Laclede Steel Co. v. United States

Slip Op. 00-151

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: THE HONORABLE GREGORY W. CARMAN, CHIEF JUDGE

______________________________
:
LACLEDE STEEL CO., et al., :
:
Plaintiffs, :
:
v. :
:
UNITED STATES, : Consol. Court No. 93-09-00569-CVD
:
Defendant, :
:
and :
:
DONGBU STEEL CO. :
LTD., et al., :
:
Defendant- :
Intervenors. :
______________________________:

[Commerce’s Remand Redetermination is affirmed in its entirety. Plaintiffs’ request to affirm
the Remand Redetermination is granted; Defendant-Intervenors’ challenge is rejected;
Defendant-Intervenors’ motion for leave to reply to responses by Defendant and Plaintiff is
denied.]

Korean steel manufacturers challenge United States Department of Commerce’s
(Commerce) Remand Redetermination, arguing Commerce has, in recalculating countervailing
duties owed in conformity with AK Steel Corp. v. United States, 192 F.3d 1367 (Fed. Cir. 1999)
(AK Steel), unlawfully distinguished between private domestic loans and government-sourced
domestic loans. The United States and domestic steel producers respond Commerce’s Remand
Redetermination should be affirmed in its entirety. This Court affirms Commerce’s Remand
Redetermination in its entirety and denies Korean steel manufacturer’s motion for leave to reply
to responses by the United States and domestic steel producers.

Dated: November 13, 2000

Dewey Ballantine LLP (John A. Ragosta, Jennifer Danner Riccardi, and Navin Joneja)
Washington, D.C., for Plaintiffs.
Court No. 93-09-00569-CVD Page 2

David W. Ogden, Assistant Attorney General of the United States; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, Department of Justice; A. David Lafer,
Senior Trial Counsel, Commercial Litigation Branch, Civil Division, Department of Justice;
William L. Olsen, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of
Justice; Cindy Buys, Office of the Chief Counsel for Import Administration, United States
Department of Commerce, of Counsel, for Defendant.

Kaye, Scholer, Fierman, Hays & Handler LLP (Donald B. Cameron, Julie C. Mendoza,
and Margaret E. Scicluna), Washington, D.C. for Defendant-Intervenors.

OPINION

CARMAN, Chief Judge: This Court upholds the conclusions of Commerce in Final

Results of Redetermination on Remand Pursuant to Laclede Steel Co., et al. v. United States (Ct.

Int’l Trade, Apr. 5, 2000) (Remand Redetermination). This Court grants Plaintiffs’ (Domestic

Producers) request that the Remand Redetermination be affirmed in its entirety and denies

Defendant-Intervenors’ (Korean Respondents) request for a remand to Commerce to recalculate

company-specific and countrywide ad valorem rates with respect to all domestic loans received

by the Korean steel industry after 1984. Also denied is Korean Respondents’ motion for leave to

reply to the responses by United States and Domestic Producers.

BACKGROUND

In British Steel P.L.C. v. United States, 941 F. Supp. 119, 130 (Ct. Int’l Trade, 1996)

(British Steel II), this Court upheld Commerce’s determination in Certain Steel Products from

Korea, 58 Fed. Reg. 37,338 (July 9, 1993) (Final Determination) that the Korean government

program of general control over the Korean financial system provided industry-specific benefits

to Korean Respondents in the form of preferential access to long-term loans. To countervail the

governmental subsidy, Commerce met the three requirements of 19 U.S.C. § 1677(5) (1988),
Court No. 93-09-00569-CVD Page 3

demonstrating the program was: (1) a government action; (2) that conferred a benefit; (3) upon a

specific industry. Because of the indirect nature of the subsidy, this Court had further required

Commerce to demonstrate the existence of a causal nexus between the government program and

the steel industry’s preferential access to credit. See British Steel P.L.C. v. United States, 879 F.

Supp. 1254, 1326, 1328 (Ct. Int’l Trade, 1995) (British Steel I). Commerce attempted to do so in

Final Results of Redetermination Pursuant to Court Remand in British Steel P.L.C. v. United

States (Ct. Int’l Trade, February 9, 1995) (First Remand). This Court upheld Commerce’s

findings. See British Steel II, 941 F. Supp. at 129-130.

