Court Opinion

ID: 9910978
Source: CourtListenerOpinion
Date Created: 2023-12-18 22:01:57.364675+00
Date Added: 2024-06-11T12:55:20.147928
License: Public Domain

Slip Op. 23-182

                 UNITED STATES
          COURT OF INTERNATIONAL TRADE

    Court No. 22-00029                 Court No. 22-00032
HYUNDAI STEEL COMPANY,            DONGKUK STEEL MILL CO.,
         Plaintiff,                       LTD.,
             v.                              Plaintiff,
    UNITED STATES,                                 v.
        Defendant,                      UNITED STATES,
            and                             Defendant,
SSAB ENTERPRISES LLC and                       and
  NUCOR CORPORATION,                NUCOR CORPORATION,
   Defendant-Intervenors.              Defendant-Intervenor.

                  Before: M. Miller Baker, Judge

                            OPINION

     [The court grants Plaintiffs’ motions for judgment on
     the agency record in part and remands to the Depart-
     ment of Commerce.]

                                 Dated: December 18, 2023

     Brady W. Mills and Nicholas C. Duffey, Morris, Man-
     ning & Martin, LLP, of Washington, DC, argued for
     Hyundai Steel Company, Plaintiff in Case 22-29. With
     them on the briefs were Donald B. Cameron, Julie C.
     Mendoza, R. Will Planert, Mary S. Hodgins, Eugene
Ct. Nos. 22-00029, 22-00032                     Page 2

Degnan, Edward J. Thomas III, and Jordan L.
Fleischer.

Ruby Rodriguez, Winton & Chapman PLLC of Wash-
ington, DC, argued for Dongkuk Steel Mill Co., Ltd.,
Plaintiff in Case 22-32. On the briefs for Dongkuk
were Jeffrey M. Winton and Vi N. Mai.

Elizabeth A. Speck, Senior Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of
Justice of Washington, DC, argued for Defendant in
both cases. On the brief for Defendant were Brian M.
Boynton, Principal Deputy Assistant Attorney Gen-
eral; Patricia M. McCarthy, Director; L. Misha Pre-
heim, Assistant Director; and Kelly A. Krystyniak,
Trial Attorney. Of counsel for Defendant was Jared M.
Cynamon, Office of the Chief Counsel for Trade En-
forcement and Compliance, U.S. Department of Com-
merce of Washington, DC.

Derick G. Holt, Wiley Rein LLP of Washington, DC,
argued for Nucor Corporation, Defendant-Intervenor
in both cases. With him on the brief were Alan H.
Price, Christopher B. Weld, and Paul A. Devamithran.

Christopher T. Cloutier, Schagrin Associates of Wash-
ington, DC, argued for SSAB Enterprises LLC, De-
fendant-Intervenor in Case 22-29 only.

   Baker, Judge: This case involves a South Korean
steel producer’s challenge to a countervailing duty or-
der focused on that country’s cap-and-trade system for
limiting carbon emissions. The Department of Com-
merce found that because the scheme provides some
indigenous manufacturers with 100 percent of their
Ct. Nos. 22-00029, 22-00032                        Page 3

allotted units under the system while giving other
such producers only 97 percent, the system provides a
countervailable subsidy to the former. For the reasons
outlined below, the court remands for reconsideration.

                             I

   The Tariff Act of 1930, as amended, provides that
when Commerce determines that a foreign govern-
ment is providing a “countervailable subsidy” as to
goods imported into the United States, and the Inter-
national Trade Commission further determines that
such imports injure U.S. domestic industry, the De-
partment will impose a “countervailing duty” on the
relevant merchandise “equal to the amount of the net
countervailable subsidy.” 19 U.S.C. § 1671(a).

   To conclude that a foreign producer received a sub-
sidy, Commerce must determine that “(1) a foreign
government provide[d] a financial contribution (2) to a
specific industry and (3) a recipient within the indus-
try receive[d] a benefit as a result of that contribution.”
Fine Furniture (Shanghai) Ltd. v. United States, 748
F.3d 1365, 1369 (Fed. Cir. 2014) (citing 19 U.S.C.
§ 1677(5)(B)); see also 19 U.S.C. § 1677(5)(A). “Analyz-
ing all three factors is therefore necessary for Com-
merce to determine whether a [countervailing duty]
must be imposed.” Fine Furniture, 748 F.3d at 1369.

