### Slip Op. 01- 143

UNITED ST ATES COURT OF INTE RNATIONAL T RADE

______________________________ : TA CHEN STAINL

ESS STEEL : PIPE, Ltd., : : Plaintiff, :

: v. : Court No. 99-07-00446

: UNI TED STATE S, : Public Version : Defend ant. :

: ______________________________: [Antidumping Duty Remand Determination Sustained.] Dated: December 13, 2001 Ablondi, F oster, Sob in & Davidow, P.C. ( Joel Davidow , Peter Ko enig , and Kristen Smith ) for Plaintiff. Robert D. McCallum, Jr. , Assistant Attorney Gene ral, David M. Cohen , Director, Velta A. Melnbre

ncis , Assistant Director, Commercial Litiga tion Branch, Civil Division, United States Department of Justice ( Mark L. Josephs ), Ci nd y G. Bu ys , Office of the Ge neral Cou nsel, United Sta

tes Depa rtment of Commerce , of coun sel, for Defend ant.

OPINION RESTANI, Judge: This antidumping duty matter is befor e the court following remand. See Ta Chen Stainless Steel Pipe, Inc. v. United States , Slip Op. 01 -101, 200 1 WL 915 254 (Ct. Int’l Trade Aug

ust 14, 2001) (“ Ta C hen III ”), familiarity with which is pre sumed. Plaintiff Ta Chen Stain

less Stee l Pipe, L

td. (“Ta Chen”) r eceive d an adve

rse Be st Inf

ormation A

vailable (BIA) dumping

margin because the Depar tment of Commerce concluded that Ta Chen hadCOURT NO
. 99-07- 00446 PAGE 2

1 Uruguay

Round Agreements Act, Pub.L. N o. 103-465, 108 Stat. 4809 (1994).

2 19 U.S.C. §1 677(13) ( 1988) re ads in per tinent pa rt as foll ows: (13) Exporter For the purpose of determining United States price , the term “exporter” includes the person by whom or f

or whose account the merchandise is imported into the United States if-- (A) such person is the agent or principa l of the exporter, manufacturer, o r produc er; (B) suc h pers on own s or co ntrol s, di rectl y or indir ectly, th rough stock ownership or control or otherwise, any interest in the business o f the expor

ter, man ufactur er, or pr oducer; (C) the e xporter, ma

nufactu rer, or produce r owns or controls , directly or indirec

tly, through stock owne

rship or control or otherwise, any

interest in any business conducted by such per son; or (D) any person or persons, jointly or se verally, dire ctly or indirectly, throug

h stock ownership or control or otherwise, own or control in the aggreg ate 20 percent or more of the voting powe r or control in the business carried on by the person by whom or f or whose ac count the

mercha ndise is imp orted into

the Unite d States, and also 20 percent or more of such power or control in the business of the exporter, manufacturer, or producer

. inexcusab ly f

ailed to p rovide sa

les data for two e ntities re lated to it , San Shing Hardwa re Works, USA (“San Shing”) and Sun Stainless Steel, Inc. ( “Sun”). The first question to be addressed by Commerce on remand was whether San Shing and Sun are p arties “

by w hom or for

whose ac count mer

chandise is importe d into the U

nited State s” under pre-URAA 1 19 U.S.C. § 1677(13) (1988). 2 This is the first step in finding them to be related “exporters” from whom sales data was r equired. Commerce determined that Sun and San Shing had replace d Ta Chen International (“TCI”) as Ta

Chen’s welded pipe distributor in the United States and that the overwhelmingCOURT NO
. 99-07- 00446 PAGE 3

