of any fluctuations in Sidmar's economic health. Thus, these
preference shares were shielded from erosion in value due to poor performance.
       13
          Countervailing Duties: Final Rule, 63 Fed. Reg. 65348 (Dep't Commerce 1998) ("1999
Regulations").

                                                 28
although never formally implemented, essentially codified Commerce's countervailing duty

investigation practices. See Remand Determination at 10, n.17 ("While a final version of these

regulations was never promulgated, the Department relied on the 1989 Proposed Regulations as a

statement of it [sic] practice in many areas until adoption of its current regulations in November

1998."). However, the 1999 Regulations, by their terms, apply to countervailing duty

investigations initiated after December 28, 1998. See 19 C.F.R. § 351.702(a)(1) (1999).

Although the Plaintiffs concede this obvious limitation, they argue that the 1999 Regulations

direct Commerce to apply its terms to a countervailing determination commenced prior to its

effective date, when "the previous methodology was invalidated by the [Uruguay Round

Agreements Act], in which case the Secretary will treat subpart E of this part as a restatement of

the Department's interpretation of the requirements of the [Tariff Act of 1930] as amended by the

[Uruguay Round Agreements Act]. 19 C.F.R. § 351.702(b) (1999) (emphasis added); see

Plaintiffs' Supplemental Brief at 4.

       Plaintiffs further argue that as a result of the 1999 Regulations' expansion of the

equityworthiness analysis, they override the 1989 Proposed Regulations. The 1999 Regulations

require a government entity that made an equity infusion to provide Commerce with a report,

prepared prior to the infusion, that contains an objective analysis of the target company. Under

the 1999 Regulations, such a report demonstrates that the government entity behaved as a private

investor whose "usual investment practice . . . [is] to evaluate the potential risk versus the

expected return." 1999 Regulations, 63 Fed. Reg. at 65373. In the absence of such a report, it "is

unlikely that [Commerce] would find that the infusion was in accordance with the usual


                                                 29
investment practice of a private investor." Id. Plaintiffs also direct the court's attention to

Commerce's comment that the revised equityworthiness evaluation process "better reflects the

principles set forth in the statute, [Statement of Administrative Action], and the [Agreement on

Subsidies and Countervailing Measures]. . . ." Id. at 65372. Based on this statement, the

Plaintiffs argue that "Commerce officially found that the equityworthiness analysis of the 1989

Proposed Regulations does not properly effectuate" the Tariff Act of 1930 and Commerce's own

regulations and therefore the 1999 Regulations control. Plaintiffs' Supplemental Brief at 6.

Plaintiffs additionally point out that the Uruguay Round Agreements Act changed the statutory

language regarding the investigation of equity infusions, so that Commerce no longer judged if

the infusion was "inconsistent with commercial considerations", 19 U.S.C. § 1677(5)(A)(ii)(I)

(1994), but rather whether the infusion was "inconsistent with the usual investment practice of

private investors. . ." 19 U.S.C. § 1677(5)(E)(i) (2000). They claim the new language, in

conjunction with the additional objective report requirement of the 1999 Regulations, supports

their conclusion. If applicable, the 1999 Regulations would most likely demand a formal

equityworthiness investigation. Indeed, in the instant case, the GOB did not prepare such a

report, and as conceded by Commerce, "consistent with [the 1999 Regulations], the GOB's

actions were not consistent with those of a reasonable private investor." Remand Determination

at 22.

         However, Plaintiffs misconstrue the 1999 Regulations analysis as a wholesale

invalidation of the older analysis. Instead, the 1999 Regulations simply build upon the older




                                                  30
analysis with the new objective report factor.14 Moreover, Commerce simply states this revised


       14
        In fact, aside from the added paragraph concerning an objective investment report, the
equityworthiness standards in the 1999 Regulations are essentially identical to those within the
1989 Proposed Regulations:

       (4) Equityworthiness. --(i) In general. The Secretary will consider a firm to have
       been equityworthy if the Secretary determines that, from the perspective of a
       reasonable private investor examining the firm at the time the government-
       provided equity infusion was made, the firm showed an ability to generate a
       reasonable rate of return within a reasonable period of time. The Secretary may, in
       appropriate circumstances, focus its equityworthiness analysis on a project rather
       than the company as a whole. In making the equityworthiness determination, the
       Secretary may examine the following factors, among others:

               (A) Objective analyses of the future financial prospects of the recipient firm
               or the project as indicated by, inter alia, market studies, economic
               forecasts, and project or loan appraisals prepared prior to the government-
               provided equity infusion in question;

               (B) Current and past indicators of the recipient firm's financial health
               calculated from the firm's statements and accounts, adjusted, if appropriate,
               to conform to generally accepted accounting principles;

               (C) Rates of return on equity in the three years prior to the government
               equity infusion; and

               (D) Equity investment in the firm by private investors.

       (ii) Significance of a pre-infusion objective analysis. For purposes of making an
       equityworthiness determination, the Secretary will request and normally require
       from the respondents the information and analysis completed prior to the infusion,
       upon which the government based its decision to provide the equity infusion (see,
       paragraph (a)(4)(i)(A) of this section). Absent the existence or provision of an
       objective analysis, containing information typically examined by potential private
       investors considering an equity investment, the Secretary will normally determine
       that the equity infusion received provides a countervailable benefit within the
       meaning of paragraph (a)(1) of this section. The Secretary will not necessarily
       make such a determination if the absence of an objective analysis is consistent with
       the actions of reasonable private investors in the country in question.


                                                31
analysis "better reflects" the 1930 Tariff Act and Commerce's obligations under the Uruguay

Round Agreement Act. This language is not tantamount to an official conclusion that the 1989

Proposed Regulations analysis failed to properly effectuate the Act, nor it is it strong enough to

even imply that the older analysis is invalidated.

       To conclude otherwise would be to open the door to retroactive application of the 1999

Regulations in any case where they build upon their predecessor. Plaintiffs simply cannot rely on

the 1999 Regulations to force Commerce to engage in a full equityworthiness investigation; the

current investigation is properly governed by their predecessor.




1999 Regulations, 63 Fed. Reg. at 65410-11.




                                                 32
                                                   VI

                                           CONCLUSION

        For the foregoing reasons, the court finds that Commerce's Remand Determination is

supported by substantial evidence and is otherwise in accordance with the law.15



                                        __________________________
                                         Evan J. Wallach, Judge

Dated: July 18, 2001
New York, New York




        15
          The court is aware of the recent preliminary determination in Stainless Steel Plate in Coils
from Belgium: Preliminary Results of Countervailing Duty Administrative Review, 66 Fed. Reg. 20425
(Dep't Commerce 2001) ("Preliminary Results") within which Commerce found the subject infusion
countervailable. The court, however, notes the fact that the Preliminary Results are based on the 1999
Regulations, not the 1989 Proposed Regulations, and therefore regards that investigation as separate with
unique circumstances and issues.

                                                   33