Korean Respondents challenged Commerce’s determinations on appeal. The United

States Court of Appeals for the Federal Circuit (CAFC) reversed the portion of this Court’s

decision in British Steel II upholding Commerce’s finding of a causal nexus between the Korean

government’s control of the financial system and the domestic loans received by the steel

industry from private sources. See AK Steel, 192 F.3d at 1376. It also reversed the portion of

this Court’s judgment “affirming the assessment of countervailing duties based on preferential

access to foreign credit.” Id. at 1378. Pursuant to 28 U.S.C. § 1651 (1994), this Court remanded

the matter to Commerce to recalculate duties owed in conformity with the CAFC’s decision in

AK Steel. See Laclede Steel Co., et al. v. United States, Slip Op. 00-36 (April 5, 2000).

Conformity with the CAFC’s decision required Commerce to exclude from its

calculations those countervailing duties based upon: (1) domestic credit provided to the Korean

steel industry by private Korean lenders; and (2) preferential access to foreign credit. See AK

Steel, 192 F.3d at 1376, 1378. Commerce also determined the CAFC’s holding “related only to

foreign loans and domestic loans received by the steel industry from private sources during the de
Court No. 93-09-00569-CVD Page 4

facto period [after 1984].”1 (Remand Redetermination at 3.) Accordingly, Commerce removed

from its net subsidy calculations any loans made by private Korean lenders after 1984 and all

direct foreign loans. See id. It continued to include post-1984 domestic loans from the following

government banks and programs: Korean Development Bank (KDB), Korean Exchange Bank

(KEB), Export-Import Bank of Korea (ExIm), Korea Development Finance Corporation (KDFC),

National Investment Fund (NIF), Energy Saving Fund (ESF), Petroleum Business Fund (PBF),

and Export Industry Facility Loans (EIFL). See id.

Commerce issued its Draft Remand, provided the parties with opportunity to comment,

and addressed the parties’ comments in the final Remand Redetermination. See id. at 2, 6.

Korean Respondents challenge Commerce’s Remand Determination, arguing Commerce

has unlawfully distinguished between the private domestic loans and the government-sourced

domestic loans. (Dongbu Steel Co., Ltd., et al. Comments Upon the Final Results of

1
The de facto period contrasts with the de jure preference period in which the
Korean government overtly promoted the steel industry through laws and programs. See
Final Results of Redetermination Pursuant to Court Remand in British Steel P.L.C. v.
United States (Ct. Int’l Trade, February 9, 1995) at 24-29 (First Remand) and Certain
Steel Products from Korea, 58 Fed. Reg. 37,338, 37,342-3 (Dep’t Comm. July 9, 1993)
(Final Determination). Commerce previously determined the Korean government
continued to provide the steel industry with preferential access to long-term credit despite
removal of the legal preferences, resulting in a de facto program of specific benefits to the
steel industry. (First Remand at 29); Final Determination, 58 Fed. Reg. at 37,343. The
CAFC acknowledged that government control of the financial system benefitted the
Korean steel industry until 1985, by which time the de jure preferences had been
terminated. See AK Steel at 1371, 1376. The parties therefore concede Commerce must
bring only those loans received by the steel industry after 1984, the de facto period, into
conformity with the CAFC decision. (Dongbu Steel Co., Ltd., et al. Comments Upon the
Final Results of Redetermination at 14 (Korean Respondents’ Br.)); (Domestic
Producers’ Brief in Response to Dongbu Steel Co. et al.’s Comments upon the Final
Results of Redetermination Pursuant to Court Remand at 18-19 (Domestic Producers’
Resp.).)
Court No. 93-09-00569-CVD Page 5

Redetermination at 1 (Korean Respondents’ Br.).) The United States and Domestic Producers

respond that Commerce’s distinction between the private domestic loans and the government-

sourced domestic loans is consistent with the CAFC’s decision. (Defendants’ Response to

Comments of Dongbu Steel Co. Ltd. et al. on the Final Results of Redetermination Pursuant to

Court Remand at 2-3 (Defs.’ Resp.)); (Domestic Producers’ Brief in Response to Dongbu Steel

Co. et al.’s Comments upon the Final Results of Redetermination Pursuant to Court Remand at 2

(Domestic Producers’ Resp.).)

