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

• Citation: 273 F.Supp.3d 1225
• Decision Date: 16 October 2017
• Docket Number: Slip Op. 17–142,Court No. 16–00206
• Parties: ÖZDEMIR BORU SAN. VE TIC. LTD. STI., Plaintiff, v. UNITED STATES, Defendant, and Atlas Tube and Independence Tube Corporation, Defendant–Intervenors.
• Court: U.S. Court of International Trade

273 F.Supp.3d 1225

ÖZDEMIR BORU SAN. VE TIC. LTD. STI., Plaintiff,

v.UNITED STATES, Defendant,andAtlas Tube and Independence Tube Corporation, Defendant–Intervenors.

Slip Op. 17–142

Court No. 16–00206

United States Court of International Trade.

October 16, 2017

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 Krvstyniak, 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. Readier, 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.

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 Royer B. Schagrin.

OPINION

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, Özdemir Boru San. ve Tic. Ltd. Sti ("Özdemir"), 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 for the Final Determination, July 14, 2016, P.R. 241 ("IDM"). Summons, ECF No. 1; Complaint ¶ 1, ECF No. 5 ("Compl."). Specifically, Özdemir argues that Commerce's application of adverse facts available ("AFA") to Özdemir 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. Özdemir 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") oppose Özdemir's motion.

For the reasons set forth hereafter, the court finds that the Final Determination is supported by substantial evidence² 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 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 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 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 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),...