                                      Slip Op 17-153

                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 argued 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.

       Maureen E. Thorson, Wiley Rein LLP of Washington, DC argued for Defendant-
Intervenors Rebar Trade Action Coalition, Nucor Corporation, Gerdau Ameristeel
U.S. Inc., Commercial Metals Company, and Byer Steel Corporation. With them on the
brief were Alan H. Price and John R. Shane.
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 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 RTAC’s challenge to the Final Determination. See RTAC’s

R. 56.2 Mot. for J. on the Agency R., ECF No. 50 (“RTAC’s Br.”); see also Pl.’s Resp. in



1
 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. 14-00267                                                         Page 3


Opp’n to Def.-Intervenor RTAC’s R. 56.2 Mot. for J. on the Agency R., ECF No. 68 (“Icdas’

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

(“Def.’s Resp.”); RTAC’s Reply Br., ECF No. 80 (“RTAC’s Reply”).

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

used to calculate countervailable benefits that respondents obtained from natural gas

purchases; (2) Commerce’s selection of benchmark prices used to calculate

countervailable benefits that respondents obtained from lignite coal purchases;

(3) Commerce's refusal to exceed the largest deduction possible in applying adverse

facts available to Icdas’ use of an export revenue tax deduction program; and

(4) Commerce’s refusal to initiate an investigation on RTAC’s new subsidy allegation

relating to respondents’ sales of electricity from the Turkish government.2 For the reasons

set forth below, the court sustains the Final Determination for each of these issues

challenged by RTAC.

                                 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); see also Universal



2
 The court addresses RTAC’s separate argument about Commerce’s refusal to consider
certain documents in support of RTAC’s subsidy allegation in a separate decision.
Consol. Court No. 14-00267                                                       Page 4


Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951) (“The substantiality of evidence must

take into account whatever in the record fairly detracts from its weight.”). 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. 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. Natural Gas Benchmark

      RTAC challenges Commerce’s selection of benchmark prices for natural gas

purchases used to calculate the program benefit received by Turkish rebar producers who

received countervailable subsidies by purchasing natural gas from a Turkish state-owned

entity for less than adequate remuneration (“LTAR”). Once Commerce determined that

the market for natural gas in Turkey was distorted, 19 C.F.R § 351.511(a)(2)(ii) directs
Consol. Court No. 14-00267                                                         Page 5


Commerce to select a world market benchmark to measure the benefit received from the

provision of natural gas for LTAR pursuant to section 19 U.S.C. § 1677(5)(E)(iv).

Specifically, 19 C.F.R § 351.511(a)(2)(ii) states

       If there is no useable market-determined price with which to make the
       comparison under paragraph (a)(2)(i) of this section, the Secretary will seek
       to measure the adequacy of remuneration by comparing the government
       price to a world market price where it is reasonable to conclude that such
       price would be available to purchasers in the country in question. Where
       there is more than one commercially available world market price, the
       Secretary will average such prices to the extent practicable, making due
       allowance for factors affecting comparability.

19 C.F.R § 351.511(a)(2)(ii). To enable Commerce to calculate the benefit received from

purchasing natural gas from a state-owned entity, RTAC submitted "a set of ‘border’

monthly prices for natural gas sales between various European countries, sourced from

Global Trade Information Services (GTIS).” Decision Memorandum at 11. RTAC also

placed on the record "monthly prices for natural gas sales from Russia to Germany,

sourced from the International Monetary Fund (IMF),” and in addition “derived quarterly

natural gas prices charged by Gasprom, a large Russian gas company, using data from

the company's financial statements." Id. The IMF dataset contained no value and quantity

information and unlike the GTIS data could not be weight-averaged. Id.

       In the preliminary determination Commerce first weight-averaged the GTIS data

for a set of monthly benchmark prices, and then proceeded to simple average those prices

with the IMF data. Id. Commerce rethought this approach in the final determination.

Commerce determined that inclusion of the IMF data and the use of simple averaging

skewed the pricing results by failing to account for the differences between minor gas
Consol. Court No. 14-00267                                                          Page 6


supplier countries and dominant gas supplier countries. Id. at 12. Accordingly, Commerce

weight-averaged the GTIS data and excluded the “unweightable” IMF data. Id. Commerce

further explained that the limited IMF pricing data closely tracked the larger corresponding

GTIS data. Id. Commerce also distinguished past administrative proceedings cited by

RTAC in which Commerce used simple averaging of pricing data, noting that in these

prior cases Commerce lacked sufficient data reported in a uniform manner with adequate

information to engage in weight-averaging. Id.

