ICDAS Celik Enerji Tersane ve Ulasim Sanayi, A.S. v. United States

2017 CIT 152

• Court: United States Court of International Trade
• Decided: November 17, 2017
• Docket: Consol. 14-00267
• Status: Published

Opinion

Slip Op 17-152

UNITED STATES COURT OF INTERNATIONAL TRADE

ICDAS CELIK ENERJI TERSANE VE ULASIM SANAYI, A.S.,

Plaintiff,

v.

UNITED STATES, Before: Leo M. Gordon, Judge Defendant, Consol. Court No. 14-00267 and

REBAR TRADE ACTION COALITION, et al., and HABAS SINAI VE TIBBI GAZLAR ISTIHSAL ENDUSTRISI, A.S.,

Defendant-Intervenors.

OPINION

[Final Determination sustained.]

Dated: November 17, 2017

Matthew M. Nolan, Diana D. Quaia, and Nancy A. Noonan, Arent Fox LLP of Washington, DC for Plaintiff Icdas Celik Enerji Tersane ve Ulasim Sanayi, A.S.

Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC for Defendant, United States. With him on the briefs were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the briefs was Scott McBride, Assistant Chief Counsel, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement and Compliance of Washington, DC.

Alan H. Price, John R. Shane, and Maureen E. Thorson, Wiley Rein LLP of Washington, DC for Defendant-Intervenors Rebar Trade Action Coalition, Nucor Corporation, Gerdau Ameristeel U.S. Inc., Commercial Metals Company, and Byer Steel Corporation. Consol. Court No. 14-00267 Page 2

Gordon, Judge: This action involves the U.S. Department of Commerce

(“Commerce”) final determination in the countervailing duty (“CVD”) investigation of steel

concrete reinforcing bar from the Republic of Turkey. See Steel Reinforcing Bar From the

Republic of Turkey, 79 Fed. Reg. 54,963 (Dep’t of Commerce Sept. 15, 2014) (final affirm.

& crit. circum. determ.) (“Final Determination”); see also Issues & Decision Memorandum

for the Final Affirmative Countervailing Duty Determination and Final Affirmative Critical

Circumstances Determination in the Countervailing Duty Investigation of Steel Concrete

Reinforcing Bar from the Republic of Turkey, C-489-819 (Dep’t of Commerce

Sept. 8, 2014), available at http://enforcement.trade.gov/frn/summary/turkey/2014-

21989-1.pdf (last visited this date) (“Decision Memorandum”); see also Steel Concrete

Reinforcing Bar from the Republic of Turkey, 79 Fed. Reg. 65,926 (Dep’t of Commerce

Nov. 6, 2014) (final countervailing duty order) (“Order”). Before the court are the motions

for judgment on the agency record of Plaintiff Icdas Celik Enerji Tersane ve Ulasim, A.S.

(“Icdas”) and Defendant-Intervenor Rebar Trade Action Coalition ("RTAC"), and its

individual members, Nucor Corporation, Gerdau Ameristeel U.S. Inc., Commercial Metals

Company, and Byer Steel Corporation. The court has jurisdiction pursuant to Section

516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i)

(2012)1, and 28 U.S.C. § 1581(c) (2012).

This opinion addresses Icdas' challenge to the Final Determination. See Pl.’s

R. 56.2 Mot. for J. on the Agency R., ECF No. 52 (“Icdas’ Br.”); see also Def.’s Resp. in

1 Further citations to the Tariff Act of 1930, as amended, are to the relevant portions of Title 19 of the U.S. Code, 2012 edition. Consol. Court No. 14-00267 Page 3

Opp’n to Pl.’s R. 56.2 Mots. for J. on the Agency R., ECF No. 69 (“Def.’s Resp.”); RTAC’s

Resp. to Pl.’s R. 56.2 Mot. for J. on the Agency R., ECF No. 70 (“RTAC’s Resp.”); Pl.’s

Reply Br., ECF No. 79 (“Icdas’ Reply”).

Specifically, Icdas challenges (1) Commerce’s selection of benchmark prices used

to calculate countervailable benefits that respondents obtained from lignite coal

purchases and (2) Commerce’s ex parte meeting with petitioners late in the proceeding

and acceptance of untimely information. For the reasons set forth below, the court

sustains the Final Determination.

