Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi A.S. v. United States

Slip Op. 09-55

UNITED STATES COURT OF INTERNATIONAL TRADE

______________________________

HABAS SINAI VE TIBBI GAZLAR :

ISTIHSAL ENDUSTRISI A.S.,

:

Plaintiff,

:

v.

:

UNITED STATES,

: Court No. 05-00613

Defendant,

:

and

:

NUCOR CORPORATION, GERDAU

AMERISTEEL CORPORATION, and :

COMMERCIAL METALS COMPANY,

:

Defendant-Intervenors.

______________________________

[Sustaining in part U.S. Department of Commerce’s remand determination in administrative review

of antidumping duty order.]

Dated: June 15, 2009

Law Offices of David L. Simon (David L. Simon), for Plaintiff.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, and Reginald T.

Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of

Justice (Richard P. Schroeder); Scott D. McBride, Office of the Chief Counsel for Import

Administration, U.S. Department of Commerce, Of Counsel; for Defendant.

Wiley Rein LLP (Alan H. Price, John R. Shane, and Maureen E. Thorson), for Defendant-

Intervenors.

Court No. 05-00613 Page 2

OPINION

RIDGWAY, Judge:

Pending before the Court are the Final Results of Redetermination Pursuant to Court

Remand, filed by the U.S. Department of Commerce pursuant to the decision in Habas. See

generally Final Results of Redetermination Pursuant to Court Remand (“Remand Determination”);

Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S. v. United States, 31 CIT ____, 2007 WL

3378201 (2007) (“Habas”).

Habas remanded to Commerce two issues concerning the agency’s analyses in the seventh

administrative review of the antidumping duty order on Certain Steel Concrete Reinforcing Bars

From Turkey: (1) Commerce’s use of annual Period of Review (“POR”) average costs (rather than

Habas’ quarterly costs) in the agency’s “sales-below-cost” analysis, and (2) Commerce’s use of

invoice date (rather than contract date) as the date of sale for Habas’ U.S. sales in the agency’s

antidumping duty margin calculations. See Habas, 31 CIT at ____, ____, 2007 WL 3378201 * 5,

8.

In its Remand Determination, Commerce reaffirmed its earlier decision to use POR average

costs, rather than quarterly costs. However, Commerce reversed its prior determination on the date

of sale issue, concluding that contract date is the appropriate date of sale. See generally Remand

Determination.

In its comments on the Remand Determination, Habas requests that the quarterly costing

issue be remanded once again, but argues that the Remand Determination on the date of sale issue

should be sustained. See generally Brief of Plaintiff Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi

Court No. 05-00613 Page 3

A.S. Concerning Remand Final Determination of Department of Commerce (“Pl.’s Brief”); Reply

Brief of Plaintiff Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi A.S. Concerning Remand Final

Determination of Department of Commerce (Pl.’s Reply Brief”).

The Domestic Producers – Defendant-Intervenors Nucor Corporation, Gerdau Ameristeel

Corporation, and Commercial Metals Company – oppose Habas on both counts. According to the

Domestic Producers, the Remand Determination should be sustained as to the quarterly costing

issue, while the date of sale issue should be remanded to the agency once more. See generally

Defendant-Intervenors’ Comments on the Remand Results (“Def.-Ints.’ Brief”); Defendant-

Intervenors’ Supplemental Brief (“Def.-Ints.’ Reply Brief”).

The Government maintains that Commerce has complied fully with the Court’s instructions

in Habas, and that the Remand Determination is supported by substantial evidence and is otherwise

in accordance with the law. The Government therefore contends that the Remand Determination

should be sustained in its entirety. See Defendant’s Response to Comments Regarding Remand

Redetermination (“Def.’s Response Brief”) at 4.

Jurisdiction lies under 28 U.S.C. § 1581(c) (2000).1 For the reasons set forth below, the

Remand Determination is sustained as to Commerce’s determination on the use of contract date as

the date of sale. However, as to the issue of quarterly costs versus POR-average costs, this matter

must be remanded to the agency yet again.

1

All citations to federal statutes herein are to the 2000 edition of the United States Code.

Similarly, all citations to federal regulations are to the 2003 edition of the Code of Federal

Regulations.

Court No. 05-00613 Page 4

I. Background

This action arises out of the seventh administrative review of the antidumping duty order on

imports of steel concrete reinforcing bar (“rebar”) from Turkey. In the Preliminary Results of the

administrative review, Commerce made a preliminary determination that the dumping margin for

Habas was 26.07%. See generally Certain Steel Concrete Reinforcing Bars from Turkey;

Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review and Notice

of Intent to Revoke in Part, 70 Fed. Reg. 23,990 (May 6, 2005) (“Preliminary Results”); see also

Habas, 31 CIT at ____, 2007 WL 3378201 * 2.

Following publication of the Preliminary Results, Habas’ advocacy before Commerce

focused principally on the two issues in dispute in this action – whether Commerce erred in using

annual POR-average costs (rather than Habas’ quarterly costs) in the agency’s sales-below-cost

analysis, and whether Commerce erred in using invoice date (rather than contract date) as the date

of sale for Habas’ U.S. sales in the agency’s antidumping duty margin calculations. In the Final

Results, Commerce rejected Habas’ arguments on both issues, and left Habas’ dumping margin

unchanged at 26.07%. See generally Certain Steel Concrete Reinforcing Bars From Turkey: Final

Results, Rescission of Antidumping Duty Administrative Review in Part, and Determination to

Revoke in Part, 70 Fed. Reg. 67,665 (Nov. 8, 2005) (“Final Results”); see also Issues and Decision

Memorandum for the Antidumping Duty Administrative Review on Certain Steel Concrete

Reinforcing Bars from Turkey – April 1, 2003, through March 31, 2004, 2005 WL 3054566 (Nov.

