Özdemir Boru San. Ve Tic. Ltd. Sti. v. United States

Slip Op. 17-
UNITED STATES COURT OF INTERNATIONAL TRADE
हZDEMIR BORU SAN. VE TIC. LTD. STI.,
Plaintiff,
v.
UNITED STATES, Before: Gary S. Katzmann, Judge
Defendant, Court No. 16-00206
and
ATLAS TUBE and
INDEPENDENCE TUBE CORPORATION,
Defendant-Intervenors.
OPINION
[Commerce’s Final Determination is sustained in part and remanded in part. Plaintiff’s Motion for
Judgment on the Agency Record is denied in part.]
Dated:2FWREHU
David L. Simon, Law Office of David L. Simon, of Washington, DC, argued for plaintiff. With
him on the brief was Mark B. Lehnardt of Washington, DC.
Kelly Ann Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of New York, NY, argued for defendant. With her on the brief were Chad
A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke,
Assistant Director, and Tara K. Hogan, as Senior Trial Counsel. Of counsel on the brief was Emily
R. Beline, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
of Commerce, of Washington, DC. With them on the supplemental brief was Robert E. Kirschman,
Jr., Director. Of counsel on the supplemental brief was Brandon J. Custard, Office of the Chief
Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington,
DC.
Court No. 16-00206 Page 2
Cynthia C. Galvez, Attorney, Wiley Rein LLP, of Washington, DC, argued for defendant-
intervenor Independence Tube Corp. With her on the brief were Timothy C. Brightbill and Alan
H. Price.
John W. Bohn, Attorney, Schagrin Associates, of Washington, DC, argued for defendant-
intervenor Atlas Tube. With him on the brief was Roger B. Schagrin.
Katzmann, Judge: The Trade Preferences Extension Act of 2015 (“TPEA”), Pub. L. No.
114-27, § 502, 129 Stat. 362, 383–84 (2015), which was signed into law on June 29, 2015, made
numerous amendments to the antidumping and countervailing duty laws found under Title 19 of
the United States Code. Specifically, 19 U.S.C. § 1677e(b) and (c) were amended, and (d) was
added. 1 In what appears to be a matter of first impression, the countervailable subsidy case now
before the court provides an occasion to consider these TPEA amendments as they concern the
application, by the United States Department of Commerce (“Commerce”), of facts available and
adverse inferences to a respondent company.
Plaintiff, हzdemir Boru San. ve Tic. Ltd. Sti (“हzdemir”), a Turkish producer and exporter
to the United States of heavy walled rectangular welded carbon steel pipes and tubes (“HWR pipes
and tubes”), brought this action against Defendant, the United States (“the Government”), on
October 9, 2016, challenging elements of Commerce’s final determination in Heavy Walled
Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Turkey: Final Affirmative
Countervailing Duty Determination, 81 Fed. Reg. 47,349 (Dep’t Commerce July 21, 2016) (final
results of investigation), and the subsequent Amended Final Affirmative Countervailing Duty
Determination and Countervailing Duty Order, 81 Fed. Reg. 62,874 (Dep’t Commerce Sept. 13,
2016) (“Final Determination”), as well as the corresponding Issues and Decision Memorandum
1
These TPEA amendments affect all antidumping and countervailing duty determinations made
on or after August 6, 2015. See Dates of Application of Amendments to the Antidumping and
Countervailing Duty Laws Made by the Trade Preferences Extension Act of 2015, 80 Fed. Reg.
46,793 (Dep’t Commerce Aug 6, 2015).
Court No. 16-00206 Page 3
for the Final Determination, July 14, 2016, P.R. 241 (“IDM”). Summons, ECF No. 1; Complaint
¶ 1, ECF No. 5 (“Compl.”). Specifically, हzdemir argues that Commerce’s application of adverse
facts available (“AFA”) to हzdemir regarding the Turkish Exemption from Property Tax (“EFPT”)
program, and Commerce’s inclusion of two particular land parcels in the Land for Less-than-
Adequate-Remuneration (“LTAR”) benchmark, are actions unsupported by record evidence and
contrary to law. Compl. ¶¶ 21–24. हzdemir thus asks this court to hold unlawful the Final
Determination on these grounds, and to remand it to the agency for a redetermination consistent
with the court’s judgment. Compl. at 6. The Government, and defendant-intervenors Independence
Tube Corporation (“Independence”) and Atlas Tube Corporation (“Atlas”) RSSRVH ह]GHPLU¶V
motion.
For the reasons set forth hereafter, the court finds that the Final Determination is supported
by substantial evidence 2 and in accordance with law with respect to the AFA issue, but not with
respect to the Land for LTAR issue, and thus remands it to Commerce.
BACKGROUND
A. Statutory and Regulatory Framework
1. Countervailable Subsidies: Basic Principles
If Commerce determines that the government of a country is providing, directly or
indirectly, a countervailable subsidy with respect to the manufacture, production, or export of a
class or kind of merchandise imported, or sold, or likely to be sold for import, into the United
States, and the International Trade Commission determines that an industry in the United States is
materially injured or threatened with material injury thereby, then Commerce shall impose a
countervailing duty (“CVD”) upon such merchandise equal to the amount of the net
2
Regarding the substantial evidence standard of review, see infra p.19.
Court No. 16-00206 Page 4
countervailable subsidy. See Section 701 of the Tariff Act of 1930, as amended, 19 U.S.C. §
1671(a) (2012). 3 Generally, a subsidy is countervailable if it consists of a foreign government’s
financial contribution to a recipient, which is specific, and also confers a benefit upon the recipient,
as defined under 19 U.S.C. § 1677(5). A benefit is conferred when, in the case where goods or
services are provided, such goods or services are provided for less than adequate remuneration.
19 U.S.C. § 1677(E)(iv). Furthermore, the statute states that:
[T]he adequacy of remuneration shall be determined in relation to
prevailing market conditions for the good or service being provided
or the goods being purchased in the country which is subject to the
investigation or review. Prevailing market conditions include price,
quality, availability, marketability, transportation, and other
conditions of purchase or sale.
Id. The regulation on “adequate remuneration” states that:
[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. Such a price could include
prices stemming from actual transactions between private parties,
actual imports, or, in certain circumstances, actual sales from
competitively run government auctions. In choosing such
transactions or sales, [Commerce] will consider product similarity;
quantities sold, imported, or auctioned; and other factors affecting
comparability.
19 C.F.R. § 351.511(a)(2)(i) (2015).
The subsidy must also be “specific” as defined under 19 U.S.C. § 1677(5A). In the case
of domestic subsidies like those alleged in this case, a specific subsidy can be one that is “limited
3
Further citations to the Tariff Act of 1930, as amended, are to the relevant provision of Title 19
of the U.S. Code, 2012 edition. Citations to 19 U.S.C. § 1677e, however, are not to the U.S.
Code 2012 edition, but to the unofficial U.S. Code Annotated 2017 edition. The current
U.S.C.A. reflects the amendments made to 19 U.S.C. § 1677e (2012) by the Trade Preferences
Extension Act of 2015, Pub. L. No. 114-27, § 502, 129 Stat. 362, 383–84 (2015), which are
integral to this case.
Court No. 16-00206 Page 5
to an enterprise or industry located within a designated geographical region within the jurisdiction
of the authority providing the subsidy.” 19 U.S.C. § 1677(5A)(D)(iv). An investigation of
countervailable subsidies shall commence whenever an interested party files a petition with
Commerce, on behalf of an industry, 4 which alleges the elements necessary for the imposition of
the duty, and which is accompanied by information reasonably available to the petitioner
supporting those allegations. 19 U.S.C. § 1671a(b)(1), (c)(2).
2. Legal Standard for Application of Facts Available and Adverse Inferences
During the course of its countervailing duty proceeding, Commerce requires information
from both the producer respondent and the foreign government alleged to have provided the
subsidy. See Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365, 1369–70 (Fed. Cir.
2014). Information submitted to Commerce during an investigation is subject to verification.
19 U.S.C. § 1677m(i)(1).
When a respondent: (1) withholds information that has been requested by Commerce, (2)
fails to provide such information by Commerce’s deadlines for submission of the information or
in the form and manner requested, (3) significantly impedes an antidumping proceeding, or (4)
provides information that cannot be verified, then Commerce shall “use the facts otherwise
available [FA] in reaching the applicable determination.” 19 U.S.C. § 1677e(a)(2). 5 Unaltered by
4
“The term ‘industry’ means the producers as a whole of a domestic like product, or those
producers whose collective output of a domestic like product constitutes a major proportion of the
total domestic production of the product.” 19 U.S.C. § 1677(4)(A).
5
19 U.S.C. § 1677e(a) provides:
If--
(1) necessary information is not available on the record, or
(2) an interested party or any other person--
(A) withholds information that has been requested
by [Commerce] . . .
Court No. 16-00206 Page 6
the TPEA, this FA subsection thus asks whether necessary or requested information is missing
from the administrative record, and provides Commerce with a methodology to fill the resultant
informational gaps. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir.
2003).
Under certain circumstances, in an investigation, Commerce may determine to assign an
AFA rate to an investigated respondent as to a given subsidy program, instead of the
countervailable subsidy rate that the respondent might receive for that program under normal
circumstances. Typically, an AFA rate is higher than the normally calculable subsidy rate for an
investigated program, and thus ultimately results in a higher CVD rate. See 19 U.S.C. § 1677e
(addressing both FA and AFA).
Commerce “may use an inference that is adverse to the interests of that party in selecting
from among the facts otherwise available,” AFA, if it “finds that an interested party has failed to
cooperate by not acting to the best of its ability to comply with a request for information[.]” Id. §
1677e(b)(1)(A). 6 A respondent’s failure to cooperate to “the best of its ability” is “determined by
(B) fails to provide such information by the
deadlines for submission of the information or in
the form and manner requested . . .
(C) significantly impedes a proceeding under this
subtitle, or
(D) provides such information but the information
cannot be verified . . .
[Commerce] . . . shall . . . use the facts otherwise available in
reaching the applicable determination under this subtitle.
6
19 U.S.C. § 1677e(b)(1) provides:
In general
If [Commerce] . . . finds that an interested party has failed to
cooperate by not acting to the best of its ability to comply with a
Court No. 16-00206 Page 7
assessing whether [it] has put forth its maximum effort to provide Commerce with full and
complete answers to all inquiries.” Nippon Steel, 337 F.3d at 1382.
When applying an adverse inference, Commerce may rely on information from the petition,
a final determination in the investigation, a previous administrative review, or any other
information placed on the record. 19 U.S.C. § 1677e(b)(2); 19 C.F.R. § 351.308(c)(1)-(2) (2015).
Relevantly, section 502 of the TPEA amended 19 U.S.C. § 1677e(b) to provide that Commerce “is
not required to determine, or make any adjustments to, a countervailable subsidy rate . . . based on
any assumptions about information the interested party would have provided if the interested party
had complied with the request for information.” 19 U.S.C. § 1677e(b)(1)(B).
Pursuant to subsection (c), if the information relied upon is secondary -- as opposed to
primary information, which is obtained in the course of the investigation -- then Commerce “shall,
to the extent practicable, corroborate that information from independent sources that are
reasonably at [its] disposal.” 19 U.S.C. § 1677e(c)(1) (emphasis added). As regards the issues in
this case, the TPEA did not substantially amend the corroboration requirement. 7
request for information from [Commerce] . . . [Commerce] . . . in
reaching the applicable determination under this subtitle—
(A) may use an inference that is adverse to the interests of
that party in selecting from among the facts otherwise
available; and
(B) is not required to determine, or make any adjustments to,
a countervailable subsidy rate . . . based on any assumptions
about information the interested party would have provided
if the interested party had complied with the request for
information.
(emphasis added).
