Tosçelik Profil Ve Sac Endüstrisi A.S. v. United States , 358 F. Supp. 3d 1370 ( 2019 )

Slip Op. 19-9
UNITED STATES COURT OF INTERNATIONAL TRADE
TOSÇELIK PROFIL VE SAC
ENDÜSTRISI A.ù. and ERBOSAN
ERCIYAS BORU SANAYI VE TICARET
A.S.,
Plaintiffs,
Before: Leo M. Gordon, Judge
Consol. Court No. 17-00255
v.
UNITED STATES,
Defendant.
Opinion and Order
[Commerce’s Final Results sustained in part; remanded in part.]
Dated: January 18, 2019
David L. Simon, Law Office of David L. Simon of Washington, DC, for Plaintiff
Tosçelik Profil ve Sac Endüstrisi A.ù.
Irene H. Chen, Chen Law Group, LLC of Rockville, MD, for Plaintiff Erbosan
Erciyas Boru Sanayi ve Ticaret A.S.
Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch,
U.S. Department of Justice of Washington, DC, for Defendant United States. With her on
the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director,
Franklin E. White, Jr., Assistant Director. Of counsel was Saad Y. Chalchal, Attorney,
U.S. Department of Commerce, Office of Chief Counsel for Trade Enforcement and
Compliance of Washington, DC.
Roger B. Schagrin and John W. Bohn, Schagrin Associates of Washington, DC,
for Defendant-Intervenor Wheatland Tube Co.
Gordon, Judge: This action involves the final results of the 2015 administrative
review conducted by the U.S. Department of Commerce (“Commerce”) of the
Consol. Court No. 17-00255 Page 2
countervailing duty (“CVD”) order on circular welded carbon steel pipes and tubes from
Turkey, published as Welded Carbon Steel Pipes and Tubes from Turkey, 82 Fed. Reg.
47,479 (Dep’t of Commerce, Oct. 12, 2017) (final results admin. review) (“Final Results”);
see also accompanying Issues and Decision Memorandum, C-489-502, (Dep’t of
Commerce Oct. 4, 2017), available at https://enforcement.trade.gov/frn/summary/turkey/
2017-22069-1.pdf (last visited this date) (“Decision Memorandum”).
Before the court are the motions for judgment on the agency record of Plaintiffs
Tosçelik Profil ve Sac Endüstrisi A.ù. (“Tosçelik”) and Erbosan Erciyas Boru Sanayi ve
Ticaret A.S. (“Erbosan”). See Mot. of Pl. Tosçelik for J. on the Agency R., ECF No. 271
(“Tosçelik Br.”); Mem. in Supp. of. Pl. Erbosan’s Rule 56.2 Mot. for Summ. J., ECF No. 29
(“Erbosan Br.”); see also Def.’s Resp. Opp. Pls.’ Rule 56.2 Mots. for J. on the Agency R.,
ECF No. 31 (“Def.’s Resp.”); Mem. of Def.-Intervenor Wheatland Tube Co. in Resp. to
Pls.’ Rule 56.2 Mots. for J. on the Agency R., ECF No. 33; Reply Br. of Pl. Tosçelik, ECF
No. 35 (“Tosçelik Reply”); Reply Br. of Erbosan, ECF No. 37 (“Erbosan Reply”). The court
has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012),2 and 28 U.S.C. § 1581(c) (2012).
For the reasons that follow, the court sustains Commerce’s determinations for
Tosçelik’s hot-rolled steel (“HRS”) issues, and remands Commerce’s determination
regarding Erbosan’s no shipment certification for further consideration.
1
All citations to parties’ briefs and the agency record are to their confidential versions
unless otherwise noted.
2
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. 17-00255 Page 3
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).
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. 2018). 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. 2018).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984) governs judicial review of
Consol. Court No. 17-00255 Page 4
Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A.,
555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”).
II. Discussion
A. Tosçelik’s Domestic Sales of HRS
During the administrative review, Commerce examined whether a public authority
in Turkey, Eregli Demir ve Çelik Fabrikalari T.A.S. Esas Sözlesmesi (“Erdemir”), provided
Tosçelik with hot-rolled steel (“HRS”) for less than adequate remuneration. Commerce’s
regulation, 19 C.F.R. § 351.511(a)(2), sets forth the basis for identifying appropriate
market-determined benchmarks for measuring the adequacy of remuneration for
government-provided goods or services. See 19 C.F.R. § 351.511(a)(2). Under that
provision, Commerce will “normally seek to measure the adequacy of remuneration
by comparing the government price to a market-determined price for the good or service
resulting from actual transactions in the country in question,” which could include
“prices stemming from actual transactions between private parties.” Decision
Memorandum at 14 (citing § 351.511(a)(2)). The regulation further specifies that in the
comparison Commerce must consider “factors affecting comparability” (e.g., product
similarity, quantities sold, whether they are imported or auctioned, etc.). Id. Additionally,
Commerce’s benchmark under § 351.511(a) must include “delivery charges and import
duties” so that the comparison price reflects the price “that a firm actually paid or would
pay if it imported the product.” 19 C.F.R. § 351.511(a)(2)(iv).
