Slip Op. 11-107 UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Leo M. Gordon, Judge Court No. 10-00310 PUBLIC VERSION [Confidential material deleted on page 11.] OPINION [Administrative review results sustained.] Dated: August 24, 2011 Appleton Luff Pte Lt d. (Kelly A. Slater) for Plainti ff Yieh Phui Enterprise Co. Ltd. Tony West, Assistant Attorney General , Jeanne E. Davidson, Director, Franklin E. White, Jr., Assistant Director, Commerci al Litigation Branch, Civil Division, U.S. Department of Justice (Melissa M. Devine ); and Office of Chief Counsel for Import Administration, Department of Commerce (Willi am G. Isasi), of counsel, for Defendant United States. Schagrin Associates (Roger B. Schagrin, John W. Bohn, Michael J. Brown) for Defendant-Intervenor Allied Tu be and Conduit Corporation. King & Spalding (Gilbert B. Kaplan, Bria n E. McGill, Daniel L. Schneiderman, P. Lee Smith) for Defendant-Inter venor Wheatland Tube Company. Gordon, Judge: This action involves an ad ministrative review conducted by the United States Department of Commerce (“Co mmerce") of the antidumping duty order covering certain circular welded carbon steel pipes and tubes from Taiwan. See Circular Welded Carbon Steel Pipes and Tubes from Taiwan, 75 Fed. Reg. 62,366 (Dep’t of Commerce Oct. 8, 2010) (final results admin. re view) (“Final Results”); see also Issues YIEH PHUI ENTERPRISE CO., Plaintiff,

v. UNITED STATES, Defendant.Court No. 10-00310 Page 2

and Decision Memorandum, A-583-008 (Dep’t of Commerce Sept. 30, 2010) available at http://www.ia.ita.doc.gov/frn/summary /TAIWAN/2010-25298-1.pdf (last visited Aug. 24, 2011) (“Decision Memorandum”). Befo re the court is Plaintiff Yieh Phui Enterprise Company’s (“Yieh Phui”) moti on for judgment on the agency record challenging Commerce’s selection of invoice dat e as the date of sale for Plaintiff's U.S. sales. 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) (2006), 1 and 28 U.S.C. § 1581(c) (2006). For the reasons set forth below , the Final Results are sustained. I. Standard of Review For administrative reviews of antidumpi ng duty orders, the court sustains Commerce’s determinations, findings, or conc lusions unless they are “unsupported by substantial evidence on the record, or other wise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, w hen 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). Subst antial 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 “somethi ng less than the weight of the evidence,

1 Further citations to the Tariff Act of 1930, as amended, ar e to the relevant provisions of Title 19 of the U.S. Code, 2006 edition.Court No. 10-00310 Page 3

and the possibility of drawing tw o 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 u nderstood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d. ed. 2011). Ther efore, when addressing a subst antial evidence issue raised by a party, the court analyze s whether the chal lenged agency action “was reasonable given the circumstances presen ted by the whole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's F ed. Forms, National Courts § 13342 (2d ed. 2011). Separately, when reviewing Commerce's in terpretation of its regulations, the court accords the agency’s interpretation “controlling weight unless it is plainly erroneous or inconsistent with t he regulation.” Am. Signature, Inc. v. United States, 598 F.3d 816, 827 (Fed. Cir. 2010) (quoting Bowles v. Seminol e Rock & Sand Co., 325 U.S. 410, 414 (1945)). II. Background In general “an antidumping analysis involv es a comparison of export price or constructed export price in t he United States with normal val ue in the foreign market.” 19 C.F.R. § 351. 401(a) (2010) 2 ; see also 19 U.S.C. §§ 167 7a, 1677b. The date of sale for a respondent’s U.S. sales is part of t he export price calculation, which is then

