Citations
- 296 F. Supp. 3d 1320
Full opinion text
Barnett, Judge:
In this consolidated action, Plaintiff POSCO ("POSCO"), Plaintiff Nucor Corporation ("Nucor"), and Plaintiff-Intervenors ArcelorMittal USA LLC, AK Steel Corporation, and United States Steel Corporation challenge the final determination of the U.S. Department of Commerce ("Commerce" or the "agency") in its countervailing duty ("CVD") investigation of cold-rolled steel products ("cold-rolled steel") from the Republic of Korea ("Korea"). See Countervailing Duty Investigation of Certain Cold-Rolled Steel Flat Products from the Republic of Korea , 81 Fed. Reg. 49,943 (Dep't Commerce July 29, 2016) (final aff. determination; 2014) (" Final Determination "), ECF No. 41-4, as amended by Certain Cold-Rolled Steel Flat Products from Brazil, India, and the Republic of Korea , 81 Fed. Reg. 64,436 (Dep't Commerce Sept. 20, 2016) (am. final aff. countervailing duty determination and countervailing duty order; 2014) (" Am. Final Determination "), ECF No. 41-3, and accompanying Issues and Decision Mem., C-580-882 (July 20, 2016) ("I & D Mem."), ECF No. 41-5.
POSCO (a Korean cold-rolled steel producer) challenges Commerce's use of the facts available with an adverse inference (referred to as "adverse facts available" or "AFA") for several reporting errors and its selection and corroboration of adverse facts available rates. See Confidential Mot. of Pl. POSCO for J. on the Agency R., ECF No. 53, and Confidential Pl. POSCO's Br. in Supp. of its Mot. for J. on the Agency R. ("POSCO Mot.") at 2-3, ECF No. 59-1. Nucor and Plaintiff-Intervenors (domestic cold-rolled steel producers) (collectively, "Nucor") challenge Commerce's finding that the Government of Korea ("GOK") did not provide electricity for less than adequate remuneration and its decision not to use adverse facts available with respect to the electricity program based on the GOK's questionnaire responses. See Confidential Pl. Nucor Corp. and Pl.-Ints. ArcelorMittal USA LLC, AK Steel Corp, and United States Steel Corp.'s Rule 56.2 Mot. for J. on the Agency R. ("Nucor Mot.") at 2-3, ECF No. 56. Defendant United States ("Defendant" or the "Government") supports Commerce's determination. See generally Confidential Def.'s Resp. to Pls.' Mots. For J. Upon the Agency R. ("Gov. Resp"), ECF No. 65.
For the following reasons, the court remands Commerce's selection of the highest calculated rate as POSCO's AFA rate and Commerce's selection of an AFA rate that is itself based on adverse facts available. Accordingly, the court grants, in part, POSCO's motion with respect to those issues, and denies the motion in all other respects. The court sustains Commerce's determinations regarding the GOK's provision of electricity for not less than adequate remuneration and the adequacy of its questionnaire responses. Accordingly, the court denies Nucor's motion in full.
BACKGROUND
I. Legal Framework
A. Basic CVD Principles
Commerce "impose[s] countervailing duties on merchandise that is produced with the benefit of government subsidies" when the various statutory criteria are met. Fine Furniture (Shanghai) Ltd. v. United States , 748 F.3d 1365, 1369 (Fed. Cir. 2014) ; see also 19 U.S.C. § 1671(a) (2012). Among other things, countervailable subsidies arise "when (1) a foreign government provides a financial contribution (2) to a specific industry and (3) a recipient within the industry receives a benefit as a result of that contribution." Fine Furniture (Shanghai) , 748 F.3d at 1369 (citing 19 U.S.C. § 1677(5)(B) ). Investigating these factors requires Commerce to obtain information from the foreign government alleged to have provided the subsidy and the producer/respondent that purportedly benefitted from the subsidy. See Essar Steel Ltd. v. United States , 34 CIT 1057, 1070, 721 F.Supp.2d 1285, 1296 (2010), rev'd on other grounds , 678 F.3d 1268 (Fed. Cir. 2012). The information Commerce receives is subject to verification. See 19 U.S.C. § 1677m(i)(1).
B. Sales for Less than Adequate Remuneration
A countervailable benefit includes the provision of goods or services "for less than adequate remuneration." 19 U.S.C. § 1677(5)(E)(iv). The statute directs Commerce to determine the adequacy of remuneration "in relation to prevailing market conditions for the good or service being provided or the goods being purchased in the [subject] country .... Prevailing market conditions include price, quality, availability, marketability, transportation, and other conditions of purchase or sale." Id.
Commerce's regulations prescribe a three-tiered approach for determining the adequacy of remuneration. See 19 C.F.R. § 351.511. Commerce first seeks to compare the government price to a market-based price for the good or service under investigation in the country in question (a "Tier 1" analysis). Id. § 351.511(a)(2)(i). When an in-country market-based price is unavailable, Commerce will compare the government price to a world market price, when the world market price is available to purchasers in the country in question (a "Tier 2" analysis). Id. § 351.511(a)(2)(ii). When, as here, both an in-country market-based price and a world market price are unavailable, Commerce considers "whether the government price is consistent with market principles" (a "Tier 3" analysis). Id. § 351.511(a)(2)(iii).
In the Preamble to the final rule implementing Commerce's CVD regulations, Commerce explained that a Tier 3 analysis requires an examination of "such factors as the government's price-setting philosophy,[ ] costs (including rates of return sufficient to ensure future operations), or possible price discrimination." Countervailing Duties , 63 Fed. Reg. 65,348, 65,378 (Dep't Commerce Nov. 25, 1998) ("CVD Preamble "). Those factors are not "in any hierarchy," and Commerce "may rely on one or more of these factors in any particular case." Id. Commerce recognized that a Tier 3 analysis may be particularly "necessary for such goods or services as electricity, land leases, or water." Id. (citing, inter alia , Pure Magnesium and Alloy Magnesium from Canada , 57 Fed. Reg. 30,946, 30,954 (Dep't Commerce July 13, 1992) (" Magnesium from Canada ") ).
In Magnesium from Canada , Commerce explained that examining the preferential provision of electricity first requires a comparison of "the price charged with the applicable rate on the power company's non-specific rate schedule." 57 Fed. Reg. at 30,949. However, "[i]f the amount of electricity purchased by a company is so great that the rate schedule is not applicable, we will examine whether the price charged is consistent with the power company's standard pricing mechanism applicable to such companies." Id. at 30,949 -50. When "the rate charged is consistent with the standard pricing mechanism and the company under investigation is, in all other respects, essentially treated no differently than other industries which purchase comparable amounts of electricity, [Commerce] would probably not find a countervailable subsidy." Id. at 30,950.
