ÖZDEMIR BORU SAN. VE TIC. LTD. STI., Plaintiff, v. UNITED STATES, Defendant, and Atlas Tube and Independence Tube Corporation, Defendant-Intervenors.
Court No. 16-00206
United States Court of International Trade.
October 16, 2017
Slip Op. 17-142
Katzmann, Judge:
Kelly Ann Krystyniak, 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. Readler, 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 Roger B. Schagrin.
OPINION
Katzmann, Judge:
The Trade Preferences Extension Act of 2015 (“TPEA“),
Plaintiff, Ozdemir Boru San. ve Tic. Ltd. Sti (“Ozdemir“), 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, Ozdemir argues that Commerce‘s application of adverse facts available (“AFA“) to Ozdemir 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. Ozdemir 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 Ozdemir‘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 Com-
[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.
[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.
The subsidy must also be “specific” as defined under
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.
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
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[.]”
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.
Pursuant to subsection (c), if the information relied upon is secondary—as opposed to primary information, which is obtained in the course of the investigation—then Commerce “shall, to the extent practicable, corroborate that information from independent sources that are reasonably at [its] disposal.”
If Commerce uses an adverse inference, then in selecting among the facts otherwise available, and ultimately choosing an AFA rate, the agency utilizes the statutory authorization found in subsection (d), which was added to the statute by the TPEA. Per subsection (d)(1), Commerce [m]ay ... (i) use a countervailable subsidy rate applied for the same or similar program in a countervailing duty proceeding involving the same country, or (ii) if there is no same or similar program, use a countervailable subsidy rate for a subsidy program from a proceeding that [Commerce] considers reasonable to use[.]
Prior to the enactment of the TPEA, Commerce articulated a policy that it employs when selecting AFA rates. Commerce still follows this policy, and employed it in the underlying proceeding:
In selecting AFA rates for programs on which a company has failed to fully cooperate, it is [Commerce‘s] practice to use the highest calculated program-specific rates determined for a cooperating respondent in the same investigation, or, if not available, rates calculated in prior CVD cases involving the same country. Specifically, [Commerce] applies the highest calculated rate for the identical program in the investigation if a responding company used the identical program, and the rate is not zero. If there is no identical program match within the investigation, or if the rate is zero, [Commerce] uses the highest non-de minimis rate calculated for the identical program in another CVD proceeding involving the same country. If no such rate is available, [Commerce] will use the highest non-de minimis rate for a similar program (based on treatment of the benefit) in another CVD proceeding involving the same country. Absent an above-de minimis subsidy rate calculated for a similar program, [Commerce] applies the highest calculated subsidy rate for any program otherwise identified in a CVD case involving the same country that could conceivably be used by the non-cooperating companies.
IDM at 4 (citations omitted) (emphasis added).
Commerce has explained the rationale behind its AFA policy:
[Commerce‘s] practice when selecting an adverse rate from among the possible sources of information is to ensure that the result is sufficiently adverse “as to effectuate the statutory purposes of the AFA rule to induce respondents to provide the Department with complete and accurate information in a timely manner.”
Id. (citations omitted). Importantly, Commerce maintains that its practice also ensures “that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.”
B. Prior Proceedings
On July 21, 2015, Atlas, Independence, and additional petitioners,9 filed with Commerce a CVD petition concerning imports of HWR pipes and tubes from the Republic of Turkey (“Turkey“). See Petition for the Imposition of Antidumping and Countervailing Duties Pursuant to Sections 701 and 731 of the Tariff Act of 1930, as Amended July 21, 2015 Volume V—Information Relating to the Republic of Turkey—Countervailing Duties, P.R. 9 (“Petition“); CVD Investigation Initiation Checklist (Aug. 10, 2015), P.R. 31, C.R. 22 (“Initiation Checklist“).