2 Further citations to title 19 of the C ode of Federal Regulatio ns are to the 2010 edition.Court No. 10-00310 Page 4

compared to normal value. S ee 19 C.F.R. § 351.401(a), (i). In the preliminary results Commerce used invoice date as the date of sale for Plaintiff’s U.S. sales. In its administrative case brief Plaintiff argued that Commerce erred because Commerce’s “calculation of the frequency of change to the ma terial terms of sale between the final contract date and the invoice date was incorrectly based on a selective review of sales documents,” and that Plaintiff “had an extr aordinarily low percent age of changes after the final contract date for its U.S. sales.” Yieh Phui Admin. Case Br. 3-4, PD 74. 3 Plaintiff also argued that t he difference in its U.S. sales and home market sales processes mandated use of contra ct date. Id. Plaintiff also argued that the facts and circumstances of its U.S. sale s were similar to other admin istrative decisions in which Commerce used a date other than invoice date. Commerce was not persuaded. In the Final Results Commerce provided a detailed, well-reasoned response to each of Plaintiff’s arguments, and continued to use invoice date for Plaintiff’s U.S. sales. S ee Decision Memorandum at 4-8. Specifically, Commerce found that Plaintiff underreported t he total number of U.S. sales for which the material terms changed after contract date and therefore understated those changes during the period of review. Id. at 8; Final Analysis Memorandum for Yieh Phui Enterprise Co., Ltd.: Circular Welded Carb on Steel Pipes and Tubes from Taiwan (A583-008), May 1, 2008-April 30, 2009 at 3-4 (“Confidential Final Analysis Memorandum”), CD 24. Commerce concluded that the material terms of multiple U.S.

3 “PD__” refers to a document contained in the public administrative record. “CD__” refers to a document cont ained in the confidential record.Court No. 10-00310 Page 5

sales changed after contract date and selected in voice date as the date of sale. Id. Commerce also rejected Plaintiff’s arguments that relied on differences in Plaintiff’s U.S. and home market sales processes to establis h contract date as the date of sale. See Decision Memorandum at 6-8. III. Discussion The antidumping statute does not specific ally address Commerc e’s selection of date of sale. Commerce, however, has a long- standing regulation that does, 19 C.F.R. § 351.401(i) (“Date of Sale”). Section 351.401(i) provides t hat Commerce “normally will use the date of invoice” as the date of sale . The regulation specifies invoice date as the presumptive date of sale because as a matter of commercial reality, the date on which the terms of a sale are first agreed is not necessarily the date on which those terms are finally established. In the Department's ex perience, price and quantity are often subject to continued negotiation between the buyer and t he seller until a sale is invoiced. The existence of an enforceable sales agreement between the buyer an d the seller does not alter the fact that, as a practical matter, customers frequently c hange their minds and sellers are responsive to those changes. The Department also has found that in many industries, even though a buyer and seller may initially agree on the terms of a sale, those terms rema in negotiable and are not finally established until the sale is invoiced. Thus, the date on which the buyer and seller appear to agr ee on the terms of a sale is not necessarily the date on which the terms of sale actually are est ablished. T he Department also has found that in most industrie s, the negotiation of a sale can be a complex process in which the details o ften are not committed to writing. In such situations, the Department lacks a firm basis for determining when the material terms were established. In fact, it is not uncommon for the buyer and seller themselves to disagr ee about the exact date on which the terms became final. However, for them , this theoretical date usually has little, if any, relevance. From their per spective, the relevant issue is thatCourt No. 10-00310 Page 6

