Posco v. United States

• Citation: 296 F.Supp.3d 1320
• Decision Date: 08 March 2018
• Docket Number: Consol. Court No. 16–00225,Slip Op. 18–18
• Parties: POSCO et al., Plaintiffs, and AK Steel Corporation, et al., Plaintiff–Intervenors, v. UNITED STATES, Defendant, and Steel Dynamics, Inc., et al., Defendant–Intervenors.
• Court: U.S. Court of International Trade

296 F.Supp.3d 1320

POSCO et al., Plaintiffs,andAK Steel Corporation, et al., Plaintiff–Intervenors,

v. UNITED STATES, Defendant,andSteel Dynamics, Inc., et al., Defendant–Intervenors.

Slip Op. 18–18

Consol. Court No. 16–00225

United States Court of International Trade.

Dated: March 8, 2018

Donald B. Cameron and Brady W. Mills, Morris Manning & Martin LLP, of Washington, DC, argued for Plaintiff POSCO and Defendant–Intervenors the Government of Korea, POSCO, and Hyundai Steel Company. With them on the brief were Julie C. Mendoza, R. Will Planert, Mary S. Hodgins, Eugene Degnan, Sarah S. Sprinkle, and Henry N. Smith.

Timothy C. Brightbill, Wiley Rein LLP, of Washington, DC, argued for Plaintiff and Defendant–Intervenor Nucor Corporation. With him on the brief were Alan H. Price, Tessa V. Capeloto, and Adam M. Teslik.

Kathleen W. Cannon, R. Alan Luberda, and Melissa M. Brewer, Kelley Drye & Warren LLP, of Washington, DC, for Plaintiff–Intervenor and Defendant–Intervenor ArcelorMittal USA LLC.

Stephen A. Jones and Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC, for Plaintiff–Intervenor and Defendant–Intervenor AK Steel Corporation.

Jeffrey D. Gerrish, Nathaniel B. Bolin, and Luke A. Meisner, Skadden Arps Slate Meagher & Flom LLP, of Washington, DC, for Plaintiff–Intervenor and Defendant–Intervenor United States Steel Corporation.

Renée A. Burbank, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant United States. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Amanda T. Lee, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION AND ORDER

Barnett, Judge:

In this consolidated action, Plaintiff POSCO ("POSCO"), Plaintiff Nucor Corporation ("Nucor"), and Plaintiff–Intervenors ArcelorMittal USA LLC, AK Steel Corporation, and United States Steel Corporation challenge the final determination of the U.S. Department of Commerce ("Commerce" or the "agency") in its countervailing duty ("CVD") investigation of cold-rolled steel products ("cold-rolled steel") from the Republic of Korea ("Korea"). See Countervailing Duty Investigation of Certain Cold–Rolled Steel Flat Products from the Republic of Korea , 81 Fed. Reg. 49,943 (Dep't Commerce July 29, 2016) (final aff. determination; 2014) (" Final Determination "), ECF No. 41–4, as amended by Certain Cold–Rolled Steel Flat Products from Brazil, India, and the Republic of Korea , 81 Fed. Reg. 64,436 (Dep't Commerce Sept. 20, 2016) (am. final aff. countervailing duty determination and countervailing duty order; 2014) (" Am. Final Determination "), ECF No. 41–3, and accompanying Issues and Decision Mem., C–580–882 (July 20, 2016) ("I & D Mem."), ECF No. 41–5.¹

POSCO (a Korean cold-rolled steel producer) challenges Commerce's use of the facts available with an adverse inference (referred to as "adverse facts available" or "AFA") for several reporting errors and its selection and corroboration of adverse facts available rates. See Confidential Mot. of Pl. POSCO for J. on the Agency R., ECF No. 53, and Confidential Pl. POSCO's Br. in Supp. of its Mot. for J. on the Agency R. ("POSCO Mot.") at 2–3, ECF No. 59–1. Nucor and Plaintiff–Intervenors (domestic cold-rolled steel producers) (collectively, "Nucor") challenge Commerce's finding that the Government of Korea ("GOK") did not provide electricity for less than adequate remuneration and its decision not to use adverse facts available with respect to the electricity program based on the GOK's questionnaire responses. See Confidential Pl. Nucor Corp. and Pl.–Ints. ArcelorMittal USA LLC, AK Steel Corp, and United States Steel Corp.'s Rule 56.2 Mot. for J. on the Agency R. ("Nucor Mot.") at 2–3, ECF No. 56. Defendant United States ("Defendant" or the "Government") supports Commerce's determination. See generally Confidential Def.'s Resp. to Pls.' Mots. For J. Upon the Agency R. ("Gov. Resp"), ECF No. 65.²

For the following reasons, the court remands Commerce's selection of the highest calculated rate as POSCO's AFA rate and Commerce's selection of an AFA rate that is itself based on adverse facts available. Accordingly, the court grants, in part, POSCO's motion with respect to those issues, and denies the motion in all other respects. The court sustains Commerce's determinations regarding the GOK's provision of electricity for not less than adequate remuneration and the adequacy of its questionnaire responses. Accordingly, the court denies Nucor's motion in full.

