Court Opinion

ID: 9872408
Source: CourtListenerOpinion
Date Created: 2023-09-26 21:01:08.13018+00
Date Added: 2024-06-11T12:49:11.921475
License: Public Domain

Slip Op. 23-142

            UNITED STATES
     COURT OF INTERNATIONAL TRADE

               Court No. 21-00304

              HYUNDAI STEEL CO.,
                     Plaintiff,
                         v.
                UNITED STATES,
                    Defendant,
                        and
             NUCOR CORPORATION,
               Defendant-Intervenor.

           Before: M. Miller Baker, Judge

                    OPINION

[The court grants judgment on the agency record to
Plaintiff as to port-usage fees and sustains Com-
merce’s uncontested remand determination about
sewerage fees.]

                         Dated: September 26, 2023

Brady W. Mills, Donald B. Cameron, Julie C. Men-
doza, 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, DC, on the briefs for Plaintiff.
Ct. No. 21-00304                                    Page 2

Brian M. Boynton, Principal Deputy Assistant Attor-
ney General; Patricia M. McCarthy, Director; Claudia
Burke, Assistant Director; and Elizabeth Anne Speck,
Senior Trial Counsel, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice of Washing-
ton, DC, on the brief for Defendant. Of counsel on the
brief for Defendant was Ayat Mujais, Attorney, Office
of the Chief Counsel for Trade Enforcement & Compli-
ance, U.S. Department of Commerce of Washington,
DC.

Alan H. Price, Christopher B. Weld, Maureen E. Thor-
son, Tessa V. Capeloto, and Adam M. Teslik, Wiley
Rein LLP of Washington, DC, on the brief for Defend-
ant-Intervenor.

   Baker, Judge: In this case, Hyundai Steel Company
challenges the Department of Commerce’s determina-
tion that the company’s receipt of port-usage rights
from the South Korean government was a countervail-
able benefit. The court remands because Commerce’s
decision is contrary to law. 1

                             I

  The Tariff Act of 1930, as amended, provides that
when Commerce determines that a foreign

1 The court previously granted the government’s request

for a voluntary remand as to a sewerage-fees program. ECF
26. The Department then determined that the program is
not countervailable and reduced Hyundai’s overall subsidy
rate by 0.01 percent to reflect that decision. See generally
ECF 27-1 (remand results). No party challenges that find-
ing, which the court accordingly sustains.
Ct. No. 21-00304                                     Page 3

government is providing a “countervailable subsidy” to
imported goods, and the International Trade Commis-
sion further determines that such imports materially
injure U.S. domestic industry, the former will impose
a “countervailing duty” on the relevant merchandise
“equal to the amount of the net countervailable sub-
sidy.” 19 U.S.C. § 1671(a).

    A countervailable “subsidy exists when (1) a foreign
government provides a financial contribution (2) to a
specific industry and (3) a recipient within the indus-
try receives a benefit [from] 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)). As relevant here, the statute defines “fi-
nancial contribution” as including the foreign govern-
ment “foregoing or not collecting revenue that is oth-
erwise due, such as granting tax credits or deductions
from taxable income.” 19 U.S.C. § 1677(5)(D)(ii). It de-
fines “benefit” as “including” the provision of “goods or
services . . . for less than adequate remuneration . . . .”
id. § 1677(5)(E)(iv). 2

2 Section 1677(5)(E), titled “Benefit conferred,” provides:

  A benefit shall normally be treated as conferred when
  there is a benefit to the recipient, including—
  (i) in the case of an equity infusion, if the investment
  decision is inconsistent with the usual investment
  practice of private investors, including the practice re-
  garding the provision of risk capital, in the country in
  which the equity infusion is made,
Ct. No. 21-00304                                      Page 4

                             II

    This case arises from a countervailing duty order
on certain steel products from four countries includ-
ing, as relevant here, South Korea. See Certain Corro-
sion-Resistant Steel Products from India, Italy, Repub-
lic of Korea and the People’s Republic of China: Coun-
tervailing Duty Order, 81 Fed. Reg. 48,387 (Dep’t Com-
merce July 25, 2016). In 2019, several domestic steel
producers requested an administrative review of that

 (ii) in the case of a loan, if there is a difference between
 the amount the recipient of the loan pays on the loan
 and the amount the recipient would pay on a compara-
 ble commercial loan that the recipient could actually
 obtain on the market,
 (iii) in the case of a loan guarantee, if there is a differ-
 ence, after adjusting for any difference in guarantee
 fees, between the amount the recipient of the guaran-
 tee pays on the guaranteed loan and the amount the
 recipient would pay for a comparable commercial loan
 if there were no guarantee by the authority, and
 (iv) in the case where goods or services are provided, if
 such goods or services are provided for less than ade-
 quate remuneration, and in the case where goods are
 purchased, if such goods are purchased for more than
 adequate remuneration.
 For purposes of clause (iv), the adequacy of remunera-
 tion shall be determined in relation to prevailing mar-
 ket conditions for the good or service being provided or
 the goods being purchased in the country which is sub-
 ject to the investigation or review. Prevailing market
 conditions include price, availability, marketability,
 transportation, and other conditions of purchase or
 sale.
19 U.S.C. § 1677(5)(E).
Ct. No. 21-00304                                Page 5

order for calendar year 2018. Appx01000–01001,
Appx01004. Commerce obliged and selected Hyundai,
a South Korean producer, as a mandatory respondent.
Appx01002.