the terms be fixed when t he seller demands payment (i.e., when the sale is invoiced). Antidumping Duties; Countervailing Duties: Fi nal Rule, 62 Fed. Reg. 27,296, 27,348-49 (Dep’t of Commerce May 19, 1997) (“Preambl e”). Notwithstand ing the regulatory presumption of invoice date, Commerce “may use a date other than the date of invoice if [Commerce] is satisfied that a differ ent date better reflects the date on which the exporter or producer establishes the material terms of sale.” 19 C.F. R. § 351.401(i). In implementing the regulation, Comme rce further explained that if the Department is presented with satisf actory evidence that the material terms of sale are finally established on a date other than the date of invoice, the Department wil l use that alternative date as the date of sale. For example, in situations involv ing large custom-made merchandise in which the parties engage in formal negotiation and contracting procedures, the Department usually will use a date other than the date of invoice. However, the D epartment emphasizes that in these situations, the terms of sale must be firmly established and not merely proposed. A preliminary agreement on terms , even if reduced to writ ing, in an industry where renegotiation is common does not provide any reliable indication that the terms are truly “established” in the minds of the buyer and seller. This holds even if, for a particular sa le, the terms were not renegotiated. 62 Fed. Reg. at 27,349. Comm erce therefore has some flex ibility in selecting the date of sale; the presumption in fa vor of invoice date is not c onclusive. See, e.g., Circular Welded Non-Alloy Steel Pipe From the Republic of Korea, 63 Fed. Reg. 32,833, 32,385 (Dep’t of Commerce 1998) (While . . . the Depar tment prefers to use invoice date as the date of sale, we are mindful that this prefer ence does not require t he use of invoice date if the facts of a case indicate a different date better reflects the time at which the material terms of sale were established. Indeed, . . . both the Proposed and FinalCourt No. 10-00310 Page 7

Regulations speak to giving the Department flexibility to abandon the use of invoice date.”) (emphasis added); Issues and Decisi on Memorandum for the Antidumping Duty Administrative Review of Ce rtain Welded Carbon Steel Pipes and Tubes from Thailand, A-549-502 at Comment 1 (Dep’t of Co mmerce Oct. 4, 2000) (“[T]he Department recognizes the need for flexibilit y in those circumstances in which an alternative date better reflects the date of sale. ”) (emphasis added) available at http://www.ia.ita.doc.gov/frn/summary/tha iland/00-26385-1.txt (las t visited Aug. 24, 2011). Plaintiff posits a “legal” argument that Commerce was too inflexible (or not flexible enough) in applying its date of sale re gulation in the Final Results. This though is not so much a “legal” argument (challengi ng Commerce’s interpretation of its own regulation), as it is a concessi on by Plaintiff that it needs a “flexibly” applied date of sale regulation to achieve its desired result. The court, however, c annot meaningfully or sensibly review whether Commerce’s date of sa le selection was flexible or inflexible (words that do not appear in the regulation), but instead must focus on the more concrete and reviewable problem of whether a reasonable mind woul d conclude that the administrative record as a whole demonstrates t hat Plaintiff’s material terms of its U.S. sales were “finally” and “firmly” established on contract date. Pream ble, 62 Fed. Reg. at 27,349; see, e.g., Allied Tube and Conduit Corp. v. Unit ed States, 24 CIT 1357, 1371- 72, 127 F. Supp. 2d 207, 220 (2000) (“Alli ed Tube”) (“Plaintiff, therefore, must demonstrate that it present ed Commerce with evidence of sufficient weight andCourt No. 10-00310 Page 8

authority as to justify its factual conclu sions as the only reasonable outcome. If, however, the record indicates that Commerce' s decision to use the invoice date as the date of sale was reasonable and was support ed by substantial evidence, Plaintiff's arguments must fail.”). 4 In making its “legal” argument about flexibility, Plaint iff relies on various quotes contained in Nucor Corp. v. United States , 33 CIT __, __, 612 F. Supp. 2d 1264, 1341 (2009) (“Nucor”) (“Flexibility in Commerce’s dat e of sale analysis is more than a mere regulatory preference; it rises to the level of a statutor y mandate.” (citing Allied Tube, 24 CIT at 1368, 127 F. Supp. 2d at 216-17)). Pl. Mot. for J. on the Agency R. 7, ECF No. 35 (“Pl. Br.”). Plaintiff, however, fails to ci te or discuss the subsequent history of Nucor, which tempers, if not mutes ent irely, the court’s earlier, intermediate decision. In Nucor the court remanded Commerce’s selection of in voice date for further consideration. Nucor 33 CIT at ___, 612 F. Supp. 2d at 1323. On remand Commerce provided a comprehensive, well-reasoned di scussion of the date of sale issue and regulation, one in which Commerce determined that its original selection of invoice date and its date of sale methodology were correct. See Nucor Corp. v. United States, Consol. Court No. 05-00616, Final Results of R edetermination at 43-51, 76- 91 (Nov. 6, 2009), ECF No.