Court No. 05-00613 Page 5

8, 2005) (Pub. Doc. No. 256) (“Decision Memorandum”).2

This action followed, contesting Commerce’s determination in the Final Results. See

generally Habas, 31 CIT ____, 2007 WL 3378201.3 In Habas, the Court granted in part Habas’

Motion for Judgment Upon the Agency Record, remanding to Commerce for further consideration

the issues of quarterly costs and date of sale. See generally Habas, 31 CIT at ____, ____, 2007 WL

3378201 * 5, 8.

In its Remand Determination, Commerce reaffirmed the agency’s earlier decision to use

annual POR average costs – rather than quarterly costs – in its sales-below-cost analysis. See

generally Remand Determination at 1-19, 21-40, 49. However, Commerce reversed its earlier

determination on the date of sale issue, concluding that contract date is the appropriate date of sale

for use in the agency’s antidumping duty margin calculations. See generally Remand Determination

at 1-2, 19-21, 40-49. Commerce therefore recalculated Habas’ dumping margin, which now stands

at 22.53%. See Remand Determination at 1-2, 21, 49.

2

Because this action was remanded to Commerce in Habas, there are now two administrative

records filed with the court – the initial administrative record (which comprises the information on

which the agency’s Final Results were based), and the supplemental administrative record (on which

the Remand Determination was based). Moreover, because confidential information is included in

both administrative records, there are two versions of each – a public version and a confidential

version. Citations herein to public documents in the initial administrative record are noted as “Pub.

Doc. No. ____.” There are no citations to confidential documents in the initial administrative

record, or to any documents in the supplemental administrative record.

3

A pending companion case challenges the results of the same proceeding at issue here – the

seventh administrative review. See Nucor Corp. v. United States, No. 05-00616 (Ct. Int’l Trade filed

Nov. 14, 2005). In addition, an action contesting the results of the sixth administrative review

(covering 2002-2003) also remains pending. See Gerdau AmeriSteel Corp. v. United States, No. 04-

00608 (Ct. Int’l Trade filed Dec. 6, 2004); see also Gerdau AmeriSteel Corp. v. United States, 519

F.3d 1336 (Fed. Cir. 2008).

Court No. 05-00613 Page 6

II. Standard of Review

In reviewing a challenge to Commerce’s final determination in an antidumping case, the

agency’s determination must be upheld unless it is found to be “unsupported by substantial evidence

on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(I); see Elkem

Metals Co. v. United States, 468 F.3d 795, 800 (Fed. Cir. 2006).4

“[S]ubstantial evidence is more than a mere scintilla. It means such relevant evidence as a

reasonable mind might accept as adequate to support a conclusion.” Universal Camera Corp. v.

NLRB, 340 U.S. 474, 477 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).

Moreover, any determination as to the substantiality of evidence “must take into account whatever

in the record fairly detracts from its weight,” including “contradictory evidence or evidence from

which conflicting inferences could be drawn.” Suramerica de Aleaciones Laminadas, C.A. v. United

States, 44 F.3d 978, 985 (Fed. Cir. 1994) (quoting Universal Camera, 340 U.S. at 487-88). On the

other hand, the mere fact that “it [may be] possible to draw two inconsistent conclusions from

evidence in the record . . . does not prevent Commerce’s determination from being supported by

substantial evidence.” Am. Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed. Cir. 2001);

see also Consolo v. Federal Maritime Commission, 383 U.S. 607, 620 (1966) (same).

4

See also Elkem Metals Co. v. United States, 27 CIT 838, 842, 276 F. Supp. 2d 1296, 1301

(2003) (“The same standard of review applies to the review of a remand determination as to the

review of the original determination.”); Bethlehem Steel Corp. v. United States, 26 CIT 1003, 1006,

223 F. Supp. 2d 1372, 1375 (2002) (same).

Court No. 05-00613 Page 7

III. Analysis

Habas and the Domestic Producers each challenge one aspect of Commerce’s Remand

Determination. Specifically, Habas takes issue with Commerce’s continued adherence to the use

of a single cost-averaging period, contemporaneous with the period of review (POR), in the agency’s

sales-below-cost analysis, while the Domestic Producers dispute Commerce’s decision to reverse

its earlier determination and use contract date (rather than invoice date) as the date of sale in its

antidumping duty calculations.

Both issues are discussed in turn below. For the reasons detailed there, Habas’ challenge to

the Remand Determination is sustained, and this matter is remanded to Commerce for a second time,

for further consideration of the issue of the use of POR-average costs versus quarterly costs. On the

other hand, the Domestic Producers’ challenge to Commerce’s decision to use contract date (rather

than invoice date) as the date of sale is rejected, and the Remand Determination on that issue is

sustained.

A. Commerce’s Determination on Use of Quarterly Costs versus POR-Average Costs

In order to make fair comparisons between U.S. sales and normal value, and between home

market sales and costs, Commerce must determine the appropriate time period(s) for its weighted-

average cost calculations. In the instant case, Habas claims that Commerce’s use of POR-average

costs created a mismatch between sales and costs which distorted the comparisons between U.S.

price and normal value. See Habas, 31 CIT at ____, 2007 WL 3378201 * 3. According to Habas,

Commerce’s use of POR average costs “causes a 14% increase in normal value . . . which, in turn,

inflates the dumping margins by 20%.” See Pl.’s Brief at 4.

Court No. 05-00613 Page 8

The Remand Determination at issue here is, in part, the result of the Government’s request

for a voluntary remand on the issue of POR-average costs versus quarterly costs. Habas vigorously

opposed the request for a voluntary remand, claiming that Commerce “simply want[ed] another

chance to come up with a rationale to support its previous decision,” and cautioning against giving

Commerce “another chance to find a theory that will support [its] predetermined result,” by allowing

the agency yet “another bite at this apple.” See Habas, 31 CIT at ____, ____, 2007 WL 3378201

* 4 (internal quotation marks and citations omitted). The source of frustration with the

Government’s request for a voluntary remand, explained Habas, was that:

During the administrative proceeding, Commerce issued a preliminary result based

on a particular rationale. Habas’ case brief addressed Commerce’s rationale.

