Nucor Corporation v. United States

Slip Op. 21-22
UNITED STATES COURT OF INTERNATIONAL TRADE
NUCOR CORPORATION,
Plaintiff,
and
DONGBU INCHEON STEEL CO., LTD.,
and DONGBU STEEL CO., LTD.,
Consolidated Plaintiffs,
and
UNITED STATES STEEL
CORPORATION,
Plaintiff-Intervenor,
v.
UNITED STATES,
Defendant,
and
DONGBU STEEL CO., LTD., DONGBU
INCHEON STEEL CO., LTD., HYUNDAI
STEEL COMPANY, NUCOR
CORPORATION, UNITED STATES
STEEL CORPORATION, CALIFORNIA
STEEL INDUSTRIES, and STEEL
DYNAMICS, INC.,
Defendant-Intervenors.
Before: Jennifer Choe-Groves, Judge
Consol. Court No. 19-00042
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OPINION
[Sustaining the remand results of the U.S. Department of Commerce in the first administrative
review of the countervailing duty order on certain corrosion-resistant steel products from the
Republic of Korea.]
Dated: February 22, 2021
Alan H. Price, Robert E. DeFrancesco, III, Tessa V. Capeloto, Adam M. Teslik, and Elizabeth S.
Lee, Wiley Rein LLP, of Washington, D.C., for Plaintiff and Defendant-Intervenor Nucor
Corporation.
Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S. Hodgins, and
Jordan L. Fleischer, Morris, Manning, & Martin, LLP, of Washington, D.C., for Consolidated
Plaintiffs and Defendant-Intervenors Dongbu Steel Co., Ltd. and Dongbu Incheon Steel Co., Ltd.
Claudia Burke, Assistant Director, and Elizabeth A. Speck, Senior Trial Counsel, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for
Defendant United States. With them on the briefs were Jeffrey Bossert Clark, Acting Assistant
Attorney General, and Jeanne E. Davidson, Director. Of counsel was Ayat Mujais, Office of the
Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce.
Choe-Groves, Judge: Consolidated Plaintiffs Dongbu Incheon Steel Co., Ltd. and
Dongbu Steel Co., Ltd. (collectively, “Dongbu”) and Plaintiff Nucor Corporation (“Nucor”) filed
this consolidated action challenging the final results published by the U.S. Department of
Commerce (“Commerce”) in the first administrative review of the countervailing duty order on
certain corrosion-resistant steel products from the Republic of Korea. See Certain Corrosion-
Resistant Steel Products from the Republic of Korea (“Final Results”), 84 Fed. Reg. 11,749
(Dep’t Commerce Mar. 28, 2019) (final results and partial rescission of countervailing duty
administrative review; 2015–2016); see also Issues and Decision Mem. for the Final Results and
Partial Rescission of Countervailing Duty Admin. Review, PD 299 (Mar. 18, 2019) (“Final
IDM”). Before the court are the Final Results of Redetermination Pursuant to Court Remand,
ECF Nos. 88, 89 (“Remand Results”), which the court ordered in Nucor Corp. v. United States
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(“Nucor I”), 44 CIT __, 461 F. Supp. 3d 1374 (2020). For the following reasons, the court
sustains the Remand Results.
ISSUES PRESENTED
This case presents the following issues:
1. 	Whether Commerce’s determination that Dongbu’s loans could not be used as a
benchmark for measuring benefits from government loans is supported by substantial
evidence; and
2. 	Whether Commerce’s determination that Dongbu’s loan restructuring was a specific
subsidy is supported by substantial evidence.
BACKGROUND
The court presumes familiarity with the facts and procedural history as set forth in its
prior opinion and recounts the facts relevant to the court’s review of the Remand Results. See
Nucor I, 44 CIT at __, 461 F. Supp. 3d at 1377.
In the Final Results, Commerce determined that Dongbu’s loans from private creditors on
the debt restructuring committee could not be used as a benchmark for measuring benefits from
government loans. See Final IDM at 32–33. Commerce determined that Dongbu was
uncreditworthy and calculated a benchmark rate based on the formula for uncreditworthy
companies. Id. Commerce also determined that Dongbu’s loan restructuring was a
countervailable, specific subsidy. Id. at 31. Dongbu challenged these determinations in Nucor I.