Commerce initiated its investigation on August 17, 2015. Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Turkey: Initiation of Countervailing Duty Investigation, 80 Fed. Reg. 49,207 (Dep‘t Commerce Aug, 17, 2015). The period of investigation (“POI“) was January 1, 2014 through December 31, 2014. Id Commerce selected Ozdemir as one of two mandatory respondents in the investigation,10 pursuant to section
On December 28, 2015, Commerce published its preliminary determination. Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Turkey: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Determination With Final Antidumping Determination, 80 Fed. Reg. 80,749 (Dep‘t Commerce Dec. 28, 2015) (“Preliminary Determination“). It was accompanied by Commerce‘s memorandum, Countervailing Duty Investigation of Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from the Republic of Turkey: Decision Memorandum for the Preliminary Determination, dated December 18, 2015, P.R. 199 (“Preliminary Decision Memo“). The foregoing two documents were accompanied by a third, company specific memorandum entitled Preliminary Determination Calculation Memorandum for Ozdemir Boru Profil San. ve Tic. Sti., dated December 18, 2015, P.R. 202, C.R. 161 (“Preliminary Calculation Memo“). Ozdemir was assigned a preliminary CVD rate of 1.35 percent.13 Preliminary Determination at 80,750. Also on December 28, 2015, Ozdemir filed a request for correction of ministerial error. Compl. ¶ 12.
In the Preliminary Decision Memo, Commerce preliminarily determined under the Provision of Land for LTAR program that the Zonguldak organized industrial zone (“OIZ“) land sold to Ozdemir in 2008 constituted a financial contribution within the meaning of
As to the EFPT program at issue in this case, Commerce preliminarily concluded that Ozdemir had not used it, based on Ozdemir‘s responses to Commerce‘s questionnaires. Preliminary Decision Memo at 16. Specifically, in response to Commerce‘s questions regarding that program, Ozdemir stated that:
[It] did not receive any benefits under this program. Eligibility for this program is limited to enterprise located within certain designated regions. Since none of the Ozdemir‘s plants are located in those regions, Ozdemir was not eligible to use this program.
QR at 33.
Commerce subsequently conducted verifications of Ozdemir‘s QR. Verification of the Questionnaire Responses of Ozdemir Boru Profil San ve Tic. Ltd Sti. (Mar. 10, 2016), P.R. 227, C.R. 235 (“Verification Report“); Verification Exhibit 2, C.R. 173-75; Verification Exhibit 10, C.R 173, 191-92; Verification Exhibit 15, C.R. 203. During verification, Commerce discovered that Ozdemir was eligible for, and did receive, an EFPT subsidy during the five years prior to the period of investigation, because it possessed buildings in the Zonguldak OIZ in Turkey. Verification Report at 2, 9. Commerce determined that Ozdemir was unable to demonstrate at verification that it had not received this subsidy during the POI as well. Ministerial Error Allegations in the Final Determination (Aug. 19, 2016), P.R. 252 at 5 (“Min. Error Dec. Memo“). On March 24, 2016, Ozdemir filed its case brief. P.R. 233, C.R. 237. The GOT filed its case brief the same day. P.R. 232.
On July 21, 2016, Commerce published its original final determination, wherein the agency continued to find that Ozdemir was subsidized by reason of its purchase of certain real property from the government at LTAR, and assigned Ozdemir a subsidy rate of 0.54 percent ad valorem for that program. IDM at 15. Regarding the EFPT program, Commerce determined that “Ozdemir withheld information requested by” the agency and thus had failed to cooperate to the best of its ability in reporting benefits under this program. Id. at 5; see
Commerce next addressed corroboration of the selected CWP & T 1986 rate per
As to the Provision of Land for LTAR program, Commerce determined Ozdemir‘s net subsidy rate to be 0.54 percent ad valorem. IDM at 15.
Ozdemir subsequently alleged that Commerce made a ministerial error with respect to its application of AFA to the EFPT program. Min. Error Dec. Memo. Commerce acknowledged that it inadvertently characterized its application of an adverse inference to the EFPT program as resulting from Ozdemir‘s failure to follow questionnaire instructions to report all “other subsidies” received from the GOT, but concluded that an adverse inference was nonetheless appropriate because Ozdemir failed to respond accurately to specific questions about that program in its initial questionnaire response. Min. Error Dec. Memo at 4-5, 5 n.21. Accordingly, Commerce published the amended Final Determination, in which it did not change the subsidy rate for Ozdemir, on September 13, 2016.
