Posco v. United States
296 F. Supp. 3d 1320
Ct. Intl. Trade2018Background
- Commerce investigated countervailing duties (CVDs) on cold-rolled steel from Korea (POI: 2014); POSCO and Hyundai Steel were mandatory respondents.
- POSCO submitted questionnaire responses that omitted (or denied) certain Korean affiliated input suppliers and an R&D facility listed in an Incheon FEZ; Commerce discovered contradictory information at verification.
- Commerce applied facts available with an adverse inference (AFA) to POSCO for (a) unreported cross-owned input suppliers, (b) an FEZ-located R&D facility, and (c) DWI/KORES loan reporting (the DWI issue became moot if AFA for affiliates stood).
- Commerce selected adverse AFA subsidy rates by using its hierarchical practice of choosing the highest calculated program-specific rates (including rates taken from prior Korean CVD proceedings), producing a large aggregate rate for POSCO.
- Nucor challenged Commerce’s Tier 3 electricity (KEPCO) analysis and argued Commerce should have applied AFA against the Government of Korea (GOK) for incomplete information about tariff-setting; Commerce found electricity was not provided for less than adequate remuneration and declined to use AFA against the GOK.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Use of AFA for POSCO’s failure to report cross-owned input suppliers | POSCO: it reasonably believed inputs were not "primarily dedicated" and thus withholding was justified; at most FA (not AFA) appropriate | Govt: POSCO withheld verifiable info and impeded the proceeding; failure to explain withholding showed lack of cooperation | Court: Sustained Commerce's use of AFA — POSCO withheld/untimely submitted info and did not act to best of its ability. |
| 2) Use of AFA for POSCO’s FEZ-located R&D facility | POSCO: GOK said POSCO received no FEZ benefits during “investigation period,” so no subsidy; withholding was reasonable | Govt: GOK's phrase ambiguous; POSCO provided hand-drawn contradictory map and refused site visit, showing non-cooperation | Court: Sustained Commerce's AFA and adverse inference that POSCO benefitted from FEZ program. |
| 3) Selection of highest-calculated AFA rates and corroboration (including 1.64% and 1.05% component rates) | POSCO: Commerce applied highest rates mechanically without evaluating whether the situation warranted the maximum; corroboration of secondary rates inadequate (1.64% unreliable) | Govt: Commerce followed §1677e(d) hierarchy and corroborated rates to the extent practicable; highest rates appropriate to deter non-cooperation | Court: Remanded — Commerce failed to explain why the highest rates were warranted under §1677e(d)(2). Corroboration: 1.05% sustained; 1.64% found to be derived from AFA estimates and not supported — remanded for reconsideration. |
| 4) Nucor: Tier 3 electricity analysis & whether to apply AFA to GOK | Nucor: Commerce unlawfully used a standard-pricing/preferentiality approach post-URAA, ignored cost-recovery and market-distortion arguments, and should have used AFA against GOK for incomplete tariff-setting info | Govt: Tier 3 (standard pricing, costs, price discrimination) is a permissible approach when market prices unavailable; GOK provided timely, verifiable info and Commerce analyzed it fully | Court: Sustained Commerce — Tier 3 standard-pricing analysis is permissible; substantial evidence supports finding electricity not provided for less than adequate remuneration; Commerce properly declined to apply AFA to GOK. |
Key Cases Cited
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir.) (best-of-ability standard for cooperation/AFA)
- Essar Steel Ltd. v. United States, 678 F.3d 1268 (Fed. Cir.) (affirming adverse-inference application where respondent concealed or misreported)
- Maverick Tube Corp. v. United States, 273 F. Supp. 3d 1293 (CIT) (affirming Commerce Tier 3 electricity analysis)
- Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337 (Fed. Cir.) (Chevron framework for reviewing Commerce interpretations)
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (U.S.) (substantial evidence standard explained)
- RZBC Grp. Shareholding Co. v. United States, 100 F. Supp. 3d 1288 (CIT) (use of petition/record to fill evidentiary gaps with FA)
- F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027 (Fed. Cir.) (discussion of corroboration limits)
- Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319 (Fed. Cir.) (commercial reality discussion in corroboration context)
- NMB Singapore Ltd. v. United States, 557 F.3d 1316 (Fed. Cir.) (agency must articulate rationale for decisions)