Slip Op. 11-107
UNITED STATES COURT OF INTERNATIONAL TRADE
YIEH PHUI ENTERPRISE CO.,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Court No. 10-00310
UNITED STATES,
PUBLIC VERSION
[Confidential material deleted
Defendant.
on page 11.]
OPINION
[Administrative review results sustained.]
Dated: August 24, 2011
Appleton Luff Pte Ltd. (Kelly A. Slater) for Plaintiff Yieh Phui Enterprise Co. Ltd.
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Franklin
E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice (Melissa M. Devine); and Office of Chief Counsel for Import
Administration, Department of Commerce (William G. Isasi), of counsel, for Defendant
United States.
Schagrin Associates (Roger B. Schagrin, John W. Bohn, Michael J. Brown) for
Defendant-Intervenor Allied Tube and Conduit Corporation.
King & Spalding (Gilbert B. Kaplan, Brian E. McGill, Daniel L. Schneiderman,
P. Lee Smith) for Defendant-Intervenor Wheatland Tube Company.
Gordon, Judge: This action involves an administrative review conducted by the
United States Department of Commerce (“Commerce") 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. review) (“Final Results”); see also Issues
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”). Before the court is Plaintiff Yieh Phui
Enterprise Company’s (“Yieh Phui”) motion for judgment on the agency record
challenging Commerce’s selection of invoice date 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 antidumping duty orders, 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). 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,
1
Further citations to the Tariff Act of 1930, as amended, are 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 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. 2011). 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.” Edward D. Re, Bernard J.
Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342 (2d ed.
2011).
Separately, when reviewing Commerce's interpretation of its regulations, the
court accords the agency’s interpretation “controlling weight unless it is plainly
erroneous or inconsistent with the regulation.” Am. Signature, Inc. v. United States, 598
F.3d 816, 827 (Fed. Cir. 2010) (quoting Bowles v. Seminole Rock & Sand Co., 325 U.S.
410, 414 (1945)).
II. Background
In general “an antidumping analysis involves a comparison of export price or
constructed export price in the United States with normal value in the foreign market.”
19 C.F.R. § 351.401(a) (2010)2; see also 19 U.S.C. §§ 1677a, 1677b. The date of sale
for a respondent’s U.S. sales is part of the export price calculation, which is then
2
Further citations to title 19 of the Code of Federal Regulations are to the 2010
edition.
Court No. 10-00310 Page 4
compared to normal value. See 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 material 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 extraordinarily low percentage 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 the difference in its U.S. sales and home market sales
processes mandated use of contract date. Id. Plaintiff also argued that the facts and
circumstances of its U.S. sales were similar to other administrative 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. See Decision Memorandum at 4-8. Specifically,
Commerce found that Plaintiff underreported the 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 Carbon Steel Pipes and Tubes from Taiwan (A-
583-008), 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 contained in the confidential record.
Court No. 10-00310 Page 5
sales changed after contract date and selected invoice 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 establish contract date as the date of sale. See
Decision Memorandum at 6-8.
III. Discussion
The antidumping statute does not specifically address Commerce’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 that 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 experience, price and quantity are often
subject to continued negotiation between the buyer and the seller until a
sale is invoiced. The existence of an enforceable sales agreement
between the buyer and the seller does not alter the fact that, as a practical
matter, customers frequently change 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 remain negotiable and are not finally
established until the sale is invoiced. Thus, the date on which the buyer
and seller appear to agree on the terms of a sale is not necessarily the
date on which the terms of sale actually are established. The Department
also has found that in most industries, the negotiation of a sale can be a
complex process in which the details often 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 disagree about the exact date on which the
terms became final. However, for them, this theoretical date usually has
little, if any, relevance. From their perspective, the relevant issue is that
Court No. 10-00310 Page 6
the terms be fixed when the seller demands payment (i.e., when the sale
is invoiced).
Antidumping Duties; Countervailing Duties: Final Rule, 62 Fed. Reg. 27,296, 27,348-49
(Dep’t of Commerce May 19, 1997) (“Preamble”). Notwithstanding the regulatory
presumption of invoice date, Commerce “may use a date other than the date of invoice
if [Commerce] is satisfied that a different 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, Commerce further explained that if
the Department is presented with satisfactory evidence that the material
terms of sale are finally established on a date other than the date of
invoice, the Department will use that alternative date as the date of sale.
For example, in situations involving 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 Department 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 writing, 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 sale, the terms were not renegotiated.
62 Fed. Reg. at 27,349. Commerce therefore has some flexibility in selecting the date
of sale; the presumption in favor of invoice date is not conclusive. 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 Department prefers to use invoice date as the
date of sale, we are mindful that this preference does not require the 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 Final
Court No. 10-00310 Page 7
Regulations speak to giving the Department flexibility to abandon the use of invoice
date.”) (emphasis added); Issues and Decision Memorandum for the Antidumping Duty
Administrative Review of Certain Welded Carbon Steel Pipes and Tubes from Thailand,
A-549-502 at Comment 1 (Dep’t of Commerce Oct. 4, 2000) (“[T]he Department
recognizes the need for flexibility 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/thailand/00-26385-1.txt (last visited Aug. 24,
2011).