3 The court is not persuaded that alleged TCI sales to [ ] of what may be another product or produc t from ano ther time period ha ve any bearing here. T a Chen ha s not pointe d to sufficie nt eviden ce of re levant sa

les afte r the distr ibution re structur

ing to [ ] in th ese reviews to undermine Commerce’s conclusion that TCI had been replaced as sole distributor of the subject merchandise. majority of Ta Chen’s sa

les in the relevant reviews were imported for the account of San Shing and Sun. Contrary to Ta Chen’ s argument, this is not a finding that § 1677(13) is satisfied by

mere sa les to cus tomers. Co mmerce’ s finding of virtua l identity for this pu

rpose be tween TCI and San Shing and Sun, and mutual dependence betwee n San Shing and Sun on one hand and Ta Chen on the

other is su

pported by th e followi

ng evid ence: (1) the purchase by

San Shing and Sun of all of TCI’s inventory

, thereby e ffectively

(even if not technically

or legally

) replacing TCI

as the sole distributor of subject merchandise in the U.S. for at least part of the pe riod of investigation (POI); 3 (2) the f act that 8 5% or 88%

(depend ing on wh ether th e approp riate measurement is weight or length) of Ta Chen’s sales in the first review and over 80% in the second review were to customers sharing San Shing’s and Sun’s d/b/a names; (3) Ta Chen was the exclusive supplier for San Shing and Sun. This analysis recog

nizes the business realities of this situation in which Ta Chen, which was makin

g U.S. sa les throu gh rela ted TCI , would ha

ve rece ived Export

er Sales Price (E SP) treatment, but the reporting requirements wer e allegedly

too burdensome. See Certain Welded Stainless Steel Pipe from Taiwan , 64 Fed. Reg. 33, 243 (1999 ). Ta Che n restru ctured i ts distributi on arra

ngemen ts after the antid umping du

ty o rder wa s issued in

an attemp t to have a

ll the Ta Chen s ales t reated as Pur chase P rice t ransac tion s, but did n ot in fact ce ase sel ling t hrough a U.S. distributor, as described above.COURT NO
. 99-07- 00446 PAGE 4

This matte

r is disting

uishable from Certain Small Business Telephone Syste ms and Subassemblies Thereof from Korea , 54 Fed. Reg. 53,141, 53,151 (1989) (“ Small Busi ness Telephone ”) as to the first step of § 1677(13) because, inter ali a , the buy er from t he U.S. distributor whom petitioner there sought to have recog nized as the one for whose account the merchandise was imported did not not buy the entire sales inventory of the U.S. distributor and the U.S. di stributor

was rec ognized a s the expor ter for E SP purpose s. Defend ant now r ecogn izes that Small Business Telephones is not distinguishable for purposes of the second step of § 1677(13), which was also to be a ddressed on remand, and that Commerce’s new policy

which allows relatedness through control to be deter mined on other than ownership bases is different from that of Small Business Telephones and Disposable Pocket Lighters from Tha

iland , 60 Fed. Reg. 14, 263, 14,26 7-68 (199 5), in whic h control through equity ownership only deter

mined relatedness. Ta Chen misunderstands Commerce’s duty of explanation of a policy cha nge, as now admittedl y oc curred

here. I t is hornbo ok adminis trative l aw that a n agency may chang e its policy, practice

or legal interpretation, subject only to the constraint that it explain the reason for its change and that the new policy remains consistent with the governing statute. The re ason for the change may

simply be a reve

rsal of the agency ’s position because it believes the new position to be more sound; no intervening event is required to justify the change. Cf. Greater Boston Televisi on Corp. v. F.C.C. , 444 F .2d 84 1, 852 (D.C. Cir. 1970) (Leventh al, J .) (“An agency's view of w hat is in the

public inte

rest may chang e, eithe

r with or w

ithout a c hange

in circumstances.”). To impose a requirement of c hanged circumstances, as Ta Che n would have the court do, would result in the ossification of the entire administrative state. In this regar d, TaCOURT NO
. 99-07- 00446 PAGE 5

