Slip Op. 26-69
UNITED STATES COURT OF INTERNATIONAL TRADE
ELLWOOD CITY FORGE CO.,
ELLWOOD NATIONAL STEEL CO.,
ELLWOOD QUALITY STEELS CO.,
AND A. FINKL & SONS,
Plaintiffs/Defendant-Intervenors,
Before: Timothy M. Reif, Judge
v.
Consol. Court No. 21-0007
UNITED STATES,
Defendant.
BGH EDELSTAHL SIEGEN GMBH,,
Defendant-Intervenor/Plaintiff.
OPINION AND ORDER
[Sustaining in part and remanding in part Commerce’s remand redetermination in the administrative review of the antidumping order on Fluid End Blocks from Germany.]
Dated: June 29, 2026
James E. Ransdell, Cassidy Levy Kent (USA) LLP, of Washington, D.C., argued for plaintiffs and defendant-intervenors Ellwood City Forge Company, Ellwood Quality Steels Company, Ellwood National Steel Company, and A. Finkl & Sons. Also on the brief were Myles S. Getlan, Thomas M. Beline and Nicole Brunda.
Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant United States. Also on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Franklin E. White, Jr., Assistant Director, and Kara M. Westercamp, Trial Attorney. Of counsel was Alexander Fried, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.
Marc E. Montalbine, deKieffer & Horgan, PLLC, of Washington, D.C., argued for plaintiffs and defendant-intervenors BGH Edelstahl Siegen GmbH. Also on the brief
Consol. Court No. 21-00077 Page 2
were J. Kevin Horgan, Gregory S. Menegaz, Alexandra H. Salzman and Merisa A. Horgan.
* * *
Reif, Judge: This action is a challenge to the Final Determination and Second
Remand Redetermination of the U.S. Department of Commerce (“Commerce”) in its
less-than-fair-value investigation into forged steel fluid end blocks (“FEBs”) from the
Federal Republic of Germany (“Germany”). See Forged Steel Fluid End Blocks from
the Federal Republic of Germany (“Final Determination”), 85 Fed. Reg. 80,018 (Dep’t of
Commerce Dec. 11, 2020) and accompanying Issues and Decision Memorandum
(“IDM”); Final Results of Redetermination Pursuant to Ct. Remand, ECF No. 80-1
(“Second Remand Redetermination”).
In Ellwood City Forge Co. v. United States (“Ellwood I”), 46 CIT __, __, 600 F.
Supp. 3d 1281 (2022), the Court remanded Commerce’s Final Determination for
reconsideration of its particular market situation (“PMS”) adjustments to the dumping
margin calculation for BGH Edelstahl Siegen GmbH (“BGH”). Id. at 1308.
In Ellwood City Forge Co. v. United States (“Ellwood II”), Slip Op. 23-110, 2023
WL 4703309 (CIT July 24, 2023), the Court: (1) granted Commerce’s request for a
remand to examine errors alleged by Ellwood City Forge Co., Ellwood National Steel
Co., Ellwood Quality Steels Co. and A. Finkl & Sons (collectively, “Ellwood”); and (2)
ordered Commerce to provide an adequate explanation for its decision on Ellwood’s
request that Commerce employ alternative pathways to a PMS adjustment. Id. at *6.
BGH requests that the court reject Commerce’s PMS adjustments for subsidized
electricity rates and imported inputs of ferrochrome on the grounds that Commerce’s
findings are not supported by substantial evidence and are otherwise not in accordance
Consol. Court No. 21-00077 Page 3
with law. BGH Edelstahl Siegen GMBH Cmts. on Second Remand Redetermination
(“BGH Cmts.”) at 6-22, ECF No. 85.
Ellwood moves the court to: (1) reject Commerce’s construction of 19 U.S.C. §
1677b(f)(1)(A) in the agency’s Second Remand Redetermination as contrary to law and
unsupported by substantial evidence; and (2) remand the Second Remand
Redetermination to the agency to reconsider the § 1677b(f)(1)(A) pathway for adjusting
the agency’s antidumping calculations. Pls. Cmts. in Opp’n to the Final Results of
Commerce’s Second Redetermination Pursuant to Ct. Remand (“Pls. Cmts.”) at 1-2, 26,
ECF No. 83.
For the reasons discussed below, the court sustains in part and remands in part
Commerce’s Second Remand Redetermination.
BACKGROUND
I. Administrative Record
The court presumes familiarity with the FEBs at issue as detailed in Ellwood I. 1
1
The International Trade Administration describes the types of FEBs considered
within the scope of Commerce’s less-than-fair-value investigation as follows:
The products covered by this investigation are forged steel fluid end blocks (fluid
end blocks), whether in finished or unfinished form, and which are typically used
in the manufacture or service of hydraulic pumps.
The term "forged" is an industry term used to describe the grain texture of steel
resulting from the application of localized compressive force. Illustrative forging
standards include, but are not limited to, American Society for Testing and
Materials (ASTM) specifications A668 and A788 . . . . The products covered by
this investigation are: (1) Cut-to-length fluid end blocks with an actual height
(measured from its highest point) of 8 inches (203.2 mm) to 40 inches (1,016.0
mm), an actual width (measured from its widest point) of 8 inches (203.2 mm) to
40 inches (1,016.0 mm), and an actual length (measured from its longest point)
of 11 inches (279.4 mm) to 75 inches (1,905.0 mm); and (2) strings of fluid end
blocks with an actual height (measured from its highest point) of 8 inches (203.2
Consol. Court No. 21-00077 Page 4
BGH is a German manufacturer of FEBs for import into the United States and a
mandatory respondent in Commerce’s less-than-fair-value investigation at issue in the
instant action. Ellwood I, 46 CIT at __, 600 F. Supp. 3d at 1287 (citing Compl., ECF No.
6). Ellwood is a domestic producer of a like product. Compl. ¶ 2. On December 19,
2019, Ellwood filed a petition with Commerce alleging that German exporters sold FEBs
in the United States at less-than-fair value. Forged Steel Fluid End Blocks from the
Federal Republic of Germany, India, and Italy, 85 Fed. Reg. 2394 (Dep’t of Commerce
Jan. 15, 2020) (initiation of antidumping duty investigation).
On December 11, 2020, Commerce published its Final Determination, assigning
BGH a dumping margin of 3.82 percent. Final Determination, 85 Fed. Reg. at 80,019.
On February 26, 2021, Ellwood challenged Commerce’s Final Determination
regarding BGH. Compl. ¶¶ 23-39. On March 30, 2021, the Court granted BGH’s
motion to intervene as defendant-intervenor. Order Granting BGH’s Mot. to Intervene,
ECF No. 14.
mm) to 40 inches (1,016.0 mm), an actual width (measured from its widest point)
of 8 inches (203.2 mm) to 40 inches (1,016.0 mm), and an actual length
(measured from its longest point) up to 360 inches (9,144.0 mm) . . . .
A fluid end block may be imported in finished condition (i.e., ready for
incorporation into a pump fluid end assembly without further finishing operations)
or unfinished condition (i.e., forged but still requiring one or more finishing
operations before it is ready for incorporation into a pump fluid end assembly).
Such finishing operations may include: (1) Heat treating; (2) milling one or more
flat surfaces; (3) contour machining to custom shapes or dimensions; (4) drilling
or boring holes; (5) threading holes; and/or (6) painting, varnishing, or coating.
Ellwood City Forge Co. v. United States (“Ellwood I”), 46 CIT __, __, 600 F. Supp.
3d 1281, 1287-88 (2022) (quoting Forged Steel Fluid End Blocks from the Federal
Republic of Germany, India, and Italy, 85 Fed. Reg. 2394, 2399 (Dep’t of Commerce
Jan. 15, 2020) (initiation of antidumping duty investigation)).
Consol. Court No. 21-00077 Page 5
On May 7, 2021, the Court granted Ellwood’s consent motion to consolidate the
instant case with a companion case in which BGH challenged similar aspects of the
Final Determination under consideration here. Order Granting Mot. to Consolidate
Cases, ECF No. 18. The Court designated the instant case as the lead case. Id.