I. Standard of Review

The court sustains Commerce’s “determinations, findings, or conclusions” unless

they are “unsupported by substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing

agency determinations, findings, or conclusions for substantial evidence, the court

assesses whether the agency action is reasonable given the record as a whole. Nippon

Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial

evidence has been described as “such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,

407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.

197, 229 (1938)). Substantial evidence has also been described as “something less than

the weight of the evidence, and the possibility of drawing two inconsistent conclusions

from the evidence does not prevent an administrative agency’s finding from being

supported by substantial evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 Consol. Court No. 14-00267 Page 4

(1966). Fundamentally, though, “substantial evidence” is best understood as a word

formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and

Practice § 9.24[1] (3d ed. 2017). Therefore, when addressing a substantial evidence issue

raised by a party, the court analyzes whether the challenged agency action “was

reasonable given the circumstances presented by the whole record.” 8A West’s Fed.

Forms, National Courts § 3.6 (5th ed. 2017).

II. Discussion

A. Lignite Benchmark

1. Rejection of Tier One Steam Coal Price Benchmark Data

Icdas challenges Commerce’s determination of the lignite price benchmark on two

separate grounds. First, Icdas alleges that Commerce’s failure to use the available

market-determined prices of steam-coal imports into Turkey as “tier one” data violates the

Congressional statutory directive in 19 U.S.C. § 1677(5)(E) as well as Commerce’s own

express regulatory preference for the use of such tier one data to establish benchmarks

as set forth in 19 C.F.R. § 351.511(a)(2). Second, Icdas argues that Commerce’s use of

the “tier two” GTIS world market lignite pricing data to compute a benchmark “includes

prices that are not reasonably available to Icdas, are not commercially realistic, and

resulted in a highly distorted margin.” Icdas’ Br. 26. This section addresses Icdas’ first

contention regarding Commerce’s failure to use tier one steam coal import pricing data,

while Section II.A.2, infra, addresses Icdas’ challenge to Commerce’s use of the tier two

GTIS lignite pricing data. Consol. Court No. 14-00267 Page 5

All parties agree that Commerce has established an express three-tiered hierarchy

for the determination of market-price benchmarks in evaluating the adequacy of

remuneration for alleged subsidy programs. “Under 19 CFR 351.511(a)(2), [Commerce]

sets forth the basis for identifying appropriate market-determined benchmarks for

measuring the adequacy of remuneration for government provided goods or services.

These potential benchmarks are listed in hierarchical order by preference: (1) market

prices from actual transactions within the country under investigation (e.g., actual sales,

actual imports or competitively run government auctions) (tier one); (2) world market

prices that would be available to purchasers in the country under investigation (tier two);

or (3) an assessment of whether the government price is consistent with market principles

(tier three). As provided in the regulations, the preferred benchmark in the hierarchy is an

observed market price from actual transactions within the country under investigation.”

Decision Memorandum at 14. Accordingly, under this hierarchy, Commerce will first look

to see if there is evidence of a “market-determined price for the good or service resulting

from actual transactions in the country in question.” 19 C.F.R. § 351.511(a)(2).

Icdas relies heavily on this express regulatory preference for market-determined

pricing, but attempts to discard the clear limitation that such a preference only applies for

market-determined pricing relating to the “good” in question. Specifically, Icdas asserts

that Commerce was obligated to use the tier one pricing data resulting from actual import

transactions of hard steam coal; however, Commerce explained in its decision

memorandum that it had found that hard steam coal was not supplied by the Government

of Turkey (“GOT”), but instead only lignite coal was provided to Icdas by a Turkish state- Consol. Court No. 14-00267 Page 6

owned entity. For this reason, among others, Commerce determined that it would be

inappropriate to use steam coal prices to derive a benchmark for lignite. Decision

Memorandum at 14-16.

Icdas argues that all of the parties, at some point during the investigation, assumed

that steam coal and lignite coal were interchangeable in their use in power generation

and for purposes of Commerce’s investigation. Icdas’ Br. 20-22. Icdas also highlights that

in its preliminary determination, Commerce expressly found lignite and hard steam coal

to be interchangeable for purposes of the investigation’s analysis. Id. at 22 (citing

Commerce’s preliminary determination memo at 18). With this background, Icdas asserts

that “[n]o information on the record shows that any of these findings changed between

the Preliminary Determination and the Final Determination . . . . Commerce provided no

support in its apparent conclusion that lignite coal is different than hard steam coal for

purposes of power plant consumption.” Id. at 22-23.