Consol. Court No. 17-00255 Page 5
In the preliminary results Commerce determined that Tosçelik’s reported prices for
domestic and imported HRS purchases from private suppliers “can serve as tier one
benchmarks.” See Decision Memorandum accompanying Circular Welded Carbon Steel
Pipes and Tubes from Turkey, 82 Fed. Reg. 16,994 (Dep’t of Commerce Apr. 7, 2017)
(Prelim. results) (“Preliminary Decision Memorandum”). Accordingly, Commerce “used
[Tosçelik’s] actual domestic and import prices for HRS to calculate the benefit from [its]
purchases of HRS from Erdemir … during the [period of review (“POR”)].” Id.
In its administrative case brief Tosçelik argued that Commerce should calculate
the benchmark under § 351.511(a)(2)(i) using Tosçelik’s domestic sales of HRS
(i.e., compare the prices Tosçelik paid to Erdemir for HRS with the prices at which
Tosçelik sold HRS to private customers). See Decision Memorandum at 14 (summarizing
case brief arguments). The petitioner, Wheatland Tube Company, responded that use of
Tosçelik’s HRS sales data would result in a circular comparison by trying to determine
whether the price Tosçelik paid for HRS from Erdemir was subsidized by comparing that
price to a price that was also subsidized. Id. at 15.
Commerce sidestepped the issue somewhat by determining that it could not
identify the delivery terms among Tosçelik’s sales data:
We do not reach the issue of whether the statute,
the Department’s regulations, and case precedent allows
the Department the option to use respondent’s sales of
an input to measure the adequacy of remuneration for that
input, because as explained below, we determine that
our record lacks information regarding the Tosçelik
Companies’ sales such that they are not useable tier-one
benchmarks in this review. . . .
Consol. Court No. 17-00255 Page 6
...
We have reviewed the Tosçelik Companies’ HRS sales
data, and find that the Tosçelik Companies’ HRS sales data
do not specify whether the sales reported are on a delivered
or free on board (f.o.b.) basis. Were Tosçelik Companies’
sales made on a f.o.b. basis, the Department would be
required to adjust those prices under its regulations to achieve
an apples-to-apples comparison with its purchased HRS
prices. As such, even if we were to find that the Tosçelik
Companies’ proposed benchmark was permissible under
19 CFR 351.511(a)(2)(i), we would lack the information
required to ensure a comparable benchmark, as required
under 19 CFR 351.511(a)(iv). Thus, we find that the
benchmark proposed by the Tosçelik Companies—i.e., the
prices at which the Tosçelik Companies sold HRS to other
private parties—is not a viable benchmark on this record.
Decision Memorandum at 15–16. Tosçelik challenges as unreasonable Commerce’s
finding that Tosçelik’s HRS sales data do not specify delivery terms (whether they are on
a delivered or free on board (“FOB”) basis). Tosçelik Br. at 6–8. Tosçelik argues that its
domestic sales of HRS were made on a delivered basis. Id. Tosçelik references a
worksheet as support, which has three separate columns—one for total weight, one for
total value, and one for freight-adjusted value. Id. (citing Tosçelik Sales Worksheet,
CD3 193). According to Tosçelik the presence of the freight-adjusted column confirms that
its domestic sales were made on a delivered basis. Tosçelik Br. at 7.
Defendant has a compelling counter-argument. Defendant explains that Tosçelik
confirmed that it made some export sales on an FOB basis, and that Tosçelik reported its
3
“CD” refers to a document in the confidential administrative record, which is found in
ECF No. 19-4, unless otherwise noted. “PD” refers to a document in the public
administrative record, which is found in ECF No. 19-5, unless otherwise noted.
Consol. Court No. 17-00255 Page 7
export sales in the same format as its domestic sales—one column for total weight, one
column for total value, and one for freight-adjusted value—meaning the presence of the
freight-adjusted column does not itself confirm Tosçelik’s delivery terms as Tosçelik
argues. See Def.’s Resp at 10. (citing Tosçelik’s Case Brief and Tosçelik Sales
Worksheet).
In its reply brief Tosçelik acknowledges the weakness of its argument by
attempting to introduce a new fact that it failed to establish on the administrative record:
an alleged “common practice in the Turkish domestic market” of making sales on a
delivered basis. See Tosçelik Reply at 12. One might infer such a general practice from
the limited number of Turkish HRS transactions with clear delivery terms on the
administrative record: (1) Tosçelik’s purchases of HRS from Erdemir are on a delivered
basis, (2) Tosçelik’s purchases of HRS from other Turkish producers are on a delivered
basis, and (3) Tosçelik’s imports of HRS are on a delivered basis. The administrative
record, however, does not mandate such an inference, especially because Tosçelik never
informed Commerce of the practice. All that a reasonable mind may definitively conclude
from the administrative record is that Tosçelik’s purchases of HRS identify delivery terms
whereas Tosçelik’s sales of HRS do not. It was therefore reasonable, if not correct, for
Commerce to conclude that it could not determine the delivery terms of Tosçelik’s sales
of HRS.