   As relevant here, the Tariff Act defines “financial
contribution” as meaning “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). The statute further (and unhelpfully)
Ct. Nos. 22-00029, 22-00032                      Page 4

provides that “[a] benefit shall normally be treated as
conferred where there is a benefit to the recipient,” id.
§ 1677(5)(E), and (more helpfully) outlines four non-
exclusive examples. See id. § 1677(5)(E)(i)–(iv).

                           II

                           A

    The South Korean government has imposed a cap-
and-trade system on that country’s industry to reduce
carbon emissions. In general, companies—including
steel producers—that emit more than a certain volume
of carbon must “pay” to do so by surrendering “Korean
Allowance Units.” Appx14329–14330. The South Ko-
rean government allocates the units. Appx14330. Be-
fore a given compliance year, the government calcu-
lates the number of units to be assigned to each regu-
lated company. Id. Certain business sectors that meet
“high international trade intensity” or “high produc-
tion cost” criteria receive 100 percent of their assigned
units. Appx14330–14331. Other sectors that fail to
meet the “trade intensity” or “production cost” criteria
instead receive 97 percent of their assigned units.
Appx14330.

    Every year, the South Korean government deter-
mines each regulated company’s actual carbon emis-
sions for the preceding year. Appx14331. Such an en-
tity must then surrender the necessary number of
units to cover—to “pay” for, as it were—its emissions.
A company that does not have enough units available
has various options. It can borrow from its anticipated
future units; it can buy additional units through an
auction at which the government sells the held-back
Ct. Nos. 22-00029, 22-00032                     Page 5

three percent portion of other companies’ units; it can
buy units from other companies that have more than
they need; or it can pay a monetary penalty. Id. A com-
pany that has more units than it needs can, in turn,
sell its excess units to other companies either via a
centralized exchange or directly, or it may carry over
a certain percentage of units to the following compli-
ance year. Appx14331–14332.

                           B

                           1

    Hyundai Steel Company, a South Korean steel
manufacturer, qualified for 100 percent of its allocated
units because of its high international trade intensity
and/or high production costs. Appx14332. During an
administrative review for 2019 of a countervailing
duty order on certain steel imported from South Ko-
rea, Nucor Corporation, an American steel producer,
filed a “new subsidy allegation” with Commerce con-
tending that Hyundai’s receipt of 100 percent of its al-
located units is a countervailable subsidy.
Appx09230–09238.

   Following an investigation, the Department found
in a post-preliminary determination that by providing
the additional three percent of units (i.e., the amount
beyond the 97 percent awarded to most participants)
to companies such as Hyundai at no cost, the South
Korean government relieved them of the financial bur-
den of purchasing those units from either the govern-
ment-run auction or from private actors. Appx14332.
Commerce found that because the South Korean gov-
ernment sells the additional units via a government-
Ct. Nos. 22-00029, 22-00032                         Page 6

run auction, it “is able to collect revenue on any addi-
tional units that these entities may need to purchase,”
and it was therefore “providing something of value on
which it could otherwise potentially collect revenue.”
Id. Based on that finding, the Department concluded
that South Korea’s provision of the “additional, free”
three percent of the units was “a financial contribution
in the form of revenue forgone” under 19 U.S.C. §
1677(5)(D)(ii). Id.

   Commerce then found that the South Korean stat-
ute and implementing regulations “have delineated
the criteria for determining which sectors and sub-sec-
tors qualify for the additional [unit] allotment” and
that the South Korean government applies those cri-
teria to determine who qualifies:

      As such, companies falling within the sectors
      and sub-sectors that the GOK determined as
      trade intensive and/or high production cost sec-
      tors automatically qualify for the additional free
      three percent [unit] allocation from the GOK.
      Accordingly, we . . . preliminarily find the provi-
      sion of additional free [units] to certain sectors,
      including Hyundai Steel, to be de jure specific
      under [19 U.S.C. § 1677(5A)(D)(i)].

Id.

   Finally, the Department determined that because a
company receiving 100 percent of its units “is relieved
of the obligation to purchase additional allowances,”
such companies receive a benefit under 19 C.F.R.
§ 351.503(b)(2). Appx14333. Commerce therefore
Ct. Nos. 22-00029, 22-00032                     Page 7

preliminarily assigned Hyundai a countervailable sub-
sidy rate of 0.10 percent, id., bringing the company’s
total margin to 0.56 percent. Appx01074–01075. The
Department thereafter issued its final decision—
which, as relevant here, remained unchanged—over
the objections of both Hyundai and the South Korean
government.

