Hyundai Steel Co. v. United States

659 F. Supp. 3d 1327, 2023 CIT 144

Opinion

Slip Op. 23-

UNITED STATES COURT OF INTERNATIONAL TRADE

HYUNDAI STEEL COMPANY,

Plaintiff,

v.

UNITED STATES, Before: Mark A. Barnett, Chief Judge Court No. 22-00170 Defendant,

and

NUCOR CORPORATION,

Defendant-Intervenor.

OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s final results for the 2019 administrative review of the countervailing duty order on hot-rolled steel flat products from the Republic of Korea.]

Dated: September 29, 2023

Brady W. Mills and Nicholas C. Duffey, Morris, Manning & Martin, LLP, of Washington, DC, argued for Plaintiff. With them on the brief were Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Mary S. Hodgins, Eugene Degnan, Edward J. Thomas III, and Jordan L. Fleischer.

Sosun Bae, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was Hendricks Valenzuela, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Derick G. Holt, Wiley Rein LLP, of Washington, DC, argued for Defendant-Intervenor. On the brief were Alan H. Price, Christopher B. Weld, and Theodore P. Brackemyre. Court No. 22-00170 Page 2

Barnett, Chief Judge: This matter is before the court on a motion for judgment on

the agency record pursuant to U.S. Court of International Trade (“USCIT”) Rule 56.2.

Confid. Pl. Hyundai Steel Co.’s Mot. for J. on the Agency R., ECF No. 25, and

accompanying Confid. Br. in Supp. of its Mot. for J. on the Agency R. (“Hyundai’s

Mem.”), ECF No. 25-2; Confid. Pl. Hyundai Steel Co.’s Reply Br. in Supp. of its Mot. for

J. on the Agency R. (“Hyundai’s Reply”), ECF No. 42. Plaintiff Hyundai Steel Company

(“Hyundai Steel”) challenges the U.S. Department of Commerce’s (“Commerce” or “the

agency”) decision to countervail the Government of the Republic of Korea’s

(“Government of Korea” or “GOK”) emissions trading program in the final results of the

2019 administrative review of the countervailing duty order on hot-rolled steel flat

products from the Republic of Korea (“Korea”). Hyundai’s Mem. at 2; see also Certain

Hot-Rolled Steel Flat Prods. From the Republic of Korea, 87 Fed. Reg. 27,570 (Dep’t

Commerce May 9, 2022) (final results of countervailing duty admin. review; 2019)

(“Final Results”), ECF No. 20-4; and accompanying Issues and Decision Mem., C-580-

884 (May 3, 2022) (“I&D Mem.”), ECF No. 20-5. 1

Defendant United States (“the Government”) and Defendant-Intervenor Nucor

Corporation (“Nucor”) urge the court to sustain Commerce’s determination. Def.’s

1 The administrative record for the Final Results is contained in a Public Administrative Record (“PR”), ECF No. 20-1, and a Confidential Administrative Record (“CR”), ECF No. 20-2. Hyundai Steel submitted joint appendices containing record documents cited in parties’ briefs. Confid. J.A. (“CJA”), ECF No. 44; Public J.A., ECF No. 45. The court references the confidential record documents unless otherwise specified. Court No. 22-00170 Page 3

Resp. to Pls.’ Mots. for J. on the Agency R. (“Def.’s Resp.”), ECF No. 34; 2 Confid. Nucor

Corp.’s Resp. to Hyundai Steel Co.’s Mot. for J. on the Agency R. (“Nucor’s Resp.”),

ECF No. 38. For the following reasons, the court remands Commerce’s Final Results.

BACKGROUND

In 2016, Commerce published the countervailing duty order covering hot-rolled

steel flat products from Korea. Certain Hot-Rolled Steel Flat Prods. From Brazil and the

Republic of Korea, 81 Fed. Reg. 67,960 (Dep’t Commerce Oct. 3, 2016) (am. final

affirmative countervailing duty determinations and countervailing duty orders). On

December 8, 2020, Commerce initiated an administrative review of the underlying order

for the 2019 period of review (“POR”). Initiation of Antidumping and Countervailing Duty

Admin. Reviews, 85 Fed. Reg. 78,990, 78,994 (Dep’t Commerce Dec. 8, 2020), PR 62,

CJA Tab 4. Commerce selected Hyundai Steel as the sole mandatory respondent for

the review. Resp’t Selection Mem. (Jan. 12, 2021), CR 6, PR 21, CJA Tab 1.

On May 17, 2021, Hyundai Steel and the Government of Korea each responded

to Commerce’s carbon emissions questionnaire. Hyundai Steel’s Carbon Emission

New Subsidy Allegation Questionnaire Resp. (May 17, 2021) (“Hyundai Steel’s NSA

Resp.”), CR 74–75, PR 75, CJA Tab 7; GOK’s Carbon Emissions New Subsidy

Allegation Questionnaire Resp. (May 17, 2021) (“GOK’s NSA Resp.”), CR 77, PR 76,

2 At the time of filing the Government’s response, this case was consolidated with another case commenced by Nucor such that two motions for judgment on the agency record were pending. The court subsequently granted Nucor’s motion to sever its case to enable dismissal of that case. See Nucor Corp.’s Consent Mot. to Sever Ct. No. 22- 00171 From Consol. Ct. No. 22-00170 at 1, ECF No. 40; Order (June 12, 2023), ECF No. 41. Court No. 22-00170 Page 4

CJA Tab 8. 3 The questionnaire responses explained that, to reduce greenhouse gas

emissions, the Government of Korea established the Emissions Trading System of

Korea (“K-ETS”) in the Act on the Allocation and Trading of Greenhouse Gas Emissions

Permits (“AAGEP”), with rules governing K-ETS implementation set forth in the

AAGEP’s accompanying Enforcement Decree. GOK’s NSA Resp., Ex. SQA-1 at 1; see

also id., Ex. CEP-1 (reproducing the AAGEP and the Enforcement Decree). 4 The K-

ETS applies to business entities that emit 125,000 tons or more of carbon dioxide or

equivalents or have a single place of business that emits 25,000 tons or more of carbon

dioxide or equivalents. AAGEP, art. 8(1).

