2018 CIT 169
Ct. Intl. Trade2018Background
- Commerce investigated countervailing subsidies on certain carbon and alloy cut‑to‑length (CTL) steel plate from Korea; POSCO and POSCO Daewoo were mandatory respondents.
- Key contested programs/acts: electricity provision (KEPCO/KPX/POSCO Energy), POSCO M‑Tech and Chemtech R&D and port‑usage grants, and Hyundai's tax reporting of RSTA Article 22.
- Commerce used a Tier‑3 (price‑setting / market principles) benchmark and the “standard pricing mechanism” analysis to evaluate adequacy of remuneration for electricity and found no benefit to POSCO.
- Commerce applied adverse facts available (AFA) to POSCO for: (1) M‑Tech’s failure to report R&D grants (acquired companies’ grants), (2) Chemtech’s untimely reporting of port usage grants, and (3) Hyundai’s reporting error; it assigned AFA rates drawn from prior CVD proceedings leading to POSCO’s final rate of 4.31%.
- POSCO and Nucor sued. The Court sustained most of Commerce’s determinations but remanded (1) the countervailability finding for M‑Tech’s R&D grants for insufficient factual findings on specificity/benefit and (2) Commerce’s use of the highest available AFA rates for failure to perform the statute‑required case‑specific evaluation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Use of standard pricing mechanism / Tier‑3 for electricity adequacy of remuneration | Nucor: relying on preferentiality / standard‑pricing framework (Magnesium from Canada) is inconsistent with URAA and adequate‑remuneration focus | Commerce: Tiered regulation is reasonable; Tier‑3 properly applies where market prices unavailable and government controls market | Court: Commerce's Tier‑3/standard pricing analysis is reasonable and supported by substantial evidence; sustained |
| Attribution of POSCO Energy subsidies to POSCO | Nucor: POSCO Energy is cross‑owned and subsidies to generator should be passed through because POSCO bought electricity from KPX at lower price | Commerce: POSCO Energy sold electricity to KPX (not to POSCO); no input‑supplier relationship under 19 C.F.R. §351.525(b)(6) | Court: Attribution rejection supported by substantial evidence; sustained |
| AFA for M‑Tech’s failure to report acquired companies’ R&D grants | POSCO: questionnaire did not require reporting grants of companies that ceased to exist; error inadvertent | Commerce: questionnaire sought "any subsidy" and respondent failed to act to best of ability; AFA justified | Court: AFA application justified for failure to report, but Commerce failed to make necessary factual findings to support countervailability (specificity/benefit); remand for reconsideration |
| Application of highest available AFA rates | POSCO: Commerce must evaluate and explain why highest rate is appropriate under 19 U.S.C. §1677e(d)(2) rather than automatically select it | Commerce: applied hierarchy and selected rates from prior proceedings consistent with methodology | Court: Remand — Commerce must perform and explain the case‑specific evaluation required by §1677e(d)(2) before applying the highest rate |
Key Cases Cited
- Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041 (Fed. Cir.) (describing CVD statute framework)
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir.) (standard for AFA: "best of its ability")
- Apex Frozen Foods Pvt. Ltd. v. United States, 862 F.3d 1337 (Fed. Cir.) (agency deference in trade remedy decisions)
- Maverick Tube Corp. v. United States, 273 F. Supp. 3d 1293 (CIT) (reasonableness of Tier‑3/standard pricing mechanism in state‑controlled markets)
- POSCO v. United States, 296 F. Supp. 3d 1320 (CIT) (prior discussion of adequate‑remuneration/Tier approach)
- Trina Solar v. United States, 195 F. Supp. 3d 1334 (CIT) (limits on using AFA: must still point to record facts for countervailability findings)
- Mueller Comercial de Mexico v. United States, 753 F.3d 1227 (Fed. Cir.) (inducement analysis for unaffiliated suppliers/attribution context)
- Essar Steel Ltd. v. United States, 753 F.3d 1368 (Fed. Cir.) (AFA methodology principles)
- PSC VSMPO‑Avisma Corp. v. United States, 688 F.3d 751 (Fed. Cir.) (deference to Commerce in complex economic determinations)
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (U.S.) (substantial evidence/consideration of detracting evidence)
- SKF USA Inc. v. United States, 263 F.3d 1369 (Fed. Cir.) (arbitrary and capricious review — treating like situations differently)