                                      Slip Op. 19-9

               UNITED STATES COURT OF INTERNATIONAL TRADE


 TOSÇELIK PROFIL VE SAC
 ENDÜSTRISI A.ù. and ERBOSAN
 ERCIYAS BORU SANAYI VE TICARET
 A.S.,

                     Plaintiffs,
                                                      Before: Leo M. Gordon, Judge

                                                      Consol. Court No. 17-00255
                     v.

 UNITED STATES,

                     Defendant.


                                   Opinion and Order

[Commerce’s Final Results sustained in part; remanded in part.]

                                                                Dated: January 18, 2019

      David L. Simon, Law Office of David L. Simon of Washington, DC, for Plaintiff
Tosçelik Profil ve Sac Endüstrisi A.ù.

      Irene H. Chen, Chen Law Group, LLC of Rockville, MD, for Plaintiff Erbosan
Erciyas Boru Sanayi ve Ticaret A.S.

       Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch,
U.S. Department of Justice of Washington, DC, for Defendant United States. With her on
the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director,
Franklin E. White, Jr., Assistant Director. Of counsel was Saad Y. Chalchal, Attorney,
U.S. Department of Commerce, Office of Chief Counsel for Trade Enforcement and
Compliance of Washington, DC.

       Roger B. Schagrin and John W. Bohn, Schagrin Associates of Washington, DC,
for Defendant-Intervenor Wheatland Tube Co.

      Gordon, Judge: This action involves the final results of the 2015 administrative

review conducted by the U.S. Department of Commerce (“Commerce”) of the
Consol. Court No. 17-00255                                                        Page 2


countervailing duty (“CVD”) order on circular welded carbon steel pipes and tubes from

Turkey, published as Welded Carbon Steel Pipes and Tubes from Turkey, 82 Fed. Reg.

47,479 (Dep’t of Commerce, Oct. 12, 2017) (final results admin. review) (“Final Results”);

see also accompanying Issues and Decision Memorandum, C-489-502, (Dep’t of

Commerce Oct. 4, 2017), available at https://enforcement.trade.gov/frn/summary/turkey/

2017-22069-1.pdf (last visited this date) (“Decision Memorandum”).

       Before the court are the motions for judgment on the agency record of Plaintiffs

Tosçelik Profil ve Sac Endüstrisi A.ù. (“Tosçelik”) and Erbosan Erciyas Boru Sanayi ve

Ticaret A.S. (“Erbosan”). See Mot. of Pl. Tosçelik for J. on the Agency R., ECF No. 271

(“Tosçelik Br.”); Mem. in Supp. of. Pl. Erbosan’s Rule 56.2 Mot. for Summ. J., ECF No. 29

(“Erbosan Br.”); see also Def.’s Resp. Opp. Pls.’ Rule 56.2 Mots. for J. on the Agency R.,

ECF No. 31 (“Def.’s Resp.”); Mem. of Def.-Intervenor Wheatland Tube Co. in Resp. to

Pls.’ Rule 56.2 Mots. for J. on the Agency R., ECF No. 33; Reply Br. of Pl. Tosçelik, ECF

No. 35 (“Tosçelik Reply”); Reply Br. of Erbosan, ECF No. 37 (“Erbosan Reply”). The court

has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930,

as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012),2 and 28 U.S.C. § 1581(c) (2012).

       For the reasons that follow, the court sustains Commerce’s determinations for

Tosçelik’s hot-rolled steel (“HRS”) issues, and remands Commerce’s determination

regarding Erbosan’s no shipment certification for further consideration.


1
 All citations to parties’ briefs and the agency record are to their confidential versions
unless otherwise noted.
2
 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
Consol. Court No. 17-00255                                                     Page 3


                                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 (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. 2018). 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. 2018).

      Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984) governs judicial review of
Consol. Court No. 17-00255                                                           Page 4


Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A.,

555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of

unambiguous statutory language to the contrary or unreasonable resolution of language

that is ambiguous.”).

