Posco v. United States

N OTE: This disposition is nonprecedential.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: 1 Filed: 10/23/2023

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POSCO v. US 2
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. D EF RANCESCO, III, Wiley Rein, LLP, Wash-
ington, DC, argued for plaintiff-appellant. Also repre-
sented by STEPHANIE MANAKER B ELL , T ESSA V. CAPELOTO,
ALAN H. P RICE , A DAM M ILAN T ESLIK, MAUREEN E.
T HORSON, E NBAR T OLEDANO, 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, T ARA K. HOGAN, P ATRICIA M.
MCCARTHY ; WILLIAM MITCHELL P URDY , 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.
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POSCO v. US 3
Appellant Nucor Corporation1 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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POSCO v. US 4
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
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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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POSCO v. US 6
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
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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
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POSCO v. US 8
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
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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
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