Korean Sewerage Program Not Countervailable, Commerce Says on Remand at Trade Court

The Commerce Department switched its position on the countervailability of a South Korean sewerage fees program in Feb. 7 remand results, finding that the program is not countervailable. Commerce asked the Court of International Trade for a chance to reconsider the issue itself, ultimately coming back with the position that no benefit was preferred under the sewerage fees program and that the overall subsidy rate for countervailing duty respondent Hyundai Steel Company should be the de minimis rate of 0.49% (Hyundai Steel Company v. United States, CIT #21-00012).

The case concerns the 2018 CVD administrative review of cut-to-length carbon-quality steel plate from South Korea. In the East Asian country, the regional government water authority assumes that however much water a customer consumes equals the amount of sewerage it discharges into the public sewer system. The customers are therefore charged for this sewerage based on the level of water consumed. However, if a customer can prove that it did not discharge as much sewerage as the amount of water it consumed, that customer can be charged at the actual rate of water usage.

Hyundai said it uses water as part of its production process. Therefore, the company hired an "independent study" to find its actual level of sewerage. This study was accepted by the regional Korean water authority, lowering Hyundai's level at which it is charged for water consumption (see 2106240047). The CVD petitioner then alleged that this was a countervailable benefit to Hyundai. Commerce initially agreed, prompting Hyundai to file its case. During litigation, Commerce requested a voluntary remand since its understanding of the program increased following the 2019 administrative review of the CVD order (see 2111080050).

Commerce, on remand, said that it now finds that both federal and municipal law and regulations show that sewerage fees are based on the volume of sewage discharged into the public sewerage system rather than just the amount of water consumed. "Therefore, after a reevaluation of the record, we find that the record does not support a determination that this program is countervailable," Commerce said. "Specifically, we determine that the record does not support a finding that the reduction in Hyundai Steel’s sewerage fee in Incheon represents revenue forgone ... Hyundai Steel qualified for a reduction in its sewerage bill in the amount that it demonstrated to the government that it could not have discharged into the public sewerage system."