On October 9, 2016, within thirty days after the publication of the CVD order, Ozdemir timely filed its summons. Sum.; see
Ozdemir argues before this court that the Final Determination was unsupported by substantial evidence, and was contrary to law, in regards to the application of AFA to Ozdemir regarding the EFPT program, and in the inclusion of certain land parcels in the benchmark for the Land for LTAR program.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to
DISCUSSION
I. The Application of AFA to Ozdemir is Supported by Substantial Evidence and in Accordance with Law.
A. Commerce‘s Use of Facts Otherwise Available is Supported by Substantial Evidence.
1. Parties’ Arguments
Ozdemir argues that it correctly reported its “non-use” of the EFPT program, and placed all necessary documentation on the record. Pl.‘s Br. at 21-24. Ozdemir explains that Commerce asked in the Questionnaire, under the heading of “Program-Specific Questions,” that it report only on subsidies received during the POI calendar year 2014;
For each program, if your company (including cross-owned affiliate required to respond, as well as all trading companies) did not apply for, use, or benefit from that program during the POI, you must clearly state so. Otherwise, please answer the questions listed.
Questionnaire at Sec. III p.7. Ozdemir argues that it followed this instruction, answering that “Ozdemir did not receive any benefits under [the EFPT] program.” QR at 33; Pl.‘s Br. at 23. The Property Tax Law creating this subsidy program provides a 0.2 percent property tax exemption on buildings built in an OIZ for the first five years following completion of construction. GOT QR at 84. Ozdemir thus submits that because it completed its building on the OIZ property in 2008, SQR at 5, the company was exempted from paying property tax on it specifically from 2009 through 2013. GOT QR at 76-84; GOT QR Ex. 19; Pl.‘s Br. at 22. As Commerce confirmed: “Ozdemir did not make any tax payments for buildings located at its facility in the Zonguldak OIZ for the first five years following completion of the buildings’ construction (i.e., December 24, 2008).” Verification Report at 9; see Verification Exhibit 10 at 534 (acknowledging that Ozdemir had “completed construction of factory and begun production” as of December 25, 2008), Pl.‘s Br. at 22.
Ozdemir asserts in conjunction that because the exemption is a tax program, Petition at 24,16 Initiation Checklist at 25, Questionnaire at 14, and thus a recurring subsidy, the benefit is expensed in the year received.
Independence argues that Ozdemir now attempts to artificially reduce its incorrect QR statement to the point that it did not receive benefits under the EFPT program during the POI, ignoring the portion of that statement where it stated that it was altogether ineligible for the program for geographic reasons. Independence Br. at 10. Independence also refers to Com-
mation in order to verify that Ozdemir had not received an EFPT program benefit during the POI.20 Atlas Br. at 22.
The Government argues that Commerce‘s conclusion that Ozdemir withheld information and failed to cooperate to the best of its ability in providing the requested information about use of the EFPT program is supported by substantial evidence on the record. IDM at 5-6; Def.‘s Br. at 10-11. The Government also argues that Commerce should not have been required to calculate the allegedly de minimis subsidy rate based on record evidence, as Ozdemir contends it could and should have, because Commerce‘s resort to facts otherwise available was statutorily authorized and reasonable in light of Ozdemir‘s QR misstatement. Def.‘s Br. at 11.
2. Analysis
The court concludes that Commerce‘s application of AFA is supported by substantial evidence on the record. Substantial evidence is “more than a mere
Commerce “shall ... use the facts otherwise available” if one of the criteria spelled out in
The court is not persuaded by Ozdemir‘s argument that Commerce could have referred to the record to calculate the precise countervailable subsidy received under the EFPT program, rather than rely on facts otherwise available. The possibility that the record does contain the information necessary to calculate a putative countervailable subsidy is irrelevant to the statutory triggers found in
B. Commerce‘s Application of AFA is Supported by Substantial Evidence and in Accordance with Law.
1. Commerce‘s Decision to Apply an Adverse Inference is Supported by Substantial Evidence.
Ozdemir argues that it fully cooperated in the investigation, and thus Commerce had no factual basis in the record to apply AFA under
erty tax benefit before the POI began in 2014. Pl.‘s Br. at 26; QR at 13-16, Exs. 8-10; SQR at 5.