Chen also misapplies retroactivity a nalysis. An ag ency is fre e to adopt, employ, and a lter rules made en tirel y through t he cou rse of a djud icati on, an d ther efore p resum ably thro ugh “investigations” such as these. See Bowen v. Georgetown Univ. Hosp. , 488 U.S. 204, 219-25 (1988) (Scalia, J., concurring) (noting distinction between r etroactivity in rule-ma

king and adjud icati on con text s, and recogni zing p ermis sibi lity of re troact ive ap plica tion throu gh adjudication). For example, such adjudicatory rule-making is the NLRB ’s virtually exclusive means of setting policies. See , e.g. , Allentown Mack Sales & S erv., Inc. v. N.L.R.B. , 522 U.S. 359, 374 ( 1998). Identify ing the D epartme

nt’s acti ons here

as imperm

issible re troactiv ity would call into question every c

hange in agency

policy acc omplished through adjudication or “investigation.” Here, Commerce cites to the Statement of Administration Action (“SAA”) f or the URAA as to the reason it changed its policy under prior law: “[C]ontrol”

exists if one

person is legall y or operati onally

in a position to exerc ise restraint or direction over another person. The Administration believes that including control in the definition of “affiliated” will permit a more sophisticated analysis which better

reflects the realities of the marketplace

. The trad itional fo cus on co ntrol thro ugh stock owners hip fails t o addres s adequately

modern business arrangements, which often f ind one firm “opera tionally in a position to exerc ise restr aint or dir ection” over ano ther eve

n in the abse nce of a n equity relation ship. A co mpany may be in a pos ition to exer

cise restrai nt or dire ction, fo r example, through corpora te or fa mily groupin gs, franchises or joint venture agree ments, debt financing, or close supplier relationships in which the supplier or buye r becomes reliant upon the other. See SAA, accompany

ing H.R. Rep. No. 130-826 at 838, reprinte d in 1994 U.S.C.C.A.N. 4040, 4174-75. There is no conflict with pre-URAA statutory law. See 19 U.S.C. § 1 677(13)( B), (C) (r el at ed ne ss es ta bl is he d b y ow ne rs hi p o r c on tr ol of ex po rt er or im po rt er “d ir ec tl y or in di re ct ly,COURT NO
. 99-07- 00446 PAGE 6

4 Ta Chen I

involved the third

review period and was completed before the reviews for the earlier periods at issue here. through stock own ership or

control o r otherw

ise” of th e other) ; see also Ta C hen III , 2001 WL 915254 at *5. Any limitation of relatedne ss inquiries to equity ownership was of Commerc e’s own making and Commerce has justified its departure, eve n under prior law. In the remand d

etermina tion, Comme

rce cite s in suppor

t of its finding of r

elatedn ess through control largely

the same reasons which support its determination that San Shing and Sun qualifie d as part

ies for w hose acc ount merc

handise i s imported . In f act, the evidenc e support s both findings. In addition, Commerce noted that a stoc kholder and director of Ta Chen incorporated Sun, and that the President of Ta Chen and TCI owned the property

at Sun’s address. In its original pre -remand final determination, Commerce also relied on Ta Che n’s control o f check

signing stamps, un fettere d compute r acce ss, interm

ingling of perso nnel, prefer ential cr edit and pricing

arrang ements, g eneral

lack of d istinguishment of f

inancia l interes ts between Ta Chen and Sun and San Shing and neg otiations of Sun and San Shing’s sales by Ta Chen. See 64 Fed. Reg. at 33,251, 33,256-59. These matters we re discussed in detail in Ta Chen Stainless Steel Pipe, Inc. v. United States , Slip Op. 99-117, 1999 WL 1001194, *11 (Ct. Int’l Trade, Oct. 28, 1999) (“ Ta Chen I ”), and led the court there to conclude that Commerce ’s finding of relatedness was substantially supported. 4 The determination here leads to no different re sult. Commerce’s determination of relatedness is adequate ly supported.COURT NO
. 99-07- 00446 PAGE 7