C. Facts Available and Adverse Facts Available
When an interested party "withholds information" requested by Commerce, "significantly impedes a proceeding," "fails to provide [ ] information by the deadlines for submission of the information," or provides information that cannot be verified pursuant to 19 U.S.C. § 1677m(i), Commerce shall use the "facts otherwise available" (or "FA") in making its determination. 19 U.S.C. § 1677e(a)(2)(2015). Additionally, if Commerce determines that the party "has failed to cooperate by not acting to the best of its ability to comply with a request for information," it "may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available." Id. § 1677e(b)(1)(A).
"Compliance with the 'best of its ability' standard is determined by assessing whether a respondent has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an investigation." Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003) ; see also Essar Steel Ltd. v. United States ) ("Essar Steel I "), 678 F.3d 1268, 1275-76 (Fed. Cir. 2012) (reaffirming Nippon Steel 's interpretation of what is required for respondents to comply with the "best of its ability" standard). Before using adverse facts available, Commerce "must make an objective showing that a reasonable and responsible importer would have known that the requested information was required to be kept and maintained under the applicable statutes, rules, and regulations." Nippon Steel , 337 F.3d at 1382. Next, Commerce
must [ ] make a subjective showing that the respondent['s] ... failure to fully respond is the result of the respondent's lack of cooperation in either: (a) failing to keep and maintain all required records, or (b) failing to put forth its maximum efforts to investigate and obtain the requested information from its records.
"An adverse inference may not be drawn merely from a failure to respond." Id. at 1383. Rather, Commerce may apply an adverse inference "under circumstances in which it is reasonable for Commerce to expect that more forthcoming responses should have been made." Id. (affirming Commerce's use of an adverse inference when respondent first told Commerce the requested information was unnecessary, then told Commerce the information did not exist, and only later produced the information after Commerce assigned an adverse dumping margin, at which time the respondent told Commerce it had never asked its factories for the information during the investigation).
When applying an adverse inference, Commerce may rely on information derived from the petition, a final determination in the investigation, a previous administrative review, or any other information placed on the record. See 19 U.S.C. § 1677e(b)(2) ; 19 C.F.R. § 351.308(c)(2015). When Commerce relies on secondary information, that is, information that was not obtained in the course of the instant investigation or review, Commerce "shall, to the extent practicable, corroborate that information from independent sources that are reasonably at [its] disposal." 19 U.S.C. § 1677e(c)(1). The corroboration requirement does not apply to a "countervailing duty applied in a separate segment of the same proceeding." Id. § 1677e(c)(2). Pursuant to Commerce's regulations, corroboration requires the agency to assess "whether the secondary information to be used has probative value." 19 C.F.R. § 351.308(d). When corroboration is not "practicable in a given circumstance," Commerce may still "apply[ ] an adverse inference as appropriate and us[e] the secondary information in question." Id.
D. Selecting an AFA Rate
Section 1677e(d) governs Commerce's selection of subsidy rates to apply as adverse facts available. In a CVD proceeding, Commerce may "use a countervailable subsidy rate applied for the same or similar program in a countervailing duty proceeding involving the same country; or [ ] if there is no same or similar program, use a countervailable subsidy rate for a subsidy program from a proceeding that the administering authority considers reasonable to use." 19 U.S.C. § 1677e(d)(1)(A). Commerce "may apply any of the countervailable subsidy rates ... specified under [ ] paragraph [1], including the highest such rate or margin, based on the evaluation by [Commerce] of the situation that resulted in [the agency] using an adverse inference in selecting among the facts otherwise available." Id. § 1677e(d)(2). Commerce need not "estimate what the countervailable subsidy rate ... would have been if the interested party found to have failed to cooperate ... had cooperated ... [or] demonstrate that the countervailable subsidy rate ... used by [Commerce] reflects an alleged commercial reality of the interested party." Id. § 1677e(d)(3).
II. Prior Proceedings
In August 2015, Commerce initiated a CVD investigation of cold-rolled steel from several countries. See Certain Cold-Rolled Steel Flat Products from Brazil, India, the People's Republic of China, the Republic of Korea, and the Russian Federation , 80 Fed. Reg. 51,206 (Dep't Commerce Aug. 24, 2015) (initiation of countervailing duty investigations) ("Initiation Notice "), CJA Tab 3, PJA Tab 3, PR 58, ECF No. 77. Commerce selected POSCO and Hyundai Steel Co., Ltd. as mandatory respondents for the investigation into cold-rolled steel from Korea. Respondent Selection Mem. (Sept. 15, 2015) at 6, CJA Tab 4, CR 40, PJA Tab 4, PR 75, ECF No. 77. The period of investigation ("POI") encompassed January 1 to December 31, 2014. Initiation Notice , 80 Fed. Reg. at 51,206. The subject merchandise includes "certain cold-rolled (cold-reduced), flat-rolled steel products, whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances." Initiation Notice , 80 Fed. Reg. at 51,210.
A. Questionnaire Responses
1. POSCO
During the investigation, Commerce issued to POSCO a series of questions regarding its affiliated companies. See POSCO CVD Questionnaire (Sept. 16, 2015) at 2-3, CJA Tab 6, PJA Tab 6, PR 77, ECF No. 77. POSCO submitted a joint response on behalf of itself and its affiliated trading company DWI. See generally POSCO Affiliated Companies Resp. (Sept. 30, 2015) ("POSCO AQR"), CJA Tab 7, CR 41, PJA Tab 7, PR 84, ECF No. 77. In particular, Commerce asked POSCO to "[s]pecify whether an affiliated company supplies inputs into your company's production process." Id. at 4. POSCO responded that "[t]here were no affiliated companies located in Korea that provided inputs to POSCO's production of subject merchandise." Id. In response to Commerce's instruction that POSCO must provide a complete questionnaire response for affiliates that supply inputs for production of the downstream product, POSCO affirmed that "[t]here were no affiliated companies located in Korea that provided inputs to POSCO's production of subject merchandise." Id. at 4-5. In a supplemental questionnaire, Commerce requested POSCO to "confirm that you have provided responses for all cross-owned companies[ ] that fall within 19 C.F.R. [§] 351.525(b)(6)." POSCO Second Suppl. Questionnaire Resp. (Nov. 12, 2015) ("POSCO 2nd Suppl. QR") at 1, CJA Tab 12, CR 353, PJA Tab 12, PR 289, ECF No. 78. POSCO answered "that it believes it has provided responses for all cross-owned companies that fall within 19 C.F.R. § 351.525(b)(6)." Id.
Commerce also asked POSCO about subsidies to companies located in free economic zones ("FEZ"). See POSCO Initial Questionnaire Resp. (Oct. 23, 2015) ("POSCO IQR") at 52, CJA Tab 8, CR 58-102, PJA Tab 8, PR 120-138, ECF No. 77. POSCO reported that it "has no facilities located in a [FEZ] and thus was not eligible for and did not receive any tax reductions, exemptions, grants or financial support under any of the [ ] programs listed in [Commerce's] question." Id. at 52.
