CIT Decision Not to Reopen Record in Expedited CVD Review on Canadian Lumber
The Court of International Trade remanded the Commerce Department's expedited countervailing duty review on Canadian softwood lumber for the ninth time on Dec. 18, finding the agency abused its discretion in declining to reopen the record to let respondent Les Produits Forestiers D&G and its cross-owned affiliate Les Produits Forestiers Portbec add information to help distinguish sales affected by subsidies to unaffiliated input suppliers.
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Following lengthy litigation on the review, the sole issue now before the trade court concerns the agency's calculation of D&G's CVD rate. Specifically, the issue concerns the method of calculation Commerce used to adjust for the amount of lumber D&G and Portbec bought from unaffiliated suppliers when determining how much of the suppliers' subsidies were attributable to D&G (see 2501290040).
While Commerce initially chose not to attribute these subsidies to D&G, Judge Mark Barnett remanded this decision last year (see 2404230031). After the remand, Commerce decided to use its trading company methodology to attribute those suppliers’ benefits to D&G in proportion to the number of purchases it made from them.
The agency's trading company regulation says subsidies provided to a trading company that exports subject merchandise shall be cumulated with benefits from subsidies given to the firm that produces the subject merchandise, "regardless of whether the trading company and the producing firm are affiliated."
D&G and Portbec argued that Commerce needed to take into account that the "vast majority" of the companies' transactions involve buying Canadian lumber on a "duty paid basis in the United States and reselling the lumber to buyers in the United States." The respondent asked the court to tell Commerce to "collect the requisite data to complete a fair and accurate calculation" if the agency can't distinguish between U.S. and Canadian lumber purchases by the companies.
While Barnett again remanded the matter, the court declined to instruct Commerce to reopen the record, and the agency declined to do so on its own on remand despite a request from D&G to "provide a breakdown of purchases of lumber from unaffiliated Canadian suppliers separately for deliveries in Canada and in the United States." The respondent argued the trading company regulation doesn't apply to a purchaser in the U.S. at arm's length from the importer of the subject merchandise. The result was an above-de minimis 1.75% CVD rate for D&G and Portbec.
Barnett dubbed the question on Commerce's decision not to reopen the record a "close call" due to D&G's and Portbec's "failure to build the record in 2024" after the court initially remanded the issue. While the respondents said they didn't fail to build the record, pointing to certain purchase documents they submitted, the judge said the "information hardly leaps off the page," since it requires one to "piece together the dates on the invoice and warehouse documentation."
However, the court was ultimately persuaded that, with regard to "supplier subsidies in its current form," the agency "failed to consider its earlier findings." While Commerce said D&G and Portbec had the obligation to report purchases from unaffiliated Canadian suppliers of lumber that wasn't made in Canada or that was located in the U.S., Barnett said "D&G/Portbec had reported those facts, and Commerce had relied on those facts and the agency’s verification thereof earlier in the proceeding."
While the information D&G and Portbec previously submitted "may have been qualitative instead of quantitative," the agency's statement that the respondents sought to raise arguments based on information that wasn't previously disclosed "is contradicted by the record." Thus, the agency is "incorrect to state that it 'had no reason to question the accuracy of the information provided in D&G/Portbec's [2024] Response,'" the judge said.
Barnett concluded that finality concerns don't outweigh the agency's failure to reopen the record and "grapple with the basis for D&G/Portbec’s request to reopen the record within the context of the record as a whole."
(Committee Overseeing Action for Lumber International Trade Investigations or Negotiations v. United States, Slip Op. 25-158, CIT Consol. # 19-00122, dated 12/18/25; Judge: Mark Barnett; Attorneys: Sophia Lin of Picard Kentz for plaintiff Committee Overseeing Action for Lumber International Trade Investigations or Negotiations; Sosun Bae for defendant U.S. government; Edward Lebow of Haynes and Boone for defendant-intervenors Les Produits Forestiers D&G and Les Produits Forestiers Portbec)