5 Whether sales to [ ] are correctly reported is of no moment. Respondents may not pick and choose which data to report . See , e.g. , Rhone Poulene, Inc, v. United States , 899 F.2d 1185, 1190 (Fed Cir 1990) . The failure to report San Shing and Sun sales was a substantial failure to comply with an infor mation request. When such a substantial failure of compliance occurs Commerce need not apply partial BIA, but may

provide a total substitute margin. See id. (affirming, under pre-URAA la w, the use of the highest calculated marg in from prior administr ative re views as B IA f

or respo ndent who

provided deficie nt submissio ns) . Next, the court must decide whether Commerce may resort to BIA. 5 The issue is whether Ta Chen had notice of the agency ’s request for sales data for Sun and San Shing. Ta Chen di d have noti ce that th e relate d party issue wou

ld pose a problem, a s evidenc ed by the petiti oners’ submissions raising precisely this point. See , e.g. , Questionn aire Res ponse (May 18, 1994), a

t 2, 48, C.R. Doc . 1, Def. ’s App., T ab 1, at 2, 4; Petitioner’s Letter to Commerce (July 18, 1994), at 1, C.R. Doc. 2, Def’s App., Tab 2, at 1. The Department’s initial questionnaire a lso defines related parties more broadly than that which would fit Ta Chen’s view of Commerce’s previous “equity only

” standard, see , e.g. , Original Questionnaire (March 16, 1994), at 93, P.R. Doc. 7, Def.’s App., Tab 1, at 5, sugge sting that Ta Chen was expected to provide information on parties with interlocking directorates as well as those re lated by equity . The Department asked questions about the involvement with Ta Chen of certain persons also involved with San Shing and Sun, reveal ing at le ast an init

ial inter est in con trol by means be yon d equity ownersh ip. Ta Che

n also continue d throug

hout eac h review to deny any related ness with Su

n or San Shi

ng, indic ating its awareness of the continuing controver sy over the issue.
In Ta Chen I , the court found that Ta Chen did not have adequate notice of the information sought pursuant to post-URAA law. Commerce had sent a supplemental questionnaire on December 24, 1996, stating that no dec ision had been made in any of theCOURT NO
. 99-07- 00446 PAGE 8

6 Although a submission after the third review preliminary results would technically be beyond the dea

dline, see 19 C.F.R. § 353.31(a)(ii) (1993), the fact that these revie ws have been extended f

or years ma

y ha ve provid ed Ta Che

n with a str

ong bas is to arg

ue that th e normal

time (continued...) reviews as to whether Ta C hen was r elated to Sun. Only

two week s later, C ommerce issued its Preliminary Results for the third revie w, finding that Sun and San Shing were related to Ta Chen. The court noted that, given the time frame, Commerce should have known when it issued the deficiency

letter required by

the URAA that it might find the parties to be related and theref ore should have sought more information in a direct manner. See Ta Chen I , 1999 WL 1001194, at *12. I n contra st, in this c ase, Pre liminary Results we

re not issu

ed until Ma

y, 1 997. The r

esults in the third review placed Ta Chen on notice that sales from Sun and San Shing were considered by Commerce to be r

elated party

sales, at least under the new statute. See Gourmet Equipment Corp. v. United States , No. 99-05-00262, 2000 WL 977369, at *4 (Ct. I nt’l Trade July 6, 2000) (“When Commerce is judging a party 's ability to comply

in the context of an administrative review, as opposed to an initial investigation, it is not inappropriate for Commerce to consider that party' s past behavior. Past participation may be relevant to notice, knowledge and r eliance issues.”). While it is true that Commerce could have issued another supplemental questionnaire again requesting resa

le data, this time specifically f or Sun and San Shing, and under URAA’s 19 U.S.C. § 1677m(d) likely would have, this was not require d under prior law. Certainly after the third review preliminary

results, viewed in conjunction with the Department’s initial questionnaire an

d continui

ng ques tions reg arding

related ness with Su

n and San Sh

ing in the first and second review supplemental questionnaires, Ta Chen wa s aware of the potential importance of sub mitt ing res ale dat a for S un and San S hing. 6COURT NO
. 99-07- 00446 PAGE 9

6 (...continued) limit of 180 days after initiation should not preclude the D epartment from accepting the data

. Furthermore, for the Department to have refused Ta Chen’s request under these c ircumstances would seem to be an abuse of discretion, if the earlier filings were insufficient to give Ta Chen notice. Ta Chen did not attempt to submit the information timely in response to supplemental questionnaires and it did not seek to provide it after the third review g ave it further notice. Ta Chen may

be held r esponsibl e for the se failur es.