Commerce inquired about loans to POSCO and DWI from the Korean Resources Corporation ("KORES") and the Korea National Oil Corporation ("KNOC"). Id. at 33. DWI initially reported that it received KNOC and KORES loans during the POI. Id. at 34. POSCO subsequently provided more information about those loans. POSCO 2nd Suppl. QR, Ex. F-11 at 1-2.
2. The Government of Korea
Relevant here, Commerce requested that the GOK provide information regarding the Korean electricity industry and market generally, and the Korea Electric Power Corporation ("KEPCO") specifically. See GOK CVD Questionnaire (Sept. 16, 2015), Sect. II at 2-7, CJA Tab 5, PJA Tab 5, PR 76, ECF No. 77. KEPCO is a "state-owned entity," Decision Mem. for the Prelim. Neg. Determination (Dec. 15, 2015) ("Prelim. Mem.") at 30, CJA Tab 17, PJA Tab 17, PR 338, ECF No. 78 (citation omitted), and is "the exclusive supplier of electricity in Korea," The Republic of Korea's Resp. to CVD Questionnaire (Oct. 30, 2015) ("GOK QR") at 4, CJA Tab 9, CR 108-217, PJA Tab 9, PR 147-218, ECF Nos. 77-78; see also Prelim. Mem. at 30 (noting that "KEPCO is an integrated electric utility company engaged in the transmission and distribution of substantially all of the electricity in Korea.") (citation omitted).
The GOK explained that electricity is generated by "[i]ndependent power generators, community energy systems, and KEPCO's six subsidiaries." GOK QR at 11. By law, electricity must be bought and sold through the Korean Power Exchange (the "KPX"), including by KEPCO. Id. The GOK also noted that KEPCO's electricity tariff rates are approved by the Ministry of Trade, Industry and Energy ("MOTIE"). Id. ; see also id. at 13 (explaining that MOTIE sets Korean electricity rates through its approval or disapproval of KEPCO's applications to change the tariff rates, and MOSF "considers the impact of changes in electricity rates on the national economy"). Electricity tariff rates must, by law, "be set to cover the aggregate costs," including "a reasonable rate of return on investment." Id. at 17.
Commerce issued to the GOK a supplemental questionnaire asking it to clarify MOSF's review process. The Republic of Korea's Resp. to CVD Suppl. Questionnaire (Nov. 20, 2015) ("GOK Suppl. QR") at 9, CJA Tab 13, CR 369-377, PJA Tab 13, PR 300-304, ECF No. 78. The GOK responded that "MOSF normally does not engage in a detailed review of the proposed change to the tariff rate schedule, as long as the proposed changes are not inconsistent with general price trends in Korea." Id. Because the (most recent) November 2013 tariff rate changes "were consistent with general price trends in Korea, the MOSF did not engage in a detailed review of those changes when they were proposed." Id. ; see also GOK QR at 15 (noting that the November 2013 electricity tariff rate increase was in effect throughout the POI).
As to FEZ-related benefits, the GOK stated that "[d]uring the investigation period, none of the respondents received tax reductions or exemptions, lease-fee reductions or exemptions, or grants or financial support due to their location in an FEZ." GOK QR at 108.
On the basis of the questionnaire responses, Commerce issued a preliminary negative determination, calculating a de minimis subsidy rate for POSCO of 0.18 percent. Countervailing Duty Investigation of Certain Cold-Rolled Steel Flat Products from the Republic of Korea , 80 Fed. Reg. 79,567, 79,568 (Dep't Commerce Dec. 22, 2015) (prelim. neg. determination and alignment of final determination with final antidumping duty determination), CJA Tab 30, PJA Tab 30, PR 402, ECF No. 79. Commerce also determined that the GOK's provision of electricity was not for less than adequate remuneration. Prelim. Mem. at 30.
B. Verification
1. POSCO and DWI
Commerce conducted verification at POSCO from March 13 to March 17, 2017, in Seoul, Korea, and at DWI on March 18, 2016. Verification of POSCO and its Cross-Owned Affiliates' Questionnaire Resp. (March 7, 2016) ("POSCO Verification Agenda") at 1, CJA Tab 18, CR 394, PJA Tab 18, PR 376, ECF No. 78. Before verification, Commerce instructed POSCO to make available original records substantiating the information reported in its questionnaire responses, and to "[b]e prepared to demonstrate that none of POSCO's other affiliated companies provided inputs for the production of cold-rolled steel or otherwise would fall under our attribution regulations." Id. at 5-6. Commerce also cautioned POSCO that "verification is not intended to be an opportunity for the submission of new factual information." Id. at 2. In the course of verification, Commerce discovered several inaccuracies in POSCO's questionnaire responses:
Cross-Owned Input Suppliers
At verification, a POSCO official reiterated that no raw material inputs were purchased from Korean affiliated companies. Verification Report: POSCO and Daewoo Int'l Corp. (Apr. 29, 2016) ("POSCO Verification Report") at 16, CJA Tab 29, CR 454, PJA Tab 29, PR 397, ECF No. 79. Commerce requested-and POSCO provided-a list of suppliers of raw material inputs used in the production of cold-rolled steel. See POSCO Verification Report at 16; POSCO's Verification Ex. 3 (March 24, 2016) ("POSCO Verification Ex. 3") at ECF pp. 92-94, CJA Tab 22, CR 402-411, PJA Tab 22, ECF No. 79. Upon reviewing this information, Commerce learned that four POSCO affiliates supplied inputs used in the production of cold-rolled steel. I & D Mem. at 9 & n.30 (citing POSCO Verification Ex. 3). They were POSCO Chemtech Company, Ltd. ("POSCO Chemtech"); POSCO Processing and Service ("POSCO P & S"); POSCO M-Tech Co., Ltd. ("POSCO M-Tech"); and POS-HiMetal Co., Ltd. ("POS-HiMetal").
DWI's Loans
At DWI's verification, POSCO presented "two new loans" under the KORES program as "minor corrections." POSCO Verification Report at 3. Commerce "did not explicitly state that [it] would accept the submission as a minor correction at the time of verification." Id. Upon subsequent review of the loan chart, Commerce found that POSCO sought to add more than two loans as minor corrections. Id. Commerce later rejected the corrections as not minor, and did not verify the new loans. Request to Take Action on Certain Barcodes (Apr. 21, 2016) at 1-2, CJA Tab 27, CR 442, PJA Tab 27, PR 394, ECF No. 79; I & D Mem. at 77 & nn.371-72 (citing POSCO Verification Report at 25-26).
