Habas Sinai Ve Tibbi Gazlar v. United States

992 F.3d 1348

• Court: Court of Appeals for the Federal Circuit
• Decided: March 30, 2021
• Docket: 20-1506
• Status: Published

Opinion

Case: 20-1506 Document: 43 Page: 1 Filed: 03/30/2021

United States Court of Appeals for the Federal Circuit ______________________

HABAS SINAI VE TIBBI GAZLAR ISTIHSAL ENDUSTRISI A.S., Plaintiff-Appellant

v.

UNITED STATES, REBAR TRADE ACTION COALITION, Defendants-Appellees ______________________

2020-1506 ______________________

Appeal from the United States Court of International Trade in Nos. 1:17-cv-00202-LMG, 1:17-cv-00203-LMG, Senior Judge Leo M. Gordon. ______________________

Decided: March 30, 2021 ______________________

DAVID L. SIMON, Law Offices of David L. Simon, Wash- ington, DC, argued for plaintiff-appellant.

MARGARET JANTZEN, Commercial Litigation Branch, Civil Division, United States Department of Justice, Wash- ington, DC, argued for defendant-appellee United States. Also represented by JEFFREY B. CLARK, JEANNE DAVIDSON, LOREN MISHA PREHEIM; REZA KARAMLOO, Office of the Chief Counsel for Trade Enforcement & Compliance, United States Department of Commerce, Washington, DC. Case: 20-1506 Document: 43 Page: 2 Filed: 03/30/2021

JOHN R. SHANE, Wiley Rein, LLP, Washington, DC, ar- gued for defendant-appellee Rebar Trade Action Coalition. Also represented by STEPHANIE MANAKER BELL, LAURA EL- SABAAWI, JEFFREY OWEN FRANK, CYNTHIA CRISTINA GALVEZ, ALAN H. PRICE, MAUREEN E. THORSON. ______________________

Before NEWMAN, REYNA, and STOLL, Circuit Judges. REYNA, Circuit Judge. Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi A.S. appeals the decision of the U.S. Court of International Trade that affirms the U.S. Department of Commerce’s fi- nal affirmative determination imposing a 14.01 percent countervailing duty on imports of certain steel concrete re- inforcement bar from the Republic of Turkey. Because Ha- bas has not shown that Commerce exceeded its statutory authority in the selection of the 14.01 countervailing duty rate, we affirm. BACKGROUND On September 20, 2016, the Rebar Trade Action Coali- tion (“Coalition”) submitted a petition to the U.S. Depart- ment of Commerce (“Commerce”) requesting the initiation of a countervailing duty (“CVD”) investigation on imports of certain reinforcement bar (“rebar”) imported from Tur- key. See Steel Concrete Reinforcing Bar From the Republic of Turkey: Initiation of Countervailing Duty Investigation, 81 Fed. Reg. 71,705 (Oct. 18, 2016); J.A. 17. The Coalition alleged that the Turkish government provided countervail- able subsidies to Turkish companies that manufactured, produced, or exported rebar from Turkey to the United States, and that those subsidies were causing material in- jury to the United States rebar industry. See 81 Fed. Reg. at 71,705–06; J.A. 17–18. Case: 20-1506 Document: 43 Page: 3 Filed: 03/30/2021

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On October 18, 2016, Commerce initiated a CVD inves- tigation on U.S. imports of rebar from Turkey. See 81 Fed. Reg. at 71,705–09; J.A. 17–21. Commerce issued CVD questionnaires to the Turkish government and to Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi A.S. (“Habas”), the sole respondent subject to the investigation. The ques- tionnaire broadly inquired about benefits the Turkish gov- ernment extended to Habas during the period of investigation. See J.A. 22–36. In its questionnaire response, Habas did not disclose that it received benefits via a duty drawback program im- plemented under Article 22 of Turkey’s Domestic Pro- cessing Regime (RDP) Resolution 2005/8391 (“duty drawback program”). 1 J.A. 6, 37–88. Under this duty drawback program, the Turkish government granted in- centives, including “inward processing permits,” to Turkish manufacturers and exporters. J.A. 94. During Commerce’s verification of Habas’s questionnaire response, Habas re- vealed that it held a permit under the program and there- fore occasionally benefitted from import duty drawbacks for billets and ferroalloys, raw materials used to make re- bar. J.A. 94, 125, 129. Habas informed Commerce that it had no obligation to disclose the duty drawback program in its questionnaire response because Commerce had previ- ously, in an investigation on circular welded carbon steel pipes and tubes from Turkey, determined that benefits un- der the duty drawback program were not countervailable. J.A. 129–30 (citing Circular Welded Carbon Steel Pipes and Tubes From Turkey: Preliminary Results of Counter- vailing Duty Administrative Review; Calendar Year 2015, 82 Fed. Reg. 16,994 (Apr. 7, 2017)). Habas also asserted

