BGH Edelstahl Siegen GmbH v. United States

The U.S. Court of International Trade upheld in part and remanded in part the U.S. Department of Commerce’s redetermination on remand from the court’s 2022 decision regarding the determination that certain German regulatory programs, including an Electricity Tax Act and an Energy Tax Act, constituted countervailable subsidies for forged steel fluid end blocks from Germany, including blocks produced by the plaintiff. The court found that the Commerce Department’s interpretation that it was not required to offset the costs of compliance with laws and regulations such as climate measures in determining the countervailing duty rates for Electricity Tax Act and Energy Tax Act was reasonable and consistent with past practice. The court remanded to the Department of Commerce a second issue concerning whether a separate German program was a specific subsidy.

In a German steel company’s challenge to the U.S. Department of Commerce’s determinations that German government regulatory programs provided countervailable subsidies to the company, the Court of International Trade upheld the determinations with respect to exemptions from certain electricity and energy taxes, reductions in surcharges intended to distribute the costs of promoting renewable energy sources, allocations of additional free allowances for carbon emissions under the European Union’s Emissions Trading System, and compensation for higher energy costs under Germany’s CO2 Compensation Program. For each of these programs, the court found that the program provided a financial contribution, that the program conferred a benefit on the German company, and that the subsidies were limited to a sufficiently small number of enterprises to be “specific” subsidies. With respect to the exemptions from electricity and energy taxes, the court rejected the company’s contention that Commerce should have considered the relative burdens on German manufacturers due to the U.S.’s withdrawal from the Paris Climate Accords, finding that neither Commerce nor the court was “at liberty to evaluate the environmental rationale” of the German measures or to compare them with U.S. measures. With respect to a program that provided exemptions from concession fees paid for laying and operation of gas and power lines on public transport routes, the court found that additional explanation or reconsideration was required with respect to the determination that program was a specific subsidy.