Relevant to this case, for each annual compliance year, the Government of

Korea uses emissions data from the 2014 to 2016 baseline period 5 to determine the

number of emissions permits 6 entities will be allocated, subject also to the phase of the

program, the number of permits available, and the number of K-ETS participants. See

GOK’s NSA Resp. at 3–4; Decision Mem. for the Prelim. Results of the Countervailing

Duty Admin. Review (Oct. 29, 2021) (“Prelim. Mem.”) at 17–18, PR 98, CJA Tab 15. 7

3 During the 2018 administrative review, Commerce determined to initiate an investigation into the Government of Korea’s carbon emissions program but deferred the investigation until the 2019 review. See GOK Carbon Emissions Program Questionnaire (Apr. 26, 2021), Attach. 1 at 1, PR 63, CJA Tab 5. 4 For ease of reference, the court cites to the articles of the AAGEP and the Enforcement Decree, respectively. 5 This method is called the “grandfathering method” and is the method the GOK applied to Hyundai Steel. GOK’s NSA Resp. at 4. 6 Permits are also called Korean Allowance Units (“KAUs”). Id., Ex. SQA-1 at 5. 7 Compliance years correspond to calendar years, Prelim. Mem. at 17 n.121, and are also referred to as “commitment periods,” GOK’s NSA Resp. at 7. Commerce explained Court No. 22-00170 Page 5

The 2019 POR fell within phase two of the K-ETS program, 8 during which time all K-

ETS participants received a gratuitous allocation of 97 percent of their permits (referred

to herein as “the standard allocation”) with the remaining three percent held in reserve.

Enforcement Decree, art. 13(2). 9 However, the “types of businesses” that met certain

“international trade intensity” or “production cost” criteria received a gratuitous allocation

of 100 percent of their permits (referred to as “the full allocation”). Id., art. 14. 10

Hyundai Steel qualified for the full allocation. Hyundai Steel’s NSA Resp., Ex. NSA-1 at

2.

Following the end of each compliance year, K-ETS participants must surrender

permits in an amount equal to their emissions during that compliance year or incur

penalties for any shortfall. GOK’s NSA Resp. at 4, 7. Entities that require additional

permits to cover their emissions have several options to avoid a penalty: 1) carry

forward unused permits from prior years, 2) borrow permits from future years, 3) earn

credits by reducing greenhouse gas emissions through external projects (carbon offset

that permits corresponding to compliance year 2019 “are allocated in late 2018.” Prelim. Mem. at 17. 8 Phase two ran from 2018 through 2020. Id. at 18. 9 The GOK uses the permits held in reserve for new entrants and for market stabilization. AAGEP, art. 18. 10 The “types of businesses” eligible for the full allocation are those that have either “an international trade intensity of at least 30 percent”; “production costs of at least 30 percent”; or “an international trade intensity of at least 10 percent and production costs of at least 5 percent.” I&D Mem. at 23; see also Enforcement Decree, art. 14. International trade intensity measures exports plus imports against sales plus imports for the period of 2013 through 2015; production costs are measured as the cost of compliance (emissions multiplied by the market price of permits) measured against the value added during the period of 2013 through 2015. See GOK’s NSA Resp. at 2. Court No. 22-00170 Page 6

programs), 4) purchase permits from nongovernmental parties either directly or through

a trading exchange, or 5) purchase permits through a government-run auction. Prelim.

Mem. at 19 & nn.130–31 (citing GOK’s NSA Resp. at 4–5, Ex. CEP-1, then citing GOK’s

First Suppl. Questionnaire Resp. (Sept. 17, 2021) at 2–3, 7, Ex. CEP-7.1, CR 95, PR

93, CJA Tab 14). Companies that receive the full allocation may not participate in a

government-run auction. GOK’s NSA Resp. at 6. For compliance year 2019, Hyundai

Steel purchased additional permits from private parties and borrowed against the

company’s compliance year 2020 allocation. Hyundai Steel’s NSA Resp. at 4; see also

GOK’s NSA Resp. at 7.

Commerce issued its preliminary results on October 29, 2021. Certain Hot-

Rolled Steel Flat Prods. From the Republic of Korea, 86 Fed. Reg. 60,797 (Dep’t

Commerce Nov. 4, 2021) (prelim. results of countervailing duty admin. review and

rescission in part; 2019) (“Prelim. Results”), PR 100, CJA Tab 17. For the Preliminary

Results, Commerce found that the additional three percent of permits provided to

recipients of the full allocation constituted a countervailable benefit. Prelim. Mem. at

17–20. Commerce preliminarily calculated a subsidy rate of 0.56 percent ad valorem

for Hyundai Steel, Prelim. Results, 86 Fed. Reg. at 60,798, inclusive of a 0.10 percent

ad valorem subsidy rate based on the K-ETS, Prelim. Mem. at 21.

On May 4, 2022, Commerce issued the Final Results. 87 Fed. Reg. at 27,570.

Commerce made no relevant changes to Hyundai Steel’s subsidy rate. I&D Mem. at Court No. 22-00170 Page 7

17. This appeal followed, and the court heard oral argument on September 7, 2023.

Docket Entry, ECF No. 51. 11

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of

1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018), 12 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).

To resolve questions concerning statutory interpretation, the court is guided by

the two-part framework set forth in Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 842–45 (1984). Pursuant to Chevron, the court must first

determine “whether Congress has directly spoken to the precise question at issue.” 467

U.S. at 842. If Congress’s intent is clear, “that is the end of the matter,” and the court

“must give effect to the unambiguously expressed intent of Congress.” Id. at 842–43.

However, “if the statute is silent or ambiguous,” the court must determine whether the

agency’s action “is based on a permissible construction of the statute.” Id. at 843.

DISCUSSION

A countervailable subsidy “exists when . . . a foreign government provides a

financial contribution . . . to a specific industry” that confers “a benefit” on “a recipient

11 Subsequent citations to the Oral Argument include the time stamp from the recording, which is available at https://www.cit.uscourts.gov/node/288/. 12 Further citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code. All references to the U.S. Code are to the 2018 edition unless otherwise specified. Court No. 22-00170 Page 8

within the industry.” Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365,

1369 (Fed. Cir. 2014) (citing 19 U.S.C. § 1677(5)(B)). Hyundai Steel challenges

Commerce’s determination with respect to the financial contribution, benefit, and

specificity elements of a subsidy. Although a lay observer may consider it clear that the

GOK makes a financial contribution to Hyundai Steel by providing the additional KAUs,

confers a benefit by providing those KAUs at no cost, and, by limiting the additional

distribution to certain industries, does so with specificity, it is incumbent upon the

agency to ground its determinations in the statute and regulations, consistent with the

various requirements and limitations contained therein. It is with this in mind that the

court reviews and addresses each issue, in turn.

I. Financial Contribution

Section 1677(5) defines a financial contribution to include, inter alia, “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)(ii). Commerce determined that Hyundai

Steel received a financial contribution pursuant to this provision. I&D Mem. at 21–22.

