Essar Steel Ltd. v. United States

• Decision Date: 27 April 2012
• Docket Number: 2011–1271,Nos. 2011–1270,2011–1289.,s. 2011–1270
• Citation: 34 ITRD 1129,678 F.3d 1268
• Parties: ESSAR STEEL LIMITED, Plaintiff–Appellant, v. UNITED STATES, Defendant–Cross Appellant, and United States Steel Corporation, Defendant–Cross Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

678 F.3d 1268

34 ITRD 1129

ESSAR STEEL LIMITED, Plaintiff–Appellant,

v. UNITED STATES, Defendant–Cross Appellant,andUnited States Steel Corporation, Defendant–Cross Appellant.

Nos. 2011–1270, 2011–1271, 2011–1289.

United States Court of Appeals, Federal Circuit.

April 27, 2012.

Mark P. Lunn, Arent Fox LLP, of Washington, DC, argued for plaintiff-appellant.

David D'Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-cross appellant. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Deborah R. King, Attorney–International, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Nathaniel B. Bolin, Skadden, Arps, Slate, Meagher & Flom, LLP, of Washington, DC, argued for the defendant-cross appellant United States Steel Corporation. With him on the brief were Robert E. Lighthizer, Jeffrey D. Gerrish and Stephen J. Narkin. Of counsel was James C. Hecht.

Before NEWMAN, LOURIE, and MOORE, Circuit Judges.

Opinion for the court filed by Circuit Judge MOORE. Circuit Judge NEWMAN dissents in part, concurs in the result.

MOORE, Circuit Judge.

Essar Steel Limited (Essar) appeals from the United States Court of International Trade's decision affirming the Department of Commerce's (Commerce) finding that Essar received countervailable subsidies from the government of India for certain hot-rolled carbon steel flat products. The United States government and United States Steel Corporation (US Steel) cross-appeal the trial court's decision affirming Commerce's finding that Essar received no subsidies through the Chhattisgarh Industrial Program (CIP). For the reasons described below, we affirm the trial court's decision to uphold the subsidies found by Commerce and reverse its decision regarding the CIP.

Background

In 2008, Commerce initiated an investigation to assess whether Essar received countervailable subsidies for its iron ore products in India for the period of review from January 1, 2007 through December 31, 2007. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 73 Fed.Reg. 4829 (Jan. 28, 2008). Commerce investigated several programs, including Essar's purchase of iron ore from the government-owned National Mineral Development Corporation (NMDC), participation in programs under India's Special Economic Zone (SEZ) Act, and participation in the CIP administered by the state government of Chhattisgarh, India.

Commerce concluded that Essar's purchase of iron ore from NMDC was countervailable. To compare pricing of iron ore purchases, Commerce sought benchmark purchases of both iron ore lumps and fines, which are two different types of iron ore products. Commerce relied on Essar's previous purchase of iron ore lumps from a non-affiliated Brazilian supplier during the period of review. Commerce found no comparable Essar purchase of iron ore fines, so it used the price from Hamersley, Australia listed in the Tex Report, which is a daily Japanese publication reporting on international price negotiations for high-grade iron ore. In addition, Commerce included freight and delivery charges in its benchmark pricing.

With respect to the SEZ Act, Commerce found that the government of India did not cooperate to the best of its ability in responding to Commerce's questions. As a result, Commerce applied adverse facts available and determined that Essar's use of programs under the SEZ Act constituted subsidies.

Commerce also questioned Essar regarding its participation in the CIP. In May 2008, Essar stated that it did not have any manufacturing facilities in the State of Chhattisgarh. Commerce then identified a press release indicating that Essar did, in fact, have an iron ore manufacturing plant in Chhattisgarh, so Commerce submitted the question to Essar a second time. In response to the second question, in October 2008, Essar stated that it did not have an iron ore beneficiation plant in Chhattisgarh. A beneficiation plant differs from a manufacturing plant, but both are involved in the processing of iron ore. Essar claimed that the Chhattisgarh facilities were still in the planning stage. Accordingly, in its preliminary results that same month, Commerce found that Essar had no facilities in Chhattisgarh and therefore did not benefit from the CIP.

