Posco v. United States

• Citation: 337 F.Supp.3d 1265
• Decision Date: 11 September 2018
• Docket Number: Consol. Court No. 16-00227,Slip Op. 18-117
• 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

337 F.Supp.3d 1265

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. 18-117

Consol. Court No. 16-00227

United States Court of International Trade.

September 11, 2018

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

Adam M. Teslik and Christopher B. Weld, Wiley Rein LLP, of Washington, D.C., argued for Consolidated Plaintiff and Defendant-Intervenor Nucor Corporation. With them on the brief was Alan H. Price. 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.

Renee A. Burbank, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., 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 Emma T. Hunter, Attorney, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

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

Daniel L. Schneiderman, King & Spalding, LLP, of Washington, D.C., for Defendant-Intervenor AK Steel Corporation. With him on the brief was Stephen A. Jones.

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

Thomas M. Beline and Sarah E. Shulman, Cassidy Levy Kent (USA) LLP, of Washington, D.C., for Defendant-Intervenor United States Steel Corporation. Formerly on the brief were Jeffrey D. Gerrish and Luke A. Meisner, Skadden Arps Slate Meagher & Flom LLP, of Washington, D.C.

OPINION AND ORDER

Choe-Groves, Judge:

This case involves certain hot-rolled steel flat products from the Republic of Korea ("Korea"). Plaintiff POSCO and Consolidated Plaintiff Nucor Corporation ("Nucor") bring this action contesting various aspects of the final determination in a countervailing duty investigation, in which the U.S. Department of Commerce ("Commerce" or "Department") found that countervailable subsidies are being provided to producers and exporters of certain hot-rolled steel flat products from 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); see also Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products from the Republic of Korea, C-580-884, (Aug. 4, 2016), available at https://enforcement.trade.gov/frn/summary/korea-south/2016-19377-1.pdf (last visited Sept. 5, 2018) ("Final IDM"). This matter is before the court on Plaintiff POSCO's Rule 56.2 motion for judgment on the agency record and Consolidated Plaintiff Nucor's Rule 56.2 motion for judgment on the agency record challenging various aspects of the Department's final determination. See Pl. POSCO's Mot. J. Agency R., June 1, 2017, ECF No. 54; Pl. POSCO's Br. Supp. Mot. J. Agency R., June 1, 2017, ECF No. 54-2 ("POSCO's Mot."); Pl. Nucor Corporation & Pl.-Intervenors ArcelorMittal USA LLC, AK Steel Corporation, & United States Steel Corporation's Rule 56.2 Mot. J. Agency R., June 1, 2017, ECF No. 56 ("Nucor's Mot.").

ISSUES PRESENTED

The court reviews the following issues:

1. Whether Commerce properly applied facts otherwise available with an adverse inference ("adverse facts available" or "AFA") against POSCO with respect to POSCO's four cross-owned affiliates;

2. Whether Commerce properly rejected factual information submitted at verification regarding POSCO's affiliated trading company, Daewoo International Corporation;

3. Whether Commerce properly applied adverse facts available against POSCO with respect to POSCO's facility located in a free economic zone;

4. Whether Commerce properly selected the highest rates when applying adverse facts available;

5. Whether Commerce properly corroborated the adverse facts available rates used;

6. Whether Commerce properly determined that the Government of Korea's provision of electricity to respondents was not for less than adequate remuneration;

7. Whether Commerce properly determined not to take into account information regarding the Korea Power Exchange ("KPX");

8. Whether Commerce properly determined that the Government of Korea's provision of electricity is consistent with market principles; and

9. Whether Commerce properly declined to apply facts otherwise available with an adverse inference against the Government of Korea.

