POSCO v. United States, Slip Op. 19-52

• Decision Date: 01 May 2019
• Docket Number: Consol. Court No. 16-00227,Slip Op. 19-52
• Parties: POSCO, Plaintiff, and Nucor Corporation, Consolidated Plaintiff, v. UNITED STATES, Defendant, and Steel Dynamics, Inc., AK Steel Corporation, Arcelormittal USA LLC, United States Steel Corporation, Hyundai Steel Company, and Government of Korea, Defendant-Intervenors.
• Court: U.S. Court of International Trade

378 F.Supp.3d 1348

POSCO, Plaintiff,

and

Nucor Corporation, Consolidated Plaintiff,

v.UNITED STATES, Defendant,andSteel Dynamics, Inc., AK Steel Corporation, Arcelormittal USA LLC, United States Steel Corporation, Hyundai Steel Company, and Government of Korea, Defendant-Intervenors.

Slip Op. 19-52

Consol. Court No. 16-00227

United States Court of International Trade.

Dated: May 1, 2019

Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S. Hodgins, and Eugene Degnan, Morris, Manning & Martin LLP, of Washington, D.C., for Plaintiff POSCO and Defendant-Intervenors Hyundai Steel Company and the Government of Korea. Sabahat Chaudhary also appeared.

Alan H. Price, Christopher B. Weld, and Adam M. Teslik, Wiley Rein LLP, of Washington, D.C., for Consolidated Plaintiff and Defendant-Intervenor Nucor Corporation. Cynthia C. Galvez, Derick G. Holt, Laura El-Sabaawi, Maureen E. Thorson, Stephanie M. Bell, Tessa V. Capeloto, Timothy C. Brightbill, and Usha Neelakantan also appeared.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for Defendant United States. With her on the brief were Joseph H. Hunt, Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel was Emma T. Hunter, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Melissa M. Brewer, Kathleen W. Cannon, Paul C. Rosenthal, R. Alan Luberda, and Scott M. Wise, Kelley Drye & Warren, LLP, of Washington, D.C., for Defendant-Intervenor ArcelorMittal USA LLC.

Daniel L. Schneiderman and Stephen A. Jones, King & Spalding, LLP, of Washington, D.C., for Defendant-Intervenor AK Steel Corporation.

Roger B. Schagrin, Christopher T. Cloutier, Elizabeth J. Drake, and Paul W. Jameson, Schagrin Associates, of Washington, D.C., for Defendant-Intervenor Steel Dynamics, Inc.

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, D.C., for Defendant-Intervenor United States Steel Corporation.

Choe-Groves, Judge:

This case reviews the U.S. Department of Commerce's ("Commerce") methodology when selecting the highest calculated rate after applying facts otherwise available with an adverse inference ("adverse facts available" or "AFA") and Commerce's corroboration of those rates. Plaintiff POSCO ("POSCO") and Consolidated Plaintiff Nucor Corporation ("Nucor") initiated this action contesting various aspects of the final determination in a countervailing duty investigation, in which Commerce found that countervailable subsidies are being provided to producers and exporters of certain hot-rolled steel flat products from the Republic of Korea ("Korea"). See Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products From the Republic of Korea, 81 Fed. Reg. 53,439 (Dep't Commerce Aug. 12, 2016) (final affirmative determination), as amended, 81 Fed. Reg. 67,960 (Dep't Commerce Oct. 3, 2016) (amended final affirmative countervailing duty determination and countervailing duty order) (collectively, "Final Determination"). Before the court are the Final Results of Redetermination Pursuant to Court Remand, Nov. 13, 2018, ECF No. 100-1 ("Remand Results"), filed by Commerce as directed in the court's prior opinion. See POSCO v. United States, 42 CIT ––––, 337 F.Supp.3d 1265 (2018) (" POSCO I"). For the reasons discussed below, the court sustains the Remand Results in full.

PROCEDURAL HISTORY

The court presumes familiarity with the facts of this case. See POSCO I. The court held that 19 U.S.C. § 1677e(d)(2)¹ requires Commerce to provide its reasoning when selecting the highest calculated AFA rate. Id. at ––––, 337 F.Supp.3d at 1278–79. In this case, the two AFA rates applied to POSCO in the Final Determination were the 1.64% rate from Bottom Mount Combination Refrigerator-Freezers From the Republic of Korea, 77 Fed. Reg. 17,410 (Dep't Commerce Mar. 26, 2012) (final affirmative countervailing duty determination) ("Refrigerators From Korea"), and the 1.05% rate from Large Residential Washers From the Republic of Korea, 77 Fed. Reg. 75,975 (Dep't Commerce Dec. 26, 2012) (final affirmative countervailing duty determination) ("Washers From Korea"). The court remanded Commerce's Final Determination with directions for Commerce to explain the basis for its decision. POSCO I, 42 CIT at ––––, 337 F.Supp.3d at 1278–79. The court reserved consideration on the issue of corroboration. Id. at 1279.