JURISDICTION

Because the CAFC’s judgment contained no remand order, this Court derives its

jurisdiction, in part, from the “mandate rule” wherein the “[i]ssuance of the mandate formally

marks the end of appellate jurisdiction,” and “[j]urisdiction returns to the tribunal to which the

mandate is directed, for such proceedings as may be appropriate . . . .” Carlson v. Hyundai

Motor Co., 222 F.3d 1044, 1045 (8th Cir. 2000), quoting Johnson v. Bechtel Associates, et. al.,

801 F.2d 412, 415 (D.C. Cir. 1986). After the CAFC issued its mandate, jurisdiction passed

from the CAFC and returned “to the forum from whence it came.” Ostrer v. United States, 584

F.2d 594, 599 (2d Cir. 1978). Jurisdiction therefore again vested with this Court.

This Court also derives its jurisdiction from the language of the opinion in AK Steel. In

order to give effect to the CAFC’s specific exclusion of private domestic loans from the

countervailing duty determination, Commerce must recalculate the duties owed by Korean

Respondents. By not explicitly directing the recalculation, the CAFC left to this Court the task

of ordering and reviewing Commerce’s recalculation of the countervailing duties. In Exxon

Chemical Patents, Inc. v. The Lubrizol Corp., 137 F.3d 1475, 1483 (Fed. Cir. 1998), the CAFC
Court No. 93-09-00569-CVD Page 6

found the lack of an explicit remand order did not preclude additional proceedings in the district

court. Rather, “every appellate court judgment vests jurisdiction in the district court to carry out

some further proceedings.” Id. The nature of those proceedings “is discerned not simply from

the language of the judgment, but from the judgment in combination with the accompanying

opinion.” Id., citing In re Sanford Fork & Tool Co., 160 U.S. 247, 256 (1895).

The scope of this Court’s jurisdiction is narrow. In implementing the higher court’s

mandate, this Court “cannot vary it, or examine it for any other purpose than execution.” In re

Sanford Fork & Tool Co., 160 U.S. at 255. This Court, therefore, will merely consider whether

Commerce’s Remand Redetermination conforms with AK Steel and nothing beyond the scope of

that decision.

CONTENTIONS OF THE PARTIES

A. Korean Respondents

Korean Respondents first contend that because the interpretation of the CAFC decision is

a legal issue that does not involve agency expertise, the Court should afford no deference to

Commerce’s determination. (Korean Respondents’ Br. at 10.) Instead, they reason, the Court

should approach the Remand Redetermination with heightened scrutiny. See id.

Korean Respondents next make two arguments contending Commerce has unlawfully

interpreted the CAFC’s decision by distinguishing between private domestic loans and

government-sourced domestic loans. See id. at 11. First, Korean Respondents argue that

although the CAFC decided upon all the issues before it, direct subsidies were not among them.

Korean Respondents state, “[T]he ‘program’ appealed was an ‘indirect’ subsidy accomplished

through control of the entire Korean financial system.” Id. at 12. To separate private loans from
Court No. 93-09-00569-CVD Page 7

the program, Korean Respondents seem to suggest, would convert government loans into direct

subsidies. Korean Respondents contend that because Commerce presented no evidence of direct

subsidies to this Court or the Court of Appeals, the Court of Appeals had no reason to place

significance upon a distinction between government and private sources of the loans. See id. at

12-13. Korean Respondents argue that Commerce may not now place significance upon the

distinction. See id. at 13.

Second, Korean Respondents argue the CAFC did not affirm any aspect of this Court’s

holding in British Steel II regarding domestic loans. See id. at 13. Respondents claim the CAFC

reversed this Court’s judgment regarding domestic loans in whole and could not have separately

affirmed a finding on government-sourced domestic loans because Commerce never made the

distinction in the history of the case. See id. at 14-15. Respondents contend Commerce provided

a new theory for the distinction by identifying the government loans as direct subsidies. See id.

at 18. Korean Respondents charge that “Commerce has never made the requisite findings for

determining that government loans are a direct subsidy nor does the CAFC’s decision grant to

them the authority to do so now.” Id. at 21.

B. Defendant United States

The United States makes three arguments. It first argues Commerce’s assessment of

countervailing duties against loans provided by government banks and programs conforms with

the CAFC’s decision. (Defs.’ Resp. at 3.) For support, the United States asserts that before

finding an indirect subsidy is countervailable, Commerce must make all necessary

determinations for a direct subsidy. See id. at 4. Here, the United States maintains, the CAFC

only held there was insufficient evidence to support the additional causal nexus finding required
Court No. 93-09-00569-CVD Page 8

for an indirect subsidy. See id. at 5. The United States also notes the CAFC expressly limited its

holding to the portion of this Court’s judgment pertaining to private loans. See id. at 6. The

United States contends that Korean Respondents’ reading is too broad because it precludes the

assessment of countervailing duties against any domestic loans. See id.

