Question of Countervailability Not Moot Because of de Minimis Rate, Hyundai Tells CIT

The issue of whether a South Korean port usage rights program is countervailable is not moot just because the Commerce Department has now assigned a de minimis rate to the countervailing duty respondent, Hyundai Steel Co. argued in a Dec. 8 reply brief at the Court of International Trade. Rather, since Commerce can continue subjecting Hyundai to countervailing duty reviews based on this port usage rights program, the question is key for Hyundai, despite the fact that it is not being hit with CV duties this time around, the company said (Hyundai Steel Company v. United States, CIT #20-03799).

In the 2017 administrative review of the CVD order on certain hot-rolled steel flat products from South Korea, it was alleged that Hyundai received a subsidy from a program involving port usage rights at the Port of Incheon. The company was scheduled to receive berthing income from shipping operators along with "other" income from Hyundai itself and third parties. Commerce found that Hyundai received a countervailable benefit relating to this "other" income -- namely, certain fees it received -- and subsequently assessed a 0.51% final subsidy rate on Hyundai. Commerce based this rate on facts available, citing a lack of necessary information for the fees.

Hyundai filed a CIT challenge, arguing that since Commerce did not actually find deficiencies in the company's submissions, it can't use facts otherwise available. Commerce requested a voluntary remand to rethink its use of facts available. Petitioner Nucor Corporation was the only party to oppose the request, yet Judge Jennifer Choe-Groves ultimately granted it, giving deference to the agency to fix its own mistakes (see 2108270037). After the remand was granted, Commerce then issued a follow-up questionnaire to Hyundai. The agency said that it was missing information needed to determine the amount of benefit conferred from the provision of port usage rights as they relate to harbor exclusive fees, so it fielded this information from Hyundai. The result was a 0.01% CVD rate based on the port usage program (see 2110200075).

This still leaves the question of whether the port usage rights program is actually countervailable -- also the subject of another case from Hyundai, the complaint regarding which was filed in October (see 2110210040). On the port usage rights, between 2003 and 2007, Hyundai paid for and built a port facility at North Incheon Harbor, receiving reimbursement from the Korean government. The port changed hands after it was finished, officially reverting to the Korean government. But, since it built the facility, Hyundai obtained the right to operate and use the port for its own operations, along with collecting fees from third-party users, for a period of just over 40 years. The respondent told Commerce of this arrangement, also noting that it received berthing income from shipping companies.

CIT should not just sustain these results and maintain the de minimis CVD rate though, since the issue of the countervailability of the port usage rights is not moot, Hyundai argued. There are exceptions to mootness in these instances, which include the conditions that the challenged action is too short in its duration to be fully litigated prior to expiration and that there is a reasonable expectation that the same complaining party will be subject to the same action again. Commerce has countervailed the port usage rights program in the various past CVD reviews. "As Commerce’s decisions in these previous and subsequent proceedings make clear, Commerce continues to rely on legally unsupportable grounds for finding that Hyundai Steel’s port usage rights provide a countervailable benefit, and will likely continue to do so repeatedly until this Court decides the issue," Hyundai said.

Part of Hyundai's argument against the countervailability of the port usage rights program is that Commerce mischaracterizes the basis for Hyundai's port usage rights to find that they are a benefit to Hyundai. Even if Hyundai had built the port for its own use, as Commerce suggests, this doesn't excuse abandoning the agency's excessive benefit analysis established through past practice. If it were to conduct such analysis, Hyundai seems to think it would pass, since the period of 41 years and eight months for which Hyundai is to receive the benefits is shorter than any of the periods Commerce has found to be "excessive," the brief said.