AK Stell Corp v. U.S.

• Decision Date: 01 October 1999
• Docket Number: GROUP--A
• Citation: 192 F.3d 1367
• Parties: (Fed. Cir. 1999) AK STEEL CORP., BETHLEHEM STEEL CORPORATION, INLAND STEEL INDUSTRIES, INC., LTV STEEL COMPANY, NATIONAL STEEL CORPORATION, and U.S. STEELUNIT OF USX CORPORATION, Plaintiffs Cross-Appellants, and LACLEDE STEEL COMPANY, GENEVA STEEL, GULF STATES STEEL, INC. OF ALABAMA, LUKENS STEEL COMPANY, SHARON STEEL CORPORATION, and WCI STEEL, INC., Plaintiffs, v. THE UNITED STATES, Defendant-Appellee, v. DONGBU STEEL CO., LTD., POHANG IRON & STEEL CO., LTD., POHANG COATED STEEL CO., LTD., POHANG STEEL INDUSTRIES CO., LTD., and UNION STEEL MANUFACTURING CO., LTD., Defendants-Appellants. 97-1116,-1169,-1200 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1367

192 F.3d 1367 (Fed. Cir. 1999)

AK STEEL CORP., BETHLEHEM STEEL CORPORATION, INLAND STEEL INDUSTRIES, INC., LTV STEEL COMPANY, NATIONAL STEEL CORPORATION, and U.S. STEEL GROUP--A UNIT OF USX CORPORATION, Plaintiffs Cross-Appellants, and LACLEDE STEEL COMPANY, GENEVA STEEL, GULF STATES STEEL, INC. OF ALABAMA, LUKENS STEEL COMPANY, SHARON STEEL CORPORATION, and WCI STEEL, INC., Plaintiffs, v. THE UNITED STATES, Defendant-Appellee, v. DONGBU STEEL CO., LTD., POHANG IRON & STEEL CO., LTD., POHANG COATED STEEL CO., LTD., POHANG STEEL INDUSTRIES CO., LTD., and UNION STEEL MANUFACTURING CO., LTD., Defendants-Appellants.

97-1116,-1169,-1200

United States Court of Appeals for the Federal Circuit

DECIDED: October 1, 1999

Appealed from: United States Court of International Trade Chief Judge Gregory W. Carman

[Copyrighted Material Omitted]

John A. Ragosta, and Jennifer Danner Riccardi, Dewey Ballantine, of Washington, DC, argued for plaintiffs cross-appellants, AK Steel Corp., et al., and plaintiffs, Geneva Steel, et al. With them on the brief was Michael H. Stein.

John K. Lapiana, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee, The United States. With him on the brief were David M. Cohen, Director, and A. David Lafer, Senior Trial Counsel. Of counsel on the brief were Stephen J. Powell, Chief Counsel; Elizabeth C. Seastrum, Senior Counsel; and David W. Richardson, Attorney-Advisor, Office of the Chief Counsel for Import Administration, Department of Commerce, Washington, DC.

Donald B. Cameron, Kaye, Scholer, Fierman, Hays & Handler, of Washington, DC, argued for defendants-appellants, Dongbu Steel Col, Ltd., et al. With him on the brief were Julie C. Mendoza; and Craig A. Lewis, Morrison & Foerster, LLP, of Washington, DC.

Opinion of the court filed PER CURIAM, dissenting opinion filed by Senior Circuit Judge ARCHER

Before BRYSON, Circuit Judge, ARCHER, Senior Circuit Judge,^* and GAJARSA, Circuit Judge.

PER CURIAM

Defendants-Appellants Dongbu Steel Co., Ltd., et al. (collectively "Korean producers") appeal from the judgment of the Court of International Trade, British Steel P.L.C. v. United States, 941 F. Supp. 119 (Ct. Int'l Trade 1996) (British Steel II), sustaining the Department of Commerce's decision that the government of Korea had provided the Korean steel industry with preferential and disproportionate access to long-term domestic and direct foreign loans, had constructed infrastructure at the Kwangyang Bay Industrial Estate (KBIE) for the specific benefit of the Pohang Iron and Steel Company (POSCO), and had exempted POSCO from dockyard fees. See Final Affirmative Countervailing Duty Determinations and Final Negative Critical Circumstances Determinations: Certain Steel Products from Korea, 58 Fed. Reg. 37,338 (Dep't Commerce 1993) (Final Determination); Final Results of Redetermination Pursuant to Court Remand in British Steel P.L.C. v. United States, Slip. Op. 95-17 (Dep't Commerce 1995) (Redetermination) .

Plaintiffs/Cross-Appellants AK Steel Corp., et al., (collectively "domestic producers") appeal from the judgment of the Court of International Trade in British Steel II upholding Commerce's conclusion in the Final Determination that the Korean government did not provide a specific benefit to the steel industry in Korea and in particular, POSCO, by the revaluation provisions of the Tax Exemption and Reduction Control Act (TERCL) Article 56-2.