                           2

   During the same administrative review, a second
South Korean steel producer, Dongkuk Steel Mill Co.,
requested that Commerce examine it individually as a
voluntary respondent. The Department declined to do
so. Appx01070–01071. Commerce instead assigned
Dongkuk the same 0.56 percent rate Hyundai re-
ceived, citing the statutory requirement that because
Hyundai’s rate was neither zero nor de minimis, that
rate also applied to non-examined respondents.
Appx01074–01075.

                           C

   Hyundai brought this suit under 19 U.S.C.
§§ 1516a(a)(2)(A)(i)(I) and 1516a(a)(2)(B)(iii) to chal-
lenge its countervailing subsidy margin. See generally
Case 22-29, ECF 8 (complaint). Shortly thereafter,
Dongkuk also sued under the same provisions to chal-
lenge that same margin. See Case 22-32, ECF 15 (com-
plaint).

   Nucor and SSAB Enterprises moved to intervene as
of right in both cases. In Case 22-29, Hyundai con-
sented and the court granted both motions. ECF 22
(SSAB) and 23 (Nucor). In Case 22-32, Dongkuk
Ct. Nos. 22-00029, 22-00032                          Page 8

consented to Nucor’s intervention and the court
granted the latter’s motion, ECF 29. Dongkuk, how-
ever, opposed SSAB’s motion, and the court denied it
because the latter did not actively participate in the
Commerce proceedings and therefore was not a “party
to the proceeding” with a right to intervene under 28
U.S.C. § 2631(j)(1)(B). Dongkuk Steel Mill Co. v.
United States, 567 F. Supp. 3d 1359, 1364 (CIT 2022).

   The court then consolidated the cases for the lim-
ited purpose of briefing and argument. Hyundai filed
a motion for judgment on the agency record. Case
22-29, ECF 38. Dongkuk filed a joinder to Hyundai’s
arguments and argued that if the court granted the
latter’s motion, it should also order Commerce to re-
calculate Dongkuk’s rate. Case 22-32, ECF 43-1, at 4. 1

  The government, Case 22-29, ECF 47; Case 22-32,
ECF 50, and Nucor, Case 22-29, ECF 51; Case 22-32,
ECF 54, opposed. 2 Hyundai, Case 22-29, ECF 51, and
Dongkuk, Case 22-32, ECF 55, replied. The court then
heard argument.

1 The point of Dongkuk’s case is to protect the company’s

interest in having its rate recalculated if Hyundai prevails.
Because Dongkuk merely rides Hyundai’s coattails, the
court does not address the former’s filings. All docket cita-
tions that follow therefore refer to Case 22-29 absent any
indication otherwise.
2 SSAB filed no response to the motion for judgment on the

agency record in Case 22-29, the case where it was permit-
ted to intervene.
Ct. Nos. 22-00029, 22-00032                       Page 9

                           III

   The court has subject-matter jurisdiction over these
actions under 28 U.S.C. § 1581(c).

     In § 1516a(a)(2) actions, “[t]he court shall hold un-
lawful any determination, finding, or conclusion 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). That is, the question is
not whether the court would have reached the same
decision on the same record—rather, it is whether the
administrative record as a whole permits Commerce’s
conclusion.

   Substantial evidence has been defined as more
   than a mere scintilla, as such relevant evidence
   as a reasonable mind might accept as adequate
   to support a conclusion. To determine if substan-
   tial evidence exists, we review the record as a
   whole, including evidence that supports as well
   as evidence that fairly detracts from the sub-
   stantiality of the evidence.

Nippon Steel Corp. v. United States, 337 F.3d 1373,
1379 (Fed. Cir. 2003) (cleaned up).