Before Commerce initiated its investigation for the 2007 period of review and before Essar's denials regarding the existence of any plant (manufacturing or beneficiation), Essar applied to the government of Chhattisgarh for benefits under the CIP because of its facility in Chhattisgarh. Essar sent a request to the government of Chhattisgarh on March 26, 2007. Essar received word from the government of Chhattisgarh on September 12, 2008—while the instant investigation was still underway—that its application for benefits under CIP was denied. Essar did not submit either its request for benefits or the denial of these benefits to Commerce in response to Commerce's questionnaires.

Along with its answers to Commerce's questions during the investigation for the 2007 period of review, Essar submitted to Commerce a 2006–2007 annual report, which lists an Essar facility in Chhattisgarh. Hence the only evidence of record at that time was an annual report and press release which both indicated the presence of a facility in Chhattisgarh and two separate denials by Essar of any facilities in Chhattisgarh. Finally, in its February 2009 rebuttal brief to Commerce during Commerce's review of its initial results, Essar argued for the first time that its facility in Chhattisgarh was ineligible for benefits under the CIP. It did not submit any evidence in support of this claim. Commerce noted Essar's failure to respond to the best of its ability to Commerce's questions by providing false information about its Chhattisgarh facility. Because of Essar's failure to respond to the best of its abilities, Commerce applied adverse facts in its May 2009 final results and concluded that Essar did benefit from the CIP.

Essar appealed Commerce's final results to the Court of International Trade. The court upheld Commerce's decision to impose duties for Essar's purchase of iron ore from NMDC and its participation in the SEZ Act. Essar Steel Ltd. v. United States, 721 F.Supp.2d 1285, 1295–96 (Ct. Int'l Trade 2010). The trial court held that Commerce applied appropriate benchmark pricing for its evaluation of Essar's iron ore purchases from NMDC and correctly included freight and delivery charges. Id. at 1295. It further upheld Commerce's results with respect to the SEZ Act. Id. at 1296. Essar argued for the first time at the trial court that it did not produce merchandise within the Special Economic Zone, but the court held that Essar failed to exhaust administrative remedies with respect to that argument. Id.

The trial court remanded the case to Commerce for further proceedings regarding the CIP. The court relied on the September 12, 2008 letter in which the government of Chhattisgarh stated that Essar's Chhattisgarh facility was not eligible for benefits under the CIP. The court knew of the letter because Essar had submitted it during Commerce's independent review in a different investigation of Essar's iron ore practices for the 2006 period of review, not the instant investigation. Id. at 1300. Although the trial court accepted that Essar did not act to the best of its ability in responding to Commerce's questions, it directed Commerce to reopen the record to consider the letter on remand.

On remand, Commerce entered two documents into the record: the March 26, 2007 letter from Essar to the government of Chhattisgarh requesting subsidies under the CIP; and the September 12, 2008 letter from the government of Chhattisgarh informing Essar that it did not qualify for benefits under the CIP for 2004 to 2009. Despite having the documents in its custody during Commerce's investigation, Essar did not submit either document to Commerce. Commerce “strongly disagreed” with the trial court's decision to remand and enter the documents into the record, but “under protest” it held that Essar did not receive benefits under the CIP. The Court of International Trade affirmed Commerce's finding post-remand.

Essar appealed Commerce's decision to impose subsidies for its purchase of iron ore from NMDC and its participation in the SEZ Act program. The United States and US Steel cross-appealed the decision regarding the CIP. We have jurisdiction to review the final judgment of the Court of International Trade pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

We review the Court of International Trade's decisions de novo, applying anew the same standard of review applied by that court. SKF USA, Inc. v. United States, 537 F.3d 1373, 1377 (Fed.Cir.2008). We uphold Commerce's determination unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” NSK Ltd. v. United States, 510 F.3d 1375, 1379 (Fed.Cir.2007); 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” U.S. Steel Corp. v. United States, 621 F.3d 1351, 1357 (Fed.Cir.2010) (citations omitted).

The countervailing duty laws impose duties on imported goods that are subsidized by the country of export or manufacture. The countervailing duty laws provide that a countervailable subsidy exists when a foreign government provides a specific financial contribution to a party and that party benefits from the contribution. See19 U.S.C. § 1677(5). One way that a party receives a benefit is through the provision of goods or services at “less than adequate remuneration.” 19 U.S.C. § 1677(5)(E)(iv).

I. Essar's Appeal

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