Nucor Corp. v. United States

653 F.Supp.3d 1295

NUCOR CORPORATION, Plaintiff, v. UNITED STATES, Defendant,andPOSCO, Defendant-Intervenor.

Slip Op. 23-119 Court No. 21-00182

United States Court of International Trade

August 21, 2023

Alan H. Price, Christopher B. Weld, Maureen E. Thorson, Adam M. Teslik, Wiley Rein LLP, of Washington, DC, for Plaintiff.

Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was W. Mitch Purdy, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Brady W. Mills, Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Mary S. Hodgins, Eugene Degnan, Edward J. Thomas III, Jordan L. Fleischer, and Nicholas C. Duffy, Morris, Manning & Martin, LLP, of Washington, DC, for Defendant-Intervenor.

OPINION AND ORDER

Barnett, Chief Judge:

This matter is before the court following the U.S. Department of Commerce's ("Commerce" or "the agency") redetermination upon remand. See Confid. Final Results of Redetermination Pursuant to Court Remand ("Remand Results"), ECF No. 60-1. Plaintiff Nucor Corporation ("Nucor") challenged Commerce's final results in the 2018 administrative review of the countervailing duty ("CVD") order on certain carbon and alloy steel cut-to-length plate ("CTL plate") from the Republic of Korea ("Korea"). Compl., ECF No. 5; Certain Carbon and Alloy Steel Cut-to-Length Plate From the Republic of Korea, 86 Fed. Reg. 15,184 (Dep't Commerce Mar. 22, 2021) (final results and partial rescission of [CVD] admin. review, 2018) ("Final Results"), ECF No. 18-4, and accompanying Issues and Decision Mem., C-580-888 (Mar. 16, 2021) ("I&D Mem."), ECF No. 18-5.¹ In Nucor Corp. v. United States ("Nucor I"), 46 CIT —, 600 F. Supp. 3d 1225 (2022),² the court remanded Commerce's determination not to initiate an investigation into the alleged provision of off-peak electricity for less than adequate remuneration (sometimes referred to as "LTAR") and Commerce's determination that mandatory respondent POSCO and its affiliate POSCO Plantec ("Plantec") do not meet the requirements necessary to find a cross-owned input supplier relationship with respect to the supply of scrap and a converter vessel.

On January 31, 2023, Commerce filed the Remand Results. Therein, Commerce provided further explanation for its determinations, which otherwise remain unchanged. Remand Results at 11-33, 38-52, 55-72.

Nucor filed comments opposing Commerce's Remand Results. Confid. Nucor Corp.'s Am. Cmts. on Final Results of Redetermination Pursuant to Ct. Remand ("Pl.'s Opp'n Cmts."), ECF No. 74. Defendant United States ("the Government") filed comments in support of the Remand Results. Confid. Def.'s Resp. to Pl.'s Cmts. Regarding the Remand Redetermination ("Def.'s Supp. Cmts."), ECF No. 70.³

For the following reasons, the court remands again the matters addressed in Commerce's redetermination.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018),⁴ and 28 U.S.C. § 1581(c). The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Nucor's Allegation Concerning Electricity for Less Than Adequate Remuneration

A. Background

During the investigation underlying the order on CTL plate from Korea, the Korean government explained that "if one consumes electricity when the load factor is low, e.g., at night, the electricity tariff decreases since electricity could be generated by those using cheap fuels, e.g., nuclear generators." New Subsidy Allegations (Nov. 4, 2019) ("Allegation") at 9 & n.34, CR 182-84, PR 76-78, CRJA Tab 5 (citing the Government of Korea's July 15, 2016, response filed in the original investigation, attached to the Allegation as Exhibit 6). Nucor's allegation in this review pointed to news reports and KPX data demonstrating that electricity demand was more "evenly divided between on-peak and off-peak hours." Id. Nucor relied, in part, on the absence of fluctuation in the system marginal price ("SMP")⁵ and information indicating that lower cost generators, such as coal or nuclear power, established the SMP "less than 4 [percent] of the time even during off-peak hours." Id. at 11 & n.41 (citing Allegation, Ex. 10). To demonstrate benefit, Nucor initially compared POSCO's weighted average off-peak electricity price for one plant⁶ to the average off-peak SMP in the amount of 93.17 KRW/kWh and the KPX's annual average cost of sale in the amount of 106 KRW/kWh. Id. at 14-15.