II. Ellwood I
In August 2021, Ellwood and BGH filed separate Rule 56.2 motions for judgment
on the agency record. Pls. Rule 56.2 Mot. for J. on the Agency R., ECF No. 26; BGH
Mot. for J. Upon the Agency R. (“BGH Rule 56.2 Mot.”), ECF No. 27.
Ellwood asked this Court to remand Commerce’s Final Determination on the
bases that: (1) the agency’s failure to conduct on-site verification was contrary to law;
and (2) the agency’s Final Determination was unsupported by substantial evidence and
contrary to law because it relied on unreconciled cost data. Pls. Br. in Support of Mot.
for J. on the Agency R. at 17-36, ECF No. 26-1.
BGH asked the Court to remand Commerce’s Final Determination on the
grounds that: (1) Commerce erred in making PMS adjustments to BGH’s reported costs;
and (2) Commerce erred in its application of differential pricing methodology. BGH Rule
56.2 Mot. at 5-22.
Following oral argument in April, the Court issued its opinion in Ellwood I on
November 8, 2022. 46 CIT at __, 600 F. Supp. 3d at 1287. The Court held that
Ellwood had forfeited its verification claim and that Commerce did not err in its pricing
methodology. Id. at 1308. The Court remanded the Final Determination to Commerce
to remove its PMS adjustment in accordance with the decision of the U.S. Court of
Appeals for the Federal Circuit (“Federal Circuit”) in Hyundai Steel Co. v. United States,
Consol. Court No. 21-00077 Page 6
19 F.4th 1346 (Fed. Cir. 2021). Id. at 1302-03. In Hyundai Steel, the Federal Circuit
upheld the CIT’s longstanding position that application of PMS adjustments in
calculating the cost of production for sales below cost is inconsistent with 19 U.S.C. §
1677b(b). 2 Hyundai Steel, 19 F.4th at 1352-55.
On this basis, the Court remanded “to allow Commerce to recalculate the
dumping margin without impermissible cost-based [PMS] adjustments.” Ellwood I, 600
F. Supp. 3d at 1303.
III. Ellwood II
On March 14, 2023, Commerce filed its First Remand Redetermination with the
Court, removing the PMS adjustment to BGH’s antidumping margin and providing BGH
with a new dumping margin of zero. Final Results of Redetermination Pursuant to Ct.
Remand (“First Remand Redetermination”) at 4, ECF No. 59-1.
2
(b) SALES AT LESS THAN COST OF PRODUCTION . . ., (3) CALCULATION OF COST OF
PRODUCTION. For purposes of this part, the cost of production shall be an amount
equal to the sum of—
(A) the cost of materials and of fabrication or other processing of any kind
employed in producing the foreign like product, during a period which would
ordinarily permit the production of that foreign like product in the ordinary course
of business;
(B) an amount for selling, general, and administrative expenses based on actual
data pertaining to production and sales of the foreign like product by the exporter
in question; and
(C) the cost of all containers and coverings of whatever nature, and all other
expenses incidental to placing the foreign like product in condition packed ready
for shipment.
19 U.S.C. § 1677b(b) (citation modified).
Consol. Court No. 21-00077 Page 7
In its First Remand Redetermination, Commerce responded to comments made
by Ellwood arguing that Commerce improperly ignored alternative avenues to making its
PMS adjustment to BGH’s production costs. Id. at 6. Commerce stated that “this
remand redetermination is not the appropriate proceeding in which Commerce should
address, for the first time, alternative possible interpretations of the [Federal Circuit’s]
analysis in Hyundai Steel.” Id.
On April 13, 2023, Ellwood filed comments opposing Commerce’s First Remand
Redetermination, arguing that Commerce’s revision to the margin calculation: (1)
contained an error 3 that distorted BGH’s dumping margin; and (2) was contrary to law
on the grounds that Commerce refused to consider alternative pathways to adjust
BGH’s production costs. Pls. Cmts. in Opp’n to the Final Results of Redetermination
Pursuant to Ct. Remand at 2-17 (“Pls. Cmts. on First Remand Results”), ECF No. 63.
In response, defendant argued that Commerce was barred from considering alternative
pathways and requested voluntary remand to review the alleged error. Def. Resp. to
Pls. Cmts. on the Remand Redetermination and Req. for Partial Voluntary Remand at
4-8, ECF No. 65.
3
In the Ellwood City Forge, Co. v. United States (“Ellwood II”), Slip Op. 23-110, 2023
WL 4703309 (CIT July 24, 2023) proceedings, Ellwood alleged that when
Commerce removed the PMS adjustment, Commerce failed to remove that
adjustment from the denominator of the equation used to determine the variable cost
difference, “a filtering mechanism [used] to determine whether a given . . . product
sold in the U.S. market can reasonably be compared with the closest, nonidentical . . . product sold in the home market.” Pls. Cmts. in Opp’n to the Final
Results of Remand Redetermination Pursuant to Ct. Remand at 2, ECF No. 63.
Consol. Court No. 21-00077 Page 8
On July 24, 2023, the Court published Ellwood II, which: (1) granted Commerce’s
request for voluntary remand; 4 and (2) ordered Commerce to “consider the arguments
made and state a fulsome rationale for either considering or not considering [p]laintiffs’
alternative pathways.” Ellwood II, 2023 WL 4703309 at *3, *6 (citing Bonney Forge
Corp. v. United States, 46 CIT __, __, 560 F. Supp. 3d 1303, 1312 (2022) (“The Court
reviews answers Commerce actually gave for substantial evidentiary support. It does
not draft answers Commerce never gave from the available record information before
the Department.”)).
IV. Second Remand Redetermination
On November 21, 2023, Commerce filed its Second Remand Redetermination
with the Court, correcting the mathematical error alleged by Ellwood and providing BGH
with a new antidumping margin of 3.08 percent. Second Remand Redetermination at
19. The agency addressed also Ellwood’s arguments regarding alternative pathways
for a PMS and explained the reasons that such pathways were not permissible. Id. at 4-8.
On December 21, 2023, Ellwood filed comments in opposition to the Second
Remand Redetermination, arguing that Commerce’s construction of 19 U.S.C. §
1677b(f)(1)(A) 5 is contrary to law. Pls. Cmts. at 1-2. Ellwood alleged also that
4
Pursuant to Federal Circuit precedent in SKF USA Inc. v. United States, 254 F.3d
1022, 1029 (Fed. Cir. 2001), Commerce is not considered to have confessed error in
requesting remand to reconsider its previous position. See Ellwood II, 2023 WL
4703309 at *3; see also Ethyl Corp. v. Browner, 989 F.2d 522, 524 (D.C. Cir. 1993).
5
(f) SPECIAL RULES FOR CALCULATION OF COST OF PRODUCTION AND FOR CALCULATION OF
CONSTRUCTED VALUE . . . . (1)COSTS
Consol. Court No. 21-00077 Page 9
Commerce’s determination that “BGH’s records ‘reasonably reflect’ production costs”
was arbitrary and unsupported by substantial evidence. Id.
On January 5, 2024, defendant filed a response, rejecting Ellwood’s arguments
and requesting that the Court sustain Commerce’s Second Remand Redetermination
and enter final judgment in favor of the United States. Def. Resp. to Pls. Cmts. on
Remand Redetermination at 10, ECF No. 84.
On January 22, 2024, BGH filed comments on the Second Remand
Redetermination: (1) supporting Commerce’s response to Ellwood’s arguments
regarding the agency’s construction of § 1677b(f)(1)(A); and (2) arguing that
Commerce’s PMS adjustments related to electricity and ferrochrome are not supported
by substantial evidence on the administrative record. See BGH Cmts.
On July 7, 2025, pursuant to 28 U.S.C. § 253(c) and CIT Rule 77(e)(4), the
instant action was reassigned. Ord. of Reassignment, ECF No. 115.
