De Jure and De Facto Specificity Analyses Not Mutually Exclusive, Petitioners Say

Petitioners contested in comments March 13 a third remand redetermination in which the Commerce Department reluctantly ruled that a German government subsidy was not specific to a German exporter of forged steel fluid end block. Commerce failed to conduct a de facto specificity analysis, they argued (BGH Edelstahl Siegen GmbH v. U.S., CIT # 21-00080).

The department reached its specificity conclusion (see 2402130034) by court order after the Court of International Trade’s Judge Claire Kelly found that Germany’s Konzessionsabgabenverordung (KAV) program could not be de jure specific to the exporter, BGH Edelstahl Siegen (see 2311140048). Commerce said in its Feb. 12 remand redetermination in the countervailing duty investigation that it was precluded from conducting a de facto specificity analysis because “there is no basis to reconsider our prior finding.”

On the contrary, the department was legally obligated to make just that analysis, petitioners led by Ellwood City Forge Company said.

“To understand the absurdity of Commerce’s position in its remand redetermination, it is necessary to understand the history of the issue through the investigation and on remand administratively,” the petitioners said.

They said that during its investigation, Commerce sought information necessary to conduct a de facto specificity analysis. The German government said it couldn't answer that specific request, but the department still made an affirmative de facto specificity ruling in its preliminary determination based on the factual record, the petitioners said.

Germany, however, disputed Commerce’s ruling on the basis of lack of evidence -- though it “notably failed to mention that the reason the record did not contain information concerning the number of KAV program recipients is because, as discussed supra, the [German government] itself failed to provide that information in response to Commerce’s initial request,” petitioners said.

Commerce then changed course in its final determination “in response to the [German government’s] arguments,” finding that the KAV program was instead de jure specific, and that it thus didn't have to conduct a de facto specificity analysis.

But Commerce was required to conduct a de facto analysis because the statute requires one “where there are reasons to believe a subsidy may be specific as a matter of fact,” and that holds regardless of whether a negative de jure specificity finding is made, they claimed.

The department’s failure to conduct a de facto specificity analysis after its de jure finding was overturned was “wholly unreasonable,” petitioners said, because it was “based on a false dichotomy that simply does not exist in 19 U.S.C. § 1677(5A)(D).” It is “self-evident” that de facto and de jure specificity inquiries aren't mutually exclusive because the statute “easily envisions the existence of programs that meet both specificity types,” they said.

The petitioners also argued that Commerce’s decision to not conduct a de facto specificity inquiry was unsupported by substantial evidence.

They pointed to the department’s argument in its redetermination that “Petitioners ‘fail to provide any evidence in support of their claim’ that a de facto specificity analysis is necessary,” calling it “simply untrue.”

“Commerce’s own findings demonstrate ample reasons for such a belief in this case,” the petitioners said. “Most notably, in its post-preliminary determination Commerce itself initially found that the KAV program was specific as a matter of fact.”

Commerce also claimed that there were no facts on the record on which to base its de facto specificity analysis, but this was due to the German government’s failure to provide any, the petitioners said. The department will have to resort to facts available, but it may not use the German government as an excuse for its own failure to conduct a de facto specificity analysis, they said.

The petitioners opposed the department’s claim that it had, in fact, conducted a specificity analysis, as Commerce had stated that “[r]egardless, Commerce analyzes information on the record to determine whether a subsidy meets any of the specificity provisions ....”

“Yet, Commerce tellingly fails to provide any citation to where it conducted such an analysis on this record … because no such analysis exists,” they said.