More specifically, Icdas contends that Commerce relied upon mere “speculation”

in determining that steam coal is not interchangeable with lignite coal for purposes of the

investigation. Id. at 23. RTAC, in response, notes that Icdas acknowledged in its own

questionnaire responses several significant differences between lignite and hard steam

coal including the significant differences in caloric values of the types of coal (which in

turn affect their pricing), as well as the fact that hard steam coal ashes can be resold to

cement producers while lignite coal ash must be disposed of as waste. RTAC’s Resp. 15

(citing Icdas' CVD Questionnaire Response at 23-24). In addition, Commerce explained

that it was only after its preliminary determination during verification that it became aware Consol. Court No. 14-00267 Page 7

of the essential differences between the types of coal (including the differing physical

characteristics and uses of hard steam coal, lignite coal, coking coal, etc.), as well as the

fact that Turkish Coal Enterprises (“TKI”) “mines only lignite” and that Icdas only

purchased lignite domestically, while it imported hard steam coal. Decision Memorandum

at 13-14. Commerce also noted that the administrative record indicated significant

additional differences between steam coal and lignite, such as the fact that “lignite is

mined close to the surface and is less expensive to extract, whereas steam coal is mined

deep in the ground,” and “generating energy with lignite requires a larger volume of coal

than with hard coal, importing lignite requires greater freight and transportation expenses,

so imports of lignite (in comparison to hard coal imports) into Turkey are negligible.” Def.’s

Resp. 38 (citing GOT Verification Report).

Icdas argues that Commerce improperly narrowed the scope of the petition and

the investigation without good cause. Icdas’ Br. 20-21. Specifically, Icdas argues that it

“makes little sense for [Commerce] to exclude ‘steam coal’ from any potential benchmarks

when, in fact, steam coal includes both lignite and hard steam coal.” Id. at 21. Here, Icdas

misses the very point of Commerce’s verification and fact-finding in the course of its

investigation. Commerce initially analyzed a broad petition that posited subsidies in the

“Steam Coal” market, but upon gaining a better understanding of the factual

circumstances during the course of its investigation, Commerce found that only the

narrower lignite coal market was at issue because Icdas’ only domestic coal purchases

were of lignite while it imported hard steam coal. Contrary to Icdas’ position, in light of this

factual development, it would have made “little sense” for Commerce to continue to Consol. Court No. 14-00267 Page 8

analyze the broader market for “steam coal” when the only potential countervailable

subsidies respondents were receiving were specific to lignite coal. Commerce acted

reasonably when focusing its investigation to the “Provision of Lignite for LTAR.”2

Decision Memorandum at 14.

Icdas’ insistence that Commerce erred by rejecting the pricing data of steam coal

imports into Turkey entirely relies upon the assumption that Commerce could not and did

not reasonably determine on the record that steam coal and lignite coal were not

interchangeable for purposes of the investigation. Commerce, however, with the benefit

of further investigation after its preliminary determination, determined that lignite coal and

steam coal were not interchangeable and that lignite coal was the “only government-

provided good” being provided for LTAR, and reasonably found that steam coal prices

from import transactions into Turkey were not appropriate sources for a benchmark for

the investigation. Decision Memorandum at 15-16. Notably, Icdas did not dispute that the

lignite coal market in Turkey was distorted, implicitly accepting Commerce’s

determination that domestic lignite prices from actual transactions could not serve as a

tier one source of data for calculating a benchmark. See Icdas’ Br. 17-25; Def.’s Resp.

40. Accordingly, Commerce reasonably concluded that it would proceed to evaluate tier

two pricing data for world market transactions for lignite coal.

On this administrative record the court believes that a reasonable mind could reach

Commerce’s determination that steam coal is not interchangeable with lignite coal as well

2 “LTAR” stands for less than adequate remuneration. Consol. Court No. 14-00267 Page 9

as its determination that there were no appropriate tier one data sets for evaluating the

adequacy of remuneration for transactions in the lignite coal market.