Referencing the agency’s preliminary analysis, Commerce explained that

“because companies receiving the standard 97 percent allocation were able to purchase

KAUs via the GOK-run auction,” the additional three percent allocated to other

companies represented “something of value on which [the GOK] could collect revenue.”

Id. at 21–22 & n.113 (citing Prelim. Mem. at 20). Commerce rejected Hyundai Steel’s

argument that the Government of Korea did not forgo revenue that was otherwise due.

Id. at 22. The agency reasoned that “it is not a matter of what the GOK would have Court No. 22-00170 Page 9

done with the KAUs had they not given them to qualifying entities like Hyundai Steel,”

but that “the key consideration is that, in lieu of giving these entities the additional KAUs

for free, the GOK would have retained the ability to collect the three percent allocation

from Hyundai Steel.” Id. Commerce explained that because K-ETS participants must

surrender the necessary permits at the end of each commitment period or incur a

penalty, “through various means, the GOK has forgone revenue otherwise due – in the

form of uncollected payments/fines, or through the non-collection of additional allocation

from K-ETS participants (whether from Hyundai Steel or otherwise) – by providing the

additional three percent allocation to certain industries.” Id. at 22.

A. Parties’ Contentions

Hyundai Steel contends that Commerce has misinterpreted the plain language of

the “revenue forgone” provision of the statute. Hyundai’s Mem. at 10. Focusing on the

phrase “otherwise due,” Hyundai Steel contends that the phrase plainly requires the

authority to forgo revenue it otherwise has a “‘right’ to collect.” Id. at 11. Hyundai Steel

asserts that the GOK’s provision of the full allocation to certain companies does not

result in the GOK forgoing revenue otherwise due because companies that receive the

standard allocation are not required to purchase additional permits from the GOK. Id. at

12–15.

The Government contends that, but for the provision of additional permits, “the

[GOK] would have otherwise retained the ability to collect the three percent allocation.”

Def.’s Resp. at 16; see also id. at 17 (arguing that the revenue forgone provision is met

when the relevant authority “provid[es] something of value for which it could otherwise Court No. 22-00170 Page 10

potentially collect revenue”) (emphasis added). The Government relies on BGH

Edelstahl Siegen GmbH v. United States (“BGH I”), 46 CIT __, __, 600 F. Supp. 3d

1241, 1262–63 (2022), to support its position. See id. at 16–17.

Nucor contends that the statute does not require “the revenue [to] be due from

the respondent in question.” Nucor’s Resp. at 16. Nucor thus posits that the GOK

forgoes revenue because recipients of the full allocation are less likely to have to

purchase additional permits on the private market, which, in turn, reduces the need for

other companies to buy permits through the government-run auction. Id. Nucor also

identifies the penalty paid by companies with insufficient permits as “revenue the GOK

could potentially collect.” Id. 13

In its reply brief, Hyundai Steel counters that BGH I is not persuasive because

that opinion does not address arguments raised herein. Hyundai’s Reply at 6–8.

Hyundai Steel further asserts that Nucor’s argument regarding the indirect impact on the

number of permits purchased from the GOK is misplaced because “[t]here is no cap on

the number of permits that can be sold on the private market.” Id. at 9. Hyundai Steel

argues that the GOK’s authority to extract a penalty from companies with insufficient

13 Nucor also asserts that Hyundai Steel is wrong to focus “on the timing of when Hyundai Steel would have owed any revenue to the GOK.” Nucor’s Resp. at 15. Nucor’s argument is not well-developed, but it appears to be rooted in Nucor’s assertion that the permits themselves have value and, thus, the full allocation “placed [Hyundai Steel] in an initial advantageous position.” Id. (quoting Def.’s Resp. at 17). Given that the initial permit allocation (whether full or standard) is gratuitous, AAGEP, art. 12(3)– (4); Enforcement Decree, art. 13, Nucor fails to support the argument that the GOK forgoes revenue that is otherwise due through the allocation process. Court No. 22-00170 Page 11

permits does not mean that revenue “is otherwise due” because such payments are not

certain to occur. Id.

B. Commerce Must Reconsider the Legal Basis for its Financial Contribution Determination

Hyundai Steel contests Commerce’s determination that the Government of Korea

is forgoing revenue that “is otherwise due” when the GOK provides eligible entities with

the full allocation of emissions permits. Hyundai’s Mem. at 9. Commerce’s financial

contribution determination thus turns on the meaning of the phrase “is otherwise due.” 14

Statutory interpretation requires the court to determine “whether Congress has directly

spoken to the precise question at issue.” Chevron, 467 U.S. at 842. 15 The court readily

concludes that the plain meaning of the phrase does not encompass revenue that

could, but not necessarily would, have otherwise been collected by the relevant

authority.

As set forth above, “[t]he term ‘financial contribution’ means-- . . . (ii) foregoing or

not collecting revenue that is otherwise due, such as granting tax credits or deductions

14 Commerce did not take the position that the statutory term “revenue” is ambiguous and permissibly interpreted to cover the emissions permits as a type of monetary equivalent. Rather, Commerce tied the value of the KAUs to their value on the governmental or private markets. See I&D Mem. at 21 (“The record demonstrates that KAUs are market instruments with prices established for the purpose of trading KAUs both through the GOK-run auction and in private trading markets throughout the POR.”). Thus, the revenue that is material to this case is the revenue associated with the sale of permits. Accordingly, and consistent with Commerce’s further explanation on financial contribution and its benefit calculation, see id. at 22, 25, the question before the court is whether the additional three percent allocation resulted in the GOK forgoing revenue from the sale of additional allocations that was otherwise due. 15 Commerce did not state whether the agency considered the statute plain or ambiguous. See id. at 21–22. Court No. 22-00170 Page 12

from taxable income.” 19 U.S.C. § 1677(5)(D)(ii). Congress’s use of the simple present

tense “is” denotes an existent obligation that is due presently or would be due at some

time in the future. See, e.g., Carr v. United States, 560 U.S. 438, 448 (2010) (stating

that, “[c]onsistent with normal usage, we have frequently looked to Congress’ choice of

verb tense to ascertain a statute’s temporal reach”); see also 1 U.S.C. § 1 (“In

determining the meaning of any Act of Congress, unless the context indicates

otherwise--. . . words used in the present tense include the future as well as the

present[.]”). As such, the revenue that is forgone must be due either presently or on

some future date, but it must, nevertheless, be “otherwise due.”