   In its review, the Department examined a program
under which the South Korean government grants
port-usage rights to private-sector entities. To summa-
rize, South Korean law requires that certain infra-
structure—including, as relevant here, port facili-
ties—be government-owned. To encourage the private
sector to develop such facilities, the program author-
izes participating entities to construct government-
owned infrastructure at their expense. In return for
their investment, such entities may collect certain us-
age fees from third-party users. Appx01022–01023.

   Under that program, Hyundai built a wharf at
North Incheon Harbor between 2003 and 2006.
Appx01023. Commerce found that the company and
the South Korean government agreed that the former
would pay the bulk of the construction costs and then
transfer ownership to the latter in 2007. Id. Under the
agreement, “Hyundai Steel was granted the right to
operate and use the port for its own operations freely,
as well as collect fees from third-party users, for a
specified time period.” Id. The Department found that
the “specified time period” was “about 41 years.”
Appx01058.

   Additionally, “Hyundai Steel reported it collected
berth occupancy charges (or berthing income) from
shipping companies and reported those amounts for
each of the years from 2007 through 2018.”
Ct. No. 21-00304                                 Page 6

Appx01023. The company further disclosed that “it
had a service contract with an unaffiliated private ter-
minal operating company. . . . While Hyundai Steel
paid the terminal operating company for its services,
Hyundai Steel was entitled to harbor facility usage
fees from the terminal operating company.” Id.

   The Department preliminarily determined the
port-usage program represented a financial contribu-
tion to Hyundai by the South Korean government. Ab-
sent their agreement, the latter would have collected
the fees in question, which “represent revenue fore-
gone by the [government] within the meaning of sec-
tion 771(5)(D)(ii) of the Act.[3] The berthing income and
the harbor facility usage fees are revenue foregone by
the [South Korean government] as [the company] did
not pay [the government] the fees it collected.”
Appx01023–01024.

   Commerce also found that the program provided
Hyundai a benefit under 19 U.S.C. § 1677(5)(E) “in the
amount of the fees exempted reported by Hyundai
Steel.” Appx01024. “To calculate the benefit, [the De-
partment] summed up the berthing income and the
harbor facility usage fees that Hyundai Steel reported
and divided this amount by [the company]’s total sales
which resulted in a rate of 0.01 percent ad valorem.”
Appx01031. 4

3 19 U.S.C. § 1677(5)(D)(ii).

4 Commerce also determined the program was specific “be-

cause the actual recipients are limited in number.”
Appx01024.
Ct. No. 21-00304                                    Page 7

   Commerce preliminarily assigned Hyundai an
overall countervailable subsidy rate of 0.51 percent ad
valorem that included other matters not at issue here.
Appx01033; Appx01035. The final determination reaf-
firmed that finding. See Appx01057–01061 (conclu-
sions); Appx01081 (rate).

                            III

   Hyundai brought this action under 19 U.S.C.
§§ 1516a(a)(2)(A)(i)(I) and (a)(2)(B)(iii) to contest Com-
merce’s final determination. See ECF 9 (complaint). 5
The Court has subject-matter jurisdiction under
28 U.S.C. § 1581(c).

   Nucor Corporation intervened as of right to support
the government. See ECF 20. The court then granted
the government’s request for a voluntary remand to al-
low Commerce to reconsider or clarify its decision on
the sewerage-fees program. ECF 26.

   The Department’s remand results found the sewer-
age-fees program not countervailable and reduced
Hyundai’s subsidy margin by 0.01 percent to 0.50 per-
cent. ECF 27; see also above note 1. The company now
moves for judgment on the agency record except as to
that issue. ECF 34 (confidential); ECF 35 (public); see
also USCIT R. 56.2. The government and Nucor op-
pose. ECF 37 (government, confidential); ECF 38

5  In actions such as this brought under 19 U.S.C.
§ 1516a(a)(2), “[t]he court shall hold unlawful any determi-
nation, 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).
Ct. No. 21-00304                                    Page 8

(government, public); ECF 41 (Nucor, confidential);
ECF 42 (Nucor, public). The court decides the motion
on the papers.

                            IV

   Hyundai’s motion raises one question: Whether the
Department’s determination that the port-usage pro-
gram provided the company with a “benefit” under
19 U.S.C. § 1677(5)(E) is unsupported by substantial
evidence or otherwise contrary to law. 6 The company’s
central contention is that the South Korean govern-
ment provided port-usage rights “as repayment of a
debt” rather than as “a gift-like transfer of funds,”
ECF 35-2, at 11, and as a result, Commerce has not
identified any countervailable “benefit.”