PROCEDURAL HISTORY

Nucor, AK Steel Corporation, ArcelorMittal USA LLC, Steel Dynamics Inc., and United States Steel Corporation (collectively, "Petitioners") filed a petition with Commerce concerning imports of hot-rolled steel flat products from Korea. See Decision Memorandum for the Preliminary Negative Determination: Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products from the Republic of Korea at 1, C-580-884, (Jan. 8, 2016), available at https://enforcement.trade.gov/frn/summary/korea-south/2016-00750-1.pdf (last visited Sept. 5, 2018) ("Prelim. IDM"). Commerce initiated a countervailing duty investigation into certain hot-rolled steel flat products from Korea on September 9, 2015. See id.; see also Certain Hot-Rolled Steel Flat Products From Brazil, the Republic of Korea, and Turkey, 80 Fed. Reg. 54,267 (Dep't Commerce Sept. 9, 2015) (initiation of countervailing duty investigations). The investigation named two entities, POSCO and Hyundai Steel Co., Ltd. ("Hyundai Steel"), as mandatory respondents. See Prelim. IDM at 2.

POSCO submitted a questionnaire response related to Daewoo International Corporation ("Daewoo"), a trading company affiliated with POSCO. See id. at 9; POSCO and Daewoo International Corporation's Response to the Affiliated Companies Questions of Commerce's Sept. 24, 2015 Initial Questionnaire, PD 74, bar code 3404843-01 (Oct. 13, 2015). Daewoo is majority-owned by POSCO and exported POSCO-produced subject merchandise into the United States during the period of investigation. See Prelim. IDM at 9.

Commerce also issued an initial questionnaire to the Government of Korea, seeking information about how electricity prices in Korea are set and how the Korean Electric Power Corporation's ("KEPCO") costs are reflected in its electricity rates. See Commerce's Initial Countervailing Duty Questionnaire, PD 46–47, bar code 3308604-01 (Sept. 24, 2015).

Commerce issued its preliminary determination on January 15, 2016. See Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products From the Republic of Korea, 81 Fed. Reg. 2,172 (Dep't Commerce Jan. 15, 2016) (preliminary negative determination and alignment of final determination with final antidumping duty determination) ("Preliminary Results"). The Department found that POSCO and Daewoo are cross-owned through common ownership as defined in 19 C.F.R. § 351.525(b)(6)(vi). See Prelim. IDM at 9. Commerce determined preliminarily that the Government of Korea's provision of electricity was not for less than adequate remuneration and did not confer a benefit to the respondents. See id. at 33. In reaching this result, Commerce analyzed whether the pricing set by KEPCO was consistent with market principles based on the "Tier Three" benchmark analysis set forth in Commerce's regulations. See id. at 31–33. Under the Tier Three benchmark analysis, Commerce determined preliminarily that KEPCO applied the same price-setting method (standard pricing mechanism) to calculate the electricity rates for each tariff classification, that there was no information that the Korean producers were treated differently from other industrial users of electricity purchasing comparable amounts, and that this program provided no benefit to the Korean producers. See id. at 32–33. Commerce calculated a de minimis rate for both POSCO and Hyundai Steel. Preliminary Results, 81 Fed. Reg. at 2,172 –73. Nucor submitted subsequent pre-verification comments. See Nucor's Pre-Verification Comments for the Government of Korea, PD 349, bar code 3461986-01 (Apr. 21, 2016).

Between the publication of the Preliminary Results and verification, POSCO attempted to provide additional factual information to the Department. See POSCO's Response to Commerce's Apr. 26, 2016 Supplemental New Subsidy Allegation Questionnaire (Rejected and Retained by Commerce), CD 364, bar code 3466175-01 (May 3, 2016). The Department rejected the submission as untimely. See Commerce's Letter to POSCO Regarding POSCO's May 3, 2016 Questionnaire Response, PD 384, bar code 3466187-01 (May 3, 2016); Commerce's Rejection of Document Memorandum, PD 385, bar code 3466188-01 (May 3, 2016). Commerce conducted verifications of the questionnaire responses submitted by the Government of Korea, POSCO, and Hyundai Steel from May 9 through May 20, 2016. See Final IDM at 2.

Commerce issued its final determination on August 12, 2016. See Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products From the Republic of Korea, 81 Fed. Reg. at...