POSCO v. United States

415 F.Supp.3d 1233

POSCO, Plaintiff,

Nucor Corporation, Consolidated Plaintiff,

ArcelorMittal USA LLC and SSAB Enterprises LLC, Plaintiff-Intervenors,

v.UNITED STATES, Defendant,andSSAB Enterprises LLC, Nucor Corporation, ArcelorMittal USA LLC and POSCO, Defendant-Intervenors.

Slip Op. 19-138

Consol. Court No. 17-00137

United States Court of International Trade.

Dated: November 8, 2019

Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S. Hodgins, Eugene Degnan, and Ragan W. Updegraff, Morris, Manning & Martin LLP, of Washington, DC, for plaintiff and defendant-intervenor POSCO.

Christopher Weld, Alan H. Price, and Adam M. Teslik, Wiley Rein, LLP, of Washington, DC, for consolidated plaintiff and defendant-intervenor Nucor Corporation.

John Herrmann and Christopher Cloutier, Kelley Drye & Warren, LLP, of Washington, DC, for plaintiff-intervenor and defendant-intervenor ArcelorMittal USA LLC.

Roger B. Schagrin, Schagrin Associates, of Washington DC, for plaintiff-intervenor and defendant-intervenor SSAB Enterprises LLC.

Kelly A. Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant United States. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, Tara K. Hogan, Assistant Director. Of counsel on the brief was Reza Karamloo, Senior Attorney, Office of the Chief Counsel Commercial Litigation Branch for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION

Katzmann, Judge:

The court returns to Plaintiff POSCO's challenge to the U.S. Department of Commerce's ("Commerce") final affirmative determination in the countervailing duty investigation of certain carbon and alloy cut-to-length ("CTL") plate from Korea. Certain Carbon and Alloy Steel Cut-To-Length Plate From the Republic of Korea: Final Affirmative Countervailing Duty Determination and Final Negative Critical Circumstances Determination ("Final Determination"), 82 Fed. Reg. 16,341 (Dep't Commerce Apr. 4, 2017), P.R. 505 and accompanying Issues and Decision Memorandum ("IDM") (Mar. 29, 2017), P.R. 497.

Before the court now are Commerce's Final Results of Redetermination Pursuant to Court Remand ("Remand Results") (Dep't Commerce July 1, 2019), ECF No. 97, which the court ordered in POSCO v. United States, 42 CIT ––––, 353 F. Supp. 3d 1357 (2018) (" POSCO I") and POSCO v. United States, 43 CIT ––––, ––––, 382 F. Supp. 3d 1346 (2019) (" POSCO II"). The court sustains Commerce's Remand Results.

BACKGROUND

The relevant legal and factual background of the underlying action is set forth in greater detail in POSCO I, 353 F. Supp. 3d at 1363–69 and POSCO II, 382 F. Supp. 3d at 1348.

In 2016, Commerce initiated a countervailing duty investigation of certain carbon and alloy steel cut-to-length ("CTL") plate from Korea, with a period of investigation ("POI") of January 1, 2015 through December 31, 2015. Certain Carbon and Alloy Steel Cut-to-Length Plate from Brazil, the People's Republic of China, and the Republic of Korea: Initiation of Countervailing Duty Investigations, 81 Fed. Reg. 27,098 (Dep't Commerce May 5, 2016), P.R. 59. POSCO was a mandatory respondent. Respondent Selection Memorandum (Dep't Commerce May 31, 2016), P.R. 102. On April 4, 2017, Commerce issued its Final Determination, imposing a countervailing duty ("CVD") rate of 4.31 percent on POSCO.

Before the court, POSCO challenged several aspects of Commerce's Final Determination, including POSCO M-Tech's failure to report R & D grants received by companies it had acquired, Commerce's application of AFA to POSCO Chemtech's failure to timely report port usage grants, and Hyundai's failure to report assistance received under Korea's Restriction on Special Taxation Act ("RSTA") Article 22. POSCO I and POSCO II. Nucor, moreover, challenged Commerce's determination with regards to the attribution of electricity subsidies. Id.

In POSCO I, the court affirmed several aspects of Commerce's Final Determination. The court upheld Commerce's application of AFA to POSCO M-Tech's unreported additional government subsidies, but remanded to the agency for reconsideration of its determination that the assistance received by POSCO M-Tech was countervailable. Pertinent to the Remand Results now under review, the court concluded that (1) Commerce failed to make the requisite factual findings to meet the specificity and benefit requirements of countervailability for the R & D grants received by Ricco Metal and Nine-Digit; and (2) Commerce did not conduct a fact-specific inquiry necessary to justify its application of the highest AFA rates to POSCO. POSCO I, 353 F. Supp. 3d at 1374-76. Accordingly, it remanded the Final Determination to Commerce to make those required fact-specific inquiries and for reconsideration of "why the highest available rate should apply to POSCO." Id. at 1383. Given that the court remanded "the issue of the use of the highest available AFA rate ... the court [did] not address POSCO's contention that Commerce failed to corroborate the AFA rates under 19 U.S.C. § 1677e(c)(1)." Id. at 1383 n.15.