Commerce filed its Remand Results on November 13, 2018. See Remand Results. On remand, Commerce continued to find that POSCO failed to act to the best of its ability in the administrative investigation and that the evidence on the record supported applying AFA to POSCO. See id. at 11–14. Because Commerce determined that POSCO failed to disclose certain information, Commerce concluded that "the record does not support the application of an alternative rate to POSCO" and selected the highest calculated AFA rate. Id. at 14.

Although Commerce continued to find that selection of the highest calculated AFA rate was appropriate in this investigation, Commerce reevaluated the reliability of one of the previous rates. See id. at 17–18. Instead of using the 1.64% rate from Refrigerators From Korea, Commerce revised its calculation and selected only the 1.05% rate from Washers From Korea. See id. at 18. In corroborating the 1.05% rate from Washers From Korea, Commerce found that the rate was reliable because it was "a non-de minimis rate calculated for a cooperating Korean company in another [countervailing duty] proceeding for a similar program." Id. at 19. As a result, Commerce calculated a revised subsidy rate of 41.57% for POSCO. Id. at 24.

POSCO filed comments on the Remand Results. See Pl. POSCO's Comments U.S. Dep't Commerce's Nov. 13, 2018 Final Redetermination Pursuant Ct. Remand, Dec. 12, 2018, ECF No. 102 ("POSCO's Comments"). Nucor also filed comments on the Remand Results, supporting Commerce's explanation of its selection methodology but contesting the use of the revised 1.05% rate. See Nucor's Comments U.S. Dep't Commerce's Nov. 13, 2018 Final Redetermination Pursuant Remand 1, Dec. 13, 2018, ECF No. 103 ("Nucor's Comments"). Defendant United States filed a reply to the comments and in support of the Remand Results. See Def.'s Resp. Comments Remand Redetermination, Feb. 13, 2019, ECF No. 109.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i), and 28 U.S.C. § 1581(c). The court shall hold unlawful any determination, finding, or conclusion found "to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

ANALYSIS

The two issues on remand are Commerce's selection of the highest calculated AFA rate and Commerce's corroboration.

I. Selection of the Highest Calculated AFA Rate

Commerce may apply AFA if a respondent does not cooperate "to the best of [its] ability, regardless of motivation or intent." Nippon Steel Corp. v. United States, 337 F.3d 1373, 1383 (Fed. Cir. 2003). Commerce's selection of an AFA rate in a countervailing duty proceeding is a hierarchical methodology, as codified in the Trade Preferences Extension Act of 2015. See 19 U.S.C. § 1677e(d)(1)(A). When selecting an AFA rate in a countervailing duty proceeding, Commerce may:

(i) Use a countervailable subsidy rate applied for the same or similar program in a countervailing duty proceeding involving the same country; or

(ii) If there is no same or similar program, use a countervailable subsidy rate for a subsidy program from a proceeding that the administering authority considers reasonable to use.

Id. When choosing an AFA rate under this statutory hierarchy, Commerce may select the highest calculated rate. Id. § 1677e(d)(2). Commerce must explain the basis for its selection by conducting a fact-specific inquiry and providing its reasons for selecting the highest calculated rate. See id.; see also POSCO I, 42 CIT at ––––, 337 F.Supp.3d at 1278.

The court held in POSCO I that Commerce did not explain adequately its selection of the highest calculated rates (1.64% from Refrigerators From Korea and 1.05% from Washers From Korea ) when applying AFA to POSCO in the Final Determination. See POSCO I, 42 CIT at ––––, 337 F.Supp.3d at 1278. On remand, Commerce elaborated on its practice and explained that Commerce interprets 19 U.S.C. § 1677e(d)(2) "as an exception to the selection of an AFA rate" under 19 U.S.C. § 1677e(d)(1). Remand Results at 11. Commerce asserts that it is presumed to choose the highest calculated rate available unless Commerce determines, based on "unique and unusual facts on the record," that the highest calculated rate available within that step of its hierarchy is not appropriate. Id. Commerce reiterated the factors that led to the application of AFA to POSCO, including POSCO's failure to report information about its affiliated input suppliers, to provide information about its facility located in a free economic zone, and to report certain loans that its affiliated trading company received. Id. at 11–14. After re-evaluating the situation that led to the use of AFA, Commerce concluded that "the record does not support the application of an alternative rate to POSCO" and continued to use the highest calculated rate under the statute. Id. at 14.

POSCO does not believe that Commerce complied fully with the court's decision in POSCO I, but in the interest of a "speedy end to this litigation," defers to the court's discretion and refrains from commenting further. POSCO's Comments 2. POSCO does not articulate any specific grounds for challenging Commerce's alleged noncompliance with the court's decision. It is well established that arguments that are not appropriately developed in a party's briefing may be deemed waived. United States v. Great Am. Ins. Co. of...