Court Opinion

ID: 9892301
Source: CourtListenerOpinion
Date Created: 2023-10-23 14:01:07.502549+00
Date Added: 2024-06-11T08:03:35.925724
License: Public Domain

Case: 22-1525     Document: 59          Page: 1        Filed: 10/23/2023

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                   ______________________

                             POSCO,
                             Plaintiff

                                  v.

                      UNITED STATES,
                         Defendant

 SSAB ENTERPRISES LLC, ARCELORMITTAL USA
                     LLC,
            Intervenors-Defendants

                  NUCOR CORPORATION,
                Intervenor-Defendant-Appellant

            ------------------------------------------------

                 NUCOR CORPORATION,
                    Plaintiff-Appellant

 SSAB ENTERPRISES LLC, ARCELORMITTAL USA
                     LLC,
             Intervenors-Plaintiffs

                                  v.

                      UNITED STATES,
                      Defendant-Appellee
Case: 22-1525    Document: 59    Page: 2    Filed: 10/23/2023

 2                                              POSCO v. US

                         POSCO,
                   Intervenor-Defendant
                  ______________________

                        2022-1525
                  ______________________

    Appeal from the United States Court of International
 Trade in Nos. 1:17-cv-00137-GSK, 1:17-cv-00156-GSK,
 Judge Gary S. Katzmann.
                 ______________________

                Decided: October 23, 2023
                 ______________________

     ROBERT E. DEFRANCESCO, III, Wiley Rein, LLP, Wash-
 ington, DC, argued for plaintiff-appellant. Also repre-
 sented by STEPHANIE MANAKER BELL, TESSA V. CAPELOTO,
 ALAN H. PRICE, ADAM MILAN TESLIK, MAUREEN E.
 THORSON, ENBAR TOLEDANO, CHRISTOPHER B. WELD.

     EMMA EATON BOND, Commercial Litigation Branch,
 Civil Division, United States Department of Justice, Wash-
 ington, DC, argued for defendant-appellee. Also repre-
 sented by BRIAN M. BOYNTON, TARA K. HOGAN, PATRICIA M.
 MCCARTHY; WILLIAM MITCHELL PURDY, Office of the Chief
 Counsel for Trade Enforcement and Compliance, United
 States Department of Commerce, Washington, DC.
                   ______________________

 Before CHEN, HUGHES, and CUNNINGHAM, Circuit Judges.
 HUGHES, Circuit Judge.
Case: 22-1525     Document: 59     Page: 3    Filed: 10/23/2023

 POSCO v. US                                                 3

      Appellant Nucor Corporation 1 appeals a decision from
 the United States Court of International Trade sustaining
 the Department of Commerce’s remand determination that
 the government-run Korean Electric Power Corporation
 did not provide electricity to South Korean steel producers
 for less than adequate remuneration, and accordingly did
 not require a countervailing duty. Nucor Corporation con-
 tends that the agency’s determination is contrary to our
 holding in POSCO v. United States, 977 F.3d 1369 (Fed.
 Cir. 2020), where we held that the agency erred by using a
 preferential-rate analysis that was eliminated by the Uru-
 guay Round Agreements Act. Because we agree with the
 trial court that the agency’s remand determination com-
 plies with our decision in POSCO, we affirm.
                               I
                               A
     Under 19 U.S.C. § 1671(a), if a foreign government sub-
 sidizes the production of goods abroad, the United States
 can apply a countervailing duty when those goods are im-
 ported into the United States. This duty is intended to pro-
 tect American companies from unfair competition. See
 Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347,
 1349 (Fed. Cir. 2006). The Department of Commerce ap-
 plies a countervailing duty when it determines the foreign
 government conferred a benefit to the foreign producer. 19
 U.S.C. § 1677(5). Relevant here, if the foreign government
 provides a benefit in the form of a financial contribution for
 less than adequate remuneration, that can be the basis for
 applying a countervailing duty. 19 U.S.C. § 1677(5)(D)–(E).

     1 Appellee POSCO, a South Korean-based steel com-

 pany, submitted a letter to this court indicating its intent
 not to participate in the appeal and did not submit any
 briefing. Dkt. 18.
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 4                                                 POSCO v. US

