ICDAS Celik Enerji Tersane ve Ulasim Sanayi, A.S. v. United States , 277 F. Supp. 3d 1354 ( 2017 )

Slip Op 17-153
UNITED STATES COURT OF INTERNATIONAL TRADE
ICDAS CELIK ENERJI TERSANE VE
ULASIM SANAYI, A.S.,
Plaintiff,
v.
UNITED STATES,
Before: Leo M. Gordon, Judge
Defendant,
Consol. Court No. 14-00267
and
REBAR TRADE ACTION COALITION, et
al., and HABAS SINAI VE TIBBI GAZLAR
ISTIHSAL ENDUSTRISI, A.S.,
Defendant-Intervenors.
OPINION
[Final Determination sustained.]
Dated: November 17, 2017
Matthew M. Nolan, Diana D. Quaia, and Nancy A. Noonan, Arent Fox LLP of
Washington, DC for Plaintiff Icdas Celik Enerji Tersane ve Ulasim Sanayi, A.S.
Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice of Washington, DC argued for Defendant, United States.
With him on the briefs were Chad A. Readler, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the briefs
was Scott McBride, Assistant Chief Counsel, U.S. Department of Commerce, Office of the
Chief Counsel for Trade Enforcement and Compliance of Washington, DC.
Maureen E. Thorson, Wiley Rein LLP of Washington, DC argued for Defendant-
Intervenors Rebar Trade Action Coalition, Nucor Corporation, Gerdau Ameristeel
U.S. Inc., Commercial Metals Company, and Byer Steel Corporation. With them on the
brief were Alan H. Price and John R. Shane.
Consol. Court No. 14-00267 Page 2
Gordon, Judge: This action involves the U.S. Department of Commerce
(“Commerce”) final determination in the countervailing duty investigation of steel concrete
reinforcing bar from the Republic of Turkey. See Steel Reinforcing Bar From the Republic
of Turkey, 79 Fed. Reg. 54,963 (Dep’t of Commerce Sept. 15, 2014) (final affirm. & crit.
circum. determ.) (“Final Determination”); see also Issues & Decision Memorandum for the
Final Affirmative Countervailing Duty Determination and Final Affirmative Critical
Circumstances Determination in the Countervailing Duty Investigation of Steel Concrete
Reinforcing Bar from the Republic of Turkey, C-489-819 (Dep’t of Commerce
Sept. 8, 2014), available at http://enforcement.trade.gov/frn/summary/turkey/2014-
21989-1.pdf (last visited this date) (“Decision Memorandum”); see also Steel Concrete
Reinforcing Bar from the Republic of Turkey, 79 Fed. Reg. 65,926 (Dep’t of Commerce
Nov. 6, 2014) (final countervailing duty order) (“Order”). Before the court are the motions
for judgment on the agency record of Plaintiff Icdas Celik Enerji Tersane ve Ulasim, A.S.
(“Icdas”) and Defendant-Intervenor Rebar Trade Action Coalition ("RTAC"), and its
individual members, Nucor Corporation, Gerdau Ameristeel U.S. Inc., Commercial Metals
Company, and Byer Steel Corporation. The court has jurisdiction pursuant to Section
516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i)
(2012)1, and 28 U.S.C. § 1581(c) (2012).
This opinion addresses RTAC’s challenge to the Final Determination. See RTAC’s
R. 56.2 Mot. for J. on the Agency R., ECF No. 50 (“RTAC’s Br.”); see also Pl.’s Resp. in
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions
of Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 14-00267 Page 3
Opp’n to Def.-Intervenor RTAC’s R. 56.2 Mot. for J. on the Agency R., ECF No. 68 (“Icdas’
Resp.”); Def.’s Resp. in Opp’n to Pl.’s R. 56.2 Mots. for J. on the Agency R., ECF No. 69
(“Def.’s Resp.”); RTAC’s Reply Br., ECF No. 80 (“RTAC’s Reply”).