The parties do not dispute that the adverb “otherwise” means, in effect, “in

different circumstances,” see Hyundai’s Mem., Ex. B (appending a printout from an

online dictionary), or as is relevant here, “but for the subsidy program.”

Dispositive for purposes of this case, however, is the meaning of “due.” The

Oxford English Dictionary defines “due,” when used as an adjective as it is in the

statute, as something “[t]hat is owed or payable as an enforceable obligation or debt.”

Due, Oxford English Dictionary, https://www.oed.com/dictionary/due_adj (last visited

Sept. 29, 2023) (emphasis added). Other dictionary definitions are in accord. See Due,

Dictionary.com, https://www.dictionary.com/browse/due (last visited Sept. 29, 2023)

(defining “due” as “owed at present; having reached the date for payment” or, “owing or

owed, irrespective of whether the time of payment has arrived”); Hyundai’s Mem., Ex. A

(appending a printout from Merriam-Webster’s online dictionary defining “due” as “owed

or owing as a debt”). These definitions indicate that the statute requires the forgoing of Court No. 22-00170 Page 13

revenue that the recipient of the financial contribution would—not merely could—

otherwise owe the authority.

The statutory text and legislative history are consistent with this view. See

Gazelle v. Shulkin, 868 F.3d 1006, 1010 (Fed. Cir. 2017) (directing the court to examine

“the statute’s text, structure, and legislative history,” applying, if necessary, “the relevant

canons of interpretation”). The statute and the Statement of Administrative Action

accompanying the Uruguay Round Agreements Act provide nonexhaustive examples in

the form of tax credits or deductions from taxable income that operate to reduce the

amount of tax revenue a recipient would owe the authority. See 19 U.S.C.

§ 1677(f)(D)(ii); Uruguay Round Agreements Act, Statement of Administrative Action

(“SAA”), H.R. Doc. No. 103–316, vol. 1, at 912 (1994), reprinted in 1994 U.S.C.C.A.N.

4040, 4229. 16

Neither Commerce nor the Government 17 offer a contrary interpretation of the

phrase “is otherwise due” or specifically explain why the potential collection of

revenue—either from permits or penalties—fulfills this statutory requirement.

16 The SAA is the authoritative interpretation of the statute. 19 U.S.C. § 3512(d). 17 Cases cited by the Government for the statutory framework also do not suggest a different interpretation. See Def.’s Resp. at 15–16 (citing Gov’t of Québec v. United States, 46 CIT __, __, 567 F. Supp. 3d 1273, 1278 (2022); Essar Steel, Ltd. v. United States, 29 CIT 1311, 1313, 395 F. Supp. 2d 1275, 1277 (2005)). Such cases address financial contribution determinations analogous to the statutory examples. See Gov’t of Québec, 567 F. Supp. 3d at 1296 (revenue forgone when the authority provided “additional depreciation [thereby reducing the tax burden] for buildings used in manufacturing by comparison to the rate applicable if the additional depreciation were not claimed”); Essar Steel, 29 CIT at 1313, 395 F. Supp. 2d at 1277 (revenue forgone when the authority provided credits to be used “for the future payment of import duties”). Court No. 22-00170 Page 14

Commerce’s brief discussion of its decision in FEBs From Germany involving the

European Union Emissions Trading System (“EU ETS”) does not illuminate

Commerce’s statutory interpretation. 18 See I&D Mem. at 22 & nn.114–17 (discussing

Issues and Decision Mem. for Fluid End Blocks from Germany, C-428-848 (Dec. 7,

2020), Cmt. 10). 19

At oral argument, the court asked the parties to provide examples of prior

Commerce decisions, if they exist, in which the agency relied on the revenue forgone

provision when the authority provided something of value to a recipient (i.e., something

other than a tax credit or similar fiscal incentive). See Letter to Counsel (Aug. 31,

2023), ECF No. 50. The Government identified Hyundai Steel Co. v. United States

(“Hyundai Steel II”), Slip Op. 23-121, 2023 WL 5352235, at *1 (CIT Aug. 1, 2023), as

such an example. Oral Arg. 26:00–27:30. Nucor identified a Commerce decision

concerning silicon metal from Australia. Id. 32:00–34:03. 20

18 Commerce quoted from a portion of its FEBs From Germany decision in which the agency analogized the EU ETS to a tax rebate system. See I&D Mem. at 22 n.114. However, beyond declaring that in each situation “the government has forgone revenue that would otherwise have been due,” Commerce does not explain precisely why the EU ETS is analogous to a tax rebate system. See id. While the BGH I court sustained Commerce’s financial contribution determination with respect to the EU ETS, 600 F. Supp. at 1262–63, Hyundai Steel raises different arguments grounded in statutory interpretation that the BGH I court did not have occasion to address and, in any case, CIT opinions are not binding, see Algoma Steel Corp. v. United States, 865 F.2d 240, 243 (Fed. Cir. 1989). 19 Commerce’s decision memoranda are publicly available at https://access.trade.gov/ public/FRNoticesListLayout.aspx, with separate links for pre- and post-June 2021 memoranda. 20 Nucor did not provide a specific citation, but the court understands Nucor to refer to the agency’s preliminary determination in the countervailing duty investigation Court No. 22-00170 Page 15

While the relevant determinations were not subject to judicial review, 21 it appears

that the revenue the respective authorities declined to collect in each case would

otherwise have been due (owed) to the authority. In Hyundai Steel II, Commerce relied

on the revenue forgone provision when, following Hyundai Steel’s construction of port

facilities and subsequent transfer of port ownership to the Government of Korea, the

GOK assigned its right to collect port fees to Hyundai Steel. 2023 WL 5352235, at *3

(explaining that the port fees “would otherwise have been collected by the [Government

of Korea] absent the agreement between the parties”) (alteration in original). In Silicon

Metal From Australia, Simcoa, an electricity retailer, obtained certificates exempting it

from certain renewable energy liabilities and provided those certificates to Synergy, an

electricity provider and “authority” pursuant to the statute, that functioned as a credit on

Simcoa’s electricity account. Silicon Metal Prelim. Mem. at 10–11. Commerce found a

financial contribution in the form of reduced electricity payments from Simcoa to

Synergy. Id. at 11 (unchallenged in the final decision memorandum). Commerce’s

determinations in these two instances are more clearly reconcilable with the above

concerning silicon metal from Australia. See Prelim. Decision Mem. for Silicon Metal from Australia, C-602-811 (Aug. 7, 2017) (“Silicon Metal Prelim. Mem.”). 21 The court’s opinion ordering the remand determination reviewed in Hyundai Steel II made clear that Hyundai Steel’s challenge was limited to the benefit determination and did not include the financial contribution or specificity determinations. See Hyundai Steel Co. v. United States, 47 CIT __, __, 615 F. Supp. 3d 1351, 1354 (2023). In another recent case involving the countervailability of port-usage fees, Hyundai Steel likewise challenged only Commerce’s benefit determination. See Hyundai Steel Co. v. United States, Slip Op. 23-142, 2023 WL 6240149, at *3–4 (CIT Sept. 26, 2023) (ordering remand for further consideration of the issue). A review of the court’s docket does not disclose litigation concerning Silicon Metal From Australia, nor did Nucor provide such a citation. Court No. 22-00170 Page 16

definitions of the term “due” in connection with enforceable payment obligations or

debts.

