UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-15

Before the Court in Hyundai Steel Co. v. United States, Court No. 21-00536, Slip Op. 23-15 (February 10, 2023) was Plaintiff’s motion for judgment challenging the U.S. Department of Commerce’s 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”). The agency determined that the Government of Korea’s provision of port usage rights to Hyundai Steel constituted a countervailable benefit and that Hyundai Steel’s payment of reduced sewerage usage fees involved a financial contribution and a countervailable benefit. For the following reasons the Court remanded the final results.

The issue turned on the accuracy of Commerce’s determination that the free provision of port usage rights associated with the Port of Incheon Program conferred a benefit, and of the benefit and financial contribution determinations related to the Sewerage Usage Fees Program. Commerce calculated in the Final Results a final subsidy rate of 0.51% for Hyundai Steel. First, Commerce determined that Hyundai Steel received a countervailable subsidy through the Port Usage Rights Program because of the free provision of port usage rights associated with the Port of Incheon Program conferred a countervailable subsidy to Hyundai Steel. In determining that Hyundai Steel’s non-payment of port usage fees accorded a countervailable benefit, Commerce considered that the Government of Korea did not collect port usage fees from Hyundai Steel that it was entitled to collect as the owner of the port and that Hyundai Steel had the right to use the port without charge. Hyundai Steel challenged Commerce’s benefit determination arguing that Commerce should have applied its “excessive benefit” standard, by which Commerce would have determined that a benefit was not conferred. Moreover, plaintiff argued that Commerce’s benefit determination was not supported by substantial evidence and is not in accordance with the law because the port usage rights were provided as repayment of a debt as compensation for the taking of property when ownership was conferred to the Government of Korea under Korean law. The court distinguished this case from AK Steel Corp. v. United States, 192 F.3d 1367 (Fed. Cir. 1999), where the U.S. Court of Appeals for the Federal Circuit upheld Commerce’s benefit determination based on POSCO’s exemption from dockyard fees and held that Commerce’s determination was supported by substantial evidence, holding that the instant case differs from AK Steel Corp. in the evidence on the administrative record. The court remanded this determination, holding that the agency did not satisfy the statutorily defined components and therefore, Commerce’s determination that the provision of port usage rights constituted a benefit is not supported by substantial evidence. 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). Yet, Commerce did not consider Hyundai Steel’s non-payment of port usage fees in terms of adequacy of remuneration, that Hyundai Steel uses the port to transport raw materials for steel production, and that the Government of Korea is not collecting fees that it is entitled to collect. Commerce considered that nothing on the record demonstrated that the main purpose of building the port was for the public good or any governmental functions.

Second, Commerce determined that Hyundai Steel’s reduced fees pursuant to the sewerage usage fees program constituted a countervailable subsidy. On this issue, Defendant requested a remand for Commerce to reconsider its determination in light of its better understanding of the program and the underlying Korean law that governs the reduction of sewerage usage fees, and Hyundai Steel supported this request for remand. The court ordered a partial remand by relying on SKF USA, Inc. v. United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001), where the U.S. Court of Appeals for the Federal Circuit recognized that the decision to remand is in the court’s discretion when an agency seeks a remand without confessing error in order to reconsider its previous position. The court determination related to the Sewerage Usage Fees Program stating that a remand will allow Commerce to cure its own mistakes and reconsider two substantive issues raised by Hyundai Steel, as well as preserve court resources.