Background
This case involves the Department of Commerce’s imposition of countervailing duties on steel products from South Korea. The dispute centers on three debt-to-equity conversions performed by Dongbu Steel Co., Ltd. between two thousand fourteen and two thousand eighteen. Commerce initially determined these conversions conferred no countervailable benefit. However, during a subsequent administrative review, Commerce re-evaluated the earlier conversions, concluding they did provide a benefit due to government dominance and a lack of significant private investor participation. The Court of International Trade sustained Commerce’s final determination after two remands, but the Federal Circuit reversed that judgment.
The court’s reasoning
The Court applied the standard from Fox Television Stations to determine if Commerce’s change in position was arbitrary. The Court found that Commerce provided a reasonable explanation for re-evaluating the prior infusions based on new record evidence regarding the role of private investors in a fourth conversion. The Court held that Commerce was not required to cite new evidence specifically addressing the first three infusions, as facts arising later could shed light on earlier subsidies within the average useful life. The Court further found substantial evidence supported Commerce’s conclusion that private participation was insignificant and that the benefit passed through to the acquiring entity, KG Consortium.
We therefore conclude that reconsideration of the first three equity infusions in Commerce’s Final Results was not contrary to law and that the trial court’s reasoning in the First Remand Order was error.
KG Dongbu Steel Co., Ltd. v. Nucor Corp., 2026 U.S. App. LEXIS 16543 (Fed. Cir. July 16, 2026)
What it means going forward
The decision reinstates the Department of Commerce’s original determination that Dongbu Steel received countervailable benefits from its debt-to-equity conversions. This subjects Dongbu’s steel products to countervailing duties and confirms that the benefit passed through to KG Consortium following the acquisition.