7
The TPEA added to 19 U.S.C. § 1677e(c) an exception to the corroboration requirement,
specifically that “[Commerce] . . . shall not be required to corroborate any dumping margin or
countervailing duty applied in a separate segment of the same proceeding.” 19 U.S.C. §
1677e(c)(2). This added subsection is not relevant to the instant proceeding.
Court No. 16-00206 Page 8
If Commerce uses an adverse inference, then in selecting among the facts otherwise
available, and ultimately choosing an AFA rate, the agency utilizes the statutory authorization
found in subsection (d), which was added to the statute by the TPEA. Per subsection (d)(1),
Commerce
[m]ay . . . (i) use a countervailable subsidy rate applied for the same
or similar program in a countervailing duty proceeding involving the
same country; or (ii) if there is no same or similar program, use a
countervailable subsidy rate for a subsidy program from a
proceeding that [Commerce] considers reasonable to use[.]
19 U.S.C. § 1677e(d)(1)(A)(i)–(ii) (emphasis added). In carrying out this AFA rate selection
procedure, Commerce may select “the highest such rate” made available. 19 U.S.C. § 1677e(d)(2).
In doing so, Commerce “is not required . . . to estimate what the countervailable subsidy rate . . .
would have been if the interested party found to have failed to cooperate . . . had cooperated,” or
to demonstrate that the countervailable subsidy rate used as an AFA rate “reflects an alleged
commercial reality of the interested party.” 19 U.S.C. § 1677e(d)(3).
Prior to the enactment of the TPEA, Commerce articulated a policy that it employs when
selecting AFA rates. Commerce still follows this policy, and employed it in the underlying
proceeding:
In selecting AFA rates for programs on which a company has failed
to fully cooperate, it is [Commerce’s] practice to use the highest
calculated program-specific rates determined for a cooperating
respondent in the same investigation, or, if not available, rates
calculated in prior CVD cases involving the same country.
Specifically, [Commerce] applies the highest calculated rate for the
identical program in the investigation if a responding company used
the identical program, and the rate is not zero.
If there is no identical program match within the investigation, or if
the rate is zero, [Commerce] uses the highest non-de minimis rate
calculated for the identical program in another CVD proceeding
involving the same country.
Court No. 16-00206 Page 9
If no such rate is available, [Commerce] will use the highest non-de
minimis rate for a similar program (based on treatment of the
benefit) in another CVD proceeding involving the same country.
Absent an above-de minimis subsidy rate calculated for a similar
program, [Commerce] applies the highest calculated subsidy rate for
any program otherwise identified in a CVD case involving the same
country that could conceivably be used by the non-cooperating
companies.
IDM at 4 (citations omitted) (emphasis added).
Commerce has explained the rationale behind its AFA policy:
[Commerce’s] practice when selecting an adverse rate from among
the possible sources of information is to ensure that the result is
sufficiently adverse “as to effectuate the statutory purposes of the
AFA rule to induce respondents to provide the Department with
complete and accurate information in a timely manner.”
Id. (citations omitted). Importantly, Commerce maintains that its practice also ensures “that the
party does not obtain a more favorable result by failing to cooperate than if it had cooperated
fully.” Id. (quoting Statement of Administrative Action, accompanying the Uruguay Round
Agreements Act, H.R. No. 103–316, vol. 1, at 870 (1994), reprinted in 1994 U.S.C.C.A.N. at 4199
(“SAA”)); 8 compare 19 U.S.C. § 1677e(d)(3).
B. Prior Proceedings
On July 21, 2015, Atlas, Independence, and additional petitioners, 9 filed with Commerce
a CVD petition concerning imports of HWR pipes and tubes from the Republic of Turkey
(“Turkey”). See Petition for the Imposition of Antidumping and Countervailing Duties Pursuant
8
The SAA “shall be regarded as an authoritative expression by the United States concerning the
interpretation and application of the Uruguay Round Agreements and this Act in any judicial
proceeding in which a question arises concerning such interpretation or application.” 19 U.S.C. §
3512(d).
9
Bull Moose Tube Company, EXLTUBE, Hannibal Industries, Inc., Maruichi American
Corporation, Searing Industries, Southland Tube, and Vest, Inc. See IDM at 1.
Court No. 16-00206 Page 10
to Sections 701 and 731 of the Tariff Act of 1930, as Amended July 21, 2015 Volume V –
Information Relating to the Republic of Turkey – Countervailing Duties, P.R. 9 (“Petition”); CVD
Investigation Initiation Checklist (Aug. 10, 2015), P.R. 31, C.R. 22 (“Initiation Checklist”).
Commerce initiated its investigation on August 17, 2015. Heavy Walled Rectangular
Welded Carbon Steel Pipes and Tubes from the Republic of Turkey: Initiation of Countervailing
Duty Investigation, 80 Fed. Reg. 49,207 (Dep’t Commerce Aug. 17, 2015). The period of
investigation (“POI”) was January 1, 2014 through December 31, 2014. Id. Commerce selected
हzdemir as one of two mandatory respondents in the investigation, 10 pursuant to section 19 U.S.C.
§ 1677f-1(e)(2) 11 and 19 C.F.R. § 351.204(c)(2) (2015). 12 IDM at 2.
10
The other company was MMZ Onur Boru Profil uretim San Ve Tic. A.S. IDM at 2. MMZ is
not otherwise relevant to the instant proceeding.
11
19 U.S.C. § 1677f-1(e)(2) provides:
If [Commerce] determines that it is not practicable to determine
individual countervailable subsidy rates . . . because of the large
number of exporters or producers involved in the investigation or
review, [Commerce] may--
(A) determine individual countervailable subsidy rates for a
reasonable number of exporters or producers by limiting its
examination to--
(i) a sample of exporters or producers that the
administering authority determines is statistically
valid based on the information available to the
administering authority at the time of selection, or
(ii) exporters and producers accounting for the
largest volume of the subject merchandise from the
exporting country that the administering authority
determines can be reasonably examined; . . .
12
19 C.F.R. § 351.204(c)(2) provides:
Exporters and producers examined--
(1) In general. In an investigation, [Commerce] will attempt
to determine an . . . individual countervailable subsidy rate
for each known exporter or producer of the subject
merchandise. . . .
Court No. 16-00206 Page 11
On September 9, 2015, Commerce issued a CVD Questionnaire to respondents and the
Government of Turkey (“GOT”). Countervailing Duty Questionnaire Countervailing Duty (CVD)
Investigation Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes From the
Republica of Turkey C-489-823, P.R. 37 (“Questionnaire”). The GOT filed its response to the
Questionnaire on October 28, 2015, along with a number of supportive exhibits. P.R. 63, C.R. 27
(“GOT QR”); Law Concerning Incentives on Investments and Employment and on the
Amendment of Certain Laws (Law No. 5084), P.R. 67, C.R.92 (“GOT QR Ex. 9); The provinces
under the Article 2 of Law Concerning Incentives on Investments and Employment and on the
Amendment of Certain Law (Law No. 5084), P.R. 125, C.R. 93 (“GOT QR Ex. 10”); Article 4 of
Law No. 3365, P.R. 134 (“GOT QR Ex. 19”). By its counsel, हzdemir filed the following relevant
substantive submissions: on October 30, 2015, its questionnaire response (“QR”), P.R. 134, C.R.
104, and on November 30, 2015, its response to Commerce’s supplemental questionnaire (“SQR”),
P.R. 186, C.R. 147.
On December 28, 2015, Commerce published its preliminary determination. Heavy
Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Turkey:
Preliminary Affirmative Countervailing Duty Determination and Alignment of Final
Determination With Final Antidumping Determination, 80 Fed. Reg. 80,749 (Dep’t Commerce
Dec. 28, 2015) (“Preliminary Determination”). It was accompanied by Commerce’s
memorandum, Countervailing Duty Investigation of Heavy Walled Rectangular Welded Carbon
Steel Pipes and Tubes from the Republic of Turkey: Decision Memorandum for the Preliminary
Determination, dated December 18, 2015, P.R. 199 (“Preliminary Decision Memo”). The
(2) Limited investigation. Notwithstanding paragraph (c)(1)
of this section, [Commerce] may limit the investigation by
using a method described in . . . [19 U.S.C. § 1677f-1(e)].
Court No. 16-00206 Page 12
foregoing two documents were accompanied by a third, company specific memorandum entitled
Preliminary Determination Calculation Memorandum for Özdemir Boru Profil San. ve Tic. Sti.,
dated December 18, 2015, P.R. 202, C.R. 161 (“Preliminary Calculation Memo”). हzdemir was
assigned a preliminary CVD rate of 1.35 percent. 13 Preliminary Determination at 80,750. Also
on December 28, 2015, हzdemir filed a request for correction of ministerial error. Compl. ¶ 12.
In the Preliminary Decision Memo, Commerce preliminarily determined under the
Provision of Land for LTAR program that the Zonguldak organized industrial zone (“OIZ”) land
VROGWRह]GHPLULQFRQVWLWXWHGDILQDQFLDOFRQWULEXWLRQZLWKLQWKHPHDQLQJRI86&†
1677(5)(E)(iv), 14 and that it was specific under § 1677(5A)(D)(iv). 15 Commerce further
preliminarily determined that the program FRQIHUUHGDEHQHILWXSRQह]GHPLUWRWKHH[WHQWWKDWWKH
ODQGLQTXHVWLRQZDVVROGWRह]GHPLUIRU/7$5DVGHVFULEHGXQGHU86&†(LY
In making an LTAR determination, Commerce compares the price actually paid to a benchmark
13
MMZ Onur Boru Profil uretim San Ve Tic. A.S. received a subsidy rate of 7.69 percent.
Preliminary Determination at 80,750. Companies not individually-investigated were assigned an
“all-others” rate of 4.39 percent, calculated by weighing the subsidy rates of the individual
companies selected as respondents by those companies’ exports of the subject merchandise to the
United States. Id.
14
19 U.S.C. § 1677(5)(E)(iv) provides:
A benefit shall normally be treated as conferred where there is a
benefit to the recipient, including -- . . .
(iv) in the case where goods or services are provided, if such
goods or services are provided for less than adequate
remuneration, and in the case where goods are purchased, if
such goods are purchased for more than adequate
remuneration.
15
19 U.S.C. § 1677(5A)(D)(iv) provides:
Where a subsidy is limited to an enterprise or industry located within
a designated geographical region within the jurisdiction of the
authority providing the subsidy, the subsidy is specific.
Court No. 16-00206 Page 13
value, pursuant to 19 C.F.R. § 351.511(a). As a benchmark, Commerce used land values that it
had previously used in its investigation of line pipe from Turkey, Welded Line Pipe from the
Republic of Turkey: Final Affirmative Countervailing Duty Determination, 80 Fed. Reg. 61,371(Dep’t Commerce Oct. 13, 2015). See Preliminary Decision Memo at 11–12. Commerce
SUHOLPLQDULO\ GHWHUPLQHG ह]GHPLU¶V QHW VXEVLG\ UDWH XQGHU Whis program to be 0.55 percent ad
valorem. Id. at 12.
As to the EFPT program at issue in this case, Commerce preliminarily concluded that
ह]GHPLU KDG QRW XVHG LW EDVHG RQ ह]GHPLU¶V UHVSRQVHV WR &RPPHUFH¶V TXHVWLRQQDLUHV
Preliminary Decision Memo at 16. Specifically, in response to Commerce’s questions regarding
that program, ह]GHPLUVWDWHGWKDW
[It] did not receive any benefits under this program. Eligibility for
this program is limited to enterprise located within certain
designated regions. 6LQFHQRQHRIWKHह]GHPLU¶VSODQWVDUHORFDWHG
LQWKRVHUHJLRQVह]GHPLUZDVQRWHOLJLEOHWRXVHWKLVSURJUDP
QR at 33.
