273 F. Supp. 3d 1225
Ct. Intl. Trade2017Background
- Özdemir, a Turkish producer/exporter of heavy-walled rectangular welded carbon steel pipes and tubes, was a mandatory respondent in a U.S. Commerce Department countervailing duty (CVD) investigation covering 2014 (POI).
- Commerce preliminarily found two relevant subsidy issues: (1) eligibility/benefit under the Turkish Exemption from Property Tax (EFPT) program; and (2) provision of land for less-than-adequate remuneration (LTAR) and used a market benchmark of advertised industrial land prices.
- Özdemir's questionnaire response stated it did not receive EFPT benefits and that its plants were not in eligible regions; at verification Commerce found Özdemir had facilities in a designated OIZ and had received EFPT benefits prior to the POI.
- Commerce concluded Özdemir withheld requested information and failed to cooperate to the best of its ability, applied adverse facts available (AFA), and assigned a 14.01% AFA rate for EFPT (derived from a 1986 Turkey CVD proceeding).
- Commerce calculated a 0.54% subsidy for the Land-for-LTAR program using a simple average of fourteen advertised land sale prices, including two high-priced parcels in Istanbul and Yalova.
- Özdemir challenged Commerce's application of AFA to EFPT and the inclusion of the Istanbul/Yalova parcels in the land benchmark; the Court reviewed the record under the substantial-evidence/administrative-law standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce permissibly applied AFA to Özdemir for EFPT | Özdemir said it accurately reported non-use during the POI, provided record data to calculate any de minimis benefit, and did not withhold information | Commerce argued Özdemir misstated eligibility in its questionnaire, verification showed EFPT use or inability to show otherwise, so facts available and AFA were warranted | Court: AFA application sustained — substantial evidence supports finding Özdemir failed to act to best of its ability and Commerce reasonably applied/corroborated AFA under the TPEA framework |
| Whether Commerce's AFA-rate selection (14.01%) was lawful | Özdemir argued Commerce should have used a 0.01% rate from a prior OCTG proceeding (identical program) and that the 1986 export-rebate rate is not a "similar" domestic tax exemption; challenged Commerce's de minimis threshold rationale | Government argued TPEA gives Commerce broad discretion to use same-or-similar program rates and to skip de minimis rates to ensure AFA deterrence; Commerce corroborated to extent practicable | Court: Held lawful — Commerce reasonably applied §1677e(d), permissibly selected and corroborated the rate, and need not show the rate reflects the party's "commercial reality" under the TPEA |
| Whether Commerce's land-benchmark (including Istanbul and Yalova parcels) was supported by substantial evidence | Özdemir argued the Istanbul/Yalova prices are aberrational (far exceed other parcels), Commerce relied on petitioners' assertions about future intended industrial use without adequate record support, and averaging distorted the benchmark | Government defended use of publicly available market sale/offer prices and Commerce's moderation by averaging parcels classified as "investment land for industrial facilities" | Court: Remanded — Commerce failed to explain why high-priced parcels are not aberrational, how averaging moderates distortion, and why advertised future use outweighs current/past use; remand for further explanation or recalculation |
Key Cases Cited
- Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365 (Fed. Cir.) (Commerce requires information from producer and foreign government in CVD investigations)
- Nippon Steel Corp. v. United States, 337 F.3d 1373 (Fed. Cir.) ("best of its ability" standard for AFA)
- Maverick Tube Corp. v. United States, 857 F.3d 1353 (Fed. Cir.) (permitting AFA to encourage cooperation; standard for substantial evidence review)
- Essar Steel Ltd. v. United States, 678 F.3d 1268 (Fed. Cir.) (upholding Commerce's AFA selection methodology and deterrent rationale)
- Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319 (Fed. Cir.) (secondary information must have grounding in commercial reality)
- Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362 (Fed. Cir.) (deference to Commerce in selecting methodologies)
- Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837 (U.S.) (agency interpretation of ambiguous statute reviewed for reasonableness)
- De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027 (Fed. Cir.) (AFA may include a built-in increase as deterrent)