2. Use of GTIS Data

On January 22, 2014, RTAC included Global Trade Information Services (“GTIS’)

pricing data for 2012 exports of lignite from various countries as part of its submission of

factual information. See Non-Confidential App. to Pl. Icdas’ Br. in Support of its R. 56.2

Mot. for J. on the Agency R. 50-53, 56-68 (RTAC’s Submission of Factual Information

Jan. 22, 2014), ECF. No. 57 (“Icdas’ Br. App.”). On July 29, 2014, RTAC submitted its

administrative case brief in which it argued that Commerce should depart from its

preliminary determination and find that lignite coal is distinguishable from hard steam

coal, and that Commerce accordingly should use lignite coal world market prices to

calculate the benefit received by Icdas’ purchases of lignite coal from TKI. See Icdas’ Br.

App. 249-260 (Case Brief of the Rebar Trade Commission July 29, 2014). On July 31,

2014, Icdas submitted a rebuttal brief arguing that Commerce properly used imported

hard steam coal prices to calculate the lignite benchmark in its preliminary determination.

See Icdas’ Br. App. 265-271 (Revised Rebuttal Brief of Icdas July 31, 2014). On

September 9, 2014, Commerce issued the Final Determination and corresponding

Decision Memorandum in which it explained its decision to distinguish lignite coal from

hard steam coal and its refusal to use hard steam coal prices in calculating the benchmark

for Icdas’ benefit from the lignite purchases from TKI. See Decision Memorandum at 13-

17. On September 15, 2014, Icdas submitted a ministerial errors allegation to Commerce,

in which it attempted to argue that Commerce’s selection and reliance upon the GTIS Consol. Court No. 14-00267 Page 10

lignite data was an “unintentional error” due to the GTIS’s data’s alleged inaccurate and

incomplete nature. See Icdas’ Br. App. 319-325 (Icdas’ Ministerial Errors Allegation Letter

Sept. 15, 2014). Commerce rejected Icdas’ ministerial errors allegation, explaining that

the selection and use of the GTIS data was a deliberate choice, and further noting that

“[i]f Icdas had believed that the GTIS data on the record was incomplete, it had the

opportunity during the investigation to add additional GTIS information to the record, and

did not do so.” Icdas’ Br. App. 338 (Memorandum from K. Johnson to M. Skinner, re:

Allegations of Ministerial Errors in the Final Determination Oct. 1, 2014).

Using arguments substantially similar to those in its ministerial errors allegation,

Icdas asserts in its briefing to the court that Commerce’s use of the GTIS lignite pricing

data set to establish the tier two benchmark was improper, contending that such prices

are “not reasonably available to Icdas, are not commercially realistic, and resulted in a

highly distorted margin.” Icdas’ Br. 26. Commerce does not dispute Icdas’ arguments on

the merits, but instead contends that these arguments have been waived as Icdas failed

to properly raise them before the agency during the administrative proceeding, and has

thus failed to exhaust its administrative remedies. Def.’s Resp. 44-47.

The court agrees that Icdas failed to exhaust its administrative remedies. See

28 U.S.C. § 2637(d); see also Icdas’ Br. App. 265-271; 19 C.F.R. § 351.309(c)(2)

(case briefs should contain all relevant arguments); Boomerang Tube LLC v. United

States, 856 F.3d 908 (Fed. Cir. 2017); Corus Staal BV v. United States, 502 F.3d 1370,

1379 (Fed. Cir. 2007). Consol. Court No. 14-00267 Page 11

Commerce’s use of the GTIS data to determine the lignite benchmark was

squarely in play. Specifically, RTAC argued in its administrative case brief that Commerce

should use the GTIS lignite data in calculating the lignite benchmark. See Icdas’ Br. App.

260 & n.40 (highlighting RTAC’s submission of the GTIS lignite data in early 2014). Icdas,

in its rebuttal brief, failed to directly address this argument or challenge the GTIS data

specifically proposed for use by RTAC. See Icdas’ Br. App. 266-272. Icdas had the

opportunity to challenge the adequacy of the GTIS data before Commerce but chose not

to do so, attempting to correct its omission through ministerial error comments submitted

after the final determination. See Icdas’ Br. App. 319-325 (providing substantially the

same arguments as to the impropriety of using the GTIS lignite data due to its inaccuracy

and incompleteness as Icdas has raised before this court). Contrary to Icdas’ arguments

in its reply brief, Icdas’ Reply Br. at 4-5, nothing limited its ability to respond in toto to the

usefulness of the GTIS lignite data. And in response to the ministerial error comments,