      Before Congress enacted the Uruguay Round Agree-
 ments Act (URAA) in 1994, the agency defined a “subsidy”
 as a “preferential rate” in the context of a foreign govern-
 ment providing goods and services to a foreign producer,
 under 19 U.S.C. § 1677(5)(A)(ii)(II) (1988). The URAA in-
 troduced the less-than-adequate remuneration standard
 for defining a benefit: “if such goods or services are pro-
 vided for less than adequate remuneration, and in the case
 where goods are purchased, if such goods are purchased for
 more than adequate remuneration.” 19 U.S.C.
 § 1677(5)(E)(iv). The statute states that “the adequacy of
 remuneration shall be determined in relation to prevailing
 market conditions for the good or service being provided or
 the goods being purchased in the country which is subject
 to the investigation or review.” Id. Additionally, “[p]revail-
 ing market conditions include price, quality, availability,
 marketability, transportation, and other conditions of pur-
 chase or sale.” Id.
      After the URAA was passed, the agency requested pub-
 lic comments on how to develop a methodology for deter-
 mining the adequacy of remuneration. This process led to
 a three-tiered methodology for determining adequate re-
 muneration. Under the third tier of this methodology,
 which is relevant here, the agency “measure[s] the ade-
 quacy of remuneration by assessing whether the govern-
 ment price is consistent with market principles.” 19 C.F.R.
 § 351.511(a)(2)(iii).
      Simply put, the “preferential rate” analysis and the
 “less-than-adequate remuneration” analysis approach the
 question of what constitutes a “benefit” from two angles.
 The “preferential rate” approach considers whether, when
 compared to other consumers receiving the same good or
 service, the government is providing that same good or ser-
 vice to the foreign producer for a more favorable rate. And
 the “less than adequate remuneration” standard looks at
 whether the foreign producer is receiving the good or
Case: 22-1525    Document: 59      Page: 5    Filed: 10/23/2023

 POSCO v. US                                                5

 service in accordance with fair market principles, with less
 emphasis on what other consumers are getting or paying.
                                B
     In South Korea, electricity is provided through the gov-
 ernment-owned Korean Electric Power Corporation
 (KEPCO). All electricity generated in Korea, including
 from private generators, must be sold to KEPCO through a
 wholesale market known as the Korean Power Exchange
 (KPX). KPX is wholly owned by KEPCO and its six gener-
 ation subsidiaries.
     Nucor Corporation (Nucor) is a domestic producer of dif-
 ferent types of steel. Nucor, along with other domestic steel
 producers, petitioned the agency in April 2016 to impose
 countervailing duties on cut-to-length steel plates from
 several countries, including South Korea. Nucor alleged
 that KEPCO was providing South Korean steel producers
 with electricity at less than adequate remuneration. Be-
 cause KEPCO is largely government-owned and controlled,
 Nucor asserted that KEPCO is an “authority” that provides
 a “financial contribution” constituting a “benefit” to Korean
 steel producers. In its final determination, for the period
 covering January through December 2015, the agency de-
 termined that KEPCO did not provide electricity for less
 than adequate remuneration, and therefore, a countervail-
 ing duty was not required. This determination was af-
 firmed by the Court of International Trade, which found
 that the agency’s determination was supported by substan-
 tial evidence.
     This case, and several similar cases involving KEPCO,
 were appealed to this court, and we addressed those cases
 in POSCO. 977 F.3d at 1376. There, citing Nucor Corp. v.
 United States, 927 F.3d 1243, 1251–52 (Fed. Cir. 2019), we
 held that the agency’s benefit analysis was not supported
 by substantial evidence because it relied on pre-URAA
 preferential-rate standards that were “inconsistent with
 the       adequate-remuneration         standard        under
 § 1677(5)(E)(iv).” Id. We also found that the agency did not
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 6                                                  POSCO v. US

 sufficiently investigate or evaluate KPX’s generation costs
 or other markers of prevailing market conditions, and thus
 we held that its determination was not supported by sub-
 stantial evidence. Id. at 1376–78. We vacated and re-
 manded the case to the trial court, and the trial court in
 turn remanded to the agency.
     In its remand determination, the agency continued to
 find that KEPCO did not provide electricity for less-than-
 adequate remuneration. The agency explained the steps it
 took to investigate whether the “electricity generation cost
 paid by KEPCO through KPX reflected the full cost of gen-
 erating electricity.” J.A. 23262. The agency stated that it
 had “requested information from [the government of South
 Korea] to confirm the Korean electricity market structure
 and that the electricity generation cost paid by KEPCO
 through KPX reflected the full cost of generating electric-
 ity, including an amount of investment return.” J.A. 23262.
 Based on its additional analysis of the record, the agency
 determined that “the electricity generation cost paid by
 KEPCO reflected the full costs to KPX of generating elec-
 tricity,” J.A. 23273, and that the record evidence “demon-
 strated that there was no benefit in the pricing of electricity
 between KPX and KEPCO.” J.A. 23263. The agency then
 explained that its analysis into KEPCO’s industrial tariff
 classifications, as well as the costs paid through KPX,
 demonstrated that it had considered prevailing market
 conditions beyond a pre-URAA preferential rate analysis.
 And for those reasons, the agency continued to find that
 KEPCO did not provide electricity for less than adequate
 remuneration.
     The trial court sustained the agency’s remand determi-
 nation, finding that the agency ’s additional analysis of the
 record and revised findings were consistent with our hold-
 ing in POSCO. Specifically, the trial court found that
 “Commerce did not rely only on the presence or absence of
 [price] discrimination to conclude that KEPCO did not pro-
 vide electricity to respondents for [less than adequate
Case: 22-1525     Document: 59       Page: 7   Filed: 10/23/2023