Commerce’s construction of the statute in this case might fare better if the statute

provided for a financial contribution in the form of revenue forgone without further

qualification, but by adding the phrase “that is otherwise due,” Congress added a

constraint for which Commerce must account. See United States v. Nordic Vill. Inc.,

503 U.S. 30, 36 (1992) (stating that courts must construe statutes “in such a fashion

that every word has some operative effect”). Because Commerce did not do so here,

the agency’s financial contribution determination is not in accordance with law. 22

Additionally, as a factual matter, 23 the full allocation provided by the K-ETS as

compared to the standard allocation does not meet the plain language of the revenue

22 Commerce’s interpretive approach (pursuant to which the potential forgoing of revenue suffices for purposes of section 1677(5)(D)(iii)) is problematic because it could subsume other provisions of the financial contribution statute. Because Commerce considers money to be fungible for purposes of administering the countervailing duty statute, see, e.g., Kiswok Indus. Pvt. v. United States, 28 CIT 774, 787 (2004) (“A cash subsidy, regardless of its intended or actual use, frees up revenue, which in turn may be applied for other purposes, and thus entails general benefit.”), Commerce could, in theory, find that a grant, which typically falls under a different statutory provision, constitutes revenue forgone to the extent that the grant money may be used to offset a recipient’s tax liability. In such a case, the authority is forgoing revenue in an amount equal to the amount of the grant, and such amount is potentially due to the authority even if the grant is provided without regard to when (or if) the tax may be due. Given that Commerce considers the KAUs to be market instruments, see I&D Mem. at 21, the possibility that Commerce’s determination conflates otherwise distinct statutory provisions bolsters the need for the agency to reconsider its interpretive approach. 23 The overall thrust of Commerce’s decision appears to rest on the agency’s conclusion that the potential for collecting revenue fulfills the revenue forgone provision. See id. at 18 (recognizing that “the assistance provided by the additional three percent KAU allocation is intended to cover potential liability owed by, not to, the respondent under Court No. 22-00170 Page 17

forgone provision. While “the three percent allocation represents a value that the GOK

will no longer collect” because companies that receive the additional permits will not

have to purchase those permits from the GOK to cover their annual emissions (or obtain

them elsewhere), I&D Mem. at 22, the value embodied by those permits does not

represent revenue that, but for the permits being given to Hyundai Steel gratis, “is

otherwise due” to the GOK. K-ETS participants that receive the standard allocation do

not automatically incur any enforceable debt or financial obligation that recipients of the

full allocation avoid by reason of the additional allocation, all other things being equal.

Companies that receive the standard allocation might not incur any permit shortfall and,

if they do, they have various options to remedy the shortfall besides sending payment to

the GOK. See, e.g., Prelim. Mem. at 19. That the GOK might obtain revenue from the

sale of additional KAUs does not mean that the GOK has, in the case of companies like

Hyundai Steel, forgone revenue that “is otherwise due.” 24

the K-ETS program”) (emphasis added; other emphasis omitted); id. at 22 (noting that “the GOK is providing something of value on which it could collect revenue” and that without the additional allocation “the GOK would have retained the ability to collect the three percent allocation from Hyundai Steel”) (emphasis added). However, after recounting these scenarios, Commerce concluded that “the GOK has forgone revenue otherwise due.” Id. (emphasis added). As a result of this conclusory reasoning, and as discussed herein, the court is unable to find that substantial evidence supports Commerce’s finding that the full allocation fulfills the plain meaning of the revenue forgone provision. 24 Nucor’s argument that the additional allocation indirectly reduces the number of permits that need to be purchased from the GOK because it relieves pressure on the private permit market, see Nucor’s Resp. at 16, is not persuasive. Nucor identifies no record evidence demonstrating that, but for the full allocation, additional private purchases by companies otherwise eligible for the full allocation would require other, companies to purchase permits from the GOK to avoid a penalty or that other sources of permits (including those earned through offset projects) would be exhausted. Court No. 22-00170 Page 18

Accordingly, Commerce’s determination with respect to financial contribution is

not in accordance with the law to the extent that it rests on an incorrect interpretation of

the statute and lacks substantial evidence to the extent that the full allocation does not

result in revenue forgone that is otherwise due. Thus, Commerce’s determination will

be remanded for Commerce to reconsider whether the full allocation constitutes a

financial contribution.

II. Benefit

“A benefit shall normally be treated as conferred where there is a benefit to the

recipient.” 19 U.S.C. § 1677(5)(E). As a practical matter, the statute provides rules to

guide Commerce’s benefit determination in the case of an equity infusion, loan, loan

guarantee, or the provision of a good or service, but these examples are not exhaustive.

See id. § 1677(5)(E)(i)–(iv). Commerce’s regulations also guide the agency’s

identification and measurement of a benefit. See 19 C.F.R. §§ 351.503–351.520. For

subsidy programs not specifically covered by Commerce’s regulations, Commerce

“normally will consider a benefit to be conferred where a firm pays less for its inputs

(e.g., money, a good, or a service) than it otherwise would pay in the absence of the

government program . . . .” Id. § 351.503(b)(1). When subsection (b)(1) does not apply,

Commerce “will determine whether a benefit is conferred by examining whether the

alleged program or practice has common or similar elements to the four illustrative

examples in [19 U.S.C. § 1677(5)(E)(i)–(iv)].” Id. § 351.503(b)(2).

For the Preliminary Results, Commerce relied on 19 C.F.R. § 351.503(b)(2) to

find a benefit “to the extent that the recipient is relieved of the obligation to purchase Court No. 22-00170 Page 19

additional allowances.” Prelim. Mem. at 20. Hyundai Steel did not challenge

Commerce’s reliance on subsection (b)(2) but instead focused solely on Commerce’s

claimed failure to consider the burdens imposed by the K-ETS. See Hyundai Steel’s

Case Br. (Jan. 11, 2022) at 3–9, CR 120, PR 122, CJA Tab 19.