POSCO's Global R & D Center
While verifying that DWI was not located in an FEZ, Commerce learned that a POSCO facility, named POSCO Global R & D Center (the "R & D facility"), "was listed on the official Incheon FEZ government website as being located in the Incheon FEZ." I & D Mem. at 72-73; see also POSCO Verification Report at 2, 38-39. When asked about the R & D facility's "location and purpose," a POSCO official "presented a map printed from a Korean website [with] a hand-drawn border surrounding what they claimed to be the FEZ," which purported to show that the R & D facility was located outside the FEZ. I & D Mem. at 73. Commerce compared the hand-drawn map to the map from the Incheon government website and noted several discrepancies. Id. ; see also POSCO Verification Report at 38 (explaining that the hand-drawn boundary "was very small" and included only a "few apartment buildings" in the FEZ, and no office buildings). Commerce "offered repeatedly to visit the facility as depicted on the Korean government website in order to clarify its location and confirm non-use of the FEZ program, but POSCO officials declined." I & D Mem. at 73. POSCO then concluded the verification. POSCO Verification Report at 39.
2. The Government of Korea
Commerce conducted verification of the GOK's questionnaire responses from March 14 to March 25, 2016. I & D Mem. at 2. Commerce did not, however, verify the GOK's provision of electricity for less than adequate remuneration; instead, the agency relied on the verification conducted as part of its investigation into corrosion-resistant steel ("CORE") from Korea. See id. at 42 & n.199 (citing Verification Documents to Proceeding (May 5, 2016) ("CORE Electricity Verification Report"), CJA Tab 31, CR 456-58, PJA Tab 31, PR 404, ECF No. 79).
C. Final Determination and Amended Final Determination
In the Final Determination , Commerce announced a countervailing duty rate of 58.36 percent for POSCO. 81 Fed. Reg. at 49,944. Commerce calculated this rate after deciding to use adverse facts available with respect to certain subsidy programs. Specifically, Commerce concluded, as AFA, that POSCO and its cross-owned input suppliers benefited from certain specific subsidies. I & D Mem. at 10. Commerce found, as AFA, that the inputs produced by the four above-mentioned input suppliers were primarily dedicated to the production of the downstream product within the meaning of its attribution regulation, 19 C.F.R. § 351.525(b)(6)(iv). Id. at 69. Commerce also concluded, as AFA, that POSCO benefitted from the FEZ program, id. at 73, and that DWI benefitted from the KORES/KNOC lending program, id. at 76. For these reasons, Commerce concluded, as AFA, that "POSCO benefitted from the majority of programs in the current investigation." Id. at 11; see also id. at 13-15 (identifying 45 programs for which Commerce applied an AFA rate to POSCO).
With regard to selecting rates to use for these programs, Commerce explained that "[i]t is the [agency's] practice in CVD proceedings to compute an AFA rate for non-cooperating companies using the highest calculated program-specific rates determined for a cooperating respondent in the same investigation, or, if not available, rates calculated in prior CVD cases involving the same country." Id. at 12. Commerce selected its rates pursuant to the following hierarchical methodology:
Specifically, [Commerce] applies the highest calculated rate for the identical subsidy program in the investigation if a responding company used the identical program, and the rate is not zero. If there is no identical program match within the investigation, or if the rate is zero, [Commerce] uses the highest non-de minimis rate calculated for the identical program in a CVD proceeding involving the same country. If no such rate is available, [Commerce] will use the highest non-de minimis rate for a similar program (based on treatment of the benefit) in another CVD proceeding involving the same country. Absent an above-de minimis subsidy rate calculated for a similar program, [Commerce] applies the highest calculated subsidy rate for any program otherwise identified in a CVD case involving the same country that could conceivably be used by the non-cooperating companies.
Id.
Commerce did not expressly state which hierarchical provision(s) it relied on in this proceeding. See id. at 12-17. For six programs, Commerce appears to have relied on the first prong of its hierarchy to apply the highest non-zero rate calculated for Hyundai Steel in this investigation. See id. at 14-15 & nn.74, 79, 81, 83-84, 86. For the remaining 39 programs, Commerce applied one of two rates selected from other Korean CVD proceedings. See id. at 13-15 & nn.45-88. Specifically, Commerce applied a 1.65 percent rate associated with a GOK lending program found countervailable in Bottom Mount Combination Refrigerator-Freezers from the Republic of Korea . See id. at 13-15 (noting the source of the rate); id. at 16-17 (noting the rate); Bottom Mount Combination Refrigerator-Freezers from the Republic of Korea , 77 Fed. Reg. 17,410 (final aff. countervailing duty determination; 2010) (Dep't Commerce March 26, 2012) ("Refrigerators from Korea "), and accompanying Issues and Decision Mem., C-580-866 (March 16, 2012)
("Refrigerators from Korea , I & D Mem.") at 11-12. Commerce also applied a 1.05 percent rate associated with a tax deduction program found countervailable in Large Residential Washers from the Republic of Korea . See I & D Mem. at 13-15 (noting the source of the rate); id. at 16-17 (noting the rate); Large Residential Washers from the Republic of Korea , 77 Fed. Reg. 75,975 (final aff. countervailing duty determination; 2011) (Dep't Commerce December 26, 2012) (" Washers from Korea "), and accompanying Issues and Decision Mem., C-580-869 (Dec. 18, 2012) (" Washers from Korea , I & D Mem.") at 14-15.
Commerce also affirmed its preliminary determination that the GOK's provision of electricity was not for less than adequate remuneration, and was not, therefore, countervailable. I & D Mem. at 45.
In response to ministerial error comments submitted by POSCO, Commerce selected a different program rate for certain of POSCO's programs. Resp. to Ministerial Error Cmts. Filed by Hyundai Steel Co. Ltd and POSCO (Aug. 24, 2016) ("Ministerial Error Mem.") at 3-4, CJA Tab 43, PJA Tab 43, PR 451, ECF No. 79. Instead of the 1.65 percent rate derived from Refrigerators from Korea , Commerce selected a 1.64 percent rate associated with a K-SURE Short-Term Export Insurance program found countervailable in that proceeding. Id. at 4; Refrigerators from Korea , I & D Mem. at 14-15. Commerce also discovered that it had made an additional ministerial error by excluding a sub-program within POSCO's overall AFA rate. Ministerial Error Mem. at 6. Accordingly, POSCO's final subsidy rate increased to 59.72 percent. Am. Final Determination , 81 Fed. Reg. at 64,437.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i), and 28 U.S.C. § 1581(c).
The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). "Substantial evidence is 'such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' " Huaiyin Foreign Trade Corp. (30) v. United States , 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB. , 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). It "requires more than a mere scintilla," but "less than the weight of the evidence." Nucor Corp. v. United States , 34 CIT 70, 72, 675 F.Supp.2d 1340, 1345 (2010) (quoting Altx, Inc. v. United States , 370 F.3d 1108, 1116 (Fed. Cir. 2004) ). The court may not "reweigh the evidence or ... reconsider questions of fact anew." Downhole Pipe & Equip., L.P. v. United States , 776 F.3d 1369, 1377 (Fed. Cir. 2015) (quoting Trent Tube Div., Crucible Materials Corp. v. Avesta Sandvik Tube AB , 975 F.2d 807, 815 (Fed. Cir. 1992) ).
