Hyundai Steel Co. v. United States

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