Commerce then chose to keep the same result, but to formulate a new rationale [in

its Final Results]. . . . In its principal brief [filed with the Court], Habas exposed the

errors of Commerce’s rationale. Now, having read Habas’ principal brief, the

government would like another chance before this court to formulate a more

persuasive rationale.

Habas, 31 CIT at ____, 2007 WL 3378201 * 4 (internal quotation marks and citations omitted).

Habas instead sought a directed remand, urging the Court to require Commerce to recalculate Habas’

dumping margin using Habas’ quarterly costs (rather than POR-average costs). See Habas, 31 CIT

at ____, 2007 WL 3378201 * 4-6.

Notwithstanding Habas’ request, the Court granted the Government’s request for a voluntary

remand in Habas, noting that – under SKF – an agency is generally entitled to a voluntary remand

to reconsider its position if the agency’s concern is substantial and legitimate. See Habas, 31 CIT

at ____, 2007 WL 3378201 * 4 (citing SKF USA, Inc. v. United States, 254 F.3d 1022, 1028-29

(Fed. Cir. 2001)). Habas also took note of the Government’s assurances that Commerce intended

Court No. 05-00613 Page 9

to “take a fresh look” at the issue on remand. See Habas, 31 CIT at ____, 2007 WL 3378201 * 5;

see also Pl.’s Brief at 5-6.

Habas now asserts that – in its Remand Determination – Commerce has once more “shown

itself unwilling to consider this issue without prejudgment,” and has “made no attempt to ‘take a

fresh look’ at quarterly cost, nor did it ‘consider anew’ its methodologies.” See Pl.’s Brief at 6.

Habas essentially claims that the Remand Determination has yet again “moved the goalpost” on the

issue of the use of multiple cost-averaging periods, and that Commerce “continue[s] to rely on

flawed tests, illogical propositions, and selective statistics.” See Pl.’s Brief at 39. Although they

are strong, there is at least some truth to Habas’ charges.

As a threshold matter, four interrelated overarching points bear note.

First, throughout its briefs, the Government repeatedly alludes to the general “virtue” of

Commerce’s standard practice of using annual (POR) average costs in its sales-below-cost analysis

– i.e., that the use of annual POR-average costs tends to smooth out swings in production costs that

respondents may experience over shorter periods of time. See, e.g., Def.’s Response Brief at 13

(noting that “the use of annualized costs ‘normally evens out swings in production costs’” that may

occur over shorter periods) (quoting Remand Determination at 12).5 At the same time, the

Government strives to depict Habas as seeking to carve out for itself some novel, aberrant,

5

See also Def.’s Response Brief at 15 (citing Commerce’s “trusted annual methodology”),

16 (referring to Commerce’s “standard and predictable annual methodology,” and to a methodology

used to “calculate cost of production upon a consistent, and predictable annual basis”), 23 (citing

the “smooth[ing] out over time” of “volatility and overall trends” as “one of the benefits of

calculating annual-based costs”); see generally Fujitsu General Ltd. v. United States, 88 F.3d 1034,

1038-39 (Fed. Cir. 1996) (noting that use of a single cost period generally “smooths out”

distortions”).

Court No. 05-00613 Page 10

extraordinary “special exception” to Commerce’s standard practice – going so far as to characterize

the relief that Habas seeks as “a dramatic change from Commerce’s normal practice.” See Def.’s

Response Brief at 7, 8 (emphasis added).6

As the Government acknowledges, however, Habas is not challenging in principle

Commerce’s standard practice of using annual POR average costs. See Def.’s Response Brief at 7

(noting that “Habas does not challenge the reasonableness of Commerce’s general practice”), 13

(noting that Habas does not claim that “Commerce’s annual-based methodology is impermissible”).

Nor – contrary to the Government’s implication7 – is Habas attempting to fashion and then exploit

6

See also Def.’s Response Brief at 12 (arguing that what Habas seeks is a “[m]ethodology

. . . [t]hat [i]s [i]nconsistent [w]ith Commerce’s [n]ormal [p]ractice”), 13 (asserting that Habas seeks

“an exception”), 15 (referring to “the alternative quarterly methodology proposed by Habas”), 19

(characterizing relief sought by Habas as “a radical change from Commerce’s practice,” and

predicting that Habas’ approach would “increase dramatically” the use of shorter cost-averaging

periods).

7

Unlike Commerce itself (as well as the Domestic Producers and, of course, Habas), the

Government fails to acknowledge even the existence of Commerce’s long-recognized and well-

established exception permitting the use of multiple, shorter cost-averaging periods in certain

circumstances. Compare Def.’s Response Brief with, e.g., Remand Determination at 14-16

(surveying various past cases involving requests for use of multiple, shorter periods), 28

(acknowledging that Commerce in this case has “refine[d]” its criteria for use of multiple, shorter

periods, as compared to criteria applied in past cases); Def.-Ints.’ Brief at 13-15 (explaining how

Commerce here “refined its traditional test for determining whether to employ multiple cost

periods”; comparing and contrasting “[t]he test formerly employed” by Commerce to determine

whether to use multiple cost-averaging periods with test employed by agency in this review); Pl.’s

Brief at 2 (noting that “[t]he precedents when this review was underway . . . required quarterly

costing (or some other form of multiple cost-averaging periods) when the respondent’s cost to

acquire the input of a ‘single-primary-input’ product ‘increased significantly’ during the POR”), 6

(distilling “the test for quarterly cost (‘multiple averaging periods’) for ordinary industrial products”

at time when instant administrative review began), 16-17 (discussing “consistent and predictable

test” for multiple cost-averaging periods used by Commerce “[f]or nearly 20 years before the

Turkish rebar case”), 26 (referring to “Commerce’s long-standing approach” to multiple cost-

averaging periods), 39 (referring to Commerce’s “then-prevailing single-primary-input test for

multiple averaging periods”); Pl.’s Reply Brief at 2 (citing select “precedents favoring shorter cost-

Court No. 05-00613 Page 11

some creative, brand new, unprecedented, one-off “loophole” or caveat to Commerce’s standard

practice.