JURISDICTION AND STANDARD OF REVIEW
This court exercises jurisdiction over the instant action under 19 U.S.C. §
1516a(a)(2)(B)(i) and 28 U.S.C. § 1581(c).
(A) IN GENERAL. Costs shall normally be calculated based on the records of the
exporter or producer of the merchandise, if such records are kept in accordance
with the generally accepted accounting principles of the exporting country (or the
producing country, where appropriate) and reasonably reflect the costs
associated with the production and sale of the merchandise. The administering
authority shall consider all available evidence on the proper allocation of costs,
including that which is made available by the exporter or producer on a timely
basis, if such allocations have been historically used by the exporter or producer,
in particular for establishing appropriate amortization and depreciation periods,
and allowances for capital expenditures and other development costs.
19 U.S.C. § 1677b(f).
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On remand, the Court will sustain a determination by Commerce if the
determination is “in accordance with the remand order [is] supported by substantial
evidence, and [is] otherwise in accordance with law.” Maclean-Fogg Co. v. United
States, 39 CIT __, __, 100 F. Supp. 3d 1349, 1355 (2015) (citing 19 U.S.C. §
1516a(b)(1)(B)(i)); see also Prime Time Com. LLC v. United States, 45 CIT __, __, 495
F. Supp. 3d 1308, 1313 (2021) (“The court will uphold Commerce's determination
unless it is ‘unsupported by substantial evidence on the record, or otherwise not in
accordance with law[.]’” (quoting 19 U.S.C. § 1516a(b)(1)(B)(i))).
The “substantial evidence” standard requires “more than a mere scintilla” of
evidence, Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting Consol. Edison Co.
of N.Y. v. NLRB, 305 U.S. 197, 229 (1938)), “but is satisfied by ‘something less than the
weight of the evidence.’” Altx, Inc. v. United States, 370 F.3d 1108, 1116 (Fed. Cir.
2004) (quoting Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.
Cir. 1984)). The standard requires that Commerce provide a “rational connection
between the facts found and the choice made.” Burlington Truck Lines, Inc. v. United
States, 371 U.S. 156, 168 (1962).
In reviewing Commerce’s determination, the Court assesses whether the
agency’s action is reasonable given the record as a whole. Nippon Steel Corp. v.
United States, 458 F.3d 1345, 1351 (Fed. Cir. 2006); see also Universal Camera Corp.
v. NLRB, 340 U.S. 474, 488 (1951) (“The substantiality of evidence must take into
account whatever in the record fairly detracts from its weight.”). “[A]n agency’s action
must be upheld, if at all, on the basis articulated by the agency itself.” Motor Vehicle
Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983) (citing
Consol. Court No. 21-00077 Page 11
Burlington Truck Lines, 371 U.S. at 168; SEC v. Chenery Corp., 332 U.S. 194, 196
(1947); Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 539 (1981)).
DISCUSSION
I. Whether Commerce’s finding of market distortions is supported by
substantial evidence
A. Legal framework
19 U.S.C. § 1677b(b)(1) provides that certain sales made outside “the ordinary
course of trade” may be excluded from the calculation of normal value. The statute
defines “ordinary course of trade” to exclude specifically sales below cost and situations
in which a PMS does not allow for a proper comparison between normal value and
export price or constructed export price. § 1677(15)(A), (C). Commerce may disregard
sales made outside of the “ordinary course of trade” and instead rely on constructed
value (“CV”) under § 1677b(e). § 1677b(a)(4). A PMS under § 1677(15) involves
distortions in sales prices, which thereby affects whether Commerce may rely on homemarket sales data for normal-value comparisons. This type of distortion is also referred
to as a sales-based PMS. See, e.g., Saha Thai Steel Pipe Public Co. v. United States
(“Saha Thai I”), 43 CIT __, __, 422 F. Supp. 3d 1363, 1370 (2019) (“Section 504(a)
amended 19 U.S.C. § 1677(15), allowing Commerce to consider certain sales and
transactions . . . to be outside the ordinary course of trade when a particular market
situation prevents a proper comparison with the export price or constructed export
price.”) (internal quotation marks omitted).
A cost-based PMS, by contrast, refers to distortions in production costs—such as
manipulated input or energy prices—addressed under § 1677b(e), which governs how
Commerce constructs value. See, e.g., Id. Under that provision, a cost-based PMS
Consol. Court No. 21-00077 Page 12
exists when the “cost of materials and fabrication or other processing of any kind”
deviates from the typical cost of production “in the ordinary course of trade,” and
Commerce finds it more likely than not that this distortion affected the cost of production
(“COP”) of the subject merchandise. § 1677b(e)(3).
The 2015 Trade Preferences Extension Act (“TPEA”) amendment to § 1677b(e)
authorizes Commerce to employ “another calculation methodology” when a PMS
renders reported costs unreliable. Trade Preferences Extension Act of 2015, Pub. L.
No. 114-27, 129 Stat. 362, 385. However, that authority applies only in the constructedvalue context. When drafting the TPEA, “Congress did not leave a gap for Commerce
to fill with regard to adjusting the costs of production. Rather, Congress simply and
unambiguously allowed for a PMS adjustment to constructed value but not to the costs
of production for purposes of the sales-below-cost test.” Hyundai Steel, 19 F.4th at
1354.
The statute does not define “particular market situation” other than to require a
showing that either the sales made, or the production costs incurred, are outside the
“ordinary course of trade.” §§ 1677b(b), (e). The Federal Circuit has stated that “the
circumstances supporting a ‘particular’ market situation also must be ‘particular’ to
producers of the subject merchandise during the relevant period.” NEXTEEL Co. v.
United States, 28 F.4th 1226, 1234 (Fed. Cir. 2022) (citing SeAH Steel Corp. v. United
States, 45 CIT __, __, 513 F. Supp. 3d 1367, 1393 (2021)).
The Court noted that “in addition to finding unique market phenomena,
Commerce must demonstrate that those market phenomena prevent the cost of
materials and fabrication from accurately reflecting the cost of production,” adding
Consol. Court No. 21-00077 Page 13
“Commerce must therefore identify what unique facts render the cost of materials and
fabrication an inaccurate reflection of the cost of production in the ordinary course of
trade.” Garg Tube Exp. LLP v. United States, 46 CIT __, __, 569 F. Supp. 3d 1202,
1211 (2022).
Accordingly, to sustain a PMS determination under § 1677b(e), Commerce must
identify evidence on the record of a particular market situation that distorts production
costs such that the costs fall outside the ordinary course of trade and Commerce must
reasonably explain, supported by substantial evidence, how that distortion affects the
production costs of the producers under review. See NEXTEEL, 28 F.4th at 1234.
B. Electricity
1. Whether Commerce’s findings of distortions in electricity
pricing are supported by substantial evidence
The court concludes that Commerce’s determination that the German electricity
market is distorted is supported by substantial evidence.
BGH argues that “no significant market distortions exist with respect to the
German electricity market,” adding that “[t]here is no evidence that there is government
control over pricing . . . to such an extent that home market prices cannot be considered
to be competitively set.” BGH Cmts. at 10.
BGH advances three main arguments. First, BGH argues that electricity in
Germany is “produced, sold, and distributed by a network of private companies.” Id.
Commerce explained that the presence of private actors does not preclude a finding of
distortion where the government intervenes in pricing. IDM at 20. Instead, Commerce
found that “the [German] regulatory regime distorts the costs of electricity in the German
market such that a PMS exists. In addition to the government control over pricing for a
Consol. Court No. 21-00077 Page 14
portion of the electricity market alleged by the petitioner, this regulatory scheme is
manifested in several electricity-related subsidy programs.” Id. Commerce concluded
that these price-setting and subsidization programs, considered collectively,
demonstrated substantial government efforts to control electricity pricing such that
market prices are not competitively set. See id.
