POSCO v. United States , 335 F. Supp. 3d 1283 ( 2018 )

Slip Op. 18-115
UNITED STATES COURT OF INTERNATIONAL TRADE
POSCO, et al.,
Plaintiffs,
and
AK STEEL CORPORATION, et al.,
Plaintiff-Intervenors,
Before: Mark A. Barnett, Judge
v.
Consol. Court No. 16-00225
UNITED STATES,
Defendant,
and
STEEL DYNAMICS, INC., et al.,
Defendant-Intervenors.
OPINION AND ORDER
[Sustaining the U.S. Department of Commerce’s Final Results of Redetermination.]
Dated: September 10, 2018
Donald B. Cameron, Brady W. Mills, Julie C. Mendoza, R. Will Planert, Mary S.
Hodgins, and Eugene Degnan, Morris, Manning & Martin LLP, of Washington, DC, for
Plaintiff POSCO.
Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for Defendant United States. With her
on the brief were Chad A. Readler, Acting Assistant Attorney General, and Jeanne E.
Davidson, Director. Of counsel on the brief was Natan P. L. Tubman, Attorney, Office of
the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of
Commerce, of Washington, DC.
Consol. Court No. 16-00225 Page 2
Timothy C. Brightbill, Alan H. Price, Tessa V. Capeloto, and Adam M. Teslik, Wiley Rein
LLP, of Washington, DC, for Consolidated Plaintiff and Defendant-Intervenor Nucor
Corporation.
Barnett, Judge: This matter is before the court following the U.S. Department of
Commerce’s (“Commerce” or the “agency”) redetermination upon remand in this case.
See Confidential Final Results of Redetermination Pursuant to Court Remand
(“Remand Results”), ECF No. 112-1. For the reasons stated below, Commerce’s
Remand Results are sustained. 1
BACKGROUND
The court assumes familiarity with the facts of this case as stated in POSCO v.
United States (“POSCO I”), 42 CIT ___, 296 F. Supp. 3d 1320 (2018). The factual and
legal background relevant to this remand is summarized herein.
In this consolidated action, Plaintiff POSCO (“POSCO”) challenged Commerce’s
final determination in its countervailing duty (“CVD”) investigation of cold-rolled steel
products from the Republic of Korea (“Korea”). See Countervailing Duty Investigation of
Certain Cold-Rolled Steel Flat Products from the Republic of Korea, 81 Fed. Reg.
49,943 (Dep’t Commerce July 29, 2016) (final aff. determination) (“Final
Determination”), ECF No. 41-4, and accompanying Issues and Decision Mem., C-580-
882 (July 20, 2016) (“I&D Mem.”), ECF No. 41-5, as amended by Certain Cold-Rolled
Steel Flat Products from Brazil, India, and the Republic of Korea, 81 Fed. Reg. 64,4361
The administrative record filed in connection with the Remand Results is divided into a
Public Administrative Record, ECF No. 114-2, and a Confidential Administrative Record,
ECF No. 114-3.
Consol. Court No. 16-00225 Page 3
(Dep’t Commerce Sept. 20, 2016) (am. final aff. countervailing duty determination and
countervailing duty order) (“Amended Final Determination”), ECF No. 41-3. In
particular, POSCO (a Korean cold-rolled steel producer) challenged Commerce’s use of
the facts available with an adverse inference (referred to as “adverse facts available” or
“AFA”) for several reporting errors and its selection and corroboration of the adverse
facts available rates. See Confidential Mot. of Pl. POSCO for J. on the Agency R., ECF
No. 53, and Confidential Pl. POSCO’s Br. in Supp. of its Mot. for J. on the Agency R. at
2-3, ECF No. 59-1. 2 The court previously sustained Commerce’s use of the adverse
facts available. See POSCO I, 296 F. Supp. 3d at 1336-47. The court remanded
Commerce’s selection of the highest calculated rates to use as the adverse facts
available rate and its corroboration of one of the selected rates. Id. at 1347-54.
Selection of Subsidy Rates
Commerce’s selection of subsidy rates when making an adverse inference is
governed by 19 U.S.C. § 1677e(d) (2015). 3 Subsection (d)(1) permits Commerce to
2
Consolidated Plaintiff Nucor Corporation (“Nucor”) and Plaintiff-Intervenors
ArcelorMittal USA LLC, AK Steel Corporation, and United States Steel Corporation
(domestic cold-rolled steel producers) also challenged certain aspects of Commerce’s
final determination. Because the court sustained Commerce’s determinations thereto,
the Remand Results address challenges raised solely by POSCO. See POSCO I, 296
F. Supp. 3d at 1354-63.
3
The Trade Preferences Extension Act (“TPEA”), Pub. L. No. 114–27, § 502, 129 Stat.