The court held in Nucor I that Commerce’s determination that Dongbu’s loans from
private creditors could not be used as a benchmark was unsupported by substantial evidence on
the record. Nucor I, 44 CIT at __, 461 F. Supp. 3d at 1378–79. The court also held that
Commerce failed to address Dongbu’s arguments challenging Commerce’s determination that
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Dongbu’s loan restructuring was a specific subsidy and that Commerce did not support its
determination with substantial evidence. Id. at __, 461 F. Supp. 3d at 1379–80. The court
remanded the case to Commerce for further proceedings. Id. at __, 461 F. Supp. 3d at 1382.
Commerce filed the Remand Results on September 30, 2020. On remand, Commerce
maintained its determinations that loans from private creditors could not be used as a benchmark
and that Dongbu’s loan restructuring was a specific subsidy. See Remand Results at 34.
Dongbu filed comments in opposition to the Remand Results. Comments of Consol. Pls.
[Dongbu] in Opp’n to Remand Determination of [Commerce], ECF Nos. 93, 94 (“Dongbu
Cmts.”). Defendant United States (“Defendant”) and Nucor filed reply comments in support of
the Remand Results. Def.’s Resp. Comments in Supp. of [Commerce’s] Remand
Redetermination, ECF Nos. 95, 96 (“Def. Cmts.”); Comments of [Nucor] in Supp. of Remand
Redetermination, ECF Nos. 97, 98 (“Nucor Cmts.”).
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C.
§ 1516a(a)(2)(B)(iii). The court will hold unlawful any determination found to be unsupported
by substantial evidence on the record or otherwise not in accordance with the law. 19 U.S.C.
§ 1516a(b)(1)(B)(i). The court also reviews determinations made on remand for compliance
with the court’s remand order. Ad Hoc Shrimp Trade Action Comm. v. United States, 38 CIT
__, __, 992 F. Supp. 2d 1285, 1290 (2014), aff’d, 802 F.3d 1339 (Fed. Cir. 2015).
DISCUSSION
I. 	Commerce’s Determination that Dongbu’s Loans from Private Creditors
Could Not Be Used as a Benchmark
The first issue before the court is whether Commerce’s determination that Dongbu’s
loans from private creditors could not be used as a benchmark for measuring benefits from
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government loans is supported by substantial evidence. In Nucor I, the court found that
Commerce had failed to support its benchmark determination with substantial evidence on the
record and remanded accordingly. Nucor I, 44 CIT at __, 461 F. Supp. 3d at 1378–79.
Commerce maintained its determination on remand that Dongbu’s loans from private
creditors could not be used as a benchmark for measuring benefits from government loans. See
Remand Results at 3–10, 26–29. Dongbu argues that even if Dongbu was uncreditworthy,
Commerce could have used Dongbu’s loans as a benchmark. See Dongbu Cmts. at 3–6.
Dongbu asserts that Commerce failed to support its determination with substantial evidence that
Dongbu’s loans were not comparable commercial loans that could be used as a benchmark. See
id. at 6–13. Defendant responds that Commerce complied with the court’s remand order and
supported its determination with substantial evidence. See Def. Cmts. at 5–11.
Commerce must determine in a creditworthiness analysis whether a company could have
obtained long-term loans from conventional commercial sources. See Nucor I, 44 CIT at __, 461
F. Supp. 3d at 1379. While comparable commercial loans may be used as a benchmark to
calculate a countervailable benefit, loans provided under a government program are not
considered to be commercial. See 19 U.S.C. § 1677(5)(E)(ii); 19 C.F.R. § 351.505(a)(2)(ii).
Commerce follows the applicable regulations when conducting a creditworthiness analysis. See
19 C.F.R. § 351.505. If Commerce determines that a company is uncreditworthy, as defined in
19 C.F.R. § 351.505(a)(4), Commerce will normally calculate the benefit associated with the
extension of a government-provided long-term loan to an uncreditworthy company during the
period of review, as follows:
If the Secretary finds that a firm that received a government-provided long-term
loan was uncreditworthy, as defined in paragraph (a)(4) of this section, the
Secretary normally will calculate the interest rate to be used in making the
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comparison called for by paragraph (a)(1) of this section according to the following
formula:
i b = [(1 − qn )(1 + i f
) n / (1 − pn )] 1/n − 1,
where:
n = the term of the loan;
i b = the benchmark interest rate for uncreditworthy companies;
i f = the long-term interest rate that would be paid by a creditworthy company;
pn = the probability of default by an uncreditworthy company within n years; and
qn = the probability of default by a creditworthy company within n years.