The court agrees, as this Court has held previously, that the statute permits a
PMS determination where there is government intervention in the market through pricesetting or subsidy programs. See, e.g., Wilmar Trading Pte Ltd. v. United States, 46
CIT __, __, 582 F. Supp. 3d 1243, 1256 (2022) (upholding a PMS finding based on the
extent of the Indonesian government’s control over biodiesel, rather than the number of
programs, where that control rendered prices non-competitive and outside the ordinary
course of trade). Congress expressly identified “government control over pricing to
such an extent that home market prices cannot be considered to be competitively set”
as an example of a PMS. See Uruguay Round Agreements Act, Statement of
Administrative Action (“SAA”), H.R. Doc. No. 103-316, vol. 1, at 82 (1994), reprinted in
1994 U.S.C.C.A.N. 4040, 4162. Further, the Federal Circuit observed in NEXTEEL that
“[g]overnment control of electricity prices is a type of distortion expressly contemplated
by Congress.” 28 F.4th at 1237. The court accordingly holds that Commerce’s basis
for finding that the German electricity market is distorted due to government intervention
is in accordance with law.
BGH’s second argument is that there can be no PMS with respect to electricity
costs in Germany because those costs are “far above” electricity costs in the United
States even after accounting for German government reductions. BGH Cmts. at 10-12.
Consol. Court No. 21-00077 Page 15
Defendant argues that BGH’s comparison is misplaced. See Def. Sur-Reply to Consol.
Pls. Cmts. on Commerce’s Remand Redetermination at 7 (“Def. Sur-Reply”), ECF No.
90 (finding BGH’s second argument “meritless” and explaining that, even if German
electricity prices are higher relative to other countries, that comparison does not disturb
Commerce’s conclusion—based on record evidence—that electricity prices in Germany
are outside the ordinary course of trade (citing IDM at 20-22)). In the IDM, Commerce
explained further that “where a PMS exists such that the price of certain input materials
does not accurately reflect the cost of manufacture, it is within Commerce’s discretion to
use another calculation methodology to calculate [a normal value] that reflects
production costs in the ordinary course of trade.” IDM at 21.
The court concludes that a PMS finding is not precluded under these
circumstances merely because German electricity prices are higher than electricity
prices in the United States. The SAA explains that cross-country comparisons may be
informative but are not dispositive. See 1994 U.S.C.C.A.N. at 4162 (noting that “a
particular market situation could arise from differing patterns of demand in the United
States and in the foreign market,” for example where “significant price changes are
closely correlated with holidays which occur at different times of the year in the two
markets.”). By acknowledging that differing patterns across markets may indicate the
existence of a PMS, Congress made clear that a cross-country price comparison alone
is not determinative of whether a PMS exists.
As noted, a PMS finding requires that Commerce: (1) show that the sales made,
or the costs incurred, are outside the ordinary course of trade; and (2) explain how the
circumstances supporting a “particular” market situation affect the producers of the
Consol. Court No. 21-00077 Page 16
subject merchandise during the relevant period. NEXTEEL, 28 F.4th at 1234; §
1677b(e); § 1677b(b). With respect to the first requirement, the court holds that
Commerce’s finding that Germany’s electricity market is distorted by government
intervention is supported by substantial evidence and in accordance with law.
Commerce reasonably relied on record evidence showing that multiple government
programs collectively influenced electricity pricing. The court addresses the second
requirement—particularity—and BGH’s third argument below.
2. Whether distortions in German electricity prices are
‘particular’
The court is unable to determine whether substantial evidence supports
Commerce’s finding that distortions in the German electricity market satisfy the
particularity requirement for a PMS determination, or whether that finding is in
accordance with law. BGH argues that “none of the electricity taxes or surcharges
treated by Commerce as a PMS are [sic] particular to producers of fluid end blocks or
even steel products in general.” 6 BGH Post-Oral Arg. Br. at 7, ECF No. 106. The
electricity taxes or surcharges to which BGH refers include: “Sections 9a, 9b and 10 of
the Electricity Tax Act, Sections 51, 54 and 55 of the Energy Tax Act, the EEG Special
Equalization Scheme and Concession Fee Ordinance Relief.” Id. at 6.
6
Commerce’s PMS finding is made in regard to four German programs: the
Stromsteuergesetz (“StromStG” or “the Electricity Tax Act”), Energiesteuergesetz
(“EnergieStG” or “the Energy Tax Act”), Erneuerbare-Energien-Gesetz's Reduced
Surcharge Program (the “Reduced EEG Surcharge Program” or “EEG Program”)
and Konzessionsabgabenverordung (the “KAV Program” or the “Concession Fee
Ordinance Program”). See BGH Edelstahl, 600 F. Supp. 3d at 1248 n.2; Second
Remand Redetermination at 18.
Consol. Court No. 21-00077 Page 17
BGH provides four reasons that, in its view, none of the subsidization programs
is particular. First, “Sections 9a, 9b, and 10 of the Electricity Tax Act are available to
and used by thousands of companies throughout the German manufacturing sector,
producing a myriad of products from glass and bricks to metals and chemicals.” Id. at 7.
Second, “The EEG Special Equalization Scheme also applied to thousands of
companies throughout the German manufacturing sector.” Id.
In response to BGH’s first and second claims, defendant explains that “the 2018
Special Equalization Scheme is indeed particular to BGH Siegen and similar entities
because the regulation sets an even lower artificial pricing floor for ‘electricity-intensive
undertakings’ (such as themselves), while other German electricity users pay higher
EEG surcharges.” Def. Letter Br. in Resp. to Procedural Order (“Def. Resp. Br.”) at 4-7,
ECF No. 107 (citing Forged Steel Fluid End Blocks From the Federal Republic of
Germany, 85 Fed. Reg. 31,454 (Dep’t of Commerce May 26, 2020) (preliminary
countervailing duty determination) and accompanying Preliminary Decision
Memorandum (unchanged in the final determination)); Forged Steel Fluid End Blocks
From the Federal Republic of Germany, 85 Fed. Reg. 80,011 (Dep’t of Commerce Dec.
11, 2020) (final countervailing duty determination) and accompanying IDM).
Defendant’s response aligns with the explanation provided in the parallel CVD
investigation, to which Commerce cited in the IDM. See IDM at 20. This Court upheld
Commerce’s conclusion in the parallel CVD investigation that BGH benefited specifically
from relief provisions under the EEG, Electricity Tax Act and the Energy Tax Act. BGH
Edelstahl Siegen GmbH v. United States, 46 CIT __, __, 600 F. Supp. 3d 1241, 1254-61 (2022). The Court explained that although the Electricity Tax Act and the Energy
Consol. Court No. 21-00077 Page 18
Tax Act imposed additional taxes on companies, certain companies could apply for
relief under specific provisions, such as Sections 9a, 9b, 10 of the Electricity Tax Act or
Sections 51 and 55 of the Energy Tax Act, if the companies met requirements like
energy-efficiency measures. Id. at 1253-54. Because BGH qualified for and used these
programs, it paid less tax than it otherwise would have, meaning it received a benefit.
Id. at 1254. That benefit was limited to certain eligible manufacturers like BGH, rather
than all companies. Id. at 1253-57.
Similarly, the Court held that the EEG Special Equalization Scheme was used as
a mechanism “to distribute among electricity consumers the cost of promoting
renewable energy sources” but that customers certified as “electricity-intensive
undertakings . . . are entitled to a reduction in their EEG surcharge.” Id. at 1259. The
Court concluded that “[t]he reduction of the surcharges lowered BGH's energy costs.
Because BGH was able to receive energy for a lesser cost, Commerce's determination
that BGH received a benefit was reasonable.” Id. at 1260.
In the IDM, Commerce cited to the Court’s holding in the parallel CVD
investigation to support the proposition that BGH benefitted from the Special
Equalization Scheme, the Energy Tax Act, and the Electricity Tax Act, and that “[t]he
sheer number and extent of these programs, when considered collectively, demonstrate
the efforts undertaken by the German government to control the German market for
electricity, thereby creating a PMS.” IDM at 20-21.