 POSCO v. US                                                  7

 remuneration],” but instead “analyzed both the relation-
 ship between KEPCO’s standard pricing mechanism and
 its cost of production of electricity . . . and the presence or
 absence of preferential pricing.” J.A. 15. And because the
 agency’s determination considered whether Korean steel
 producers received a benefit for less than adequate remu-
 neration, the trial court held that its analysis was in ac-
 cordance with the post-URAA statutory requirements.
     Nucor now appeals. We have jurisdiction under 28
 U.S.C. § 1295(a)(5).
                               II
     We review the decisions of the Court of International
 Trade de novo, applying the same standard of review used
 by the trial court in reviewing the administrative record
 before the agency. Boomerang Tube LLC v. United States,
 856 F.3d 908, 912 (Fed. Cir. 2017). This court will uphold
 the agency’s determination unless it is “unsupported by
 substantial evidence on the record, or otherwise not in ac-
 cordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i); Union
 Steel v. United States, 713 F.3d 1101, 1106 (Fed. Cir. 2013).
 “The specific factual findings on which [the] agency relies
 in applying its interpretation are conclusive unless unsup-
 ported by substantial evidence.” United States v. Eurodif
 S.A., 555 U.S. 305, 316 n.6 (2009) (citing 5 U.S.C.
 § 706(2)(E)).

                               III

     Nucor argues that the trial court erred in sustaining
 the agency’s remand redetermination because part of the
 agency’s analysis involved a preferential rate analysis, and
 thus runs contrary to our holding in POSCO and Nucor.
 Nucor further argues that the agency’s decision is unsup-
 ported by substantial evidence because it did not ade-
 quately evaluate KPX’s pricing and its impact on the
 Korean electricity market. We disagree and now hold that
Case: 22-1525     Document: 59      Page: 8    Filed: 10/23/2023

 8                                                  POSCO v. US

 the agency’s remand determination complies with our prec-
 edent.

      In POSCO, we held that the agency’s “reliance on a
 preferential-rate standard” is inconsistent with the post-
 URAA adequate remuneration analysis required by 19
 U.S.C. § 1677(5)(E)(iv). 977 F.3d at 1376. But we did not
 hold that the agency may never consider the presence or
 absence of preferential pricing as part of its adequate re-
 muneration analysis. See id. (“Commerce cannot rely on
 price discrimination to the exclusion of a thorough evalua-
 tion of fair-market principles . . . . “) (emphasis added). Un-
 like in POSCO, here, the agency explained how it
 considered prevailing market principles in its analysis of
 whether KEPCO was providing electricity to respondents
 for less than adequate remuneration. As the trial court ex-
 plained, the agency considered “the relationship between
 KEPCO’s standard pricing mechanism and its costs of pro-
 duction of electricity” as well as “whether the tariff charged
 to the respondent failed to cover cost of production plus a
 profitable return on the investment.” J.A. 15 (internal quo-
 tations omitted). This analysis satisfies the statutory and
 regulatory requirement to consider “prevailing market con-
 ditions.”    19    U.S.C.    § 1677(5)(E)(iv);     19   C.F.R.
 § 351.511(a)(2)(iii). And accordingly, this analysis is con-
 sistent with our holding in POSCO that the agency must
 evaluate prevailing market principles in order to deter-
 mine the adequacy of remuneration. Thus, the trial court
 did not err in sustaining the agency’s remand determina-
 tion.

     Furthermore, the agency’s remand determination is
 supported by substantial evidence because it sufficiently
 investigated KPX’s generation costs in its analysis, as we
 instructed in POSCO. The agency explicitly requested in-
 formation on KPX in its questionnaire to the Government
 of Korea, including both pricing and generation costs. The
 agency sought this information to “confirm that electricity
Case: 22-1525    Document: 59     Page: 9    Filed: 10/23/2023

 POSCO v. US                                               9

 generation costs paid by KEPCO reflected the full cost to
 KPX of generating electricity, including an amount of in-
 vestment return.” J.A. 19. The agency provided sufficient
 details about KPX’s cost recovery with respect to its listed
 unit price and used this information to determine that the
 “electricity prices established by KPX are consistent with
 prevailing market conditions,” meaning that there was no
 benefit conferred. J.A. 19. This information was not evalu-
 ated by the agency in its initial determination, which was
 the basis for our holding in POSCO that the agency’s de-
 termination was not supported by substantial evidence.
 However, because the agency has now specifically investi-
 gated KPX’s pricing and generation costs, its determina-
 tion that there was no benefit in the pricing of electricity
 between KPX and KEPCO is supported by substantial evi-
 dence.

                             IV

      We have considered the remainder of Nucor’s argu-
 ments and find them unpersuasive. Accordingly, we affirm
 the Court of International Trade’s holding that the Depart-
 ment of Commerce’s determination on remand both satis-
 fies our requirements set forth in POSCO and is supported
 by substantial evidence.

                        AFFIRMED