German KAV Program Not Countervailable, Commerce Rules Reluctantly After Third Remand

The Commerce Department on Feb. 12 found on remand, and under protest, that a German subsidy was not de jure specific to an exporter of forged steel fluid end blocks from Germany (BGH Edelstahl Siegen v. U.S., CIT # 21-00080).

Commerce’s Feb. 12 remand redetermination was its third in a case challenging the countervailability of Germany’s Konzessionsabgabenverordung (KAV) program, which exempts a fee that gas and power pipeline companies must pay the government if those companies sell electricity below a certain price point and that the companies usually pass on to their customers.

The department has argued the subsidy is de jure specific because its limitations make it only accessible to a “group” of industries (see 2308070053), but the Court of International Trade disagreed (see 2311140048 and 2305090053). Saying Commerce hadn’t proven the program was actually limited enough, nor considered its economic and horizontal properties, Judge Claire Kelly remanded the department’s redetermination again in November.

On remand, Commerce reluctantly reversed its position with a finding that the program is not de jure specific.

“In its Third Remand Order, the CIT held that Commerce’s position that a subsidy is dejure specific where ‘implementing legislation expressly limit[s] access to the "group" that the legislation itself created’ to be contrary to law,” Commerce said.

As a result, it said, the KAV program also wasn't countervailable. It noted it couldn’t find KAV to be de facto specific instead because “there is no basis to reconsider our prior finding.”

In a previous determination, Commerce found that Germany’s KAV eligibility criteria were not horizontal, and so not neutral, the department said. Therefore, it could only reach a ruling of de jure non-specificity because it could find “no other basis on the record to conclude that [Germany] established vertical eligibility criteria for the KAV Program” than the one CIT struck down.

If the change is sustained, plaintiff and exporter BGH Edelstahl Seigen’s AD rate is set to drop from 5.86% to 5.81%, while the all-others rate would drop from 6.29% to 6.18%.