ICDAS Celik Enerji Tersane ve Ulasim Sanayi, A.S. v. United States

Slip Op 17-152
UNITED STATES COURT OF INTERNATIONAL TRADE
ICDAS CELIK ENERJI TERSANE VE
ULASIM SANAYI, A.S.,
Plaintiff,
v.
UNITED STATES,
Before: Leo M. Gordon, Judge
Defendant,
Consol. Court No. 14-00267
and
REBAR TRADE ACTION COALITION, et
al., and HABAS SINAI VE TIBBI GAZLAR
ISTIHSAL ENDUSTRISI, A.S.,
Defendant-Intervenors.
OPINION
[Final Determination sustained.]
Dated: November 17, 2017
Matthew M. Nolan, Diana D. Quaia, and Nancy A. Noonan, Arent Fox LLP of
Washington, DC for Plaintiff Icdas Celik Enerji Tersane ve Ulasim Sanayi, A.S.
Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice of Washington, DC for Defendant, United States. With him on
the briefs were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the briefs was Scott
McBride, Assistant Chief Counsel, U.S. Department of Commerce, Office of the Chief Counsel
for Trade Enforcement and Compliance of Washington, DC.
Alan H. Price, John R. Shane, and Maureen E. Thorson, Wiley Rein LLP of
Washington, DC for Defendant-Intervenors Rebar Trade Action Coalition, Nucor
Corporation, Gerdau Ameristeel U.S. Inc., Commercial Metals Company, and Byer Steel
Corporation.
Consol. Court No. 14-00267 Page 2
Gordon, Judge: This action involves the U.S. Department of Commerce
(“Commerce”) final determination in the countervailing duty (“CVD”) investigation of steel
concrete reinforcing bar from the Republic of Turkey. See Steel Reinforcing Bar From the
Republic of Turkey, 79 Fed. Reg. 54,963 (Dep’t of Commerce Sept. 15, 2014) (final affirm.
& crit. circum. determ.) (“Final Determination”); see also Issues & Decision Memorandum
for the Final Affirmative Countervailing Duty Determination and Final Affirmative Critical
Circumstances Determination in the Countervailing Duty Investigation of Steel Concrete
Reinforcing Bar from the Republic of Turkey, C-489-819 (Dep’t of Commerce
Sept. 8, 2014), available at http://enforcement.trade.gov/frn/summary/turkey/2014-
21989-1.pdf (last visited this date) (“Decision Memorandum”); see also Steel Concrete
Reinforcing Bar from the Republic of Turkey, 79 Fed. Reg. 65,926 (Dep’t of Commerce
Nov. 6, 2014) (final countervailing duty order) (“Order”). Before the court are the motions
for judgment on the agency record of Plaintiff Icdas Celik Enerji Tersane ve Ulasim, A.S.
(“Icdas”) and Defendant-Intervenor Rebar Trade Action Coalition ("RTAC"), and its
individual members, Nucor Corporation, Gerdau Ameristeel U.S. Inc., Commercial Metals
Company, and Byer Steel Corporation. The court has jurisdiction pursuant to Section
516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i)
(2012)1, and 28 U.S.C. § 1581(c) (2012).
This opinion addresses Icdas' challenge to the Final Determination. See Pl.’s
R. 56.2 Mot. for J. on the Agency R., ECF No. 52 (“Icdas’ Br.”); see also Def.’s Resp. in
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant portions of
Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 14-00267 Page 3
Opp’n to Pl.’s R. 56.2 Mots. for J. on the Agency R., ECF No. 69 (“Def.’s Resp.”); RTAC’s
Resp. to Pl.’s R. 56.2 Mot. for J. on the Agency R., ECF No. 70 (“RTAC’s Resp.”); Pl.’s
Reply Br., ECF No. 79 (“Icdas’ Reply”).
Specifically, Icdas challenges (1) Commerce’s selection of benchmark prices used
to calculate countervailable benefits that respondents obtained from lignite coal
purchases and (2) Commerce’s ex parte meeting with petitioners late in the proceeding
and acceptance of untimely information. For the reasons set forth below, the court
sustains the Final Determination.
