# ASG Industries, Inc. v. United States

> Court of Customs and Patent Appeals · November 29, 1979 · 610 F.2d 770

URL: https://www.frixlaw.com/law-library/cases/6824431

## Case

- **Full name:** ASG Industries, Inc., PPG Industries, Inc., Libbey-Owens-Ford Company, and C E Glass v. United States
- **Court:** Court of Customs and Patent Appeals
- **Decided:** November 29, 1979
- **Citations:** 610 F.2d 770; 67 C.C.P.A. 11; 1979 CCPA LEXIS 179
- **Precedential status:** Published
- **Opinion:** Dissent by Market
- **Judges:** Baldwin, Market, Markey, Miller, Penn, Rich
- **Cited by:** 27 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/6824431

## How later opinions describe it (automated extraction)

- concluding that “it was error to employ an injury (to United States trade) test in determining whether a bounty or grant was paid upon the manufacture or production of the involved merchandise”
- concluding *1544 that “it was error to employ an injury (to United States trade) test in determining whether a bounty or grant was paid upon the manufacture or production of the involved merchandise”

## Opinion text

Market, Chief Judge,
dissenting, with whom Rich, Judge, joins
With due respect, and recognizing fully the frustration imposed by the absence of a statutory definition of “bounty,” I dissent.
The Nature of the Appeal
The case comes to us on appeal from the grant of summary judgment to defendant. Both parties sought summaiy judgment. Both insist that no fact issue is present. Hence, the sole question before us is whether appellants have established on the present record that the payments here involved constituted a bounty as a matter of law. 1 cannot find in the record of this case a basis in law for reversing the judgment of the Customs Court 1 or for disturbing the decision of the Secretary that no bounty was here paid.
Nothing in the state of the law applicable to this case precludes the Secretary’s acceptance of another government’s advice that its payment merely offset disadvantages of moving. Nor has appellant shown anything to suggest that the advice accepted here was untrue. Absent a clear legal basis, and absent contrary evidence, the courts should avoid even an appearance of directing the Secretary to disregard statements of sovereign foreign governments with which he and our government must deal daily on a wide variety of matters.
The legal posture on appeal might be different if it could be said that appellants had established on the record an excess in the government payment over the foreign manufacturer’s costs incurred in meeting his government’s goals. If proved, that excess might or might not constitute a bounty. Its absence means there is no support whatever in the present record for the majority’s assertion that a bounty was here paid.
The Presumption of Correctness
Lost in the shuffling march of the majority opinion toward a desired result is the statutory presumption of correctness attaching to the *24 Secretary’s decision that a bounty was not paid. 28 U.S.C. 2635(a). The statute and the Customs Court’s determination that appellants had failed to overcome the presumption are quoted in the background section of the majority opinion, but I search the opinion section in vain for any reference whatever to the presumption, or to the evidence by which appellants overcame it.
Footnote 16 of the majority opinion is the sole reference in the majority opinion to burden-of-proof considerations. It misconstrues appellant’s burden, in stating that “the domestic manufacturer should not have the burden of obtaining evidence of deductions necessary to negate its own case.” The statutory burden is to obtain and submit evidence that the Secretary’s decision was incorrect, i.e., in the context of the footnote, that some or all deductions were improper.
The majority opinion necessarily rests on the unstated premise that mere proof of the existence of the payments “here involved” 2 constitutes sufficient evidence to overcome the presumption of correctness. It then proceeds to analyze the Secretary’s reasons supporting his decision and finds them wanting. 3 But thereby it shifts, contrary to 28 U.S.C. 2635(a), the burden of proof to the Secretary.
Application and enforcement of the statutory presumption of correctness cannot be escaped by leaping to a judicial analysis of the bases for the Secretary’s decision. The Secretary, confronted only by proof that payments had been made, may have been tactically unwise in attempting to justify his decision. If so, that circumstance does not entitle a court to disregard its duty to apply 28 U.S.C. 2635(a).
If the presumption and burden application of 28 U.S.C. 2635(a) means anything, it means that only after a domestic manufacturer has submitted evidence that a payment constituted a bounty; i.e., some evidence that the Secretary’s negative decision was incorrect,' need the Secretary be required to go forward with evidence in support of his decision. Even then, the ultimate burden of proving the Secretary’s decision incorrect remains with the domestic manufacturer. In the present record, I find no evidence submitted by appellants that the payments here involved constituted a bounty, and the majority opinion cites none. Absent that proof, the question of whether the *25 Secretary’s bases for his decision would appear adequate to this court is simply not, and should not be, reached.
I agree that American manufacturers carry a burden most heavy and probably unfair. They are faced with a presumption of correctness favoring the Secretary’s negative finding, and have limited access to foreign data more readily available to the Secretary and to an importer. But the cure is for Congress to devise. No judge is and none ever truly was, an oracle. That judges do make law, however, argues for reasoned restraint, and for limitation of that institutional imperative to cases of clear necessity. Concerning the design and placement of the present burden of proof, Congress has spoken, leaving no room in this case for the courtroom creativity reflected in the majority opinion.