RTAC was quick to point out that Icdas did not challenge the substance of the GTIS data

until it was too late. Icdas’ Br. App. 329 (RTAC’s Response to Icdas’ Ministerial Errors

Allegation Letter) (“Icdas is trying to argue now what it failed to argue in its case or rebuttal

briefs. Icdas could have made an alternative argument on the GTIS data in the event the

Department relied on it for the final determination. The information was on the record

since Petitioner's January 22, 2014, factual information submission, but Icdas failed to

criticize it until after the final determination. Instead of raising this issue at the proper time,

Icdas argued that the Department should use another source to value lignite and ignored

the validity of the GTIS data altogether.”). It is all too clear that Icdas attempted to correct Consol. Court No. 14-00267 Page 12

its omissions by including them in a ministerial errors allegation letter, and again tries to

raise those same arguments before the court after failing to properly present them to

Commerce.

The facts here are similar to Boomerang Tube LLC v. United States, 856 F.3d 908

(Fed. Cir. 2017), in which the Federal Circuit concluded that it was appropriate to require

exhaustion of administrative remedies for interested parties attempting to raise new

arguments that that they failed to raise before Commerce in their rebuttal briefs. Like the

parties in Boomerang, Icdas here committed a similar omission and failed to raise

arguments about Commerce’s use of the GTIS data to determine the lignite benchmark

that it could and should have raised in its rebuttal brief.

Icdas tries to avoid this result by arguing that it somehow provided skeletal “notice”

to Commerce of its arguments. Icdas’ Reply 3-5 (citing Trust Chem. Co. v. United States,

35 CIT ___, 791 F. Supp. 2d 1257, 1268 n.27 (2011) (“The determinative question is

whether Commerce was put on notice of the issue, not whether Plaintiff’s exact wording

below is used in the subsequent litigation.”)). This misunderstands the requirement of

exhaustion of administrative remedies and its twin purposes of protecting administrative

authority (by requiring arguments to be presented to the agency in the first instance so

that agency may find facts, apply its expertise, and interpret statutes and regulations that

it administers) and promoting judicial economy (by avoiding unnecessary remands for

agency to address arguments in first instance). Providing mere notice of an argument or

issue accomplishes neither purpose; notice is therefore not enough. As for the passing

observation in a footnote in Trust Chem. Co. that a “determinative question” for the Consol. Court No. 14-00267 Page 13

exhaustion requirement is whether Commerce was simply “put on notice” of the issue,

this is not correct because “mere notice” fails to accomplish the twin purposes of the

exhaustion requirement, and therefore simply putting Commerce on notice cannot satisfy

the exhaustion requirement. Arguments must be presented in toto for this entire judicial

review process to work sensibly.

B. Ex Parte Meeting

Icdas challenges Commerce’s decision to hold an ex parte meeting with RTAC late

in the proceeding at which Commerce accepted untimely information (two photographs)

provided by RTAC. Icdas’ Br. at 32-34. Defendant responds that the procedural waiver

for RTAC’s photographs did not cause prejudice to Icdas because they did not depict

anything material to Commerce's decision, and that Icdas had a full opportunity to convey

its views on the meeting and photos, and Icdas did so, before Commerce issued the

Final Determination. Def.’s Resp. 50-51. Icdas for its part cites a “heavy burden” to prevail

on a claim of procedural unfairness. See Icdas’ Br. 34. Problematically for Icdas

(and despite the bad optics of an ex parte meeting held so late in the proceeding),

Commerce is expressly authorized by statute to hold ex parte meetings. See 19 U.S.C.

§ 1677f(a)(3). The statute requires Commerce to maintain a record of any ex parte

meetings and disclose any information that is submitted during the meeting, 19 U.S.C.

§ 1677f(a)(3), (4), which Commerce did here. See Icdas’ Br. App. 282-86 (Memorandum

from M. Skinner to The File, re: Ex Parte Meeting with Members of Domestic Industry and

Counsel to Petitioners Aug. 19, 2014). As Icdas has failed to demonstrate that the Consol. Court No. 14-00267 Page 14

untimely photographs factored into the Final Determination, the court sustains Commerce

on this issue.

III. Conclusion

For the foregoing reasons, the court sustains the Final Determination for each of

Icdas’ issues.

/s/ Leo M. Gordon Judge Leo M. Gordon

Dated: November 17, 2017 New York, New York