       Despite this facially reasonable application of the benchmark regulation, RTAC

nevertheless contends that Commerce erred by not utilizing simple averaging instead of

weighted-averaging, and further erred by not including the IMF data in its analysis.

RTAC’s Br. 31-36. This is an admittedly steep hill for RTAC to climb. After all, Commerce

averaged "more than one commercially available world market price" without introducing

the distortions that naturally result from using a simple average. 19 C.F.R

§ 351.511(a)(2)(ii); see also RZBC Group Shareholding Co. v. United States, 39 CIT ___,

100 F. Supp. 3d 1288, 1308-11 (2015) (holding that calculating a benchmark derived from

a weighted-average methodology, if possible, is preferable to one using a simple average

methodology); id. at 1309 (noting that “Commerce now prefers to use weighted averages

when the parties report price and quantity in a uniform manner.” (citing Certain Oil Country

Tubular Goods from the Republic of Turkey, 79 Fed. Reg. 41964 (Dep't of Commerce

July 18, 2014) (final affirm. determination), and accompanying issues and decision

memorandum at cmt. 4 ("Using weighted-average prices where possible reduces the

potential distortionary effect of any specific transaction (e.g., extremely small
Consol. Court No. 14-00267                                                        Page 7


transactions) in the data."))). RTAC fails to demonstrate that Commerce acted

unreasonably in determining that weighted averaging, rather than simple averaging, was

the superior method for minimizing price distortions in establishing a natural gas

benchmark on the available data.

      RTAC further argues that Commerce did not “grapple with the question of

robustness." RTAC’s Br. 36. This is incorrect. Commerce expressly found that its ability

to "derive a robust natural gas benchmark" did not hinge on the IMF data because the

GTIS data held "hundreds of data points, [and was] ‘weightable,’ whereas the single row

of IMF pricing data for sales from Russia to Germany [was] not." Decision Memorandum

at 12. And because the GTIS dataset contained Russian gas prices that closely tracked

those in the IMF dataset, Commerce’s concerns about the distorting effect of using a

simple average outweighed RTAC’s concerns about robustness. Id.

      RTAC also speculates that because of possible "volume discounts" and alleged

non-market considerations, there are problems in claiming that large suppliers reflect the

market rate, while using a simple average represents a "midpoint of various values based

on different volumes and distances." RTAC’s Br. 33-34. RTAC, however, never made this

argument to Commerce. In its administrative case briefing RTAC objected to Commerce's

preliminary determination to use what it referred to as "an unprecedented

'weighted/simple average' hybrid methodology to calculate the benchmark[,]" see Non-

Confidential App. to RTAC’s Br. in Support of its R. 56.2 Mot. for J. on the Agency R. 266

(RTAC’s Case Brief July 29, 2014), ECF. No. 55 (“RTAC’s Br. App.”). RTAC did not argue,

as it does now, the existence of "volume discounts" in the underlying investigation, nor
Consol. Court No. 14-00267                                                        Page 8


claim that such discounts, should they exist, reflected non-market prices or were based

on non-market principles. RTAC has therefore failed to exhaust its administrative

remedies with respect to that particular aspect of its argument.

      When reviewing Commerce's antidumping determinations, the U.S. Court of

International Trade is mandated by statute to require exhaustion of administrative

remedies “where appropriate.” 28 U.S.C. § 2637(d); Boomerang Tube LLC v. United

States, 856 F.3d 908 (Fed. Cir. 2017). RTAC had an opportunity to present these

arguments to Commerce in the first instance and chose not to do so. The court therefore

will not consider them.

      Commerce's calculation of a benchmark for natural gas derived from a weighted-

average of natural gas prices in the GTIS dataset is reasonable and therefore sustained.