Instead, Habas has sought merely to demonstrate that it falls within the pre-existing,

longstanding, and well-established exception to the Government’s standard practice – an exception

that provides for the use of multiple, shorter cost-averaging periods by respondents that meet certain

heretofore relatively clear-cut criteria, in situations where the fundamental underlying “virtue” of

Commerce’s standard practice does not hold true (i.e., where the use of annual POR-average costs

does not serve to “smooth out” swings in production costs, but – rather – has a distortive effect).

See Pl.’s Reply Brief at 2 (observing that “Habas is simply asking Commerce to apply a well-

established test to Habas’ facts”), 3 (same).

The second threshold observation is related to the first. As noted immediately above, Habas

has here sought simply to avail itself of the longstanding, well-recognized exception to Commerce’s

standard practice – an exception permitting the use of multiple, shorter cost-averaging periods under

averaging periods, . . . following through the judicial precedents . . . and multinational (WTO)

precedent”; explaining that “[t]here is, in fact, abundant administrative, judicial and multinational

precedent favoring shorter cost-averaging periods during periods of exceptional cost surges”), 4

(discussing “all the precedents, from Brass Sheet and Strip through Pasta from Italy, Fujitsu General

and Thai Pineapple”), 9 (noting that “shorter cost-averaging periods originated” in “the original

Brass Sheet cases”; noting use of consistent test “[i]n Brass Sheet, as in Pasta from Italy and SRAMs

from Taiwan, Fujitsu General, . . . and Thai Pineapple”), 10-11 (explaining that “the question of

whether a change in cost over the POR was ‘significant’ has always been the key question

underlying shorter cost-averaging periods”; “[i]n all of the precedents, Commerce compared the

costs across the POR; it is the core of a long-standing and clearly articulated test”), 11 (“comparing

costs at the beginning of the POR to costs at the end of the POR “is precisely the way in which the

test was applied in Brass Sheet, in Pasta from Italy, and in all the other cases involving shorter cost-

averaging periods”), 15 (referring to “[Commerce’s] own precedents and those of the courts and the

WTO”).

Court No. 05-00613 Page 12

certain specific circumstances. As Habas quite properly complains, however, Commerce’s test for

the use of multiple, shorter cost-averaging periods has (to say the least) been a constantly moving

target in the administrative review at issue here. See generally section III.A.1, infra; see, e.g., Pl.’s

Brief at 2 (summarizing evolution of Commerce’s approach over course of this proceeding, and

emphasizing that agency’s “approach [in this case] is completely different in kind from that of all

previous cases”), 6-10 (reviewing evolution of Commerce’s approach in this case).8

The third threshold observation is related to the second. The Government’s brief is peppered

with various references casting aspersions on Habas’ motives in taking the positions that Habas has

taken in this case.9 Ordinarily, it would suffice simply to dismiss such finger-pointing with the

8

See also, e.g., Pl.’s Brief at 14 (noting that Commerce has seemingly “repudiated its long-

standing single-primary-input test”), 15 (noting that “in all of the previous cases, Commerce

analyzed the movement of cost across the period of review,” and underscoring that “Commerce

never explains why a test that was appropriate for 20 years’ of precedent is suddenly irrelevant”),

16-17 (explaining that Commerce apparently has now “discarded the single-primary-input test,” but

that “[f]or nearly 20 years before the Turkish rebar case, Commerce had a consistent and predictable

test”; “[f]or normal industrial products, the single-primary input criterion was workable”; “[t]he

issue of whether cost of the input had experienced a consistent and significant increase or decrease

served well”), 26 (asserting that “Habas experienced a 28% increase in the cost of its single primary

input across the POR,” which “would have satisfied the threshold inquiry for multiple cost-

averaging periods” under “Commerce’s long-standing approach”; but, “[t]o avoid this result,

Commerce disavowed 20 years of precedent and created a new approach which it applied in so

stilted a manner as to exclude one-half of the POR from the analysis”), 35-36 (referring to

Commerce’s “new-found criteria for multiple cost-averaging periods,” and criticizing agency for

adding further, additional “secondary tests” which did not “constitute[] a test for quarterly cost in

any previous case, nor were they grounds for Commerce’s denial of quarterly cost in the final results

of the underlying review”), 39 (arguing that “[w]hen Habas established that the[ ] facts brought this

case within the then-prevailing single-primary-input test for multiple averaging periods, Commerce

changed the test”); Pl.’s Reply Brief at 9 (noting that eight factors cited by Commerce in Remand

Determination “have never been posited as tests for shorter costing periods”).

9

At one point, for example, the Government argues:

Court No. 05-00613 Page 13

general observation that presumably all litigants take their positions with an eye toward promoting

their own self-interests. See Pl.’s Reply Brief at 7-8. In this case, however, it is not much of a

stretch to view the Government’s efforts to impugn Habas as a classic case of “the pot calling the

kettle black.” As noted above (and discussed in greater detail below), Commerce’s test for multiple,

shorter cost-averaging periods has been such a moving target that one might be forgiven for

wondering whether, in fact, in this case it is the Government (specifically, Commerce) that is

pursuing a (questionably) single-minded agenda – in other words, whether it is actually Commerce

that has a “result in search of a rationale.”10

The fourth, and final, threshold observation is also related to the second – i.e., the apparently

still-evolving nature of Commerce’s test for the use of multiple, shorter cost-averaging periods.