The Merits
Assuming the existence of a basis for disregarding Congress’ placement of the burden of proof, and for thereby opening the door to judicial probing of the Secretary’s reasoning in this case, I would nonetheless affirm the judgment below.
Concerning the determination of the existence or nonexistence of a bounty, the Congress unquestionably left to the Secretary the clear discretion to decide. 4 Congress has, moreover, consistently refused to impede or guide that discretion by statutory definition or guidelines to be used in its exercise. 5 Absent violation of the Constitution, or a concern of virtually equal dimension, the courts should not rush in where the people’s representatives have refused to tread. 6
*26 Naked of guidance, and faced with provisions for judicial review, the Secretary has assertedly employed a guideline of his own devising; i.e., the presence or absence of distortions and of barriers to trade caused by the challenged payments. Though “distortions” and “barriers” are terms undefined, the Secretary’s references to sales of float glass in various locales were apparently meant to show absence of distortion or of erected barriers. The Secretary’s approach to the exercise of his discretion is in my view perfectly reasonable.
In all events, the Secretary’s approach appears far more reasonable than that set forth in the majority opinion. Reasonableness resides in equating the absence of a bounty with failure of a payment to produce adverse trade effects. The majority opinion’s effective equation of every payment to a foreign manufacturer (by a government, person, partnership, association, cartel, or corporation) with a bounty is an approach not recommended by reason. It is creative of chaos. Administrative diplomatic, and judicial channels would be clogged if every payment to every manufacturer were presumptively a bounty and subject to judicial review for its “net” amount, and if that review were available to every manufacturer upon a mere showing that a payment had been made. The law is not, and should not be made, an adversary of common, practical sense.
The majority opinion’s discussion of the Secretary’s waiver authority, though in my view irrelevant to whether a bounty was here paid, does serve to confirm the absence of reason from the majority opinion’s approach. The grant is of authority to waive imposition of countervailing duties after a bounty is found. It is not a grant of authority to waive the earlier duty to determine whether a bounty exists. Congress’s limitation, in section 303(d), of waiver of duties to those situations in which “the adverse effect of a bounty” [italic mine] is being reduced, seems the clearest congressional recognition that adverse trade effects are inherent in the concept of “bounty”. No citation of authority is needed for the proposition that Congress does not legislate unnecessarily; and it did not do so here. In section 303(d) it provided that when the Secretary found a bounty he could waive the otherwise mandatory duties if “the” adverse effects of the bounty were being or about to be reduced or eliminated. Thus section 303(d) rests, in my view, on a legislative presumption that bounties produce trade barriers and adverse effects.
Moreover, if a bounty could exist without adverse effect on international trade, who cares? What would there be to shout about on the international stage? And, absent adverse effects and distortions to be reduced and eliminated, whence the bases for waiver?
It defies reason, in my view, to posit a relationship relevant here between the Secretary’s consideration of whether adverse trade effects *27 exist (in determining existence of a bounty) and his consideration of whether those effects are being reduced (in deciding whether to waive duties). The Secretary’s initial consideration of adverse trade effects may result in finding there are none, and a consequent finding that no bo unty is being paid. That sequence is not an avoidance of an exercise of the Secretary’s waiver authority. The majority opinion’s insistence that the Secretary must be prevented from somehow engaging in a charade, i.e., from evading his duty to find a bounty by reliance on an absence of adverse trade effects, and from thereby achieving a surreptitious waiver, is at best inappropriate.
It is true that Congress has not defined “bounty” as “payments distorting trade.” Nor has it defined “distortion,” or “barriers,” or “adverse effects.” But that is not to say that Congress has precluded the Secretary from determining absence of a bounty where payments do not distort trade. On the contrary, Congress recognized in section 303(d) that bounties do distort trade. 7
Injury
Though the absence of adverse effects on international trade should raise no ruckus on the international stage, payments to those who export to our country can raise deep domestic disturbances. Respecting such payments, congressional response to concerns of American business, though arguably ambivalent, consists of just three main elements: (1) If those payments are determined by the Secretary to be a bounty, he must impose countervailing duties (or waive their imposition in limited circumstances); (2) injury or noninjury to American business shall not be a factor in determining whether a bounty is being paid; and (3) American manufacturers can obtain judicial review of the Secretary’s determination that a bounty was not paid.