Specifically, RTAC challenges (1) Commerce’s selection of benchmark prices
used to calculate countervailable benefits that respondents obtained from natural gas
purchases; (2) Commerce’s selection of benchmark prices used to calculate
countervailable benefits that respondents obtained from lignite coal purchases;
(3) Commerce's refusal to exceed the largest deduction possible in applying adverse
facts available to Icdas’ use of an export revenue tax deduction program; and
(4) Commerce’s refusal to initiate an investigation on RTAC’s new subsidy allegation
relating to respondents’ sales of electricity from the Turkish government.2 For the reasons
set forth below, the court sustains the Final Determination for each of these issues
challenged by RTAC.
I. Standard of Review
The court sustains Commerce’s “determinations, findings, or conclusions” unless
they are “unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole. Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006); see also Universal
2
The court addresses RTAC’s separate argument about Commerce’s refusal to consider
certain documents in support of RTAC’s subsidy allegation in a separate decision.
Consol. Court No. 14-00267 Page 4
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.”). Substantial
evidence has been described as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,
407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Substantial evidence has also been described as “something less than
the weight of the evidence, and the possibility of drawing two inconsistent conclusions
from the evidence does not prevent an administrative agency’s finding from being
supported by substantial evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
(1966). Fundamentally, though, “substantial evidence” is best understood as a word
formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and
Practice § 9.24[1] (3d ed. 2017). Therefore, when addressing a substantial evidence issue
raised by a party, the court analyzes whether the challenged agency action “was
reasonable given the circumstances presented by the whole record.” 8A West’s Fed.
Forms, National Courts § 3.6 (5th ed. 2017).
II. Discussion
A. Natural Gas Benchmark
RTAC challenges Commerce’s selection of benchmark prices for natural gas
purchases used to calculate the program benefit received by Turkish rebar producers who
received countervailable subsidies by purchasing natural gas from a Turkish state-owned
entity for less than adequate remuneration (“LTAR”). Once Commerce determined that
the market for natural gas in Turkey was distorted, 19 C.F.R § 351.511(a)(2)(ii) directs
Consol. Court No. 14-00267 Page 5
Commerce to select a world market benchmark to measure the benefit received from the
provision of natural gas for LTAR pursuant to section 19 U.S.C. § 1677(5)(E)(iv).
Specifically, 19 C.F.R § 351.511(a)(2)(ii) states
If there is no useable market-determined price with which to make the
comparison under paragraph (a)(2)(i) of this section, the Secretary will seek
to measure the adequacy of remuneration by comparing the government
price to a world market price where it is reasonable to conclude that such
price would be available to purchasers in the country in question. Where
there is more than one commercially available world market price, the
Secretary will average such prices to the extent practicable, making due
allowance for factors affecting comparability.
19 C.F.R § 351.511(a)(2)(ii). To enable Commerce to calculate the benefit received from
purchasing natural gas from a state-owned entity, RTAC submitted "a set of ‘border’
monthly prices for natural gas sales between various European countries, sourced from
Global Trade Information Services (GTIS).” Decision Memorandum at 11. RTAC also
placed on the record "monthly prices for natural gas sales from Russia to Germany,
sourced from the International Monetary Fund (IMF),” and in addition “derived quarterly
natural gas prices charged by Gasprom, a large Russian gas company, using data from
the company's financial statements." Id. The IMF dataset contained no value and quantity
information and unlike the GTIS data could not be weight-averaged. Id.
In the preliminary determination Commerce first weight-averaged the GTIS data
for a set of monthly benchmark prices, and then proceeded to simple average those prices
with the IMF data. Id. Commerce rethought this approach in the final determination.
Commerce determined that inclusion of the IMF data and the use of simple averaging
skewed the pricing results by failing to account for the differences between minor gas
Consol. Court No. 14-00267 Page 6
supplier countries and dominant gas supplier countries. Id. at 12. Accordingly, Commerce
weight-averaged the GTIS data and excluded the “unweightable” IMF data. Id. Commerce
further explained that the limited IMF pricing data closely tracked the larger corresponding
GTIS data. Id. Commerce also distinguished past administrative proceedings cited by
RTAC in which Commerce used simple averaging of pricing data, noting that in these
prior cases Commerce lacked sufficient data reported in a uniform manner with adequate
information to engage in weight-averaging. Id.