                           IV

   Although Commerce assigned Hyundai a 0.56 per-
cent countervailing duty margin, the company only
challenges the 0.10 percent portion of that margin
based on the company’s receipt of 100 percent of its
cap-and-trade units. More is at stake, however, than
just one-tenth of one percent. Commerce’s regulations
Ct. Nos. 22-00029, 22-00032                        Page 10

preclude the imposition of any countervailable subsidy
rate of less than 0.50 percent. See 19 C.F.R.
§ 351.106(c)(1). Thus, if Hyundai were to prevail on
any remand and the challenged 0.10 percent portion is
subtracted from its 0.56 percent margin, it will have
no liability and will receive a refund of all countervail-
ing duty cash deposits it paid under the order. 3

   In its challenge to that 0.10 percent portion, Hyun-
dai raises three different issues. It contends that it re-
ceived no subsidy because the South Korean govern-
ment did not forego any revenue that was otherwise
due, ECF 38-2, at 15–33, that its 100 percent unit al-
location does not provide a benefit, id. at 34–47, and
that the cap-and-trade system is not specific, id. at 47–
57. The court addresses these issues in turn.

                             A

    Hyundai argues that in awarding the company 100
percent of its cap-and-trade units, the South Korean
government did not forego, or fail to collect, revenue
that was “otherwise due,” ECF 38-2, at 15–16 (citing
19 U.S.C. § 1677(5)(D)(ii)), and thus did not make a
financial contribution. The company contends that
there is no expected revenue otherwise due because
there is no way to know, when the South Korean gov-
ernment issues units, whether the recipient will need
all the units received, a smaller number (in which case
the recipient might then sell the unused portion), or a
larger number. ECF 38-2, at 19. The company further

3 The same is true of Dongkuk. Its rate rises and falls with

Hyundai’s.
Ct. Nos. 22-00029, 22-00032                       Page 11

argues that when a recipient needs a larger number of
units, there is no way to know whether that recipient
will purchase them at the government-run auction or
through private channels from another company that
has surplus units. Id.

   Commerce correctly rejected these arguments, ex-
plaining, “[T]he key consideration is that, in lieu of giv-
ing these entities the additional [units] for free, the
[South Korean government] would have received rev-
enue from said entities.” Appx01051. As the govern-
ment says: “By simply receiving an additional alloca-
tion of permits for free, the [South Korean govern-
ment] has overlooked initial revenue it could have
been received but for the three percent additional allo-
cation.” ECF 47, at 25–26 (emphasis in original). Be-
cause most other entities were required to pay for ad-
ditional units that were simply given away to Hyundai
and a few other similarly situated companies, the
South Korean government failed to collect revenue
that it otherwise would have received. Thus, Com-
merce’s reading of 19 U.S.C. § 1677(5)(D)(ii) was ex-
actly right, and its determination on the financial con-
tribution issue is supported by substantial evidence.

                            B

   Hyundai also challenges the Department’s finding
that the South Korean government’s provision of the
free units provided a “benefit.” As noted above, the
statute unhelpfully provides that “[a] benefit shall nor-
mally be treated as conferred where there is a benefit
to the recipient.” 19 U.S.C. § 1677(5)(E). Despite that
definition’s circularity, it’s manifest that the
Ct. Nos. 22-00029, 22-00032                   Page 12

additional three percent confers a benefit even if one
accepts Hyundai’s theory that the cap-and-trade sys-
tem imposes an overall burden on companies subject
to its requirements.

    The company contends that “Commerce ignores the
immense burden this program places on companies
like Hyundai Steel and the fact that Hyundai Steel is
subject to the program whereas other companies are
not.” ECF 38-2, at 34. There is no doubt that the cap-
and-trade system imposes a burden. But the com-
pany’s argument ignores that the free provision of ad-
ditional units reduces the compliance burden that re-
cipients would otherwise have to bear. As the govern-
ment explains, “Hyundai and Dongkuk receive a ben-
efit compared to other Korean industries with a lower
volume of international trade or production costs,”
ECF 47, at 32 (emphasis in original), and if they in-
stead received only the “standard” 97 percent alloca-
tion of units, “they would be required to incur a cost
for acquiring these [units] from either the [South Ko-
rean government] or private markets,” id.