For the Final Results, Commerce found that the full allocation constituted a

benefit despite the costs incurred by Hyundai Steel to comply with K-ETS requirements.

I&D Mem. at 20. Commerce explained that “[a] subsidy that reduces a firm’s cost of

compliance remains a subsidy . . . even though the overall effect of the two government

actions, taken together, may leave the firm with higher costs.” Id. at 18 & n.94 (quoting

Countervailing Duties, 63 Fed. Reg. 65,348, 65,361 (Dep’t Commerce Nov. 25, 1998)

(final rule) (“Preamble”) (alterations in original). According to Commerce, “[t]he

[Preamble] describes a relevant example” as when “a government implements new

environmental restrictions that require a firm to purchase new equipment” and “[t]he

government then provides that firm with subsidies to purchase the new equipment” but

the subsidy “does not fully offset the cost of the equipment.” Id. at 18 & n.96 (citing

Preamble, 63 Fed. Reg. at 65,361).

A. Parties’ Contentions

Hyundai Steel contends that Commerce’s benefit determination is unlawful

insofar as Commerce “ignore[d] the immense burden this program places on companies

like Hyundai Steel” as compared to companies that are not subject to the K-ETS.

Hyundai’s Mem. at 20–21. Hyundai Steel cites Gov’t of Sri Lanka v. United States, 42

CIT __, __, 308 F. Supp. 3d 1373, 1380 (2018) (“GOSL”), to support its position. Id. at Court No. 22-00170 Page 20

24, 27. Hyundai Steel also contends that Commerce failed to conduct the examination

required by 19 C.F.R. § 351.503(b)(2). Id. at 22.

The Government contends that Commerce need not consider “any related

‘burdens’ imposed on a firm” in connection with the subsidy program, “such as those

pertaining to compliance with certain environmental obligations.” Def.’s Resp. at 18;

see also id. at 19 (discussing BGH I, 600 F. Supp. 3d at 1264). Nucor contends that

Commerce explained its benefit determination pursuant to 19 C.F.R. § 351.503(b)(2)

when it concluded that “the recipient is relieved of the obligation to purchase additional

allowances.” Nucor’s Resp. at 18 (quoting Prelim. Mem. at 20; I&D Mem. at 24).25

B. Commerce Must Reconsider Its Determination of Benefit Consistent with the Agency’s Reconsideration of Financial Contribution

Because Commerce must reconsider the legal basis, if any, for its financial

contribution determination, the agency may, if necessary, reconsider the regulatory

basis for its benefit determination. 26 For the sake of completeness, however, and

insofar as it may remain relevant to the matters addressed on remand, the court

25 Nucor also argues that Hyundai Steel received the additional permits for less than adequate remuneration, Nucor’s Resp. at 18, but Commerce did not make a benefit determination pursuant to 19 U.S.C. § 1677(5)(E)(iv). 26 Commerce’s regulations contain specific rules for measuring the benefits conferred through various types of subsidy programs in addition to the catchall provision Commerce relied on here. See 19 C.F.R. § 351.503(a), (b)(2). Thus, any change in Commerce’s basis for finding a financial contribution may alter Commerce’s benefit analysis, requiring application of a different regulation. Accordingly, the court need not address Hyundai Steel’s challenge to the adequacy of Commerce’s explanation of its reliance on 19 C.F.R. § 351.503(b)(2) at this time. See Hyundai’s Mem. at 22; Hyundai’s Reply at 15. Court No. 22-00170 Page 21

considers—and rejects—Hyundai Steel’s primary claim that Commerce impermissibly

ignored the burdens imposed by the K-ETS program.

The statute addresses the circumstances in which environmental compliance is

non-countervailable, and those circumstances are not present here nor does Hyundai

Steel claim that they are present. See 19 U.S.C. § 1677(5B)(D)(i) (governing

nonrecurring subsidies provided for “the adaptation of existing facilities to new

environmental requirements” that “result in greater constraints and financial burdens on

the recipient”). 27 Further, as Commerce explained, the Preamble expressly

contemplates the countervailability of subsidies that are intended to offset a firm’s cost

of complying with environmental restrictions. See I&D Mem. at 18 & n.93 (citing

Preamble, 63 Fed. Reg. at 65,361). 28 Hyundai Steel identifies no legal requirement for

Commerce to compare Hyundai Steel’s experience to that of other companies, foreign

27 The statute also lists permissible offsets from Commerce’s calculation of the gross countervailable subsidy, see 19 U.S.C. § 1677(6), though Hyundai Steel does not argue that any such offsets apply here, see Hyundai’s Mem. at 27. 28 Hyundai Steel argues that the Preamble’s discussion is inapposite because it relates to input cost reductions, which was not the basis for Commerce’s decision here, and because the Preamble refers to the imposition and the subsidization of the requirements as “two separate actions,” whereas the “emissions caps allocated in the form of permits here are the environmental restriction.” Hyundai’s Reply at 12. Those distinctions are immaterial. There is no indication in the Preamble that the agency intended to constrain its ability to find a benefit when a company ultimately incurs higher costs to only those situations involving input cost effects. In fact, the reference to “two separate actions” occurs with respect to an example in which a firm is required to purchase new equipment to adapt its facilities and receives a subsidy to purchase “that new equipment.” Preamble, 63 Fed. Reg. at 65,361. Additionally, statutory treatment of an imposition and corresponding subsidization of compliance with that imposition “as two separate actions” does not mean that Commerce cannot consider one aspect of a larger government action to confer a benefit when other aspects of that same action may result in higher overall costs. Id. Court No. 22-00170 Page 22

or domestic, that do not incur similar compliance costs, nor is the court aware of any.

Cf. BGH I, 600 F. Supp. 3d at 1255 (rejecting a similar argument with the observation

that “[n]either the statute nor the regulations allow for such a comparison”).

Hyundai Steel’s reliance on GOSL to persuade the court otherwise is also

misplaced. There, the court remanded Commerce’s benefit determination when the

agency countervailed payments made by the Government of Sri Lanka (“GSL”)

reimbursing tire manufacturers/rubber buyers for payments made to rubber

smallholders. GOSL, 308 F. Supp. 3d at 1379–84. The program being examined in

that case involved an above-market “guaranteed price” to smallholders that rubber

buyers were required to pay, subject to reimbursement by the GSL for any difference

between the “market price” and the “guaranteed price,” i.e., the value of the guarantee

to the smallholders. Id. at 1379–80. The court concluded that Commerce erred in

ignoring evidence that the rubber buyers had effectively extended “interest-free loans”

to the GSL such that the “reimbursement payments” at issue were not properly

considered a benefit. Id. at 1382.

