Habas Sinai Ve Tibbi Gazlar Istihsal Endüstrisi A.S. v. United States

• Citation: 536 F.Supp.3d 1333
• Decision Date: 18 August 2021
• Docket Number: Court No. 20-00065,Slip Op. 21-100
• Parties: HABAS SINAI VE TIBBI GAZLAR ISTIHSAL ENDÜSTRISI A.S., Plaintiff, v. UNITED STATES, Defendant, and Rebar Trade Action Coalition, Defendant-Intervenor.
• Court: U.S. Court of International Trade

536 F.Supp.3d 1333

HABAS SINAI VE TIBBI GAZLAR ISTIHSAL ENDÜSTRISI A.S., Plaintiff,

v. UNITED STATES, Defendant,andRebar Trade Action Coalition, Defendant-Intervenor.

Slip Op. 21-100

Court No. 20-00065

United States Court of International Trade.

August 18, 2021

David L. Simon, Law Office of David L. Simon, of Washington, D.C., argued for plaintiff.

Ann C. Motto, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant. With her on the brief were Jeffrey Bossert Clark, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of Counsel Reza Karamloo, Senior Attorney, Office of Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Maureen E. Thorson, Wiley Rein LLP, of Washington, D.C., argued for defendant-intervenor. With her on the brief were John R. Shane, Stephanie M. Bell, Jeffrey O. Frank, Cynthia A. Galvez, and John Allen Riggins.

OPINION

Katzmann, Judge:

This case involves a challenge to the Department of Commerce's ("Commerce") use of a tier-three benchmark in its determination of countervailing duties ("CVD's") in the administrative review of steel concrete reinforcing bar ("rebar") from Turkey. Steel Concrete Reinforcing Bar From the Republic of Turkey: Final Results of Countervailing Duty Administrative Review; 2017, 85 Fed. Reg. 16,056 (Dep't Commerce Mar. 20, 2020) ("Final Results") PR 147. Plaintiff Habas Sinai ve Tibbi Gazlar Istihsal Endüstrisi A.S. ("Habas"), a Turkish rebar producer, specifically challenges Commerce's selection of a tier-three benchmark for Habas’s purchases of natural gas from Turkish government-owned entity Botas. Habas argues that Commerce impermissibly rejected viable tier-two benchmarks, and that Commerce's ultimate calculation of a tier-three benchmark was arbitrary and capricious and unsupported by substantial evidence. Pl.’s Mot. for J. on the Agency R. 23-33, Aug. 21, 2020, ECF No. 23 ("Pl.’s Br."). The court sustains Commerce's Final Results.

BACKGROUND

I. Legal Background

A countervailable subsidy exists when (1) a government or public authority has provided a financial contribution; (2) a benefit is thereby conferred upon the recipient of the financial contribution; and (3) the subsidy is specific to a foreign enterprise or foreign industry, or a group of such enterprises or industries. 19 U.S.C. § 1677(5). To empower Commerce to offset economic distortions caused by countervailable subsidies, Congress promulgated the Tariff Act of 1930. Sioux Honey Ass'n v. Hartford Fire Ins., 672 F.3d 1041, 1046-47 (Fed. Cir. 2012) ; ATC Tires Private Ltd. v. United States, 42 CIT ––––, ––––, 322 F. Supp. 3d 1365, 1366 (2018). The Tariff Act authorizes Commerce to investigate potential countervailable subsidies and, where such subsidies are identified, issue orders on the subject merchandise imposing duties equal to the net countervailable subsidies. Sioux Honey, 672 F.3d at 1046-47 ; ATC Tires, 322 F. Supp. 3d at 1366-67 ; 19 U.S.C. §§ 1671, 1673. Beginning on the anniversary of publication of a CVD order, if Commerce has received a request for administrative review of that order, Commerce is required to review and determine the amount of the countervailable subsidy at issue. 19 U.S.C. § 1675(a)(1).

In determining whether a benefit has been conferred upon the recipient of a financial contribution under 19 U.S.C. § 1677(5), Commerce considers (among other factors) whether a good or service has been provided to the recipient for less-than-adequate remuneration ("LTAR"). 19 U.S.C. § 1677(5)(E)(iv) ; see also Nucor Corp. v. United States, 927 F.3d 1243, 1245 (Fed. Cir. 2019). To identify such benefits,

[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.

