CIT Backs Commerce's Data Picks for Tier-Three Benchmark Analysis in CVD Review

The Commerce Department reasonably rejected United Nations Comtrade and Eurostat data on natural gas imports from Russia when spurning the use of a tier-two benchmark for its less than adequate remuneration of a countervailing duty respondent's natural gas purchase prices, the Court of International Trade said. Further, Judge Gary Katzmann ruled that the agency properly denied the use of Eurostat natural gas import data from Norway, Algeria, Libya and Ukraine in a tier-three benchmark calculation, while reasonably selecting International Energy Agency (IEA) data for the benchmark.

The case, brought by Turkish steel company Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S., concerns the countervailing duty administrative review of steel concrete reinforcing bar from Turkey. The company challenged Commerce's pick of a tier-three benchmark for Habas' purchases of natural gas from Turkish government-owned entity Botas, pushing instead for a tier-two benchmark.

The tier-two benchmark is used by Commerce to measure the government price for a good in a given country against a "world market price" that is available to interested purchasers in the given country. If such a price is unavailable, Commerce then falls back on its use of a tier-three benchmark whereby the agency evaluates if the government price is "consistent with market principles."

In the CVD review, Commerce spurned the use of a tier-two benchmark, claiming that "the only applicable tier-two benchmark price for natural gas in Turkey is the price valid in countries 'connected to Turkey through natural gas pipelines’ (i.e. Russia, Azerbaijan, and Iran)'" and that "natural gas prices from Russia, proposed by Habas as a tier-two benchmark, are distorted and therefore unsuitable for the construction of a natural gas benchmark." Habas then launched its challenge at CIT, arguing that the denial of its suggested data for the tier-two benchmark, from Comtrade and Eurostat, was capricious and even Commerce's rejection of certain data suggestions for the tier-three benchmark from Eurostat was unreasonable.

Commerce's issues with the data came down to reliability. In all of its explanations for why it dropped the data, Commerce cited conversion-factor and collection concerns for both the Comtrade and Eurostate numbers. For both datasets, Commerce said that since the data was reported in kilograms and Habas' own data was reported in a price per unit of energy basis, the use of Comtrade and Eurostat data in an LTAR analysis "would require conversion and would further risk varying conversion amounts." There was also no explanation of the methodology used to calculate the Comtrade or Eurostat data or the methodology each country used to collect the data, Commerce said.

The agency also found that the Comtrade and Eurostat data was "distorted by the inclusion of Russian export prices, which are themselves distorted by the Government of Russia's 'monopoly over the sales and distribution of natural gas' domestically, and its 'position as dominant supplier in the international market, which enables it to leverage gas prices and supplies for geopolitical purposes.'" Katzmann backed Commerce's rationale in these instances.

Habas also sought to attack Commerce's selection of the IEA data in the tier-three analysis, claiming that it is fatally flawed since it is not restricted to natural gas in its gaseous form, instead encompassing liquid natural gas as well, ruling it out as a candidate to be comparable to Habas' gaseous natural gas purchases. "There is no evidence that Commerce failed to consider (and adjust for) the IEA dataset’s inclusion of liquid natural gas pricing data as well as gaseous natural gas pricing data," the judge said. "Rather, the IEA data Commerce relied upon for purposes of its tier-three benchmark calculation included only 'end-use' pricing data: in other words, data regarding the sale price of natural gas when it is sold to ultimate consumers."

(Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S. v. United States, Slip Op. 21-100, CIT # 20-00065, dated 08/18/21, Judge Katzmann. Attorneys: David Simon of Law Office of David Simon for plaintiff Habas; Ann Motto for defendant U.S. government)