1 Generally, a duty drawback is a rebate of import duties paid on imported goods (or components or raw ma- terials) that are subsequently exported in whole or finished form. 19 U.S.C. § 1313. Case: 20-1506 Document: 43 Page: 4 Filed: 03/30/2021

that the questionnaire did not specifically inquire about the program. J.A. 130. On May 15, 2017, Commerce issued a final affirmative CVD determination. J.A. 123. Commerce imposed a CVD rate of 14.01 percent ad valorem on Habas’s imports of re- bar from Turkey. J.A. 133. Commerce faulted Habas for not reporting benefits received from the duty drawback program. Specifically, Commerce found that Habas failed to cooperate with Commerce’s investigation, as required by 19 U.S.C. § 1677e(b), when it failed to timely report receipt of benefits under the duty drawback program. J.A. 125– 33. Commerce determined that Habas’s failure to disclose that information impeded the CVD investigation, including by preventing Commerce from issuing a supplemental questionnaire directed to whether the program constitutes a financial contribution conferring a benefit upon Habas, as required to establish a countervailable subsidy under 19 U.S.C. §§ 1677(5)(B), -(E). J.A. 132–33. Commerce de- termined that it was appropriate to draw an adverse infer- ence that those requirements were met and to apply a CVD rate based on “facts otherwise available” under 19 U.S.C. § 1677e. J.A. 132–33. Commerce used its established hierarchy as a guide to determine the applicable CVD rate based on facts other- wise available. 19 U.S.C. § 1677e(d)(1)(A); J.A. 133. Spe- cifically, Commerce selected a CVD rate from the following order of preference: (1) the highest calculated rate for the identical subsidy program in the investigation if a respond- ing company used the identical program and the rate is not zero; (2) the highest non-de minimis rate calculated for the identical program in a countervailing duty proceeding in- volving the same country; (3) the highest non-de minimis rate for a similar program, based on treatment of the ben- efit, in another countervailing duty proceeding involving the same country; (4) the highest calculated subsidy rate for any program otherwise identified in a countervailing Case: 20-1506 Document: 43 Page: 5 Filed: 03/30/2021

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duty case involving the same country that could conceiva- bly be used by the non-cooperating companies. J.A. 133. Commerce found that the first two options in its hier- archy did not apply. Turning to the third option, Com- merce selected a countervailing duty rate of 14.01 percent ad valorem, reasoning that it had applied that rate with respect to an export tax rebate program in a 1986 CVD in- vestigation on “Welded Pipe and Tube from Turkey.” Id. & n.208 (citing Final Affirmative Countervailing Duty Deter- minations; Certain Welded Carbon Steel Pipe and Tube Products from Turkey, 51 Fed. Reg. 1268 (Jan. 10, 1986) [hereinafter Welded Pipe and Tube]). Commerce thus se- lected the 14.01 percent ad valorem rate as facts otherwise available on the basis that it was the highest rate for a sim- ilar program in a countervailing duty proceeding involving Turkey. J.A. 133. Commerce is required under the statute to corroborate, “to the extent practicable,” any rate that it relies on as best information available. 19 U.S.C. § 1677e(c). Here, Com- merce explained that the 14.01 percent rate was a rate es- tablished in the course of a prior CVD investigation that involved a tariff rebate program similar to the duty draw- back program in the underlying investigation, from which it determined Habas had benefited. J.A. 133–34. On that basis, Commerce concluded that the 14.01 percent rate was both relevant and reliable. J.A. 134. Habas appealed Commerce’s final affirmative determi- nation to the Court of International Trade (“Trade Court”). See Rebar Trade Action Coal. v. United States, 389 F. Supp. 3d 1371 (Ct. Int’l Trade 2019). As relevant to this appeal, Habas argued that, even if Commerce was jus- tified in using “facts otherwise available” to select a CVD rate, Commerce’s selection of the 14.01 percent rate was unreasonable because it was not adequately corroborated by the 1986 Welded Pipe and Tube investigation. Id. at 1379. The Trade Court rejected Habas’s argument, Case: 20-1506 Document: 43 Page: 6 Filed: 03/30/2021

