Hyundai Steel Co. v. United States

651 F. Supp. 3d 1321, 2023 CIT 121

Opinion

Slip Op. 23-121

UNITED STATES COURT OF INTERNATIONAL TRADE

HYUNDAI STEEL COMPANY,

Plaintiff,

v.

UNITED STATES, Before: Jennifer Choe-Groves, Judge Defendant, Court No. 21-00536 and

NUCOR CORPORATION, SSAB ENTERPRISES, LLC, and STEEL DYNAMICS, INC.,

Defendant-Intervenors.

OPINION AND ORDER

[Sustaining the U.S. Department of Commerce’s remand results in the 2018 administrative review of the countervailing duty order on certain hot-rolled steel flat products from the Republic of Korea.]

Dated: August 21, 2023

Brady W. Mills, Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Mary S. Hodgins, Eugene Degnan, Edward J. Thomas, III, Jordan L. Fleischer, and Nicholas C. Duffey, Morris, Manning & Martin, LLP, of Washington, D.C., for Plaintiff Hyundai Steel Company.

Tara K. Hogan, Assistant Director, and Sosun Bae, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With them on the brief were Court No. 21-00536 Page 2

Brian M. Boynton, Principal Deputy Assistant Attorney General, and Patricia M. McCarthy, Director. Of counsel on the brief was Hendricks Valenzuela, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Alan H. Price, Christopher B. Weld, and Theodore P. Brackemyre, Wiley Rein, LLP, of Washington, D.C., for Defendant-Intervenor Nucor Corporation.

Roger B. Schagrin and Jeffrey D. Gerrish, Schagrin Associates, of Washington, D.C., for Defendant-Intervenors SSAB Enterprises, LLC and Steel Dynamics, Inc.

Choe-Groves, Judge: Plaintiff Hyundai Steel Company (“Plaintiff” or

“Hyundai Steel”) filed this action challenging the final results in the 2018

administrative review of the countervailing duty order on certain hot-rolled steel

flat products from the Republic of Korea (“Korea”). Certain Hot-Rolled Steel Flat

Products from the Republic of Korea (“Final Results”), 86 Fed. Reg. 47,621 (Dep’t

of Commerce Aug. 26, 2021) (final results of countervailing duty admin. review;

2018); see also Issues and Decision Mem. for the Final Results of the 2018 Admin.

Review of the Countervailing Duty Order on Certain Hot-Rolled Steel Flat

Products from the Republic of Korea (“Final IDM”), ECF No. 21-5.

Before the Court are the Final Results of Redetermination Pursuant to Court

Remand of the U.S. Department of Commerce (“Commerce”) on Certain Hot-

Rolled Steel Flat Products from the Republic of Korea, filed pursuant to the

Court’s remand order in Hyundai Steel Co. v. United States, 47 CIT __, 615 F.

Supp. 3d 1351 (2023) (“Hyundai Steel” or “Remand Order”). See Final Results of Court No. 21-00536 Page 3

Redetermination Pursuant to Court Remand, ECF No. 48-1 (“Remand Results”).

This opinion presumes familiarity with the facts as outlined in Hyundai Steel, in

which the Court remanded Commerce’s determination that the free provision of

port usage rights associated with the Port of Incheon Program conferred a benefit

and Commerce’s benefit and financial contribution determinations related to the

Sewerage Usage Fees Program. Hyundai Steel, 47 CIT at __, 615 F. Supp. 3d at

1353.

On remand, Commerce reexamined the Reduction for Sewerage Fees

program, determined that the program was not countervailable, and provided

further explanation for its determination that the provision of port usage rights at

the Port of Incheon conferred a benefit. Remand Results at 39. Commerce

changed the final subsidy rate calculation from the previous rate of 0.51% for

Hyundai Steel to a new subsidy rate of 0.50%. Id.

Plaintiff Hyundai Steel Company filed comments supporting Commerce’s

determination of the Reduction for Sewerage Fees program and opposing

Commerce’s port usage rights determination. Pl. Hyundai Steel Co.’s Cmts.

Commerce’s Redetermination Pursuant Court Remand, ECF Nos. 50, 51 (“Pl.’s

Br.”). Defendant United States (“Defendant”) filed comments in support of

Commerce’s Remand Results. Def.’s Cmts. Supp. Remand Redetermination, ECF

No. 56 (“Def.’s Br.”). Defendant-Intervenors Nucor Corporation, SSAB Court No. 21-00536 Page 4

Enterprises, LLC, and Steel Dynamics, Inc. filed comments in support of

Commerce’s Remand Results. Def.-Intervs.’ Cmts. Supp. Final Results

Redetermination Pursuant Court Remand (“Def.-Intervs.’ Br.”), ECF No. 55.