362, 383–84 (2015), made several amendments to the antidumping and countervailing
duty laws, including the addition of subsection (d) to 19 U.S.C. § 1677e. The TPEA
amendments affect all CVD determinations made on or after August 6, 2015. See
Dates of Application of Amendments to the Antidumping and Countervailing Duty Laws
Made by the Trade Preferences Extension Act of 2015, 80 Fed. Reg. 46,793 (Dep’t
Commerce Aug 6, 2015). All references to 19 U.S.C. § 1677e are to the amended
version of the statute.
Consol. Court No. 16-00225 Page 4
“use a countervailable subsidy rate applied for the same or similar program in a
countervailing duty proceeding involving the same country,” or “if there is no same or
similar program, use a countervailable subsidy rate for a subsidy program from a
proceeding that the administering authority considers reasonable to use.” 19 U.S.C.
§ 1677e(d)(1)(A). Subsection (d)(2) directs Commerce to base its selection of the
subsidy rate, which may include the highest rate, on an “evaluation . . . of the situation
that resulted in the [agency] using an adverse inference.” Id., § 1677e(d)(2).
In the Issues and Decision Memorandum accompanying the Final Determination,
Commerce explained that “[i]t is the [agency’s] practice in CVD proceedings to compute
an AFA rate for non-cooperating companies using the highest calculated program-
specific rates determined for a cooperating respondent in the same investigation, or, if
not available, rates calculated in prior CVD cases involving the same country.” I&D
Mem. at 12 (emphasis added). 4 The court remanded Commerce’s selection of the
4
Specifically, Commerce selected its rates pursuant to the following hierarchical
methodology:
[Commerce] applies the highest calculated rate for the identical subsidy
program in the investigation if a responding company used the identical
program, and the rate is not zero. If there is no identical program match
within the investigation, or if the rate is zero, [Commerce] uses the highest
non-de minimis rate calculated for the identical program in a CVD
proceeding involving the same country. If no such rate is available,
[Commerce] will use the highest non-de minimis rate for a similar program
(based on treatment of the benefit) in another CVD proceeding involving
the same country. Absent an above-de minimis subsidy rate calculated for
a similar program, [Commerce] applies the highest calculated subsidy rate
for any program otherwise identified in a CVD case involving the same
country that could conceivably be used by the non-cooperating
companies.
I&D Mem. at 12.
Consol. Court No. 16-00225 Page 5
highest calculated subsidy rates as lacking the case-specific evaluation required by
subsection (d)(2). POSCO I, 296 F. Supp. 3d at 1349-50. The court reasoned that
subsection (d)(2) contemplates a range of possible rates from among which Commerce
may choose based on its “evaluation of the specific situation,” and faulted the agency
for “fail[ing] to fulfill its statutory duty because it failed to explain why this case justified
its selection of the highest rates.” Id. at 1349; see also id. at 1350 (“[Section]
1677e(d)(2) contemplates the selection of the highest rate when the situation merits the
highest rate. . . . Commerce failed to evaluate whether the circumstances in this case
merited the highest rate.”).
On remand, Commerce explained that by selecting the highest rate within each
prong of its adverse facts available hierarchy, it “strikes a balance between [] three
necessary variables: inducement, industry relevancy, and program relevancy.” Remand
Results at 10-12. Commerce further explained that it interprets 19 U.S.C. § 1677e(d)(2)
to constitute
an exception to the selection of an adverse facts available rate under [§
1677e(d)(1)]; that is, after ‘an evaluation of the situation that resulted in
the application of an adverse inference,’ Commerce may decide that given
the unique and unusual facts on the record, the use of the highest rate
within that step is not appropriate.
Id. at 12. Commerce evaluated the situation that resulted in the use of adverse
inferences and concluded that no deviation from the highest rates was merited. See id.
at 12-16.
Consol. Court No. 16-00225 Page 6
Corroboration of Subsidy Rates
“Corroborat[ion] means that the [agency] will examine whether the secondary
information to be used has probative value,” 19 C.F.R. § 351.308(d), which includes an
examination of its reliability and relevance, Özdemir Boru San. ve Tic. Ltd. Sti. v. United
States, 41 CIT ___, ___, 273 F. Supp. 3d 1225, 1247 (2017) (citing Ad Hoc Shrimp
Trade Action Comm. v. United States, 802 F.3d 1339, 1354 (Fed. Cir. 2015)). For the
Amended Final Determination, pursuant to the aforementioned hierarchy, Commerce
applied a 1.64 percent rate associated with an insurance program deemed
countervailable in Bottom Mount Combination Refrigerator–Freezers from the Republic
of Korea, 77 Fed. Reg. 17,410 (final aff. countervailing duty determination) (Dep't
Commerce March 26, 2012) (“Refrigerators from Korea”), for several of POSCO’s
countervailable programs. POSCO I, 296 F. Supp. 3d at 1335-36; see also Am. Final
Determination, 81 Fed. Reg. at 64,437. The court remanded Commerce’s selection of
the 1.64 percent rate because the rate was “derived from estimates Commerce made
on the basis of an adverse inference” and, thus, was not an “[a]ctual rate[ ] calculated
based on actual usage of a countervailable program by a Korean company.” POSCO I,
296 F. Supp. 3d at 1353 (internal quotation marks, emphasis, and citation omitted).
Accordingly, the court determined that the reliability of that rate was unsupported by
substantial evidence. See id. at 1351, 1353.