In NEXTEEL, the Federal Circuit explained that “[t]he statute does not define
‘particular market situation,’ but the plain language of § 1677b(e) identifies the factual
support Commerce must provide to invoke this provision.” 28 F.4th at 1234.
Consol. Court No. 21-00077 Page 19
The Federal Circuit noted that “[n]othing in the statute requires Commerce to
quantify the distortion precisely. Still, a quantitative comparison showing a difference
between costs incurred and costs in the ordinary course of trade could be substantial
evidence supporting the existence of a particular market situation.” Id.
Assessing this case in light of NEXTEEL, the court concludes that Commerce
demonstrated that the EEG Special Equalization, the Electricity Tax Act and the Energy
Tax Act conferred benefits targeted toward electricity-intensive manufacturers such as
BGH. The court holds also that there is substantial evidence to support Commerce’s
finding that the EEG Special Equalization and the Electricity Tax Act were a part of the
German electricity scheme. Commerce explained how the electricity scheme was
particular to BGH and found in the parallel CVD investigation that the scheme provided
a specific benefit to BGH. Taken together, these findings support Commerce’s
conclusion that BGH particularly benefited from the government’s intervention in the
German electricity market.
BGH’s third argument is that “[The Energy Tax Act] does not cover electricity but
rather is limited to other energy products such as heating oil and natural gas.” BGH
Cmts. at 16. Here, defendant responds that “[a]lthough the Energy Tax Act is limited to
heating oil and natural gas, these energy sources are part of the German market for
energy alongside electricity.” Def. Resp. Br. at 8 (citing BGH Edelstahl, 600 F. Supp. 3d
at 1254 n.7). The court concludes that Commerce’s argument—that the Energy Tax Act
is a part of an overall regulatory scheme that satisfies the particularity requirement and
therefore the Energy Tax Act satisfies the particularity requirement as part of that
scheme—is unpersuasive. Commerce failed to explain how the Energy Tax Act, which
Consol. Court No. 21-00077 Page 20
does not apply to electricity, contributes to distortions in electricity costs that are
particular to producers of the subject merchandise.
Finally, BGH argues that Commerce erred in considering benefits from the
Concession Fee Ordinance Relief Program (also known as the “KAV Program”),
because in one prior case the Court found that Commerce’s conclusion that the KAV
Program was specific was not supported by substantial evidence. BGH Cmts. at 16;
BGH Edelstahl, 600 F. Supp. 3d at 1269. BGH adds that the standard for particularity is
higher than the standard for specificity and therefore, if electricity fails specificity, it ipso
facto fails particularity. Tr. of Oral Arg. at 76:3-16, ECF No. 127 (Jan. 29, 2026).
Defendant responds that while specificity is a prerequisite for countervailability,
specificity is not required for a finding of particularity in connection with a PMS
determination. Def. Resp. Br. at 8. Commerce further clarified that, in addition to the
fact that the CVD case as it relates to the KAV Program is still ongoing, the “PMS
finding is neither directly tied to that program alone, nor is it based entirely on the CVD
determination.” Second Remand Redetermination at 18.
Similar to Commerce’s explanation with regard to the Energy Tax Act, the court
finds that Commerce’s arguments as they relate to the KAV Program are unpersuasive.
Commerce failed to explain how the KAV Program is part of “the circumstances
supporting a ‘particular’ market situation … [that are] ‘particular’ to producers of the
subject merchandise during the relevant period.” NEXTEEL, 28 F.4th at 1234.
In sum, Commerce’s particularity determination rests on four programs—the
Electricity Tax Act, the Energy Tax Act, the EEG Special Equalization Scheme and the
KAV Program. In view of this fact, the court remands for Commerce either to explain
Consol. Court No. 21-00077 Page 21
why the Energy Tax Act and the KAV Program support Commerce’s conclusion of
particularity or clarify whether the remaining two programs alone are sufficient to
support a conclusion that those programs created circumstances supporting a particular
market situation.
C. Ferrochrome
The court concludes that Commerce’s PMS determination with respect to the
German ferrochrome market is not supported by substantial evidence.
BGH argues that Commerce failed to support its PMS finding in the German
ferrochrome market because Commerce failed to show: (1) that ferrochrome from
Kazakhstan was imported into Germany at distorted prices; (2) the impact the alleged
distorted Kazakh imports had on the German market; and (3) how the “circumstances
relating to ferrochrome from Kazakhstan are ‘particular’ to producers of the subject
merchandise.” See BGH Cmts. at 17-20.
BGH argues first that Commerce failed to show that ferrochrome from
Kazakhstan is exported to Germany at a distorted price. BGH Cmts. at 17. Specifically,
BGH argues that “Commerce’s determination is based solely upon information that
ferrochrome from Kazakhstan is imported into Germany and that the Kazakh producer
Kazachrome is state-controlled,” adding that “data on imports of ferrochrome into
industrialized countries show that the unit values for ferrochrome imported into
Germany are consistent with the unit values for ferrochrome imported into other
industrialized G20 countries.” Id. BGH asserts that “Commerce simply ignores this [sic]
international data and uses only the ‘benchmark [U.S. Geological Survey (“USGS”)]
price’ based on U.S. import prices,” and that by doing so, “Commerce seems to impose
Consol. Court No. 21-00077 Page 22
an irrebuttable presumption that input prices in a foreign market that are lower than U.S.
input prices represent per se a particular market situation.” Id.
Defendant notes that “U.S. Geological Survey benchmark prices are not merely
United States input prices, but instead are based on the prices of imports from all other
countries as collected by the United States.” Def. Sur-Reply at 16. Defendant adds that
“although the prices of ferrochrome are consistent across the countries BGH identified,
the fact that they are lower than the broader U.S. Geological Survey benchmark price is
sufficient to conclude there is a distortion in the German ferrochrome market.” Id.
In addition, in the IDM, Commerce emphasized that ferrochrome imported from
Kazakhstan is produced by a state-controlled entity, Kazchrome, and that Kazakh
export prices are lower than benchmark prices published by the USGS. IDM at 24.
Commerce’s selection of the USGS data as a benchmark falls within
Commerce’s discretion to choose among reasonable data sources. Where the statute
does not prescribe a particular benchmark, Commerce’s methodological choices—
including the selection of a benchmark dataset—are entitled to deference so long as
they are reasonable. See Dorbest Ltd. v. United States, 30 CIT 1671, 1675, 462 F.
Supp. 2d 1262, 1268 (2006) (“On factual issues, the court's role is not to evaluate
whether the information Commerce used was the best available, but rather whether a
reasonable mind could conclude that Commerce chose the best available information.”
(internal quotation and citations omitted)). Accordingly, the question is whether
Commerce’s selection of USGS data was reasonable—a standard that is satisfied here.
BGH argues also that Commerce failed to show the impact that the distorted
Kazakh ferrochrome market has on the German ferrochrome market. BGH Cmts. at 19.
Consol. Court No. 21-00077 Page 23
Specifically, BGH notes that, because Germany is part of the European Union,
“ferrochrome imported into German seaports does not remain in Germany but circulates
freely throughout the European Union.” Id.
Commerce concluded that the record showed that Kazakhstan was Germany’s
largest source of ferrochrome imports. IDM at 24. Commerce added that because of
the “importance of Kazakhstan as a source of ferrochrome in the German market,”
those imports had a “distortive impact” on the German ferrochrome market based on
Commerce’s finding that Kazakh export prices were lower than the benchmark USGS
price. Id. Commerce added also that “there is information on the record suggesting
that Kazchrome, the state-controlled producer of ferrochrome in Kazakhstan, does not
make pricing decisions solely based on commercial considerations, which would affect
the price of Kazakh ferrochrome sold in Germany, Italy, or any other country.” Id.
Commerce ultimately concluded: “we find that the low-priced imports of ferrochrome
from Kazakhstan affect prices for this input in the German market.” Id. at 24-25.