Commerce has (to put it most charitably) sought to reformulate and refine its test for the use of

multiple, shorter cost-averaging periods over the course of these proceedings; but – at the same time

– Commerce and the Government (and, to a somewhat lesser extent, the Domestic Producers) seek

In this case, Habas is unhappy with the results. However, if Habas’s United States

sales all had been in the third and fourth quarters of the period of review, Habas

presumably would not be challenging Commerce’s application of its annual-based

methodology.

Def.’s Response Brief at 12. Elsewhere, the Government argues that “Habas is simply . . . taking

a ‘results-oriented’ approach to selecting a comparison period.” See Def.’s Response Brief at 17.

10

Indeed, in the initial briefing in this action, Habas charged that Commerce had “a margin

in search of a rationale.” See Habas, 31 CIT at ____, 2007 WL 3378201 * 4 (quoting Habas’ reply

brief); see also, e.g., Pl.’s Reply Brief at 15 (asserting that Commerce here “continues to . . .

chang[e] its criteria at each stage of the proceeding to fit the results it wishes to achieve,” and

arguing that “[t]he government has now demonstrated its unyielding commitment to its result

regardless of the evidence, and . . . has shown that it will simply continue to create new tests in an

effort to support its foreordained conclusion if given the opportunity to do so”).

Court No. 05-00613 Page 14

to confine Habas to the administrative record developed before Commerce fully defined and

articulated the (still, frankly, rather amorphous and unclear) criteria that the agency now seeks to

apply. See, e.g., Remand Determination at 26-27 (noting Domestic Producers’ arguments that

agency should refuse to consider various authorities cited by Habas to demonstrate that 5% to 10%

difference in COM is significant), 30-31 (stating that “Habas’ reliance on information which is not

on the administrative record before the agency is inappropriate and [Commerce] will not address this

line of argument further”).11 There is thus an obvious issue of fundamental fairness, to which

Commerce and the Government (and, to a somewhat lesser extent, the Domestic Producers) seem

to turn a blind eye.

11

See also Def.’s Response Brief at 18-19 (objecting that Commerce has had no opportunity

to address Habas’ argument concerning monthly or quarterly application of 25% market distortion

benchmark used in agency’s hyperinflationary economy analyses), 20 n.4 (arguing that it was proper

for Commerce to refuse to consider sources cited by Habas concerning definition of “significant”

difference), 25 (arguing that Habas’ “correlation coefficient” argument should be disregarded

because “Commerce has never seen these tables and never had the opportunity to respond to this

complicated analysis”); Def.-Ints.’ Reply Brief at 4 (asserting that Habas should not be permitted

to argue for monthly application of Commerce’s 25% market distortion benchmark used in agency’s

hyperinflationary economy analyses, because point “was not raised or argued by Habas before the

agency”), 4 n.4 (arguing that Commerce “acted reasonably, and consistently with the [statute], in

determining not to consider information that was not on the record, not relevant to the period of

review, not relevant to Habas’ cost of production during the period of review, and [which] did not

address the propriety of multiple cost-averaging periods”), 7-9 (arguing that Habas’ “correlation

coefficient” argument should be disregarded). But see Pl.’s Brief at 24-26 (arguing that Commerce

erred in disregarding “external evidence” cited by Habas concerning “significance” of “changes in

cost of 5 to 10%,” and noting, inter alia, that “Commerce does not hesitate to cite later-developed

precedent when it so desires”); Pl.’s Reply Brief at 14 (asserting that Commerce’s reference to

“close correlation” in Remand Determination “opened the door” for Habas’ “correlation coefficient”

argument).

Court No. 05-00613 Page 15

1. Commerce’s Evolving Test for Use of Multiple Cost-Averaging Periods

When the underlying administrative review began, Commerce’s then well-established test

for the use of multiple cost-averaging periods in cases involving ordinary industrial products (such

as the rebar at issue here) “focused on the behavior and economics of the respondent,” inquiring:

(1) whether the product at issue had a “single primary input,” and (2) if so, whether the cost of that

single primary input experienced a change during the POR that was of a quality and magnitude to

warrant the use of multiple, shorter cost-averaging periods (i.e., less than a full POR). If those two

criteria were satisfied, and if the respondent’s changes in prices tracked changes in costs, Commerce

used multiple cost-averaging periods. See generally Pl.’s Brief at 6; see also id. at 2. As Habas puts

it, “[t]he core issue was whether costs had increased or decreased markedly across the POR.” Id.

at 6.

The Preliminary Results in the case at bar reflect Commerce’s then well-established test, as

it was being applied by the agency at that time. Specifically, Commerce stated in the Preliminary

Results:

The Department has used monthly or quarterly costs in non-inflationary cases only

where [1] there was a single primary input and [2] that input experiences a

significant and consistent decline or rise in its cost during the reporting period.

Preliminary Results, 70 Fed. Reg. at 23,993 (emphases added). Applying that then well-established

test, Commerce concluded in the Preliminary Results that Habas did not qualify for the use of

multiple cost-averaging periods:

In this case, because we do not find that the price of scrap [the single primary input

in rebar] experienced a significant and consistent increase during the POR, we have

continued to follow [Commerce’s] normal practice of using weighted-average POR

costs for all respondents.

Court No. 05-00613 Page 16

Preliminary Results, 70 Fed. Reg. at 23,993 (emphasis added). In other words, Commerce implicitly

found in the Preliminary Results that Habas satisfied the first criterion – i.e., Commerce found that

rebar is a “single primary input” product. But Commerce also found that Habas had not

demonstrated that it satisfied the second criterion – i.e., Commerce found that Habas had not shown

that the cost of the single primary input (scrap) had “experienced a significant and consistent

increase during the POR.”