Ozdemir argues in its Reply that Commerce impermissibly applied a per se rule in determining that Ozdemir “failed to act to the best of its ability” and therefore warranted an adverse inference.
The court is persuaded by the Government‘s argument that substantial evidence supports Commerce‘s decision to apply AFA. “If [Commerce] ... 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 from [Commerce], [then Commerce] ... may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available.”
Substantial evidence supports both Commerce‘s finding that Ozdemir did not act to the best of its ability to comply with Commerce‘s request for information, and its decision to apply an adverse inference in consequence. As explained supra, the Questionnaire asks for a detailed series of answers regarding the respondent‘s history with the EFPT program. Questionnaire at 18-19. Ozdemir stated in its QR that it “did not receive any benefits under [the EFPT] program. Eligibility for this program is limited to enterprises located within certain designated regions. Since none of the Ozdemir‘s plants are located in those regions, Ozdemir was not eligible to use this program.” QR at 33. At verification, Commerce discovered that this response was not accurate, as Ozdemir had taken advantage of the EFPT program, and did have facilities in the designated region.22 Verification Report at 2, 9. Commerce‘s resulting conclusion that Ozdemir had withheld requested information, pursuant to
warranted.
Ozdemir‘s assertion that it inadvertently provided the incorrect QR statement regarding EFPT benefits does not advance its argument here. “While intentional conduct, such as deliberate concealment or inaccurate reporting, surely evinces a failure to cooperate, the statute does not contain an intent element.” Nippon Steel, 337 F.3d at 1383, cited in Essar Steel, 678 F.3d at 1276. Rather, “the statutory trigger for Commerce‘s consideration of an adverse inference is simply a failure to cooperate to the best of respondent‘s ability, regardless of motivation or intent.”
The court is likewise unpersuaded by Ozdemir‘s argument that Commerce could have used additional tax information provided at verification to ascertain its participation in the EFPT program during the POI and beforehand. The purpose of verification is not to “continue the information-gathering stage of [Commerce‘s] investigation.” Borusan Mannesmann Boru Sanyi ve Ticaret A.S. v. United States, 39 CIT ___, ___, 61 F.Supp.3d 1306, 1349 (2015) (quoting agency position), aff‘d, Maverick Tube, 857 F.3d 1353. “Verifica-
The operative point is that Ozdemir possessed information that Commerce requested in its Questionnaire, and upon being asked to provide that information with supportive details and explanations, Ozdemir did not provide it. QR at 33. “Such behavior cannot be considered ‘maximum effort to provide Commerce with full and complete answers.‘” Maverick Tube, 857 F.3d at 1361 (quoting Nippon Steel, 337 F.3d at 1382). Commerce‘s decision to apply an adverse inference, and an AFA rate, was thus supported by substantial evidence on the record.
Commerce used the third level of its methodology in applying the CWP & T 1986 rate24 to Ozdemir in this proceeding. IDM at 6-7 (“If no such rate is available, the Department will use the highest non-de minimis rate for a similar program (based on treatment of the benefit) in another CVD proceeding involving the same country.“) (emphasis added). In a two-pronged argument, Ozdemir contends that even if it did not act to the best of its ability in responding to Commerce‘s Questionnaire, Commerce nonetheless violated its AFA selection criteria in assigning the 14.01 percent program-specific rate to Ozdemir. Pl.‘s Br at 27.
