Posco v. United States

• Decision Date: 06 December 2018
• Docket Number: Slip Op. 18-169,Consol. Court No. 17-00137
• Parties: POSCO, Plaintiff, Nucor Corporation, Consolidated Plaintiff, ArcelorMittaL USA LLC and SSAB Enterprises LLC, Plaintiff-Intervenors, v. UNITED STATES, Defendant, and SSAB Enterprises LLC, Nucor Corporation, ArcelorMittal USA LLC and POSCO, Defendant-Intervenors.
• Court: U.S. Court of International Trade

353 F.Supp.3d 1357

POSCO, Plaintiff,Nucor Corporation, Consolidated Plaintiff,ArcelorMittaL USA LLC and SSAB Enterprises LLC, Plaintiff-Intervenors,

v. UNITED STATES, Defendant,andSSAB Enterprises LLC, Nucor Corporation, ArcelorMittal USA LLC and POSCO, Defendant-Intervenors.

Slip Op. 18-169

Consol. Court No. 17-00137

United States Court of International Trade.

Dated: December 6, 2018

Brady W. Mills and Ragan W. Updegraff, Morris, Manning & Martin LLP, of Washington, DC, argued for plaintiff and defendant-intervenor POSCO. With them on the brief were Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Mary S. Hodgins, Eugene Degnan, and Sarah S. Sprinkle.

Christopher Weld and Adam M. Teslik, Wiley Rein, LLP, of Washington, DC, argued for consolidated plaintiff and defendant-intervenor Nucor Corporation. With them on the joint brief was Alan H. Price and John Herrmann, Kelley Drye & Warren, LLP, of Washington, DC, for plaintiff-intervenor & defendant-intervenor ArcelorMittal USA LLC; Roger B. Schagrin and Christopher Cloutier, Schagrin Associates, of Washington DC, for plaintiff-intervenor and defendant-intervenor SSAB Enterprises LLC.

Stephen C. Tosini, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant United States. With him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Tara K. Hogan, Assistant Director, and Vito S. Solitro, Attorney. Of counsel on the brief was Rezza Karamloo, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION

Katzmann, Judge

The issue of the provision of electricity and other benefits by foreign government entities to producers without adequate remuneration and the resulting lower price of imports has generated intense heat in the ongoing litigation under American laws designed to promote a level playing field for American goods in the domestic marketplace. More generally, the Department of Commerce's ("Commerce") adequate remuneration and adverse facts available methodologies have been at the center of such fair trade remedy disputes. Before the court is the challenge to Commerce's final affirmative determination in the countervailing subsidy investigation of certain carbon and alloy steel cut-to-length ("CTL") plate¹ from Korea.

Certain Carbon and Alloy Steel Cut-To-Length Plate From the Republic of Korea: Final Affirmative Countervailing Duty Determination and Final Negative Critical Circumstances Determination, 82 Fed. Reg. 16,341 (Dep't Commerce Apr. 4, 2017), P.R. 505 and accompanying Issues and Decision Memorandum ("IDM") (Mar. 29, 2017), P.R. 497. Plaintiff POSCO, a producer and exporter of CTL plate from Korea, contests multiple aspects of Commerce's application of adverse facts available ("AFA") and asks the court to remand the Final Determination. POSCO's Br., Nov. 9, 2017, ECF Nos. 42, 45. Consolidated Plaintiff Nucor Corporation ("Nucor"), an American steel producer, contests various other aspects of Commerce's determination -- particularly its conclusion that POSCO did not benefit from subsidized electricity -- and also requests that this court remand the Final Determination. Nucor's Br., Nov. 9, 2017, ECF Nos. 43–44, 46–47. Defendant the United States ("the Government") asks the court to sustain Commerce's decision in its entirety. Def.'s Br., Mar. 23, 2018, ECF Nos. 52–53. The court sustains the Final Determination in part and remands Commerce's countervailability determination for POSCO M-Tech's research and development grants and Commerce's application of the highest AFA rate for reconsideration.