finding that it was Habas’s failure to timely disclose the duty drawback program from which it benefitted that led Commerce to apply facts otherwise available. Id. The Trade Court further reasoned that, because the statute re- quires that a rate selected from facts otherwise available must be “corroborated to the extent practicable,” Com- merce has “broad discretion” to follow its established hier- archy and ultimately select a rate that had been applied for the same or similar program in a CVD program involving the same country. Id. Concluding that Commerce did not exceed its statutory discretion, the Trade Court affirmed Commerce’s final affirmative determination. Id. at 1379– 80, 1384. Habas appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5). STANDARD OF REVIEW We review Trade Court decisions involving Commerce countervailing duty determinations on a de novo basis. In doing so, we apply the same standard of review applied by Trade Court in its review of Commerce’s CVD investiga- tions. Saha Thai Steel Pipe (Public) Co. v. United States, 635 F.3d 1335, 1340 (Fed. Cir. 2011). Under the applicable standard, we will uphold a Commerce determination un- less it is unsupported by substantial evidence on the rec- ord, or is otherwise not in accordance with law. Id.; 19 U.S.C. § 1516a(b)(1)(B)(i). DISCUSSION Generally, countervailing duty investigations are un- dertaken by Commerce to determine whether a foreign gov- ernment has conferred to its producers benefits that are deemed to be countervailable subsidies. See 19 U.S.C. §§ 1671, 1677. A countervailable subsidy is defined to in- clude certain types of financial assistance provided by a for- eign government or entity that confers a “benefit” to the recipient relating to its production, manufacture, or export of the subject goods. See 19 U.S.C. §§ 1677(5), 1677(5A); Case: 20-1506 Document: 43 Page: 7 Filed: 03/30/2021

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POSCO v. United States, 977 F.3d 1369, 1371 (Fed. Cir. 2020). A foreign producer subject to a countervailing duty in- vestigation, i.e., a respondent, must comply, to the best of its ability, with Commerce’s requests for information. See 19 U.S.C. § 1677e(b). Relevant to this appeal, a respondent must “put forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an inves- tigation. While the standard does not require perfection and recognizes that mistakes sometimes occur, it does not condone inattentiveness, carelessness, or inadequate rec- ord keeping.” Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003). If the interested party withholds information sought by Commerce, then Commerce may draw an adverse inference from the party’s failure to comply. 19 U.S.C. § 1677e(a)–(b). The risk of an adverse inference is intended to incentivize cooperation with Commerce’s investigations. See Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1348 (Fed. Cir. 2016) (“Commerce’s consideration of the deterrent effect of its de- termination reflects the law’s expectation.”); Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012); F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000); Statement of Administrative Action accompanying the Uruguay Round Agreements Act (“SAA”), H.R. REP. NO. 103-316, vol. 1, at 870, as reprinted in 1994 U.S.C.C.A.N. 4040, 4199. Commerce may use an adverse inference “in selecting from among the facts otherwise available.” 19 U.S.C. § 1677e(b)(1). Potential sources of information for adverse inferences include the petition, the final determination in the investigation, any previous administrative review, or any other information placed on the record. See id. § 1677e(b)(2); 19 C.F.R. § 351.308(c). To the extent Com- merce relies on information outside what it obtained dur- ing its investigation, Commerce must, “to the extent practicable, corroborate that information from Case: 20-1506 Document: 43 Page: 8 Filed: 03/30/2021