   The court agrees with the government. A company
that receives 100 percent of its allocated units is re-
lieved of the financial burden of purchasing the addi-
tional three percent that other companies must obtain.
This is true even if the company needs to purchase ex-
tra units because its emissions exceed the allowable
cap such that a 100 percent allocation is not enough—
the company receiving 100 percent would still need
Ct. Nos. 22-00029, 22-00032                        Page 13

fewer units than it would if it fell within the “97 per-
cent” group. 4

    That is what Commerce found: “The fact that cer-
tain industries are . . . granted an additional three per-
cent allocation . . . means that they are, on a propor-
tional basis, given a benefit under K-ETS not available
to those industries receiving the standard 97 percent
allocation.” Appx01049. The reduction of Hyundai’s
cost of compliance constitutes a benefit because “Com-
merce determines benefit by the reduction or elimina-
tion of the obligation, without regard to the source of
that obligation.” BGH Edelstahl Siegen GmbH v.
United States, 600 F. Supp. 3d 1241, 1264 (CIT 2022).
“Due to receiving the additional free allowances,
[Hyundai] received something for free—allowances [it]
would have been required to pay to acquire at auction
or on the private market.” Id. The Department’s “ben-
efit” determination is supported by substantial evi-
dence.

                             C

   The third and final issue Hyundai raises is whether
the benefit it received is “specific.” The statute pro-
vides that, subject to certain exceptions not relevant
here, “a countervailable subsidy is a subsidy described
in this paragraph which is specific as described in

4 Conversely, even if entities—such as Hyundai—receiving

the free extra units ultimately have no need for them be-
cause their carbon emissions are lower than anticipated,
such entities can sell those units to companies that do need
them. That’s found money for the fortunate beneficiaries of
the free units.
Ct. Nos. 22-00029, 22-00032                        Page 14

paragraph (5A).” 19 U.S.C. § 1677(5)(A). A specific
subsidy may be de jure specific—that is, specific as a
matter of law—under § 1677(5A)(D)(i), 5 or it may be
de facto specific—“specific as a matter of fact,” to use
the statute’s words—under § 1677(5A)(D)(iii).

   Here, Commerce determined the subsidy to be de
jure specific. 6 The Department’s post-preliminary de-
termination found that the South Korean statute and
implementing regulations “have delineated the crite-
ria for determining which sectors and sub-sectors
qualify for the additional KAU allotment” and that
companies within those sectors and sub-sectors “auto-
matically qualify” for the subsidy, so it is therefore de
jure specific. Appx14332. In its final determination,
Commerce concluded that “the [statute] and imple-
menting rules not only establish explicit limitations
but also are not objective criteria or conditions, as de-
fined by [19 U.S.C. § 1677(5A)(D)(ii)]. Accordingly,
consistent with Commerce’s decision in other similar
cases, we continue to find that the additional three
percent KAU allocation is de jure specific.” Appx01052.

    As it did before the agency, Hyundai relies primar-
ily on this court’s ASEMESA decision, Asociación de

5 There is an exception to de jure specificity for subsidies

that are governed by “objective criteria or conditions” and
that satisfy three enumerated criteria. See 19 U.S.C.
§ 1677(5A)(D)(ii).
6 The statute provides that “[w]here the authority provid-

ing the subsidy, or the legislation pursuant to which the
authority operates, expressly limits access to the subsidy
to an enterprise or industry, the subsidy is specific as a
matter of law.” Id. § 1677(5A)(D)(i).
Ct. Nos. 22-00029, 22-00032                       Page 15

Exportadores e Industriales de Aceitunas de Mesa v.
United States, 523 F. Supp. 3d 1393 (CIT 2021). ASE-
MESA examined the meaning of the statutory phrase
“expressly limits access to the subsidy to an enterprise
or industry.” Relying on dictionary definitions of “ex-
press” and “limit,” the court concluded that

   the plain meaning of the statute is that a sub-
   sidy is de jure specific when the authority
   providing the subsidy, or its operating legisla-
   tion, directly, firmly, or explicitly assigns limits
   to or restricts the bounds of a particular subsidy
   to a given enterprise or industry.

Id. at 1403. The court explained that Commerce must
determine “that the subsidy in question [is] explicitly
limited to a specific enterprise or industry by the ad-
ministering authority or its implementing legislation.”
Id. (emphasis added). “Under the plain meaning of
Section 1677(5A), subsidies are only de jure specific
where the authority providing the current subsidy, or
its operating legislation, directly and explicitly pre-
scribes limitations on the distribution of subsidies to
an enterprise or industry.” Id. at 1404 (emphasis
added).

