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Keywords

plaintiffequity
plaintiffequitycountervailing duty

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KG Dongbu Steel Co., Ltd. v. United States, 695 F.Supp.3d 1338

Facts

Plaintiffs KG Dongbu Steel Co., Ltd. and others filed suit against the U.S. Department of Commerce regarding its fourth administrative review of countervailing duties on corrosion-resistant steel products from Korea. The Department had previously determined that three debt-to-equity restructurings did not provide countervailable benefits, but in the fourth review, it reversed this position without citing new evidence. The Court remanded the case for Commerce to reconsider its findings.

Plaintiffs KG Dongbu Steel Co., Ltd., Dongbu Steel Co., Ltd., and Dongbu Incheon Steel Co., Ltd. (collectively “KG Dongbu” or “Plaintiffs”) filed this action challenging the U.S. Department of Commerce's (“Commerce”) fourth administrative review of Certain Corrosion-Resistant Steel Products from the Republic of Korea (“Final Results”), 87 Fed. Reg. 2759 (Dep't of Commerce Jan. 19, 2022).

Issue

Whether the Department of Commerce's determination that the first three debt-to-equity restructurings provided a countervailable subsidy to KG Dongbu was supported by substantial evidence and in accordance with law.

Whether Commerce's determination on remand that the first three debt-to-equity restructurings provided a countervailable subsidy to KG Dongbu was supported by substantial evidence and in accordance with law.

Rule

A countervailable subsidy exists when a foreign government provides a financial contribution to a specific industry that confers a benefit upon a recipient within the industry, and the determination of such benefits must be supported by substantial evidence.

A countervailable subsidy exists when a foreign government provides a financial contribution to a specific industry that confers a benefit upon a recipient within the industry.

Analysis

The court analyzed how Commerce applied its rules to the facts, noting that Commerce had previously determined that the debt-to-equity restructurings did not provide countervailable benefits. The court found that Commerce failed to provide a reasonable explanation for its departure from this established practice and did not cite new evidence to support its revised conclusions. The court emphasized that the lack of significant private investor participation in the restructurings was not adequately justified.

The Court observed that Commerce had considered the first through third debt-to-equity restructurings in each of the first three administrative reviews of the countervailing duty order.

Conclusion

The court concluded that Commerce's determination that the debt-to-equity restructurings were countervailable was arbitrary and not supported by substantial evidence, and thus remanded the case for further consideration.

The Court concludes that Commerce's determination that the same debt-to-equity restructurings in the prior three administrative reviews are now countervailable is arbitrary and not supported by substantial evidence.

Who won?

Plaintiffs KG Dongbu Steel Co., Ltd. prevailed because the court found that the Department of Commerce's remand redetermination lacked substantial evidence and failed to adequately justify its departure from prior determinations.

Plaintiffs KG Dongbu Steel Co., Ltd. prevailed because the court found that the Department of Commerce's remand redetermination lacked substantial evidence.

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