First, Ozdemir argues that “Commerce should have stopped at its second preference,” rather than reach the third, “because a rate had been been calculated for an identical program in a prior CVD proceeding involving the same country.” Pl.‘s Br. at 28. That rate, per Ozdemir, is a 0.01 percent subsidy rate applied to respondent Toscelik for the EFPT program in the investigation of oil country tubular goods (“OCTG“). Pl.‘s Br. at 28 (citing Certain Oil Country Tubular Goods From the Republic of Turkey: Final Affirmative Countervailing Duty Determination and Final Affirmative Critical Circumstances Determination, 79 Fed. Reg. 41,964 (Dep‘t Commerce July 18, 2014) and accompanying IDM). Ozdemir asserts that a rate of 0.01 percent is not de minimis, and disputes the validity of Commerce‘s 0.5 percent de minimis threshold by asserting that “Commerce‘s practice is to treat programs with ad valorem subsidy rates below 0.005 [percent] as de minimis.” Pl.‘s Br. at 29-30 (citing Circular Welded Carbon Steel Pipes and Tubes From Turkey: Final Results of Countervailing Duty Administrative Review, 77 Fed. Reg. 46,713 (Dep‘t Commerce Aug. 6, 2012)). Ozdemir contends that, though Commerce cited a previous usage of the 0.5 percent de minimis AFA threshold, it provided no reasoning in either the Final Determination or the cited decision explaining why that threshold should apply. Pl.‘s Br, at 30 (citing Wheatland Tube Co. v. United States, 161 F.3d 1365, 1369 (Fed. Cir. 1998); U.H.F.C. Co. v. United States, 916 F.2d 689, 700 (Fed. Cir, 1990)).
Second, Ozdemir argues that even if Commerce‘s selection of the CWP & T 1986 14.01 percent rate as AFA was justified, it was nonetheless inconsistent with Commerce‘s regulatory criteria. Pl.‘s Br. at 30-31. Ozdemir contends that the 1986 program was not a “match, based on program type and treatment of the benefit.” IDM at 7. According to Ozdemir, the “treatment” of a benefit refers to its attribution, which is fundamentally different between an export subsidy and a domestic subsidy. Pl.‘s Reply at 8. Specifically, the 1986 Export Tax Rebate program was an export subsidy, rather than a domestic subsidy, attributed only to export sales rather than total sales. Pl.‘s Br. at 31. Per Ozdemir, “[t]he benefit from an export subsidy is attributed to a company‘s export sales only, while the benefit from a domestic subsidy is attributed to a company‘s total sales.” Pl.‘s Reply at 8 (citing
The court notes that under the plain text of
Ozdemir presents no binding authority to support the proposition that Commerce is bound to a practice of treating programs with ad valorem subsidy rates below 0.005 percent, but not above, as de minimis, for the purpose of selecting AFA rates. Nor does Ozdemir offer determinations by Commerce evidencing that practice. See SKF USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir. 2001) (“[A]n agency action is arbitrary when the agency offer[s] insufficient reasons for treating similar situations differently“), aff‘d, 332 F.3d 1370 (Fed. Cir. 2003). Commerce, however, cited to a previous determination explicitly stating, twice, the agency‘s practice of treating programmatic rates of 0.5 percent or less ad valorem as de minimis. IDM at 7 n.26 (citing Final Affirmative Countervailing Duty Determination: Certain Welded Carbon Steel Pipe and Tube Products From Turkey, 75 Fed. Reg. 28,557 (Dep‘t Commerce May 10, 2010) and ac-
The court also finds unavailing Ozdemir‘s subsidiary argument that Commerce did not sufficiently justify the usage of a 0.5 percent de minimis threshold. Commerce did provide a justification of applying that threshold in the same paragraph to which it appended a footnote characterizing the threshold as its normal practice. IDM at 6-7 n.26. Specifically, the purpose of skipping over de minimis rates, and therefore in applying the 0.5 percent de minimis threshold in the contest of AFA rate selection, is “to ensure that the result is sufficiently adverse ‘as to effectuate the statutory purposes of the AFA rule to induce respondents to provide [Commerce] with complete and accurate information in a timely manner.‘” IDM at 6 (quoting Notice of Final Determination of Sales at Less than Fair Value: Static Random Access Memory Semiconductors From Taiwan, 63 Fed. Reg. 8909, 8932 (Dep‘t Commerce Feb. 23, 1998)). Commerce intends that this practice will ensure “that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” IDM at 6 (quoting SAA at 870). “Commerce has wide, though not unbounded, discretion ‘to select adverse facts that will create the proper deterrent to non-cooperation with its investigations and assure a reasonable margin.‘” Papierfabrik, 843 F.3d at 1380 (quoting De Cecco, 216 F.3d 1027, 1032). Indeed, Commerce‘s methodology here, consistent with the TPEA at
The court turns to Ozdemir‘s argument that Commerce is invalidly applying a new standard in selecting a “similar” program for AFA purposes, Pl.‘s Br. at 31, and finds it unpersuasive. Ozdemir contends that Commerce‘s practice of determining similarity on the basis of relevant subsections of
Further, SolarWorld does not necessarily stand for the proposition that a subsidy which is or could be classified under a given subsection of
3. Commerce Corroborated the AFA Rate to the Extent Practicable, with the Support of Substantial Evidence and in Accordance with Law.
