Arcelormittal USA LLC v. United States

• Decision Date: 29 July 2019
• Docket Number: Slip Op. 19-97,Consol. Court No. 16-00168
• Citation: 399 F.Supp.3d 1271
• 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

399 F.Supp.3d 1271

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. 19-97

Consol. Court No. 16-00168

United States Court of International Trade.

July 29, 2019

John M. Herrmann, II and Brooke Ringel, Kelly Drye & Warren, LLP, of Washington, DC, argued for plaintiff. With them on the joint brief were Paul C. Rosenthal, Kathleen W. Cannon, and R. Alan Luberda ; Alan H. Price, Timothy C. Brightbill, and Christopher B. Weld, Wiley Rein LLP, of Washington, DC, for plaintiff-intervenor, Nucor Corporation; Thomas M. Beline, and Sarah E. Shulman, Cassidy Levy Kent, LLP, of Washington, DC, for plaintiff-intervenor, United States Steel Corporation; and Daniel L. Schneiderman, and Stephen A. Jones, King & Spalding LLP, of Washington, DC, for plaintiff-intervenor, AK Steel Corporation.

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

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 Joseph H. Hunt, Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel was Brendan Saslow, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC. With him on the brief was Lydia C. Pardini, attorney.

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

OPINION

Katzmann, Judge:

In the prequel to the instant matter, there was occasion to take note of the multiple parties and agencies, shifting alignments and intersecting claims and issues that often mark the cases that unfold in the United States Court of International Trade. ArcelorMittal USA LLC v. United States, 42 CIT ––––, 337 F. Supp. 3d 1285 (2018). The court here returns to the complex litigation surrounding 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"), P.R. 531 and the accompanying July 20, 2016 Issues and Decision Memorandum, C–821–823 ("IDM"), P.R. 522. In this consolidated action, plaintiffs from two different cases -- ArcelorMittal USA LLC ("ArcelorMittal") and Novolipetsk Steel Public Joint Stock Company ("NLMK") -- challenge different elements of the Final Determination and IDM. Before the court now is Commerce's Final Results of Redetermination Pursuant to Court Remand ("Remand Redetermination") (Dep't Commerce Dec. 18, 2018), ECF No. 115, which the court ordered in ArcelorMittal, 337 F. Supp. 3d 1285.

In its previous decision, id. at 1309, the court remanded the Final Determination to Commerce (1) to explain or reconsider how the adverse facts available ("AFA") rate that Commerce applied to a respondent in the investigation, Severstal Export GMBH ("Severstal"), was sufficiently adverse; and (2) to provide the specific factual basis for its AFA finding that the Government of Russia's ("GOR") provision of natural gas to NLMK was a specific and thus countervailable subsidy. On remand, Commerce (1) applied the same AFA rate to Severstal; and (2) indicated that it based its specificity finding on the 2013 annual report of a GOR authority, Public Joint Stock Company Gazprom ("Gazprom"). See Remand Redetermination at 17, 20. Defendant the United States ("the Government") requests that the court sustain Commerce's Remand Redetermination in its entirety. Def.'s Resp. to Comments on Remand Redetermination ("Def.'s Br."), Feb. 15, 2019, ECF No. 125. NLMK argues that Commerce abused its discretion by rejecting NLMK's untimely comments on the draft remand and that the Remand Redetermination does not adequately justify Commerce's specificity finding. Consol. Pl. NLMK's Comments on Commerce's Redetermination on Remand ("NLMK's Br."), Jan. 17, 2019, ECF No. 118. ArcelorMittal urges the court to sustain Commerce's Remand Redetermination with respect to the specificity issue but contends that Commerce again failed to explain why its selected AFA rate for Severstal was sufficiently adverse. Pl. & Pl.-Inter.'s Comments on the U.S. Department of Commerce's Dec. 18, 2018 Final Redetermination Pursuant to Remand ("ArcelorMittal's Br."), Jan. 17, 2019, ECF No. 117; Pl. & Pl.-Inter.'s Resp. to Comments by NLMK on the U.S. Department of Commerce's Redetermination Pursuant to Remand ("ArcelorMittal's Resp."), Feb. 15, 2019, ECF No. 124. The court sustains Commerce's Remand Redetermination in its entirety.

