2015Guhap3386 Revocation of Disposition of Revocation of Determination of Allocation of Emission Permits

ACement Co., Ltd.

The Minister of Trade, Industry

Sungyang Co., Ltd.

January 24, 2017

February 2, 2017

1. On December 1, 2014, the Minister of Environment revokes a disposition to allocate greenhouse gas emission permits to the Intervenor joining the Defendant.

2. On December 1, 2014, the Minister of Environment revokes the disposition of refusal to allocate greenhouse gas emissions to the Plaintiff on December 1, 2014.

3. Of the costs of lawsuit, the part resulting from the intervention is borne by the Intervenor joining the Defendant, and the remainder is borne by the Defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On September 12, 2014, the Minister of Environment designated and publicly announced a company subject to allocation of emission permits under Article 8 of the Act on Allocation and Trading of Greenhouse Gas Emission Permits (hereinafter “Emission Trading Act”) as an entity subject to allocation of cement industry, and designated both the Plaintiff and the Intervenor to the Defendant (hereinafter “Supplementary Intervenor”) as an entity subject to allocation of cement industry.

B. On September 16, 2014, the Minister of Environment publicly announced a national emission permit allocation plan (hereinafter referred to as “emission plan”) under Article 3(8) of the former Enforcement Decree of the Act on the Allocation and Trading of Greenhouse Gas Emission Permits (amended by Presidential Decree No. 27181, May 24, 2016; hereinafter referred to as “former Enforcement Decree of the Emission Trading Act”) regarding the sectors subject to allocation of the first commitment period (3 years from January 1, 2015 to December 31, 2017; hereinafter referred to as “the planning period”) and the type of business, total quantity of emission permits, entry quota by type of business, criteria for allocation by company, etc.

C. From September 15, 2014 to October 14 of the same year, the period during which the Plaintiff and the Intervenor applied for the allocation of greenhouse gas emission permits to the Minister of Environment. On December 1, 2014, the Defendant allocated greenhouse gas emission permits to the Plaintiff and auxiliary intervenors as indicated below (hereinafter “instant allocation disposition”). Accordingly, the Plaintiff’s allocation of greenhouse gas emission permits to the Intervenor and auxiliary intervenors within the scope of the Plaintiff’s refusal disposition (hereinafter referred to as “instant allocation disposition”). As a result, the Plaintiff’s allocation from the Minister of Environment of 8,764,384tCO2-eq [1tCO2eq = 1 KAU (KAU) + 1KU (hereinafter referred to as “KU”) and the unit of 414,780KU (i.e., 8,764, 384, KUU - 8,349,KUKU) was denied by adding the same to each of the instant allocation within the scope of the Plaintiff’s refusal disposition.

【Unit: KAU】

A person shall be appointed.

D. Following the amendment of Article 6 of the former Enforcement Decree of the Emission Trading Act by Presidential Decree No. 27181 on May 24, 2016, the competent authority over the instant allocation disposition and the instant refusal disposition was changed to the defendant (hereinafter referred to as “the Minister of Environment and the defendant”) (hereinafter referred to as “the defendant”).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, and 8 (including paper numbers), the purport of the whole pleadings

2. Determination on the main safety defense of the Defendant and the Intervenor

A. Main Safety Defenses

The Plaintiff filed the instant lawsuit with the assertion that the instant allocation disposition with the purport of allocating excessive greenhouse gas emission permits to the auxiliary intervenor by means of false or unjust means among the auxiliary intervenors classified as their own cement type of business, and that the portion to be properly allocated to the Plaintiff was not allocated as the instant rejection disposition. However, the Plaintiff did not have specific rights infringed upon due to the instant allocation disposition, and even if the instant allocation disposition is revoked, the amount of revocation of the allocation should not be allocated to the Plaintiff as a matter of course because it is transferred to the reserve in accordance with the Emission Trading Act.

Therefore, there is no legal interest in seeking revocation of the instant allocation disposition against the Plaintiff. The instant lawsuit is unlawful.

