DOJ Defends Commerce Finding German Subsidy Program Countervailable

The Commerce Department's determination on remand that a German fee exemption program was de jure specific and could be countervailed was correct and should be sustained by the Court of International Trade, DOJ said in its Oct. 6 remand comments. In its August remand results, Commerce stuck with its previous finding in the countervailing duty investigation on forged steel fluid end blocks from Germany (see 2308070053) (BGH Edelstahl Siegen v. U.S., CIT # 21-00080).

Under the KAV program in question, municipalities must make public transport routes available for the laying and operation of power and gas pipelines. Routes operate under concession agreements that set fees paid by the pipeline operators. The operators can then pass these fees on to their customers, though the program allows customers with electricity prices lower than the marginal price agreed to by the parties to be exempted from fees.

DOJ said the central issue of specificity hinged on whether the KAV program had objective criteria for eligibility that didn't "favor one enterprise or industry over another." DOJ argued that Commerce rightly countervailed the program, finding that, while not specific in name, the eligibility requirements were specific in application.

BGH had argued that Commerce's decision "directly conflicts with the Court’s prior decisions" because the KAV program never specifically named groups or industries that could qualify for the fee exemption (see 2309070065).

Commerce correctly explained on remand that a finding of de jure specificity only in those cases where enterprises or industries are "specifically named" would create a loophole for circumvention of the CVD law, DOJ said. A foreign government could use language that conveys a benefit to a group without specifically naming an industry to achieve an identical result, as is the case here. DOJ cited a similar case where Commerce found a program to be specific because eligibility was limited to industrial customers consuming a certain amount of electricity and that undertook energy efficiency upgrades that met certain minimum requirements, which in fact limited eligibility to a specific industry.