19 C.F.R. § 351.505(a)(3)(iii).
Commerce supported its determination that Dongbu’s loans could not be used as a
benchmark by citing evidence showing the substantial government influence and inclusion of
government programs, Dongbu’s debt restructuring agreement that was significantly influenced
by the state-owned Korea Development Bank, and low-interest loans provided by government-
influenced banks. See Remand Results at 5–10, 27–29. The court concludes that it was
reasonable for Commerce to determine that Dongbu’s loans were non-commercial and provided
under a government program based on record evidence demonstrating the significant influence of
the state-owned Korea Development Bank in Dongbu’s restructuring. See Remand Results at 5–
7 (citing Certain Corrosion-Resistant Steel Products from the Republic of Korea, Case No. C-
580-879: [Dongbu’s] Initial Questionnaire Resp., PD 111–26 (Feb. 13, 2018) (“Dongbu Feb. 13
Resp.”)); see also Admin. Review on Certain Corrosion-Resistant Steel Products from the
Republic of Korea: [Government of Korea’s] Resp. at 13–14, PD 94–110 (Feb. 12, 2018)
(“Korea Feb. 12 Resp.”). Commerce complied with the court’s remand order by supporting the
benchmark determination with citations to substantial evidence on the record. See Remand
Results at 5–10 (citing Korea Feb. 12 Resp.; Dongbu Feb. 13 Resp.; Certain Corrosion-Resistant
Steel Products from the Republic of Korea, Case No. C-580-879: [Government of Korea’s]
Second Suppl. Questionnaire Resp., PD 239 (July 6, 2019) (“Korea July 6 Second Suppl.
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Resp.”)). The court concludes that Commerce determined properly that Dongbu’s loans could
not be used for calculating a benchmark interest rate because the loans provided under the
government program were non-commercial. The court notes that the relevant statute and
regulations do not require Commerce to use every loan received by a company as a benchmark.
See 19 U.S.C. § 1677(5)(E)(ii); 19 C.F.R. § 351.505(a)(2)(ii). To the contrary, the regulations
contemplate the possibility that some loans may be inappropriate to use as a benchmark. See 19
C.F.R. § 351.505(a)(2)(ii).
In addition, Commerce determined as a preliminary matter that Dongbu was
uncreditworthy during the period of review. Remand Results at 3 (citing Final IDM at 4 (citing
Decision Mem. for the Prelim. Results of the Countervailing Duty Admin. Review at 12, PD 256
(Aug. 3, 2018) (“Prelim. DM”) (citing Certain Corrosion-Resistant Steel Products from the
Republic of Korea, Case No. C-580-879: First Suppl. Questionnaire Resp. at 8–9, PD 185 (June
14, 2018) (“Dongbu Letter”)))). The court observes that Dongbu conceded its
uncreditworthiness, referenced by Commerce in the Remand Results and demonstrated in the
Dongbu Letter on the record:
Dongbu did not receive any long-term loans in 2016 . . . . Dongbu therefore does
not contest the Petitioner's uncreditworthiness allegation for Dongbu in 2015 and
2016, because it has not obtained any comparable commercial loans that could be
relied upon to rebut the Department's previous determination that it was not
creditworthy . . . . Nor have the present or past financial indicators relied upon by
the Department in the original investigation materially changed in a way that would
lead to a different conclusion.
Dongbu Letter at 8–9; see also Remand Results at 3–4. The court concludes that because
Commerce’s determination that Dongbu was uncreditworthy was based on Dongbu’s lack of
comparable commercial loans and an admission contained in a record document, Commerce’s
determination is reasonable and supported by substantial evidence. See Remand Results at 5, 10.
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Because Commerce determined reasonably that Dongbu was uncreditworthy during the period of
review, the court concludes that Commerce applied the proper formula for uncreditworthy
companies when it calculated Dongbu’s benchmark interest rate. Id. at 3–5; Final IDM at 33; see
also 19 C.F.R. § 351.505(a)(3)(iii).
The court holds that Commerce’s remand redetermination that Dongbu’s loans from
private creditors could not be used as a benchmark for measuring benefits from government
loans is supported by substantial evidence. The court sustains Commerce’s benchmark interest
rate determination based on uncreditworthiness pursuant to the relevant regulations.
