Background
POSCO challenged the Department of Commerce’s final results in a countervailing-duty administrative review of certain carbon and alloy steel cut-to-length plate from South Korea for calendar year 2021. The dispute concerned the Korean Emissions Trading System, under which regulated entities must surrender Korea Allowance Units to offset greenhouse-gas emissions. Some participants were eligible to receive an additional allocation that increased their free allowances from 90% to 100%.
In an earlier remand, Commerce treated the additional allowances as an export subsidy, but the court rejected that rationale because export performance was not a necessary condition for eligibility. The court directed Commerce to determine instead whether the subsidy was de facto specific. On second remand, Commerce found that 494 companies received the additional allowances and compared that figure with 906,325 companies operating within the Korean government’s jurisdiction in 2021. POSCO and the Korean government argued that Commerce should have compared the 494 recipients only with the 684 companies subject to the emissions-trading program.
The Court’s Holding
The court sustained Commerce’s second remand redetermination. It held that Commerce reasonably found the additional 10% allocation de facto specific because its actual recipients were limited in number under 19 U.S.C. § 1677(5A)(D)(iii)(I). The statute and regulations do not prescribe a particular denominator, and Commerce has discretion to select an appropriate comparator in this fact-intensive inquiry.
Judge Restani concluded that comparing 494 recipients with the 906,325 companies operating in Korea reasonably assessed whether the subsidy was broadly available and widely used throughout the economy. Limiting the denominator to K-ETS participants would improperly make the program’s inherent eligibility restrictions a basis for finding the subsidy non-specific. The court therefore found Commerce’s determination supported by substantial evidence and in accordance with law, sustaining the resulting 0.61% rate for the allowance program and POSCO’s revised total subsidy rate of 0.80%.
Key Takeaways
- Commerce may compare subsidy recipients with companies across the broader economy when deciding whether recipients are limited in number.
- A program’s inherent eligibility limits do not require Commerce to restrict its comparator to entities capable of receiving the benefit.
- The court sustained Commerce’s finding that the additional allowances were de facto specific and its revised 0.80% total subsidy rate for POSCO.
Why It Matters
The decision reinforces Commerce’s substantial discretion in selecting comparators for de facto-specificity analyses. A subsidy may be specific even when many entities within the regulated program receive it, if its use remains narrow when measured against the broader economy.
The ruling also confirms that regulatory programs can confer countervailable benefits through preferential allocations. Characterizing K-ETS as an environmental compliance regime did not prevent Commerce from treating the additional free allowances as a subsidy whose recipients were limited in number.