Arcelormittal U.S. LLC v. United States

• Decision Date: 19 September 2018
• Docket Number: Consol. Court No. 16-00168,Slip Op. 18-121
• Citation: 337 F.Supp.3d 1285
• Parties: ARCELORMITTAL USA LLC, Plaintiff, and AK Steel Corporation, Nucor Corporation, and United States Steel Corporation, Plaintiff-Intervenors, Novolipetsk Steel Public Joint Stock Company, Consolidated Plaintiff, v. UNITED STATES, Defendant, and PAO Severstal and Severstal Export GMBH, Defendant-Intervenors.
• Court: U.S. Court of International Trade

337 F.Supp.3d 1285

ARCELORMITTAL USA LLC, Plaintiff,andAK Steel Corporation, Nucor Corporation, and United States Steel Corporation, Plaintiff-Intervenors,Novolipetsk Steel Public Joint Stock Company, Consolidated Plaintiff,

v. UNITED STATES, Defendant,andPAO Severstal and Severstal Export GMBH, Defendant-Intervenors.

Slip Op. 18-121

Consol. Court No. 16-00168

United States Court of International Trade.

September 19, 2018

John M. Herrmann, II, and Brooke Ringel, Kelly Drye & Warren, LLP, of Washington, DC, argued for plaintiff. With them on the joint brief were Alan J. Price, Timothy C. Brightbill, and Christopher B. Weld, Wiley Rein LLP, of Washington, DC, for plaintiff-intervenor, Nucor Corporation; Thomas M. Beline, Cassidy Levy Kent, LLP, of Washington, DC, for plaintiff-intervenor, United States Steel Corporation, and on the brief were Jeffrey D. Gerrish and Luke A. Meisner, of Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, DC; and Daniel L. Schneiderman and Stephen A. Jones, King & Spalding LLP, of Washington, DC, for plaintiff-intervenor, AK Steel Corporation.

Matthew P. McCullough, Marat S. Umerov, and Tung A. Nguyen, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, DC, argued for consolidated plaintiff. With them on the brief were William H. Barringer and Valerie S. Ellis.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Chad A. Readler, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Renee A. Burbank, Trial Attorney. Of counsel on the brief was Michael T. Gagain, Senior Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Daniel J. Cannistra, Crowell & Moring LLP, of Washington, DC, argued for defendant-intervenors.

OPINION

Katzmann, Judge:

The complex litigation that unfolds in the United States Court of International Trade is typically populated by multiple parties and agencies, shifting alignments, and intersecting claims and issues. Its resolution often calls for diagramming on a blackboard with multi-colored chalk. The case now before this Court may be viewed in such context.

Plaintiffs in two separate cases -- ArcelorMittal USA LLC ("ArcelorMittal") in one case, and Novolipetsk Steel Public Joint Stock Company ("NLMK") in the other -- challenged different elements of the United States Department of Commerce's ("Commerce") final affirmative determination of its Countervailing Duty Investigation of Certain Cold-Rolled Steel Flat Products From the Russian Federation, 81 Fed. Reg. 49,935 (Dep't Commerce July 29, 2016) ("Final Determination") and the accompanying July 20, 2016 Issues and Decision Memorandum, C–821–823 ("IDM"). The United States ("the Government"), on behalf of Commerce, was the defendant in both cases. Domestic steel manufacturers AK Steel Corporation, Nucor Corporation, and United States Steel Corporation joined ArcelorMittal's case as plaintiff-intervenors and supported its arguments; all four companies joined NLMK's case as defendant-intervenors and supported the Government's position with respect to the elements of the Final Determination that NLMK contested. In addition, PAO Severstal and its wholly-owned affiliate, Severstal Export GMBH (collectively, "Severstal") joined ArcelorMittal's case as defendant-intervenor and supported the Government's position with respect to the elements of the Final Determination that ArcelorMittal contested. The Court, upon motion by the parties, consolidated the two cases into the case currently before the Court.

In essence, this case requires the Court to assess the countervailing duty ("CVD") rates selected, as well as the invocation and application of adverse facts available ("AFA"), by Commerce in its Final Determination. Commerce applied AFA in determining CVD rates for both company respondents to the CVD investigation, Severstal and NLMK. Plaintiff ArcelorMittal contests the CVD rate Commerce applied to respondent and defendant-intervenor Severstal, while consolidated plaintiff NLMK contests the CVD rate Commerce applied to it.