4 During the administrative review Plai ntiff attempted to argue that Commerce had an established administrative practice of us ing contract date in situations similar to its own, citing prior administrative decisi ons in which Commerce applied contract date as the date of sale. In the Final Result s Commerce disagreed a nd distinguished each of the prior administrative dec isions cited by Plaintiff. Decision Memorandum at 4-7. Plaintiff has not presented t hat argument to the court, choos ing not to pursue the issue of whether Commerce’s selection of invoice date is inconsistent with prior administrative practice.Court No. 10-00310 Page 9

117 (“Nucor Remand Results”). The court then sustained Commerce’s remand results in their entirety. See Nucor Corp. v. United States, 34 CIT ___, Slip Op. 10-06 (Jan. 19, 2010) (sustaining remand results). Given t he intermediate posture of Nucor and its subsequent history, in the court’s view it does not possess as much persuasive weight on the interpretation and applicat ion of 19 C.F.R. § 351.401(i) as Plaintiff contends. 5 The more helpful and persuasive guide to Commerce’s date of sale regulation is actually provided in the Nucor Remand Resu lts, which Plaintiff has not cited nor addressed. With that said, the court turns to Plai ntiff’s substantial ev idence challenge and specifically, whether a reas onable mind would conclude that the administrative record as a whole demonstrates that Plaintiff’s materi al terms of its U.S. sales were “finally” and “firmly” established on contra ct date. This is a difficult issue for Plaintiff because, as Plaintiff concedes, material terms did change after contract date for a portion of Plaintiff’s U.S. sales. Pl. Br. 10; see al so Decision Memorandum at 4. Given these changes, Plaintiff could not (and did not) argue that the material terms for all of its U.S. sales were finally and firmly established on contract date, (or that any changes to

5 To the extent that the court’s statem ent in Nucor (“Flexibility in Commerce’s date of sale analysis is more than a mere regul atory preference; it rises to the level of a statutory mandate.”) has any linge ring precedential effect, this court declines to endorse that reading of the regulat ion. If flexibility truly rose to the level of a st atutory mandate, one would expect a wide and vari ed application of dates of sale in administrative reviews. Commerce, however, rejected su ch “flexibility” when promulgating the regulation, opting for predictability and admin istrability in setting invoice date as the presumptive date of sale, subjec t to various alternatives if the record demonstrates that the material terms are finally and fi rmly established on an alternative date.Court No. 10-00310 Page 10

material terms were reflected in duly executed contract am endments). Plaintiff instead addresses this problem by arguing that t he changes in material terms occurred too “infrequently” to justify a sele ction of invoice dat e. Pl. Br. 10-11. In other words, Commerce should have simply disregarded or ignored thes e changes. To support this argument Plaintiff provides a dictionary defini tion of the word “frequent.” Pl. Br. 10. This though is not much help to the court. Leaving aside that the wo rd “frequent” does not appear in the regulation, the critical question is not whether the raw number of Plaintiff’s U.S. sales with mate rial changes satisfies a dictio nary definition of the word “frequent” or “infrequent” but whether those inst ances are so small as to be de minimis or negligible within the meaning of the regulation and antidum ping statute. This is a question Plaintiff never addresses. Duri ng the administrative review Commerce observed that Plaintiff failed to “establis h why the percentage [change in sales] should be considered ‘extraordi narily low’. . . .” Decision Memo randum at 8. Likewise, here, Plaintiff fails to anchor its “frequency” argument to a statutor y, regulatory, or administrative law standard 6 that the court may apply to review the reasonableness of Commerce’s refusal to treat as de minimis or negligible Plaintiff’s U.S. sales for which material terms changed. It is not as if such standards do not ex ist. The statute and regulations do provide