Plaintiff posits a “legal” argument that Commerce was too inflexible (or not
flexible enough) in applying its date of sale regulation in the Final Results. This though
is not so much a “legal” argument (challenging Commerce’s interpretation of its own
regulation), as it is a concession by Plaintiff that it needs a “flexibly” applied date of sale
regulation to achieve its desired result. The court, however, cannot meaningfully or
sensibly review whether Commerce’s date of sale 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 would conclude that the
administrative record as a whole demonstrates that Plaintiff’s material terms of its U.S.
sales were “finally” and “firmly” established on contract date. Preamble, 62 Fed. Reg. at
27,349; see, e.g., Allied Tube and Conduit Corp. v. United States, 24 CIT 1357, 1371-
72, 127 F. Supp. 2d 207, 220 (2000) (“Allied Tube”) (“Plaintiff, therefore, must
demonstrate that it presented Commerce with evidence of sufficient weight and
Court No. 10-00310 Page 8
authority as to justify its factual conclusions 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 supported by substantial evidence, Plaintiff's
arguments must fail.”).4
In making its “legal” argument about flexibility, Plaintiff 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 date of sale analysis is more than a mere
regulatory preference; it rises to the level of a statutory 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 cite or discuss the subsequent history of Nucor,
which tempers, if not mutes entirely, the court’s earlier, intermediate decision. In Nucor
the court remanded Commerce’s selection of invoice date for further consideration.
Nucor 33 CIT at ___, 612 F. Supp. 2d at 1323. On remand Commerce provided a
comprehensive, well-reasoned discussion 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 Redetermination at 43-51, 76-91 (Nov. 6, 2009), ECF No.
4
During the administrative review Plaintiff attempted to argue that Commerce
had an established administrative practice of using contract date in situations similar to
its own, citing prior administrative decisions in which Commerce applied contract date
as the date of sale. In the Final Results Commerce disagreed and distinguished each
of the prior administrative decisions cited by Plaintiff. Decision Memorandum at 4-7.
Plaintiff has not presented that argument to the court, choosing 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 the 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 application 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 Results, which Plaintiff has not cited nor
addressed.
With that said, the court turns to Plaintiff’s substantial evidence challenge and
specifically, whether a reasonable mind would conclude that the administrative record
as a whole demonstrates that Plaintiff’s material terms of its U.S. sales were “finally”
and “firmly” established on contract 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 also 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 statement in Nucor (“Flexibility in Commerce’s
date of sale analysis is more than a mere regulatory preference; it rises to the level of a
statutory mandate.”) has any lingering precedential effect, this court declines to endorse
that reading of the regulation. If flexibility truly rose to the level of a statutory mandate,
one would expect a wide and varied application of dates of sale in administrative
reviews. Commerce, however, rejected such “flexibility” when promulgating the
regulation, opting for predictability and administrability in setting invoice date as the
presumptive date of sale, subject to various alternatives if the record demonstrates that
the material terms are finally and firmly established on an alternative date.
Court No. 10-00310 Page 10
material terms were reflected in duly executed contract amendments). Plaintiff instead
addresses this problem by arguing that the changes in material terms occurred too
“infrequently” to justify a selection of invoice date. Pl. Br. 10-11. In other words,
Commerce should have simply disregarded or ignored these changes. To support this
argument Plaintiff provides a dictionary definition of the word “frequent.” Pl. Br. 10.
This though is not much help to the court. Leaving aside that the word “frequent” does
not appear in the regulation, the critical question is not whether the raw number of
Plaintiff’s U.S. sales with material changes satisfies a dictionary definition of the word
“frequent” or “infrequent” but whether those instances are so small as to be de minimis
or negligible within the meaning of the regulation and antidumping statute. This is a
question Plaintiff never addresses. During the administrative review Commerce
observed that Plaintiff failed to “establish why the percentage [change in sales] should
be considered ‘extraordinarily low’. . . .” Decision Memorandum at 8. Likewise, here,
Plaintiff fails to anchor its “frequency” argument to a statutory, regulatory, or
administrative law standard6 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 exist. The statute and regulations do provide
6
Perhaps the most logical source for such standards is Commerce’s own prior
administrative decisions involving the date of sale regulation. In its briefs before the
court, however, Plaintiff did not analyze Commerce’s prior administrative 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 least through analogy. For example, Commerce
treats “as de minimis any weighted-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 determinations. 19 U.S.C. § 1677(23).
Needless to say, the frequency of material changes in Plaintiff’s U.S. sales was greater
than each of these measures.7
It is therefore not possible on this administrative record to conclude that the
material terms of Plaintiff’s U.S. sales were “finally” and “firmly” established on contract
date, and by extension, that Commerce’s selection of invoice date was unreasonable.
The fact that material terms of multiple sales changed during the period of review,
combined with Commerce’s reasonable inference that even more sales may have
changed post-contract than originally 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 existence of an enforceable sales
agreement between the buyer and the 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. Confidential Final Analysis Memorandum at 3-4.
Moreover, Commerce determined that the [ ] % measure may have understated the
frequency of change in material terms during 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.; Decision 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. Specifically, Plaintiff argues that Commerce
failed to consider Yieh Phui’s formal negotiation and contracting procedures for U.S.
sales, which, according to Plaintiff, demonstrate 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 made-
to-order nature of Yieh Phui’s U.S. sales, and the amount of time required to produce
that merchandise, as evidence that the material 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. customers, arguing that the contracting parties “behaved in a
contractually-bound manner” and that Yieh Phui “produced the merchandise per the
specifications in the contract,” which further demonstrates that the material terms were
firmly established on contract date. Pl. Br. 14.
Apart from Plaintiff’s reliance on Nucor 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 material 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 formalities, (2) the made to order nature of the
Court No. 10-00310 Page 13
U.S. merchandise, and (3) the parties’ course of conduct. See Decision Memorandum
at 6-8. And these changes were not reflected in duly executed contract amendments.
Under such circumstances Commerce’s selection of invoice date, consistent with its
date of sale regulation, see 19 C.F.R. § 351.401(i); Preamble, 62 Fed. Reg. at 27,349,
is reasonable.
IV. Conclusion
For the foregoing reasons the court 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