Despite this facially reasonable application of the benchmark regulation, RTAC
nevertheless contends that Commerce erred by not utilizing simple averaging instead of
weighted-averaging, and further erred by not including the IMF data in its analysis.
RTAC’s Br. 31-36. This is an admittedly steep hill for RTAC to climb. After all, Commerce
averaged "more than one commercially available world market price" without introducing
the distortions that naturally result from using a simple average. 19 C.F.R
§ 351.511(a)(2)(ii); see also RZBC Group Shareholding Co. v. United States, 39 CIT ___,
100 F. Supp. 3d 1288, 1308-11 (2015) (holding that calculating a benchmark derived from
a weighted-average methodology, if possible, is preferable to one using a simple average
methodology); id. at 1309 (noting that “Commerce now prefers to use weighted averages
when the parties report price and quantity in a uniform manner.” (citing Certain Oil Country
Tubular Goods from the Republic of Turkey, 79 Fed. Reg. 41964 (Dep't of Commerce
July 18, 2014) (final affirm. determination), and accompanying issues and decision
memorandum at cmt. 4 ("Using weighted-average prices where possible reduces the
potential distortionary effect of any specific transaction (e.g., extremely small
Consol. Court No. 14-00267 Page 7
transactions) in the data."))). RTAC fails to demonstrate that Commerce acted
unreasonably in determining that weighted averaging, rather than simple averaging, was
the superior method for minimizing price distortions in establishing a natural gas
benchmark on the available data.
RTAC further argues that Commerce did not “grapple with the question of
robustness." RTAC’s Br. 36. This is incorrect. Commerce expressly found that its ability
to "derive a robust natural gas benchmark" did not hinge on the IMF data because the
GTIS data held "hundreds of data points, [and was] ‘weightable,’ whereas the single row
of IMF pricing data for sales from Russia to Germany [was] not." Decision Memorandum
at 12. And because the GTIS dataset contained Russian gas prices that closely tracked
those in the IMF dataset, Commerce’s concerns about the distorting effect of using a
simple average outweighed RTAC’s concerns about robustness. Id.RTAC also speculates that because of possible "volume discounts" and alleged
non-market considerations, there are problems in claiming that large suppliers reflect the
market rate, while using a simple average represents a "midpoint of various values based
on different volumes and distances." RTAC’s Br. 33-34. RTAC, however, never made this
argument to Commerce. In its administrative case briefing RTAC objected to Commerce's
preliminary determination to use what it referred to as "an unprecedented
'weighted/simple average' hybrid methodology to calculate the benchmark[,]" see Non-
Confidential App. to RTAC’s Br. in Support of its R. 56.2 Mot. for J. on the Agency R. 266
(RTAC’s Case Brief July 29, 2014), ECF. No. 55 (“RTAC’s Br. App.”). RTAC did not argue,
as it does now, the existence of "volume discounts" in the underlying investigation, nor
Consol. Court No. 14-00267 Page 8
claim that such discounts, should they exist, reflected non-market prices or were based
on non-market principles. RTAC has therefore failed to exhaust its administrative
remedies with respect to that particular aspect of its argument.
When reviewing Commerce's antidumping determinations, the U.S. Court of
International Trade is mandated by statute to require exhaustion of administrative
remedies “where appropriate.” 28 U.S.C. § 2637(d); Boomerang Tube LLC v. United
States, 856 F.3d 908 (Fed. Cir. 2017). RTAC had an opportunity to present these
arguments to Commerce in the first instance and chose not to do so. The court therefore
will not consider them.
Commerce's calculation of a benchmark for natural gas derived from a weighted-
average of natural gas prices in the GTIS dataset is reasonable and therefore sustained.