DISCUSSION
I. POSCO's Rule 56.2 Motion for Judgment upon the Agency Record
A. Commerce's AFA Determinations
POSCO challenged three applications of AFA. Each is discussed, in turn.
1. Inputs from Affiliated Suppliers
a. Parties' Contentions
POSCO contends that Commerce erred in finding that it had failed to cooperate to the best of its ability when it declined to report inputs from four affiliates because POSCO held an objectively reasonable belief that those inputs were not primarily dedicated to the production of the downstream product (hereinafter referred to as "primarily dedicated") and, thus, a response was not required. See POSCO Mot. at 19-22; Confidential Reply Br. of Pl. POSCO in Supp. of its Mot. for J. Upon the Agency R. ("POSCO Reply") at 8-9, ECF No. 73. According to POSCO, any finding that it should have disclosed inputs from these companies supported only the application of facts otherwise available and not an adverse inference. See POSCO Mot. at 21-22. POSCO further contends that Commerce's adverse inference that the inputs produced by its affiliates were primarily dedicated was contradicted by substantial evidence that Commerce failed to consider. POSCO Mot. at 18-19 (citing Changzhou Trina Solar Energy Co., Ltd. v United States , 40 CIT ----, ----, 195 F.Supp.3d 1334, 1350 (2016) ); POSCO Reply at 5.
The Government contends that Commerce's determination to rely on adverse facts available for POSCO's failure to report inputs it received from four cross-owned companies is adequately supported. See Gov. Resp. at 28-32. The Government argues that POSCO's reason for withholding the information is "irrelevant"; "[b]ecause POSCO was able to provide more information than it did, POSCO did not put forth its 'maximum' efforts to comply with Commerce's questionnaires." Id. at 30 (citing Nippon Steel , 337 F.3d at 1382 ). The Government further contends that Commerce correctly rejected POSCO's argument that the inputs were not primarily dedicated. Id. at 32. It asserts that POSCO has ignored the fact that the information POSCO seeks to rely on was not verified, and POSCO has misunderstood Commerce's regulation governing the attribution of subsidies of an input supplier to a downstream producer. Id. at 34-36.
Petitioner Defendant-Intervenors contend that POSCO may not withhold information requested based on legal conclusions it has drawn from that information. Pet'r Def.-Int. Resp. at 3-5. Petitioner Defendant-Intervenors note that POSCO did not inform Commerce that it was responding to its questionnaires based on its own "reasonable belief" that it need not provide the information, but instead stated unequivocally that it had no affiliated Korean companies supplying inputs to the production of the subject merchandise. Id. at 5-6 (citing POSCO AQR at 4, 5 & Ex. 1 at 1). Petitioner Defendant-Intervenors further contend that POSCO's arguments regarding "the merits of the 'primarily dedicated' issue should be foreclosed by its failure to disclose [the] requested information," and that they nevertheless "fail because they are based on a mischaracterization of Commerce's attribution rules and practice." Id. at 7.
b. Analysis
As an initial matter, substantial evidence supports Commerce's decision to apply facts available. The statute provides that Commerce shall rely on the facts available when a respondent withholds requested information, "significantly impedes a proceeding," or provides information after the deadline for submission. 19 U.S.C. § 1677e(a)(2). Here, Commerce relied on facts available on the basis of POSCO's inaccurate questionnaire responses and the "conflicting information discovered at verification." I & D Mem. at 10.
There is no dispute that POSCO withheld information regarding its cross-owned input suppliers in its questionnaire responses. See POSCO AQR at 4-5; POSCO 2nd Suppl. QR at 1. At verification, Commerce discovered that POSCO's affiliates supplied limestone, scrap, ferro-molybdenum, and high purity ferro-manganese for use in producing POSCO's cold-rolled steel. POSCO Verification Report at 5-17; POSCO Verification Ex. 3 at ECF pp. 92-94. POSCO's inaccurate questionnaire responses and untimely submission of new factual information at verification prevented Commerce from fully examining the extent to which POSCO's affiliates benefitted from subsidies attributable to POSCO. See I & D Mem. at 64-65. There is, thus, substantial evidence on the record demonstrating that POSCO withheld information, failed to timely provide information, and impeded the proceeding pursuant to 19 U.S.C. § 1677e(a).
Substantial evidence further supports Commerce's decision to apply an adverse inference, which was otherwise in accordance with law. Commerce "may use an inference that is adverse to the interests of [a respondent] in selecting from among the facts otherwise available" when the respondent "fail [s] to cooperate by not acting to the best of its ability to comply with a request for information." 19 U.S.C. § 1677e(b)(1)(A). Here, Commerce concluded that POSCO had failed to act to the best of its ability because it "failed to report the necessary information and only after discovery at verification did it report on the last day that some of the inputs provided by ... affiliated companies were, in fact, used in the production of the subject merchandise." I & D Mem. at 68-69 & nn.327-31 (citing Nippon Steel , 337 F.3d at 1380, 1382 ; POSCO Verification Report at 5-17); see also id. at 10 (an adverse inference was merited because, "[d]espite repeated requests, POSCO failed to identify or provide necessary information as to its respective cross-owned companies"). At issue here is the subjective prong of the Nippon Steel test; i.e., whether Commerce has shown that POSCO's failure to supply the requested information "[was] the result of [POSCO's] lack of cooperation in ... failing to put forth its maximum efforts to investigate and obtain the requested information from its records." Nippon Steel , 337 F.3d at 1382-83.
Commerce's questionnaire was framed in general terms; it did not expressly limit POSCO's scope of response to only those suppliers that provided inputs POSCO considered primarily dedicated for purposes of Commerce's attribution regulation. See POSCO AQR at 4-5. Commerce reasonably expected POSCO to have provided the affiliated supplier information in its questionnaire response or to have informed Commerce of its basis for withholding the information so that Commerce could investigate POSCO's position. See I & D Mem. at 64 ("If POSCO had explained that it was not providing information on certain companies because they were not primarily dedicated in the affiliated questionnaire response, [Commerce] would have had the opportunity to follow-up on this claim."). Instead, POSCO unequivocally stated that no Korean affiliates supplied inputs for the production of subject merchandise. POSCO AQR at 5; see also POSCO 2nd Suppl. QR at 1 (affirming "that it believes it has provided responses for all cross-owned companies that fall within 19 C.F.R. § 351.525(b)(6)," without informing Commerce about the basis for its belief).
POSCO reiterated its position at verification, and it was not until Commerce obtained a list of POSCO's input suppliers that it learned that POSCO had provided inaccurate information. POSCO Verification Report at 16-17; I & D Mem. at 9 & n.30 (citing POSCO Verification Ex. 3).