                                 B. Lignite Benchmark

      In its preliminary determination, Commerce determined that Icdas benefited from

subsidies from the Government of Turkey in the form of reduced coal prices in its

purchases of coal from Turkish Coal Enterprises (“TKI”), a state-owned entity. Decision

Memorandum at 13-16. Applying 19 C.F.R § 351.511, Commerce preliminarily

determined that the market prices of Icdas’ imports of steam coal could properly be used

as a tier one benchmark against which to evaluate the benefit Icdas received in

purchasing coal from TKI. However, upon subsequent challenge by RTAC and further

factual investigation, Commerce determined that Icdas only purchased lignite coal from

TKI and that lignite coal was distinguishable from other hard steam coal that Icdas

imported. Accordingly, in its final determination, Commerce excluded pricing data relating
Consol. Court No. 14-00267                                                               Page 9


to non-lignite coal, and after determining that the Turkish lignite market was too influenced

by the Government of Turkey to provide reliable market-set benchmark prices, Commerce

decided to use only “world market prices for lignite itself; specifically . . . GTIS pricing data

on the record submitted by Petitioner.” Id. at 15-16. Commerce explained that because

lignite coal was the only coal provided by the Turkish Government, the subsidy

investigation scope was properly narrowed to data just involving lignite coal. Further, as

Commerce found that the domestic lignite market was distorted by government

interference, it was necessary to use “tier two” pricing data from available world prices for

lignite. Id. at 16.

        RTAC, in its administrative case briefing, argued that hard steam coal and lignite

were not interchangeable as assumed initially by Commerce, and urged Commerce to

calculate a lignite benchmark from a simple averaging of world market pricing data.

RTAC’s Br. 36-37. Although Commerce ultimately adopted the position that lignite and

hard steam coal were not interchangeable, and that the subsidy investigation should be

limited to lignite coal, Commerce rejected RTAC’s suggestion of benchmark calculations

using a simple average of world prices in favor of using a weighted average of lignite

world pricing data. Decision Memorandum at 16-17. There were two sets of lignite world

pricing data on the record: GTIS and IMF. As in its natural gas subsidy analysis,

Commerce noted that the GTIS data provided monthly quantity and value pricing data for

several countries lignite transactions and that such data was “weightable;” whereas the

IMF data provided only contained monthly unit prices for sales of lignite from Australia

and was not “weightable.” Id. at 16. Using the same reasoning as it had applied in
Consol. Court No. 14-00267                                                      Page 10


evaluating the natural gas benchmark, Commerce calculated a lignite benchmark from a

weighted average of the pricing data, using only the “weightable” GTIS data and excluding

the IMF data. Id.

       RTAC challenges Commerce’s decision to use a weighted average to calculate

the lignite benchmark and Commerce’s corresponding decision to exclude the IMF data.

RTAC’s argument is essentially identical to its challenge that Commerce improperly

calculated the natural gas benchmark; both arguments urge that Commerce should have

used a simple average to calculate the appropriate benchmark and that Commerce

should not have excluded the “unweightable” IMF data absent a finding of defects in that

data. See RTAC’s Br. 37 (explaining that “DOC’s benchmarking calculations with respect

to lignite purchased by respondents from the Turkish government are flawed for the same

reasons as the benchmarking calculations for natural gas.”).

       Here again, as with the natural gas benchmarks, Commerce acted reasonably in

deciding that weight-averaging is preferable to simple averaging in calculating

benchmarks upon available world market pricing data. See Section II.A, supra

(Commerce’s determination that the distortion-minimizing benefits of weight-averaging

outweigh the benefits provided by simple averaging was reasonable). The court therefore

sustains Commerce’s weight-averaging of the GTIS data to determine the lignite

benchmark.

                                C. Export Revenue Tax

       Commerce determined, contrary to Icdas’ representation, that Icdas had in fact

used the Turkish “Deductions for Taxable Income for Export Revenue” program to reduce
Consol. Court No. 14-00267                                                        Page 11


its taxable income in 2011. Decision Memorandum at 19. As a result Commerce used an

adverse inference in evaluating the benefit Icdas received under the program. Id.

Commerce explained that the program is well known to Commerce, that Commerce has

examined, verified, and countervailed it in numerous Turkey countervailing duty cases.