Commerce’s explanation is incomplete. If ferrochrome is priced as a commodity,
prices are generally shaped by overall supply and demand; accordingly, if Kazakh
ferrochrome—imported into Germany in significant quantities at distorted prices—enters
the market, those lower-priced imports could exert downward pressure on prices for
ferrochrome more broadly, including ferrochrome purchased from other sources. Were
those facts supported by the record and so analyzed by Commerce, it would not be
necessary for BGH to have purchased ferrochrome directly from Kazakhstan for the
pricing of Kazakh imports, as found by Commerce, to affect the prices BGH paid.
Consol. Court No. 21-00077 Page 24
However, Commerce did not articulate this commodity-market rationale in its
determination.
Because Commerce failed to demonstrate how Kazakhstan’s role as a supplier
resulted in distorted prices in Germany, the court concludes that Commerce’s finding is
not supported by substantial evidence and remands for further explanation or
reconsideration.
Last, BGH argues that Commerce failed to show that any alleged distortion in the
German ferrochrome was particular to BGH. BGH Cmts. at 18. BGH emphasizes that
“invoices also show that almost all the ferrochrome purchased by BGH came from
countries other than Kazakhstan.” Id. BGH maintains that its purchases “represented
arm’s length transactions with private European companies in the ordinary course of
trade,” which “do not meet the definition of a particular market situation.” Id.
BGH adds that it “did not purchase any ferrochrome directly from Kazakhstan.
These invoices also show that almost all the ferrochrome purchased by BGH came from
countries other than Kazakhstan.” Id. (emphases supplied). The court notes that these
comments leave unclear how or to what extent BGH purchased imported ferrochrome
from Kazakhstan.
For its part, Commerce responded that “PMS findings are market-based and not
respondent-specific.” IDM at 24.
The court will assess, based on Commerce’s remand results, the relevance of
the apparent lack of clarity on this factual matter.
D. Whether Commerce is required to show that a “proper comparison”
has been made under 19 U.S.C. § 1677(15)
Consol. Court No. 21-00077 Page 25
BGH argues further that Commerce failed to demonstrate how the alleged PMS
distortions prevented a proper comparison between normal value and export price (or
constructed export price), as required by 19 U.S.C. § 1677(15). BGH Cmts. at 12-13.
As noted supra, section 1677(15) implicates two types of PMS: (1) a sales-based
PMS, which affects the sales used for normal value calculations under §
1677b(a)(1)(B)(i); and (2) a cost-based PMS, which affects production costs used to
calculate constructed value under § 1677b(e).
In Hyundai Steel, 19 F.4th at 1355 n.10, the Federal Circuit underscored this
distinction, explaining: “The PMS provisions in section 1677b(a)(1) require a finding that
a PMS exists such that there cannot be ‘a proper comparison with the export price or
constructed export price.’ By contrast, under section 1677b(e), Commerce may adjust
constructed value when a PMS exists ‘such that the cost of materials and fabrication or
other processing of any kind does not accurately reflect the cost of production in the
ordinary course of trade.’ These are different standards.” 19 F.4th at 1355 n.10
(citation omitted).
Here, Commerce did not conclude that there were any sales-based PMS
affecting home-market sales, instead focusing on cost-based PMS and the use of §
1677b(e) for constructed value. IDM at 15-36. Accordingly, Commerce was not
required to show that a PMS prevented a proper comparison between normal value and
export (or constructed export) price, as required for a sale-based PMS finding.
E. Double remedy
Commerce found that its adjustment of BGH’s electricity costs using the final
electricity subsidy rates determined in the companion CVD investigation did not result in
Consol. Court No. 21-00077 Page 26
a double remedy. IDM at 22. The court is not able to determine, based on Commerce’s
explanation, whether its conclusion is in accordance with law or supported by
substantial evidence.
BGH argues that Commerce’s PMS adjustment is contrary to law because the
adjustment may duplicate remedies already imposed through the companion CVD
investigation. BGH Cmts. at 13-15. BGH contends that Commerce is required to
explain why the CVD remedy does not already address the market distortion underlying
the PMS. Id. at 13-14 (citing Vicentin S.A.I.C. v. United States ("Vicentin I”), 43 CIT __,
__, 404 F.Supp.3d 1323 (2019)).
Commerce stated that using the subsidy rate found in the parallel CVD
investigation to adjust for the PMS distortion does not amount to a double remedy
because “AD and CVD investigations are conducted in accordance with two separate
subtitles of the Act.” IDM at 21. Commerce further stated that “in Vicentin S.A.I.C. v.
United States, the Court found that Commerce’s PMS determination was not ‘precluded
as a matter of law,’” and that there is no indication in the Act “directing Commerce to
address potential double remedies.” Id. at 21-22.
As Commerce points out, the Federal Circuit has noted that AD and CVD
investigations proceed under distinct statutory schemes and involve independent
administrative records. See Vicentin S.A.I.C. v. United States (“Vicentin II”), 42 F.4th
1372, 1380 (Fed. Cir. 2022) (“The antidumping and countervailing duty laws remedy
different practices. The countervailing duty statute broadly addresses market distortions
caused by foreign government subsidization, while the antidumping statute focuses on
whether a domestic industry is being injured by foreign producers or exporters selling
Consol. Court No. 21-00077 Page 27
imported merchandise at ‘less than its fair value.’”); see also Yama Ribbons Co. v.
United States, 36 CIT 1250, 1256, 865 F. Supp. 2d 1294, 1300 (2012) (“[A]ntidumping
duty and countervailing duty investigations operate pursuant to different statutory
provisions, are separate administrative proceedings, and as such, each investigation
has its own unique and separate administrative record.”).
The Federal Circuit explained that a PMS adjustment does not result necessarily
in a double remedy, even when the particular market situation is caused by a subsidy
addressed in a parallel CVD proceeding. See Vicentin II, 42 F.4th at 1380-81. The
Federal Circuit explained that a PMS adjustment seeks to correct an understatement of
normal value, rather than duplicating a countervailing duty remedy. Id.
Notably in Vicentin II, the Federal Circuit concluded that there was no double
remedy issue because Commerce based constructed value on data external to the
distorted market, holding that “there is no risk of double counting in this case. We
therefore need not address [plaintiff’s] argument that the statute does not allow
Commerce to make an adjustment that results in a double remedy or that creates a risk
of a double remedy.” Id. at 1382. Here, by contrast, Commerce “adjusted the
respondent’s electricity costs using the final electricity subsidy rates Commerce found
for BGH in the companion CVD investigation.” IDM at 21. That approach may be
permissible without creating a double remedy, but Commerce must explain why that is
so.
This Court in Vicentin I noted further that Congress, in response to GPX Int’l Tire
Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011), enacted legislation in 2012
authorizing Commerce to apply countervailing duties to non-market economy imports
Consol. Court No. 21-00077 Page 28
while requiring reductions in overlapping antidumping duties to avoid “double
counting.” 43 CIT at __, 404 F. Supp. 3d at 1339; see 19 U.S.C. § 1677f-1(f). The
Court then noted that, three years later, Congress enacted the TPEA, authorizing
Commerce to adjust CVD calculations upon finding a PMS. Vicentin I, 43 CIT at __,
404 F. Supp. 3d at 1339. Congress did not mention double remedies in the TPEA,
indicating no statutory limitation on the type of adjustment Commerce made here. Id.
The Vicentin I Court held that “Congress did not reference the potential for a double
remedy in [§ 1677b(e)]. The omission illustrates further the lack of a statutory
proscription on the type of adjustment Commerce made here.” Id. (citing 19 U.S.C. §
1677a(c)(1)(C); 19 U.S.C. § 1677f-1(f); and 19 U.S.C. § 1677b(c) as examples of when
Congress explicitly prohibited or limited double counting). The Court noted, however,
that in selecting a calculation methodology under § 1677b(e), Commerce “is bound by
reasonableness” under the substantial evidence standard. Id. at 1342.
