977 F.3d 1369
Fed. Cir.2020Background
- Commerce conducted a countervailing-duty (CVD) investigation of certain cold-rolled steel (CRS) from South Korea, selecting POSCO and Hyundai Steel as respondents.
- KEPCO is a state-owned, sole retail electricity provider in Korea; KEPCO purchases all generation through the Korea Power Exchange (KPX), a KPX‑wholesale market said to be wholly owned by KEPCO and its subsidiaries.
- Commerce performed a Tier 3 (no in‑country or world‑market benchmark) adequate‑remuneration analysis and focused on whether respondents received preferential treatment under KEPCO’s tariffed pricing mechanism.
- Commerce relied on a preferential‑rate / price‑discrimination framework (pre‑URAA style) and limited its cost analysis to KEPCO’s costs (KEPCO’s KPX purchase price), without separately investigating KPX generation costs or whether KPX itself is an “authority.”
- The Court of International Trade upheld Commerce; on appeal the Federal Circuit vacated and remanded, holding Commerce’s reliance on a preferentiality standard unlawful and that Commerce failed to investigate KPX’s role and costs, making the finding unsupported by substantial evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce lawfully relied on a preferential‑rate / price‑discrimination test to assess "less than adequate remuneration" | Nucor: The statute replaced preferentiality with an adequate‑remuneration standard; preferentiality alone is insufficient. | Commerce: Its regulations and prior practice (Magnesium from Canada, CVD rules) allow price‑discrimination analysis as part of Tier 3. | Court: Commerce’s preferential‑rate approach is contrary to law; it must apply the post‑URAA adequate‑remuneration standard (citing Nucor). |
| Whether Commerce’s finding of no benefit is supported by substantial evidence given KPX’s role and costs | Nucor: Commerce failed to investigate KPX’s costs and whether KPX is an authority; KEPCO pricing depends heavily on KPX. | Government: Commerce need only consider the authority’s (KEPCO’s) prices; how the authority acquired the good/service need not be analyzed. | Court: Commerce erred by not investigating KPX; record suggests KPX is an authority and its costs could affect adequacy of remuneration—finding unsupported by substantial evidence. |
Key Cases Cited
- Nucor Corp. v. United States, 927 F.3d 1243 (Fed. Cir.) (rejecting Commerce’s preferential‑rate approach and interpreting adequate‑remuneration standard)
- Novosteel S.A. v. United States, 284 F.3d 1261 (Fed. Cir.) (exhaustion/administrative‑preservation principle)
- Guangdong Wireking Houswares & Hardware Co. v. United States, 900 F. Supp. 2d 1362 (Ct. Int’l Trade) (government‑owned entities treated as public authorities)
- Allegheny Ludlum Corp. v. United States, 112 F. Supp. 2d 1141 (Ct. Int’l Trade) (Commerce’s duty to investigate apparent subsidies)