   Hyundai argues that the cap-and-trade system
does not fit within ASEMESA’s teaching because noth-
ing in the South Korean statute prescribes an express
limitation whereby only specific industries or enter-
prises can be eligible for the additional three percent
unit allotment: “[T]he [System’s] alleged failure to
treat all enterprises or industries uniformly does not
equate to an ‘explicit restriction’ to specific enterprises
Ct. Nos. 22-00029, 22-00032                      Page 16

or industries,” ECF 38-2, at 52 (citing ASEMESA, 523
F. Supp. 3d at 1403), because nothing in the South Ko-
rean statute or regulations “directly, firmly, or explic-
itly assign[s] limits to or restricts the bounds of a par-
ticular subsidy to a given enterprise or industry,” id.
(emphasis removed) (quoting ASEMESA, 523
F. Supp. 3d at 1403).

   The government responds that the South Korean
statute and regulations do “establish criteria that ex-
pressly limit[ ] which entities qualify for the additional
allocation by setting thresholds that they must meet
to qualify.” ECF 47, at 42 (emphasis in original) (citing
Appx01052). The government quotes a South Korean
statutory provision whereby a business will be eligible
for a 100 percent allocation if its “international trade
intensity” exceeds a baseline “or if it engages in a type
of business for which the production cost increased by
reducing greenhouse gases is not less than the stand-
ard prescribed by” the implementing regulation. Id.
(quoting Appx11585–11587). The government then
notes that the regulation, in turn, provides that “any
of the following types of businesses,” id. (emphasis
added) (quoting Appx01052), are eligible for the 100
percent allocation:

   (1) a business with an international trade inten-
   sity of at least 30 percent, (2) a type of business
   with production costs of at least 30 percent[,] or
   (3) a type of business with an international trade
   intensity of at least 10 percent and production
   costs of at least 5 percent.
Ct. Nos. 22-00029, 22-00032                     Page 17

Id. at 42–43 (quoting Appx01052 and citing
Appx11638). “Thus, a participant who does not meet
th[ose] criteria because they are a business with low
international trade intensity or low production costs is
explicitly ineligible.” Id. at 43 (emphasis in original).
The government contends that all that matters is that
the statute “inherently limits the subsidy to large busi-
nesses with high international trade intensity or high
production costs” and that the South Korean Ministry
of Environment determined that “Manufacturing of
Basic Steel” qualified. Id. (citing Appx14332).

    For its part, Nucor contends that ASEMESA’s
teaching is “inapplicable” here because that case in-
volved an agricultural product and a Commerce regu-
lation provides that agricultural subsidies are not spe-
cific under § 1677(5A)(D). ECF 49, at 30 (citing
19 C.F.R. § 351.502(e)). The court disagrees because
ASEMESA’s analysis turns on the statutory language,
not the regulation. See 523 F. Supp. 3d at 1403.

   Nucor then argues that “businesses with low inter-
national trade intensity or low production costs, which
are identified in the implementing legislation, are ex-
pressly ineligible for the ‘gratuitous allocation of all
emission permits,’ ” ECF 49, at 31 (citing Appx11638),
and argues that “this subsidy is limited to large pollut-
ers with significant international trade exposure
and/or production costs as defined by the” South Ko-
rean statute, id.

   The regulation Nucor cites contains the same lan-
guage Commerce and the government quoted regard-
ing the three “types of businesses,” Appx11638, and it
Ct. Nos. 22-00029, 22-00032                     Page 18

refers to an attached Table 1. The full provision reads
as follows:

   Types of business eligible for gratuitous alloca-
   tion of all emission permits pursuant to Article
   12(4) of the Act shall be any of the following
   types of businesses and determined in the allo-
   cation plan through evaluation in each commit-
   ment period:

   (1) A type of business, the international trade in-
   tensity of which, referred to in attached Table 1
   is at least 30/100;

   (2) A type of business, the production costs in-
   currence rates of which, referred to in attached
   Table 1 is at least 30/100;

   (3) A type of business, the international trade in-
   tensity and production costs incurrence rate of
   which, referred to in attached Table 1 are at least
   10/100 and at least 5/100, respectively.

Appx11638 (emphasis added). The table, in turn,
simply gives two formulas—one for calculating inter-
national trade intensity and the other for calculating
the “production costs incurrence rate,” Appx11896—
and then provides two definitions of terms used in
those formulas and instructions for how to ascertain
certain figures to be included in the formulas’ calcula-
tions, Appx11896–11897.