B. Lignite Benchmark
In its preliminary determination, Commerce determined that Icdas benefited from
subsidies from the Government of Turkey in the form of reduced coal prices in its
purchases of coal from Turkish Coal Enterprises (“TKI”), a state-owned entity. Decision
Memorandum at 13-16. Applying 19 C.F.R § 351.511, Commerce preliminarily
determined that the market prices of Icdas’ imports of steam coal could properly be used
as a tier one benchmark against which to evaluate the benefit Icdas received in
purchasing coal from TKI. However, upon subsequent challenge by RTAC and further
factual investigation, Commerce determined that Icdas only purchased lignite coal from
TKI and that lignite coal was distinguishable from other hard steam coal that Icdas
imported. Accordingly, in its final determination, Commerce excluded pricing data relating
Consol. Court No. 14-00267 Page 9
to non-lignite coal, and after determining that the Turkish lignite market was too influenced
by the Government of Turkey to provide reliable market-set benchmark prices, Commerce
decided to use only “world market prices for lignite itself; specifically . . . GTIS pricing data
on the record submitted by Petitioner.” Id. at 15-16. Commerce explained that because
lignite coal was the only coal provided by the Turkish Government, the subsidy
investigation scope was properly narrowed to data just involving lignite coal. Further, as
Commerce found that the domestic lignite market was distorted by government
interference, it was necessary to use “tier two” pricing data from available world prices for
lignite. Id. at 16.
RTAC, in its administrative case briefing, argued that hard steam coal and lignite
were not interchangeable as assumed initially by Commerce, and urged Commerce to
calculate a lignite benchmark from a simple averaging of world market pricing data.
RTAC’s Br. 36-37. Although Commerce ultimately adopted the position that lignite and
hard steam coal were not interchangeable, and that the subsidy investigation should be
limited to lignite coal, Commerce rejected RTAC’s suggestion of benchmark calculations
using a simple average of world prices in favor of using a weighted average of lignite
world pricing data. Decision Memorandum at 16-17. There were two sets of lignite world
pricing data on the record: GTIS and IMF. As in its natural gas subsidy analysis,
Commerce noted that the GTIS data provided monthly quantity and value pricing data for
several countries lignite transactions and that such data was “weightable;” whereas the
IMF data provided only contained monthly unit prices for sales of lignite from Australia
and was not “weightable.” Id. at 16. Using the same reasoning as it had applied in
Consol. Court No. 14-00267 Page 10
evaluating the natural gas benchmark, Commerce calculated a lignite benchmark from a
weighted average of the pricing data, using only the “weightable” GTIS data and excluding
the IMF data. Id.
RTAC challenges Commerce’s decision to use a weighted average to calculate
the lignite benchmark and Commerce’s corresponding decision to exclude the IMF data.
RTAC’s argument is essentially identical to its challenge that Commerce improperly
calculated the natural gas benchmark; both arguments urge that Commerce should have
used a simple average to calculate the appropriate benchmark and that Commerce
should not have excluded the “unweightable” IMF data absent a finding of defects in that
data. See RTAC’s Br. 37 (explaining that “DOC’s benchmarking calculations with respect
to lignite purchased by respondents from the Turkish government are flawed for the same
reasons as the benchmarking calculations for natural gas.”).
Here again, as with the natural gas benchmarks, Commerce acted reasonably in
deciding that weight-averaging is preferable to simple averaging in calculating
benchmarks upon available world market pricing data. See Section II.A, supra
(Commerce’s determination that the distortion-minimizing benefits of weight-averaging
outweigh the benefits provided by simple averaging was reasonable). The court therefore
sustains Commerce’s weight-averaging of the GTIS data to determine the lignite
benchmark.
C. Export Revenue Tax
Commerce determined, contrary to Icdas’ representation, that Icdas had in fact
used the Turkish “Deductions for Taxable Income for Export Revenue” program to reduce
Consol. Court No. 14-00267 Page 11
its taxable income in 2011. Decision Memorandum at 19. As a result Commerce used an
adverse inference in evaluating the benefit Icdas received under the program. Id.
Commerce explained that the program is well known to Commerce, that Commerce has
examined, verified, and countervailed it in numerous Turkey countervailing duty cases.