I. Standard of Review
The court sustains Commerce’s “determinations, findings, or conclusions” unless
they are “unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole. Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial
evidence has been described as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,
407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Substantial evidence has also been described as “something less than
the weight of the evidence, and the possibility of drawing two inconsistent conclusions
from the evidence does not prevent an administrative agency’s finding from being
supported by substantial evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
Consol. Court No. 14-00267 Page 4
(1966). Fundamentally, though, “substantial evidence” is best understood as a word
formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and
Practice § 9.24[1] (3d ed. 2017). Therefore, when addressing a substantial evidence issue
raised by a party, the court analyzes whether the challenged agency action “was
reasonable given the circumstances presented by the whole record.” 8A West’s Fed.
Forms, National Courts § 3.6 (5th ed. 2017).
II. Discussion
A. Lignite Benchmark
1. Rejection of Tier One Steam Coal Price Benchmark Data
Icdas challenges Commerce’s determination of the lignite price benchmark on two
separate grounds. First, Icdas alleges that Commerce’s failure to use the available
market-determined prices of steam-coal imports into Turkey as “tier one” data violates the
Congressional statutory directive in 19 U.S.C. § 1677(5)(E) as well as Commerce’s own
express regulatory preference for the use of such tier one data to establish benchmarks
as set forth in 19 C.F.R. § 351.511(a)(2). Second, Icdas argues that Commerce’s use of
the “tier two” GTIS world market lignite pricing data to compute a benchmark “includes
prices that are not reasonably available to Icdas, are not commercially realistic, and
resulted in a highly distorted margin.” Icdas’ Br. 26. This section addresses Icdas’ first
contention regarding Commerce’s failure to use tier one steam coal import pricing data,
while Section II.A.2, infra, addresses Icdas’ challenge to Commerce’s use of the tier two
GTIS lignite pricing data.
Consol. Court No. 14-00267 Page 5
All parties agree that Commerce has established an express three-tiered hierarchy
for the determination of market-price benchmarks in evaluating the adequacy of
remuneration for alleged subsidy programs. “Under 19 CFR 351.511(a)(2), [Commerce]
sets forth the basis for identifying appropriate market-determined benchmarks for
measuring the adequacy of remuneration for government provided goods or services.
These potential benchmarks are listed in hierarchical order by preference: (1) market
prices from actual transactions within the country under investigation (e.g., actual sales,
actual imports or competitively run government auctions) (tier one); (2) world market
prices that would be available to purchasers in the country under investigation (tier two);
or (3) an assessment of whether the government price is consistent with market principles
(tier three). As provided in the regulations, the preferred benchmark in the hierarchy is an
observed market price from actual transactions within the country under investigation.”
Decision Memorandum at 14. Accordingly, under this hierarchy, Commerce will first look
to see if there is evidence of a “market-determined price for the good or service resulting
from actual transactions in the country in question.” 19 C.F.R. § 351.511(a)(2).
Icdas relies heavily on this express regulatory preference for market-determined
pricing, but attempts to discard the clear limitation that such a preference only applies for
market-determined pricing relating to the “good” in question. Specifically, Icdas asserts
that Commerce was obligated to use the tier one pricing data resulting from actual import
transactions of hard steam coal; however, Commerce explained in its decision
memorandum that it had found that hard steam coal was not supplied by the Government
of Turkey (“GOT”), but instead only lignite coal was provided to Icdas by a Turkish state-
Consol. Court No. 14-00267 Page 6
owned entity. For this reason, among others, Commerce determined that it would be
inappropriate to use steam coal prices to derive a benchmark for lignite. Decision
Memorandum at 14-16.
Icdas argues that all of the parties, at some point during the investigation, assumed
that steam coal and lignite coal were interchangeable in their use in power generation
and for purposes of Commerce’s investigation. Icdas’ Br. 20-22. Icdas also highlights that
in its preliminary determination, Commerce expressly found lignite and hard steam coal
to be interchangeable for purposes of the investigation’s analysis. Id. at 22 (citing
Commerce’s preliminary determination memo at 18). With this background, Icdas asserts
that “[n]o information on the record shows that any of these findings changed between
the Preliminary Determination and the Final Determination . . . . Commerce provided no
support in its apparent conclusion that lignite coal is different than hard steam coal for
purposes of power plant consumption.” Id. at 22-23.