Commerce subsequently conducted verifications of हzdemir’s QR. Verification of the
4XHVWLRQQDLUH5HVSRQVHVRIह]GHPLU%RUX3Uofil San ve Tic. Ltd Sti. (Mar. 10, 2016), P.R. 227,
C.R. 235 (“Verification Report”); Verification Exhibit 2, C.R. 173–75; Verification Exhibit 10,
C.R. 173, 191–92; Verification Exhibit 15, C.R. 203. During verification, Commerce discovered
WKDWह]GHPLUZDV eligible for, and did receive, an EFPT subsidy during the five years prior to the
period of investigation, because it possessed buildings in the Zonguldak OIZ in Turkey.
Verification Report at 2, &RPPHUFHGHWHUPLQHGWKDWह]GHPLUZDVXQDEOHWRGHPRQVWrate at
verification that it had not received this subsidy during the POI as well. Ministerial Error
Allegations in the Final Determination (Aug. 19, 2016), P.R. 252 at 5 (“Min. Error Dec. Memo”).
Court No. 16-00206 Page 14
On March 24, 2016, हzdemir filed its case brief. P.R. 233, C.R. 237. The GOT filed its case brief
the same day. P.R. 232.
On July 21, 2016, Commerce published its original final determination, wherein the agency
FRQWLQXHGWRILQGWKDWह]GHPLUZDVVXEVLGL]HGE\UHDVRQRILWVSXUFKDVHRIFHUWDLQUHDOSURSHUWy
IURPWKHJRYHUQPHQWDW/7$5DQGDVVLJQHGह]GHPLUDVXEVLG\UDWHRI percent ad valorem
for that program. IDM at 15. Regarding the EFPT program, Commerce determined that “Özdemir
withheld information requested by” the agency and thus had failed to cooperate to the best of its
ability in reporting benefits under this program. Id. at 5; see 19 U.S.C. § 1677e(a)(2)(A).
Commerce consequently assigned ह]GHPLUDQ$)$UDWHIRUWKH()37SURJUDPDQGEHLQJXQDEOH
to locate an above-de minimis application of that same program in a Turkish proceeding, resorted
to the third tier of its hierarchy. IDM at 6–7; see 19 U.S.C. § 1677e(b). Under that tier, Commerce
uses the highest non-de minimis rate for a similar program, based on treatment of the benefit, in
another CVD proceeding involving the same country. IDM at 6. Commerce selected an AFA
CVD rate of 14.01 percent, derived from Final Affirmative Countervailing Duty Determinations;
Certain Welded Carbon Steel Pipe and Tube Products From Turkey, 51 Fed. Reg. 1268, 1270 (Jan.
10, 1986) (“CWP&T 1986”). IDM at 7 n.29. In that determination, 14.01 percent was the
program-specific rate applied for the Export Tax Rebate and Supplemental Tax Rebate program.
In applying that programmatic rate, Commerce found that the CWP&T 1986 program and the
EFPT program were “[a] match, based on program type and treatment of benefit.” Id. at 7.
Commerce next addressed corroboration of the selected CWP&T 1986 rate per 19 U.S.C.
§ 1677e(c). IDM at 8. Commerce noted that in determining the reliability of the selected rate,
“there typically are no independent sources for data on company-specific benefits resulting from
countervailable subsidy programs.” Id. However, Commerce determined that “no information
Court No. 16-00206 Page 15
has been presented which calls into question the reliability of these previously calculated subsidy
rates that we are applying as AFA.” Id. As to relevance, Commerce found that, “[f]or those
programs which the [agency] found a program-type match, . . . because these are the same or
similar programs, they are relevant to the programs under investigation in this case.” Id. “Due to
the lack of certain record information concerning the programs under investigation,” Commerce
“corroborated the rates it selected to the extent practicable.” Id.; see 19 U.S.C. § 1677e(c)(1).
As to the Provision of Land for LTAR program, &RPPHUFH GHWHUPLQHG ह]GHPLU¶V QHW
subsidy rate to be 0.54 percent ad valorem. IDM at 15.
हzdemir subsequently alleged that Commerce made a ministerial error with respect to its
application of AFA to the EFPT program. Min. Error Dec. Memo. Commerce acknowledged that
it inadvertently characterized its application of an adverse inference to the EFPT program as
UHVXOWLQJIURPह]GHPLU¶VIDLOXUHWRIROORZTXHVWLRQQDLUHLQVWUXFWLRQVWRUHSRUWDOO³RWKHUVXEVLGLHV´
received from the GOT, but concluded that an adverse inference was nonetheless appropriate
EHFDXVHह]GHPLUIDLOHGWRUHVSRQGDFFXUDWHO\WRVSHFLILFTXHVWLRQVDERXWWKDWSURJUDPLQLWVLQLWLDO
questionnaire response. Min. Error Dec. Memo at 4–5, 5 n.21. Accordingly, Commerce published
the amended Final Determination LQZKLFKLWGLGQRWFKDQJHWKH VXEVLG\ UDWHIRU ह]GHPLU on
September 13, 2016.
2Q2FWREHUZLWKLQWKLUW\GD\VDIWHUWKHSXEOLFDWLRQRIWKH&9'RUGHUह]GHPLU
timely filed its summons. Sum.; see 19 U.S.C. § 1516a(a)(2)(A); USCIT Rule 3(a)(2). ह]GHPLU
filed its complaint the same day. Compl. Atlas moved to intervene as defendant-intervenor on
October 28, and the court granted the motion the same day. ECF Nos. 7, 11. Independence filed
a motion to intervene as defendant-intervenor on November 8, and the court granted it the next
day. ECF Nos. 12, 15. 3XUVXDQWWR86&,75XOHह]GHPLUILOHGLWVPRWLRQIRUMXGJPHQWRQ
Court No. 16-00206 Page 16
the agency record on February 21, 2017. ECF Nos. 26, 27 (“Pl.’s Br.”). The Government filed its
responsive brief in opposition on May 28. ECF No. 33 (“Def.’s Br.”). Independence and Atlas
filed their respective responsive briefs in opposition on May 30. ECF Nos. 34, 35 (“Independence
Br.” and “Atlas Br.”). ह]GHPLUILOHGLWVUHSO\RQ-XQH ECF Nos. 36, 37 (“Pl.’s Reply”). Oral
argument was held before the court on September 12, 2017. ECF No. 52.
हzdemir argues before this court that the Final Determination was unsupported by
substantial evidence, and was contrary to law, in regards to the apSOLFDWLRQRI$)$WRह]GHPLU
regarding the EFPT program, and in the inclusion of certain land parcels in the benchmark for the
Land for LTAR program.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c), and 19 U.S.C.
§ 1516a(a)(2)(A)(i)(II), and will sustain Commerce's countervailable subsidy determinations
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); Changzhou Wujin Fine Chem. Factory Co., Ltd. v.
United States, 701 F.3d 1367, 1374 (Fed. Cir. 2012).
DISCUSSION
I. 7KH $SSOLFDWLRQ RI $)$ WR ह]GHPLU LV Supported by Substantial Evidence and in
Accordance with Law.
A. Commerce’s Use of Facts Otherwise Available is Supported by Substantial Evidence.
1. Parties’ Arguments
हzdemir argues that it correctly reported its “non-use” of the EFPT program, and placed
all necessary documentation on the record. Pl.’s Br. at 21–ह]GHPLUH[SODLQVWKDW&RPPHUFH
asked in the Questionnaire, under the heading of “Program-Specific Questions,” that it report only
on subsidies received during the POI, calendar year 2014:
Court No. 16-00206 Page 17
For each program, if your company (including cross-owned affiliate
required to respond, as well as all trading companies) did not apply
for, use, or benefit from that program during the POI, you must
clearly state so. Otherwise, please answer the questions listed.
Questionnaire at Sec. III p.  ह]GHPLU DUJXHV WKDW LW IROlowed this instruction, answering that
³ह]GHPLUGLGQRWUHFHLYHDQ\EHQHILWVXQGHU[the EFPT] program.” QR at 33; Pl.’s Br. at 23. The
Property Tax Law creating this subsidy program provides a 0.2 percent property tax exemption on
buildings built in an OIZ for the first five years following completion of construction. GOT QR
DWह]GHPLUthus submits that because it completed its building on the OIZ property in 2008,
SQR at 5, the company was exempted from paying property tax on it specifically from 2009
through 2013. GOT QR at 76–84; GOT QR Ex. 19; Pl.’s Br. at 22. As Commerce confirmed:
³ह]GHPLUGLGQRWPDNHDQ\WD[SD\PHQWVfor buildings located at its facility in the Zonguldak OIZ
for the first five years following completion of the buildings’ construction (i.e., December 24,
2008).” Verification Report at 9; see Verification Exhibit 10 at 534 (acknowledging that Özdemir
had “completed construction of factory and begun production” as of December 25, 2008); Pl.’s Br.
at 22.
हzdemir asserts in conjunction that because the exemption is a tax program, Petition at
24, 16 Initiation Checklist at 25, Questionnaire at 14, and thus a recurring subsidy, the benefit is
expensed in the year received. 19 C.F.R. § 351.524(a) (2015) (“[Commerce] will allocate
(expense) a recurring benefit to the year in which the benefit is received.”); Pl.’s Br. at 23.
7KHUHIRUHWKHEHQHILWZDVXVHGDWWKHODWHVWLQSULRUWRWKH32,3O¶V%UDWह]GHPLU
points to the QR and the GOT QR, and argues that the record “contains every element necessary
16
“The benefit equaled the difference between the amount that would have been paid in taxes
without the program and the amount actually paid.” Petition at 24.
Court No. 16-00206 Page 18
for an exact calculation of any putative benefit attributable” to the EFPT program. 17 Id. Further,
SHU ह]GHPLU WKH DPRXQW RI DQ\ VXEVLG\ VR FDOFXODWHG ZRXOG EH ZHOO EHORZ WKH OHYHO RI
countervailability. Pl.’s Br. at 24.
,QGHSHQGHQFH DUJXHV WKDW ह]GHPLU QRZ DWWHPSWV WR DUWLILFLDOO\ UHGXFH LWV incorrect QR
statement to the point that it did not receive benefits under the EFPT program during the POI,
ignoring the portion of that statement where it stated that it was altogether ineligible for the
program for geographic reasons. Independence Br. at 10. Independence also refers to Commerce’s
specific instructions that “[it is] investigating alleged subsidies received over a time period
corresponding to the AUL,” meaning for the POI and the preceding 14 years. Questionnaire at
Sec. II, p. II-2; Independence Br. at 10. Atlas argues that हzdemir’s incorrect QR statement could
not be verified, and thus triggered 19 U.S.C. § 1677e(a)(2)(D). 18 Atlas Br. at 12–14. Further,
bHFDXVHह]GHPLUGLGQRWDWWHPSWFRUUHFWLRQXQWLOverification, after the responsive deadline had
passed, Verification Report at 2, 9, Atlas argues that 19 U.S.C. § 1677e(a)(2)(B) was also triggered.
Atlas Br. at 13. 19 Atlas also argues that 19 U.S.C. § 1677e(a)(2)(C) was implicated, since even if
17
ह]GHPLUDOVRFRQWHQGVWKDWLWFDQQRWEHVDLGWRKDYHLPSHGHGWKHLQYHVWLJDWLRQsee 19 U.S.C. §
1677e(a)(2)(C), because it provided an accurate QR response regarding EFPT benefits during the
POI. Pl.’s Br. at 25.
18
Atlas notes that “Commerce is given wide latitude to determine its verification procedures,”
meaning that the agency possesses significant discretion in administering that element of the
investigative process. Atlas Br. at 16 (quoting Max Fortune Indus. Co. v. United States, Slip Op.
