Kim & Chang’s Environment Practice represented six cement companies (the “Companies”) and successfully nullified the Ministry of Environment’s (the “MOE”) denial of allocating additional greenhouse gas (“GHG”) emission permits.  The Companies had not been subject to a fair allocation of emission permits even though they had successfully obtained two nullification decisions regarding the MOE’s allocation of emission permits for the first commitment period.  Through this lawsuit, the Companies were able to resolve a long-standing dispute and finally obtain a fair and legitimate allocation of emission permits.  The following paragraphs will detail the key events of this case.

When the MOE allocated emission permits for the first commitment period (i.e., from 2015 to 2017) in December 2014, it allocated emission permits to Company A in excess, while under-allocating them to the Companies by misinterpreting the former Guidelines for the Allocation and Revocation of Emission Permits (the “Guidelines”).  As such, the Companies filed an administrative appeal to nullify the MOE’s disposition and later obtained a final decision for the nullification.

Thereafter, in December 2018, the MOE issued a second disposition, through which it once again allocated excessive emission permits to Company A while under-allocating permits to the Companies based on the amended Guidelines that had been in effect.  Subsequently, the Companies filed another administrative appeal and successfully obtained another nullification decision.

In March 2022, the MOE issued a third disposition based on the former Guidelines, allocating the same amount of emission permits to the Companies as it had in the second disposition.  The reasoning behind the MOE’s decision was that the expected emissions should be calculated based solely on the 2013 emission amount because Company A’s second kiln facility only produced clinkers in 2013, thereby qualifying as a “single-year facility” rather than an “annual-average facility.”  Regarding this point, the Companies filed another administrative appeal, arguing that the expected emissions should be calculated based on the average of the emissions from the preceding three years, including 2013, as the Company A’s second kiln facility is an “annual-average facility” under the former Guidelines.

The Seoul Administrative Court accepted the Companies’ argument that the aforementioned second facility should be considered an “annual-average facility,” owing to the fact that Company A had reported its five kiln facilities under a single statement from 2010 to 2013.  If the second kiln facility were to be considered a “single-year facility,” its statements for 2011 and 2012 must not have been filed.  However, Company A did file the statements that reported the emission amount of its second kiln facility for 2011 and 2012.

In this case, our firm represented the Companies from the very first administrative appeal and successfully nullified the MOE’s dispositions.  Our firm first successfully nullified the MOE’s first disposition by arguing that the former Guidelines must be interpreted literally.  Further, in the second administrative appeal, we successfully overturned the district court decision and won all of the cases by arguing that the second disposition should have been based on the former Guidelines.

Ultimately, our firm also succeeded in nullifying the third disposition by explaining the technical details related to this case, such as the reporting of the emissions of a kiln facility in a concise manner, while conducting strategic and thorough analyses to further strengthen our arguments.

Although the appeal proceeding still remains, this case is significant for the Companies as they are now closer to resolving a long-standing dispute and to receiving a fair and legitimate allocation of emission permits.