OCR Global Trade Brief – July 2023

Table of Contents



NextEra Energy and its subsidiary NextEra Energy Seabrook LLC have filed a brief arguing that the Federal Energy Regulatory Commission (FERC) overstepped its authority by preventing it from shifting costs associated with upgrading its New Hampshire power plant’s circuit breaker to the developer of a $1 billion transmission line. The company argues that the court should vacate and hold that Seabrook is not obligated to install the breaker, leaving cost allocation to commercial negotiations between the parties. NextEra initially brought the dispute before FERC in October 2020, urging the commission to declare that it was not required to incur a financial loss to upgrade the breaker for Avangrid’s sole benefit. Avangrid filed a complaint against NextEra, accusing the company of wrongfully obstructing its New England Clean Energy Connect transmission project by refusing to upgrade its Seabrook nuclear plant’s circuit breaker. In September, the companies later informed FERC of a deal they reached to resolve the conflict over which company would pay for the circuit breaker replacement. However, the companies disagreed over whether Avangrid should cover certain legal costs incurred by NextEra and other so-called opportunity costs.


FERC determined in early February that NextEra was required to replace the circuit breaker because it is needed for the Seabrook plant to operate reliably, consistent with the good utility practice standard present in its extensive generator interconnection agreement. FERC further dismissed NextEra’s petition and sided with Avangrid, saying opportunity costs paid to NextEra aren’t justified. NextEra petitioned the D.C. Circuit for review in early April, arguing that FERC lacks jurisdiction under the Federal Power Act to order NextEra to replace the circuit breaker. The company contends that the commission acted “arbitrarily and capriciously” in determining that NextEra must do so without compensation for its lost revenue and other economic costs.


Source: https://www.law360.com/articles/1705603/attachments/0





The World Trade Organization (WTO) has ruled in favor of Costa Rica in a steel trade dispute with the Dominican Republic, stating that the country fumbled its dumping investigation into Costa Rican steel, which led to anti-dumping tariffs. The WTO’s Dispute Settlement Body questioned the Dominican Republic’s conclusion that Costa Rican imports had depressed domestic prices between 2015 and 2017, stating that the country failed to discuss an uptick in domestic pricing that occurred toward the end of the investigation period. The panel concluded that the CDC’s price depression analysis was not objective and ordered the Dominican Republic to bring the duties into compliance.


After determining the unfairly priced products, the Dominican Republic enacted a 15% anti-dumping tariff on corrugated steel bars from Costa Rica in late 2019. Costa Rica challenged the measures, alleging several issues with the underlying trade investigation. The WTO sided with Costa Rica on several grounds, including improperly comparing one company’s sales to products manufactured during a different time and failing to provide the Dominican Republic with a complete text of the trade petition that triggered the investigation as soon as possible, as required under Article 6.1.3 of the agreement. The Dominican Republic may either accept the ruling and begin unwinding the tariffs or continue defending them. Litigating the case further could indefinitely stall the proceeding, as the WTO’s Appellate Body has lain dormant for years amid the U.S.’s opposition to appointing new jurists.


Source: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds605_e.htm





The U.S. Senate passed the $886.3 billion National Defense Authorization Act for 2024 in a bipartisan vote, largely avoiding contentious issues that had dominated the House of Representatives debate. The bill, S. 2226, the sweeping annual defense policy and budget bill, authorizes $844.3 billion in discretionary spending for the U.S. Department of Defense, $32.4 billion for nuclear weapons programs managed by the U.S. Department of Energy, and $9.5 billion for other defense-related activities. The bill provides a 5.2% pay raise for both military and civilian personnel at the DOD and includes measures aimed at keeping military assistance for Ukraine amid Russia’s ongoing invasion. It also includes extending the Ukraine Security Assistance Initiative through fiscal year 2027 and provisions to streamline related acquisitions, including allowing more munitions to be purchased using multiyear contracts.


The bill also includes measures to improve foreign arms sales, including the proposed establishment of an industry advisory group, a pilot program allowing military offices to hire acquisition specialists as advisors, and specific points of contact within the DOD for Foreign Military Sales deals. It prioritizes funding for developing and defending against emerging technologies such as hypersonic weapons, quantum computing, artificial intelligence, and unmanned aircraft systems. The Senate also agreed to two packages with dozens of noncontroversial amendments, such as increasing oversight of the use of artificial intelligence in national security. The bill also includes measures to make it harder for a president to withdraw from NATO by requiring two-thirds of senators to approve a withdrawal and ramping up domestic content requirements for the materials used in Navy shipbuilding. The two bills will ultimately have to be reconciled into a final compromise bill after Congress returns from its summer recess in September.


Source: https://www.congress.gov/bill/118th-congress/senate-bill/2226/titles





The Department of Commerce’s Bureau of Industry and Security (BIS) has imposed civil penalties against two defense weapon systems manufacturers and contractors for alleged violations of anti boycott provisions in the Export Administration Regulations (EAR). Profense LLC, a Phoenix-based defense weapon systems manufacturer, has agreed to pay a civil penalty of $48,500 for four violations of the antiboycott regulations. In contrast, B.E. Meyers & Co, Inc, a Redmond-based defense contractor, has agreed to pay a civil penalty of $44,750 for three violations. Both companies voluntarily self-disclosed their conduct to BIS, cooperated with the investigation by BIS’s Office of Antiboycott Compliance (OAC), and took remedial action, significantly reducing the penalty.


The penalties send a clear message to those receiving boycott requests, even as participants in a trade show, to avoid furnishing prohibited information and report any such requests to BIS. The settlements with BIS involved both companies admitting to the conduct in the Proposed Charging Letters, which alleged violations of the Export Administration Regulations. Both companies admitted to the conduct in the Proposed Charging Letters, which involved furnishing information about their business relationships with boycotted countries or blacklisted persons and failing to report the receipt of requests to act in support of a foreign boycott of a friendly country.


Source: https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3296-2023-07-13-antiboycott-penalties/file

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