In this case, Commerce failed to explain how the alleged distortions in the
German electricity market have not already been remedied by the countervailing duties
imposed in the parallel CVD investigation. For that reason, the court remands the issue
to Commerce for further explanation or reconsideration.
II. Whether Ellwood is precluded from raising alternative arguments not
raised during the original investigation
The court addresses next the parties’ disagreement as to whether Commerce
may use 19 U.S.C. § 1677b(f)(1)(A) to account for market distortions in its CV
calculation.
A. Legal framework
Consol. Court No. 21-00077 Page 29
Parties are required to exhaust administrative remedies by raising all issues in
their initial case briefs before Commerce. Dorbest Ltd. v. United States, 604 F.3d 1363,
1375 (Fed. Cir. 2010) (citing 19 C.F.R. § 351.309(c)(2), (d)(2)).
At the same time, “[i]t is a ‘foundational principle of administrative law’ that
judicial review of agency action is limited to ‘the grounds that the agency invoked when
it took the action.’” Dep't of Homeland Sec. v. Regents of the Univ. of Cal. (“Regents”),
591 U.S. 1, 20 (2020) (quoting Michigan v. EPA, 576 U.S. 743, 758 (2015)).
Regents identified two paths that the agency may take on remand if the grounds
that the agency invoked when it initially took the action are determined to be
inadequate: (1) the agency may offer a fuller explanation of its reasoning at the time
that it made the decision in question; or (2) the agency may take a new action and
provide new reasoning for that action. Id. at 20-21.
If the agency is simply explaining or clarifying its original reasoning—the first
Regents path—the agency may refer only to its reasons “at the time of the agency
action” and “may not provide new ones.” Id.
Alternatively, if the agency takes new action, the proceeding effectively resets.
Id. at 21 (“Alternatively, the agency can ‘deal with the problem afresh’ by taking new
agency action. An agency taking this route is not limited to its prior reasons but must
comply with the procedural requirements for new agency action.” (internal citation
omitted)). In that situation, the agency is required to follow the procedural steps that
apply to new agency action and allow parties a meaningful opportunity to comment
before issuing a final determination. See Id.
B. Additional background
Consol. Court No. 21-00077 Page 30
Ellwood first proposed using 19 U.S.C. § 1677b(f)(1)(A) to account for market
distortions in its comments on Commerce’s First Remand Redetermination. See Pls.
Cmts. on First Remand Results at 12-15. In its comments on the Second Remand
Redetermination, Ellwood termed the § 1677b(f)(1)(A) statutory pathway as “Pathway
#3,” stating: “three statutory pathways have been proposed by which Commerce might
adjust its calculations to account for distortion in a respondent’s costs.” Pls. Cmts. at
24. 7
Ellwood argued that Commerce may adjust its calculations by “finding that cost
distortion renders a respondent’s records not ‘reasonably reflect[ive of] the costs
associated with the production and sale of the merchandise,’ and adjusting the sales
below cost test (the ‘1677b(f)(1)(A) to 1677b(b)’ approach).” Id. (quoting §
1677b(f)(1)(A)). In its first remand results, Commerce declined to consider Ellwood’s
alternative pathways, giving as a reason that the remand was “not the appropriate
proceeding in which Commerce should address, for the first time, alternative possible
interpretations of the [Federal Circuit’s] analysis in Hyundai Steel.” First Remand
Redetermination at 6.
In its July 24, 2023 decision reviewing Commerce’s first remand results, this
Court found that Commerce’s decision to decline to consider Ellwood’s argument was
7
Ellwood described in its briefs three statutory pathways. “Pathway 1” was
characterized as “finding a PMS that affects costs and adjusting the sales-belowcost test directly (the ‘1677b(e) to 1677b(b)’ approach),” which the Federal Circuit
precluded in Hyundai Steel, 19 F.4th at 1352-55. Pls. Cmts. at 24-25. “Pathway 2”
was described as “finding a PMS that affects costs, concluding that the PMS renders
sales price comparisons inappropriate, resorting to constructed value, (‘CV’), and
adjusting CV calculations (the ‘1677b(a)(1)(C)(iii) to 1677b(e)’ approach),” which
Ellwood contends was deemed unlawful in Saha Thai Steel Pipe Pub. Co. Ltd. v.
United States, 2023 WL 8360080 (Fed. Cir. Dec. 4, 2023). Id.
Consol. Court No. 21-00077 Page 31
“amenable to at least three different interpretations”: that (1) Commerce believed that
the remand order prohibited Commerce from addressing Plaintiffs’ arguments; (2)
Commerce believed the arguments were forfeited because they were not raised during
the original investigation; or (3) Commerce believed that considering them would require
reopening the record. Ellwood II, 2023 WL 4703309 at *5.
The Court rejected the first and third interpretations and noted that the second
interpretation—preclusion for failure to exhaust administrative remedies—“may have
merit,” but it concluded that Commerce had not clearly articulated its reasoning. Id.
Because “the path of the agency’s reasoning [could not] be reasonably discerned,” the
Court remanded the matter for clarification. Id. at *3 (citing Bowman Transp., Inc. v.
Arkansas–Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)).
In its Second Remand Redetermination, which is currently before the Court,
Commerce stated that “the current sales-based PMS allegation is entirely different from
the one addressed in the investigation,” which had focused on cartel activity and
product differences in Germany, not on cost distortions in inputs such as ferrochrome
and electricity. Second Remand Redetermination at 9. Commerce reasoned that
because Ellwood did not raise these new cost-based arguments during the original
proceeding and “did not challenge [the] sale-based PMS finding before the Court,” the
new allegation was untimely. Id.
Commerce maintained also that Ellwood’s Pathway #3 argument was untimely
under 19 C.F.R. § 351.301(c)(2)(ii). Second Remand Redetermination at 8-9. That
provision requires parties to submit “allegations regarding market viability in an
antidumping investigation or administrative review . . . 10 days after the respondent
Consol. Court No. 21-00077 Page 32
interested party files the response to the relevant section of the questionnaire, unless
the Secretary alters this time limit.” 19 C.F.R. § 351.301(c)(2)(ii). In this case,
Commerce contends that the 10-day period expired during the original investigation.
Second Remand Redetermination at 8-9.
C. Analysis
The court concludes that Commerce’s change in position in its First Remand
Redetermination, following the Hyundai Steel decision, constituted new agency action.
Accordingly, Ellwood’s subsequent Pathway #3 argument was not precluded by the
exhaustion requirement.
Ellwood argues that Commerce’s reversal following the Federal Circuit’s Hyundai
Steel decision, from allowing a PMS adjustment when doing a price-to-price
comparison, to denying it, constituted new agency action under Regents. Pls. Cmts. at
4. Accordingly, Ellwood contends that Commerce was required to : (1) allow parties a
final opportunity to comment before issuing its redetermination under 19 U.S.C. §
1677m(g); and (2) consider “alternatives within the ambit of the existing policy.” Id. at 6.
The Court previously held that “[the] two paths offered by Regents map onto the Federal
Circuit's opinion in SKF, which explains the five different approaches an agency may
adopt when agency action is subject to judicial review.” Ellwood City Forge Co. v.
United States, 47 CIT __, __, 654 F. Supp. 3d 1268, 1276 (2023) (citing SKF USA Inc.
v. United States, 254 F.3d 1022, 1027-30 (Fed. Cir. 2001)). One of those approaches
permits an agency to seek remand due to “intervening events outside of the agency’s
control,” such as a new judicial decision or statute. Id. at 1277. The Court reasoned that
Consol. Court No. 21-00077 Page 33
“Regents requires that the agency take new agency action if it is to change its position
in light of the intervening event.” Id.
Here, the Federal Circuit’s decision in Hyundai Steel constitutes such an
intervening event. That decision prompted Commerce’s first remand request and led to
the removal of PMS adjustments from the sales-below-cost test. See Ellwood I, 600 F.
Supp. 3d at 1303.