Second, the United States argues that, contrary to Korean Respondents’ argument that

Commerce never distinguished between the domestic loans from private and government banks,

Commerce did distinguish between the two types of loans in the First Remand. See id. at 7. The

United States asserts that despite Commerce’s reference to a program of general government

control over the financial system, the program “explicitly encompassed loans from both

government-owned and private banks.” Id. at 8. The United States urges that only after the

CAFC rejected Commerce’s causal nexus finding was it necessary to distinguish the government

loans in the Remand Redetermination. See id. at 9.

Finally, the United States counters Korean Respondents’ argument that Commerce did

not make a sufficient finding of specificity for the loans from the Korean government banks and

programs.2 The United States contends this Court upheld Commerce’s conclusion that the steel

industry received a specific benefit of access to credit through the Korean government’s control

of the financial system, and the CAFC never questioned the finding. See id. at 10.

2
To demonstrate receipt of industry-specific benefits by the steel industry,
Commerce “compared the steel industry’s percentage share of available loans with its
percentage share of the gross domestic product (GDP),” thereby determining the steel
industry “was receiving a disproportionate share of the long-term loans from the entire
Korean financial market.” (First Remand at 40-41.) Commerce also compared long-term
lending to the steel industry during the de jure subsidization period with long-term
lending to the steel industry during the de facto period and found a slight increase in loans
to the steel industry in the latter period. See id. at 41-43.
Court No. 93-09-00569-CVD Page 9

C. Domestic Producers

Domestic Producers make six arguments. First, Domestic Producers argue that no direct

authority exists for Korean Respondents’ call for heightened scrutiny and that the standard of

judicial review set forth in 19 U.S.C. § 1516a(b)(1)(B) (1995) controls final countervailing duty

determinations by Commerce (a reviewing court must “hold unlawful any determination, finding,

or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not

in accordance with law”). (Domestic Producers’ Resp. at 4-5.)

Second, Domestic Producers contend that all parties, including Korean Respondents,

have distinguished between government and private lenders throughout the proceedings. See id.

at 5-9. In addition, Domestic Producers assert they presented the distinction to the CAFC in their

brief, and the government’s lawyer presented it to the CAFC at oral argument. See id. at 9.

Domestic Producers next contend the Remand Redetermination is consistent with the

CAFC’s opinion for the following reasons: (1) the CAFC’s opinion “does not compel a finding

that no domestic loan is countervailable in this proceeding”; (2) the CAFC understood the

requirements for countervailability and focused upon the causal nexus requirement for indirect

subsidies without reversing findings for the direct subsidy of government loans; and (3) silence

by the CAFC regarding direct subsidies indicates affirmation of this Court’s decision on that

issue. See id. at 11-13.

Fourth, Domestic Producers contend Commerce’s Remand Redetermination is consistent

with the concept of “program” because: (1) despite Korean Respondents’ claim of a single

program on appeal, Domestic Producers and the government presented the distinction between

government and private loans to the CAFC, and the CAFC limited its opinion to loans from
Court No. 93-09-00569-CVD Page 10

private sources; (2) Commerce has not rigidly analyzed all loans as a single program but has

instead used “program” as a convenient umbrella term for many different types of loans; and (3)

even if Commerce had treated the loans as indistinguishable parts of one program, the holding by

the CAFC that some of the loans were non-countervailable did not render the entire subsidy

program non-countervailable. See id. at 13-15.

Fifth, Domestic Producers claim Commerce’s Remand Redetermination meets all

requirements for finding a countervailable subsidy because: (1) Commerce previously treated all

loan programs as direct subsidy programs and identified government loans as direct subsidies; (2)

the CAFC opinion nowhere rejects Commerce’s findings of government action, benefit, and

specificity; and (3) record evidence supports a specificity finding for each government bank and

program. See id. at 15-18.

