BGH Edelstahl Siegen GMBH v. United States

• Decision Date: 12 October 2022
• Docket Number: Slip Op. 22-117,Court No. 21-00080
• Citation: 600 F.Supp.3d 1241
• Parties: BGH EDELSTAHL SIEGEN GMBH, Plaintiff, v. UNITED STATES, Defendant, and Ellwood City Forge Company, et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

600 F.Supp.3d 1241

BGH EDELSTAHL SIEGEN GMBH, Plaintiff,

v. UNITED STATES, Defendant,andEllwood City Forge Company, et al., Defendant-Intervenors.

Slip Op. 22-117

Court No. 21-00080

United States Court of International Trade.

October 12, 2022

James K. Horgan, Alexandra H. Salzman, Gregory S. Menegaz, Marc E. Montalbine, and Merisa A. Horgan, deKieffer & Horgan, PLLC, of Washington, D.C., for plaintiff BGH Edelstahl Siegen GmbH.

Sarah E. Kramer, U.S. Department of Justice, Commercial Litigation Branch – Civil Division, and Ayat Mujais and Paul K. Keith, Of Counsel, U.S. Department of Commerce, Office of Chief Counsel for Trade Enforcement and Compliance, for defendant United States.

Thomas M. Beline, Chase J. Dunn, Jack A. Levy, Myles S. Getlan, and Nicole Brunda, Cassidy Levy Kent (USA) LLP, of Washington, D.C., for defendant-intervenors Ellwood City Forge Co., Ellwood National Steel Co., Ellwood Quality Steels Co., and A. Finkl & Sons.

OPINION AND ORDER

Kelly, Judge:

Before the court is BGH Edelstahl Siegen GmbH's ("BGH") Rule 56.2 motion for judgment on the agency record challenging various aspects of the U.S. Department of Commerce's ("Commerce") final determination in its countervailing duty ("CVD") investigation of forged steel fluid end blocks ("Fluid End Blocks") from the Federal Republic of Germany ("FRG"). [BGH] Mot. J. Agency R., Oct. 26, 2021, ECF No. 21; [BGH] Rule 56.2 Memo. Supp. Mot. J. Agency R., Oct. 26, 2021, ECF No. 22 ("Pl. Br."); see generally [F]luid End Blocks] from the People's Republic of China, [FRG], India, and Italy, 86 Fed. Reg. 7,535 (Dep't Commerce Jan. 29, 2021) ([CVD] orders, and am. final affirmative [CVD] determination for the People's Republic of China) ("Final Results") and accompanying Issues and Decision Memo., C-428-848, PD 293, bar code 4062827-01 (Dec. 7, 2020), ECF No. 15-2 ("Final Decision Memo.");¹ [F]luid End Blocks] from the People's Republic of China, [FRG], India, and Italy, 86 Fed. Reg. 10,244 (Dep't Commerce Feb. 19, 2021) (correction to [CVD] orders). BGH challenges Commerce's Final Results on three grounds, arguing (1) that Commerce improperly initiated its CVD investigation and impermissibly expanded the CVD investigation to include new subsidy programs, Pl. Br. at 43–45, (2) failed to include ex-parte communications in the record, id. at 45–46, and (3) incorrectly determined that seven programs used by BGH during the period of investigation were countervailable subsidies.² Id. at 7–43.

Defendant United States and defendant-intervenors Ellwood City Forge Company, Ellwood National Steel Company, Ellwood Quality Steels Company, and A. Finkl & Sons ("Defendant-Intervenors") argue that Commerce's decisions to initiate and expand its CVD investigations were in accordance with law because the petition to initiate the CVD investigation "included the relevant laws and policies that provided the countervailable subsidies, tied those facts to the legal framework, and established a reasoned basis to conclude that BGH received subsidy benefits[,]" and that Commerce may consider new subsidy programs uncovered during its investigation. Rebuttal Br. of Def.-Intervenors Opp'n to Pl.’s Rule 56.2. Mot. J. Agency R. at 6, Mar. 22, 2022, ECF No. 31 ("Def.-Inter. Br."); see Def.’s Resp. to Pl.’s Rule 56.2 Mot. J. Agency R. at 41–45, Mar. 21, 2022, ECF No. 28 ("Def. Br."). Defendant and Defendant-Intervenors further argue that the record for the CVD investigation is complete because the ex parte communication that BGH asserts is missing from the record pertained to the antidumping investigation, not the CVD investigation, and therefore need not be included in the record. Def.-Inter. Br. at 38–39; Def. Br. at 45–46. Finally, Defendant and Defendant-Intervenors argue that Commerce correctly determined the Contested Programs are countervailable. Def.-Inter. Br. at 11–35; Def. Br. at 12–41. For the following reasons, the court sustains in part and remands in part Commerce's Final Results.