Once Commerce changed its position following Hyundai Steel to eliminate
Pathway #1, Ellwood argued that Commerce could still account for distortions in BGH’s
production costs through other mechanisms—namely, Pathway #3—consistent
with Hyundai Steel. Pls. Cmts. on First Remand Results at 11-15.
Because Commerce undertook new agency action on remand, Ellwood’s
subsequent Pathway #3 argument—raised after the first remand—is not forfeited under
the exhaustion rule. To the extent that Commerce rejected the argument solely as
untimely, Commerce’s reasoning is incomplete. Pathway #3 is therefore not precluded,
and the court proceeds to assess the argument on its merits.
III. Whether Commerce can apply a PMS or “distortion” analysis to constructed
value or cost of production under 19 U.S.C. § 1677b(f)(1)(A)
Section 1677b(e) governs the calculation of normal value using CV. If
Commerce determines that a PMS “exists such that the cost of materials and fabrication
or other processing of any kind does not accurately reflect the cost of production in the
ordinary course of trade,” § 1677b(e) authorizes the agency to use “any other
calculation methodology” to construct NV. 19 U.S.C. § 1677b(e).
In contrast, when Commerce calculates COP for purposes of the sales-belowcost test, § 1677b(f) establishes a separate set of rules. These rules outline how
Consol. Court No. 21-00077 Page 34
Commerce evaluates a respondent’s cost data and when Commerce may make
adjustments. In particular, § 1677b(f)(1)(A) provides:
Costs shall normally be calculated based on the records of the exporter or
producer of the merchandise, if such records are kept in accordance with
the generally accepted accounting principles of the exporting country (or the
producing country, where appropriate) and reasonably reflect the costs
associated with the production and sale of the merchandise.
The court concludes that introducing a PMS “distortion” analysis through §
1677b(f)(1)(A) when calculating the cost of production or constructed value is contrary
to law.
Ellwood argues that where, as here, a respondent’s reported production costs
are distorted, using those reported costs will result in a distorted comparison. Pls.
Cmts. at 16. Ellwood maintains, therefore, that “[c]onsequently, normal value may
include home market prices that only pass the sales below cost test due to the use of
distortedly low production costs.” Id.
In particular, Ellwood argues that because BGH’s reported costs were not
reflective of BGH's costs due to distortion of the electricity market, “such distorted costs
did not reasonably reflect the costs associated with the production and sale of the
merchandise within the meaning of 19 U.S.C. § 1677b(f)(1)(A).” Id. at 7 (internal
quotation marks omitted). For that reason, Ellwood claims that 19 U.S.C. §
1677b(f)(1)(A) provides a pathway for Commerce to address cost distortion in
conducting the sales below cost test. Id. at 11.
As discussed supra, the Federal Circuit in Hyundai Steel held that Congress
intended for a PMS adjustment to be available for calculations of constructed value, but
not for calculations of COP for purposes of a sales-below-cost test. Hyundai Steel, 19
Consol. Court No. 21-00077 Page 35
F.4th at 1352-54. Similarly, the Federal Circuit in Saha Thai added that Commerce is
not allowed to make PMS adjustments to COP when determining antidumping margins
under § 1677b(a), stating that “the TPEA amendment to § 1677b(e), which deals with
calculating constructed value, does not automatically carry over to § 1677b(b), which
deals with calculating the cost of production” and that “[t]he agency cannot use
constructed value language found in § 1677b(e) as a backdoor to slip in a PMS
adjustment for cost of production calculations.” Saha Thai Steel Pipe Pub. Co. Ltd. v.
United States, 87 F.4th 1328, 1330-31 (Fed. Cir. 2023). Notably, neither case
addressed the potential for § 1677b(f)(1)(A) to provide a mechanism for adjusting priceto-price antidumping comparisons to account for distorted production costs. In fact,
Hyundai Steel expressly declined to do so. 19 F.4th at 1356 (“We therefore do not
address [Appellant’s] section 1677b(f)(1)(A) argument in this case.”).
In Husteel Co., Ltd. v. United States, 426 F. Supp. 3d 1376 (2020), the Court
considered whether Commerce has statutory authority to apply a PMS adjustment when
determining cost of production under § 1677b(b). The Court reasoned that, the PMS
language that Congress added in TPEA appears only in § 1677b(e), which governs the
calculation of constructed value. The TPEA amended § 1677b(e) to allow Commerce to
use “any other calculation methodology” to determine constructed value when there is a
PMS. Congress did not insert comparable language in the other subsections of §
1677b, including § 1677b(b)(1) or § 1677b(f). 426 F. Supp. 3d at 1398.
The Court noted that “Commerce is not authorized to tinker with the below cost sales
calculation because of a PMS . . . . The ‘any other methodology’ language is reserved
solely for when normal value is determined by constructed value.” Id. at 1388.
Consol. Court No. 21-00077 Page 36
Similarly, § 1677b(f)(1)(A) provides general instructions for determining cost of
production and constructed value. The statute directs Commerce to rely on a
producer’s own records if they are kept in accordance with generally accepted
accounting principles and reasonably reflect the costs associated with production and
sale of the merchandise. The provision does not refer to a PMS or otherwise authorize
Commerce to modify reported costs for perceived market distortions. Id. Congress’
decision to include PMS authority in § 1677b(e) but not in § 1677b(f)(1)(A) indicates that
the adjustment authority is meant to apply only in the constructed-value context. See
Bates v. United States, 522 U.S. 23, 29-30, 118 S. Ct. 285, 290 (1997) (“Where
Congress includes particular language in one section of a statute but omits it in another
section of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.”) (citing Russello v. United States, 464
U.S. 16, 23, 104 S. Ct. 296, 300 (1983)).
Further, allowing a PMS adjustment under § 1677b(f)(1)(A) would render the text
of § 1677b(e) superfluous. The statute assigns distinct functions to its subsections:
subsection (b) governs the sales-below-cost test; subsection (e) governs constructed
value; and subsection (f) sets forth general cost-accounting principles. By locating the
PMS provision in § 1677b(e), Congress created an exception that applies when
Commerce determines normal value on the basis of constructed value. If Commerce
could invoke § 1677b(f)(1)(A) to apply the same type of PMS-based cost adjustment in
other contexts, that specific limitation would lose its meaning.
Accordingly, § 1677b(f)(1)(A) does not authorize Commerce to perform a PMS or
“distortion” analysis under the sales-below-cost test.
Consol. Court No. 21-00077 Page 37
In sum, Ellwood is not barred from raising its Pathway #3 argument. However,
Ellwood’s interpretation of § 1677b(f)(1)(A)—as requiring books and records to account
for external market distortions—is not supported by the statute. Commerce’s
construction of § 1677b(f)(1)(A) is in accordance with law.
CONCLUSION
For the reasons discussed above, the court sustains in part and remands in part
Commerce’s Second Remand Redetermination, it is hereby
ORDERED that on remand Commerce shall explain why the Energy Tax Act and
the KAV Program support Commerce’s conclusion of particularity or clarify whether the
Electricity Tax Act and the EEG Special Equalization Scheme create circumstances
sufficient to support a particular market situation finding; it is further
ORDERED that on remand Commerce shall explain how Kazakhstan’s role as a
supplier results in distorted prices in Germany; it is further
ORDERED that on remand Commerce shall explain how the alleged distortions
in the German electricity market have not been remedied by the countervailing duties
imposed in the parallel CVD investigation; it is further
ORDERED that Commerce shall file with the court its remand redetermination
within 90 days following the date of this Opinion and Order; it is further
ORDERED that the moving parties shall have 30 days from the filing of the
remand redetermination to submit comments to the court; and it is further
ORDERED that should the moving parties submit comments, defendant shall
have 21 days from the date of filing of the last comment to submit a response.
SO ORDERED.
Consol. Court No. 21-00077 Page 38
/s/ Timothy M. Reif
Timothy M. Reif, Judge
Dated: June 29, 2026
New York, New York