7 In fact, Ta Chen doe s not seek to provide that information now. In the third re view, Ta Chen claimed inability to provide the data , and the court rejected that explanation. See Ta Chen Stainless Steel Pipe, Inc. v. United States , Slip Op. 00-107, 2000 WL 1225799 (Ct. Int’l Trade Aug. 25, 2000) (“ Ta C hen II ”).

8 The cour

t notes tha

t in the re mand dete

rmination Commerce

did not re strict its a

naly sis (continued...) The problem in this case is that Commerce was not clear about its chang e in policy under the prior law until the remand decision here. Thus, Ta Chen claims it was not informed by citation to the former statute or by other questionnaire language . Ta Chen, on the other hand, was banking on prevailing on its lega l arguments about prior law. I f Commerce actually asked for the data, Ta Chen cannot rely solely on its legal a

rgument, but must provide the data and make the argument later. Even af ter the third review results, Ta Chen did not seek clarifica tion from Comme

rce, at tempt to fi le data, or make a case as to why it could no t. 7
Becaus e of th e info rmal a rrangem ents c reati ng cont rol by Ta C hen of Sun an d San S hing, and the w ay

these re views pro ceeded , Ta Chen should hav e interp reted th e questio nnaires

to require Sun and San Shing data. The facts her e are unique enough that no previous dec isions of Commerce exempted Ta Chen from providing the data. As to the exact margin chosen, there is no requirement unde r pre-URAA law that petition margin s be corr

oborate d. On the o ther han d, Defe ndant is incorrect that only judiciall y invalidated margins may

not be used as BIA. 8 D&L Supply Co. v. United States , 113 F.3d 1220,COURT NO
. 99-07- 00446 PAGE 10

8 (...continued) in this manner. This w as an inc orrect post hoc legal a rgumen t.

9 Commerce does not rely on it, but the margin for the third, earlier completed re view, was 30.95%. See Ta C hen II

. 1223-24 (Fed. Cir. 1997), is not so limited. See Pulton Chain Co., Inc. v. United States , 17 CIT 1136 (199 3) (BI

A rate f ound irre levant to

facts of cases) ; see also National Steel Co. v. United States , 18 CIT 1126, 1132-33 (1994). Commerce may not use any thoroug

hly discredited margin s. Here, there are few

margins available. Use of Ta Chen’s own or iginal margin of 3.27% or later 0% margin may

reward its failures. The 31.9% petition margin used f or BIA as to other parties is the only other mar gin available under Commerce’s proc edures. Although the previous calculated and verified marg ins were lower, this does not mean that the 31.9% margin, which was for the same product and was not particular ly old, is invalid. 9 Ta Ch en po in ts to te st im on y, which Commerce did not credit, that the dumping problem was rectified. Even if Commerce had
reason t o credit it, the tes timony

is too ge neral to be of much use. The

re are insuffic ient fac ts here to c ompel Comme

rce to de vise a ne w methodo logy

to calcu late an e ntirely new marg

in somewhere between 3.27% and 31.9%. The cour t conclud es from th e recor

d that Ta C hen wasCOURT NO
. 99-07- 00446 PAGE 11

betting on its legal arguments preva iling and that it knew what information Commerce was seeking. The whole thrust of Ta Chen’s conduct wa s to avoid giving Commerce data on sales from its U.S. distributor. It has never proffe red that data and it must receive a BI A rate. The remand determination is affirmed.

____________________________ Jane A. Restani Judge

Dated: New York, New York This 13 th day of De cember, 2001.