                                       II. Discussion

                           A. Tosçelik’s Domestic Sales of HRS

       During the administrative review, Commerce examined whether a public authority

in Turkey, Eregli Demir ve Çelik Fabrikalari T.A.S. Esas Sözlesmesi (“Erdemir”), provided

Tosçelik with hot-rolled steel (“HRS”) for less than adequate remuneration. Commerce’s

regulation, 19 C.F.R. § 351.511(a)(2), sets forth the basis for identifying appropriate

market-determined benchmarks for measuring the adequacy of remuneration for

government-provided goods or services. See 19 C.F.R. § 351.511(a)(2). Under that

provision, 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,” which could include

“prices stemming    from    actual   transactions   between    private   parties.”   Decision

Memorandum at 14 (citing § 351.511(a)(2)). The regulation further specifies that in the

comparison Commerce must consider “factors affecting comparability” (e.g., product

similarity, quantities sold, whether they are imported or auctioned, etc.). Id. Additionally,

Commerce’s benchmark under § 351.511(a) must include “delivery charges and import

duties” so that the comparison price reflects the price “that a firm actually paid or would

pay if it imported the product.” 19 C.F.R. § 351.511(a)(2)(iv).
Consol. Court No. 17-00255                                                       Page 5


       In the preliminary results Commerce determined that Tosçelik’s reported prices for

domestic and imported HRS purchases from private suppliers “can serve as tier one

benchmarks.” See Decision Memorandum accompanying Circular Welded Carbon Steel

Pipes and Tubes from Turkey, 82 Fed. Reg. 16,994 (Dep’t of Commerce Apr. 7, 2017)

(Prelim. results) (“Preliminary Decision Memorandum”). Accordingly, Commerce “used

[Tosçelik’s] actual domestic and import prices for HRS to calculate the benefit from [its]

purchases of HRS from Erdemir … during the [period of review (“POR”)].” Id.

       In its administrative case brief Tosçelik argued that Commerce should calculate

the benchmark under § 351.511(a)(2)(i) using Tosçelik’s domestic sales of HRS

(i.e., compare the prices Tosçelik paid to Erdemir for HRS with the prices at which

Tosçelik sold HRS to private customers). See Decision Memorandum at 14 (summarizing

case brief arguments). The petitioner, Wheatland Tube Company, responded that use of

Tosçelik’s HRS sales data would result in a circular comparison by trying to determine

whether the price Tosçelik paid for HRS from Erdemir was subsidized by comparing that

price to a price that was also subsidized. Id. at 15.

       Commerce sidestepped the issue somewhat by determining that it could not

identify the delivery terms among Tosçelik’s sales data:

                     We do not reach the issue of whether the statute,
              the Department’s regulations, and case precedent allows
              the Department the option to use respondent’s sales of
              an input to measure the adequacy of remuneration for that
              input, because as explained below, we determine that
              our record lacks information regarding the Tosçelik
              Companies’ sales such that they are not useable tier-one
              benchmarks in this review. . . .
Consol. Court No. 17-00255                                                       Page 6


                    ...

                    We have reviewed the Tosçelik Companies’ HRS sales
             data, and find that the Tosçelik Companies’ HRS sales data
             do not specify whether the sales reported are on a delivered
             or free on board (f.o.b.) basis. Were Tosçelik Companies’
             sales made on a f.o.b. basis, the Department would be
             required to adjust those prices under its regulations to achieve
             an apples-to-apples comparison with its purchased HRS
             prices. As such, even if we were to find that the Tosçelik
             Companies’ proposed benchmark was permissible under
             19 CFR 351.511(a)(2)(i), we would lack the information
             required to ensure a comparable benchmark, as required
             under 19 CFR 351.511(a)(iv). Thus, we find that the
             benchmark proposed by the Tosçelik Companies—i.e., the
             prices at which the Tosçelik Companies sold HRS to other
             private parties—is not a viable benchmark on this record.