BACKGROUND

On December 18, 2018, the FEB Fair Trade Coalition and Defendant-Intervenors ("Petitioners") filed a petition with Commerce requesting that Commerce impose countervailing duties on Fluid End Blocks from the FRG. Fluid End Blocks from China, Germany, India, and Italy: Antidumping and [CVD] Pets., C-428-848, PDs 1–7, CDs 1–9, bar codes 3921764-01–07, 3921755-01–09 (Dec. 18, 2019) ("Petition"); see also [F]luid End Blocks] from the [FRG], India, Italy, and the People's Republic of China, 85 Fed. Reg. 2,385, 2,385 nn.1–2 (Dep't Commerce Jan. 15, 2020) (initiation of [CVD] investigations) ("Initiation Notice"). On December 23, 2019, Commerce issued a supplemental questionnaire to Petitioners requesting clarification for several programs Petitioners alleged constitute countervailable subsidies. Suppl. Questions, C-428-848, PD 11, bar code 3923818-01 (Dec. 23, 2019). On December 29, 2019, Petitioners filed an amended petition. Amend. of Pets. & Resp. to Commerce's Suppl. Questions, C-428-848, PDs 15–19, CDs 10–15, bar codes 3924916-01–05, 3924910-01–06 (Dec. 29, 2019) ("Am. Petition"). In response, Commerce requested further information from Petitioners regarding "issues pertaining to the proposed scope, industry support, and import statistics in the Petitions." Memo. on Phone Call with Counsel to Pet'rs at 1, C-428-848, PD 20, bar code 3926026-01 (Jan. 2, 2020). Petitioners filed two additional amended petitions in January 2020. Second Amend. of Pets., C-428-848, PD 21, bar code 3926213-01 (Jan. 3, 2020); Third Amend. of Pets., C-428-848, PD 22, bar code 3926682-01 (Jan. 6, 2020).

On January 8, 2020, Commerce initiated a CVD investigation into Fluid End Blocks from the FRG covering a period of January 1, 2018, through December 31, 2018. Initiation Notice, 85 Fed. Reg. 2,385, 2,385 –86 (issued January 8, 2020). On February 4, 2020, Commerce selected Schmiedewerke Gröditz GmbH ("SWG") and BGH as mandatory respondents and sent an initial questionnaire to the Government of the Federal Republic of Germany ("GOG"). Resp't Selection Memo., C-428-848, PD 54, bar code 3938815-01 (Feb. 4, 2020); [CVD] Questionnaire, C-428-848, PD 55, bar code 3938855-01 (Feb. 4, 2020). Between February 4, 2020, and May 8, 2020, Commerce issued questionnaires and supplemental questionnaires to BGH, the GOG, and the EU;³ and received responses and pre-preliminary comments from BGH, the GOG, and the European Commission. See Decision Memo. Prelim. Affirmative Determination [CVD] Investigation of [Fluid End Blocks] from [FRG] at 2–3 & nn.9–10, C-428-848, PD 220, bar code 3975458-01 (May 18, 2020) ("Prelim. Decision Memo.") (listing responses and pre-preliminary comments).

On May 18, 2020, Commerce issued its preliminary results, determining that the GOG was providing countervailable subsidies through, inter alia, section 9a of the Electricity Tax Act, section 51 of the Energy Tax Act, the Reduced EEG Surcharge Program, and the EU ETS Program. Prelim. Decision Memo. at 20–27. Commerce requested additional information regarding the Reduced KWKG Surcharge Program, the CO₂ Compensation Program, the Concession Fee Ordinance Program, sections 9b and 10 of the Electricity Tax Act, and section 55 of the Energy Tax Act. Id. at 29. On October 21, 2020, Commerce issued its post-preliminary decision memorandum, determining that the GOG was providing countervailable subsidies through these additional programs. Post-Prelim. Analysis [CVD] Investigation: [Fluid End Blocks] from [FRG] at 6–14, C-428-848, PD 271, bar code 4043279-01 (Oct. 21, 2020) ("Post-Prelim. Decision Memo.").

On November 2, 2020, the GOG, the EC, the Petitioners, and BGH submitted case briefs to Commerce. Final Decision Memo. at 3 & n.11; see [EC] Case Br., C-428-848, PD 281, bar code 4047621-01 (Nov. 2, 2020); Case Br. [BGH], C-428-848, PD 283, bar code 4047998-01 (Nov. 2, 2020) ("BGH Agency Br."); Case Br. [FRG] and Federal Ministry Economic Affairs & Energy of [FRG], C-428-848, PD 285, bar code 4048444-01 (Nov. 2, 2020); Pet'rs’ Case Br., C-428-848, PD 282, bar code 4047815-01 (Nov. 2, 2020). Petitioners and BGH submitted rebuttal case briefs to Commerce on November 7, 2020. Final Decision Memo. at 3; see Rebuttal Br. [BGH], C-428-848, PD 286, bar code 4051243-01 (Nov. 9, 2020); Pet'r’s Rebuttal Br., C-428-848, PD 287, bar code 4051590-01 (Nov. 9, 2020). Between November 20–23, 2020, the parties withdrew their requests for a hearing before Commerce. Final Decision Memo. at 3; see Letter, C-428-848, PD 289, bar code 4055922-01 (Nov. 20, 2020) (withdrawal of BGH's hearing request); Letter, C-428-848, PD 290, bar code 4056121-01 (Nov. 20, 2020) (withdrawal of Petitioners’ hearing request); Letter, C-428-848, PD 291, bar code 4056463-01 (Nov. 23, 2020) (withdrawal of GOG's hearing request). Commerce issued the Final Decision Memorandum on December 7, 2020. Final Decision Memo. at 1. On March 29, 2021, BGH filed its complaint under section 516A of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(A)(i)(II) and (B)(i) (2018),⁴ contesting Commerce's final determination under section 705 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1671d. Compl. at 1–2, Mar. 29, 2021, ECF No. 7; see Final Results. BGH filed this motion on October 26, 2021. [BGH]’s Mot. J. Agency R., Oct. 26, 2021, ECF No. 21.

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(A)(i)(II) (2018) and 28 U.S.C. § 1581(c), which grant the court authority to review actions contesting the final determination of a CVD investigation. The court will uphold Commerce's determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Initiation of the CVD Investigation

BGH alleges Petitioners’ CVD petition failed the legal standard for initiation of a CVD investigation. Pl. Br. at 43. Commerce initiates a CVD investigation "after examining, on the basis of...