II. 	Commerce’s Determination that Dongbu’s Loan Restructuring Was a
Specific Subsidy
The second issue before the court is whether Commerce’s determination that Dongbu’s
loan restructuring was a specific subsidy is supported by substantial evidence. In Nucor I, the
court found that Commerce had failed to address Dongbu’s arguments challenging Commerce’s
specificity determination and remanded for Commerce to respond to Dongbu’s arguments and
support its determination with substantial evidence on the record. Nucor I, 44 CIT at __, 461 F.
Supp. 3d at 1379–81.
Commerce maintained its determination on remand that Dongbu’s loan restructuring was
a specific subsidy. See Remand Results at 11–19, 32–34. Dongbu argues that its loan
restructuring was not a specific subsidy and should be treated in the same manner as bankruptcy
proceedings. See Dongbu Cmts. at 13–19. Defendant argues that Dongbu’s loan restructuring is
a specific subsidy and that Commerce complied with the court’s remand order by responding to
Dongbu’s arguments and citing substantial record evidence. See Def. Cmts. at 11–15.
A subsidy is countervailable when an authority provides a financial contribution to a
person, a benefit is conferred, and the subsidy is specific. 19 U.S.C. § 1677(5)(A)–(B). A
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subsidy is specific if it is an export subsidy, an import substitution subsidy, or a domestic
subsidy. Id. § 1677(5A)(A)–(D). Domestic subsidies are specific when one or more of the
following factors exist: the actual recipients of the subsidy, whether considered on an enterprise
or industry basis, are limited in number; an enterprise or industry is a predominant user of the
subsidy; an enterprise or industry receives a disproportionately large amount of the subsidy; or
the manner in which the subsidy is granted indicates that an enterprise or industry is favored over
others. Id. § 1677(5A)(D)(iii).
Commerce determined during the initial antidumping investigation that the loan
restructuring program used by Dongbu was a specific subsidy. See Remand Results at 12 (citing
Countervailing Duty Investigation of Certain Corrosion-Resistant Steel Products from the
Republic of Korea, 81 Fed. Reg. 35,310 (June 2, 2016) (final determination), and accompanying
Issues and Decision Mem. at Cmt. 4). Commerce noted on remand based on record evidence
that the loan restructuring program was used by twenty-five companies between 2011 and 2016.
See id. at 16–17 (citing Korea Feb. 12 Resp.). Commerce determined that the actual recipients
of the loan restructuring were limited in number on an enterprise basis. Id. at 16 (citing Prelim.
DM). Commerce determined that the loan restructuring program used by Dongbu was a specific
subsidy under the factors enumerated in 19 U.S.C. § 1677(5A)(D)(iii) because the subsidy was
not broadly available and was not widely used throughout the economy. Id.; see 19 U.S.C.
§ 1677(5A)(D)(iii)(I).
Commerce addressed Dongbu’s arguments challenging Commerce’s specificity
determination in accordance with the court’s remand order. Dongbu argues that its loan
restructuring operates similarly to bankruptcy, that Commerce does not consider bankruptcy
proceedings to be a specific subsidy, and, therefore, that Commerce should not consider the loan
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restructuring to be a specific subsidy. See Dongbu Cmts. at 13–19. Commerce maintained its
determination that Dongbu’s voluntary loan restructuring operated differently from bankruptcy
proceedings. Remand Results at 16. Commerce determined on remand that Dongbu’s loan
restructuring was used only by a limited number of enterprises, was supervised by a committee
comprised mostly of state-owned policy banks, and was not administered by a bankruptcy court,
based on record evidence including the Korea Feb. 12 Resp., Korea July 6 Second Suppl. Resp.,
and Dongbu Feb. 13 Resp. Id. at 16–18, 33–34. Commerce determined based on this record
evidence that Dongbu’s voluntary loan restructuring operated differently from bankruptcy
proceedings, and Commerce maintained its specificity determination accordingly. Id. at 19.
The court concludes that Commerce’s remand redetermination that Dongbu’s loan
restructuring was a specific subsidy that operated differently from bankruptcy proceedings is
supported by substantial evidence. The court sustains Commerce’s specificity determination.
CONCLUSION
In summary, the court holds that Commerce supported its remand redetermination with
substantial evidence that Dongbu’s loans from private creditors could not be used as a
benchmark for measuring benefits from government loans and that Dongbu’s loan restructuring
was a specific subsidy that operated differently from bankruptcy proceedings. The court sustains
Commerce’s Remand Results. Judgment will be entered accordingly.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: February 22, 2021
New York, New York
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