Nucor Says Commerce Did Not Comply With CAFC Orders in Countervailing Duty Case

The Commerce Department's remand results in a countervailing duty investigation did not comply with the U.S. Court of Appeals for the Federal Circuit's opinion, plaintiff Nucor Corporation said in Aug. 6 comments filed in the Court of International Trade. The remand results "articulate but don't properly apply a standard that would comply with the statutory adequate remuneration standard," Nucor said, opposing Commerce's finding that the South Korean government did not provide a subsidy to producers of hot-rolled steel via cheap electricity (POSCO v. United States, CIT #17-00137).

The case stems from the countervailing duty investigation into carbon and alloy steel cut-to-length plate from South Korea. The case's petition told Commerce alleged that Korean steel makers were receiving a countervailable benefit through the provision of low-cost electricity. To investigate, the agency questioned the Korean government about the Korean electricity industry and market, which included the Korean Electricity Corporation (KEPCO) and the Korean Power Exchange, an entity owned by KEPCO.

Commerce claims it conducted a "tier three analysis" to examine how KEPCO calculated its electricity tariff prices for each classification of customer through its price-setting system (see 2106140051). KEPCO did not treat Korean producers differently from other electricity users and charged the producers a tariff rate that was in line with their customer classification level by including costs and return on investment in its electricity prices, Commerce said.

Therein lies the problem, Nucor explained, as what Commerce did on remand is not a tier three analysis in accordance with the instructions from the Federal Circuit. Nucor laid out three reasons to back this contention: Commerce didn't apply a tier three analysis in the original final determination, the remand results didn't address the appellate court's holdings on the flaws in the final determination's cost analysis since it didn't consider the actual costs of generation and supply, and Commerce didn't determine whether the prices actually paid by the respondents covered cost plus profit.

Instead, what Commerce used in its original final determination was a preferential rates analysis that the agency did not fix in its remand by not fully considering KEPCO's costs, Nucor said. "The one-sentence observation that 'KEPCO more than fully covered its cost for the industry tariff applicable to our respondents,' was not a 'comprehensive analysis of KEPCO's costs,'" the brief said. "It was an off-handed aside at the end of an extended argument disclaiming any obligation to consider cost recovery at all. The assertion that Commerce relied on 'the fact that KEPCO fully covered its costs in the industrial rates charged to the respondent steel companies' mischaracterizes the Final Determination."

Commerce also bucked the Federal Circuit's findings by failing to consider KPX's actual costs of generation and supply, Nucor said. Commerce only conducted a "limited analysis" of KEPCO's cost of purchasing electricity, the Federal Circuit said, pointing to three areas of statutory authority that find that the agency is required to go beyond this standard. One such authority said that Comerce must consider the adequacy of the sale in relation to "prevailing market conditions." Commerce's remand results improperly construed the prevailing market conditions standard as limited to KEPCO's pricing methdology, Nucor argued. "The Remand Results are thus unlawful inasmuch as they treat the 'prevailing market conditions' in the Korean electricity market as coextensive with KEPCO's rate setting methodology," the brief said.