13-52, 2013 WL 1811907 at *3 (Apr. 15, 2013)). The court owes Commerce’s verification
decisions “considerable deference.” Atlas Br. at 16 n.37 (quoting Daewoo Elecs. Co. v. Int'l Union
of Elec. Elec., Tech., Salaried & Mach. Workers, AFL-CIO, 6 F.3d 1511, 1516 (Fed. Cir. 1993)).
19
Both defendant-LQWHUYHQRUVDUJXHWKDWWKHUHFRUGGRHVQRWLQIDFWVKRZWKDWह]GHPLUGLGQRW
receive a benefit from the EFPT program during the POI. Independence asserts that “it is fair to
assume that हzdemir did receive a benefit under the [EFPT] program during the POI” because the
record does not demonstrate that the company paid property taxes specifically on its factory
location in the OIZ. Independence Br. at 11 (citing Min. Error Dec. Memo. at 4–5).
Atlas submits the record does not definitively demonstrate that the EFPT program applies
only during the first five years following construction, as it would have had to in this case to
Court No. 16-00206 Page 19
हzdemir’s incorrect QR response regarding the receipt of EFPT benefits were verifiable, हzdemir
regardless “significantly impede[d]” the CVD investigation. Atlas Br. at 21. This is because
Commerce’s verification team, upon its arrival in Turkey, would have required an entirely different
VHWRILQIRUPDWLRQLQRUGHUWRYHULI\WKDWह]GHPLUKDGQRWUHFHLYHGDQ()37SURJUDPEHQHILWGXULQJ
the POI. 20 Atlas Br. at 22.
7KH*RYHUQPHQWDUJXHVWKDW&RPPHUFH¶VFRQFOXVLRQWKDWह]GHPLUZLWKKHOGLQIRUPDWLRQ
and failed to cooperate to the best of its ability in providing the requested information about use
of the EFPT program is supported by substantial evidence on the record. IDM at 5–6; Def.’s Br.
at 10–11. The Government also argues that Commerce should not have been required to calculate
WKHDOOHJHGO\GHPLQLPLVVXEVLG\UDWHEDVHGRQUHFRUGHYLGHQFHDVह]GHPLUFRQWHQGVLWFRXOGDQG
should have, because Commerce’s resort to facts otherwise available was statutorily authorized
DQGUHDVRQDEOHLQOLJKWRIह]GHPLU¶V45PLVVWDWHPHQW'HI¶V%UDW
2. Analysis
The court concludes that Commerce’s application of AFA is supported by substantial
evidence on the record. Substantial evidence is “more than a mere scintilla,” but “less than the
weight of the evidence.” Altx, Inc. v. United States, 370 F.3d 1108, 1116 (Fed. Cir. 2004). “A
precede the POI. Atlas Br. at 17–19. Atlas adds that “Commerce did not verify that Özdemir’s
2013 property taxes were due LQUDWKHUWKDQLQ´QRUGLGLWYHULI\WKHYDOXHWKDWह]GHPLU
purports its building carries. Atlas Br. at 20–21.
Because this possibility does not implicate the triggering of Commerce’s resort to facts
otherwise available under 19 U.S.C. § 1677e(a), the court does not reflect in depth on defendant-
intervenors suggestions regarding EFPT benefits received during the POI.
20
,Q UHVSRQVH WR ह]GHPLU¶V DUJXPHQW WKDW WKH SRUWLRQV RI LWV 45 LQFRUUHFWO\ OLQNLQJ WKH ()37
program to geographic location are not relevant to the question of whether a benefit was received
during the POI, Atlas argues that the statute expressly contemplates that the conditions for
application of facts otherwise available under § 1677e(a)(2) apply even where (a)(1) does not,
meaning AFA may apply even where Commerce cannot find that “necessary information is not
available on the record.” Atlas Br. at 15.
Court No. 16-00206 Page 20
finding is supported by substantial evidence if a reasonable mind might accept the evidence as
sufficient to support the finding.” Maverick Tube Corp. v. United States, 857 F.3d 1353, 1359
(Fed. Cir. 2017) (citing Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938)). “The
substantiality of evidence must take into account whatever in the record fairly detracts from its
weight.” CS Wind Vietnam Co. v. United States, 832 F.3d 1367, 1373 (Fed. Cir. 2016). This
includes “contradictory evidence or evidence from which conflicting inferences could be drawn.”
Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed. Cir. 1994)
(quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)). However, “the possibility
of drawing two inconsistent conclusions from the evidence does not prevent an administrative
agency's finding from being supported by substantial evidence.” Matsushita Elec. Indus. Co. v.
United States, 750 F.2d 927, 933 (Fed. Cir. 1984) (citing Consolo v. Fed. Mar. Comm'n, 383 U.S.
607, 619–20 (1966)).
Commerce “shall . . . use the facts otherwise available” if one of the criteria spelled out in
86&†HDRUDUHPHW$OOSDUWLHVDJUHHWKDWह]GHPLUSURYLGHGDQLQFRUUHFWQR
response regarding the EFPT program. QR at 32–33. The statute is triggered “[if] . . . an interested
party . . . withholds information that has been requested by [Commerce].” Regarding the EFPT
program, Commerce specifically UHTXHVWHG WKDW ह]GHPLU DQVZHU TXHVWLRQV IRXQG LQ WKH
Questionnaire Standard Questions Appendix. QR at 33; Questionnaire at Sec. III pp.18–19. The
questions therein do not request simple answers, but rather pose several questions requiring
detailed answers about a firm’s history with the program in question, benefits received thereunder,
and records kept demonstrating those benefits. Questionnaire at Sec. III p.19. For the purposes
RIWULJJHULQJIDFWVRWKHUZLVHDYDLODEOHLWLVRIQRPRPHQWWKDWVRPHSDUWRIह]GHPLU¶VLQFRUUHFW
45VWDWHPHQWVXSSRUWVWKHSURSRVLWLRQWKDWह]GHPLUGLGQRWUHFHLYH()37EHQHILWVGXULQJWKH32,
Court No. 16-00206 Page 21
In fact, हzdemir’s argument that the Questionnaire instructions demand responses only regarding
the POI, Pl.’s Br. at 21, is undermined by Commerce’s specific instruction that “[it is] investigating
alleged subsidies received over a time period corresponding to the [15-year] AUL,” meaning for
the POI and the preceding 14 years. Questionnaire at Sec. II p.II-2. The contrast between
हzdemir’s brief, incorrect QR statement, and the detailed information that Commerce requested,
as well as the explicitly noted AUL informational timeframe, constitute substantial evidence on
the record that हzdemir “with[e]ld[] information that has been requested by [Commerce]”
pursuant to 19 U.S.C. § 1677e(a)(2)(A).
The court is QRWSHUVXDGHGE\ह]GHPLU¶VDUJXPHQWWKDW&RPPHUFHFRXOGKDYHUHIHUUHGWR
the record to calculate the precise countervailable subsidy received under the EFPT program,
rather than rely on facts otherwise available. The possibility that the record does contain the
information necessary to calculate a putative countervailable subsidy is irrelevant to the statutory
triggers found in § 1677e(a), VSHFLILFDOO\ ZKHWKHU ³DQ LQWHUHVWHG SDUW\´ VXFK DV ह]GHPLU KDV
“with[e]ld[] information that has been requested by [Commerce].” 19 U.S.C. § 1677e(a)(2)(A).
हzdemir has provided no authority stating otherwise. 21 More to the point, because that possibility
does not implicate the statutory standard, it does not detract from the substantiality of the evidence
supporting tKHFRQFOXVLRQWKDWह]GHPLU¶VLQFRUUHFW45UHVSRQVe did trigger § 1677e(a)(2)(A). See
CS Wind, 832 F.3d at 1373.
B. Commerce’s Application of AFA is Supported by Substantial Evidence and in
Accordance with Law.
21
Indeed, § 1677e(a)(1), which triggers facts otherwise available where “necessary information is
not available on the record,” is read not in tandem with, but alternately to, (a)(2), as discernible by
their separation with the conjunctive “or.” See supra n.5. That necessary information is present
in the record before Commerce, thus obviating § 1677e(a)(1), does not necessarily prevent the
triggering of a subsection of (a)(2) as well.
Court No. 16-00206 Page 22
1. Commerce’s Decision to Apply an Adverse Inference is Supported by Substantial
Evidence.
हzdemir argues that it fully cooperated in the investigation, and thus Commerce had no
factual basis in the record to apply AFA under 19 U.S.C. § 1677e(b)(1). Pl.’s Br. at 24; see supra
n.5  ह]GHPLU DFNQRZOHGJHV WKDW its QR statement regarding EFPT benefits was in error, but
submits that Commerce knew throughout the investigation that EFPT program qualification was
based on location in an OIZ, and not on the province in which the property was located. Initiation
Checklist at 25; Pl.’s Br. at 25. ह]GHPLU again argues that the operative fact is that it did not
receive an EFPT benefit during the POI, and notes that Commerce verified that any property tax
H[HPSWLRQDSSOLFDEOHWRह]GHPLUZRXOGKDve ended before the POI began. Verification Report at
9; Pl.’s Br. at 26  ह]GHPLU JHQHUDOO\ DVVHUWV DOVR WKDW LW ³GLG QRW KLGH DQ\ LQIormation from
Commerce,” having spent four pages in its QR explaining that one of its plants “is located in the
Zonguldak OIZ,” and that it provided all the payment and title information related to that property,
including information establishing that construction of that building was completed in December
2008 -- thus cutting off the applicable property tax benefit before the POI began in 2014. Pl.’s Br.
at 26; QR at 13–16, Exs. 8–10; SQR at 5.
हzdemir argues in its Reply that Commerce impermissibly applied a per se rule in
GHWHUPLQLQJWKDWह]GHPLU³IDLOHGWRDFWWRthe best of its ability” and therefore warranted an adverse
inference. 19 U.S.C. § 1677e(b)(1); Pl.’s Reply at 16–ह]GHPLUDUJXHVWKDWLQVWHDGWKH³EHVW
of its ability standard” calls for an assessment of materiality. Pl.’s Reply at 17.
The court is persuaded by the Government’s argument that substantial evidence supports
Commerce's decision to apply AFA. “If [Commerce] . . . finds that an interested party has failed
to cooperate by not acting to the best of its ability to comply with a request for information from
[Commerce], [then Commerce] . . . may use an inference that is adverse to the interests of that
Court No. 16-00206 Page 23
party in selecting from among the facts otherwise available.” 19 U.S.C. § 1677e(b)(1)(A); see 19
C.F.R. § 351.308; QVD Food Co. v. United States, 658 F.3d 1318, 1324 (Fed. Cir. 2011)
(discussing burdens of proof in administrative proceedings before Commerce). Commerce “may
employ [such] inferences . . . to ensure that the party does not obtain a more favorable result by
failing to cooperate than if it had cooperated fully.” Viet I-Mei Frozen Foods Co. v. United States,
839 F.3d 1099, 1109 (Fed. Cir. 2016) (quoting SAA at 870). “Because Commerce lacks subpoena
power, Commerce's ability to apply adverse facts is an important one.” Maverick Tube, 857 F.3d
at 1360 (quoting Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012)). Thus,
“[t]he purpose of the adverse facts statute is ‘to provide respondents with an incentive to cooperate’
with Commerce's investigation.” Id. (quoting F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v.
United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000)). “Compliance with the ‘best of its ability’
standard is determined by assessing whether respondent has put forth its maximum efforts to
provide Commerce with full and complete answers to all inquiries in an investigation.” Maverick
Tube, 857 F. 3d at 1360 (quoting Nippon Steel, 337 F.3d at 1382).