We have jurisdiction to hear these appeals pursuant to 28 U.S.C. § 1295(a)(5) (1994). We affirm the Court of International Trade's decision with respect to the infrastructure at the KBIE, dockyard fees and the revaluation provisions of TERCL 56-2, and reverse the Court of International Trade's decision with respect to the long-term domestic and direct foreign loans.

I. BACKGROUND

This consolidated appeal arose from proceedings before the Department of Commerce to determine whether the Korean government conferred countervailable benefits on particular members of the Korean steel industry. The proceedings are summarized in the opinion of the Court of International Trade. See British Steel II, 941 F. Supp. at 123. For purposes of this appeal, the relevant background is as follows.

On July 9, 1993, Commerce issued its Final Determination concluding, inter alia, that "the [government of Korea] ha[d] provided the steel industry with preferential access to medium- and long-term credit from government and commercial banking institutions," 58 Fed. Reg. at 37345, and that as to both domestic and foreign loans this preferential access constituted a countervailable benefit. Commerce also determined that the Korean government's provision of infrastructure to POSCO at the Kwangyang Bay Industrial Estate and the exemption of POSCO from dockyard fees conferred countervailable benefits. Id. at 37346-48. In addition, Commerce determined that the revaluation provisions of TERCL Article 56-2 did not provide POSCO "with a selective exemption from the 25 percent requirement in the Asset Revaluation Act." Id. at 37351.

In the Korean producers' appeal of Commerce's determination, the Court of International Trade remanded the Final Determination, instructing Commerce to

explain, if it is able, what evidence on the record demonstrates that programs existed during the period of investigation to benefit the respondent steel companies by giving them preferential access to both domestic and direct foreign credit markets, and how the respondent steel companies received that access to credit.

British Steel P.L.C. v. United States, 879 F. Supp. 1254, 1331 (Ct. Int'l Trade 1995) (British Steel I).

Following Commerce's Redetermination, on remand, the Court of International Trade upheld Commerce's determination of the existence of a causal nexus between the Korean government's control of the financial system and preferential access to domestic and foreign credit by the Korean steel industry, see British Steel II, 941 F. Supp. at 127-30, and that such access constituted a countervailable benefit with respect to both domestic and direct foreign loans, see id. at 133, 135-36. In addition, the Court of International Trade affirmed Commerce's determination that the infrastructure provided to POSCO at KBIE and the exemption from dockyard fees were countervailable. See id. at 133-35. Finally, the Court of International Trade affirmed Commerce's conclusion in the Final Determination that TERCL Article 56-2 did not constitute a countervailable benefit. See id. at 132-33.

On appeal to this court, the Korean producers challenge Commerce's determinations. Domestic producers challenge Commerce's finding of non-countervailability regarding TERCL Article 56-2.

II. STANDARD OF REVIEW

We review a decision of the Court of International Trade by applying "anew the statutory standard of review applied by that court to the agency's decision." Torrington Co. v. United States, 82 F.3d 1039, 1044 (Fed. Cir. 1996). If a final countervailing duty determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law," it will be held unlawful. 19 U.S.C. § 1516a(b)(1)(B) (1988) (current version at 19 U.S.C. § 1516a(b)(1)(B)(i) (1994 & Supp. III 1997)); see also Creswell Trading Co., v. United States, 15 F.3d 1054, 1056 (Fed. Cir. 1994). "[S]ubstantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Aimcor, Ala. Silicon, Inc. v. United States, 154 F.3d 1375, 1378 (Fed. Cir. 1998); Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 935 (Fed. Cir. 1984) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Thus, our analysis is not whether we agree with Commerce's conclusions, nor whether we would have come to the same conclusions reviewing the evidence in the first instance, but only whether Commerce's determinations were reasonable. See United States Steel Group v. United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996). "[T]he possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 620 (1966) (citations omitted).

III. DOMESTIC LOANS

A. Background

In its Final Determination, Commerce held that the Korean government effectively controlled long-term lending practices in Korea through (1) the General Bank Act and the Korean government's Monetary Board, (2) the appointment of banking officials, (3) informal control over loan allocations, i.e., through preferential rediscounting, and (4) strict control of interest rates. 58 Fed. Reg. at 37340-41. The Korean governmental control was deemed sufficient to establish a government program. See Proposed Regulations, 54 Fed. Reg. 23366, 23379 (§ 355.2(r) defining "program" as "any government act or practice"). Although de jure preferences were terminated by 1985, Commerce found that the pattern of long-term lending to the steel industry remained largely unchanged, and that in fact lending to that industry had slightly increased. Commerce also applied a disproportionality analysis that involved the comparison of the share of long-term loans received and held by the steel industry with that industry's share of gross domestic product (GDP). Based on data supplied by the Korean government, Commerce found that while the steel industry's contribution to GDP had remained relatively constant at approximately 2.0-2.5% since the early- to mid-1980s, the volume of loans the steel industry received had consistently remained two to four times higher than its contribution to GDP in percentage terms. 58 Fed. Reg. at 37343, 37345.

As previously noted, the Court of International Trade held in British Steel I, that "Commerce [did] not sufficiently explain . . . the connection...