Finally, Domestic Producers contend Commerce received no directed remand order

limiting its recalculations to the exclusion of all loan programs. See id. at 19. Domestic

Producers argue that preventing Commerce from distinguishing between government and private

loans would be inconsistent with Korean Respondents’ concession that de jure era loans should

remain in the calculations. See id.
Court No. 93-09-00569-CVD Page 11

STANDARD OF REVIEW

In reviewing a remand redetermination by Commerce, this Court will hold unlawful any

determination found “to be unsupported by substantial evidence on the record, or otherwise not

in accordance with law.” 19 U.S.C. §1516a(b)(1)(B)(i)(1994). See also British Steel, P.L.C. v.

United States, 929 F. Supp. 426, 431 (Ct. Int’l Trade, 1996) (“The appropriate standard for the

Court’s review of a remand determination by Commerce is whether the agency’s determination is

‘unsupported by substantial evidence on the record, or otherwise not in accordance with

law.’”)(citations omitted).

DISCUSSION

In British Steel II, this Court held a government program of general control over the

Korean financial system provided a countervailable benefit to the Korean steel industry in the

form of preferential access to long-term loans from foreign lenders and domestic private and

government lenders. 941 F. Supp. at 130. To countervail the governmental subsidy, Commerce

met the three requirements of 19 U.S.C. § 1677(5)(B) (1988), demonstrating: (1) government

action; (2) conferred a benefit; (3) upon a specific industry. This Court also held that Commerce

met the additional requirement for an indirect subsidy program of demonstrating a “causal

nexus” between the government program and the steel industry’s preferential access to credit.

See British Steel II, 941 F. Supp. at 130.

The CAFC disagreed with this Court’s finding of a causal nexus with respect to domestic

private loans. Accordingly, the CAFC specifically limited its reversal to those loans received

from private sources: “Commerce’s conclusion that there is a causal nexus between the Korean

government’s control of the financial system and the domestic loans received by the steel
Court No. 93-09-00569-CVD Page 12

industry from private sources, is unsupported by substantial evidence[,]” and “[t]he portion of

the Court of International Trade’s judgment sustaining the imposition of countervailing duties

based on domestic credit provided to the Korean steel industry by private Korean lenders

therefore must be reversed.” AK Steel, 192 F.3d at 1376 (emphasis added).

The CAFC did not reverse this Court’s entire holding that the Korean government

program provided a countervailable benefit to the Korean steel industry. It left untouched that

portion of the program providing preferential access to long-term loans from domestic

government lenders. Therefore, in removing only those loans provided by foreign lenders and

domestic private lenders from its recalculations, Commerce obeyed this Court’s remand order to

recalculate duties owed in conformity with the CAFC’s decision. This Court holds that

Commerce’s conclusions in its Remand Redetermination are supported by substantial evidence

and otherwise in accordance with law.

Korean Respondents incorrectly contend the CAFC affirmed no aspect of this Court’s

holding in British Steel II regarding domestic loans. (Korean Respondents’ Br. at 14.) As the

United States correctly notes, “The Federal Circuit expressly limited its holding to ‘the portion of

the Court of International Trade’s judgment sustaining the imposition of countervailing duties

based on domestic credit provided to the Korea[n] steel industry by private Korean lenders.”

(Defs.’ Resp. at 6, quoting AK Steel, 192 F.3d at 1376 (emphasis added).) By reversing only the

part of this Court’s holding in British Steel II regarding domestic loans from private sources, the

CAFC affirmed this Court’s holding regarding domestic loans from government sources.

This Court will not address whether the government-sourced domestic loans are direct

subsidies. In British Steel II, this Court rejected Respondents’ arguments on the issue because it
Court No. 93-09-00569-CVD Page 13

had “already sustained Commerce’s finding of a government program.” 941 F. Supp. at 133.

This Court’s holding in British Steel II and the CAFC’s silence regarding direct subsidies in AK

Steel place the issue outside the scope of this Court’s jurisdiction.

CONCLUSION

This Court finds Commerce’s recalculation of the subsidy conferred upon the Korean

steel industry by: (1) removing any loans from private Korean lenders made after 1984; (2)

removing all direct foreign loans; and (3) continuing to include loans provided by government

banks and programs, is supported by substantial evidence on the record and otherwise in

accordance with law. Accordingly, Defendant-Intervenors’ challenges are rejected, and

Commerce’s Remand Redetermination is affirmed. Plaintiffs’ request that the Remand

Redetermination be affirmed in its entirety is granted. Defendant-Intervenors’ motion for leave

to reply to responses by Defendant and Plaintiff is denied.

____________________________
Gregory W. Carman
Chief Judge
Dated: __________________
New York, New York