independent sources that are reasonably at their disposal.” 19 U.S.C. § 1677e(c)(1). In a case where Commerce has drawn an adverse in- ference, Commerce may (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 the administering authority considers reasonable to use. 19 U.S.C. § 1677e(d)(1)(A). Commerce has discretion, in such cases, to apply any rate falling into these categories, “including the highest such rate,” as appropriate depend- ing on the facts that gave rise to the adverse inference. Id. § 1677e(d)(2). Commerce is not required to select a rate that reflects the investigated party’s commercial reality, nor must Commerce estimate the rate that would have ap- plied had the investigated party cooperated. Id. § 1677e(d)(3). Against this backdrop, we turn to Habas’s arguments on appeal. Habas “only appeals Commerce’s selection of [the 14.01 percent rate],” and explains that the “gravamen” of its arguments on appeal is that Commerce erred in adopting the 14.01 percent rate because it is not an ade- quately corroborated rate. Appellant’s Br. 8. According to Habas, the drawback program investigated in Welded Pipe and Tube was in effect over thirty years ago and was ter- minated in 1987, making any relationship between the 1986 program and modern economic conditions too tenu- ous, and the 14.01 percent rate too stale, to meet the cor- roboration requirement. Id. at 8–9. In other words, Habas argues that Commerce should be permitted to apply Tur- key’s tax rebate programs only to the extent it determines they “could conceivably have benefitted Habas in 2015.” Case: 20-1506 Document: 43 Page: 9 Filed: 03/30/2021

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Id. at 22. Habas argues that a thirty-five-year-old rate can- not be deemed “corroborated” under the statute, and that the CVD determination is therefore not supported by sub- stantial evidence and is otherwise contrary to law. We dis- agree. Habas overlooks the context of Commerce’s analysis, which is that Commerce resorted to facts otherwise availa- ble because Habas, as it concedes, failed to disclose the duty drawback program from which it benefitted. When an interested party withholds requested information in a CVD investigation, as Habas did here, Commerce has statutory latitude to draw adverse inferences concerning the with- held information and resort to “facts otherwise available” to select a countervailing duty rate. See 19 U.S.C. § 1677e. Habas does not explain how Commerce exceeded that stat- utory authority in this case. Nor does Habas challenge as contrary to law Commerce’s established hierarchy for se- lecting a countervailing duty rate based on “facts otherwise available.” If accepted, Habas’s arguments would have this court impose on Commerce an obligation that is not supported by the statute, namely to use only “facts otherwise available” that reflect the commercial reality of the affected party or that bends to the benefit of the affected party. See 19 U.S.C. § 1677e(d)(3). Such a requirement would be im- possible to apply where the respondent cannot or refuses to provide the very required information intended to inform Commerce of a respondent’s commercial reality in the con- text of a CVD investigation, including that it has benefitted from a countervailable subsidy. Even accepting Habas’s argument that the Welded Pipe and Tube determination is now “stale” and unrelated to present commercial realities, this does not necessarily mean that Commerce’s selection of the 14.01 percent rate was contrary to law. Once a party withholds information requested by Commerce, it invites Commerce to rely on information that is not limited to the information obtained in the course of the investigation. Case: 20-1506 Document: 43 Page: 10 Filed: 03/30/2021

The statute requires Commerce to corroborate secondary information not perfectly, but “to the extent practicable.” See id. § 1677e(c)(1). Habas has not shown that Commerce acted contrary to that statutory requirement. Commerce’s use of the 14.01 percent rate is consistent with the overall statutory regime. Congress explained, when discussing the legislative purpose of § 1677e, that Commerce “may employ adverse inferences about the miss- ing information to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” Nan Ya Plastics, 810 F.3d at 1348 (quot- ing SAA, 1994 U.S.C.C.A.N. 4040, 4199). In light of Con- gress’s desire that Commerce guard against incentivizing non-cooperation with Commerce’s investigations, Com- merce was justified in selecting a rate that, in its consid- ered discretion, would deter future non-cooperation and avoid rewarding Habas (and other would-be respondents) for further non-cooperation by promoting a rate lower than it would have received had it disclosed the duty drawback program. Although the origin of 14.01 percent rate may relate to a CVD determination from decades ago, Habas does not address why the rate unreasonably departs from § 1677e. Absent such a showing, and based on the record before us, we conclude that Commerce’s selection of the 14.01 percent CVD rate is not contrary to law and is sup- ported by substantial evidence. We therefore affirm the Trade Court’s decision sustaining Commerce’s determina- tion. CONCLUSION We have considered the parties’ remaining arguments and find them unpersuasive. For the reasons set forth above, the Trade Court’s decision is affirmed. AFFIRMED