The majority opinion recognizes that Congress disdained the “injury concept,” but, with no authority, and contrary to all legislative history, the majority opinion then converts the rejected concept of injury to domestic business into “injury to U.S. trade”. 8 It then accuses the Secretary of “injecting” the latter concept into counter *28 vailing duties cases and of erroneously employing “an injury (to U.S. trade) test.” The complete answer is, “Certainly!” That is the name of this game. It is precisely the trade relationships of the United States with other countries that constitute the raison d’étre for oui countervailing duty laws. 9
Net Amount
After seeming to reject appellants’ assertion that any payment requires a countervailing duty, the majority opinion says that once it is established that a foreign manufacturer is receiving payments such as those here involved from its government, a countervailing duty must, absent a waiver by the Secretary, be impored, unless there is no net benefit. 10 The majority then requires a virtual audit by the Secretary of a foreign manufacturer’s operations, to establish whether a payment exceeded the manufacturer’s cost (here of moving), and, if so, by how much. If the payment exceeds moving costs, the majority opinion says the excess is the “net amount” of the bounty by which countervailing duties must be measured. The majority opinion would thus insist that a bounty was paid (but no countervailing duties would be imposable) when a payment is equal to or less than the costs of moving. Harkening again to a plea for practicality, I cannot see the value in creating even the potential for requiring investigation of every payment made to a foreign manufacturer: nor can I estimate the hoards of government employees, buildings, and paper supplies, involved in meeting that potential.
Earlier court opinions have not distinguished “bounty” from “net amount” in the manner suggested in the majority opinion because there is no such distinction there. If the Secretary finds a bounty, he must calculate or estimate the net in determining the countervailing duty. If there be a payment exceeding expenses, that excess may or may not adversely affect world trade. If it doesn’t, there is no bounty. But if there is zero excess, i.e., zero net, “there is also zero bounty”, and there is nothing to countervail. In law, a payment resulting in *29 no net benefit cannot be held a ‘‘bounty” countervailable under § 303. 11
Conclusion
The majority opinion, having assumed, sub silentio, that Congress’ provision for countervailing the net amount of a bounty means there must somewhere be a gross bounty, and that the payment here was (as every non-de minimis payment would be) a gross bounty, remands the case for a trial to determine whether there was a net payment to be countervailed. 12 In so doing it creates a material fact issue, not raised below, ignoring the fact that this case is nere on requests for summary judgment made by both parties below, which presupposes no such issue.
The one clear point in the majority opinion, to me at least, is the view that all payments, including the one here, are (at least in gross) bounties, and that proof of payment alone imposes on the Secretary a burden to prove that there is no net amount to be countervailed. That view cuts the Gordian knot of frustration (by defining “bounty” as any non-de minimis payment) but it severely restricts the Secretary’s discretion to determine whether a “bounty or grant” exists, ignores the statutory presumption of correctness, and would require a trial de novo to determine net amount in every suit challenging a negative countervailing duty determination. More importantly, by rejecting the Secretary’s right to rest his discretionary bounty *30 determinations on the presence or absence of adverse effects on world trade, the majority opinion opens a ponderous Pandora’s box which only Congress or the Supreme Court, after long travail, may close.
Perceiving no reversible error, and because appellants failed to carry their burden of overcoming the statutory presumption of correctness attaching to the Secretary’s decision that no bounty was paid, I would affirm the grant of summary judgment to defendant in this case.
It is not necessary that this court agree with the reasoning of the Customs Court. It is a judgment we review.
There is no magic in the phrase “the payments here involved/’ Except for their admitted non-de minimis nature, they are indistinguishable in law from any other payments. Sec. 303(a) says “Whenever any country * * * shall pay * * * any bounty * * The distinction is not in the size or nature of the payment, or in its relation to other payments relating to other products by other countries, but in whether it constitutes a bounty.
The majority opinion’s foray into trade distortion analysis is both inappropriate and flawed There is no precedent or warrant for this court to substitute ivs judgment for that of the Secretary, by deciding that every non-de minimis payment meets factor (X), or that 20-percent exportation in every case meets factor (2), or that a payment amounting to less than 2 percent of the value of product produced must always have a positive effect on exports and thus meets factor (3). No basis exists for a court-created “presumption" of beneficial effects. That the Secretary found a bounty in another case, absent proof of identity of all factors, bears no relation to whether a bounty was here paid.
The majority opinion confuses the “mandatory" duty to impose duties countervailing a found bounty, with the preliminary, separate, and discretionary duty to determine whether a bounty exists.
