CAFC Says Commerce Legally Used LTAR Analysis to Decide Not to Countervail Korean Electricity Provision

The Commerce Department legally found that the Korean government didn't provide a countervailable benefit through its provision of electricity to respondents in the countervailing duty investigation on carbon and alloy steel cut-to-length plate from South Korea, the U.S. Court of Appeals for the Federal Circuit ruled Oct. 23. Judges Raymond Chen, Todd Hughes and Tiffany Cunningham said Commerce sufficiently carried out a less-than-adequate-remuneration (LTAR) analysis after its original preferential rate analysis fell short before the appellate court in 2019.

CVD petitioner Nucor Corp. challenged Commerce's LTAR analysis, arguing it relied in part on a preferential rate analysis, which the Federal Circuit already rejected. However, Hughes, who wrote the opinion, said the court "did not hold that the agency may never consider the presence or absence of preferential pricing as part of its adequate remuneration analysis." Unlike the last time this case was before the court, Commerce "explained how it considered prevailing market principles in its analysis of whether" the Korean Electricity Power Corporation (KEPCO) "was providing electricity to respondents for less than adequate remuneration."

Nucor also argued the agency failed to properly evaluate the Korean Power Exchange's pricing and its impact on the Korean electricity market. The appellate court again sided with the government, finding Commerce adequately looked into KPX's generation costs as the Federal Circuit previously instructed. The agency provided sufficient details on KPX's cost recovery regarding listed unit price and used this information to find that the electricity prices KPX established are consistent with "prevailing market conditions." As a result, it is clear that no benefit was conferred to the respondents, Hughes said.

In South Korea, KEPCO is the sole supplier of electricity, which it buys from KPX, a wholesale market for electricity. KPX itself is owned by KEPCO and its six generation subsidiaries. The electricity price is set through a formula with a variable and fixed cost component along with an adjustment coefficient factor.

In the CVD investigation, Commerce originally said that South Korean steel producers hadn't been treated differently from other users by KEPCO and didn't benefit from the provision of electricity. The Federal Circuit rejected this, saying that use of a preferential-rate standard isn't enough to establish the adequacy of remuneration, adding that Commerce failed to address the role of KPX. On remand, the agency used an LTAR analysis and further explained KPX's cost structure. The trade court again upheld this finding, which was premised on the claim that KEPCO recovered its costs plus a profit when providing electricity (see 2209150038).

(POSCO v. U.S., Fed. Cir. # 22-1525, dated 10/23/23; Judges: Raymond Chen, Kimberly Hughes and Tiffany Cunningham; Attorneys: Robert DeFrancesco of Wiley Rein for plaintiff-appellant Nucor Corp.; Emma Bond for defendant-appellee U.S. government)