More specifically, Icdas contends that Commerce relied upon mere “speculation”
in determining that steam coal is not interchangeable with lignite coal for purposes of the
investigation. Id. at 23. RTAC, in response, notes that Icdas acknowledged in its own
questionnaire responses several significant differences between lignite and hard steam
coal including the significant differences in caloric values of the types of coal (which in
turn affect their pricing), as well as the fact that hard steam coal ashes can be resold to
cement producers while lignite coal ash must be disposed of as waste. RTAC’s Resp. 15
(citing Icdas' CVD Questionnaire Response at 23-24). In addition, Commerce explained
that it was only after its preliminary determination during verification that it became aware
Consol. Court No. 14-00267 Page 7
of the essential differences between the types of coal (including the differing physical
characteristics and uses of hard steam coal, lignite coal, coking coal, etc.), as well as the
fact that Turkish Coal Enterprises (“TKI”) “mines only lignite” and that Icdas only
purchased lignite domestically, while it imported hard steam coal. Decision Memorandum
at 13-14. Commerce also noted that the administrative record indicated significant
additional differences between steam coal and lignite, such as the fact that “lignite is
mined close to the surface and is less expensive to extract, whereas steam coal is mined
deep in the ground,” and “generating energy with lignite requires a larger volume of coal
than with hard coal, importing lignite requires greater freight and transportation expenses,
so imports of lignite (in comparison to hard coal imports) into Turkey are negligible.” Def.’s
Resp. 38 (citing GOT Verification Report).
Icdas argues that Commerce improperly narrowed the scope of the petition and
the investigation without good cause. Icdas’ Br. 20-21. Specifically, Icdas argues that it
“makes little sense for [Commerce] to exclude ‘steam coal’ from any potential benchmarks
when, in fact, steam coal includes both lignite and hard steam coal.” Id. at 21. Here, Icdas
misses the very point of Commerce’s verification and fact-finding in the course of its
investigation. Commerce initially analyzed a broad petition that posited subsidies in the
“Steam Coal” market, but upon gaining a better understanding of the factual
circumstances during the course of its investigation, Commerce found that only the
narrower lignite coal market was at issue because Icdas’ only domestic coal purchases
were of lignite while it imported hard steam coal. Contrary to Icdas’ position, in light of this
factual development, it would have made “little sense” for Commerce to continue to
Consol. Court No. 14-00267 Page 8
analyze the broader market for “steam coal” when the only potential countervailable
subsidies respondents were receiving were specific to lignite coal. Commerce acted
reasonably when focusing its investigation to the “Provision of Lignite for LTAR.”2
Decision Memorandum at 14.
Icdas’ insistence that Commerce erred by rejecting the pricing data of steam coal
imports into Turkey entirely relies upon the assumption that Commerce could not and did
not reasonably determine on the record that steam coal and lignite coal were not
interchangeable for purposes of the investigation. Commerce, however, with the benefit
of further investigation after its preliminary determination, determined that lignite coal and
steam coal were not interchangeable and that lignite coal was the “only government-
provided good” being provided for LTAR, and reasonably found that steam coal prices
from import transactions into Turkey were not appropriate sources for a benchmark for
the investigation. Decision Memorandum at 15-16. Notably, Icdas did not dispute that the
lignite coal market in Turkey was distorted, implicitly accepting Commerce’s
determination that domestic lignite prices from actual transactions could not serve as a
tier one source of data for calculating a benchmark. See Icdas’ Br. 17-25; Def.’s Resp.
40. Accordingly, Commerce reasonably concluded that it would proceed to evaluate tier
two pricing data for world market transactions for lignite coal.
On this administrative record the court believes that a reasonable mind could reach
Commerce’s determination that steam coal is not interchangeable with lignite coal as well
2
“LTAR” stands for less than adequate remuneration.
Consol. Court No. 14-00267 Page 9
as its determination that there were no appropriate tier one data sets for evaluating the
adequacy of remuneration for transactions in the lignite coal market.
