A German steelmaker argued before the US Court of International Trade (CIT), a specialized trial court, that the US had improperly classified an EU and German climate change program as an illegal subsidy. The US Department of Commerce (DOC) placed duties on German forged steel fluid end blocks in May 2020. The steel products are imported to the US for use in hydraulic fracking.

BGH Edelstahl Siegen GmbH (BGH), the German steelmaker in question, argued on Wednesday that the EU and German programs actually create additional taxes, surcharges, and fees to enable the governments to meet their Paris Agreement obligations. Further, “these measures result in the direct and substantial increase in BGH’s energy costs and impose financial costs and obligations upon German producers that are not borne by the US domestic industry,” according to BGH’s filing with the CIT.

The DOC is authorized to impose anti-dumping or countervailing duties when its investigations determine that an industry receives illegal subsidies from their local government. Such subsidies make it difficult for domestic producers to compete against cheaper foreign imports. When a subsidy has been found, DOC imposes a duty to neutralize the subsidy. BGH argues that the programs are not subsidies and that countervailing duties are consequently inappropriate. Moreover, BGH argues that DOC lacked the required evidence to initiate an investigation of countervailing duties in the first place.

BGH has moved the CIT for a Judgment on an Agency Record. This motion is akin to a motion for summary judgment based on the facts gathered by DOC in its investigation. If the CIT grants BGH’s motion, the agency determination of a countervailing duty can be removed by the CIT.