Commerce Correctly Avoided LTAR Analysis When Analyzing Port Fee Rights, Agency Argues on Remand

Usage rights at the Port of Incheon granted to Hyundai Steel by the Korean government are countervailable, but did not require a less than adequate remuneration (LTAR) analysis as part of a countervailing duty investigation, the Commerce Department said in its April 10 remand results at the Court of International Trade (Hyundai Steel Company v. U.S., CIT # 21-00536).

Commerce also voluntarily looked into its analysis of Incheon's sewerage rate reductions for Hyundai, finding them not countervailable. Commerce reduced its overall subsidy rate from 0.51% to 0.5% on remand.

The case contests the final results of the 2018 administrative review of the CVD order on hot-rolled steel flat products from South Korea, in which Hyundai served as the only mandatory respondent. Commerce countervailed both the port usage rights and sewerage fee reductions. CIT ordered a reexamination of both programs in its Feb. 10 remand order (see 2302100052).

After reexamination and "gaining an increased understanding of how companies could receive a reduction in sewerage fees," Commerce determined that the sewerage program was not countervailable. Both federal and municipal laws in Korea state that sewerage fees are based on volumes discharged into the public sewerage system. Because of the vaporization of water during the steel production process, Hyundai applied for, and was granted, a fee reduction by the city of Incheon.

The court also required Commerce to look again at its port usage benefit determination, finding that the department failed to provide an analysis of "adequate remuneration for port usage in relation to the prevailing market conditions, such as price, quality, availability, marketability, transportation, and other conditions of purchase or sale,” and failed to provide an analysis of the record evidence to determine that the Korean government provided usage of the port for LTAR.

On remand, Commerce said that instead of using LTAR, it lawfully looked at the program as revenue forgone because the port rights were "not a subsidy that is appropriately analyzed under an LTAR analysis," and instead represent forgone revenue by the Korean government within the meaning of the statute, Commerce said.

"The Remand Order cited statutory language relating to the determination of a benefit under section 771(5)(E) of the Act with respect to 'prevailing market conditions,'" Commerce said. "That exact language does not apply to programs analyzed as revenue forgone." An LTAR analysis would apply only to "the provision of goods or services," Commerce argued. Hyundai Steel received funds from the Korean government between 2004 and 2007 for certain construction costs, but Hyundai reported no costs or payments for this investigation period and no one alleged the provision of goods or services during the administrative proceeding, Commerce said.

Hyundai only challenged Commerce’s benefit determination, not other determinations as to financial contribution and specificity, Commerce said. Under the 2001 and 2009 agreements, the Korean government partnered with Hyundai for the construction of harbor facilities under a build-transfer-operate agreement. Hyundai financed the construction of the port and was granted a free use period and other rights including fee collection as part of those agreements, Commerce said. That fee collection was the only aspect of the program analyzed and countervailed by Commerce, it said.

"Hyundai Steel believes that Commerce’s remand redetermination is flawed and that Commerce’s continued treatment of the port rights program as a subsidy is unsupported by substantial evidence and not in accordance with law," said Brady Mills, counsel for Hyundai.