The primary question posed with respect to Severstal's CVD rate is whether Commerce erred in its selection of a program-specific AFA rate for Severstal's unreported use of the tax deduction program for mining-exploration expenses.

The following questions are posed with respect to NLMK's CVD rate: (1) Was Commerce's determination -- that the Government of Russia's ("the GOR") alleged provision of natural gas for less than adequate remuneration ("LTAR") was de facto specific to steel manufacturing -- supported by substantial evidence and in accordance with law? (2) Were Commerce's benefit and benchmark determinations supported by substantial evidence and in accordance with law?

BACKGROUND

A. Countervailable Subsidies Generally.

If Commerce determines that the government of a country is providing, directly or indirectly, a countervailable subsidy with respect to the manufacture, production, or export of a class or kind of merchandise imported, or sold, or likely to be sold for import, into the United States, and the International Trade Commission determines that an industry in the United States is materially injured or threatened with material injury thereby, then Commerce shall impose a countervailing duty upon such merchandise equal to the amount of the net countervailable subsidy.

See Section 701 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1671(a) (2012).¹ An investigation of countervailable subsidies shall commence whenever an interested party files a petition with Commerce, on behalf of an industry,² which alleges the elements necessary for the imposition of the duty, and which is accompanied by information reasonably available to the petitioner supporting those allegations. 19 U.S.C. § 1671a(b)(1), (c)(2).

Generally, a subsidy is countervailable if it consists of a foreign government's financial contribution to a recipient, which is specific, and also confers a benefit upon the recipient, as defined under 19 U.S.C. § 1677(5). A benefit is conferred when, in the case where goods or services are provided, such goods or services are provided for less than adequate remuneration. 19 U.S.C. § 1677(5)(E)(iv). Furthermore, the statute states that:

[T]he adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service being provided or the goods being purchased in the country which is subject to the investigation or review. Prevailing market conditions include price, quality, availability, marketability, transportation, and other conditions of purchase or sale.

Id. The regulation on "adequate remuneration" provides a multi-tiered analysis under which Commerce may determine a suitable benchmark for the purposes of determining the existence and amount of a benefit conferred. Under Tier One, 19 C.F.R. § 351.511(a)(2)(i), Commerce assesses market prices from actual transactions within the country under investigation; under Tier Two, id. § 351.511(a)(2)(ii), Commerce assesses world market prices that would be available to purchasers in the country under investigation; and under Tier Three, id. § 351.511(a)(2)(iii), Commerce assesses whether the government price is consistent with market principles. See IDM at 16.

The subsidy must also be "specific," either in law or fact, as defined under 19 U.S.C. § 1677(5A). As relevant to this case, a subsidy may be de facto specific when "[a]n enterprise or industry is a predominant user of the subsidy." 19 U.S.C. § 1677(5A)(D)(iii)(II).

B. Adverse Facts Available.

During the course of its CVD proceeding, Commerce requires information from both the producer respondent and the foreign government alleged to have provided the subsidy. See Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365, 1369–70 (Fed. Cir. 2014). Information submitted to Commerce during an investigation is subject to verification. 19 U.S.C. § 1677m(i)(1).

When a respondent: (1) withholds information that has been requested by Commerce, (2) fails to provide such information by Commerce's deadlines for submission of the information or in the form and manner requested, (3) significantly impedes an antidumping proceeding, or (4) provides information that cannot be verified, then Commerce shall "use the facts otherwise available in reaching the applicable determination." 19 U.S.C. § 1677e(a)(2). This subsection thus asks whether necessary or requested information is missing from the administrative record, and provides Commerce with a methodology to fill the resultant informational gaps. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003).

Under certain circumstances, in an investigation, Commerce may assign an AFA rate to an investigated respondent as to a given subsidy program, instead of the countervailable subsidy rate that the respondent might receive for that program under normal circumstances. Specifically, Commerce "may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available" if it "finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information[.]" 19 U.S.C. § 1677e(b)(1)(A). A respondent's failure to cooperate to "the best of its ability" is "determined by assessing whether [it] has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries." Nippon Steel, 337 F.3d at 1382 ; see Özdemir Boru San. ve Tic. Ltd. Sti. v. United States, 41 CIT ––––, ––––, 273 F.Supp.3d 1225, 1231, 1241–42 (2017).

When applying an adverse inference, Commerce may rely on information from the petition, a final determination in the investigation, a previous administrative review, or any other information placed on the record. 19 U.S.C. § 1677e(b)(2...