POSCO v. United States, 1:17-cv-00137

Background

Domestic producers petitioned Commerce alleging countervailable subsidies and dumped imports of certain carbon and alloy cut-to-length (CTL) steel plate from Korea; Commerce selected POSCO (and POSCO Daewoo) as mandatory respondents.
Commerce investigated alleged subsidies including electricity supplied via Korean Power Exchange/KEPCO, R&D grants received by POSCO M‑Tech and POSCO Chemtech, port‑usage grants, and Hyundai Corporation’s tax‑related benefits.
Commerce issued a Preliminary Determination finding no electricity benefit but, in the Final Determination, applied adverse facts available (AFA) to POSCO for unreported or untimely information from M‑Tech, Chemtech, and Hyundai, assigning POSCO an overall CVD rate of 4.31%.
POSCO and U.S. domestic producer Nucor challenged various aspects: POSCO contested AFA applications and rate selection; Nucor challenged Commerce’s electricity attribution and adequacy‑of‑remuneration analysis.
The Court sustained most of Commerce’s determinations but remanded two discrete issues: (1) Commerce’s countervailability finding (benefit/specificity) concerning POSCO M‑Tech’s R&D grants because Commerce failed to make required factual findings before applying AFA; and (2) Commerce’s choice to apply the highest available AFA rates without the statutorily required, case‑specific evaluation explaining why the highest rate was warranted.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Adequacy of remuneration for electricity (use of Tier‑3 / standard pricing mechanism)	Nucor: Commerce improperly relied on preferential‑pricing/standard‑pricing analysis contrary to URAA and must prioritize market‑based benchmarks.	Gov: Tiered regs permit Tier‑3 (price‑setting/market principles) analysis where market comparators unavailable; Commerce reasonably applied it to Korea’s state‑controlled electricity market.	Held: Commerce’s Tier‑3 standard‑pricing mechanism analysis was reasonable and supported by substantial evidence.
Attribution of POSCO Energy subsidies to POSCO	Nucor: POSCO Energy is cross‑owned; electricity subsidies to POSCO Energy should be attributed to POSCO because POSCO buys cheaper power from KPX.	Gov: POSCO Energy sold electricity to KPX, not to POSCO; title transferred at KPX meter; not an input supplier under regs.	Held: No attribution; Commerce reasonably relied on record that POSCO Energy sold to KPX, not to POSCO.
Application of AFA to POSCO M‑Tech R&D grants	POSCO: Questionnaire did not require reporting grants received by entities prior to acquisition; Commerce lacked factual basis to find specificity/benefit and thus cannot apply AFA to countervailability.	Gov: M‑Tech failed to report "any subsidy" as requested and did not act to the best of its ability; AFA permissible.	Held: AFA application generally supported, but Commerce failed to make necessary factual findings on specificity/benefit for Ricco Metal and Nine‑Digit grants; remanded for reconsideration.
Selection of highest available AFA rates	POSCO: Commerce improperly applied highest non‑de minimis rates without the evaluation required by 19 U.S.C. §1677e(d)(2).	Gov: Commerce followed its hierarchical methodology and selected previously used rates; statute permits using highest rate if justified.	Held: Remand required — Commerce must perform and explain the statutorily required, case‑specific evaluation before applying the highest AFA rates.

Key Cases Cited

Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (agency deference under Chevron)
Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir.) ("best of its ability" standard for AFA)
Universal Camera Corp. v. NLRB, 340 U.S. 474 (substantial evidence / consideration of contrary record evidence)
Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337 (Fed. Cir.) (deference to Commerce on technical economic issues)
Mueller Comercial de Mexico, S. de R.L. de C.V. v. United States, 753 F.3d 1227 (Fed. Cir.) (inducement analysis re: unaffiliated companies)
Essar Steel Ltd. v. United States, 753 F.3d 1368 (Fed. Cir.) (AFA rate selection practice)
PSC VSMPO‑Avisma Corp. v. United States, 688 F.3d 751 (Fed. Cir.) (deference in antidumping/CVD technical determinations)
SKF USA Inc. v. United States, 263 F.3d 1369 (Fed. Cir.) (arbitrary and capricious review for disparate treatment)