For the following reasons, the Court sustains the Remand Results.

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and

28 U.S.C. § 1581(c), which grant the Court authority to review actions contesting

the final results of an administrative review of a countervailing duty order. The

Court will hold unlawful any determination found to be unsupported by substantial

evidence on the record or otherwise not in accordance with law. 19 U.S.C.

§ 1516a(b)(1)(B)(i). The Court also reviews determinations made on remand for

compliance with the Court’s Remand Order. Ad Hoc Shrimp Trade Action Comm.

v. United States, 38 CIT 727, 730, 992 F. Supp. 2d 1285, 1290 (2014), aff’d, 802

F.3d 1339 (Fed. Cir. 2015).

DISCUSSION

A countervailable subsidy is a financial contribution provided by an

authority (a foreign government or public entity) to a specific industry when a

recipient within the industry receives a benefit as a result of that contribution. See

19 U.S.C. § 1677(5); see also Fine Furniture (Shanghai) Ltd. v. United States, 748

F.3d 1365, 1369 (Fed. Cir. 2014). Section 1677(5) defines a financial contribution, Court No. 21-00536 Page 5

in relevant part, to mean “foregoing or not collecting revenue that is otherwise due,

such as granting tax credits or deductions from taxable income,” “providing goods

or services, other than general infrastructure,” and “purchasing goods.” 19 U.S.C.

§ 1677(5)(D).

The statute provides that “[a] benefit shall normally be treated as

conferred . . . if [] goods or services are provided for less than adequate

remuneration.” Id. § 1677(5)(E), (E)(iv); see POSCO v. United States, 977 F.3d

1369, 1371 (Fed. Cir. 2020). “For purposes of clause (iv), the adequacy of

remuneration [is] determined in relation to prevailing market conditions for the

good or service being provided . . . in the country which is subject to the

investigation or review. Prevailing market conditions include price, quality,

availability, marketability, transportation, and other conditions of purchase or

sale.” 19 U.S.C. § 1677(5)(E).

I. Commerce’s Determination that the Provision of Port Usage Rights Without Fee Constituted a Benefit

In the Final Results, Commerce determined that the free provision of port

usage rights associated with the Port of Incheon Program conferred a

countervailable subsidy to Hyundai Steel. Final IDM at 19–23. The Court

remanded this issue for Commerce to reconsider Commerce’s benefit Court No. 21-00536 Page 6

determination relating to the provision of port usage rights at the Port of Incheon.

Hyundai Steel, 47 CIT at __, 615 F. Supp. 3d at 1356.

On remand, Commerce provided additional reasoning for its determination

that the provision of port usage rights at the Port of Incheon constituted a

countervailable benefit. Commerce explained at the outset that it does not view the

provision of port usage rights at the Port of Incheon as a subsidy to be analyzed for

less than adequate remuneration (“LTAR”). Remand Results at 12. Commerce

specified that it examined the agreement between Hyundai Steel and the

Government of Korea as focusing on the narrow issue of the Government of

Korea’s assignment to Hyundai Steel of the right to collect certain port fees, id. at

12–13, and that Commerce regarded the financial contribution received by

Hyundai Steel to be revenue foregone. Id. at 13. Commerce noted on remand that

Hyundai Steel obtained the right to collect berthing income and other fees

associated with port activity during the period of review pursuant to the agreement

with the Government of Korea, and determined that “[t]he ability to collect such

fees (i.e., fees otherwise payable to the government) cannot be construed as the

provision of a good or service but is instead revenue forgone.” Id. at 17.

Hyundai Steel argues that Commerce’s determination that the prevailing

market conditions clause of section 771(5)(E) only applies to LTAR financial

contributions is not supported by the plain language of the statute. Pl.’s Br. at 6. Court No. 21-00536 Page 7

Hyundai Steel contends that Commerce should have analyzed the Port Rights

Program to determine if Hyundai Steel paid less for the port rights than it

otherwise would earn by considering the prevailing market conditions, including

other conditions of purchase or sale. Id. at 7. Defendant and Defendant-Intervenor

assert that Commerce’s determination is in accordance with law because

Commerce determined the provision of port usage rights to be revenue foregone,

not LTAR, and conducted a proper revenue foregone analysis without examining

the prevailing market conditions. Def.’s Br. at 5–9; Def.-Intervs.’ Br. at 3–8. Both

Defendant and Defendant-Intervenor contend that the LTAR standards do not

apply to the revenue foregone situation. Def.’s Br. at 5–6; Def.-Intervs.’ Br. at 5.

