BGH Edelstahl Siegen GmbH v. United States
| Decision Date | 09 May 2023 |
| Docket Number | 21-00080,Slip Op. 23-71 |
| 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 |
[Sustaining in part and remanding in part the U.S. Department of Commerce's remand redetermination in the 2018 investigation of the countervailing duty order covering forged steel fluid end blocks from the Federal Republic of Germany.]
Marc E. Montalbine, deKieffer & Horgan, PLLC, of Washington DC, for plaintiff BGH Edelstahl Siegen GmbH. Also on the brief were Gregory S. Menegaz, Alexandra H. Salzman, and Merisa A. Horgan.
Sarah E. Kramer, Trial Attorney, and Patricia M. McCarthy Director, Commercial Litigation Branch, Civil Division, U.S Department of Justice, of Washington, DC, for defendant United States. Also on the brief was Brian M. Boynton Principal Deputy Assistant Attorney General. Of counsel on the brief was Ayat Mujais, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.
Nicole Brunda, Cassidy Levy Kent (USA) LLP, of Washington, DC, for defendant-intervenors Ellwood City Forge Co., Ellwood National Steel Co., Ellwood Quality Steels Co., and A. Finkl & Sons. Also on the brief were Thomas M. Beline, Jack A. Levy, Myles S. Getlan, and Chase J. Dunn.
Before: Claire R. Kelly, Judge.
Before the court is the U.S. Department of Commerce's ("Commerce") remand redetermination pursuant to the court's remand order, see BGH Edelstahl Siegen GmbH v. United States, 600 F.Supp.3d 1241 (Ct. Int'l Trade 2022) ("BGH I"), on Commerce's final determination in its countervailing duty ("CVD") investigation of forged steel fluid end blocks ("fluid end blocks") from the Federal Republic of Germany ("FRG"). See Final Results of Redetermination Pursuant to Court Remand, C-428-848 (Jan. 9, 2023), ECF No. 48-1 ("Remand Results"); see generally [Fluid 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) and accompanying Issues and Decision Mem., C-428-848, PD 293, bar code 4062827-01 (Dec. 7, 2020), ECF No. 15-2; [Fluid 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). For the following reasons, the court sustains in part and remands in part Commerce's determinations on remand.
The court presumes familiarity with the facts of this case as set out in its previous opinion ordering remand to Commerce, see BGH I, 600 F.Supp.3d 1241, and now recounts only those facts relevant to the court's review of the Remand Results. In the underlying CVD investigation of fluid end blocks from the FRG covering a period of January 1, 2018 to December 31, 2018, Commerce selected plaintiff BGH Edelstahl Siegen GmbH ("BGH") as a mandatory respondent. Resp't Selection Mem. at 1, C-428-848, PD 54, bar code 3938815-01 (Feb. 4, 2020). Commerce determined that the Government of Germany provided countervailable subsidies through several programs, including the Electricity Tax Act, the Energy Tax Act, and the KAV Program, inter alia.[1] Issues and Decision Mem. at 6-8, C-428-848, PD 293, bar code 4062827-01 (Dec. 7, 2020), ECF No. 15-2; see also Post-Prelim. Analysis [CVD] Investigation: [Fluid End Blocks] from [FRG] at 6-19, C-428-848, PD 271, bar code 4043279-01 (Oct. 21, 2020); Decision Mem. Prelim. Affirmative Determination [CVD] Investigation of [Fluid End Blocks] from [FRG] at 19-27, C-428-848, PD 220, bar code 3975458-01 (May 18, 2020). BGH filed its complaint and moved for judgment on the agency record, contesting Commerce's final determination. Compl., Mar. 29, 2021, ECF No. 7; [BGH] Mot. J. Agency R., Oct. 26, 2021, ECF No. 21. After briefing was complete, the court sustained in part and remanded in part Commerce's final determination. BGH I, 600 F.Supp.3d at 1248, 1258, 1269. Specifically, the court remanded Commerce's determination: (i) with respect to its calculations of the CVD rates for the provisions of the Electricity Tax Act and the Energy Tax Act because Commerce failed to address BGH's costs of complying with those provisions, id. at 1258; and (ii) that the KAV Program constitutes a specific subsidy because Commerce failed to explain how that program favors certain industries over others and did not address whether the program criteria are economic in nature and horizontal in application, id. at 1269. The court sustained Commerce's determinations that the following programs constitute countervailable subsidies: (i) the Electricity Tax Act and the Energy Tax Act, id. at 1252-57; (ii) the EEG Program and KWKG Program reduced surcharges under the Special Equalization Scheme, id. at 1259-62; (iii) the ETS Program, id. at 1262-65; and the (iv) the CO2 Compensation Program, id. at 1266-67. For those programs other than the Electricity Tax Act and the Energy Tax Act, the court also sustained Commerce's CVD rate calculations. Id. at 1259-67. Additionally, the court held that Commerce had properly initiated and developed its CVD investigation and that BGH failed to establish ex parte communications had occurred in the CVD investigation or that the record was incomplete. Id. at 1251-52.
