Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. United States

• Decision Date: 22 April 2015
• Docket Number: Court No. 14–00214.,Slip Op. 15–36.
• Parties: BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S. and Borusan Istikbal Ticaret, Plaintiff, v. UNITED STATES, Defendant, and U.S. Steel Corporation, Boomerang Tube LLC, Energex Tube, Tejas Tubular Products, TMK IPSCO, Vallourec Star, L.P., Welded Tube USA Inc., and Maverick Tube Corporation, Defendant–Intervenors.
• Court: U.S. Court of International Trade

61 F.Supp.3d 1306

BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S. and Borusan Istikbal Ticaret, Plaintiff

v.UNITED STATES, DefendantandU.S. Steel Corporation, Boomerang Tube LLC, Energex Tube, Tejas Tubular Products, TMK IPSCO, Vallourec Star, L.P., Welded Tube USA Inc., and Maverick Tube Corporation, Defendant–Intervenors.

Slip Op. 15–36.

Court No. 14–00214.

United States Court of International Trade.

April 22, 2015.

Donald B. Cameron, Brady W. Mills, Julie C. Mendoza, Mary S. Hodgins, Rudi W. Planert, and Sarah S. Sprinkle, Morris Manning & Martin, LLP, of Washington, DC, for the plaintiffs.

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the defendant. With her on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of Counsel on the brief was Scott D. McBride, Senior Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Alan H. Price, Adam M. Teslik, Lara El–Sabawi, and Robert E. DeFrancesco, III, Wiley Rein, LLP, of Washington, DC, for the defendant-intervenor Maverick Tube Corporation.

Jeffrey D. Gerrish, Nathaniel B. Bolin, and Robert E. Lighthizer, Skadden Arps Slate Meagher & Flom, LLP, of Washington, DC, for the defendant-intervenor United States Steel Corporation.

Roger B. Schagrin, John W. Bohn, and Paul W. Jameson, Shagrin Associates, of Washington, DC, for the defendant-intervenors Boomerang Tube LLC, Energex Tube, Tejas Tubular Products, TMK IPSCO, Vallourec Star, L.P., and Welded Tube USA Inc.

OPINION AND ORDER

MUSGRAVE, Senior Judge:

Before the court is a challenge to Certain Oil Country Tubular Goods From the Republic of Turkey, 79 Fed.Reg. 41964 (July 18, 2014), PDoc 369, and accompanying issues and decision memorandum (July 10, 2014) (“IDM ”), PDoc 363, (collectively “Final Determination ”), a final affirmative countervailing duty (“CVD”) investigation determination conducted by the International Trade Administration, U.S. Department of Commerce (“Commerce”). The period of investigation (“POI”) is January 1, 2012, through December 31, 2012.

The plaintiffs¹ challenge these determinations: (1) that Erdemir and its subsidiary Isdemir,² suppliers to Borusan of the hot rolled steel (“HRS”) input, are statutory “authorities”; (2) that in measuring the “benefit” Borusan received under the statute, the level of government involvement in the Turkish HRS market is so significant that the price of HRS sold in Turkey is significantly distorted, thereby warranting rejection of Borusan's “tier-one” purchases of HRS from domestic and import suppliers; (3) the use of a “tier-two” monthly weighted-average world market prices for HRS derived from the Global Trade Atlas (“GTA”) maintained by Global Trade Information Services as benchmarks to measure the benefit; (4) that HRS was provided for less than adequate remuneration (“LTAR”) to a “limited” number of industries as a matter of fact and was therefore a “specific” subsidy; (5) the application of facts available with an adverse inference for failing to provide information about HRS purchases with respect to two of Borusan's pipe manufacturing facilities in Turkey in two different questionnaires. For the following reasons, the matter will be remanded for further proceedings.

Background

I. The Petition

On July 2, 2013, certain domestic producers (“petitioners”) of oil country tubular goods (“OCTGs”) filed a petition with Commerce alleging that certain foreign governments including the Republic of Turkey were providing countervailable subsidies to producers and exporters of OCTGs in their respective countries.

The petition explained that HRS is a significant input into the production of OCTGs, and claimed that the Turkish government distorts HRS pricing through several means, including that government's National Restructuring Plan, which by its terms allows the Turkish government to provide subsidies to its HRS industry to increase the competitiveness of that sector and to allow Turkish steel producers using government subsidies to increase production quality, developing product range to high value added products, reducing production costs and improving viability and competitiveness of the sector. PDoc 2 at Vol. X, pp. 4–5. The petition alleged that the result of the Turkish government's involvement in the HRS market was a reduction across the board within Turkey of HRS prices. Id. at 6–7.