POSCO acknowledges that it withheld information about its affiliated input suppliers on the basis of its own belief about the relevance of the information. See, e.g. , POSCO Mot. at 13-14, 19-22; POSCO Case Br. at 12. POSCO's conduct, therefore, may not precisely constitute a failure to exert "maximum efforts to investigate and obtain the requested information from its records," Nippon Steel , 337 F.3d at 1382-83, because POSCO apparently had the information, but chose not to provide it. Nevertheless, the Federal Circuit further stated that "intentional conduct, such as deliberate concealment or inaccurate reporting , surely evinces a failure to cooperate." Nippon Steel , 337 F.3d at 1383 (emphasis added). For example, "[p]roviding false information and failing to produce key documents unequivocally demonstrate [a respondent's failure to] put forth its maximum effort." Essar Steel I , 678 F.3d at 1275-76 (citing Nippon Steel , 337 F.3d at 1383 ) (affirming Commerce's determination to apply adverse facts available on the basis of respondent's assertions regarding the absence of manufacturing plants in a particular location and record evidence contradicting that assertion). Here, "Commerce requested information from [POSCO], which [POSCO] did not provide and never claimed that it was unable to provide."
Maverick Tube Corp. v. United States , 857 F.3d 1353, 1360-61 (Fed. Cir. 2017) (affirming application of adverse facts available when respondent had withheld information it had access to on the basis that it deemed it unnecessary to Commerce's determination). "Such behavior cannot be considered 'maximum effort to provide Commerce with full and complete answers.' " Id. (quoting Nippon Steel , 337 F.3d at 1382 ).
POSCO's reliance on its purported objectively reasonable belief about the irrelevance of the inputs is unavailing. See POSCO Mot. at 19-22; POSCO Reply at 8-9. Although Commerce's regulations speak to the attribution of subsidies obtained by a cross-owned "input supplier and a downstream producer" when "the input product is primarily dedicated to production of the downstream product," 19 C.F.R. § 351.525(b)(6)(iv), Commerce's questionnaire went further, directing POSCO to "[s]pecify whether an affiliated company supplies inputs into your company's production processes," POSCO AQR at 4; see also Pet'r Def.-Int. Resp. at 4-5 (noting the distinction between the regulation and the questionnaire). This is fitting given Commerce's responsibility to determine, based on the information respondents provide, whether subsidies should be attributed to cross-owned affiliates. See 19 C.F.R. § 351.525(b)(6)(iv) (when certain circumstances are present, "the Secretary [i.e. Commerce] will attribute subsidies received by the input producer to the combined sales of the input and downstream products") (emphasis added); I & D Mem. at 67 (explaining that it is for Commerce to determine whether inputs are primarily dedicated). Thus, "[r]egardless of whether [POSCO] deemed the [ ] information relevant, it nonetheless should have produced it [in] the event that Commerce reached a different conclusion." Essar Steel , 34 CIT at 1073, 721 F.Supp.2d at 1299 (AFA merited when respondent withheld requested information on the basis of its belief that the information was irrelevant to Commerce's CVD determination); see also Reiner Brach , 26 CIT at 555-64, 206 F.Supp.2d at 1330-38 (adverse facts available merited when respondent failed to provide information regarding all home market sales of identical and similar merchandise on the basis of its own interpretation of the statutory definition of "foreign-like product," even though Commerce had requested information about " 'all' home market sales [ ] for 'identical or similar merchandise' ").
POSCO's related assertion that Commerce's reliance on adverse facts available is unsubstantiated because POSCO accurately responded to Commerce's questionnaire is also unavailing. See POSCO Mot. at 13-19 (arguing that evidence establishes that the unreported inputs were not primarily dedicated). First, it bears repeating that Commerce did not limit its inquiry to only those inputs POSCO deemed primarily dedicated. See, e.g. , POSCO AQR at 4. Second, as discussed below, POSCO's evidentiary argument also fails.
To support its argument, POSCO points to two categories of information: (1) the respective proportion of each affiliates' sales of their inputs to POSCO as a percentage of their total sales, and (2) the respective proportion of each affiliates' total sales to POSCO as a portion of their total sales. See POSCO Mot. at 16-18; POSCO Case Br. at 13-19; POSCO's Rebuttal Br. (May 25, 2016) at 10-19, CJA Tab 35, CR 462-63, PJA Tab 35, PR 424-25, ECF No. 79. Commerce addressed the first category of information, but not the latter. See I & D Mem. at 66-67. The court will discuss both.
In the Issues and Decision Memorandum, Commerce explained its rejection of POSCO's reliance on the amount of each input sold to POSCO on the basis that POSCO had untimely attempted to submit that factual information at verification. See I & D Mem. at 66-67 & nn.315-318 (citing POSCO Verification Report at 5-17; POSCO Verification Ex. 3 at ECF pp. 92-94; Countervailing Duty Investigation of Certain Corrosion-Resistant Steel Products From India , 81 Fed. Reg. 35,323 (Dep't Commerce June 2, 2016) (final aff. determination; 2014) ("CORE from India "), and accompanying Issues and Decision Mem., C-533-864 (May 24, 2016) ("CORE from India , I & D Mem.") at Cmt. 11). For that reason, Commerce did not verify the input amounts POSCO sought to rely upon. See I & D Mem. at 67. POSCO argues that Commerce's failure to verify the information "does not undermine [its] accuracy or reliability" because Commerce "has discretion to decide what to verify, and if it chooses not to verify an item, then the item is considered accurate." POSCO Mot. at 16 n.2 (citing Certain Oil Country Tubular Goods From the Republic of Turkey , 79 Fed. Reg. 41,964 (Dep't Commerce July 18, 2014) (final aff. countervailing duty determination and final aff. critical circumstances determination; 2012) ("OCTG from Turkey "), and accompanying Issues and Decision Mem., C-489-817 (July 10, 2014) ("OCTG from Turkey , I & D Mem.") at Cmt. 9). POSCO also argues that CORE from India is inapposite because Commerce issued the decision after POSCO's verification, and because the decision does not discuss Commerce's approach to primary dedication as applied in past cases. POSCO Reply at 6-7 (citing Washers from Korea , I & D Mem. at 3; Certain Softwood Lumber Products From Canada , 67 Fed. Reg. 67,388 (Dep't Commerce Nov. 5, 2002) (final results and partial rescission of countervailing duty expedited reviews; 2000-2001) (" Lumber from Canada "), and accompanying Issues and Decision Mem., C-122-839 (undated) (" Lumber from Canada , I & D Mem.") at 23).
First, Commerce had notified POSCO that "verification is not intended to be an opportunity for the submission of new factual information." POSCO Verification Agenda at 2. Indeed, "[v]erification is intended to test the accuracy of data already submitted, rather than to provide a respondent with an opportunity to submit a new response." Tianjin Mach. Import & Export Corp. v. United States , 28 CIT 1635, 1644, 353 F.Supp.2d 1294, 1304 (2004), aff'd , 146 Fed.Appx. 493 (Fed. Cir. 2005). Accordingly, Commerce did not err in declining to rely on this new information in the Final Determination . See 19 U.S.C. 1677m(i)(1) (Commerce "shall verify all information relied upon in making ... a final determination in an investigation").