B. Tosçelik’s Purchases of HRS
Tosçelik argues that Commerce should have excluded from its benchmark
calculation certain purchases of HRS that involved a distinct grade of allegedly non-
Consol. Court No. 17-00255 Page 8
comparable HRS. See Tosçelik Br. at 10–19. Tosçelik though did not record the grade of
its HRS purchases, and had to acknowledge in its administrative case brief that in another
proceeding, OCTG from Turkey, Commerce did not consider steel grades in its
benchmark analysis because the record did not reflect the grades purchased or the
grades in the dataset used for the benchmark. Decision Memorandum at 17 (summarizing
Tosçelik’s arguments in its case brief). Without direct evidence of the grade of its HRS
purchases, Tosçelik had to rely on indirect evidence to try and establish that some of its
HRS purchases were an alleged non-comparable grade for the benchmark. Tosçelik tried
to argue that the alleged grade difference is revealed through (1) disparate pricing within
the benchmark database (a higher price and a lower price), and (2) the fact that Tosçelik,
as supplier to a major pipeline project, was buying large volumes of higher priced HRS.
Id. Tosçelik offered an interpretation of its product catalog from which one might infer the
grade differences of its HRS purchases. Commerce was not persuaded and did not
exclude the HRS purchases from its benchmark calculation. Id. at 17–19.
Not much need be said here other than that the court does not believe the
administrative record requires a reasonable mind to draw Tosçelik’s hoped-for inference
about the non-comparability of its HRS purchases. Tosçelik implicitly concedes the
weakness of its opening brief arguments by yet again raising a new argument in its reply
brief—that Commerce made a similar exclusion for another respondent. Tosçelik Reply
at 7–11. Leaving aside the problems of raising arguments for the first time in one’s reply
brief, the court notes that Tosçelik’s argument about the other respondent does not have
Tosçelik’s intended persuasive effect, quite the opposite. Rather than demonstrating
Consol. Court No. 17-00255 Page 9
alleged arbitrary treatment of similarly situated parties, Tosçelik instead highlights that the
other respondent made a more rigorous and persuasive evidentiary proffer, which earned
that other respondent the exclusion of certain noncomparable purchases of HRS from the
benchmark. See id. The good news for Tosçelik is it now has an approach that it can
emulate to better develop the administrative record for future administrative reviews.
As for the instant review, the court sustains as reasonable Commerce’s treatment
of Tosçelik’s HRS purchases in the benchmark calculation.
C. Erbosan’s No Shipment Certification
Erbosan challenges Commerce’s denial of its no shipment certification. Commerce
denied the no shipment certification based on U.S. Customs and Border Protection
(“CBP”) information demonstrating that Erbosan’s subject merchandise entered the
United States during the POR. The record confirms this fact. See Def.’s Resp. at 26 (citing
record evidence of entries of Erbosan’s subject merchandise). Erbosan argued in its
administrative case brief that other than a test shipment, “[i]t made no other shipment
itself, and it does not know or have reason to know that any of its domestic or third country
customers of subject merchandise subsequently exported or resold Erbosan’s
merchandise to the United States during the POR. Its understanding is that no such
transshipments were made.” See Erbosan Administrative Case Brief at 4, CD 219.
The POR entries of Erbosan’s subject merchandise appear to involve exportation to the
United States by a third country purchaser of Erbosan’s merchandise. In any event,
Commerce did not address Erbosan’s contention that it did not know or have reason
to know of any transshipments of its subject merchandise to the United States during
Consol. Court No. 17-00255 Page 10
the POR. Commerce simply concluded “that record evidence contradicts Erbosan’s
assertions of no shipments, and demonstrates that subject merchandise produced
by Erbosan entered the United States during the POR.” Decision Memorandum at 19.
The statute requires Commerce to provide “an explanation of the basis for
its determination that addresses relevant arguments made by interested parties.”
19 U.S.C. § 1677f(i)(3)(A). The court might infer from Commerce’s decision that
Erbosan’s knowledge (actual or constructive) about any transshipments is simply
irrelevant in the CVD context. The Government argues as much in its brief. Def.’s Resp.
at 34–35. Erbosan counters that its knowledge matters. Erbosan Reply at 9–12.
Commerce should address this issue in the first instance prior to consideration by
the court. The court will therefore remand this issue to Commerce to address whether
Erbosan’s knowledge of U.S. entries of its subject merchandise is relevant in the CVD
context.
III. Conclusion
Accordingly, it is hereby
ORDERED that this action is remanded to Commerce to address whether
Erbosan’s knowledge of U.S. entries of its subject merchandise is relevant in the CVD
context; it is further
ORDERED that the Final Results are sustained with respect to Commerce's
treatment of Tosçelik’s HRS issues in calculating the HRS benchmark;
ORDERED that Commerce shall file its remand results within 45 days of the end
of the Government shutdown; and it is further
Consol. Court No. 17-00255 Page 11
ORDERED that, if applicable, the parties shall file a proposed scheduling order
with page limits for comments on the remand results no later than seven days after
Commerce files its remand results with the court.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: January 18, 2019
New York, New York