The statute provides that when Commerce reviews whether a benefit is

conferred, “adequacy of remuneration [is] determined in relation to prevailing

market conditions.” 19 U.S.C. § 1677(5)(E), (E)(iv). 19 U.S.C. § 1677(5)(E)

states that:

For purposes of clause (iv), the adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service being provided or the goods being purchased in the country which is subject to the investigation or review. Prevailing market conditions include price, quality, availability, marketability, transportation, and other conditions of purchase or sale.

19 U.S.C. § 1677(5)(E). Court No. 21-00536 Page 8

19 U.S.C. § 1677(5)(D) states that:

Financial contribution. The term “financial contribution” means

(i) the direct transfer of funds, such as grants, loans, and equity infusions, or the potential direct transfer of funds or liabilities, such as loan guarantees,

(ii) foregoing or not collecting revenue that is otherwise due, such as granting tax credits or deductions from taxable income. . . .

19 U.S.C. § 1677(5)(D).

On remand, Commerce noted that Hyundai Steel and the Government of

Korea’s Ministry of Oceans and Fisheries entered into agreements regarding the

construction of the Port of Incheon. Remand Results at 12. As part of the

agreements, the Government of Korea granted to Hyundai Steel the right to collect

fees from third-party users of the Port of Incheon. Id. at 12–13 (citing Hyundai

Steel’s Initial Questionnaire Resp. (Apr. 10, 2020) at 43, PR 611). Commerce

noted that no third party has used the harbor. Id. at 13 (citing Hyundai Steel’s

Initial Questionnaire Resp. at 43). Commerce clarified on remand that its

countervailing duty analysis focused on the narrow aspect of the Port Usage Rights

program involving the Government of Korea’s assignment to Hyundai Steel the

right to collect certain port fees. Id. Commerce explained that it “considered the

1 Citations to the administrative record reflect the public record (“PR”) and public remand record (“PRR”) document numbers filed in this case, ECF Nos. 44, 58, 61, 64. Court No. 21-00536 Page 9

financial contribution that Hyundai Steel received pursuant to this program to be

revenue foregone. . . . [in that] the fees that the [Government of Korea] gave

Hyundai Steel the right to collect—the berthing income and the harbor facility

usage fees—which would otherwise have been collected by the [Government of

Korea] absent the agreement between the parties, represent revenue foregone by

the [Government of Korea] within the meaning of section 771(5)(D)(ii) of the

Act.” Id. (internal quotation omitted). Commerce explained on remand that it

conducted its analysis pursuant to section 771(5)(D)(ii) because the subsidy

program was revenue foregone, not the provision of goods or services applicable

under section 771(5)(E). Id. at 14–15.

The Court concludes that Commerce reasonably determined that it should

conduct a revenue foregone analysis rather than an LTAR analysis because

Hyundai Steel’s non-payment of port usage fees did not involve the provision of

goods or services, but rather involved a type of financial contribution from revenue

foregone when the Government of Korea conferred the right to Hyundai Steel to

collect revenue from third parties at the port. The Court also concludes that

Commerce reasonably determined that the Government of Korea’s provision of

rights under the Port of Incheon Program, specifically the right to collect revenues

from third parties using the port, conferred a benefit to Hyundai Steel. The Court

observes that Commerce cited substantial evidence, including Hyundai Steel’s Court No. 21-00536 Page 10

April 10, 2020 Initial Questionnaire Response at 43, to support its determination

that the Government of Korea conferred the right to Hyundai Steel to collect

revenue from third-party users of the port. See Remand Results at 13 (citing

Hyundai Steel’s Initial Questionnaire Resp. at 43). Because Commerce’s Remand

Results with respect to the Port of Incheon Program are in accordance with law and

supported by substantial evidence, the Court sustains Commerce’s Remand Results

on this issue.

II. Partial Remand of Commerce’s Determination that Hyundai Steel’s Reduced Fees Pursuant to the Sewerage Usage Fees Program Constituted a Countervailable Subsidy

In the Final Results, Commerce determined that the Sewerage Usage Fees

Program was countervailable. Final IDM at 25–27. The Court granted

Commerce’s request for remand to reconsider the Sewerage Usage Fees Program.