BACKGROUND

I. Legal Background.

To empower Commerce to offset economic distortions caused by countervailable subsidies and dumping, Congress enacted the Tariff Act of 1930.² Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012) ; ATC Tires Private Ltd. v. United States, 42 CIT ––––, ––––, 322 F.Supp.3d 1365, 1366 (2018). Under the Tariff Act's framework, Commerce may -- either upon petition by a domestic producer or of its own initiative -- begin an investigation into potential countervailable subsidies and, if appropriate, issue orders imposing duties on the subject merchandise. Sioux Honey, 672 F.3d at 1046 ; ATC Tires, 322 F.Supp.3d at 1366–67 ; 19 U.S.C. §§ 1671, 1673. Commerce determines that a countervailable subsidy exists where a foreign government provides a financial contribution, a benefit is thereby conferred, and the subsidy is specific. 19 U.S.C. § 1677(5). A "financial contribution" includes "the direct transfer of funds, such as grants, loans, and equity infusions, or the potential direct transfer of funds or liabilities, such as loan guarantees" and "foregoing or not collecting revenue that is otherwise due." 19 U.S.C. § 1677(5)(D)(i)–(ii). In cases where an authority makes a financial contribution through the provision of goods or services, a benefit occurs when those goods or services "are provided for less than adequate remuneration." 19 U.S.C. § 1677(5)(E)(iv). The adequacy of remuneration "shall be determined in relation to prevailing market conditions for the good or service being provided" in the relevant country. 19 U.S.C. § 1677(5)(E). Prevailing market conditions include "price, quality, availability, marketability, transportation, and other conditions of purchase or sale." Id. If Commerce determines that the goods or services are provided for less than adequate remuneration, "a benefit shall normally be treated as conferred," whereas a benefit will not be found if adequate remuneration is received. 19 U.S.C. § 1677(5)(E)(iv).

Commerce's regulations set forth three ways to measure the adequacy of remuneration. 19 C.F.R. § 351.511. Commerce "will normally seek to measure the adequacy of remuneration by comparing the government price to a market-determined price for the good or service resulting from actual transactions in the country in question." 19 C.F.R. § 351.511(a)(2)(i). When market prices are not available, Commerce "compar[es] the government price to a world market price where it is reasonable to conclude that such price would be available to purchasers in the country in question." 19 C.F.R. § 351.511(a)(2)(ii). If a world market price is also unavailable, then Commerce "will normally measure the adequacy of remuneration by assessing whether the government price is consistent with market principles." 19 C.F.R. § 351.511(a)(2)(iii). The last approach, known as a "Tier 3" benchmark, may be particularly appropriate "for such goods or services as electricity, land leases, or water, and the circumstances of each case vary widely." See Countervailing Duties, 63 Fed. Reg. 65,348, 65,378 (Dep't Commerce Nov. 25, 1998) ("CVD Preamble"). Factors Commerce uses to assess whether the government price is consistent with market principles include the government's price-setting philosophy, costs, or possible price discrimination among recipients of the good or service. Id.; 19 C.F.R. § 351.511(a)(2)(iii).

When either necessary information is not available on the record, or 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). This subsection thus provides Commerce with a methodology to fill informational gaps when necessary or requested information is missing from the administrative record. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003). 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). Commerce may apply an adverse inference for a respondent's "failure to cooperate to the best of [its] ability, regardless of motivation or intent." Nippon Steel, 337 F.3d at 1382. 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." Id. To meet this standard, importers must "conduct prompt, careful, and comprehensive investigations of all relevant records that refer or relate to the imports in question to the full extent of the importers' ability to do so." Id.

II. Factual and Procedural Background.

Domestic producers of CTL³ filed petitions with Commerce and the United States International Trade Commission on April 7, 2016, alleging that an industry in the United States was materially injured or threatened with material injury due to certain carbon and alloy steel CTL plate product imports that were being subsidized or sold at less than fair value. Certain Carbon and Alloy Steel Cut-to-Length Plate from Austria, Belgium, Brazil, the People's Republic of China, France, the Federal Republic of Germany, Italy, Japan, the Republic of Korea, South Africa, Taiwan, and Turkey: Petitions for the Imposition of Antidumping and Countervailing Duties (Apr. 8, 2016), P.R. 1–29, C.R. 1–30. Commerce initiated a countervailing duty investigation of CTL plate from Korea on April 28, 2016. Certain Carbon and Alloy Steel Cut-to-Length Plate from Brazil, the People's Republic of China, and the Republic of Korea: Initiation of Countervailing Duty Investigations, 81 Fed. Reg. 27,098 (Dep't Commerce May 5, 2016), P.R. 59. Commerce selected POSCO and POSCO Daewoo Corporation (collectively, "POSCO") as mandatory respondents.⁴ Respondent Selection Memorandum (...