The petition also alleged that Erdemir and its subsidiary Isdemir are two of Turkey's largest HRS producers and supply HRS to Borusan of HRS and are owned by Ordu Yardimlasma Kurum (“OYAK”), Turkey's military pension fund, and collectively account for at least 54 percent of the Turkish HRS market. Id. at 9. The petition alleged that because the Government of Turkey effectively owns Erdemir and Isdemir, and because that government has been completely restructuring the HRS industry in Turkey, it was likely that Turkish OCTG producers have purchased HRS for LTAR for these companies. Id. at 3, 8–9.

Commerce subsequently initiated a countervailing duty investigation of OCTGs from Turkey. Certain Oil Country Tubular Goods from Indian and Turkey, 78 Fed.Reg. 45502 (July 29, 2013) (initiation). Commerce selected Borusan as one of the mandatory respondents, PDoc 61 at 3, and issued questionnaires to both the Turkish government and Borusan requesting specific information on the provision of HRS in Turkey.

II. Questionnaire Responses

On October 31, 2013, Borusan provided its initial questionnaire response. See PDocs 72–75, CDocs 27–38. Borusan reported that it purchased a significant amount of HRS from Erdemir and Isdemir during the period of investigation, and that, for purposes for use as a benchmark, it was submitting its domestic and imported HRS purchases from private suppliers in each month of the POI. PDoc 75 at 15.

Commerce requested that Borusan report all of its purchases of HRS during the POI and explained that Borusan should report this purchase information regardless of whether it used the input to produce the subject merchandise during the POI. Id. at 10–11. In response, Borusan explained that it had production facilities at three locations: Gemlik, Halkali, and Izmit. Id. Borusan stated that only the Gemlik mill produced the subject OCTGs, so it reported HRS purchases for only that mill, as these are the only purchases that could have benefitted from subsidies attributable to the production or sale of the OCTG subject merchandise. Id. at 11. Borusan claimed that collecting HRS purchase data for the other mills could impose great burdens on it for no purpose. Id. at 11, n. 2.

The Turkish government also submitted its response to Commerce's questionnaire, explaining that there are five producers of HRS in Turkey, but that it does not maintain any ownership or management interest in any of those companies, including Isdemir and Erdemir, either directly or through other governmental entities. PDoc 179 at 5. It claimed that Erdemir and Isdemir are both private actors who operate their businesses based on normal commercial considerations and in the best interests of their shareholders. Id. at 9. Further, the Turkish government claimed it does not hold any shares in Erdemir and Isdemir and that there is no government proclamation, regulation, decree, opinion, law or policy defining any government objectives with regard to Erdemir and Isdemir. Id. According to the Turkish government, the fact that the military pension fund OYAK is a majority shareholder in Erdemir and Isdemir does not render them government authorities. Id.

In response to Commerce's request on the industries in Turkey that purchase HRS directly, the Turkish government stated that it did not have such data, but that worldwide, HRS users are construction (50%), automobile (32%), machine (7%), electricity (2%) white appliances (2%), agriculture (2%), petroleum/gas (3%) and packaging, but that no Turkish industry-specific data was available. Id. at 7.

On November 21, 2013, Commerce issued a supplemental questionnaire response to Borusan, which responded on December 5, 2013. PDoc 218 at 8–12. Commerce noted that Borusan had not provided Borusan's purchases of HRS for mills at Halkali and Izmit, pointing to the language from the original questionnaire instructing Borusan to report such purchases even if a mill did not make OCTGs, and specifically requested that Borusan report all of its HRS purchases, including its purchases for the Halkali and Izmit mills.Id. at 8. The request encompassed the dates, quantities, and values of all of Borusan's HRS purchases, and stated that if Borusan was unable to provide this information, Borusan should provide an explanation “in detail and the efforts you made to provide it to Commerce.” Id. Borusan did not provide the HRS purchases for the Halkali and Izmit mills, however. It alleged that the time, burden, and transportation costs in getting such information would be substantial. Id. at 8–9. Borusan stated that it wanted to fully cooperate with Commerce but that Commerce's request resulted in an unreasonable burden, and that if Commerce insists on full reporting of all hot-coil purchases from every facility it would provide that information but would require several weeks to do so. Id. at 9–11.

III. Preliminary Results

On December 23, 2013, Commerce issued its preliminary results, determining that the investigated respondents had de minimis calculated margins. PDoc 250. Commerce explained, however, that with respect to its investigation of HRS for LTAR, based on information in the Turkish government's questionnaire response, it intended to request additional information about OYAK and address this information and this alleged subsidy program in a post-preliminary analysis. PDoc 224 at 20. On January 31, 2014, Commerce issued the Turkish government a second supplemental questionnaire,...