Substantial evidence supports both Commerce’s ILQGLQJWKDWह]GHPLUGLGQRWDFWWRWKH
best of its ability to comply with Commerce’s request for information, and its decision to apply an
adverse inference in consequence. As explained supra, the Questionnaire asks for a detailed series
of answers regarding the respondent’s history with the EFPT program. Questionnaire at 18–19.
ह]GHPLUVWDWHGLQLWV45WKDWLW³GLGQRWUHFHLYHDQ\EHQHILWVXQGHU>WKH()37@SURJUDP(OLJLELOLW\
for this program is limited to enterprises located within certain designated regions. Since none of
WKHह]GHPLU¶VSODQWVDUHORFDWHGLQWKRVHUHJLRQVह]GHPLUZDVQRWHOLJLEOHWRXVHWKLVSURJUDP´
QR at 33. $WYHULILFDWLRQ&RPPHUFHGLVFRYHUHGWKDWWKLVUHVSRQVHZDVQRWDFFXUDWHDVह]GHPLU
Court No. 16-00206 Page 24
had taken advantage of the EFPT program, and did have facilities in the designated region. 22
Verification Report at 2, 9&RPPHUFH¶VUHVXOWLQJFRQFOXVLRQWKDWह]GHPLUKDGZLWKKHOGUHTXHVWHG
information, pursuant to 19 U.S.C. § 1677e(a)(2)(A), by failing to report use of the EFPT program
was reasonable and supported by substantial evidence. IDM at 5. Accordingly, resort to facts
otherwise available was warranted. Id. So too was Commerce’s decision to apply an adverse
inference reasonable. Id. DW7KHUHFRUGVKRZVWKDWह]GHPLUGLGQRW³SURYLGH&RPPHUFHZLWK
full and complete answers to all inquiries in [the] investigation,” as regards the EFPT program.
Maverick Tube, 857 F.3d at 1360. While “[t]he best-of-one’s-ability standard ‘does not require
perfection and recognizes that mistakes sometimes occur,’ it “does not condone inattentiveness,
carelessness, or inadequate record keeping.” Papierfabrik Aug. Koehler SE v. United States, 843
F.3d 1373, 1379 (Fed. Cir. 2016) (quoting Nippon Steel, 337 F.3d at 1382). In summary,
³&RPPHUFHUHTXHVWHGLQIRUPDWLRQIURP>ह]GHPLU@ZKLFK>ह]GHPLU@GLGQRWSURYLGHDQGQHYHU
claimed that it was unable to provide.” 23 Maverick Tube, 857 F.3d at 1360; IDM at 6; Verification
Report at 2, 9. Commerce’s decision to apply an AFA rate was therefore supported by substantial
evidence on the record.
ह]GHPLU¶VDVVHUWLRQWKDWLWLQDGYHUWHQWO\ SURYLGHGthe incorrect QR statement regarding
EFPT benefits does not advance its argument here. “While intentional conduct, such as deliberate
concealment or inaccurate reporting, surely evinces a failure to cooperate, the statute does not
22
&RPPHUFH DOVR GHWHUPLQHG WKDW ह]GHPLU ZDV XQDEOH WR SURYLGH LQformation showing that it
actually paid property taxes on the factory located in the Zonguldak OIZ during the POI. Min.
Error Decision Memo at 5.
23
7KHFRXUWQRWHVWKDWह]GHPLUFRXOGUHDVRQDEO\KDYHSURYLGHGFRUUHFWHGLQIRUPDWLRQUHJDUGLQJ
its use of the EFPT program in its SQR. See 645DW+RZHYHUह]GHPLUGLGQRWGRVRId.; see,
e.g., Fresh Garlic Producers Ass'n v. United States, 39 CIT ___, ___, 121 F. Supp. 3d 1313, 1325
(2015).
Court No. 16-00206 Page 25
contain an intent element.” Nippon Steel, 337 F.3d at 1383, cited in Essar Steel, 678 F.3d at 1276.
Rather, “the statutory trigger for Commerce's consideration of an adverse inference is simply a
failure to cooperate to the best of respondent's ability, regardless of motivation or intent.” Id. The
FRXUW DOVR ILQGV XQSHUVXDVLYH ह]GHPLU¶V DUJXPHQWV WKDW LWV LQFRUUHFW 45 statement was not
material, and thus could not justify an adverse inference. Pl.’s Reply at 14–16. Neither the statute
nor binding precedent impose that standard on Commerce; the animating inquiry of the adverse
inferences provision is whether “an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information from [Commerce].” 19 U.S.C. §
1677e(b)(1); see Maverick Tube, 857 F.3d at 1360–61. &RQWUDU\ WR ह]GHPLU¶V PDWHULDOLW\
articulation, the “best of its ability” standard “expects respondents to ‘(a) take reasonable steps to
keep and maintain full and complete records . . . ; (b) have familiarity with all of the records it
maintains in its possession, custody, or control; and (c) conduct prompt, careful, and
comprehensive investigations of all relevant records that refer or relate to the imports in question.’”
Papierfabrik, 843 F.3d at 1379 (quoting Nippon Steel, 337 F.3d at 1382). ह]GHPLU¶VHPSKDVLVRQ
EFPT benefits received during the POI is besides the point. Rather, the relevant point is that
Özdemir did not put forth its best efforts to provide “full and complete” answers to Commerce’s
inquiries in its QR. Nippon Steel, 337 F.3d at 1382; see Essar Steel, 678 F.3d at 1276 (“Without
the ability to enforce full compliance with its questions, Commerce runs the risk of gamesmanship
and lack of finality in its investigations.”).
7KHFRXUWLVOLNHZLVHXQSHUVXDGHGE\ह]GHPLU¶VDUJXPHQWWKDW&RPPHUFHFRXOGKDYHXVHG
additional tax information provided at verification to ascertain its participation in the EFPT
program during the POI and beforehand. The purpose of verification is not to “continue the
information-gathering stage of [Commerce’s] investigation.” Borusan Mannesmann Boru Sanyive
Court No. 16-00206 Page 26
Ticaret A.S. v. United States, 39 CIT ___, ___, 61 F. Supp. 3d 1306, 1349 (2015) (quoting agency
position), aff’d, Maverick Tube, 857 F.3d 1353. “Verification is intended to test the accuracy of
data already submitted, rather than to provide a respondent with an opportunity to submit a new
response.” Tianjin Mach. Imp. & Exp. Corp. v. United States, 28 CIT 1635, 1644, 353 F. Supp.
2d 1294, 1304 (2004), aff'd, 146 F. App’x 493 (Fed. Cir. 2005). “Commerce . . . is under no
obligation to request or accept substantial new factual information from a respondent after
discovering that a response cannot be corroborated during verification.” Id.; see 19 C.F.R. §
351.307(d) (2015). Nor is it for this court to mold Commerce’s verification procedures more
strictly than the statute provides. Indeed, the statute gives Commerce wide latitude in its
verification procedures, Micron Tech., Inc. v. United States, 117 F.3d 1386, 1396 (Fed. Cir. 1997)
(citing American Alloys, Inc. v. United States, 39 F.3d 1469, 1475 (Fed. Cir. 1994)), and further
“Congress has implicitly delegated to Commerce the latitude to derive verification procedures ad
hoc.” Id. More generally, the Federal Circuit “ha[s] recognized Commerce's authority to apply
adverse facts, even when a party provides relevant factual information if a party has not acted to
the best of its ability to provide the information.” Essar Steel, 678 F.3d at 1278; see Nippon Steel,
337 F.3d at 1378–83.
TKHRSHUDWLYHSRLQWLVWKDWह]GHPLUSRVVHVVHGLQIRUPDWLRQWKDW&RPPHUFHUHTXHVWHG in its
Questionnaire, and upon being asked to provide that information with supportive details and
H[SODQDWLRQV ह]GHPLU GLG QRW SURYLGH LW  QR at 33. “Such behavior cannot be considered
‘maximum effort to provide Commerce with full and complete answers.’” Maverick Tube, 857
F.3d at 1361 (quoting Nippon Steel, 337 F.3d at 1382). Commerce’s decision to apply an adverse
inference, and an AFA rate, was thus supported by substantial evidence on the record.
Court No. 16-00206 Page 27
2. Commerce Selection of the AFA Rate was in Accordance with Law.
Commerce used the third level of its methodology in applying the CWP&T 1986 rate 24 to
हzdemir in this proceeding. IDM at 6–7 (“If no such rate is available, the Department will use the
highest non-de minimis rate for a similar program (based on treatment of the benefit) in another
CVD proceeding involving the same country.”) (emphasis added). In a two-pronged argument,
हzdemir contends that even if it did not act to the best of its ability in responding to Commerce’s
Questionnaire, Commerce nonetheless violated its AFA selection criteria in assigning the 14.01
percent program-VSHFLILFUDWHWRह]GHPLU3O¶V%UDW
First, हzdemir argues that “Commerce should have stopped at its second preference,”
rather than reach the third, “because a rate had been calculated for an identical program in a prior
CVD proceeding involving the same country.” Pl.’s Br. at 28. ThDWUDWHSHUह]GHPLULVD
percent subsidy rate applied to respondent Toscelik for the EFPT program in the investigation of
oil country tubular goods (“OCTG”). Pl.’s Br. at 28 (citing Certain Oil Country Tubular Goods
From the Republic of Turkey: Final Affirmative Countervailing Duty Determination and Final
Affirmative Critical Circumstances Determination, 79 Fed. Reg. 41,964 (Dep’t Commerce July
18, 2014) and accompanying IDM)ह]GHPLUDsserts that a rate of 0.01 percent is not de minimis,
and disputes the validity of Commerce’s 0.5 percent de minimis threshold by asserting that
“Commerce’s practice is to treat programs with ad valorem subsidy rates below 0.005 [percent] as
de minimis.” Pl.’s Br. at 29–30 (citing Circular Welded Carbon Steel Pipes and Tubes From
Turkey: Final Results of Countervailing Duty Administrative Review, 77 Fed. Reg. 46,713 (Dep’t
Commerce Aug. 6, 2012)). हzdemir contends that, though Commerce cited a previous usage of
24
See supra p.14, regarding CWP&T 1986 (the 1986 Final Affirmative Countervailing Duty
Determinations; Certain Welded Carbon Steel Pipe and Tube Products From Turkey, 51 Fed.
Reg. 1268).
Court No. 16-00206 Page 28
the 0.5 percent de minimis AFA threshold, it provided no reasoning in either the Final
Determination or the cited decision explaining why that threshold should apply. Pl.’s Br. at 30
(citing Wheatland Tube Co. v. United States, 161 F.3d 1365, 1369 (Fed. Cir. 1998); U.H.F.C. Co.
v. United States, 916 F.2d 689, 700 (Fed. Cir. 1990)).
Second, हzdemir argues that even if Commerce’s selection of the CWP&T 1986 14.01
percent rate as AFA was justified, it was nonetheless inconsistent with Commerce’s regulatory
criteria. Pl.’s Br. at 30–31. हzdemir contends that the 1986 program was not a “match, based on
program type and treatment of the benefit.” IDM at 7. $FFRUGLQJWRह]GHPLUWKH³WUHDWPHQW´RI
a benefit refers to its attribution, which is fundamentally different between an export subsidy and
a domestic subsidy. Pl.’s Reply at 8. Specifically, the 1986 Export Tax Rebate program was an
export subsidy, rather than a domestic subsidy, attributed only to export sales rather than total
VDOHV  3O¶V %U DW   3HU ह]GHPLU ³>W@KH EHQHILW IURP DQ H[SRUW VXEVidy is attributed to a
company’s export sales only, while the benefit from a domestic subsidy is attributed to a
company’s total sales.” Pl.’s Reply at 8 (citing 19 C.F.R. § 351.525(b)(2)–(3) (2015)). 25
7KH FRXUW FRQVWUXHV ह]GHPLU¶V DUJXPHQW DV DQ assertion that Commerce acted in an
arbitrary and capricious fashion, and thus, not in accordance with law. When determining whether
Commerce’s interpretation and application of the statute is in accordance with law, this Court must
consider “whether Congress has directly spoken to the precise question at issue,” and, if not,
whether the agency’s interpretation of the statute is reasonable. Apex Frozen Foods Private Ltd.
v. United States, 862 F.3d 1337, 1344 (Fed. Cir. 2017) (quoting Chevron U.S.A. Inc. v. Natural
25
)XUWKHUPRUH ह]GHPLU DUJXHV WKDW XQGHU WKH IRXUWK DOWHUQDWLYH UHVSRQGHQWV FRXOG QRW
“conceivably” use that program, as it was terminated nearly 30 years ago; if the rate could not
“conceivably” be used under the fourth alternative, it could certainly not be “similar” under the
third alternative. Pl.’s Br. at 31; Pl.’s Reply at 2.
