Commerce Doesn't Properly Apply 'Adequate Remuneration' Standard in CVD Case, Exporter Argues

The Commerce Department's remand results finding that a South Korean authority did not provide electricity below cost in a countervailing duty investigation does not properly apply an "adequate remuneration" standard, plaintiff-appellant Nucor Corp. told the U.S. Court of Appeals for the Federal Circuit. Filing its opening brief in its appeal, Nucor said that while Commerce does identify an adequate remuneration standard that could address the Federal Circuit's prior holding on the agency's sole reliance on a preferential rates analysis, the standard is not properly applied (POSCO v. United States, Fed. Cir. #22-1525).

During the CVD investigation into carbon and alloy steel cut-to-length plate from South Korea, Commerce had found South Korean steel producers hadn't been treated differently by the Korean Electricity Corp. from other electricity users and did not benefit from the provision of electricity (see 2106140051).

After the final determination was sustained by the Court of International Trade, Nucor appealed to the U.S. Court of Appeals for the Federal Circuit. The appellate court held that the use of a preferential-rate standard isn't sufficient to establish the adequacy of remuneration and that Commerce failed to address the role of the Korean Power Exchange, a KEPCO-owned entity, in the South Korean electricity market. CIT ultimately remanded the case to Commerce, but the agency again found KEPCO didn't provide electricity for LTAR.

Nucor challenged multiple aspects of Commerce's remand, including whether Commerce found that the actual price that South Korean electricity customers paid recouped costs plus profit. Nucor said Commerce used a preferential rate analysis rather than an LTAR analysis. Judge Gary Katzmann sided with Commerce, though, holding that Nucor mischaracterized Commerce's analysis (see 2201130038). The agency looked at both the relationship between KEPCO's standard pricing mechanisms and its cost of production along with the presence of preferential pricing. If Commerce had based its analysis solely on the consistent application of KEPCO's standard pricing mechanism, the court said, it would have agreed with Nucor, but Commerce didn't do this.

Now seeking to poke holes in Commerce's remand again at the Federal Circuit, Nucor argued that the remand does not properly apply a remuneration standard. "While this standard as re-articulated might address the Court's prior holdings regarding sole reliance on preferentiality or price discrimination, it does not resolve the POSCO Court's separate remand because of legal and factual errors in the agency's finding that 'KEPCO more than fully covered its cost for the industry tariff applicable to our respondents,'" the brief said.

Nucor said that Commerce tries to "sidestep" the appellate court's original ruling by characterizing the issue as an "upstream subsidy" allegation. However, upstream subsidies are governed by different statutory and regulatory provisions that are not applicable to the current situation, Nucor said.

Further, the remand relies only on the aggregate financial performance of KEPCO, the brief said. "Findings that the government supplier was profitable overall, or that it covered cost-plus-profit on all sales to all customers ignores the relevant question -- whether the prices paid by the respondents reflected adequate remuneration," Nucor argued. The appellant said that lastly, the remand randomly tries to rely on KEPCO cost data that predates the review period even when it has rejected certain information that undermines its position since it predated the review period. This move is arbitrary and illegal, the brief said.