BACKGROUND

The relevant legal and factual background of the prior proceedings has been set forth in greater detail in ArcelorMittal, 337 F. Supp. 3d at 1290–98. Information pertinent to the instant case is set forth below.

In the Final Determination, Commerce determined a de minimis ad valorem countervailable subsidy rate for Severstal and a 6.5 percent rate for NLMK. See Final Determination, 81 Fed. Reg. at 49,936. In calculating these rates, Commerce examined tax incentives for mining expenses and the provision of natural gas by Gazprom for less than adequate renumeration ("LTAR") and requested relevant information from the companies and the GOR, which it did not provide. ArcelorMittal, 337 F. Supp. 3d at 1294–96. At verification, Commerce discovered that Severstal had used an income tax deduction for mining expenses that it had not reported and applied AFA to find that Severstal had received a countervailable subsidy for that program. Id. at 1296–97. Commerce applied its "[countervailable subsidy duty] CVD AFA hierarchy" for investigations and, under the first tier of that hierarchy, selected as Severstal's AFA rate the highest rate calculated for a cooperating respondent in the same investigation for the identical program. Id. at 1297. Specifically, Commerce applied the .03 percent subsidy rate that had been calculated for NLMK for the mining expense program. Id.; see also 19 C.F.R. § 351.511(a)(2)(ii).

Regarding the provision of natural gas for LTAR via Gazprom, Commerce applied AFA because the Russian government did not provide Commerce with documentation and underlying data that Commerce requested to verify natural gas sales detailed in Gazprom's 2014 annual report. ArcelorMittal, 337 F. Supp. 3d at 1296. As part of its application of AFA, Commerce found that Gazprom's provision of natural gas to NLMK was de facto specific under 19 U.S.C. § 1677(5A)(D)(iii)(II),¹ thus meeting the criteria for a countervailable subsidy. Id.

In its remand order, the court sustained Commerce's application of AFA to Severstal's use of the mining expense program; however, the court found that Commerce had not adequately explained why the .03 rate was sufficiently adverse. Id. at 1300–01. Specifically, the court found that the two reasons that Commerce gave for why the .03 rate was sufficiently adverse -- that (1) the rate was above zero and (2) the rate was higher than the incorrectly calculated preliminary determination rate -- were insufficient. Noting that "Commerce [ ] has wide latitude in its selection of an appropriate AFA rate" and that "Commerce is not obligated to deviate from its hierarchy or produce a program-specific rate that necessarily results in an affirmative overall rate," the court instructed Commerce on remand to "provide adequate explanation as to why the program-specific rate it selected was sufficiently adverse to satisfy the underlying statutory purposes." Id. at 1301.

The court also sustained Commerce's application of AFA to the provision of natural gas for LTAR but held that Commerce "did not provide any specific factual basis for its [de facto specificity] conclusion" and remanded the Final Determination to Commerce to "identify the record facts it relied upon in making its de facto specificity determination." Id. at 1309.

On November 15, 2018, Commerce released its draft remand redetermination to the parties and gave them until November 26, 2018 to submit comments on it. Remand Redetermination at 7. ArcelorMittal submitted timely comments, id., but NLMK did not. Instead, on December 3, 2018, NLMK submitted an untimely request for an extension of time to submit comments on the draft remand redetermination. NLMK explained that it did not learn of the issuance of the draft redetermination until December 3 because its counsel had been abroad when Commerce released the draft redetermination and that the "notification to that effect was lost in the email traffic during that period." See Rejection of Extension Request and Comments to Draft Results of Redetermination (Dec. 10, 2018), Remand P.R. 5 ("Rejection Letter"). Commerce found that extraordinary circumstances did not exist that would require it to consider NLMK's untimely request for an extension and rejected NLMK's submissions from the remand record. Id.

In its Remand Redetermination, Commerce again determined that NLMK's .03 subsidy rate should be applied to Severstal as AFA. Commerce noted that, when applying AFA, it "is not required [by statute] to guess at what the result would have been if there had been cooperation" and that "[t]he fact that the CVD program rate in question is, by itself, not sufficiently high to result in an overall subsidy rate for the Severstal Companies that is above de minimis is not determinative of whether the program rate itself is sufficiently adverse." Remand Redetermination at 8–9. Commerce described how its hierarchy typically deters non-cooperation, id. at 9–17, and explained that "[t]here is no information on the record to indicate that NLMK's...