2. Use of GTIS Data
On January 22, 2014, RTAC included Global Trade Information Services (“GTIS’)
pricing data for 2012 exports of lignite from various countries as part of its submission of
factual information. See Non-Confidential App. to Pl. Icdas’ Br. in Support of its R. 56.2
Mot. for J. on the Agency R. 50-53, 56-68 (RTAC’s Submission of Factual Information
Jan. 22, 2014), ECF. No. 57 (“Icdas’ Br. App.”). On July 29, 2014, RTAC submitted its
administrative case brief in which it argued that Commerce should depart from its
preliminary determination and find that lignite coal is distinguishable from hard steam
coal, and that Commerce accordingly should use lignite coal world market prices to
calculate the benefit received by Icdas’ purchases of lignite coal from TKI. See Icdas’ Br.
App. 249-260 (Case Brief of the Rebar Trade Commission July 29, 2014). On July 31,
2014, Icdas submitted a rebuttal brief arguing that Commerce properly used imported
hard steam coal prices to calculate the lignite benchmark in its preliminary determination.
See Icdas’ Br. App. 265-271 (Revised Rebuttal Brief of Icdas July 31, 2014). On
September 9, 2014, Commerce issued the Final Determination and corresponding
Decision Memorandum in which it explained its decision to distinguish lignite coal from
hard steam coal and its refusal to use hard steam coal prices in calculating the benchmark
for Icdas’ benefit from the lignite purchases from TKI. See Decision Memorandum at 13-
17. On September 15, 2014, Icdas submitted a ministerial errors allegation to Commerce,
in which it attempted to argue that Commerce’s selection and reliance upon the GTIS
Consol. Court No. 14-00267 Page 10
lignite data was an “unintentional error” due to the GTIS’s data’s alleged inaccurate and
incomplete nature. See Icdas’ Br. App. 319-325 (Icdas’ Ministerial Errors Allegation Letter
Sept. 15, 2014). Commerce rejected Icdas’ ministerial errors allegation, explaining that
the selection and use of the GTIS data was a deliberate choice, and further noting that
“[i]f Icdas had believed that the GTIS data on the record was incomplete, it had the
opportunity during the investigation to add additional GTIS information to the record, and
did not do so.” Icdas’ Br. App. 338 (Memorandum from K. Johnson to M. Skinner, re:
Allegations of Ministerial Errors in the Final Determination Oct. 1, 2014).
Using arguments substantially similar to those in its ministerial errors allegation,
Icdas asserts in its briefing to the court that Commerce’s use of the GTIS lignite pricing
data set to establish the tier two benchmark was improper, contending that such prices
are “not reasonably available to Icdas, are not commercially realistic, and resulted in a
highly distorted margin.” Icdas’ Br. 26. Commerce does not dispute Icdas’ arguments on
the merits, but instead contends that these arguments have been waived as Icdas failed
to properly raise them before the agency during the administrative proceeding, and has
thus failed to exhaust its administrative remedies. Def.’s Resp. 44-47.
The court agrees that Icdas failed to exhaust its administrative remedies. See
28 U.S.C. § 2637(d); see also Icdas’ Br. App. 265-271; 19 C.F.R. § 351.309(c)(2)
(case briefs should contain all relevant arguments); Boomerang Tube LLC v. United
States, 856 F.3d 908 (Fed. Cir. 2017); Corus Staal BV v. United States, 502 F.3d 1370,
1379 (Fed. Cir. 2007).
Consol. Court No. 14-00267 Page 11
Commerce’s use of the GTIS data to determine the lignite benchmark was
squarely in play. Specifically, RTAC argued in its administrative case brief that Commerce
should use the GTIS lignite data in calculating the lignite benchmark. See Icdas’ Br. App.
260 & n.40 (highlighting RTAC’s submission of the GTIS lignite data in early 2014). Icdas,
in its rebuttal brief, failed to directly address this argument or challenge the GTIS data
specifically proposed for use by RTAC. See Icdas’ Br. App. 266-272. Icdas had the
opportunity to challenge the adequacy of the GTIS data before Commerce but chose not
to do so, attempting to correct its omission through ministerial error comments submitted
after the final determination. See Icdas’ Br. App. 319-325 (providing substantially the
same arguments as to the impropriety of using the GTIS lignite data due to its inaccuracy
and incompleteness as Icdas has raised before this court). Contrary to Icdas’ arguments
in its reply brief, Icdas’ Reply Br. at 4-5, nothing limited its ability to respond in toto to the
usefulness of the GTIS lignite data. And in response to the ministerial error comments,
RTAC was quick to point out that Icdas did not challenge the substance of the GTIS data
until it was too late. Icdas’ Br. App. 329 (RTAC’s Response to Icdas’ Ministerial Errors
Allegation Letter) (“Icdas is trying to argue now what it failed to argue in its case or rebuttal
briefs. Icdas could have made an alternative argument on the GTIS data in the event the
Department relied on it for the final determination. The information was on the record
since Petitioner's January 22, 2014, factual information submission, but Icdas failed to
criticize it until after the final determination. Instead of raising this issue at the proper time,
Icdas argued that the Department should use another source to value lignite and ignored
the validity of the GTIS data altogether.”). It is all too clear that Icdas attempted to correct
Consol. Court No. 14-00267 Page 12
its omissions by including them in a ministerial errors allegation letter, and again tries to
raise those same arguments before the court after failing to properly present them to
Commerce.