Ozdemir argues that Commerce failed to corroborate the 14.01 percent rate, which the agency must do “to the extent practicable, ... from independent sources that are reasonably at [its] disposal,” whenever it uses “secondary information other than information obtained in the course of an investigation.” Pl.‘s Br. at 32 (quoting
Ozdemir additionally argues that “Commerce must select secondary information that has some grounding in commercial reality.” Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1324 (Fed. Cir. 2010). Ozdemir contends that, though the TPEA removed any statutory requirement “to demonstrate that the countervailable subsidy rate ... reflects an alleged commercial reality of the interested party,” commercial reality remains relevant as it pertains to industry-wide or program-wide considerations. Pl.‘s Br. at 32. Ozdemir argues that on a program-wide basis, the 14.01 percent rate is far removed from the commercial reality of any alleged EFPT program benefits, which are typically far smaller than that amount. Pl.‘s Br. at 33.
To the extent that Ozdemir contends that Commerce‘s verification was not performed in accordance with law, that argument fails. As explained supra, Commerce is empowered to formulate the methodologies it uses to execute its statutory mandates. Thai Pineapple, 187 F.3d at 1365. In this case, as noted, the statute requires that Commerce “shall, to the extent practicable, corroborate [secondary information] from independent sources that are reasonably at [its] disposal.”
To the extent that Ozdemir attacks Commerce‘s findings regarding probative value for lack of substantial evidence support on the record, the court is again unpersuaded. Substantively, corroboration by Commerce requires satisfaction that the secondary information to be used, here the AFA rate from the CWP & T 1986 proceeding, has probative value. SAA at 870. Commerce demonstrates probative value by “demonstrating the rate is both reliable and relevant,” Ad Hoc Shrimp Trade Action Comm. v. United States, 802 F.3d 1339, 1354 (Fed. Cir. 2015). Critical-ly, as noted, Commerce is charged with
Additionally, Ozdemir‘s commercial reality argument fails because it is contrary to plain statutory language. Ozdemir‘s case law citations, which interpret a prior version of the statute, do not persuade this court to read the current iteration of the statute contrarily to its unambiguous text. Commerce “is not required, for the purposes of subsection (c),” which covers corroboration of secondary information, “or for any other purpose ... to demonstrate that the countervailable subsidy rate ... [used] reflects an alleged commercial reality of the interested party.”
Ozdemir also asserts that Commerce treated it differently from similarly situated respondents so as to constitute arbitrary and capricious behavior. Pl.‘s Br. at 33 (citing SKF, 263 F.3d at 1382). Ozdemir points to Commerce‘s 2014 investigation of reinforcing bar from Turkey. Pl.‘s Br. at 34 (citing Steel Concrete Reinforcing Bar From the Republic of Turkey: Final Affirmative Countervailing Duty Determination Final Affirmative Critical Circumstances Determination, 79 Fed. Reg. 54,963 (Dep‘t Commerce Sept. 15, 2014) and accompanying IDM (“Rebar from Turkey“)). In that proceeding, Turkish respondent Içdas reported that it had received no benefits under the “lump-sum” program, which allowed respondents to deduct 0.5 percent of their foreign exchange income from taxable income for tax purposes, only for Commerce to discover at verification that Içdas had received this benefit in the POI.