B. Determination

1) Even if a third party who is not the other party to an administrative disposition is not the direct party, if the interests protected by law have been infringed due to the administrative disposition, the party is entitled to obtain a decision of the propriety thereof by filing an administrative litigation seeking the revocation or nullification of the administrative disposition. The term “legal interests” refers to individual, direct, and specific interests protected by the relevant administrative disposition and relevant laws and regulations (see, e.g., Supreme Court Decision 2009Du10512, Jun. 10, 2010)

2) In full view of the following grounds and circumstances derived from the relevant provisions, such as the Emission Trading Act, if a certain revocation of the instant allocation occurs with respect to the portion allocated to cement type of business due to the entirety or partial revocation of the instant allocation, the allocation should be retroactively allocated to the competent authority for the pertinent cement type of business regarding the refusal of the allocation. Therefore, even if the Plaintiff is not the other party to the instant allocation disposition, it may be deemed that the Plaintiff’s right to sue seeking revocation of the instant allocation constitutes a case of infringement of legal interests protected by the instant allocation disposition. Accordingly, the Plaintiff is recognized to have standing to seek revocation of the instant allocation disposition.

① According to Article 5(1)1 and 4 of the Emission Trading Act, Article 12(1) and (2) of the former Enforcement Decree of the Emission Trading Act, and accordingly, a plan to allocate emission permits prepared by the Defendant, the Defendant set the State’s outlook (BAU: Busi Business U.S.) and performance-based emission targets under Article 42 of the Framework Act on Low Carbon, Green Growth (hereinafter “Framework Act”) to preferentially determine the State’s total emission allowances and the total emission allowances for each type of business within the scope of the total emission allowances, the amount of emission permits for each type of business is determined within the scope of the total emission allowances, and the amount of emission permits for each type of business is determined within the scope of the total emission allowances, and the company classified as the same type of business is not a structure that determines the total emission allowances for each type of business recognized by the Defendant by the combination of emission allowances recognized by the Defendant.

(2) According to the current allocation method of emission permits by type of business and company as classified by the same type of business as the present, if the total amount of emission permits recognized by the defendant as the expected emission volume by type of business exceeds the total amount of emission permits by type of business, each business entity eligible for allocation shall be allocated emission permits in a quantity less than the emission

(3) In such cases, the adjustment coefficient (the coefficient calculated by dividing the allocation by type of business to all business entities eligible for allocation in the same type of business) shall be applied when calculating the allocation by business entity is calculated. Since the adjustment coefficient is also changed following the change of recognized quantity by other business entities eligible for allocation in the same type of business, the recognized amount of business entities eligible for allocation shall directly affect the determination of allocation to all other business entities eligible for allocation in the same type of business (i.e., when part of recognized amount of business entities eligible for allocation is revoked, the adjustment coefficient is higher by itself and the allocation of all other business entities eligible for allocation in

(4) According to Articles 19 and 33(1) of the Emission Trading Act, a business entity eligible for allocation may trade allocated emission permits by means of trading or other methods, and, when emission permits submitted by a business entity eligible for allocation are less than the actual emission quantity, a business entity eligible for allocation may receive administrative sanctions, such as penalty surcharges not exceeding three times the average market price of emission permits in the relevant implementation year within the extent of 100,000 won per 1 K

⑤ According to Article 17(1)5 of the Emission Trading Act and Article 22(5) and (9) of the Enforcement Decree of the Emission Trading Act, when the whole or part of allocated emission permits is revoked by fraud or other improper means, it may be interpreted that the revoked emission permits are not allocated to the Plaintiff even after the revocation of the allocation of emission permits. However, the provision that allows the revocation of the allocation of emission permits to be transferred to a preliminary portion following the revocation of the allocation of emission permits can be applied to cases where the defendant’s allocation of emission permits occurs due to the lapse of the period for filing a lawsuit. Accordingly, each of the dispositions of this case, which was filed by the plaintiff within the period for filing a lawsuit, is not applicable to each of the dispositions of this case, and there is no room to apply each of the above provisions, but only the issue of "small-level allocation of the portion that should have been originally allocated to the plaintiff if the anticipated greenhouse gas allocated by the intervenor at the time of each disposition of this case had been calculated lawfully and appropriately."

