Slip Op 17-153 UNITED STATES COURT OF INTERNATIONAL TRADE

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

v. UNITED STATES, Defendant, and REBAR TRADE ACTION COALITION, et al., and HABAS SINAI VE TIBBI GAZLAR ISTIHSAL ENDUSTRISI, A.S., Def endant-Intervenors. Before: Leo M. Gordon, Judge Consol. Court No. 14-00267

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, Comm ercial Litigation Branch, Civil Division, U.S. Department of Justice of Washi ngton, 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, Wile y Rein LLP of Washingt on, DC argued for DefendantIntervenors Rebar Trade Action Coalition, Nucor Corporation, Gerdau Ameristeel U.S. Inc., Commercial Metals Company, and By er 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 Ba r 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 al so Issues & Decision Memorandum for the Final Affirmative Countervailing Duty De termination and Final Affirmative Critical Circumstances Determination in the Countervaili ng 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://enf orcement.trade.gov/frn/summary/turkey/2014- 21989-1.pdf (last visited this date) (“Decisi on Memorandum”); see also Steel Concrete Reinforcing Bar from the Republic of Turk ey, 79 Fed. Reg. 65,926 (Dep’t of Commerce Nov. 6, 2014) (final countervailing duty order) (“Or der”). Before the c ourt are the motions for judgment on the agency record of Plaintif f Icdas Celik Enerji Tersane ve Ulasim, A.S. (“Icdas”) and Defendant-Int ervenor Rebar Trade Action C oalition ("RTAC"), and its individual members, Nucor Cor poration, Gerdau Ameristeel U. S. Inc., Commercial Metals Company, and Byer Steel Corporation. The c ourt 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 Ta riff 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 t he Agency R., ECF No. 69 (“Def.’s Resp.”); RTAC’s Reply Br., ECF No. 80 (“RTAC’s Reply”). Specifically, RTAC challenges (1) Comme rce’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 larg est deduction possible in applying adverse facts available to Icdas’ use of an ex port revenue tax deduction program; and (4) Commerce’s refusal to initiate an investigation on RTAC’s new subsidy allegation relating to respondents’ sales of elec tricity from the Turkish government. 2 For the reasons set forth below, the court su stains the Final Determination for each of these issues challenged by RTAC. I. Standard of Review The court sustains Commerce’s “determinat ions, findings, or conclusions” unless they are “unsupported by subs tantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More spec ifically, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonabl e given the record as a whole. Nippon Steel Corp. v. United States , 458 F.3d 1345, 1350-51 (F ed. Cir. 2006); see also Universal

2 The court addresses RTAC’s separate argument about Commerc e’s refusal to consider certain documents in support of RTAC’s s ubsidy 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 fa irly detracts from its weight.”). Substantial evidence has been described as “such relev ant evidence as a reasonable mind might accept as adequate to support a conclusion.” Du Pont 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 adm inistrative agency’s finding from being supported by substantial evid ence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though, “s ubstantial evidence” is bes t understood as a word formula connoting reasonableness review. 3 Charle s 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 wh ether 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 t he program benefit received by Turkish rebar producers who received countervailable subsidies by purchasi ng natural gas from a Turkish state-owned entity for less than adequate remuneration (“LTA R”). Once Commerce determined that the market for natural gas in Turkey was di storted, 19 C.F.R § 351.511(a)(2)(ii) directsConsol. 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 pursu ant 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-determi ned price with which to make the comparison under paragraph (a)(2)(i) of th is section, the Se cretary will seek to measure the adequacy of remunerati on by comparing the government price to a world market price where it is reasonable to conclude that such price would be available to purchaser s 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 calculat e the benefit received from purchasing natural gas from a state-owned entity, RTAC subm itted "a set of ‘border’ monthly prices for natural gas sales betwe en various European countries, sourced from Global Trade Information Services (GTI S).” Decision Memorandum at 11. RTAC also placed on the record "monthly prices for na tural gas sales from Russia to Germany, sourced from the Internationa l 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 t hen 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 IM F data and the use of simple averaging skewed the pricing results by failing to a ccount for the differences between minor gasConsol. Court No. 14-00267 Page 6

supplier countries and dominant gas supplier c ountries. Id. at 12. Accordingly, Commerce weight-averaged the GTIS data and excluded the “unwei ghtable” IMF data. Id. Commerce further explained that the limit ed IMF pricing data closely tra cked the larger corresponding GTIS data. Id. Commerce also distinguished past ad ministrative proceedings cited by RTAC in which Commerce used simple averagi ng of pricing data, not ing that in these prior cases Commerce lacked sufficient dat a reported in a unifo rm manner with adequate information to engage in weight-averaging. Id. Despite this facially reasonable applicat ion 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 t he IMF data in its analysis. RTAC’s Br. 31-36. This is an admittedly steep h ill for RTAC to climb. After all, Commerce averaged "more than one commercially available world market price" without introducing the distortions that natur ally 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 benc hmark 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 t he Republic of Turkey , 79 Fed. Reg. 41964 (Dep't of Commerce July 18, 2014) (final affirm. determinat ion), and accompanying issues and decision memorandum at cmt. 4 ("Usi ng weighted-average prices w here possible reduces the potential distortionary effect of any specific transaction (e.g., extremely smallConsol. Court No. 14-00267 Page 7