The court does not find this argument persuasive. While Rebar from Turkey involved a Turkish respondent and a subsidy program that was “well known to [Commerce],” insofar as it had been countervailed numerous times beforehand, Ozdemir fails to establish that Commerce‘s treatment of respondent Içdas constitutes a practice to which the agency must now be bound. That the operative statutory provisions, to wit,
As noted, also before the court is Ozdemir‘s contention that Commerce‘s inclusion of two particular land parcels—namely, those located in Istanbul and Yalova Altinova (“Yalova“)—in the Land for LTAR benchmark, is unsupported by record evidence and contrary to law. Citing
As set forth, supra pp. 1229-30, to determine whether a foreign government provided a subsidy. Commerce must determine whether a government authority provides a specific financial contribution to a person and a benefit is conferred.
Consistent with the statute, Commerce‘s regulations set forth the basis for identifying appropriate market-determined benchmarks for measuring the adequacy of remuneration for government-provided goods.
When Commerce uses an actual transaction price or a world market price, it will “adjust the comparison price to reflect the price that a firm actually paid or would pay if it imported that product,” including “delivery charges and import duties.”
As noted, to calculate the land benchmark in the investigation here, Commerce used its preferred benchmark: publicly available, market-determined prices from industrial land sales between private parties in Turkey. IDM at 15. Specifically, Commerce used land parcels under the category “Investment Land for Industrial Facilities,” a designation that corresponds to land suitable for production of subject merchandise. Id. at 28. To derive an average price from all the parcels. Commerce stated that it moderated any differences in the infrastructure levels of the land parcels, and claims that it satisfied the comparability requirements of
Ozdemir argues that Commerce‘s decision to include allegedly anomalous prices with the benchmark for land valuation is unsupported by record evidence and not in accordance with law. Pl.‘s Br. at 35.
| Price (TL/m2) Indexed to 2008 | |
|---|---|
| Istanbul | 512.17 |
| Yalova Altinova | 304.90 |
| Gaziantep | 67.09 |
| Gaziantep | 66.67 |
| Gaziantep | 59.09 |
| Kirklarei | 51.22 |
| Kirklarei | 42.35 |
| Kirklarei | 36.58 |
| Kirklarei | 36.58 |
| Ankara | 26.01 |
| Tekirdag Corlu | 23.47 |
| Tekirdag Corlu | 14.42 |
| Tekirdag Corlu | 11.29 |
| Gaziantep | 2.87 |
| Simple Average TL/m2 Price | 89.62 |
Ozdemir argues that Commerce should not include parcels of land located in highly developed provinces, such as Yalova and Istanbul, because these properties are highly priced and anomalous vis-a-vis prices in areas outside of Istanbul and Yalova. Pl.‘s Br. at 41.
Ozdemir further argues that Commerce‘s analysis of the types of properties being compared is based entirely upon petitioners’ speculative statements. Pl.‘s Br. at 42. Specifically, Ozdemir contends that “Commerce‘s analysis is not based upon record evidence, however, but rather on petitioner‘s unsupported speculation about land values in Turkey.” Id. Ozdemir takes issue with Commerce‘s reliance on petitioners’ arguments:
We agree with the petitioners that the mere fact that past or current usage of the Istanbul and Yalova parcels was ‘agricultural’ does not undermine comparability for benchmarking purposes. What matters, as the petitioners correctly implied, is the usage for which these parcels were being offered on the market for future use. Specifically, these parcels were being offered for industrial development and, for that purpose, were classified as ‘investment land for industrial facilities.’ This puts them in essentially the same category in the land market as the other parcels in the benchmark, and in deriving an average price from all the parcels, we thereby moderate any differences in, e.g., the levels of infrastructure
development, maintaining a reasonable level of comparability that satisfies the requirements of
19 C.F.R. § 351.511 .
Pl.‘s Br. at 38-39 (quoting IDM at 28).