6 Perhaps the most logical source for such standards is Commerce’s own prior administrative decisions involvin g the date of sale regulation. In its briefs before the court, however, Plaintiff did not analyze Commerce’s prior adm inistrative decisions to provide some guideline or benchmark as to what percentage of material changes Commerce may have disregarded in the past when selecting a date of sale other than invoice date.Court No. 10-00310 Page 11

some possible helpful guidelines, at leas t through analogy. For example, Commerce treats “as de minimis any weig hted-average dumping margin . . . that is less than 0.5 percent ad valorem. . . .” 19 C.F.R. § 351.106. A 2 percent threshold applies to investigations. 19 U.S.C. § 1673b(b)(3). There is also a 3 percent negligibility benchmark for country imports in injury det erminations. 19 U.S.C. § 1677(23). Needless to say, the frequency of material c hanges in Plaintiff’s U. S. sales was greater than each of these measures. 7 It is therefore not possible on this admi nistrative record to conclude that the material terms of Plaintiff’s U. S. sales were “finally” and “f irmly” established on contract date, and by extension, that Commerce’s selection of in voice date was unreasonable. The fact that material terms of multiple sales changed during the period of review, combined with Commerce’s reasonable infe rence that even more sales may have changed post-contract than or iginally determined, led Commerce to reasonably conclude that invoice date was appropriate . Decision Memorandum at 8; see also Preamble, 62 Fed. Reg. at 27,348-49 (“The existenc e of an enforceable sales agreement between the buyer and t he seller does not alter the fact that, as a practical matter, customers frequently change their minds and sellers are responsive to those

7 Specifically, Commerce found that [ ] out of [ ] contracts ([ ] % ) involved changes to the final quantity term , which exceeded the quantity tolerance level for the respective sales contracts. Confiden tial Final Analysis Memorandum at 3-4. Moreover, Commerce determined that the [ ] % measure may have understated the frequency of change in material terms duri ng the POR because of discrepancies that the agency observed when attempting to reconcile changes identified in the sample sales documentation submitted by Yieh Phui with those same sales as reported in Yieh Phui’s sales database. Id.; De cision Memorandum at 5 n.2.Court No. 10-00310 Page 12

changes.”). As for Plaintiff’s arguments that its U. S. sales processes and course of conduct between Plaintiff and its U.S. customers mandate selection of contract date, Commerce reasonably considered and rejected them. Spec ifically, Plaintiff argues that Commerce failed to consider Yieh Phui’s formal negotia tion and contracting procedures for U.S. sales, which, according to Plaintiff, demonstrat e that the “terms of sale agreed upon by Yieh Phui and its U.S. customers . . . were ‘firmly’ established and were not mere proposals.” Pl. Br. 12. Plaintiff also argues that Commerce failed to consider the madeto-order nature of Yieh Phui’s U.S. sales, and the amount of time required to produce that merchandise, as evidence that the ma terial terms were in fact established on contract date. Pl. Br. 13. Plaintiff also references the course of conduct between Yieh Phui and its U.S. cu stomers, arguing that the contracting parties “behaved in a contractually-bound manner” and that Yieh Phui “produced the merchandise per the specifications in the contrac t,” which further demonstrates that the material terms were firmly established on contra ct date. Pl. Br. 14. Apart from Plaintiff’s reliance on Nuco r to support these arguments (which, as discussed above, is of limited persuasive weight), taken alone, they are just not convincing on this administrative record. According to Plaintiff, its U.S. sales processes should, hypothetically at least, establish mate rial terms of sale finally and firmly at contract date. In reality, material terms of Plaintiff’s U.S. sales changed after contract date despite (1) the alleged commercial formalit ies, (2) the made to order nature of theCourt No. 10-00310 Page 13

U.S. merchandise, and (3) the parties’ cour se of conduct. See Decision Memorandum at 6-8. And these changes were not reflect ed in duly executed contract amendments. Under such circumstances Commerce’s select ion of invoice date, consistent with its date of sale regulation, s ee 19 C.F.R. § 351.401(i); Preambl e, 62 Fed. Reg. at 27,349, is reasonable. IV. Conclusion For the foregoing reasons the cour t sustains Commerce’s date of sale determination. Judgment will be entered accordingly.

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

Dated: August 24, 2011 New York, New York