Habas briefed the issue extensively before the agency, seeking to demonstrate that it satisfied

Commerce’s then well-established test for the use of multiple cost-averaging periods. Specifically,

Habas argued that rebar is a single primary input product, that it had experienced a 28% increase in

material cost between the first and last quarters of the POR, and that such a change was of the type

and magnitude to qualify Habas for the use of quarterly costing. See generally Pl.’s Brief at 7 (and

sources cited there). Habas also sought to explain that Commerce’s use of POR-average costing

resulted in mismatches in the normal value calculation by driving below cost many sales that were

actually well above cost at the time that they were made. Id.

In the Final Results, Commerce apparently abandoned the well-established test that it had

applied in the Preliminary Results in this case, and in other, prior cases. No longer was Commerce

focused on the existence and cost of a single primary input. Nevertheless, relying on a seemingly

brand new test (and on a rather different rationale as well), Commerce once again concluded that

Habas did not qualify for the use of multiple cost-averaging periods:

[Commerce] analyzed the significance of the change in the COM [cost of

manufacturing], whether the change in cost occurred consistently and significantly

throughout the POR, and whether the direct material inputs causing the cost

fluctuation can be directly tied to the related sales transactions. In this case, the

Court No. 05-00613 Page 17

COM experienced by the respondents both decreased and increased during the first

three quarters of the POR. It was not until the third and fourth quarters of the POR

that the COM increased steadily. Because of this end of POR increase, the

respondents claim that the COM for the first two quarters of the POR become

inflated when using an annual average method, as compared to a quarterly average

method. While we agree with the respondents that the annual average COM is

higher than the quarterly average COM for the first two quarters of the POR, we

disagree that the difference is significant. In analyzing this point, we first identified

the 5 highest volume home market control numbers and examined the impact of

using annual average costs of manufacturing versus quarterly average costs of

manufacturing. We computed the difference in the cost of the input raw materials

for the first two quarters of the POR using quarterly average cost data versus annual

average cost data, and noted that in both instances, the difference ranged from

approximately 5 to 10% of the COM. . . . In the past, [Commerce] has not considered

one to 10% increases significant. See Pasta from Italy 1998-1999 Reviews.

Therefore, we find the respondents’ reliance on Thai Pineapple 1 and Thai Pineapple

2 irrelevant given that, in the instant case, we have found no significant change in the

cost of scrap during the POR.

Decision Memorandum at 11-12.

As the excerpt above reflects, in stark contrast to the test articulated in the Preliminary

Results in this case (and also applied in other, prior cases), Commerce in the Final Results here

focused not on the existence and cost of a single primary input (i.e., scrap), but, rather, on the total

cost of manufacturing (“COM”).12 Moreover, rather than comparing the cost at the beginning of the

POR to the cost at the end of the POR (as Commerce had done in the past, both in the Preliminary

Results in this case and in other, prior cases), Commerce instead compared Habas’ actual quarterly

COM to Commerce’s calculated POR-average COM. In essence, rather than comparing costs at two

12

Although Commerce’s analysis in the quoted excerpt focuses on the total cost of

manufacturing (“COM”) (rather than only on the cost of scrap), it is curious that the last sentence

of the excerpt refers to “the cost of scrap.” Decision Memorandum at 12 (emphasis added).

Court No. 05-00613 Page 18

different points in time, Commerce instead compared the results of two different methodologies.13

As Habas observes, the effect of this change was to repudiate the agency’s historic focus on “the

behavior and economics of the respondent” in favor of “an examination of the difference between

[two] competing methodologies” – an approach “completely different in kind from that of all

previous cases.” Finding that the difference between the results of the two methodologies ranged

from 5% to 10%, Commerce then concluded – ostensibly relying on Pasta from Italy as precedent

– that a difference of 10% was not “significant.” See Decision Memorandum at 12; see generally

Pl.’s Brief at 2, 7-8. On the strength of that analysis, Commerce determined that the use of multiple

cost-averaging periods was not warranted.

13

In other words, rather than determining the “significance” of the difference in Habas’ costs

over the course of the POR, Commerce instead determined the “significance” of the difference in

the results calculated using one methodology versus another. See Remand Determination at 7-8

(noting that Commerce “conducted a comparative analysis between the annual-average cost method

and the quarterly-average cost method,” and explaining how agency “compar[ed] the two methods”),

19 (stating that Commerce “compar[ed] the two cost methods (i.e., annual-average cost method and

the quarterly-average cost method)”), 22 (noting Habas’ concern that Commerce’s analysis

“compares the end result of . . . two different cost reporting methodologies,” rather than

“compar[ing] the costs between the first and the fourth quarters of the POR”), 28 (acknowledging

that Commerce here “compare[d] the difference between . . . two averaging methods”); Pl.’s Brief

at 2 (pointing out that Commerce’s analysis in this case “does not measure whether there is a

significant increase in cost; rather, it measures the difference between two competing

methodologies”; further noting that “[t]he focus of [Commerce’s] approach has now changed . . .

to an examination of the difference between competing methodologies”), 10-11 (explaining that

Commerce’s new approach “is to compare, during particular quarters, the quarterly [cost of

manufacturing] with the POR-average [cost of manufacturing],” and “[i]f the difference between the

two methodologies is not ‘significant,’ then Commerce will not apply multiple cost-averaging

periods”); Def.-Ints.’ Brief at 14 (noting that Commerce’s new approach is to “compar[e] the results

of . . . two methods (single and multiple period cost averaging)”); Def.-Ints.’ Reply Brief at

3(explaining, inter alia, that Commerce “measure[d] the difference between the quarterly and annual

costing methodologies”).