Commerce also explained that the program has two built-in limitations: (1) the amount of

the deduction for undocumented expenses cannot exceed 0.5 percent of export revenue

and (2) there is a cap to the amount of benefit that a company can receive under the

program. Commerce therefore maintains a practice of applying, as adverse facts

available (“AFA”), the largest deduction possible under the program. Id. (citing Circular

Welded Carbon Steel Pipes and Tubes from Turkey, 78 Fed. Reg. 64,916 (Dep't of

Commerce Oct. 30, 2013) (countervailing duty admin. rev.)). Consistent with this practice,

Commerce determined the largest deduction possible for Icdas under the program, and

then derived a net countervailable subsidy rate of 0.10 percent ad valorem for Icdas. Id.

       RTAC challenges Commerce’s selection of this rate, arguing that Commerce’s

decision was inconsistent with a more general prior practice of eschewing de minimis

rates, and that the rate applied is apparently insufficient to induce interested parties to

participate in the proceedings, thus frustrating the purpose of assigning an AFA rate.

RTAC’s Br. 38-42. RTAC argues that Commerce should have instead contrived an

adverse rate greater than the maximum benefit that Icdas could possibly receive under

the Turkish program.

       Commerce reasonably rejected RTAC’s arguments. Commerce explained that it

acted in accordance with its prior practice for this specific program, applying the largest
Consol. Court No. 14-00267                                                     Page 12


deduction possible, which was known and calculable. Decision Memorandum at 19.

RTAC identifies no express statutory command requiring Commerce to inflate a remedial

countervailing duty rate beyond the known, calculable, maximum benefit under this

particular Turkish program. It also strikes the court as an overreach to seek additional

duties for a benefit that has been fully countervailed, (wholly satisfying the statute’s

primary purpose of leveling the playing field, see generally 158 Cong. Rec. H1166,

H1166–73 (Mar. 6, 2012), and lessening the import of whatever subordinate purpose

inheres in the adverse inference provision). The court therefore sustains Commerce’s

decision.

                        D. Rejected New Subsidy Allegation

      RTAC contends that Commerce should have initiated an investigation for alleged

electricity subsidies.3 In support of its allegation, RTAC argued that the Turkish

government allegedly paid power producers more than adequate remuneration for the

sale of electricity. See RTAC’s Br. App. 241 (Memorandum from Kristen Johnson, Int'l

Trade Compliance Analyst, to Melissa G. Skinner, Director, re: Countervailing Duty (CVD)

Investigation on Steel Concrete Reinforcing Bar from Turkey: Decision Memorandum on

Additional Subsidy Allegation Nov. 25, 2013). Commerce reviewed RTAC’s argument and

information and determined that although RTAC’s submissions indicated that

Independent Power Producers (“IPPs”) benefitted from the Turkish government

guarantees and electricity purchase prices above market rates, that same evidence



3
 The court is addressing separately RTAC’s argument about Commerce’s rejection of
certain documents in support of RTAC’s subsidy allegation.
Consol. Court No. 14-00267                                                       Page 13


distinguished IPPs from autoproducers (like respondents) and did not directly indicate

that autoproducers sold surplus electricity to the government at higher than market rates.

RTAC argues that Commerce unreasonably concluded from the administrative record

that IPPs were distinct and separate from the autoproducers subject to RTAC’s subsidy

allegation. RTAC’s Br. 28.

       RTAC’s proffered information that IPPs were offered “above-market prices” and

guarantees from the Government of Turkey, and wanted Commerce to infer that those

same benefits accrued to Turkish autoproducers. Commerce though did not draw that

inference, instead noting that RTAC’s own submissions “consistently distinguish[ed] IPPs

from autoproducers.” RTAC’s Br. App. 241-42. Commerce expressly noted that

“[p]etitioner provided no information indicating that rebar autoproducers also operate as

IPPs.” Id. at 242.

       All RTAC offers is its own inference about the absence of direct evidence. That

alone though is insufficient to undermine the reasonableness of Commerce's equally

reasonable inference from the available record evidence. Daewoo Elecs. Co. v. Int'l Union

of Elec., Elec., Technical, Salaried & Mach. Workers, AFL–CIO, 6 F.3d 1511, 1520

(Fed. Cir. 1993) (“The question is whether the record adequately supports the decision of

[Commerce], not whether some other inference could reasonably have been drawn.”).

The court therefore sustains this aspect of the Final Determination.
Consol. Court No. 14-00267                                                      Page 14


                                     III. Conclusion

         For the foregoing reasons, the court sustains Commerce’s Final Determination.



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



Dated:      November 17, 2017
            New York, New York
