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CIT Remands Decision Not to Investigate Sale of Off-Peak Electricity in Korea for 3rd Time

The Court of International Trade in an April 19 decision made public April 29 sent back for the third time the Commerce Department's decision not to investigate the sale of off-peak electricity in South Korea for less than adequate remuneration. Judge Mark Barnett said that Commerce failed to explain why evidence submitted by petitioner Nucor Corp. was insufficient "pursuant to the low standard" for opening a subsidy investigation established in RZBC Group Shareholding Co. v. U.S.

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Barnett also sustained Commerce's decision not to attribute input supplier Plantec's subsidies to exporter POSCO on the grounds that POSCO and Plantec aren't cross-owned. The court said that Nucor failed to raise the issue administratively because the petitioner didn't contest the cross-ownership finding.

In considering the off-peak for LTAR issue, the court first noted the governing RZBC Group standard, which says that most subsidy petitions are granted unless they are "clearly frivolous, not reasonably supported by the facts alleged" or leave out "important facts which are reasonably available to the petitioner." However, the standard laid out in Delverde v. U.S. says that when an allegation concerns a program previously found to be non-countervailable, Commerce can require a petitioner to offer evidence of changed circumstances.

In his second opinion, Barnett took note that Commerce claimed to use the RZBC Group standard and not the Delverde standard since the agency accepted the allegation to discuss a subsidy program "distinct from" the prior examination of the provision of electricity for LTAR. The court remanded the case in its second opinion for failure to address evidence on the Korean Electricity Power Corp.'s (KEPCO's) off-peak prices and costs of buying electricity from its lowest-cost generator, Korea Hydro and Nuclear Power Co.

On remand again, Commerce said it viewed the two standards as "one and the same" since allegations on a program that is a subset of a previously investigated program implicate more information that's "reasonably available to the petitioner" and the petitioner must "address or account for that additional information." The agency again doubled down on its position that Nucor "failed to address all available information."

Commerce said on remand that while it doesn't require Nucor to submit hourly electricity costs, it does require an "additional step or reasonable explanation" to show how the average electricity price reflected the off-peak hour prices. Barnett said that the petitioner arguably "provided this explanation when it compared" KEPCO's acquisition costs from its lowest cost generator to the corporation's weighted-average off-peak prices paid by POSCO. Nucor submitted Korean government statements that say that KEPCO's cost of supply "purportedly decreases during off-peak hours" since electricity could be generated via "cheap fuels."

Nucor said the "apparent stability" found in the system marginal price "over the course of a day" shows stable prices to each generator, suggesting "minimal fluctuation" in KEPCO's costs for on- and off-peak purchases.

While the court said it told Commerce to address this information in its last opinion, Barnett found that "Commerce did so in a conclusory and confusing fashion." The agency faulted Nucor for not putting the allegation in a broader market-principles analysis context that Commerce has used before in assessing the Korean energy market, but Barnett said that "it is Commerce that has failed to consider Nucor's allegation within that context."

Commerce also dismissed Nucor's reliance on KEPCO's acquisition costs from the Korea Hydro and Nuclear Power Co. as "not off-peak specific" and representing power trading price across all hours. Barnett remanded this analysis for failing to engage with the petitioner's reasons for using this data in the "apparent absence of publicly available time-period specific data." As a result, the issue was remanded, so Commerce can "respond to this particular aspect of the allegation" and explain why it amounted to "insufficient evidence of a benefit to Commerce to investigate the off-peak pricing" under RZBC Group's low standard.

Barnett sustained, however, the decision to find that POSCO and Plantec are not cross-owned, which was based on POSCO's inability to control Plantec by virtue of the debt workout program into which Plantec entered. The program led to the POSCO Plantec Creditor Financial Institutions Committee, which controlled Plantec's decisions.

The judge said that Nucor's challenge to the finding that POSCO's majority ownership of Plantec is enough to satisfy the cross-ownership requirement was not raised administratively. During the review, Nucor made one "obscure" statement regarding this challenge when it said to the extent POSCO did lose any controlling interest in Plantec, it was "only by virtue of the very subsidy that was being alleged." The court said Commerce "adequately addressed this" by saying the agency can't attribute a subsidy Plantec received to POSCO unless first establishing the cross-ownership requirement.

(Nucor Corp. v. United States, Slip Op. 24-49, CIT # 21-00182, dated 04/29/24; Judge: Mark Barnett; Attorneys: Alan Price of Wiley Rein for plaintiff Nucor Corp.; Elizabeth Speck for defendant U.S. government; Brady Mills of Morris Manning for defendant-intervenor POSCO)