   The court agrees with Hyundai. The plain and ob-
vious import of the statute is that a countervailable
“benefit” “normally” requires, well, “a benefit to the re-
cipient.” 19 U.S.C. § 1677(5)(E) (emphasis added). A
benefit is an “[a]dvantage, profit, good.” Oxford

6 Although only 0.01 percent of the company’s overall rate

stems from the port-usage program, it is the trade law ver-
sion of the straw that broke the camel’s back. Following re-
moval on voluntary remand of the 0.01 percent previously
assigned to the sewerage-fees program, see above note 1,
Hyundai’s total subsidy rate is 0.50 percent. Commerce
treats any countervailable subsidy rate of less than 0.50
percent as de minimis and disregards it in imposing coun-
tervailing duties. 19 C.F.R. § 351.106(c)(1). That means if
the Department were to reverse its position on remand as
to port-usage rights, the company would receive a refund
of all its countervailing duty deposits under the applicable
order, not just 0.01 percent.
Ct. No. 21-00304                                     Page 9

English Dictionary (online edition). If there’s no ad-
vantage, profit, or good to the recipient from the gov-
ernment program at issue, then there’s no countervail-
able benefit for purposes of the statute, unless an ap-
plicable exception applies (and the government makes
no such contention here). 7

   The statutory context confirms the plain meaning
of “benefit.” Section 1677(5)(E)’s four examples of
countervailable benefits all involve the provision of
some advantage, profit, or good. See 19 U.S.C.
§ 1677(5)(E)(i)–(iv); see also Gov’t of Sri Lanka, 308
F. Supp. 3d at 1381–82 (examining each example).
Thus, making “interest-free loans” to a government is
not a countervailable “benefit” because such loans are
to the lender’s “detriment.” Gov’t of Sri Lanka, 308
F. Supp. 3d at 1382 (emphasis in original).

   Similarly, Commerce’s “regulatory catch-all provi-
sion” defining “benefit” states that “the Secretary nor-
mally will consider a benefit to be conferred where a
firm pays less for its inputs . . . than it otherwise would
pay in the absence of the government program, or re-
ceives more revenues than it otherwise would earn.”
Id. at 1383 (quoting 19 C.F.R. § 351.503(b)(1)). “The

7 See Gov’t of Sri Lanka v. United States, 308 F. Supp. 3d

1373, 1381 n.7 (CIT 2018) (explaining that the statute’s use
of “normally” merely “indicate[s] that in the case of certain
types of subsidy programs, such as export insurance
schemes, the use of the benefit-to-the-recipient standard
may not be appropriate”) (quoting Uruguay Round Agree-
ments Act, Statement of Administrative Action, H.R. Rep.
No. 103–316, vol. 1, at 927 (1994), reprinted in 1994
U.S.C.C.A.N. 4040, 4240); see also id. at 1380 n.4.
Ct. No. 21-00304                                   Page 10

touchstone of [§ 1677(5)(E)], from which this regula-
tion is derived, is that what the company received
somehow exceeded what [it] paid or should have paid,”
which is often “tested by reference to what would oth-
erwise be available under normal market conditions.”
Id.

   In normal market conditions, private companies
don’t gratuitously build government-owned infrastruc-
ture; they demand something in return—“considera-
tion,” in contract law terms. 8 Hyundai argues that un-
der its contract with the South Korean government,
the value of its port-usage rights for 41 years, eight
months, reflects its costs in building the port.
ECF 35-2, at 25–26. Indeed, the company points to a
detailed equation in the contract that is the basis for
that cost calculation. See id. (citing Appx14766–14769;
Appx14774–14778).

    Commerce determined that it was not required to
consider Hyundai’s costs in constructing the port facil-
ities to determine whether the company received a
benefit and refused to consider whether the company’s

8 In contract law, consideration does not have to involve ei-

ther party receiving a benefit, and courts do not typically
consider the adequacy of consideration. See, e.g., Hamer v.
Sidway, 27 N.E. 256, 257 (N.Y. 1891) (rejecting the argu-
ment that “unless the promisor was benefited, the contract
was without consideration”). In contrast, § 1677(5)(E) de-
mands that the court consider the value of the considera-
tion that the South Korean government received under the
contract. So long as that consideration equaled or exceeded
the value that Hyundai received, the company obtained no
countervailable “benefit.”
Ct. No. 21-00304                                Page 11

port-usage rights accurately reflected the costs of con-
structing the facility. See Appx01058–01060. In so do-
ing, the Department erred as a matter of law. If, as
Hyundai contends, the value of its port-usage rights
did not exceed its construction costs, then the company
received no “[a]dvantage, profit, [or] good,” and thus
no countervailable benefit. The court accordingly re-
mands for the Department to make that determina-
tion.

                       *   *   *

   For the foregoing reasons, the court GRANTS judg-
ment on the agency record to Hyundai on whether the
provision of port-usage rights at North Incheon Har-
bor conferred a countervailable benefit and RE-
MANDS that issue to Commerce for further consider-
ation. The court further SUSTAINS the Department’s
remand redetermination (ECF 27) as to the sewerage-
fees program. A separate remand order will issue.

Dated: September 26, 2023          /s/ M. Miller Baker
       New York, NY                Judge