Commerce also explained that the program has two built-in limitations: (1) the amount of
the deduction for undocumented expenses cannot exceed 0.5 percent of export revenue
and (2) there is a cap to the amount of benefit that a company can receive under the
program. Commerce therefore maintains a practice of applying, as adverse facts
available (“AFA”), the largest deduction possible under the program. Id. (citing Circular
Welded Carbon Steel Pipes and Tubes from Turkey, 78 Fed. Reg. 64,916 (Dep't of
Commerce Oct. 30, 2013) (countervailing duty admin. rev.)). Consistent with this practice,
Commerce determined the largest deduction possible for Icdas under the program, and
then derived a net countervailable subsidy rate of 0.10 percent ad valorem for Icdas. Id.RTAC challenges Commerce’s selection of this rate, arguing that Commerce’s
decision was inconsistent with a more general prior practice of eschewing de minimis
rates, and that the rate applied is apparently insufficient to induce interested parties to
participate in the proceedings, thus frustrating the purpose of assigning an AFA rate.
RTAC’s Br. 38-42. RTAC argues that Commerce should have instead contrived an
adverse rate greater than the maximum benefit that Icdas could possibly receive under
the Turkish program.
Commerce reasonably rejected RTAC’s arguments. Commerce explained that it
acted in accordance with its prior practice for this specific program, applying the largest
Consol. Court No. 14-00267 Page 12
deduction possible, which was known and calculable. Decision Memorandum at 19.
RTAC identifies no express statutory command requiring Commerce to inflate a remedial
countervailing duty rate beyond the known, calculable, maximum benefit under this
particular Turkish program. It also strikes the court as an overreach to seek additional
duties for a benefit that has been fully countervailed, (wholly satisfying the statute’s
primary purpose of leveling the playing field, see generally 158 Cong. Rec. H1166,
H1166–73 (Mar. 6, 2012), and lessening the import of whatever subordinate purpose
inheres in the adverse inference provision). The court therefore sustains Commerce’s
decision.
D. Rejected New Subsidy Allegation
RTAC contends that Commerce should have initiated an investigation for alleged
electricity subsidies.3 In support of its allegation, RTAC argued that the Turkish
government allegedly paid power producers more than adequate remuneration for the
sale of electricity. See RTAC’s Br. App. 241 (Memorandum from Kristen Johnson, Int'l
Trade Compliance Analyst, to Melissa G. Skinner, Director, re: Countervailing Duty (CVD)
Investigation on Steel Concrete Reinforcing Bar from Turkey: Decision Memorandum on
Additional Subsidy Allegation Nov. 25, 2013). Commerce reviewed RTAC’s argument and
information and determined that although RTAC’s submissions indicated that
Independent Power Producers (“IPPs”) benefitted from the Turkish government
guarantees and electricity purchase prices above market rates, that same evidence
3
The court is addressing separately RTAC’s argument about Commerce’s rejection of
certain documents in support of RTAC’s subsidy allegation.
Consol. Court No. 14-00267 Page 13
distinguished IPPs from autoproducers (like respondents) and did not directly indicate
that autoproducers sold surplus electricity to the government at higher than market rates.
RTAC argues that Commerce unreasonably concluded from the administrative record
that IPPs were distinct and separate from the autoproducers subject to RTAC’s subsidy
allegation. RTAC’s Br. 28.
RTAC’s proffered information that IPPs were offered “above-market prices” and
guarantees from the Government of Turkey, and wanted Commerce to infer that those
same benefits accrued to Turkish autoproducers. Commerce though did not draw that
inference, instead noting that RTAC’s own submissions “consistently distinguish[ed] IPPs
from autoproducers.” RTAC’s Br. App. 241-42. Commerce expressly noted that
“[p]etitioner provided no information indicating that rebar autoproducers also operate as
IPPs.” Id. at 242.
All RTAC offers is its own inference about the absence of direct evidence. That
alone though is insufficient to undermine the reasonableness of Commerce's equally
reasonable inference from the available record evidence. Daewoo Elecs. Co. v. Int'l Union
of Elec., Elec., Technical, Salaried & Mach. Workers, AFL–CIO, 6 F.3d 1511, 1520
(Fed. Cir. 1993) (“The question is whether the record adequately supports the decision of
[Commerce], not whether some other inference could reasonably have been drawn.”).
The court therefore sustains this aspect of the Final Determination.
Consol. Court No. 14-00267 Page 14
III. Conclusion
For the foregoing reasons, the court sustains Commerce’s Final Determination.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: November 17, 2017
New York, New York