The court is persuaded by Ozdemir‘s arguments that, based on the facts in the record. Commerce‘s creation of the land benchmark is deficient. Commerce must consider relevant record evidence in determining the comparability of land parcels it uses in creating a reasonable benchmark that lacks distortive pricing. See
The land price data for Istanbul (512.17) and Yalova (304.90) deviate substantially from the land price data associated with the other parcels. As Ozdemir points out, the Istanbul and Yalova property values are 571 percent and 340 percent, respectively, of the average of all fourteen parcels; they are 763 percent and 454 percent, respectively, of the next-highest-priced parcel (67.06 TL/m2); and, when the highest two and lowest three parcel prices are removed, the Istanbul and Yalova parcels are 1127 percent and 671 percent of the 45.45 TL/m2 average of the remaining nine parcels. The court is satisfied that Ozdemir‘s argument thus constitutes at least a “colorable claim that the data that Commerce is considering is aberrational.” Mittal Steel Galati S.A., 502 F.Supp.2d at 1308. Regarding the “publicly available information concerning industrial land prices in Turkey [used] for purposes of calculating a comparable commercial benchmark price for land available in Turkey,” Commerce summarily states that it found that the selected land prices, including those of the Yalova and Istanbul parcels, “serve as comparable commercial benchmarks under
The court turns to Ozdemir‘s arguments regarding the property location and level of development underlying the Yalova and Istanbul parcels. “As Commerce‘s own benchmarking method indicates, using ‘comparables’ of proximate parcels (e.g., in location, terrain, size, features) is an accepted proposition for purposes of land and realty valuation.” Toscelik Profil Ve Sac Endustrisi A.S. v. United States, 38 CIT ___, Slip Op. 14-126 at 14 n.14, 2014 WL 5462542 (Oct. 29. 2014) (Not Reported in F. Supp. 3d). It may be that land located in highly developed areas is worth several times more than land in lesser developed areas in Turkey. See table supra. In light of the presence of a colorable claim that the relevant price data is aberrational. Commerce‘s summary statements in the IDM do not carry the support of substantial evidence in the resolution of the question. See IDM at 27. On remand, Commerce should consider, pursuant
The court finally addresses Ozdemir‘s argument that Commerce unduly emphasizes future use of the relevant properties, at the expense of their current and past uses. A reasonable person interested in participating in a real estate transaction
The court does not take issue with the Government‘s characterization that benchmark data “need not—and rarely does—perfectly match the benefit it is used to measure.” Def. Br. at 23. However, as to each of the factual matters highlighted by Ozdemir, and based on the record before the court. Commerce has failed, in constructing and applying its land benchmark, to articulate a rational connection between the facts it found and the choices it made. See Motor Vehicle Mfr. Ass‘n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines Inc. v. United States, 371 U.S. 156, 168 (1962)). “[I]t is the agency‘s responsibility, not this Court‘s, to explain its decision,” and Commerce must do so based on the record before it.
The court thus remands this case for reconsideration and further explanation consistent with the court‘s opinion. If Commerce chooses to maintain its current position on remand, it must explain why, specifically, the prices associated with the land sale data for the Yalova and Istanbul provinces are not aberrational, and how its average price derivation successfully moderates the land parcel price disparities. Commerce should consider the record as a whole in reaching its conclusions regarding the comparability of those land parcels. See CS Wind, 832 F.3d at 1373 (“The substantiality of evidence must take into account whatever in the record fairly detracts from its weight.“);
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that Ozdemir‘s motion for judgment on the agency record is denied in part; and it is further
ORDERED that Commerce‘s determination regarding the Land for LTAR issue is remanded for further consideration consistent with this opinion; and it is further
ORDERED that Commerce‘s Final Determination is sustained in all other respects; and it is further
ORDERED that Commerce shall file its remand determination with the court within 60 days of this date; and it is further
ORDERED that the parties shall have 30 days thereafter to file comments; and it is further
Gary S. Katzmann
Judge