POSCO moved for the court to reconsider its affirmance of (1) Commerce's application of the 1.05 percent AFA rate to POSCO M-Tech for unreported government subsidies received by Ricco Metal and Nine-Digit, both companies acquired by POSCO M-Tech; and (2) Commerce's application of the 1.05 percent AFA rate to Hyundai and attribution of this rate to POSCO. Mot. of Pl. POSCO for Reh'g. and Recons. at 2–3, Dec. 21, 2018, ECF No. 83. In POSCO II, responding to the motion for reconsideration, the court concluded that "Commerce did not provide any additional explanation of how it determined that there was no identical program before moving to the second step of its AFA methodology -- using the rate in another investigation -- and thus did not make the requisite factual findings to address POSCO's contention that the [Industrial Technology Innovation Promotion Act] ITIPA grant was an identical program in the proceeding." POSCO II, 382 F. Supp. 3d at 1349. The court thus additionally remanded to Commerce for further consideration the issue of whether, under the first step of the AFA methodology, a program identical to the assistance received by Ricco Metal and Nine-Digit existed. Id. However, the court denied POSCO's motion to reconsider the application of AFA to Hyundai and the attribution of that rate to POSCO. POSCO II, 382 F. Supp. 3d at 1346.

Commerce filed the Remand Results with the court on July 1, 2019. Commerce (1) concluded that POSCO M-Tech's R & D grants received by Ricco Metal and Nine-Digit were countervailable because the benefit and specificity requirements were met; (2) found that the use of the highest AFA rate was appropriate in light of POSCO's failure to cooperate; (3) reconsidered the use of the 1.64 percent rate for the port usage grants and reduced the rate to 1.05 percent; and (4) addressed whether an identical program existed as part of the AFA methodology. Remand Results at 1–2. POSCO and Nucor filed their comments on the Remand Results on July 31, 2019. POSCO's Br.; Nucor's Br. The Government filed its reply to the comments on the Remand Results on August 15, 2019. Def.'s Br.

DISCUSSION

Commerce's Remand Results are consistent with the court's remand orders in POSCO I and POSCO II. POSCO and Nucor do not challenge Commerce's findings on remand that the benefit and specificity requirements were met such that the assistance received by POSCO M-Tech was countervailable. POSCO's Br.; Nucor's Br. POSCO does, however, argue that Commerce failed to comply fully with the court's orders in POSCO I and POSCO II because it did not explain whether an identical program existed before moving on the second step of the AFA methodology as applied to POSCO M-Tech's ITIPA grants and failed to conduct the additional analysis required by 19 U.S.C. § 1677e(d)(2) to justify the use of the highest AFA rate out of all possible rates. POSCO's Br. at 3. POSCO also asserts that Commerce did not corroborate the 1.64 percent rate from Refrigerators from Korea but agrees with the resulting 1.05 percent rate for the port usage grants on remand. Id. (stating that "POSCO agrees with the result of Commerce's reconsideration of this issue and has no comments"). Nucor asks the court to sustain Commerce's Remand Results with respect to Commerce's application of the highest AFA rate to POSCO M-Tech's R & D grant assistance but contends that Commerce's reduction of the 1.64 percent rate to 1.05 percent rate was unlawful because it exceeded the scope of the court's orders in POSCO I and POSCO II. Nucor's Br. at 2–3. POSCO and Nucor's arguments are not meritorious, and the court sustains the Remand Results.

I. Commerce's Countervailability Determination

As has been noted, in POSCO I, the court concluded that Commerce failed to make the "prerequisite factual findings" to meet the benefit and specificity requirements of a countervailability finding, as required by 19 U.S.C. § 1677(5), for the assistance received by Ricco Metal and Nine-Digit. POSCO I, 353 F. Supp. 3d at 1376. The court, therefore, remanded to "Commerce for reconsideration its determination that the assistance received by Ricco Metal and Nine-Digit was countervailable." Id. On remand, the Government contends that "Commerce explained that: (1) record evidence indicates research and development grants provided by the Korean government to steel producers are de jure specific; (2) such grants constitute financial contributions in the form of direct transfer of funds; and (3) the subsidies at issue confer a benefit in the form of a grant." Def.'s Br. at 6 (emphasis omitted). POSCO and Nucor do not dispute Commerce's benefit and specificity findings on remand, and thus this issue is deemed waived. Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1350 (Fed. Cir. 2016). The court...