Court No. 16-00206 Page 29
Res. Def. Council, Inc., 467 U.S. 837, 842–43 (1984)). If the Court determines that the statute is
silent or ambiguous with respect to the specific issue, then the traditional second prong of the
Chevron analysis asks what level of deference is owed Commerce's interpretation. Chevron, 467
U.S. at 842–43; see United States v. Mead Corp., 533 U.S. 218, 228 (2001). “Chevron requires us
to defer to the agency's interpretation of its own statute as long as that interpretation is reasonable.”
Koyo Seiko Co., Ltd. v. United States, 36 F.3d 1565, 1573 (Fed. Cir. 1994); see Kyocera Solar,
Inc. v. United States Int'l Trade Comm'n, 844 F.3d 1334 (Fed. Cir. 2016).
The court notes that under the plain text of 19 U.S.C. § 1677e(d), added to the statute by
the TPEA, Commerce has broad discretion to “use a countervailable subsidy rate applied for the
same or similar program in a countervailing duty proceeding involving the same country,” and to
“apply any of the countervailable subsidy rates or dumping margins specified under that paragraph,
including the highest such rate or margin.” No party has contended that this language is
ambiguous. In the context of Commerce’s execution of its statutory mandates, “reviewing courts
must accord deference to the agency in its selection and development of proper methodologies.” 26
Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1365 (Fed. Cir. 1999) (citing Daewoo
Elecs. Co. v. Int'l Union of Elec. Elec., Tech., Salaried & Mach. Workers, AFL-CIO, 6 F.3d 1511,
1516 (Fed. Cir. 1993)). To the extent that the statutory language poses some ambiguity ripe for
interpretation, “[o]ur review centers on whether the agency's interpretations of statutes and
regulations it administers are reasonable.” Thai Pineapple, 187 F.3d at 1365 (citing Chevron, 467
U.S. at 844; Daewoo, 6 F.3d at 1516).
26
The parties do not dispute the validity of Commerce’s established AFA rate selection hierarchy,
Pl.’s Br. at 27–28, Def.’s Br. at 15–16, but only whether Commerce adhered to it in the underlying
proceeding. See Essar Steel, Ltd. v. United States, 753 F.3d 1368, 1373–74 (Fed. Cir. 2014).
Court No. 16-00206 Page 30
हzdemir presents no binding authority to support the proposition that Commerce is bound
to a practice of treating programs with ad valorem subsidy rates below 0.005 percent, but not
DERYH DV GH PLQLPLV IRU WKH SXUSRVH RI VHOHFWLQJ $)$ UDWHV  1RU GRHV ह]GHPLU RIIHU
determinations by Commerce evidencing that practice. See SKF USA Inc. v. United States, 263
F.3d 1369, 1382 (Fed. Cir. 2001) (“[A]n agency action is arbitrary when the agency offer[s]
insufficient reasons for treating similar situations differently.”), aff’d, 332 F.3d 1370 (Fed. Cir.
2003). Commerce, however, cited to a previous determination explicitly stating, twice, the
agency’s practice of treating programmatic rates of 0.5 percent or less ad valorem as de minimis.
IDM at 7 n.26 (citing Pre-Stressed Concrete Steel Wire Strand from the People's Republic of
China: Final Affirmative Countervailing Duty Determination, 75 Fed. Reg. 28,557 (Dep’t
Commerce May 10, 2010) and accompanying IDM at “1. Grant Under the Tertiary Technological
Renovation Grants for Discounts Program,” “2. Grant Under the Elimination of Backward
Production Capacity Award Fund.” (“[A]ll previously calculated rates for grant programs from
prior China CVD investigations have been de minimis (e.g., less than 0.5 percent ad valorem).”)).
Thus Commerce’s application of the 0.5 percent threshold was not inconsistent with prior agency
practice, and was not arbitrary and capricious, or discordant with law, on those grounds.
The court also finds unavailing ह]GHPLU¶V VXEVLGLDU\ DUJXPHQW WKDW &RPPHUFH GLG QRW
sufficiently justify the usage of a 0.5 percent de minimis threshold. Commerce did provide a
justification of applying that threshold in the same paragraph to which it appended a footnote
characterizing the threshold as its normal practice. IDM at 6–7 n.26. Specifically, the purpose of
skipping over de minimis rates, and therefore in applying the 0.5 percent de minimis threshold in
the contest of AFA rate selection, is “to ensure that the result is sufficiently adverse ‘as to effectuate
the statutory purposes of the AFA rule to induce respondents to provide [Commerce] with
Court No. 16-00206 Page 31
complete and accurate information in a timely manner.’” IDM at 6 (quoting Notice of Final
Determination of Sales at Less than Fair Value: Static Random Access Memory Semiconductors
From Taiwan, 63 Fed. Reg. 8909, 8932 (Dep’t Commerce Feb. 23, 1998)). Commerce intends
that this practice will ensure “that the party does not obtain a more favorable result by failing to
cooperate than if it had cooperated fully.” IDM at 6 (quoting SAA at 870). “Commerce has wide,
though not unbounded, discretion ‘to select adverse facts that will create the proper deterrent to
non-cooperation with its investigations and assure a reasonable margin.’” Papierfabrik, 843 F.3d
at 1380 (quoting De Cecco, 216 F.3d at 1032). Indeed, Commerce’s methodology here, consistent
with the TPEA at 19 U.S.C. § 1677e(d)(1)–(2), has been sustained by the Federal Circuit as
permissible, under the previous iteration of the statute. Essar Steel, Ltd. v. United States, 753 F.3d
1368, 1373–74 (Fed. Cir. 2014). Even under the previous iteration of the statute, where AFA rates
were to “be a reasonably accurate estimate of the respondent's actual rate,” there was too expected
“some built-in increase intended as a deterrent to noncompliance.” Id. at 1373 (quoting De Cecco,
216 F.3d at 1032). Under that framework, Commerce’s decision to disregard ह]GHPLU¶VGHVLUHG
AFA rate of 0.01 percent ad valorem, derived from the Final OCTG determination, 79 Fed. Reg.
41,964, was reasonable, and in accordance with law. 27
The court turns to हzdemir’s argument that Commerce is invalidly applying a new standard
in selecting a “similar” program for AFA purposes, Pl.’s Br. at 31, and finds it unpersuasive.
हzdemir contends that Commerce’s practice of determining similarity on the basis of relevant
subsections of 19 C.F.R. §§ 351.504–20, as represented in SolarWorld Americas, Inc. v. United
27
To the extent that Commerce’s application of 0.5 percent as the AFA threshold, or its selection
of the highest available rate over that threshold, in the context of the proceedings at issue, also
raises a question of factual support, the court finds that these decisions were supported by
substantial evidence on the record.
Court No. 16-00206 Page 32
States, 41 CIT ___, ___, 229 F. Supp. 3d 1362, 1368 (2017), conflicts with the agency’s similarity
determination in this case. Most significantly, SolarWorld does not interpret the relevant statutory
provision, 19 U.S.C. § 1677e(d), which was added by the TPEA. Section 1677e(d)(1)(A)(i)
permits Commerce to “use a countervailable subsidy rate applied for the same or similar program
in a [CVD] proceeding involving the same country.” The “similar” qualifier is undefined, and it
is within Commerce’s purview to effectuate it and give it meaning. The court asks “whether the
agency's interpretations of statutes and regulations it administers are reasonable.” Thai Pineapple,
187 F.3d at 1365 (citing Chevron, 467 U.S. at 844; Daewoo, 6 F.3d at 1516). From the statute’s
structure, it is patent that Commerce is entitled to interpret “similar,” as the following subsection,
(ii), provides that “if there is no same or similar program, [Commerce may] use a countervailable
subsidy rate for a subsidy program from a proceeding that [Commerce] considers reasonable to
use.” 19 U.S.C. § 1677e(d)(1)(A). This language indicates a Congressional judgment that
Commerce will determine whether a subsidy program is similar, and even if none is found, the
agency will hDYHGLVFUHWLRQWRDSSO\D³UHDVRQDEOH´UDWHIURPDQRWKHUSURJUDPह]GHPLUSUHVHQWV
no binding precedent that would compel this court to remand Commerce’s determination for
insufficient explanation of similarity, let alone precedent directing this court to read § 1677(d) less
deferentially to Commerce’s discretion than the provision’s text provides. “[U]nder Chevron, an
agency can only reject a prior interpretation of an ambiguous statute if it explains why it is doing
so.” Mid Continent Nail Corp. v. United States, 846 F.3d 1364, 1382 (Fed. Cir. 2017). ह]GHPLU
has presented no prior interpretation by Commerce of the word “similar” in the context § 1677e(d)
against which the court could construe the agency’s current interpretation. 28
28
Because the court holds that Commerce’s selection of an AFA rate in accordance with the third
tier of methodology was reasonable and in accordance with law, the court does not address
हzdemir’s contention that Commerce impermissibly applied a rate that could not have
“conceivably” been used because it was terminated well prior to the underlying proceeding. Pl.’s
Court No. 16-00206 Page 33
Further, SolarWorld does not necessarily stand for the proposition that a subsidy which is
or could be classified under a given subsection of § 351 cannot be “similar,” for the purposes of
AFA rate selection, to a subsidy which is or could be classified under a different subsection of §
351. Indeed, SolarWorld cites Commerce’s statement that it “does not look at the ‘next most
similar program.’” 229 F. Supp. 3d at 1368. Assuming arguendo that SolarWorld does support
ह]GHPLU¶VLQWHUSUHWDWLRQह]GHPLUKDVIDLOHGWRHVWDEOLVK that the 1986 Export Tax Rebate program
falls under a subsection of § 351 such that it is bereft of similarity to the EFPT program, which
falls under § 351.509, for AFA rate selection purposes. See Pl.’s Br. at 19–20. Indeed, at the time
of the CWP&T 1986 proceeding, the subsidy identification regulatory regime under 19 C.F.R. §§
351.504–20 was not in force. In the instant case, Commerce looked to the foreign government’s
treatment of the benefit in determining whether it is a “similar” program. On the record, it was
well within Commerce’s discretion to conclude that where the two programs are both tax
programs, a sufficient nexus of similarity was established. In sum, Commerce is statutorily
authorized to determine, and did reasonably determine, what constitutes similarity for the purposes
RI $)$ UDWH VHOHFWLRQ DQG ह]GHPLU¶V DUJXPHQW that Commerce must apply some different
standard, without textual or precedential support, is unavailing.
3. Commerce Corroborated the AFA Rate to the Extent Practicable, with the Support
of Substantial Evidence and in Accordance with Law.
Br. at 31. This argument implicates the fourth tier of Commerce’s AFA rate selection
methodology, where “[a]bsent an above-de minimis subsidy rate calculated for a similar program,
[Commerce] applies the highest calculated subsidy rate for any program otherwise identified in a
CVD case involving the same country that could conceivably be used by the non-cooperating
companies.” IDM at 6 (citing 75 Fed. Reg. 28,557; Lightweight Thermal Paper from the People's
Republic of China: Final Affirmative Countervailing Duty Determination, 73 Fed. Reg. 57,323(Dep’t Commerce Oct. 2, 2008), and accompanying IDM at “Selection of the Adverse Facts
Available Rate.”).