Court No. 05-00613 Page 19

Habas challenged Commerce’s Final Results in this action. In its initial briefs (filed pre-

remand), Habas once again addressed the quarterly costing issue in detail, focusing primarily on

the new test that Commerce had articulated and applied in the Final Results. Habas argued that the

surge in scrap prices in the fourth quarter of the POR increased Habas’ cost of manufacturing

(“COM”) by 21% across the POR. Habas further argued that – when quarterly costs were averaged

across the POR – the surge in fourth-quarter COM created “fictitious profits and losses on home

market sales,” violating the rule of Brass Sheet and Strip From the Netherlands, and artificially

increasing normal value by 14.5%. And, significantly, Habas criticized Commerce’s reliance on

Pasta from Italy, explaining that Pasta from Italy simply does not stand for the proposition for which

the agency cited it in the Final Results. See generally Pl.’s Brief at 8-9 (citing Notice of Final

Results of Antidumping Duty Administrative Review and Determination Not to Revoke the

Antidumping Duty Order: Brass Sheet and Strip From the Netherlands, 65 Fed. Reg. 742, 747 (Jan.

6, 2000) (“Brass Sheet and Strip from the Netherlands”); RE: Certain Pasta from Italy (Period of

Review: July 1, 1988 through June 30, 1999), Subject: Issues and Decision Memorandum for the

Third Antidumping Duty Administrative Review; Final Results of Review, 2000 WL 1880666 (Dec.

13, 2000) (“Pasta from Italy”), at comment 18).

In particular, Habas explained that the gravamen of Pasta from Italy is that an increase in raw

material cost of 10% to 12% between the beginning and the end of the POR is not significant, when

costs increased for half of POR and decreased for the other half of the POR. But, notably, in Pasta

from Italy, Commerce was not comparing the results of two different costing methodologies (as the

agency did in the Final Results here). Thus, contrary to Commerce’s implication in the Final Results

Court No. 05-00613 Page 20

in this case, Pasta from Italy does not stand for the proposition that a 10% difference between two

methodologies is “not significant.” See generally Pl.’s Brief at 9.

In the course of the remand proceedings, Commerce reaffirmed that its new approach to

deciding whether to apply multiple cost-averaging periods is to compare, during particular quarters,

the quarterly cost of manufacturing (COM) with the POR-average COM. According to Commerce,

if the difference between the results of these two methodologies is not “significant,” the agency will

not use multiple cost-averaging periods.

In the Draft Remand Results, Commerce summarized its new analysis:

[W]e reviewed the precise impact of using Habas’s quarterly-average COM approach

versus [Commerce’s] preferred annual-average COM method, and found that the

difference of approximately 5 to 10% was not significant. See Final Results at

Comment 1. Accordingly, Commerce found that using annual-average costs was

consistent with [the agency’s] practice, more predictable, and reasonable.

Draft Results of Redetermination Pursuant to Court Remand (Pub. Doc. No. 3) (“Draft Remand

Results”), at 7. Habas points out that the language of the Draft Remand Results thus largely tracked

the language of the (pre-remand) Final Results – with one significant difference: The Draft Remand

Results omitted the Final Results’ reference to Pasta from Italy. As Habas notes, that omission

reflects Commerce’s tacit admission that the agency’s earlier reliance on Pasta from Italy was

misplaced. See Pl.’s Brief at 11. The relevant language of the final Remand Determination parrots

the language of the Draft Remand Results (quoted above), word-for-word. See Remand

Determination at 8.

As noted above, in its briefs now before the Court, Habas complains that – notwithstanding

the assurances that the Government gave in seeking a voluntary remand – Commerce failed to take

Court No. 05-00613 Page 21

a “fresh look” at this issue during the course of the remand proceeding. See Habas, 31 CIT at ____,

2007 WL 3378201 * 5; see also Pl.’s Brief at 6, 10, 12. Habas asserts that, on remand, “Commerce

simply restated the test for which it had previously been unable to articulate a rationale,” and then

– for good measure – sought to buttress that test with an additional “two evidentiary tests that

purport[ ] to support the conclusion that Habas did not experience a significant increase in cost in

the POR and that Habas’ prices were not correlated closely with its [cost of manufacturing].” See

Pl.’s Brief at 10.

According to Habas, “Commerce’s criteria for whether to apply multiple cost-averaging

periods, as developed in this case, remain selective, ad hoc, and unprincipled, unsupported by law

or fact.” See Pl.’s Brief at 10. And, as to the two so-called “evidentiary tests Commerce formulated

in the remand,” Habas contends that “the first actually supports quarterly costing, while the second

has no substantive bearing on the issue at hand.” Id.

2. The First Prong of Commerce’s Test for Multiple Cost-Averaging Periods

As summarized above, Commerce’s principal criteria for the use of multiple, shorter cost-

averaging periods historically have been (1) whether the product was a “single primary input

product,” and (2) if so, whether the cost of that single primary input increased or decreased

significantly across the period of review (“POR”). If a respondent satisfied those two criteria (which

in the past together comprised the first, and the main, prong of Commerce’s test for shorter cost-

averaging periods), and if the respondent’s changes in prices tracked its changes in costs (the second

prong of the test as applied in the past), then Commerce used multiple, shorter cost-averaging

periods, because use of the agency’s standard annual POR-average costs would be distortive. But

Court No. 05-00613 Page 22

Commerce approached this case quite differently.14

14

In the Remand Determination, Commerce seeks to contrast the facts of this case with those

of cases in which multiple cost-averaging periods have been used. See Remand Determination at

14-16. But Commerce’s attempts to distinguish those other cases are neither illuminating nor

persuasive.