GOSL is inapposite. There, the court faulted Commerce for disregarding

evidence demonstrating that the payments at issue did not meet the statutory or

regulatory criteria for finding a benefit; the court was not concerned with whether related

burdens from complying with a program that otherwise conferred a benefit undermined

any such finding. See id. at 1381–84. Hyundai Steel’s emphasis on contextualizing any

benefit within a governmental action’s overall burden stretches the GOSL court’s

holding too far and overlooks that Commerce routinely countervails benefits that reduce Court No. 22-00170 Page 23

otherwise greater liabilities. See, e.g., 19 C.F.R. § 351.509(a) (in the case of tax

credits, stating that “a benefit exists to the extent that the tax paid by a firm as a result of

the program is less than the tax the firm would have paid in the absence of the

program”) (emphases added). The absence of any limiting principle to Hyundai Steel’s

characterization of GOSL is another reason to reject the argument. Accordingly, the

court will sustain this aspect of Commerce’s benefit determination and will defer

addressing any remaining benefit arguments pending the agency’s redetermination on

remand.

III. Specificity

Domestic subsidies 29 may be specific as a matter of law (de jure specific) or as a

matter of fact (de facto specific). 19 U.S.C. § 1677(5A)(D). Commerce concluded that

the distribution of the full allocation of emissions permits pursuant to the K-ETS is de

jure specific. I&D Mem. at 22.

The statute provides that a “subsidy is specific as a matter of law” when “the

authority providing the subsidy, or the legislation pursuant to which the authority

operates, expressly limits access to the subsidy to an enterprise or industry.” 19 U.S.C.

§ 1677(5A)(D)(i). 30 Pursuant to the statutory safe harbor provision, however, a subsidy

is not de jure specific when “the authority providing the subsidy, or the legislation

29 In addition to domestic subsidies, the statute defines import substitution subsidies and export subsidies as per se specific, neither of which are relevant here. 19 U.S.C. § 1677(5A)(B),(C). 30 For purposes of subsection (5A), “any reference to an enterprise or industry is a reference to a foreign enterprise or foreign industry and includes a group of such enterprises or industries.” Id. § 1677(5A). Court No. 22-00170 Page 24

pursuant to which the authority operates, establishes objective criteria or conditions

governing the eligibility for, and the amount of, a subsidy.” Id. § 1677(5A)(D)(ii). 31

“[T]he term ‘objective criteria or conditions’ means criteria or conditions that are neutral

and that do not favor one enterprise or industry over another.” Id. § 1677(5A)(D).

“Neutral in this context means economic in nature and horizontal in application, such as

the number of employees or the size of the enterprise.” BGH I, 600 F. Supp. 3d at 1255

(citing SAA at 930, 1994 U.S.C.C.A.N. at 4243).

Commerce found that the AAGEP and the Enforcement Decree “establish

criteria” that “result in an express statutory limitation on which industries qualify for the

additional allocation by setting thresholds that industries must meet.” I&D Mem. at 23.

While Commerce acknowledged that “the rules do not name specific industries,”

Commerce considered the governing documents sufficiently determinative for purposes

of section 1677(5A)(D)(i) because they “establish that some industries may benefit from

the additional assistance in the form of the allocation of additional KAUs, while others

do not.” Id. In addition to establishing “explicit limitations,” Commerce found that the

enumerated criteria are “not objective” for purposes of the safe harbor provision in

section 1677(5A)(D)(ii). Id.

31 For a subsidy to avoid a specificity finding, subsection (ii) further requires that “(I) eligibility is automatic, (II) the criteria or conditions for eligibility are strictly followed, and (III) the criteria or conditions are clearly set forth in the relevant statute, regulation, or other official document so as to be capable of verification.” Id. § 1677(5A)(D)(ii). Such requirements are not at issue here. Court No. 22-00170 Page 25

A. Parties’ Contentions

Hyundai Steel contends that the relevant provisions of the AAGEP and the

Enforcement Decree are not de jure specific because they do not “explicitly limit” the full

allocation “to a specific enterprise or industry.” Hyundai’s Mem. at 29 (citing Asociación

de Exportadores e Industriales de Aceitunas de Mesa v. United States, 45 CIT __, __,

523 F. Supp. 3d 1393 (2021) (“Asemesa”)). Hyundai Steel further contends that

Commerce provided no explanation for its finding pursuant to section 1677(5A)(D)(ii).

Id. at 34.

The Government contends that Asemesa is factually distinguishable. Def.’s

Resp. at 21–22. For the Government, it is enough that the AAGEP and the

Enforcement Decree “establish that specific types of industries may benefit from the

additional assistance . . . while others do not.” Id. at 22–23. The Government further

contends that the safe harbor provision does not apply because the criteria “clearly

favor industries in trade-intensive or high production cost sectors.” Id. at 23. The

Government analogizes Commerce’s specificity finding to the agency’s determination

sustained in connection with the EU ETS in BGH I. See id. at 24. Nucor advances

similar arguments. See Nucor’s Resp. at 19. 32

32 Nucor raises additional arguments concerning the subsectors that qualified for the full allocation in an effort to demonstrate specificity. Nucor’s Resp. at 20 (discussing GOK’s NSA Resp., Exs. CEP-7, CEP-8). Commerce did not explicitly rely on, or otherwise discuss, the facts contained in these exhibits and, therefore, the court need not further discuss Nucor’s arguments. See Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168–69 (1962) (explaining that the court may only sustain Commerce’s decision “on the same basis articulated in the order by the agency itself” and not on the basis of “counsel’s post hoc rationalizations”). Court No. 22-00170 Page 26

Hyundai Steel replies that the Government’s attempt to distinguish the facts of

Asemesa is misplaced because the court’s holding nevertheless applies. Hyundai’s

Reply at 17. Hyundai Steel further asserts that the BGH I court’s specificity holding with

respect to the EU ETS program is distinguishable and that the court’s holding with

respect to a different subsidy program is more persuasive. Id. at 19–20. 33

B. Commerce Must Reconsider or Further Explain the Agency’s Specificity Finding

For a subsidy to be specific pursuant to section1677(5A)(D)(i), the authority or

the implementing legislation must “expressly limit[] access to the subsidy to an

enterprise or industry,” 19 U.S.C. § 1677(5A)(D)(i), or a “a group of such enterprises or

industries.,” id. § 1677(5A). The court has interpreted the statute to mean “that a

subsidy is de jure specific when the authority providing the subsidy, or its operating

legislation, directly, firmly, or explicitly assigns limits to or restricts the bounds of a

particular subsidy to a given enterprise or industry,” Asemesa, 523 F. Supp. 3d at 1403