The facts here are similar to Boomerang Tube LLC v. United States, 856 F.3d 908(Fed. Cir. 2017), in which the Federal Circuit concluded that it was appropriate to require
exhaustion of administrative remedies for interested parties attempting to raise new
arguments that that they failed to raise before Commerce in their rebuttal briefs. Like the
parties in Boomerang, Icdas here committed a similar omission and failed to raise
arguments about Commerce’s use of the GTIS data to determine the lignite benchmark
that it could and should have raised in its rebuttal brief.
Icdas tries to avoid this result by arguing that it somehow provided skeletal “notice”
to Commerce of its arguments. Icdas’ Reply 3-5 (citing Trust Chem. Co. v. United States,
35 CIT ___, 791 F. Supp. 2d 1257, 1268 n.27 (2011) (“The determinative question is
whether Commerce was put on notice of the issue, not whether Plaintiff’s exact wording
below is used in the subsequent litigation.”)). This misunderstands the requirement of
exhaustion of administrative remedies and its twin purposes of protecting administrative
authority (by requiring arguments to be presented to the agency in the first instance so
that agency may find facts, apply its expertise, and interpret statutes and regulations that
it administers) and promoting judicial economy (by avoiding unnecessary remands for
agency to address arguments in first instance). Providing mere notice of an argument or
issue accomplishes neither purpose; notice is therefore not enough. As for the passing
observation in a footnote in Trust Chem. Co. that a “determinative question” for the
Consol. Court No. 14-00267 Page 13
exhaustion requirement is whether Commerce was simply “put on notice” of the issue,
this is not correct because “mere notice” fails to accomplish the twin purposes of the
exhaustion requirement, and therefore simply putting Commerce on notice cannot satisfy
the exhaustion requirement. Arguments must be presented in toto for this entire judicial
review process to work sensibly.
B. Ex Parte Meeting
Icdas challenges Commerce’s decision to hold an ex parte meeting with RTAC late
in the proceeding at which Commerce accepted untimely information (two photographs)
provided by RTAC. Icdas’ Br. at 32-34. Defendant responds that the procedural waiver
for RTAC’s photographs did not cause prejudice to Icdas because they did not depict
anything material to Commerce's decision, and that Icdas had a full opportunity to convey
its views on the meeting and photos, and Icdas did so, before Commerce issued the
Final Determination. Def.’s Resp. 50-51. Icdas for its part cites a “heavy burden” to prevail
on a claim of procedural unfairness. See Icdas’ Br. 34. Problematically for Icdas
(and despite the bad optics of an ex parte meeting held so late in the proceeding),
Commerce is expressly authorized by statute to hold ex parte meetings. See 19 U.S.C.
§ 1677f(a)(3). The statute requires Commerce to maintain a record of any ex parte
meetings and disclose any information that is submitted during the meeting, 19 U.S.C.
§ 1677f(a)(3), (4), which Commerce did here. See Icdas’ Br. App. 282-86 (Memorandum
from M. Skinner to The File, re: Ex Parte Meeting with Members of Domestic Industry and
Counsel to Petitioners Aug. 19, 2014). As Icdas has failed to demonstrate that the
Consol. Court No. 14-00267 Page 14
untimely photographs factored into the Final Determination, the court sustains Commerce
on this issue.
III. Conclusion
For the foregoing reasons, the court sustains the Final Determination for each of
Icdas’ issues.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: November 17, 2017
New York, New York