Hyundai Steel, 47 CIT at __, 615 F. Supp. 3d at 1356. On remand, Commerce

explained that it gained an increased understanding of how companies could

receive a reduction in sewerage fees pursuant to the Sewerage Usage Fees Program

and changed its determination to conclude that the program did not constitute a

countervailable subsidy. Remand Results at 5. Commerce reviewed relevant

provisions of Korean law that govern the reduction of sewerage usage fees,

including Article 65(1) of Korea’s Sewerage Act, Article 36(2) of Korea’s

Enforcement Decree of the Sewerage Act, and Articles 12, 14, and 21 of the Court No. 21-00536 Page 11

Incheon Metropolitan City Ordinance on Sewerage System Use. Id. at 5–10.

Commerce determined on remand that these Korean federal and municipal laws

and regulations “state that sewerage fees shall be based on the volume of sewage

discharged into the public sewerage system.” Id. at 7. Commerce determined

based on these Korean laws and regulations that a sewerage fee reduction based on

the volume of water discharged by a participating company would not be excluded.

Id. at 8.

In examining the amount of the sewerage fee reduction that Hyundai Steel

received on its overall water bill, Commerce determined that the rate adjustments

specified in Appendix 4 of the Incheon Metropolis City Ordinance on Sewerage

System Use (“Ordinance”) apply to narrow categories of users located in disaster

zones or users that utilize reuse water and are not attempting to demonstrate that

the amount of water discharged into the sewerage system is different than the

amount of water supplied. Id. at 9–10 (citing Government of Korea’s First Supp.

Questionnaire Resp. (July 16, 2020) at Exhibit SEWER-1 (Revised), PR 95–101).

Commerce reasoned that Appendix 4 applies only to subparagraphs (1)–(6) of

Article 21 (Reduction and Exception) of the Ordinance and not subparagraph (7),

which covers “[o]ther instances where the public sewerage management authority

acknowledges public interest or any other special conditions.” Id. at 10; see

Government of Korea’s First Supp. Questionnaire Resp. at Exhibit SEWER-1 Court No. 21-00536 Page 12

(Revised) at 8–10. For Hyundai Steel, the reduction was based on a study Hyundai

Steel submitted to the Government of Korea that demonstrated the amount of water

that Hyundai Steel discharged into the public sewerage system. Remand Results at

9. Commerce determined that “[t]his reduction percentage, therefore, reflects the

intent of the federal and municipal regulations that Hyundai Steel be billed based

on the amount of water discharged into the sewerage system.” Id. Commerce

noted that on remand it reopened the record and received new information

demonstrating that Hyundai Steel was not unique in receiving a sewerage fee

reduction, and that many companies qualified for a similar fee reduction under

Korean law. Id. at 10 (citing Government of Korea’s Resp. Suppl. Questionnaire

(Mar. 8, 2023) at 3, PRR 3. Commerce concluded that:

Therefore, after a reevaluation of the record, we find that the record does not support a finding that this program is countervailable. Specifically, we determine that the record does not support a finding that the reduction in Hyundai Steel’s sewerage fee in Incheon represents revenue foregone, in accordance with section 771(5)(D)(ii) of the Act. . . . Accordingly, there is no revenue foregone to the [Korean] government because Hyundai Steel is simply billed for the service which it has used, according to the regulations that govern the applicable fees.

Id. at 10–11.

No party challenges Commerce’s Remand Results regarding the sewerage

fees program. Hyundai Steel and Defendant contend that Commerce’s Remand

Results are supported by substantial evidence and should be sustained. Pl.’s Br. at Court No. 21-00536 Page 13

3; Def.’s Br. at 4. The Court observes that the document provided by the

Government of Korea on March 8, 2023 confirms Commerce’s determination that

numerous companies qualified for sewerage fee reductions similar to that received

by Hyundai Steel. See Government of Korea’s Resp. Suppl. Questionnaire at 3.

The Court concludes that Commerce reevaluated applicable Korean laws, reopened

the record to consider new information, and cited to sufficient record evidence to

support Commerce’s remand determination that Hyundai Steel did not receive a

unique Sewerage Usage Fees reduction constituting a financial contribution and

countervailable benefit to Hyundai Steel. Because Commerce’s Remand Results

with respect to the Sewerage Usage Fees Program are in accordance with law and

supported by substantial evidence, the Court sustains Commerce’s Remand Results

on this issue.

CONCLUSION

For the aforementioned reasons, the Court sustains Commerce’s

determinations that the free provision of port usage rights associated with the Port

of Incheon Program conferred a countervailable benefit and Commerce’s

determination that the Sewerage Usage Fees Program did not constitute a

countervailable benefit. Court No. 21-00536 Page 14

Accordingly, it is hereby

ORDERED that the Remand Results are sustained; and it is further

ORDERED that judgment will issue accordingly.

/s/ Jennifer Choe-Groves Jennifer Choe-Groves, Judge Dated: August 21, 2023 New York, New York