Decision Memorandum at 15–16. Tosçelik challenges as unreasonable Commerce’s

finding that Tosçelik’s HRS sales data do not specify delivery terms (whether they are on

a delivered or free on board (“FOB”) basis). Tosçelik Br. at 6–8. Tosçelik argues that its

domestic sales of HRS were made on a delivered basis. Id. Tosçelik references a

worksheet as support, which has three separate columns—one for total weight, one for

total value, and one for freight-adjusted value. Id. (citing Tosçelik Sales Worksheet,

CD3 193). According to Tosçelik the presence of the freight-adjusted column confirms that

its domestic sales were made on a delivered basis. Tosçelik Br. at 7.

      Defendant has a compelling counter-argument. Defendant explains that Tosçelik

confirmed that it made some export sales on an FOB basis, and that Tosçelik reported its




3
 “CD” refers to a document in the confidential administrative record, which is found in
ECF No. 19-4, unless otherwise noted. “PD” refers to a document in the public
administrative record, which is found in ECF No. 19-5, unless otherwise noted.
Consol. Court No. 17-00255                                                         Page 7


export sales in the same format as its domestic sales—one column for total weight, one

column for total value, and one for freight-adjusted value—meaning the presence of the

freight-adjusted column does not itself confirm Tosçelik’s delivery terms as Tosçelik

argues. See Def.’s Resp at 10. (citing Tosçelik’s Case Brief and Tosçelik Sales

Worksheet).

       In its reply brief Tosçelik acknowledges the weakness of its argument by

attempting to introduce a new fact that it failed to establish on the administrative record:

an alleged “common practice in the Turkish domestic market” of making sales on a

delivered basis. See Tosçelik Reply at 12. One might infer such a general practice from

the limited number of Turkish HRS transactions with clear delivery terms on the

administrative record: (1) Tosçelik’s purchases of HRS from Erdemir are on a delivered

basis, (2) Tosçelik’s purchases of HRS from other Turkish producers are on a delivered

basis, and (3) Tosçelik’s imports of HRS are on a delivered basis. The administrative

record, however, does not mandate such an inference, especially because Tosçelik never

informed Commerce of the practice. All that a reasonable mind may definitively conclude

from the administrative record is that Tosçelik’s purchases of HRS identify delivery terms

whereas Tosçelik’s sales of HRS do not. It was therefore reasonable, if not correct, for

Commerce to conclude that it could not determine the delivery terms of Tosçelik’s sales

of HRS.

                            B. Tosçelik’s Purchases of HRS

       Tosçelik argues that Commerce should have excluded from its benchmark

calculation certain purchases of HRS that involved a distinct grade of allegedly non-
Consol. Court No. 17-00255                                                         Page 8


comparable HRS. See Tosçelik Br. at 10–19. Tosçelik though did not record the grade of

its HRS purchases, and had to acknowledge in its administrative case brief that in another

proceeding, OCTG from Turkey, Commerce did not consider steel grades in its

benchmark analysis because the record did not reflect the grades purchased or the

grades in the dataset used for the benchmark. Decision Memorandum at 17 (summarizing

Tosçelik’s arguments in its case brief). Without direct evidence of the grade of its HRS

purchases, Tosçelik had to rely on indirect evidence to try and establish that some of its

HRS purchases were an alleged non-comparable grade for the benchmark. Tosçelik tried

to argue that the alleged grade difference is revealed through (1) disparate pricing within

the benchmark database (a higher price and a lower price), and (2) the fact that Tosçelik,

as supplier to a major pipeline project, was buying large volumes of higher priced HRS.

Id. Tosçelik offered an interpretation of its product catalog from which one might infer the

grade differences of its HRS purchases. Commerce was not persuaded and did not

exclude the HRS purchases from its benchmark calculation. Id. at 17–19.