The majority opinion appears oblivious to the Secretary’s discretion to determine what is or is not a bounty or grant. This court has stated, “ Congress intent to provide a wide latitude, within which the (Secretary) may determine the existence or nonexistence of a bounty or grant, is clear from the statute itself, and from the congressional refusal to define the words ‘bounty,’ ‘grant’ * * * in the statute or anywhere else, for almost 80 years.” United States v. Zenith Radio Corp., 562 F. 2d 1209, 1216 (CCPA 1977), aff’d, 437 U.S. 443 (1978). In reporting the Trade Agreements Act of 1979, Congress acknowledged that, under the provision here at issue, “ The Secretary of the Treasury has discretion in determining what is a bounty or a grant.” Report of the Committee on Finance of the U.S. Senate on H.R. 453l, S. Kept. No. 96-249, 96th Cong., 1st Sess. 84 (1979). See also Berger, Judicial Review of Countervailing Duty Determinations, 19 Harv. Int'l. L. J. 593, 604-606 (1978); O’Neill, United States Countervailing Duty Law: Renewed, Revamped and Revisited— Trade Act of 1974, 17 B.C. Indust. & Comm. L. Rev. 832, 864 (1976); Butler, Countervailing Duties and Export Subsidization: A Re-emerging Issue in International Trade, 9 Va. J. Int’l L. 82, 125 (1969). As this court has repeatedly stated, countervailing duty determinations involve complex economic and foreign policy decisions of a delicate nature, for which the courts are woefully ill-etiuipped. United States v. Hammond Lead Products, Inc., 58 CCPA 129, C.A.D. 1017, 440 F. 2d 1024 , cert. denied, 404 U.S. 1005 (1971); United States v. Zenith Radio Corp., supra.
The majority lays store by what it finds to be a general intent of Congress to “tighten” administration of sec. 303(a). But those considerations arise, as the majority opinion elsewhere states, “once it has been determined that a bounty or grant has been paid or bestowed.” We are here charged only with reviewing a judgment upholding a determination of the Secretary that no bounty was paid in this case, not with a duty of forcing the Secretary to impose duties when no bounty was de ermined. Nor are we charged with a duty of somehow guarding against Secretarial chicanery. Nor do I see “adverse effects” as a “narrow or restricted” interpretation of “bounty.”
The majority opinion’s approach would placo the burden of Justifying the exercise of his waiver authority upon the Secretary in an American manufacturer’s suit challenging a waiver.
The sole statutory reference to “injury” is: “whether an industry in the United States is being or is likely to be injured.” 19 U.S.C. 1303(b)(1) (italic mine]. Determinations of domestic injury are limited to duty-free goods and» even then» domestic injury determinations are required only in response to U.S. international obligations. 35 U.S.C. 1301(a)(1).
The majority opinion does not reconcile its recognition that Congress rejected an injury test with its quotation from S. Kept. No. 93-1298, wherein it finds the congressional purpose to be an assurance of “effective protection of domestic interests from foreign subsidies/' The majority opinion confuses the underlying basis cf countervailing duty law — the distortion of trade which results from certain practices, and thereby damagts domestic manufacturers — with the < ongressional intent to relieve complaining domestic manu-factura s from the unfair and often insurmounl able burden of having to prove direct injury to their business resulting from such trade distortion.
Though the majority opinion refers to payments to a manufacturer “from its government," the statute, and presumably the majority statement, encompasses payments from the many sources listed supra.
In Zenith Radio Corp. v. United States, 437 U.S. 443 (1978) the Court held that remission of a sales tax was not a bounty, there being no excess ‘ ‘remission.” The Court was not dealing with a subsidy on production. The majority opinion’s recognition that an excess in Zenith would have led to a conclusion that a bounty had been paid, however, confirms the absence of any distinction between “bounty” and “net amount of bounty.”
Our Government pays millions to American industry, in fostering numerous social programs. If a payment exceeds the manufacturer's cost in carrying out the program, e.g., one of minority enterprise, and the payment had no effect on world trade, it could hardly be’deemed a bounty. If the payment did not exceed costs there would be not only no effect on trade but there would be nothing to be countervailed.
The majority opinion’s discussion of scope of review and the admittedly inapplicable Trade Agreement Act of 1979 is of little aid in this case, where the parties have submitted the question as one of law on cross motions for summary judgment, each standing on the record as it exists. I agree that substantive judicial review is impossible without an adequate factual record. But no such record is here required. That appellants chose to stand on the record they made is enough in this case for the court to hold on that record, that appellants’ burden was not met. Hence, no basis exists for this court’s requirement that the parties go back and create a new “adequate factual record.”
Congress moved rapidly to provide the Secretary and the courts with the review standards set forth in the Trade Agreement Act of 1979. That happy event does not, however, warrant this court’s attempt to keep alive a de novo review standard by requiring a trial here, where the matter comes up on summary judgment alone. Moreover that Congress resolved a dispute over whether de novo review was proper in countervailing duty cases, does not establish that de novo review had earlier been proper. If any implication exists in Congress provision for review in the Trade Agreement Act, it would be that de novo review had never been appropriate.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/6824431. Public record. Not legal advice.