3) Therefore, the defense of the principal safety by the Defendant and the Intervenor is without merit.

3. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

For the following reasons, the Defendant issued an illegal calculation of the amount of greenhouse gas emission permits to supplementary intervenors and issued the instant disposition of allocation, and thus, it should be revoked, and the instant disposition of rejection is also revoked on the premise that the instant disposition of allocation is legitimate.

The Defendant newly established new facilities on the ground that the record of greenhouse gas emissions from the base year (from January 1, 2011 to December 31, 2013; hereinafter referred to as “base year”) from the base year (from January 1, 2011 to December 31, 2013; hereinafter referred to as “base year”) to 2014, which was the year following the base year when the Intervenor was not operated even though the Intervenor was already established and operated, on the ground that the record of greenhouse gas emissions from the base year (hereinafter referred to as “facilities in this case” in combination with the facilities in subparagraph 1) cannot be additionally allocated to each of the intervenors in excess of the base year, on the ground that the record of greenhouse gas emissions from the last year of the base year in 2013, which was the last year of the base year in which the Intervenor was already installed and operated. However, it cannot be additionally allocated to each of the intervenors in this case.

B. Relevant legislation

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) Since 2010, the Intervenor prepared a detailed statement that contains a cleaner production in the workplace, greenhouse gas emissions, etc. (hereinafter “detailed statement”) and submitted it to the Defendant after being verified by the Korean Standards Association, etc.

2) The amount of greenhouse gas emissions in the base year of the Intervenor’s base year confirmed by the instant specification, etc. is 4,137,071KU in 201, 4,770,089KU in 201, 5,573,116KU in 201, and 5,573,116KU in 201.3) The Intervenor calculated the amount of greenhouse gas emissions in the base year of the Intervenor’s base year confirmed by the instant specification, etc., and based on

4) Each of the instant facilities has not been significantly expanded since its completion on December 29, 1969 and its extension on June 6, 1985.

5) The facility referred to in subparagraph 1 was discontinued from the time before the base year to the completion date of the base year, and re- operated as tin and tin and production facilities in 2014.

6) The facility set forth in subparagraph 2 was operated as a sprinkler production facility in 2010, which is the immediately preceding year of the base year, after being operated as a separate product production facility in 2011, was operated in 2012, and was operated as a sprinkler production facility in 2013. The supplementary intervenor reported to the Defendant that: (a) the facility set forth in subparagraph 2 was operated as a separate product production facility in 201; (b) the serial number 031 at the time of the cleaner production in 2010; and (c) the serial number at the time of the cleaner production in 2011 as 023; and (d) the serial number at the time of the cleaner production in 2013 as 035 at the time of the cleaner production in 2013. [Grounds] There is no dispute; (c) each entry in Gap, 6, 9

D. Whether each of the facilities of this case constitutes a new facility

1) According to Article 12(1) and (2) of the former Emission Trading Act and Article 12(1) and (2) of the former Enforcement Decree of the Emission Trading Act, the Defendant’s calculation method of emission permits for each business entity eligible for allocation is as follows: (a) the allocation of greenhouse gas emission permits to each business entity eligible for allocation is separated from the previous Guidelines on Allocation, Adjustment, and Revocation of Emission Permits by business entity eligible for allocation, which was established and publicly notified in detail by each business entity eligible for allocation under Article 2014-159 of the Ministry of Environment’s notification on September 12, 2014; (b) the previous Guidelines on Allocation, Adjustment, and Cancellation of Greenhouse Gas Emission Permits (which was enacted before the abolishment by Ordinance of the Ministry of Environment No. 2016-100, Jun. 8, 2016; hereinafter referred to as “former Guidelines”) Articles 10, 11, and 13 [Attachment 1] of the former Guidelines on Allocation of Greenhouse Gases Emission Permits for each business entity eligible for allocation.