       Not much need be said here other than that the court does not believe the

administrative record requires a reasonable mind to draw Tosçelik’s hoped-for inference

about the non-comparability of its HRS purchases. Tosçelik implicitly concedes the

weakness of its opening brief arguments by yet again raising a new argument in its reply

brief—that Commerce made a similar exclusion for another respondent. Tosçelik Reply

at 7–11. Leaving aside the problems of raising arguments for the first time in one’s reply

brief, the court notes that Tosçelik’s argument about the other respondent does not have

Tosçelik’s intended persuasive effect, quite the opposite. Rather than demonstrating
Consol. Court No. 17-00255                                                            Page 9


alleged arbitrary treatment of similarly situated parties, Tosçelik instead highlights that the

other respondent made a more rigorous and persuasive evidentiary proffer, which earned

that other respondent the exclusion of certain noncomparable purchases of HRS from the

benchmark. See id. The good news for Tosçelik is it now has an approach that it can

emulate to better develop the administrative record for future administrative reviews.

As for the instant review, the court sustains as reasonable Commerce’s treatment

of Tosçelik’s HRS purchases in the benchmark calculation.

                        C. Erbosan’s No Shipment Certification

       Erbosan challenges Commerce’s denial of its no shipment certification. Commerce

denied the no shipment certification based on U.S. Customs and Border Protection

(“CBP”) information demonstrating that Erbosan’s subject merchandise entered the

United States during the POR. The record confirms this fact. See Def.’s Resp. at 26 (citing

record evidence of entries of Erbosan’s subject merchandise). Erbosan argued in its

administrative case brief that other than a test shipment, “[i]t made no other shipment

itself, and it does not know or have reason to know that any of its domestic or third country

customers of subject merchandise subsequently exported or resold Erbosan’s

merchandise to the United States during the POR. Its understanding is that no such

transshipments were made.” See Erbosan Administrative Case Brief at 4, CD 219.

The POR entries of Erbosan’s subject merchandise appear to involve exportation to the

United States by a third country purchaser of Erbosan’s merchandise. In any event,

Commerce did not address Erbosan’s contention that it did not know or have reason

to know of any transshipments of its subject merchandise to the United States during
Consol. Court No. 17-00255                                                   Page 10


the POR. Commerce simply concluded “that record evidence contradicts Erbosan’s

assertions of no shipments, and demonstrates that subject merchandise produced

by Erbosan entered the United States during the POR.” Decision Memorandum at 19.

The statute requires Commerce to provide “an explanation of the basis for

its determination that addresses relevant arguments made by interested parties.”

19 U.S.C. § 1677f(i)(3)(A). The court might infer from Commerce’s decision that

Erbosan’s knowledge (actual or constructive) about any transshipments is simply

irrelevant in the CVD context. The Government argues as much in its brief. Def.’s Resp.

at 34–35. Erbosan counters that its knowledge matters. Erbosan Reply at 9–12.

Commerce should address this issue in the first instance prior to consideration by

the court. The court will therefore remand this issue to Commerce to address whether

Erbosan’s knowledge of U.S. entries of its subject merchandise is relevant in the CVD

context.

                                    III. Conclusion

       Accordingly, it is hereby

       ORDERED that this action is remanded to Commerce to address whether

Erbosan’s knowledge of U.S. entries of its subject merchandise is relevant in the CVD

context; it is further

       ORDERED that the Final Results are sustained with respect to Commerce's

treatment of Tosçelik’s HRS issues in calculating the HRS benchmark;

       ORDERED that Commerce shall file its remand results within 45 days of the end

of the Government shutdown; and it is further
Consol. Court No. 17-00255                                                  Page 11


      ORDERED that, if applicable, the parties shall file a proposed scheduling order

with page limits for comments on the remand results no later than seven days after

Commerce files its remand results with the court.




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


Dated: January 18, 2019
       New York, New York