Commerce filed its Remand Results on January 10, 2023. In its Remand Results, Commerce: (i) does not alter the final calculated subsidy rates for BGH's costs of compliance with the Electricity Tax Act and the Energy Tax Act and finds it unnecessary to reopen the record for the parties to submit further evidence, Remand Results at 4-8; and (ii) continues to find that the KAV Program constitutes a specific subsidy, id. at 8-10.
BGH argues that Commerce fails to comply with the court's instructions by not accounting for BGH's costs of compliance with the Electricity Tax Act and the Energy Tax Act and by not reasonably explaining its conclusion that the KAV Program constitutes a specific subsidy. [BGH] Comments Opp. [Remand Results] at 1-17, Feb. 23, 2023, ECF No. 53 ("BGH's Comments"). Defendant and Defendant-Intervenors argue that the court should sustain Commerce's remand redetermination because cost of compliance is not one of the permissible types of countervailable subsidy offsets and because the KAV Program is specific to a subset of special contract customers. Def.'s Resp. to Comments on [Remand Results] at 4-10, Mar. 27, 2023, ECF No. 54 ("Def. Resp."); Def.-Int.'s Reply to [BGH's Comments] at 2-8, Mar. 27, 2023, ECF No. 55 ( ).
This Court has jurisdiction pursuant to section 516A of the Tariff Act of 1930,[2]as amended, 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 in an administrative review of a CVD order. "The court shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). "The results of a redetermination pursuant to court remand are also reviewed for compliance with the court's remand order." Xinjiamei Furniture (Zhangzhou) Co. v. United States, 968 F.Supp.2d 1255, 1259 (Ct. Int'l Trade 2014) (quotation marks omitted).
On remand, Commerce maintains the final calculated subsidy rates for the Electricity and Energy Tax Acts because Commerce concludes it is not required to incorporate offsets for costs of compliance into its subsidy rate calculations. Remand Results at 4-7. Additionally, Commerce finds it unnecessary to reopen the record for the parties to submit evidence on BGH's costs of compliance. Id. at 8. BGH argues that Commerce fails to comply with the court's instructions because it does not reasonably explain why BGH's costs of complying with the Electricity and Energy Tax Acts do not constitute a required offset.[3] BGH Comments at 1-8. For the following reasons, the court sustains Commerce's remand redetermination that BGH's costs of compliance with the Electricity and Energy Tax Acts do not constitute a permissible offset.
The court remanded Commerce's failure to address BGH's costs of compliance with the Electricity Tax Act and the Energy Tax Act for Commerce to consider these costs in the first instance. BGH I, 600 F.Supp.3d at 1258. Section 1677(6) states the agency may offset "any application fee, deposit, or similar payment paid in order to qualify for, or to receive, the benefit of the countervailable subsidy . . . ." 19 U.S.C. § 1677(6)(A). The phrase "application fee or similar payment" can be interpreted narrowly or broadly. For example, Defendant argues that offsets are expressly limited to application fees, deposits, or similar payments. Def. Resp. at 7. Defendant-Intervenors further state that permissible offsets do not included expenses, which "are not even 'payments' at all." Def.-Int. Reply at 5. Conversely, BGH argues a tax or an energy management system constitutes a similar payment made in order to obtain a subsidy. BGH Comments at 3. Thus, Congress has delegated to Commerce the determination of which offsets are permissible under § 1677(6). See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843-45 (1984).
On remand, Commerce addresses BGH's cost of compliance explaining that it interprets "any application fee, deposit, or similar payment paid in order to qualify for, or to receive, the benefit of the countervailable subsidy," 19 U.S.C. § 1677(6)(A), to...
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