transactions) in the data."))). RTAC fails to demonstrate that Commerce acted unreasonably in determining that weighted averaging, rather t han simple averaging, was the superior method for minimizing price di stortions in estab lishing a natural gas benchmark on the available data. RTAC further argues that Commerce di d not “grapple with the question of robustness." RTAC’s Br. 36. This is incorre ct. Commerce expressly found that its ability to "derive a robust natural gas benchmark" di d not hinge on the IMF data because the GTIS data held "hundreds of dat a points, [and was] ‘weight able,’ 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 concer ns 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, ther e are problems in claiming that large suppliers reflect the market rate, while using a simple average repr esents 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 NonConfidential 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 di scounts" in the underlying investigation, norConsol. Court No. 14-00267 Page 8

claim that such discounts, s hould they exist, reflected non-ma rket prices or were based on non-market principles. RTAC has therefor e 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); Boom erang Tube LLC v. United States, 856 F.3d 908 (Fed. Cir. 2017). RTAC had an opport unity 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 fo r natural gas derived from a weightedaverage of natural gas pr ices in the GTIS dataset is r easonable and therefor e 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 Enterp rises (“TKI”), a state-owned entity. Decision Memorandum at 13-16. Applying 19 C.F. R § 351.511, Commerc e preliminarily determined that the mark et prices of Icdas’ im ports 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 s ubsequent 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 determinat ion, Commerce excluded pr icing data relatingConsol. Court No. 14-00267 Page 9

to non-lignite coal, and after determining that t he Turkish lignite market was too influenced by the Government of Turkey to provide reliable market-set benc hmark prices, Commerce decided to use only “world market prices for ligni te 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 dat a 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 initia lly 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 ultimate ly 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 RT AC’s suggestion of benc hmark calculations using a simple average of world prices in fa vor 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 va lue pricing data for several countries lignite transactions and that such data was “weightable;” whereas the IMF data provided only contained m onthly unit prices for sales of lignite from Australia and was not “weightable.” Id. at 16. Using t he same reasoning as it had applied inConsol. Court No. 14-00267 Page 10

evaluating the natural gas benc hmark, Commerce calculated a lignite benchmark from a weighted average of the pricing data, using onl y 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 corres ponding decision to exclude the IMF data. RTAC’s argument is essentially identical to its challenge that Commerce improperly calculated the natural gas benchmark; both argum ents urge that Commerce should have used a simple average to calculate the appropriate benchmark and that Commerce should not have excluded the “unweightable” IM F data absent a finding of defects in that data. See RTAC’s Br. 37 (expla ining that “DOC’s benchmarki ng calculations with respect to lignite purchased by respondents from the Tu rkish government are flawed for the same reasons as the benchmarking calc ulations for natural gas.”). Here again, as with the natural gas benc hmarks, Commerce acted reasonably in deciding that weight-averagi ng is preferable to simple averaging in calculating benchmarks upon available world market pr icing 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 reasonab le). 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’ r epresentation, that Icdas had in fact used the Turkish “Deductions for Taxable Inco me for Export Revenue” program to reduceConsol. Court No. 14-00267 Page 11

its taxable income in 2011. Decision Memor andum at 19. As a result Commerce used an adverse inference in eval uating the benefit Icdas rece ived under the program. Id. Commerce explained that the program is well known to Commerce, that Commerce has examined, verified, and counterva iled it in numerous Turkey countervailing duty cases. Commerce also explained that t he program has two built-in lim itations: (1) the amount of the deduction for undocumented exp enses cannot exceed 0.5 perc ent of export revenue and (2) there is a cap to the amount of benef it that a company can receive under the program. Commerce therefore maintains a practice of applying, as adverse facts available (“AFA”), the largest deduction possibl e under the program. Id. (citing Circular Welded Carbon Steel Pipes and Tubes from Tu rkey, 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 possi ble 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 applie d is apparently insufficient to induce interested parties to participate in the proceedings, thus frustr ating the purpose of assigning an AFA rate. RTAC’s Br. 38-42. RTAC ar gues that Commerce should ha ve instead contrived an adverse rate greater than the maximum benefit that Icdas could possibly receive under the Turkish program. Commerce reasonably rejected RTAC’s ar guments. Commerce explained that it acted in accordance with its prio r practice for this specific program, applying the largestConsol. Court No. 14-00267 Page 12

deduction possible, which was known and calc ulable. Decision Memorandum at 19. RTAC identifies no express statutory command requiring Comme rce to inflate a remedial countervailing duty rate beyond the known, calculable, maximum benefit under this particular Turkish program. It also strikes t he court as an overreach to seek additional duties for a benefit that has been fully countervailed, (who lly satisfying the statute’s primary purpose of leveling t he playing field, see generally 158 Cong. Rec. H1166, H1166–73 (Mar. 6, 2012), and lessening the impor t 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 pow er producers more than ade quate 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 Reinforci ng Bar from Turkey: Decision Memorandum on Additional Subsidy Allegati on Nov. 25, 2013). Commerce revi ewed 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 abov e 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 autopr oducers (like respondents) and did not directly indicate that autoproducers sold surplus electricity to the government at higher than market rates. RTAC argues that Commerc e unreasonably concluded from the administrative record that IPPs were dist inct 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 autoproducer s. Commerce though di d not draw that inference, instead noting that RTAC’s own submissions “consis tently distinguish[ed] IPPs from autoproducers.” RTAC’s Br. App. 241-42. Commerc e expressly noted that “[p]etitioner provided no information indicati ng that rebar autoproduc ers 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 av ailable record evidence. Daew oo 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 t he record adequately supports the decision of [Commerce], not whether so me 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 su stains Commerce’s Final Determination.

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

Dated: November 17, 2017 New York, New York