In the Amended Final Determination, Commerce had also applied a 1.05 percent
rate associated with a tax deduction program found countervailable in Large Residential
Washers from the Republic of Korea, 77 Fed. Reg. 75,975 (final aff. countervailing duty
Consol. Court No. 16-00225 Page 7
determination) (Dep't Commerce December 26, 2012) (“Washers from Korea”), to
certain other programs found to be countervailable. The court found that Commerce
properly corroborated that rate. POSCO I, 296 F. Supp. 3d at 1353-54.
On remand, Commerce replaced the 1.64 percent rate from Refrigerators from
Korea with the 1.05 percent rate from Washers from Korea that the court previously
concluded was properly corroborated. See Remand Results at 19-20.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012), 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). “The results of a
redetermination pursuant to court remand are also reviewed for compliance with the
court’s remand order.” SolarWorld Americas, Inc. v. United States, 41 CIT ___, ___,
273 F. Supp. 3d 1314, 1317 (2017) (internal quotation marks and citation omitted).
DISCUSSION
POSCO summarily contends that Commerce’s rate selection analysis lacks
compliance with the court’s decision in POSCO I. Pl. POSCO’s Comments on the U.S.
Dep’t of Commerce’s June 6, 2018 Final Redetermination Pursuant to Court Remand
(“POSCO Comments”) at 2, ECF No. 116. POSCO further contends that “the 1.05
percent rate is overstated.” Id. However, in the interest of “a speedy end to this
litigation,” POSCO refrained from “commenting further” on either issue. Id.Consol. Court No. 16-00225 Page 8
Nucor and Defendant United States urge the court to sustain the Remand
Results. Resp. to Pl. POSCO’s Comments on the U.S. Dep’t of Commerce’s June 6,
2018 Final Redetermination Pursuant to Court Remand (“Nucor Reply”), ECF No. 117;
Def.’s Resp. to Comments on Remand Results, ECF No. 118. Nucor specifically
requests the court to “treat the Remand Results as unopposed” because POSCO “failed
to exhaust its administrative remedies and otherwise failed to articulate any basis for the
[c]ourt [to] fault the agency’s Remand Results.” Nucor Reply at 1.
The court first directed Commerce to base its selection of the subsidy rate on an
evaluation of the specific situation that merited the adverse inferences, and apprise the
court of the basis for its findings thereto. POSCO I, 296 F. Supp. 3d at 1349-50. On
remand, Commerce explained, with citations to supporting evidence, why this case did
not merit a deviation from the highest calculated rate selected pursuant to Commerce’s
hierarchical methodology. Remand Results at 12-16. To the extent POSCO seeks to
challenge Commerce’s findings or its interpretation of subsection (d)(2) as functioning
as an “exception” to its practice of selecting the highest rates from within each prong of
its hierarchy, see POSCO Comments at 2, POSCO has failed to exhaust its
administrative remedies, see, e.g., Mittal Steel Point Lisas Ltd. v. United States, 548
F.3d 1375, 1383 (Fed. Cir. 2008) (failure to raise an issue on remand precludes parties
from raising that issue before the court); Remand Results at 21 (noting that POSCO did
not provide substantive comments on the draft remand results). Likewise, the court
considers POSCO’s failure to articulate any grounds for its assertion that Commerce
failed to fully comply with the court’s remand order as an implied waiver of that
Consol. Court No. 16-00225 Page 9
argument. See Home Prods. Int’l, Inc. v. United States, 36 CIT ___, ___, 837 F. Supp.
2d 1294, 1301 (2012) (quoting United States v. Zannino, 895 F.2d 1, 17 (1st
Cir.1990) (“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort
at developed argumentation, are deemed waived. It is not enough merely to mention a
possible argument in the most skeletal way, leaving the court to do counsel's work,
create the ossature for the argument, and put flesh on its bones.”)).
Next, the court directed Commerce to reconsider its selection and corroboration
of the 1.64 percent subsidy rate derived from Refrigerators from Korea. POSCO I, 296
F. Supp. 3d at 1353. Commerce did so, and replaced it with the 1.05 percent subsidy
rate derived from Washers from Korea, which the court had found to be properly
corroborated. Remand Results at 19-20; POSCO I, 296 F. Supp. 3d at 1354. POSCO
failed to substantively challenge Commerce’s redetermination at the agency level and
before the court. See Remand Results at 22; POSCO Comments at 2. Accordingly, the
court sees no reason to disturb Commerce’s redetermination. See Mittal Steel, 548
F.3d at 1383; Home Prods. Int’l, 837 F. Supp. 2d at 1301.
CONCLUSION AND ORDER
For the foregoing reasons, it is hereby ORDERED that Commerce’s
Remand Results are sustained. Judgment will enter accordingly.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated: September 10, 2018
New York, New York