(stating that “[t]here is no ambiguity in this reading”), or in other words, when the

33 Hyundai Steel relies on the BGH I court’s discussion of the KAV program, pursuant to which benefits were limited “to special contract customers whose average price per [kilowatt hour (“kWh”)] in the calendar year is lower than the average revenue per kWh from the supply of electricity to all special contract customers.” 600 F. Supp. 3d at 1269. The court remanded Commerce’s determination for further explanation or reconsideration. Id. Commerce subsequently provided additional explanation to support its specificity finding, and the court again remanded. BGH Edelstahl Siegen GmbH v. United States (“BGH II”), 47 CIT __, __, 639 F. Supp. 3d 1237, 1244 (2023). The BGH II court reasoned that the criteria governing the KAV program “do not expressly limit the program’s application to specific enterprises or industries” and Commerce had not “explain[ed] how the program’s criteria are neither economic in nature nor horizontal in application.” Id. Court No. 22-00170 Page 27

program is limited “to specifically named enterprises or industries or group of

enterprises or industries,” BGH II, 639 F. Supp. 3d at 1244. Nonuniform treatment

across the economy is not enough; instead, the authority or its implementation

legislation must “explicit[ly] restrict[]” the “benefits to a specific enterprise or industry.”

Asemesa, 523 F. Supp. 3d at 1403.

Commerce does not offer a convincing explanation for why the “international

trade intensity” or “production cost” criteria governing the full allocation establish de jure

specificity pursuant to section 1677(5A)(D)(i). See I&D Mem. at 23 (expressing

disagreement with Hyundai Steel’s reliance on Asemesa without directly addressing the

court’s opinion). 34 Commerce’s observation that “some industries may benefit from the

additional assistance in the form of the allocation of additional KAUs, while others do

not,” I&D Mem. at 23, merely reflects the truism that not all industries will “qualif[y] under

the criteria,” BGH II, 639 F. Supp. 3d at 1244. While the statute “does not attempt to

provide a precise mathematical formula for determining when the number of enterprises

or industries eligible for a subsidy is sufficiently small so as to properly be considered

specific,” SAA at 930, 1994 U.S.C.C.A.N. at 4243, Commerce did not make any findings

regarding the nature of the eligibility criteria that supported the de jure specificity finding.

Rather, Commerce relied on the existence of the criteria per se to establish specificity.

34 Commerce’s determination suggests that a subsidy would be de jure specific pursuant to section 1677(5A)(D)(i) whenever an authority sets eligibility criteria that operate to exclude certain industries from receiving a benefit. See I&D Mem. at 23. Commerce does not explain why the statute plainly allows for such a broad interpretation or why the agency’s interpretation represents a permissible construction of ambiguous language. See id. Court No. 22-00170 Page 28

See I&D Mem. at 23. But cf. Taizhou United Imp. & Exp. Co. v. United States, 44 CIT

__, __, 475 F. Supp. 3d 1305, 1315 (2020) (sustaining Commerce’s de jure specificity

finding when “eight specified industries” qualified for a subsidy that was “limited as a

matter of law to certain new and high technology companies”) (emphases added).

However, the existence of criteria alone, and absent any analysis of those criteria, is not

enough to demonstrate an explicit limitation to an enterprise or industry or group

thereof. See 19 U.S.C. § 1677(5A)(D)(i). 35

Commerce’s application of section 1677(5A)(D)(ii) does not save the agency’s

determination. Commerce merely declared that “the AAGEP and implementing rules . .

. are not objective criteria or conditions,” I&D Mem. at 23, but did not provide the

explanation necessary to support its decision. Commerce did not explain why the

criteria inherently favor a given enterprise or industry or address whether the criteria are

economic in nature or horizontal in application. See id.; SAA at 930, 1994 U.S.C.C.A.N.

at 4243; cf., e.g., NMB Sing. Ltd. v. United States, 557 F.3d 1316, 1319 (Fed. Cir. 2009)

(“Commerce must explain the basis for its decisions; while its explanations do not have

to be perfect, the path of Commerce's decision must be reasonably discernable to a

35 The BGH I court’s decision with respect to the EU ETS is factually distinguishable to the extent that the court relied on Commerce’s finding that eligibility for the EU ETS is “limited by law to the companies on the carbon leakage list.” 600 F. Supp. 3d at 1264. Furthermore, Commerce did not analogize this aspect of its decision in FEBs From Germany to the facts underlying this case. Court No. 22-00170 Page 29

reviewing court.”). 36 Accordingly, Commerce must reconsider or further explain its

finding of de jure specificity.

CONCLUSION AND ORDER

In accordance with the foregoing, it is hereby

ORDERED that Commerce’s Final Results are remanded for further explanation

or reconsideration consistent with this opinion with respect to the agency’s

determination that the full allocation pursuant to the K-ETS constitutes a countervailable

subsidy; it is further

ORDERED that Commerce shall file its remand redetermination on or before

January 5, 2024; it is further

ORDERED that subsequent proceedings shall be governed by USCIT Rule

56.2(h); and it is further

36 During oral argument, Nucor averred that Commerce’s rationale for finding de jure specificity is discernable through the agency’s citations to record documents in footnotes 120 and 121 of the Issues and Decision Memorandum. Oral Arg. 2:07:00– 2:08:20. Those footnotes contain citations to the AAGEP and the Enforcement Decree in their entirety and to specified pages of the GOK’s case brief to the agency. See I&D Mem. at 23 nn.120–21 (citing GOK’s NSA Resp., Ex. CEP-1, and Case Br. of the [GOK] (Jan. 11, 2022) at 8–9, CR 119, PR 121, CJA Tab 18). While these citations substantiate the fact that not all industries qualify for the full allocation (and the GOK’s view that Commerce reached an incorrect preliminary determination on specificity), the court is unable to discern Commerce’s rationale for connecting these facts found to the choice made. See, e.g., Burlington Truck Lines, 371 U.S. at 168. Court No. 22-00170 Page 30

ORDERED that any comments or responsive comments must not exceed 4,000

words.

/s/ Mark A. Barnett Mark A. Barnett, Chief Judge

Dated: September 29, 2023 New York, New York