19 U.S.C. § 1677(5)(E)(iv). In practice, Commerce determines if goods or services are being provided for LTAR by conducting an analysis under 19 C.F.R. § 351.511. See Nucor Corp., 927 F.3d at 1246 ; 19 C.F.R. § 351.511(a)(2). Section 351.511 requires Commerce to follow a three-tier analysis to identify a "suitable benchmark" that will be used to determine "the existence and amount of a benefit conferred." ArcelorMittal USA LLC v. United States, 42 CIT ––––, ––––, 337 F. Supp. 3d 1285, 1291 (2018) ; see Essar Steel Ltd. v. United States, 678 F.3d 1268, 1273 (Fed. Cir. 2012) ("Commerce must determine the proper benchmark price in order to determine if the goods were sold for ‘less than adequate remuneration.’ "). Typically, Commerce employs a tier-one benchmark by measuring the government price of the good or service against a "market-determined price" based on "actual transactions in the country in question." 19 C.F.R. § 351.511(a)(2)(i). If "there is no useable market-determined price" available for comparison, Commerce employs a tier-two benchmark by measuring the government price against a "world market price" that is "available to purchasers in the country in question." 19 C.F.R. § 351.511(a)(2)(ii). Where there is more than one commercially available world market price, Commerce considers an average of the available world market prices. Id. If neither a market-determined price nor a world market price is available, Commerce employs a tier-three benchmark by evaluating whether the government price is "consistent with market principles." 19 C.F.R. § 351.511(a)(2)(iii) ; see POSCO v. United States, 977 F.3d 1369, 1372 (Fed. Cir. 2020). Commerce's tier-three analysis considers "such factors as the government's price-setting philosophy, costs (including rates of return sufficient to ensure future operations), or possible price discrimination." Countervailing Duties, 63 Fed. Reg. 65,348, 65,378 (Dep't Commerce Nov. 25, 1998). These factors are not hierarchical in application, and Commerce may rely on one or more factors to calculate a tier-three benchmark in any particular case. Id.

II. Factual Background

On May 22, 2017 and July 14, 2017, respectively, Commerce published the CVD order and amended CVD order on rebar from Turkey. Steel Concrete Reinforcing Bar From the Republic of Turkey: Final Affirmative Countervailing Duty Determ., 82 Fed. Reg. 23,188 (Dep't Commerce May 22, 2017) ; Steel Concrete Reinforcing Bar From the Republic of Turkey: Am. Final Affirmative Countervailing Duty Determ. and Countervailing Duty Order, 82 Fed. Reg. 32,531 (Dep't Commerce Jul. 14, 2017) (together, "Initial Orders"). Collectively, the Initial Orders set out Commerce's determination that countervailable subsidies were being provided to producers and exporters of Turkish rebar, and calculation of estimated net countervailable subsidy rates for Habas and other producers.

On July 3, 2018, Commerce published a notice of opportunity to request administrative review of the Initial Orders for the period of March 1, 2017 through December 31, 2017. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 83 Fed. Reg. 31,121 (Dep't Commerce Jul. 3, 2018). Habas timely submitted a request for review, and Commerce published a notice initiating its review of Habas’s countervailable subsidy rates on September 10, 2018. Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 83 Fed. Reg. 31,121 (Dep't Commerce Jul. 3, 2018). At Commerce's request, Habas and the Government of Turkey submitted questionnaire responses. Section III Questionnaire Response of Habas Sinai ve Tibbi Gazlar Istihsal Endüstrisi A.S. (Apr. 15, 2019), P.R. 20, C.R. 6-17; Letter from Ministry of Trade, Directorate Gen. for Exports, Republic of Turkey to Sec'y Commerce, re: First Administrative Review of Countervailing Duty Order on Steel Concrete Reinforcing Bar from Turkey: Questionnaire Response of the Government of Turkey 35 (Apr. 15, 2019), P.R. 21-42, C.R. 18-44 ("Questionnaire Response of the Government of Turkey"). Rebar Trade Action Coalition ("RTAC") joined the administrative review initiated by Habas as a petitioner, and on August 7, 2019, both Habas and RTAC submitted benchmark proposals to Commerce. Letter from Wiley Rein LLP to Dep't Commerce re RTAC Benchmark Submission, P.R. 79-81 ("RTAC Submission"); Letter from D.L. Simon to Dep't Commerce re Habas Benchmark Submission ("Habas Submission"), P.R. 76-79, C.R. 75-77. In relevant part, Habas’s benchmark submission provided data from the United Nations Comtrade database on natural gas purchase prices in dollars per kilogram, and proposed conversion factors for the conversion of Habas’ natural gas purchases from cubic meters and kilowatt hours to kilograms. Habas Submission at 2-3. Habas’s submission also requested that Commerce employ the Comtrade data to calculate a tier-two benchmark based on Russian natural gas prices and included additional data in support of Habas’s contention that Russian natural gas prices are market-driven, not politically determined, and are thus appropriate for benchmark calculation. Id. at 3-7. RTAC's benchmark submission provided natural gas price data from the IEA, along with source documentation and additional natural gas import data from Eurostat, and requested that Commerce employ the IEA data in its benchmark calculations. RTAC Submission at 1-2. Both Habas and RTAC subsequently submitted benchmark rebuttals. Letter from Wiley Rein LLP to Sec'y. of Commerce, re Steel Concrete Reinforcing Bar from Turkey: RTAC's Rebuttal Benchmark Submission (Aug. 19, 2019), P.R. 89-92 ("RTAC's Rebuttal Benchmark Submission"); Letter from D.L. Simon to Dep't Commerce re Habas Benchmark Rebuttal (Aug. 19, 2019), P.R. 88.

In September...