The estimated greenhouse gas emissions in the pertinent compliance year, which are calculated by GF or BM, shall be calculated by aggregating the estimated greenhouse gas emissions in the existing facility in the pertinent compliance year and the estimated greenhouse gas emissions in the expected new and expanded facility, which are anticipated to be installed in the end of the base year (excluding facilities newly established and expanded in the last year of the base year) and the facilities newly established and expanded in the base year in the last year of the base year, while the estimated greenhouse gas emissions in the continuing operation of the facility in the base year are divided into the facilities newly established and expanded in the base year, and the estimated greenhouse gas emissions in the base year, based on the annual average greenhouse gas emissions in the base year (excluding facilities newly established and expanded in the last year of the base year) from the year immediately after the year in which the facility is newly established and expanded, to the last year in the base year. In addition, the anticipated greenhouse gas emissions in the facilities expected to be newly established and expanded are to be calculated based on the annual average greenhouse gas emissions emissions in the relevant year using the average monthly greenhouse gas emissions in the base year.

2) As seen earlier, the method of calculating greenhouse gas emission expected depending on which facilities are deemed to be continuously operated, and the method of calculating greenhouse gas emission expected depending on which facilities are to be newly established or expanded among existing facilities in the base year. In particular, in cases of new or expanded facilities among existing facilities in the base year, the calculation of annual greenhouse gas emission is based on the period of actual emission, not on the average of three years in the base year, unlike the case of the existing facilities, and if such new or expanded facilities are to be deemed as expected, the estimated greenhouse gas emission amount should be calculated according to a specific formula separate from the anticipated greenhouse gas emission amount in the existing facilities. Therefore, as an enterprise possessing or owning new or expanded facilities increases both anticipated greenhouse gas emission amount and the estimated greenhouse gas emission amount to be calculated based on the base of the estimated greenhouse gas emission amount, it would have an important impact on the calculation of greenhouse gas emission expected to mean any facilities. Accordingly, the nature of each facility stipulated in the previous allocation guidelines, in particular, the provisions related to new or expanded facilities should be interpreted faithfully and excessively without reasonable grounds, barring special circumstances.

3) In full view of the facts acknowledged earlier based on the foregoing interpretation criteria, each of the facilities of this case, which were expanded on June 1, 1985 after completion of the construction of 12, 299, does not constitute a facility physically added after January 1, 201, which is the starting point of the base year, and thus, cannot be deemed to be a facility newly established in the last year of the base year prescribed in the former Allocation Guidelines [Article 10(1)1 Item (c) of the former Allocation Guidelines] or a anticipated new facility (Article 10(1)2 Item (a) of the former Allocation Guidelines]. The main grounds are as follows.

(1) Article 2 subparagraph 12 of the former Allocation Guidelines, "new establishment" is defined as physical addition of emission facilities that separately report the emission amount in the specifications, independently from existing facilities, for production activities.

On the other hand, Article 2 subparagraph 20 of the former Allocation Directive defines ‘physical addition' as not only ‘physical removal' but also ‘a case of continuous suspension of operation' as ‘a case of continuous suspension of operation', which is different from that of ‘new establishment'.

③ When defining ‘the start of operation' in subparagraph 1 of Article 2 of the former Allocation Guidelines, ‘the start of operation' and ‘the start of operation' are different from ‘the start of operation', it is reasonable to regard ‘the start' and ‘the start of operation' as different concepts.

④ Even if the former Guidelines clearly distinguish the operation of facilities following the establishment and extension of new facilities and the re-operation of facilities after the closure of a re-operation plan during the commitment period after closure of Article 10(3)4 of the former Guidelines, the former Guidelines clearly distinguish the operation of facilities following the establishment and extension (Article 10(3)4 of the former Guidelines does not include an estimated greenhouse gas emission quantity on the sole basis of the fact that a re-operation plan exists during the commitment period after the closure).