Second, POSCO misconstrues OCTG from Turkey . Therein, Commerce chose not to verify information the Government of Turkey ("GOT") submitted before verification because it had accepted the "accuracy of th[at] information ... on its face." OCTG from Turkey , I & D Mem. at 54. Commerce explained that "unless the GOT planned to provide new factual information at verification or claim that its own submissions were false, then verification would have no effect on the final determination." Id. In contrast, here, at verification POSCO presented information that contradicted its previous questionnaire responses, the accuracy of which Commerce never accepted. See I & D Mem. at 64-68 (explaining several times that POSCO's belated presentation of factual information prevented Commerce from fully examining it, rendering the information "unsubstantiated" and "unreliable"). OCTG from Turkey does not, therefore, stand for the proposition that any information Commerce chooses not to verify, regardless of when it is first presented to the agency, must be deemed accurate.
Third, in CORE from India , although Commerce explained that its attribution regulations "do not contemplate the amount of the input provided by a supplier as a gauge for whether that company should submit a response," as here, Commerce applied adverse facts available for the respondent's failure to report an affiliated input supplier. CORE from India , I & D Mem. at 33. In so doing, Commerce rejected the respondent's argument "that the amount of the input involved is small" because Commerce did "not consider the data collected to be complete and verified." Id. Thus, Commerce had "no basis on which to conclude that the inputs ... [were] mere insignificant adjustments." Id. Accordingly, CORE from India is consistent with Commerce's decision to reject POSCO's opinion on primary dedication in the absence of timely submitted data from the respondent. See I & D Mem. at 67.
Fourth, POSCO's reliance on Washers from Korea and Lumber from Canada is unavailing. In Washers from Korea , Commerce based its primary dedication determination on the small amount of the affiliates' sales of inputs to the respondent as a proportion of their total sales, and that most of the affiliates' products are used to produce a variety of products that are sold to customers other than the respondent. See Washers from Korea , I & D Mem. at 3 (citing CVD Preamble , 63 Fed. Reg. at 65,401 ). In Lumber from Canada , Commerce declined to attribute subsidies when "less than 30 percent of [the affiliate's] timber sales [were] made to [the lumber producer]" and "all other sales [were] made to unrelated customers." Lumber from Canada , I & D Mem. at 23. Accordingly, relative sales of the input to the respondent is not Commerce's only consideration in the analysis of whether an input is primarily dedicated, and POSCO's failure to report its affiliated input suppliers prevented Commerce from investigating and obtaining other pertinent information. Further, the respondents in Washers from Korea and Lumber from Canada timely provided the information, thereby affording Commerce the opportunity to examine or verify it and allowing the agency, not the respondent, to make the decision on primary dedication. See Washers from Korea , I & D Mem. at 3; Lumber from Canada , I & D Mem. at 23. These determinations do not, therefore, support POSCO's decision to withhold that information from its questionnaire response on the basis of its own conclusion regarding primary dedication. See POSCO Reply at 7 (contending these rulings afforded POSCO a reasonable basis for withholding the information).
Finally, POSCO's reliance on Changzhou Trina Solar is also unavailing. See POSCO Mot. at 18-19 (citing Changzhou Trina Solar , 195 F.Supp.3d at 1350 ). There, the court faulted Commerce for failing to point to any record evidence to support the adverse inference that several programs, some of which were discovered at verification, were "specific," provided a "financial contribution," and "conferred a 'benefit,' " as those terms are statutorily defined. Changzhou Trina Solar , 195 F.Supp.3d at 1347 ("Although the bar is low-Commerce may use 'any ... information placed on the record,' ...-it is not non-existent." (quoting 19 U.S.C. § 1677e(b)(2)(D) ); id. at 1348 (noting that "Commerce [ ] placed no relevant factual information on record" or "indicated that it relied on any information, from any source" in drawing its adverse inference).
Changzhou Trina Solar involved the countervailability of the alleged subsidies.
In contrast, here, POSCO does not challenge the countervailability of the subsidies allegedly received by its affiliates, but the adverse inference that its affiliated-supplier inputs were primarily dedicated pursuant to Commerce's attribution regulation, such that those subsidies may be attributed to POSCO. See POSCO Mot. at 14-19; POSCO Reply at 3-6. The common issue, however, is whether Commerce's adverse inference bears some evidentiary support. Unlike Changzhou Trina Solar , here, Commerce relied on record evidence demonstrating that POSCO Chemtech, POSCO P & S, POSCO M-Tech, and POSCO Hi-Metal are cross-owned by POSCO pursuant to 19 C.F.R. § 351.525(b)(6), and that they supplied inputs used to produce cold-rolled steel. See I & D Mem. at 9, 65; POSCO Verification Ex. 3 at ECF pp. 92-94; POSCO Verification Report at 10-14; POSCO AQR, Ex. 1 at 1. Commerce's adverse inference, therefore, complied with statutory and regulatory requirements. See 19 U.S.C. § 1677e(b)(2)(D) (stating that an adverse inference may be drawn from "any [ ] information placed on the record"); 19 C.F.R. § 351.308(c)(2)(2015).
The quantity of the respective inputs sold by the affiliates to POSCO (in absolute terms and as a proportion of the affiliates' sales) does not " 'fairly detract' from the reasonableness of [Commerce's] conclusion[ ]." Changzhou Trina Solar , 195 F.Supp.3d at 1350 (quoting Universal Camera Corp. v. NLRB , 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (alteration omitted) ). As noted above, that information was supplied by POSCO on the last day of verification, leaving Commerce no time to examine or verify it. See I & D Mem. at 67. Using untimely and, therefore, unverified information to impugn Commerce's determination would create a significant loophole in Commerce's deadlines for the submission of factual information. See 19 C.F.R. § 351.301.
As to POSCO's second category of information, data regarding each affiliate's total material sales to POSCO as a percentage of its total sales was on the record from the time of POSCO's initial questionnaire response. See POSCO IQR, Ex. 12 (POSCO's 2013-2014 Audited Non-Consolidated Financial Statements), Note 37(a) (supplying POSCO's total purchases of material from its subsidiaries) and Ex. 20 (POSCO's 2013-2014 Audited Consolidated Financial Statements), Note 1(c) (supplying each affiliate's total sales). Commerce did not discuss this evidence. See I & D Mem. at 64-69. That omission, however, is not fatal.