Commerce issued a supplemental questionnaire, in which it stated: "According to . . . KEPCO's Form 20-F . . . there are other factors that determine the price for electricity other than the SMP. Based on these factors, please explain how the SMP only impacts pricing at off-peak hours." New Subsidy Allegations Suppl. Questionnaire (Dec. 20, 2019) ("Suppl. Questionnaire") at 3, PR 90, CRJA Tab 7. Nucor responded that the KPX pricing formula accounts for an adjusted coefficient and the fixed capacity price, but that Nucor did not understand those values to "affect the actual prices that end-users pay KEPCO for electricity." New Subsidy Allegations Suppl. Questionnaire Resp. (Dec. 31, 2019) ("Suppl. Allegation") at 4, PR 94, CRJA Tab 8. Nucor went on to describe the adjusted coefficient as an "ad hoc means of adjusting the distribution of profits or losses among KEPCO and its generating subsidiaries" and that it may ultimately be relevant to a benefit calculation. Id. Nucor explained, however, that it "discussed the SMP for two reasons. First, since it reflects the variable cost of electricity generation, it serves as a reasonably available and conservative proxy for what the price of electricity should be at any specific time of day." Id. Nucor further stated that "because [the SMP] is theoretically tied to demand, it should fall significantly if, as the Korean government has asserted, substantially lower off-peak electricity prices for certain end users simply reflect lower off-peak end-use demand for electricity," but that "this is not the case." Id. at 5.

The statute provides that Commerce "shall" initiate a CVD investigation "whenever an interested party" files a petition⁷ "on behalf of an industry" that "alleges the elements necessary for the imposition of the duty imposed by section 1671(a) of this title" and provides "information reasonably available to the petitioner supporting those allegations." 19 U.S.C. § 1671a(b)(1). In this case, however, Commerce declined to initiate an investigation. See Decision Mem. on New Subsidy Allegations (Apr. 1, 2020), PR 144, CRJA Tab 9. Commerce found that Nucor had not adequately accounted for the adjusted coefficient and capacity price, stating that "any cost-based, market benchmark . . . should include these factors, because . . . KEPCO's cost of electricity is based on that formula." Id.

Nucor requested Commerce to reconsider its decision. Request for Recons. of New Subsidy Allegation (Apr. 9, 2020) ("Req. for Recons."), CR 254, PR 148, CRJA Tab 10. In the request for reconsideration, Nucor argued, inter alia, that even assuming that the Korean government's pricing formula results in a suitable benchmark, "the record still presents evidence of a benefit to POSCO." Id. at 7 (underline omitted). To support this assertion, Nucor pointed to "unit prices for each KEPCO generator and for each fuel type" for the period of review ("POR"). Id. Nucor explained that the "[t]he lowest unit price was KRW 67.38" per kWh, which was "[[ ]]." Id. at 7-8. Thus, Nucor argued, Commerce's decision not to initiate an investigation lacked record support "even assuming that the lowest-cost generator supplied 100 [percent] of off-peak electricity, with fair value measured as whatever price results from the KPX's pricing formula for that specific generator." Id. at 8.

For the Final Results, Commerce rejected both the average off-peak SMP and KPX's cost-of-sale data as benchmarks, reasoning that "neither . . . reflect the average price of off-peak electricity for [less than adequate remuneration]." I&D Mem. at 22. With respect to cost recovery, Commerce did not find "one year without cost recovery sufficient to demonstrate that a government-owned entity is not recovering its costs." Id. at 23. Commerce did not address Nucor's comparison between the POR average unit price paid to the lowest cost generator and KEPCO's off-peak tariff rates. See id. at 20-26.

The court remanded Commerce's determination, explaining that although "Commerce appeared to question the propriety of examining a segment of a time-of-use system, its discussion in this regard is cursory." Nucor I, 600 F. Supp. 3d at 1233 (further noting the Government's concession that "Commerce did not explicitly address whether the off-peak supply of electricity within such a system may constitute a distinct subsidy program"). The court also found that Commerce had faulted Nucor for failing to provide information that Commerce did not identify as being reasonably available to Nucor. Id. at 1234.

B. Commerce's Remand Results

In the Remand Results, Commerce framed the issues identified by the court as "(1) whether the pricing of off-peak electricity could constitute a subsidy program distinct from Nucor's previous allegation regarding the sale of electricity for LTAR; and (2) whether Nucor's allegation met the threshold for initiating an investigation into any such program." Remand Results at 7. With respect to the first issue, Commerce clarified that it treated Nucor's allegation regarding the off-peak supply of electricity "as...