⑤ It is difficult to say that the establishment of a new facility is naturally included in the category of the new establishment because it means the establishment and installation of a new facility.

⑤ The mere fact that a facility installed and installed before April 14, 2010, when the Framework Act was in force, was re-run from a voluntary point of time after April 14, 2010, and thereafter there was a detailed statement under Article 44(1) of the Framework Act, it is difficult to regard the facility as a new facility. In particular, since the Defendant can sufficiently grasp whether the facility was installed and installed before April 14, 2010, the detailed statement on the relevant facility was reported since April 14, 2010, and the Defendant’s determination of the facility as a new facility was lawful and justifiable.

① Unlike the estimated amount of greenhouse gas emissions from a facility established in the base year, in the case of a facility newly established in the base year, it is necessary to separately calculate the estimated amount of greenhouse gas emissions on the basis of the quantity of greenhouse gases emitted or to be emitted from the newly established facility, as it is highly probable that a business entity will continuously operate a facility installed and installed with substantial expenses in the future. Accordingly, it is necessary to separately calculate the estimated amount of greenhouse gas emissions on the basis of the quantity of greenhouse gases emitted or to be emitted from the newly established facility, separately from the method of calculating the amount of greenhouse gas emissions, in the case of a facility newly established in the base year.

8. However, if a business entity eligible for allocation calculates the estimated greenhouse gas emission amount in a way different from the case of a facility newly established at or after the beginning of the base year, the nature of the facility is determined according to the intent of the business entity eligible for allocation. The amount of greenhouse gas emission recognition for the business entity eligible for allocation is highly likely to be distorted and calculated by the business entity eligible for allocation (e.g., the amount of limited emissions for the business entity eligible for allocation which has 1, 2, and 3 is fixed to the extent of 180; 1, and 2 years in the base year; 3 years in the base year; 60 times in the base year; 1, 2, and 3 years in the base year; 60 times in the base year; if it is assumed that the business entity newly established the base year, such as the defendant, is likely to increase the amount of greenhouse gas emission in the base year; 220 = (180+180 +180 +260).

4) Therefore, the Plaintiff’s assertion on this part is with merit.

E. Scope of revocation of each disposition of this case

1) According to the above facts, among the instant disposition of allocation, facilities expected to be newly established pursuant to Article 10(1)2(a) of the former Guidelines for Allocation among the instant disposition of allocation; facilities No. 2 are deemed newly established in the last year of the base year under Article 10(1)1(c) of the former Guidelines for Allocation; calculation of the estimated amount of greenhouse gas emissions expected to be generated in the last year of the base year under Article 10(1)1(c) of the former Guidelines for Allocation; and the allocation of greenhouse gas emission permits during the commitment period by applying the adjustment coefficient should be revoked unlawfully; if the amount of greenhouse gas emissions anticipated to each of the instant facilities by the Intervenor was not illegally calculated, including the amount of greenhouse gas emission permits allocated to the Intervenor revoked, among the instant disposition of rejection, it should also be revoked.

2) However, in order to cancel only illegal part of each of the dispositions in this case, the estimated greenhouse gas emissions expected to be recognized should be calculated first if each of the dispositions in this case is deemed to be facilities other than new facilities, and the adjustment coefficient should also be calculated again (the part of the adjustment coefficient is changed). Based on this, reasonable allocation of greenhouse gas emission permits to auxiliary intervenors is calculated, and the calculation amount and calculation amount are different from the calculation amount in this case, and the calculation amount of legitimate greenhouse gas emission permits to the Plaintiff and the disposition of this case are to be revoked. The data in this case alone cannot be calculated. Thus, the entire disposition in this case should be revoked to calculate the amount of greenhouse gas emission permits to auxiliary intervenors.

4. Conclusion

The plaintiff's claim shall be accepted in entirety on the grounds of the reasons.

The judge of the presiding judge shall be Jin only

Judge Song Byung-hun

Judges Song Jong-hwan