CIT Upholds Commerce Finding That Korean Electricity Provision Did Not Confer Benefit
The Court of International Trade upheld the Commerce Department's finding that the South Korean government's provision of electricity was for less than adequate remuneration but did not confer a benefit in a countervailing duty review. Judge Jennifer Choe-Groves ruled the agency permissibly analyzed whether the electricity prices paid by all companies, including the two CVD respondents, were consistent with market principles and supported its decision with substantial evidence.
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"The court correctly recognized that Nucor’s legal arguments were based on inapposite statutory and regulatory provisions, and its evidentiary challenges were not supported by the record," said Brady Mills, counsel for respondent Hyundai Steel Co. "We are pleased with the opinion and think the court got it right."
Nucor, the petitioner in the 2019 review of the CVD order on corrosion-resistant steel goods from South Korea, challenged whether Commerce legally "disregarded the government price to respondents" for electricity, since it should have determined whether a benefit was conferred individually to a specific respondent. The agency explained that its Tier 3 analysis required it to analyze whether the electricity prices the Korean Electricity Power Corp. (KEPCO), Korea's electricity provider, charged were consistent with market principles by seeing whether the prices recovered costs plus profit.
Commerce said the U.S. Court of Appeals for the Federal Circuit has twice sustained this approach. The agency said respondents KG Dongbu and Hyundai Steel paid the same price charged to all companies in the corresponding electricity consumption classifications, so the analysis accounts for the actual prices the respondents paid. Choe-Groves noted the statute "does not require that Commerce focus on the prices that the respondents actually paid KEPCO for electricity, as alleged by Nucor," though the agency did so anyway.
The Federal Circuit has noted that when carrying out a Tier 3 analysis, Commerce has "considerable prima facie leeway to make a reasonable choice within the permissible range" of calculation methodologies, "so long as that choice is properly justified" based on the CVD statute and "other relevant considerations," Choe-Groves said. As a result, the judge upheld Commerce's determination.
Nucor also challenged the agency's finding that the provision of electricity did not confer a benefit, alleging "overwhelming record evidence to the contrary" cuts against Commerce's point. Choe-Groves held that "Nucor fails to provide evidence substantiating this claim," adding that "[m]ere allegations are insufficient to raise doubts as to the veracity of the evidence upon which Commerce relied in making its determination."
In the review, Commerce ran the Tier 3 benchmark and found KEPCO provided electricity for less than adequate remuneration under certain tariff classes but ultimately assigned a non-measurable benefit amount after finding the provider recouped costs plus a profit. The result was a 0.47% de minimis rate for Hyundai Steel and a 10.51% rate for KG Dongbu.
(Nucor Corp. v. U.S., Slip Op. 23-54, CIT # 22-0050, dated 04/19/23; Judge: Jennifer Choe-Groves; Attorneys: Adam Teslik of Wiley for plaintiff Nucor Corp.; Roger Schagrin of Schagrin Associates for plaintiff-intervenor Steel Dynamics; Kelly Krystyniak for defendant U.S. government; Brady Mills of Morris Manning for defendant-intervenor Hyundai Steel Co.; and Daniel Witkowski of Akin Gump for defendant-intervenor Government of South Korea)