   The court sees an inherent disconnect between a
reference to “types of businesses” (or “a type of busi-
ness”) as referred to in the South Korean statute and
Ct. Nos. 22-00029, 22-00032                      Page 19

implementing regulation and “a specific enterprise or
industry,” or “a given enterprise or industry,” as re-
ferred to in the Tariff Act as interpreted by ASE-
MESA, 523 F. Supp. 3d at 1403 (emphasis added).
Commerce’s final determination here acknowledged
that “the rules do not name specific industries” but
found the program de jure specific anyway without re-
sponding in any meaningful way to Hyundai’s argu-
ments about ASEMESA. Appx01052. The Department
also found that the statute imposes a “limitation on
which industries qualify for the additional allocation
by setting thresholds that industries must meet in or-
der to qualify.” Id. (emphasis added).

   Absent from this discussion is any indication of how
the criteria, or the limitation and the thresholds, oper-
ate to “restrict the bounds of [the] particular subsidy
to a given enterprise or industry,” “a specific enterprise
or industry,” or even a “specific” small universe of en-
terprises or industries. See ASEMESA, 523
F. Supp. 3d at 1403 (emphasis added).

   Two questions thus present themselves here. First,
did the Department consider whether, as Hyundai ar-
gues, any large business could qualify for the addi-
tional three percent allocation regardless of the indus-
try to which it belongs? Second, did Commerce con-
sider that the South Korean government’s determina-
tion that “Manufacturing of Basic Steel” qualified for
the additional allocation appears to have no signifi-
cance for whether any other enterprise or industry
does or does not qualify? The Department failed to ad-
dress either of these questions.
Ct. Nos. 22-00029, 22-00032                      Page 20

   In other words, nothing in the record demonstrates
that the South Korean statute or regulations expressly
restrict access to a particular (specific, as it were) and
limited number of enterprises or industries. There is
also nothing to demonstrate why any particular enter-
prise or industry would not qualify as long as it met
the statutory numbers. Hyundai correctly argues that
Commerce failed to address this issue and simply
found specificity—to which the government has no re-
sponse.

    In sum, the Department’s finding of “de jure speci-
ficity” is conclusory and is not supported by substan-
tial evidence. But there is one other loose end to tie up.
The Tariff Act contains an exception whereby a sub-
sidy is not specific, even if it would otherwise be con-
sidered de jure specific, when it satisfies three condi-
tions:

   Where the authority providing the subsidy, or
   the legislation pursuant to which the authority
   operates, establishes objective criteria or condi-
   tions governing the eligibility for, and the
   amount of, a subsidy, the subsidy is not specific
   as a matter of law, if—

   (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 verifica-
   tion.
Ct. Nos. 22-00029, 22-00032                     Page 21

   For purposes of this clause, the term “objective
   criteria or conditions” means criteria or condi-
   tions that are neutral and that do not favor one
   enterprise or industry over another.

19 U.S.C. § 1677(5A)(D)(ii).

   Hyundai argued before Commerce, and argues
again here, that the cap-and-trade system’s three per-
cent allocation subsidy satisfies all three conditions
and thus falls within this exception even if it is other-
wise de jure specific. ECF 38-2, at 54–58; ECF 51,
at 30–34. The Department’s decision did not address
the issue in any meaningful way: Commerce simply
found, without explanation, that the South Korean
statute and its implementing rules do not establish
“objective criteria or conditions.” Appx01052 (quoting
the regulation’s three categories of eligible types of
business and then stating, “As such, the [statute] and
implementing rules not only establish explicit limita-
tions but also are not objective criteria or conditions,
as defined by” 19 U.S.C. § 1677(5A)(D)(ii)).

   Absent analysis and explanation, the court cannot
properly perform its judicial review function. See Inno-
vation Techs., Inc. v. SplashA Med. Devices, LLC, 528
F.3d 1348, 1350–51 (Fed. Cir. 2008) (remanding fee
award because district court failed to support “excep-
tional case” finding with particular factual findings
and reasoning); ASEMESA, 523 F. Supp. 3d at 1403
n.1 (“Conclusory statements without more are not re-
viewable even where the statute applied by Commerce
is unambiguous.”). The court therefore remands this
issue for reasoned analysis.
Ct. Nos. 22-00029, 22-00032                  Page 22

                      *   *   *

  For the foregoing reasons, the court grants judg-
ment on the agency record in part to Hyundai Steel
and Dongkuk. A separate remand order will issue.

Dated: December 18, 2023      /s/ M. Miller Baker
       New York, NY           M. Miller Baker, Judge