Court No. 16-00206 Page 34
हzdemir argues that Commerce failed to corroborate the 14.01 percent rate, which the
agency must do “to the extent practicable, . . . from independent sources that are reasonably at [its]
disposal,” whenever it uses “secondary information other than information obtained in the course
of an investigation.” Pl.’s Br. at 32 (quoting 19 U.S.C. § 1677e(c)(1)). हzdemir contends that the
CWP&T 1986 Export Tax Rebate program is not relevant because it is not similar to the EFPT
program based upon treatment of benefit. Pl.’s Br. at 33. Furthermore, tRह]GHPLU&RPPHUFH¶V
application of a terminated program as AFA means “that Commerce did not evaluate probative
value (relevance) with a full review of its own files.” Pl.’s Reply at 3.
हzdemir additionally argues that “Commerce must select secondary information that has
some grounding in commercial reality.” Gallant Ocean (Thai.) Co. v. United States, 602 F.3d
)HG&LUह]demir contends that, though the TPEA removed any statutory
requirement “to demonstrate that the countervailable subsidy rate . . . reflects an alleged
commercial reality of the interested party,” commercial reality remains relevant as it pertains to
industry-wide or program-wide considerations. Pl.’s Br. at 32. हzdemir argues that on a program-
wide basis, the 14.01 percent rate is far removed from the commercial reality of any alleged EFPT
program benefits, which are typically far smaller than that amount. Pl.’s Br. at 33.
7RWKHH[WHQWWKDWह]GHPLUcontends that Commerce’s verification was not performed in
accordance with law, that argument fails. As explained supra, Commerce is empowered to
formulate the methodologies it uses to execute its statutory mandates. Thai Pineapple, 187 F.3d
at 1365. In this case, as noted, the statute requires that Commerce “shall, to the extent practicable,
corroborate [secondary information] from independent sources that are reasonably at [its]
disposal.” 19 U.S.C. § 1677e(c)(1). “Corroborate means that the [Commerce] will satisfy [itself]
Court No. 16-00206 Page 35
that the secondary information to be used has probative value.” SAA 29 at 870. “The statute does
not prescribe any methodology for corroborating secondary information . . . .” Mittal Steel Galati
S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007), appeal dismissed, 253
F. App’x 19 (2007). Commerce states that it “will, to the extent practicable, examine the reliability
and relevance of the information to be used.” IDM at 8. ह]GHPLU KDV SURIIHUHG QR DXWKRULW\
demonstrating -- and this court does not conclude -- that on its face Commerce’s methodology is
unreasonable or not in accordance with law.
To WKHH[WHQWWKDWह]GHPLU attacks Commerce’s findings regarding probative value for lack
of substantial evidence support on the record, the court is again unpersuaded. Substantively,
corroboration by Commerce requires satisfaction that the secondary information to be used, here
the AFA rate from the CWP&T 1986 proceeding, has probative value. SAA at 870. Commerce
demonstrates probative value by “demonstrating the rate is both reliable and relevant.” Ad Hoc
Shrimp Trade Action Comm. v. United States, 802 F.3d 1339, 1354 (Fed. Cir. 2015). Critically,
as noted, Commerce is charged with corroborating AFA rates selected from secondary information
“to the extent practicable,” and with “independent sources reasonably at [its] disposal.” 19 U.S.C.
§ 1677e(c)(1). No more is required. Commerce explained that its corroboration was
circumscribed by “the lack of certain record information concerning the programs under
investigation,” and, generally, the lack of “independent sources for data on company-specific
benefits resulting from countervailable subsidy programs.” IDM at 8. Commerce, empowered to
craft methodology to execute its statutory mandate, thus confronted these limitations by reviewing
information concerning Turkish subsidy programs in other cases. Id. Under those circumstances,
Commerce determined that the CWP&T 1986 rate was relevant because it was similar, in the sense
29
Regarding the SAA, see supra p. 9 & n.8.
Court No. 16-00206 Page 36
of 19 U.S.C. § 1677e(d)(1)(A)(i), to the EFPT program at issue. Id. Commerce’s interpretation
of the term “similar” is permissible and entitled to deference. Accordingly, here its analysis of
relevance for the purposes of probative value and corroboration, performed “to the extent
practicable,” is supported by substantial evidence. Commerce determined that the CWP&T 1986
rate was reliable because it was “calculated in . . . previous Turkey CVD investigations or
administrative reviews.” IDM at 8. Under the limitations articulated by the agency, and under the
statutory standard, Commerce’s statement regarding reliability served the purposes of
corroboration “to the extent practicable.” 19 U.S.C. § 1677e(c)(1). हzdemir has not provided
binding authority that would impose on Commerce a corroboration standard stricter than that
identified in the statute and the legislative history. See § 1677e(c)(1); SAA at 869–70. For these
reasons, on the facts before the court, Commerce’s corroboration of its selected AFA rate, as well
as its explanation of the probative value thereof, IDM at 8, was reasonable, and supported by
substantial evidence.
Additionally, हzdemir’s commercial reality argument fails because it is contrary to plain
statutory language. ह]GHPLU¶VFDVHODZFLWDWLRQV, which interpret a prior version of the statute, do
not persuade this court to read the current iteration of the statute contrarily to its unambiguous text.
Commerce “is not required, for the purposes of subsection (c),” which covers corroboration of
secondary information, “or for any other purpose . . . to demonstrate that the countervailable
subsidy rate . . . [used] reflects an alleged commercial reality of the interested party.” 19 U.S.C. §
1677e(d)(3) (emphasis added). As the current statute disclaims any obligation to consider an
interested party’s alleged commercial reality “for any . . . purpose,” there exists no basis upon
which to conclude that such an analysis remains relevant with regard to industry-wide or program-
ZLGHFRQVLGHUDWLRQVDVह]GHPLUDUJXHV3O¶V%UDW; see Fresh Garlic Producers Ass'n v. United
Court No. 16-00206 Page 37
States, 39 CIT ___, ___, 121 F. Supp. 3d 1313, 1329 (2015) (comparing TPEA § 502(d)(3), 129
Stat. at 384, with Gallant Ocean, 602 F.3d at 1324). Commerce’s decision not to rely on an
interested party’s “alleged commercial reality,” § 1677e(d)(3), IDM at 5, when selecting an AFA
rate was thus made in accordance with law. 30
C. &RPPHUFHGLGQRW7UHDWह]GHPLULQDQ$UELWUDU\DQG&DSULFLRXV)DVKLRQYLV-à-vis the
Property Tax Exemption.
हzdemir also asserts that Commerce treated it differently from similarly situated
respondents so as to constitute arbitrary and capricious behavior. Pl.’s Br. at 33 (citing SKF, 263
F.3d at 1382ह]GHPLUSRLQWVWR&RPPHUFH¶VLQYHVWLJDWLRQRIUHLQIRUFLQJEDUIURP7XUNH\
Pl.’s Br. at 34 (citing Steel Concrete Reinforcing Bar From the Republic of Turkey: Final
Affirmative Countervailing Duty Determination Final Affirmative Critical Circumstances
Determination, 79 Fed. Reg. 54,963 (Dep’t Commerce Sept. 15, 2014) and accompanying IDM
(“Rebar from Turkey”)). In that proceeding, Turkish respondent Içdas reported that it had received
no benefits under the “lump-sum” program, which allowed respondents to deduct 0.5 percent of
their foreign exchange income from taxable income for tax purposes, only for Commerce to
discover at verification that Içdas had received this benefit in the POI. Id. Commerce therefore
determined that Içdas had failed to cooperate, and applied AFA. Id. However, Commerce
explained that “[t]he Deductions for Taxable Income for Export Revenue program is well known
30
7RWKHH[WHQWह]GHPLUDUJXHVWKDW&RPPHUFH¶VGHWHUPLQDWLRQZDVQRWVXSSRUWHGE\VXEVWDQWLDO
evidence because the agency did not address an alleged commercial reality in any respect, the court
disagrees, and holds that Commerce’s determination was supported by substantial evidence. The
operative point is that under the statute, Commerce need not analyze, or make any findings
regarding, an alleged commercial reality. 19 U.S.C. § 1677e(d)(3)(B). As no record support, let
alone the support of substantial evidence on the record, is required to buttress Commerce’s
GHWHUPLQDWLRQDQ\DUJXPHQWEDVHGRQODFNRIUHFRUGVXSSRUWRQWKDWEDVLVPXVWIDLOह]GHPLUKDV
offered no precedent or binding authority holding otherwise.
Court No. 16-00206 Page 38
to the Department, having examined, verified, and countervailed it in numerous Turkey CVD
cases.” Id. Commerce calculated an AFA benefit of 0.10 percent. Id. ह]GHPLUDUJXHVWKDWKHUH
as in Rebar from Turkey, Commerce is familiar with the program at issue, having countervailed
the EFPT program on numerous occasions, and that the record contains all information required
to calculate the amount of the benefit. Pl.’s Br. at 34. 3HUह]GHPLUWKHGLIIHUHQFHKHUHLVWKDW
हzdemir reported the non-use of the program, and Commerce verified that non-use, while in Rebar
from Turkey, Commerce discovered the respondent’s affirmative use of the program at issue
during verification. Id. at 35. Altogether, ह]GHPLUDUJXHVWKDW “while Commerce filled the gap in
the record for Içdas based upon the maximum possible benefit and record information about Içdas,
Commerce here disregarded its institutional knowledge and record evidence, and instead sought
WKHKLJKHVWUDWHLWFRXOGILQGWRLPSRVHRQह]GHPLU´ Id.
The court does not find this argument persuasive. While Rebar from Turkey involved a
Turkish respondent and a subsidy program that was “well known to [Commerce],” insofar as it
KDGEHHQFRXQWHUYDLOHGQXPHURXVWLPHVEHIRUHKDQGह]GHPLUIDLOVWRHVWDEOLVKWKDW&RPPHUFH¶V
treatment of respondent Içdas constitutes a practice to which the agency must now be bound. That
the operative statutory provisions, to wit, § 1677e(b), (c), were modified, and, in the case of (d),
added, further defeats the contention that the two situations are sufficiently similar so as to bind
Commerce’s behavior in the latter investigation to that in the former. SKF, 263 F.3d at 1382.
Even if Rebar from Turkey could be considered a “similar situation” to the underlying proceeding
for the purposes of an arbitrariness analysis, the record does express “[]sufficient reasons” for
&RPPHUFH¶V$)$VHOHFWLRQDQGDSSOLFDWLRQWRह]GHPLUSKF, 263 F.3d at 1382. As described
supra, under the new statutory standard imposed by the TPEA amendments, Commerce’s AFA
Court No. 16-00206 Page 39
selection methodology, and ultimate selection, were supported by substantial evidence and made
in accordance with law.
II. Commerce’s Benchmark Calculation was Not Supported by Substantial Evidence
and in Accordance with Law.
As noted, also before the court is हzdemir’s contention that Commerce’s inclusion of two
particular land parcels -- namely, those located in Istanbul and Yalova Altinova (“Yalova”) -- in
the Land for LTAR benchmark, is unsupported by record evidence and contrary to law. Citing 19
U.S.C. § 1677 and 19 C.F.R. § 351.511, the Government argues that Commerce’s usage of its
“preferred benchmark: publicly available, market-determined prices from industrial land sales
between private parties in Turkey,” was supported by substantial evidence. Def.’s Br. at 21–22
(citing IDM at 15).