The facts available provisions of the statute allow Commerce to fill gaps in the record and, when necessary conditions have been met, to do so with an adverse inference. "When key data are missing from the record ... Commerce can take proof from the far reaches of the record to close evidentiary gaps that the parties never filled." RZBC , 100 F.Supp.3d at 1298 ; see also Hebei Jiheng Chemicals Co., Ltd. v. United States , 40 CIT ----, ----, 161 F.Supp.3d 1322, 1331 (2016) ("Commerce ... has broad 'discretion to choose which sources and facts it will rely on to support an adverse inference ....' ") (quoting F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) ).
POSCO essentially argues that Commerce should have filled the primary dedication gap by way of an inference drawn from its proffered and potentially favorable facts. See, e.g. , POSCO Mot. at 16-18. But when, as here, a respondent fails to cooperate by not acting to the best of its ability, the statute permits Commerce to "use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available." 19 U.S.C. § 1677e(b)(1)(A) (emphasis added). This ensures that a "party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully." Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316, vol. 1, at 870 (1994), reprinted in 1994 USCCAN 4040, 4199 ("SAA"). Accordingly, POSCO's argument is unavailing. Commerce is not required to look elsewhere in the record for allegedly exculpatory information or to credit such information when the use of an adverse inference is otherwise justified. Commerce's decision to apply adverse facts available for POSCO's failure to report its affiliated input suppliers is supported by substantial evidence and is otherwise in accordance with law.
2. POSCO's R & D Facility
a. Parties' Contentions
POSCO contends that Commerce wrongly decided to apply adverse facts available for its failure to report a facility located in an FEZ because the Government of Korea reported that POSCO did not receive any benefits from having such a facility during the "investigation period." POSCO Mot. at 36-39 (citing GOK QR at 108); POSCO Reply at 17-19. POSCO asserts that the GOK's reference to "investigation period" reasonably means "the entire [average useful life ("AUL") period of the subject merchandise], including the POI." POSCO Mot. at 38.
The Government contends that Commerce's decision to apply adverse facts available for POSCO's failure to report this R & D facility is supported by substantial evidence, as is Commerce's decision to draw the adverse inference that POSCO benefitted from the FEZ program. Gov. Resp. at 38-39, 41. The Government further contends that Commerce correctly determined that the reference to "investigation period" was ambiguous, and record evidence demonstrates that the phrase may have been limited to the POI, undermining POSCO's argument that the GOK's response demonstrated that POSCO received no benefit from having a facility located in an FEZ. Id. at 40.
Petitioner Defendant-Intervenors contend that record evidence demonstrates the FEZ program's countervailability. Pet'r Def.-Int. Resp. at 16 (citing CVD Investigation Initiation Checklist (Aug. 17, 2015) at 28, CJA Tab 2, CR 25-29, PJA Tab 2, PR 46-50, ECF No. 77). Petitioner Defendant-Intervenors further contend that the GOK's response "cannot remedy POSCO's inaccurate reporting of its own facilities and benefits." Id. at 17.
b. Analysis
Commerce's determination to apply adverse facts available for POSCO's failure to report the R & D facility is supported by substantial evidence and is otherwise in accordance with law. Here, POSCO reported that it "has no facilities located in a [FEZ] and thus was not eligible for and did not receive any tax reductions, exemptions, grants or financial support under any of the [ ] programs listed in [Commerce's] question." POSCO IQR at 52. However, at verification, Commerce learned that POSCO's R & D facility is listed on an official GOK website as being located in an FEZ. I & D Mem. at 73-74; POSCO Verification Report at 38. When asked to clarify the purpose and location of the R & D facility, POSCO provided a hand-drawn map contradicting the official map, and refused to accompany Commerce to the R & D facility so that it could gather additional information. I & D Mem. at 73; POSCO Verification Report at 39. Accordingly, Commerce reasonably determined that POSCO had failed to put forth its maximum efforts to provide the requested information. Cf. Essar Steel I , 678 F.3d at 1275-76 (affirming Commerce's determination to apply adverse facts available on the basis of respondent's assertions regarding the absence of manufacturing plants in a particular location and record evidence contradicting that assertion).
Commerce's adverse inference that POSCO benefitted from the FEZ program is also supported by substantial record evidence. Commerce relied on evidence that POSCO had a facility within an FEZ. POSCO Verification Report at 38-39. Commerce further explained that because the GOK did not clarify whether its reference to the "investigation period" in its response meant the POI or the entire 15-year AUL of the subject merchandise, I & D Mem. at 73-74, POSCO does "not have an affirmative claim of non-use for [the FEZ] program for the remainder of the 15-year AUL period from the GOK." Id. at 81 (noting that the GOK uses "investigation period" to refer to the POI "throughout its initial questionnaire response"). Commerce also relied on record evidence demonstrating that POSCO could have benefited from the FEZ program, which was designed to attract foreign investment, because "certain shareholders of POSCO [are] foreign." I & D Mem. at 74; see also GOK QR, Ex. FEZ-1 (promotional brochure discussing foreign investment incentives associated with Korean FEZ). POSCO essentially asks the court to reweigh the evidence, which it cannot do. See POSCO Mot. at 38 ("A passing reference on a Korean website is not substantial evidence that would support the application of AFA in this instance, particularly in light of the GOK's certified statement that POSCO did not receive any FEZ benefits."); Downhole Pipe & Equip., 776 F.3d at 1377. Commerce's decision to apply adverse facts available for POSCO's failure to report the R & D facility located within an FEZ, and the adverse inference upon which Commerce relied, are supported by substantial evidence and are otherwise in accordance with law.
3. DWI's Loans
POSCO contends that Commerce erred in rejecting the additional KORES loans as minor corrections and in applying adverse facts available for DWI's failure to report the loans. POSCO Mot. at 40-44; POSCO Reply at 20-22. The Government contends that Commerce properly rejected DWI's corrections because the information significantly altered the amount of reported lending and properly applied adverse facts available because DWI "categorically withheld the information" regarding one type of loan. Gov. Resp. at 43-48; see also Pet'r Def.-Int. Resp. at 17-18. Parties agree, however, that this issue is mooted in the event the court affirms Commerce's use of adverse facts available with regard to POSCO's affiliated input suppliers. See Gov. Resp. at 42; Oral Arg. at 2:05:53-2:06:05. Because the court affirms Commerce's use of adverse facts available with regard to POSCO's affiliated input suppliers, the court need not and does not further address this issue.
B. Commerce's Use of the Highest Calculated Rates
1. Parties' Contentions
POSCO contends that Commerce applied the highest calculated subsidy rate without evaluating the circumstances that led the agency to apply an adverse inference, which it further contends did not merit the highest calculated rate. POSCO Mot. at 22-26; POSCO Reply at 12-14.
The Government contends that 19 U.S.C. § 1677e(d)(2)-(3)"codif[ied] Commerce's practice of using an adverse facts available hierarchy in countervailing duty cases when selecting adverse facts available rates for subsidy programs," and that in "selecting the adverse facts available rates, Commerce was guided by its well-established methodology." Gov. Resp. at 49 (citations omitted). The Government further contends that the Federal Circuit h