Borusan Mannesmann Boru Sanayi ve Ticaret A.S. v. United States
61 F. Supp. 3d 1306
Ct. Intl. Trade2015Background
- Commerce conducted a countervailing duty (CVD) investigation of Certain Oil Country Tubular Goods (OCTG) from Turkey for POI Jan 1–Dec 31, 2012; Borusan was a mandatory respondent.
- Petition alleged Turkish state involvement (via OYAK and other mechanisms) distorted hot-rolled steel (HRS) prices and that Erdemir/Isdemir (major domestic HRS producers) functioned as government "authorities."
- Commerce concluded Erdemir and Isdemir were public authorities under 19 U.S.C. §1677(5)(B), found the Turkish HRS market significantly distorted, declined to use Turkish market prices (tier one), and used a tier-two GTA-derived world-market benchmark with adjustments.
- Commerce found HRS-for-LTAR specific to a limited number of industries and applied adverse facts available (AFA) to Borusan for failing to provide HRS purchase data for two non‑OCTG mills, producing a 15.58% CVD margin.
- The Court reviewed whether Commerce’s findings were supported by substantial evidence and remanded for further proceedings, directing Commerce to clarify aspects of its analysis (notably the meaningful-control/distortion rationale, benchmark selection/adjustments, and AFA application).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Erdemir and Isdemir are government "authorities" | Borusan: Commerce lacked a coherent test; record does not show entities were exercising governmental authority or carrying out government functions; "meaningful control" undefined and improperly applied. | Commerce: Finding reasonable based on totality of record (OYAK structure, TPA veto rights, board composition, policy alignment); Chevron deference applies to Commerce's interpretation of "public entity." | Court upheld Commerce's authority determination as supported by substantial evidence but asked Commerce on remand to clarify whether its "meaningful control" formulation accurately reflects its interpretation. |
| Whether Turkish HRS market was "significantly distorted" (tier-one vs tier-two) | Borusan: Commerce effectively applied a per se rule equating "substantial portion" government involvement with significant distortion without record proof of actual price distortion; imports and commercial suppliers undermine distortion finding. | Commerce: Tier-two use is reasonable under Preamble when government controls a substantial market share and record lacks usable domestic prices; relied on import/production data and government's inability to provide detailed HRS production/consumption. | Court found Commerce did not adequately explain leap from "substantial portion" to "significant distortion" given incomplete record and requested further explanation on remand; remand required. |
| Appropriateness of GTA-derived world-market benchmark and adjustments (duties, VAT, inland/ocean freight) | Borusan: GTA list included distant countries not reasonably available to Turkish purchasers; Commerce overstated freight (used container rates) and other adjustments, producing benchmark far above Borusan's actual delivered import prices. | Commerce: World-market benchmark permissible for globally traded commodity; may average multiple countries and include adjustments reflecting what "a firm" would pay (not solely the respondent's exact costs); followed practice and Essar precedent. | Court held benchmark approach is not per se unreasonable but required Commerce to better explain country selection and comparability adjustments (notably ocean and inland freight, and VAT treatment) on remand to ensure benchmark reflects prevailing market conditions available to Turkish purchasers. |
| Whether Commerce properly applied adverse facts available (AFA) for Borusan's failure to report HRS purchases for two non‑OCTG mills | Borusan: Purchases for non‑subject mills were not legally relevant (tied to non‑subject products) and Borusan reasonably declined to produce burdensome, irrelevant data; no willful withholding. | Commerce: Borusan refused requested information, did not seek extensions or timely alternatives, and failed to act to the best of its ability; AFA appropriate. | Court concluded Commerce abused its discretion by applying AFA in this manner because Borusan reasonably believed those purchases were not necessary for attribution to OCTG; remand ordered to reconsider necessity and propriety of AFA and attribution. |
Key Cases Cited
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (Sup. Ct. 1951) (standard for substantial evidence review)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (Sup. Ct. 1984) (agency deference to reasonable statutory interpretations)
- Royal Thai Government v. United States, 436 F.3d 1330 (Fed. Cir. 2006) (Commerce latitude in subsidy determinations)
- Essar Steel Ltd. v. United States, 678 F.3d 1268 (Fed. Cir. 2012) (requirements for constructing world-market benchmarks and including transport/import adjustments)
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir. 2003) ("best of its ability" standard and consequences of withholding information)
- Mukand, Ltd. v. United States, 767 F.3d 1300 (Fed. Cir. 2014) (scope of "best of its ability" and when adverse inferences are appropriate)
- Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 1997) (transport costs and purchaser's rational location-based choices)