BACKGROUND

I. Legal Framework

A. Basic CVD Principles

Commerce "impose[s] countervailing duties on merchandise that is produced with the benefit of government subsidies" when the various statutory criteria are met. Fine Furniture (Shanghai) Ltd. v. United States , 748 F.3d 1365, 1369 (Fed. Cir. 2014) ; see also 19 U.S.C. § 1671(a) (2012).³ Among other things, countervailable subsidies arise "when (1) a foreign government provides a financial contribution (2) to a specific industry and (3) a recipient within the industry receives a benefit as a result of that contribution." Fine Furniture (Shanghai) , 748 F.3d at 1369 (citing 19 U.S.C. § 1677(5)(B) ). Investigating these factors requires Commerce to obtain information from the foreign government alleged to have provided the subsidy and the producer/respondent that purportedly benefitted from the subsidy. See Essar Steel Ltd. v. United States , 34 CIT 1057, 1070, 721 F.Supp.2d 1285, 1296 (2010), rev'd on other grounds , 678 F.3d 1268 (Fed. Cir. 2012). The information Commerce receives is subject to verification. See 19 U.S.C. § 1677m(i)(1).

B. Sales for Less than Adequate Remuneration

A countervailable benefit includes the provision of goods or services "for less than adequate remuneration." 19 U.S.C. § 1677(5)(E)(iv). The statute directs Commerce to determine the adequacy of remuneration "in relation to prevailing market conditions for the good or service being provided or the goods being purchased in the [subject] country .... Prevailing market conditions include price, quality, availability, marketability, transportation, and other conditions of purchase or sale." Id.

Commerce's regulations prescribe a three-tiered approach for determining the adequacy of remuneration. See 19 C.F.R. § 351.511.⁴ Commerce first seeks to compare the government price to a market-based price for the good or service under investigation in the country in question (a "Tier 1" analysis). Id. § 351.511(a)(2)(i). When an in-country market-based price is unavailable, Commerce will compare the government price to a world market price, when the world market price is available to purchasers in the country in question (a "Tier 2" analysis). Id. § 351.511(a)(2)(ii). When, as here, both an in-country market-based price and a world market price are unavailable, Commerce considers "whether the government price is consistent with market principles" (a "Tier 3" analysis). Id. § 351.511(a)(2)(iii).

In the Preamble to the final rule implementing Commerce's CVD regulations, Commerce explained that a Tier 3 analysis requires an examination of "such factors as the government's price-setting philosophy,^{[5 ]} costs (including rates of return sufficient to ensure future operations), or possible price discrimination." Countervailing Duties , 63 Fed. Reg. 65,348, 65,378 (Dep't Commerce Nov. 25, 1998) ("CVD Preamble "). Those factors are not "in any hierarchy," and Commerce "may rely on one or more of these factors in any particular case." Id. Commerce recognized that a Tier 3 analysis may be particularly "necessary for such goods or services as electricity, land leases, or water." Id. (citing, inter alia , Pure Magnesium and Alloy Magnesium from Canada , 57 Fed. Reg. 30,946, 30,954 (Dep't Commerce July 13, 1992) (" Magnesium from Canada ") ).

In Magnesium from Canada , Commerce explained that examining the preferential provision of electricity first requires a comparison of "the price charged with the applicable rate on the power company's non-specific rate schedule." 57 Fed. Reg. at 30,949. However, "[i]f the amount of electricity purchased by a company is so great that the rate schedule is not applicable, we will examine whether the price charged is consistent with the power company's standard pricing mechanism applicable to such companies." Id. at 30,949 –50.⁶ When "the rate charged is consistent with the standard pricing mechanism and the company under investigation is, in all other respects, essentially treated no differently than other industries which purchase comparable amounts of electricity, [Commerce] would probably not find a countervailable subsidy." Id. at 30,950.

C. Facts Available and Adverse Facts Available

When an interested party "withholds information" requested by Commerce, "significantly impedes a proceeding," "fails to provide [ ] information by the deadlines for submission of the information," or provides information that cannot be verified pursuant to 19 U.S.C. § 1677m(i), Commerce shall use the "facts otherwise available" (or "FA") in making its determination.⁷ 19 U.S.C. § 1677e(a)(2)(2015).⁸ Additionally, if Commerce determines that the party "has failed to cooperate by not acting to the best of its ability to comply with a request for information," it "may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available." Id. § 1677e(b)(1)(A).⁹

"Compliance with the ‘best of its ability’ standard is determined by assessing whether a respondent has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an investigation." Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003) ;¹⁰ see also Essar Steel Ltd. v. United States ) ("Essar Steel I "), ...