## Facts

- The Department of Commerce, International Trade Administration investigated countervailing duties on certain steel products from the United Kingdom.
- British Steel Corporation (BSC), a UK state-owned steel producer, received repeated government equity infusions during a period of severe financial distress.
- On remand, Commerce evaluated a 1977/78 equity infusion to determine whether it was on terms “inconsistent with commercial considerations” under 19 U.S.C. § 1677(5).
- Commerce applied a “reasonable private investor” approach, considering BSC’s financial performance, accumulated losses, the cost of forming BSC, and depressed conditions in the world steel market.
- Commerce concluded that no reasonable private investor could expect a reasonable return within a reasonable period, so the 1977/78 infusion was a countervailable subsidy.
- BSC challenged (1) use of a private-investor benchmark for a government-owned firm and (2) Commerce’s firm-wide analysis rather than project-by-project net present value (NPV) analysis.

## Issues

1. Whether Commerce lawfully applied a reasonable private investor standard to a government equity infusion into a state-owned enterprise when interpreting “commercial considerations” under 19 U.S.C. § 1677(5).
2. Whether Commerce’s firm-wide methodology (rather than project-specific NPV analysis) was supported by substantial evidence and otherwise in accordance with law under 19 U.S.C. § 1516a.

## Decision

- The Court of International Trade sustained Commerce’s remand determination.
- The court held that the “commercial considerations” inquiry properly uses a reasonable private investor benchmark, even when the capital provider is a foreign government and the recipient is state-owned.
- The court found substantial evidence supporting Commerce’s conclusion that BSC lacked a reasonable prospect of a reasonable return in 1977/78, making the infusion inconsistent with commercial considerations.
- The court rejected BSC’s argument that governmental policy obligations (e.g., employment or capacity preservation) alter the statutory test.
- The court held Commerce was not required to conduct project-by-project NPV analysis and could reasonably rely on BSC’s overall financial condition and investment outlook.

## Legal Principles

- Under 19 U.S.C. § 1677(5), a capital provision is countervailable if made on terms inconsistent with “commercial considerations.”
- “Commercial considerations” are assessed by whether a reasonable investor could expect a reasonable rate of return within a reasonable time.
- A foreign government’s social or industrial policy motives do not control the commercial-considerations analysis; the benchmark remains private-investor behavior.
- Commerce has discretion to select an evaluative methodology for subsidies, provided it reasonably reflects record facts and is supported by substantial evidence under 19 U.S.C. § 1516a.
- Commerce may assess commercial reasonableness on a firm-wide basis when the enterprise as a whole lacks realistic prospects for a reasonable return.

## Conclusion

The court affirmed Commerce’s determination that the 1977/78 UK government equity infusion into BSC was a countervailable subsidy because it was not commercially reasonable under a private-investor standard, and it upheld Commerce’s firm-wide analytical approach as supported by substantial evidence and consistent with law.


British Steel Corp. v. United States, 632 F. Supp. 59 (Ct. Int’l Trade 1986)