As set forth, supra pp.3–4, to determine whether a foreign government provided a subsidy,
Commerce must determine whether a government authority provides a specific financial
contribution to a person and a benefit is conferred. 19 U.S.C. § 1677(5)(B). In determining
whether a benefit is conferred, the statute provides that “a benefit shall normally be treated as
conferred where there is a benefit to the recipient, including . . . if such goods or services are
provided for less than adequate remuneration.” 19 U.S.C. § 1677(5)(E)(iv). The adequacy of
remuneration is determined in relation to prevailing market conditions in the country that is subject
to the investigation. “Prevailing market conditions include price, availability, marketability,
transportation, and other conditions of purchase or sale.” 19 U.S.C. § 1677(5)(E).
Consistent with the statute, Commerce’s regulations set forth the basis for identifying
appropriate market-determined benchmarks for measuring the adequacy of remuneration for
government-provided goods. 19 C.F.R. § 351.511. Where feasible, Commerce should “compar[e]
the government price to a market-determined price for the good . . . resulting from actual
Court No. 16-00206 Page 40
transactions in the country in question.” Id. § 351.511(a)(2)(i). When market-determined prices
are unavailable or unusable, Commerce will resort to comparison to a world market price; if a
world market price is also unavailable, Commerce may assess “whether the government price is
consistent with market principles.” Id. § 351.511(a)(2)(ii)–(iii).
When Commerce uses an actual transaction price or a world market price, it will “adjust
the comparison price to reflect the price that a firm actually paid or would pay if it imported that
product,” including “delivery charges and import duties.” 19 C.F.R. § 351.511(a)(2)(iv). “[T]his
practice ensures that the Department engages in a fair comparison between the government price
and the price that a company ‘would pay if it imported the product.’” United States Steel Corp. v.
United States, 33 CIT 1935, 1946 (2009) (quoting 19 C.F.R. § 351.511(a)(2)(iv)).
As noted, to calculate the land benchmark in the investigation here, Commerce used its
preferred benchmark: publicly available, market-determined prices from industrial land sales
between private parties in Turkey. IDM at 15. Specifically, Commerce used land parcels under
the category “Investment Land for Industrial Facilities,” a designation that corresponds to land
suitable for production of subject merchandise. Id. at 28. To derive an average price from all the
parcels, Commerce stated that it moderated any differences in the infrastructure levels of the land
parcels, and claims that it satisfied the comparability requirements of 19 C.F.R. § 351.511.
हzdemir argues that Commerce’s decision to include allegedly anomalous prices with the
benchmark for land valuation is unsupported by record evidence and not in accordance with law.
Pl.’s Br. at 35. “When confronted with a colorable claim that the data that Commerce is
considering is aberrational, Commerce must examine the data and provide a reasoned explanation
as to why the data it chooses is reliable and non-distortive.” Mittal Steel Galati S.A. v. United
States, 31 CIT 1121, 1135, 502 F. Supp. 2d 1295, 1308 (2007). Here, Commerce included a total
Court No. 16-00206 Page 41
of fourteen advertisements for sale of land parcels in Turkey in 2009 and 2010 (listed in descending
price order in the table, below), and used the simple average of 89.62 TL/m2 as the benchmark:
Benchmark Land Price Data
Price (TL/m2)
Indexed to 2008
L ti
Istanbul 512.17
Yalova Altinova 304.90
Gaziantep 67.09
Gaziantep 66.67
Gaziantep 59.09
Kirklarei 51.22
Kirklarei 42.35
Kirklarei 36.58
Kirklarei 36.58
Ankara 26.01
Tekirdag Corlu 23.47
Tekirdag Corlu 14.42
Tekirdag Corlu 11.29
Gaziantep 2.87
Simple Average TL/m2 Price 89.62
Özdemir argues that Commerce should not include parcels of land located in highly
developed provinces, such as Yalova and Istanbul, because these properties are highly priced and
anomalous vis-à-vis prices in areas outside of Istanbul and Yalova. Pl.’s Br. at 41.
Özdemir further argues that Commerce’s analysis of the types of properties being
compared is based entirely upon petitioners’ speculative statements. Pl.’s Br. at 42. Specifically,
Özdemir contends that “Commerce’s analysis is not based upon record evidence, however, but
rather on petitioner’s unsupported speculation about land values in Turkey.” Id. Özdemir takes
issue with Commerce’s reliance on petitioners’ arguments:
We agree with the petitioners that the mere fact that past or current
usage of the Istanbul and Yalova parcels was ‘agricultural’ does not
undermine comparability for benchmarking purposes. What
matters, as the petitioners correctly implied, is the usage for which
these parcels were being offered on the market for future use.
Specifically, these parcels were being offered for industrial
Court No. 16-00206 Page 42
development and, for that purpose, were classified as ‘investment
land for industrial facilities.’ This puts them in essentially the same
category in the land market as the other parcels in the benchmark,
and in deriving an average price from all the parcels, we thereby
moderate any differences in, e.g., the levels of infrastructure
development, maintaining a reasonable level of comparability that
satisfies the requirements of 19 C.F.R. § 351.511.
Pl.’s Br. at 38–39 (quoting IDM at 28).
7KH FRXUW LV SHUVXDGHG E\ ह]GHPLU¶V DUJXPHQWV WKDW, based on the facts in the record,
Commerce’s creation of the land benchmark is deficient. Commerce must consider relevant record
evidence in determining the comparability of land parcels it uses in creating a reasonable
benchmark that lacks distortive pricing. See 19 C.F.R. § 351.511(a)(2)(i) (“In choosing such
transactions or sales, [Commerce] will consider product similarity; quantities sold, imported, or
auctioned; and other factors affecting comparability.”).
The land price data for Istanbul (512.17) and Yalova (304.90) deviate substantially from
the land price data associated with the other parcels. As Özdemir points out, the Istanbul and
Yalova property values are 571 percent and 340 percent, respectively, of the average of all fourteen
parcels; they are 763 percent and 454 percent, respectively, of the next-highest-priced parcel
(67.06 TL/m2); and, when the highest two and lowest three parcel prices are removed, the Istanbul
and Yalova parcels are 1127 percent and 671 percent of the 45.45 TL/m2 average of the remaining
nine parcels. 7KHFRXUWLVVDWLVILHGWKDWह]GHPLU¶VDUJXPHQWWKXV constitutes at least a “colorable
claim that the data that Commerce is considering is aberrational.” Mittal Steel Galati S.A., 502 F.
Supp. 2d at 1308. Regarding the “publicly available information concerning industrial land prices
in Turkey [used] for purposes of calculating a comparable commercial benchmark price for land
available in Turkey,” Commerce summarily states that it
found that the selected land prices, including those of the Yalova and Istanbul parcels,
Court No. 16-00206 Page 43
“serve as comparable commercial benchmarks under 19 CFR 351.511(a)(2)(i).” IDM at 15.
Commerce also states that it effectively moderates any differences in the land parcels by
“deriving an average price from all the parcels.” IDM at 28. These concise statements do not
constitute a reasoned explanation as to why the data Commerce chose is reliable and non-
distortive, given the disparities noted supra, and in light of a colorable claim that the data are
aberrational. See Mittal Steel, 502 F. Supp. 2d at 1308. Nor does Commerce explain how precisely
a simple average of prices offsets the potentially distortive data which contributes to the derived
average.
7KH FRXUW WXUQV WR ह]GHPLU¶V DUJXPHQWV UHJDUGLQJ WKH SURSHUW\ ORFDWLRQ DQG OHYHO RI
development underlying the Yalova and Istanbul parcels. “As Commerce’s own benchmarking
method indicates, using ‘comparables’ of proximate parcels (e.g., in location, terrain, size,
features) is an accepted proposition for purposes of land and realty valuation.” Toscelik Profil Ve
Sac Endustrisi A.S. v. United States, 38 CIT ___, Slip Op. 14-126 at 14 n.14 (Oct. 29. 2014) (Not
Reported in F. Supp. 3d). It may be that land located in highly developed areas is worth several
times more than land in lesser developed areas in Turkey. See table supra. In light of the presence
of a colorable claim that the relevant price data is aberrational, Commerce’s summary statements
in the IDM do not carry the support of substantial evidence in the resolution of the question. See
IDM at 27. On remand, Commerce should consider, pursuant 19 C.F.R. § 351.511(a)(2), the
relevance of the locations, and the level of land development, of the Yalova and Istanbul parcels.
The court finally addresses ह]GHPLU¶VDUJXPHQWWKDW&RPPHUFHXQGXO\emphasizes future
use of the relevant properties, at the expense of their current and past uses. A reasonable person
interested in participating in a real estate transaction could believe that actual current or past use
are equally important as future use to consider in assessing the price of land offered in online
Court No. 16-00206 Page 44
advertisements. Conf. Joint App. Memo. To File, P.R. 200. Despite agreeing with petitioners’
implication, Commerce does not explain in the IDM why potential future use factors more
prominently in its analysis under 19 U.S.C. § 1677(5)(E)(iv) and 19 C.F.R. § 351.511(a)(2) than
past or current uses. IDM at 28. Commerce must explain its focus on a land parcel’s future use,
at least as advertised in regard to the relevant parcel. See Changzhou Wujin, 701 F.3d at 1377
(“The grounds upon which an administrative order must be judged are those upon which the record
discloses that its action was based.” (quoting SEC v. Chenery Corp., 318 U.S. 80, 87)).
The court does not take issue with the Government’s characterization that benchmark data
“need not – and rarely does – perfectly match the benefit it is used to measure.” Def. Br. at 23.
However, as to HDFKRIWKHIDFWXDOPDWWHUVKLJKOLJKWHGE\ह]GHPLU, and based on the record before
the court, Commerce has failed, in constructing and applying its land benchmark, to articulate a
rational connection between the facts it found and the choices it made. See Motor Vehicle Mfr.
Ass’n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington
Truck Lines Inc. v. United States, 371 U.S. 156, 168 (1962)). “[I]t is the agency's responsibility,
not this Court's, to explain its decision,” and Commerce must do so based on the record before it.
Id. at 57. Commerce’s determination therefore lacks the support of substantial evidence on the
record. Maverick Tube, 857 F.3d at 1359.
The court thus remands this case for reconsideration and further explanation consistent
with the court’s opinion. If Commerce chooses to maintain its current position on remand, it must
explain why, specifically, the prices associated with the land sale data for the Yalova and Istanbul
provinces are not aberrational, and how its average price derivation successfully moderates the
land parcel price disparities. Commerce should consider the record as a whole in reaching its
conclusions regarding the comparability of those land parcels. See CS Wind, 832 F.3d at 1373
Court No. 16-00206 Page 45
(“The substantiality of evidence must take into account whatever in the record fairly detracts from
its weight.”); 19 C.F.R. § 351.511. Commerce must also explain whether the Yalova and Istanbul
parcels are located in a highly developed area of Turkey, as compared to other parts of Turkey,
and how Commerce’s findings with respect to that issue affect its overall analysis; and why future
usage of the relevant land parcels, as purported in online advertisements, is “what matters” under
19 U.S.C. § 1677(E)(iv) and 19 C.F.R. § 351.511. IDM at 28.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that हzdemir’s motion for judgment on the agency record is denied in part;
and it is further
ORDERED that Commerce’s determination regarding the Land for LTAR issue is
remanded for further consideration consistent with this opinion; and it is further
ORDERED that Commerce’s Final Determination is sustained in all other respects; and it
is further
ORDERED that Commerce shall file its remand determination with the court within 60
days of this date; and it is further
ORDERED that the parties shall have 30 days thereafter to file comments; and it is further
ORDERED that the parties shall have 15 days thereafter to file replies to comments on the
remand determination.
/s/ Gary S. Katzmann
Gary S. Katzmann, Judge
Dated:2FWREHU
New York, New York