The Remand Determination asserts, for example, that multiple cost-averaging periods have

been used only in cases where “a high technology product experienced drastic and consistent cost

and price changes over a short period of time or the respondent’s COM changed significantly

throughout the cost reporting period.” Remand Determination at 14 (emphasis added); see also id.

at 16 (stating that “a significant change in COM over the cost period” may warrant multiple cost-

averaging periods) (emphasis added). But, in fact, as Commerce itself acknowledges, the agency’s

analysis in other cases in the past has focused not on the significance of the change in the total cost

of manufacturing (COM), but – rather – on the significance of the change in the cost of a “single

primary input.” See Remand Determination at 8-9.

Moreover, the great bulk of the Remand Determination’s analysis of prior cases is devoted

to distinguishing this case from “those cases which have involved high technology products such

as dynamic random access memory, static random access memory or erasable programmable read

only memory,” where multiple cost-averaging periods have been used. See Remand Determination

at 15. However, that is nothing but a straw man. Habas acknowledged from the start that this case

involves only an “ordinary industrial product[].” See Pl.’s Brief at 6. Commerce’s extended

discussion of cases involving high technology products is thus mere “filler.”

The Remand Determination’s analysis of cases other than those involving high technology

products is limited to a very brief discussion of a single case – Thai Pineapple. See Remand

Determination at 15-16. Commerce utterly ignores other cases involving non-high technology

products, such as Stainless Steel Coils from Korea, Pasta from Italy, and Brass Sheet and Strip from

the Netherlands. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel

Sheet and Strip in Coils From the Republic of Korea, 64 Fed. Reg. 30,664, 30,674-76 (June 8, 1999);

Notice of Amendment of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate

in Coils From the Republic of Korea, and Stainless Steel Sheet and Strip in Coils From the Republic

of Korea, 66 Fed. Reg. 45,279, 45,280 (Aug. 28, 2001); Pasta from Italy, 2000 WL 1880666, at

comment 18; Brass Sheet and Strip from the Netherlands, 65 Fed. Reg. at 747.

Ultimately, the Remand Determination’s rationale for distinguishing this case from others

where multiple cost-averaging periods have been used comes down to little more than ipse dixit –

Commerce’s conclusory assertions that “the reasons for [using multiple cost-averaging periods] .

. . do not apply to the facts of this case” and that “the exceptions for using a different cost-averaging

period (i.e., . . . a significant change in COM over the cost period . . . ) do not apply to Habas’

situation in this case.” See Remand Determination at 14, 16; see also id. at 14 (implicitly asserting

Court No. 05-00613 Page 23

As the Remand Determination explains, as to the first prong of the test, Commerce conducted

two different analyses. First, Commerce analyzed the difference between calculating Habas’ costs

on a quarterly basis versus calculating Habas’ costs on an annual POR-average basis – in essence,

seeking to determine the “significance” of the difference between using Commerce’s standard POR-

average costing methodology versus using a quarterly costing methodology (as Habas has proposed).

See generally Remand Determination at 7-8, 28, 32. Commerce’s analysis in this case thus

represented a sea change from what the agency has done in such cases in the past. As noted above,

Commerce historically has evaluated the “significance” of a respondent’s actual changes in cost over

the POR – not the “significance” of the difference between the results of two different costing

methodologies (as Commerce did in the Remand Determination in this case). In effect, Commerce

here fundamentally alters the nature of the first prong of its two-prong test for the use of multiple

cost-averaging periods.

Second, in addition to its comparative analysis of the difference between the annual POR-

average cost methodology and the quarterly-average cost methodology, Commerce also conducted

a “price volatility” analysis. Specifically, Commerce analyzed Habas’ home market rebar prices

within each quarter of the POR as compared to fluctuations in Habas’ costs, to attempt to gauge the

extent of normal cost and price fluctuations in Habas’ home market over a short period of time. See

that instant case is not one in which “the respondent’s COM changed significantly throughout the

cost reporting period”). (Of course, as discussed in greater detail herein, the Remand Determination

largely eschewed analysis of the “significance” of the increase in Habas’ costs over the POR, in

favor of an analysis of the difference between the two competing costing methodologies. The bases

for Commerce’s assertions that Habas did not experience “a significant change in COM” are

therefore somewhat unclear.)

In sum, the Remand Determination fails to distinguish this case in any meaningful way.

Court No. 05-00613 Page 24

generally Remand Determination at 10-11, 29-30, 32.

Based on its two analyses, Commerce concluded in the Remand Determination that the use

of annual POR-average costs was not distortive. See generally Remand Determination at 8, 10-11,

19, 28-30, 32-33. In particular, Commerce found that the difference between costs calculated on a

quarterly basis versus on an annual POR-average basis was approximately 5% to 10%, which

Commerce concluded was not a sufficiently significant difference between the two methodologies

to warrant the use of quarterly costs. See Remand Determination at 8, 19, 28, 32. In addition,

Commerce found, as a result of its price volatility analysis, that – in light of the magnitude of the

fluctuation in Habas’ home market sales prices within a given quarter – Habas’ cost fluctuations

over the course of the POR were “not unusual or significant.” See Remand Determination at 10-11,

29-30, 32.

Habas attacks both of Commerce’s analyses. Habas first argues that Commerce’s analysis

of “significance” in effect measures the wrong thing, by evaluating the significance of the difference

between the end results of two competing costing methodologies, rather than the significance of the

actual increase in Habas’ costs over the course of the POR. See generally Pl.’s Brief at 2-3, 15, 23,

26; Pl.’s Reply Brief at 4, 9-11; Remand Determination at 22. But see Remand Determination at 25-

26, 28-29; Def.’s Response Brief at 16-17; Def.-Ints.’ Brief at 13-15, 21; Def.-Ints.’ Reply Brief at

1. Further, Habas faults the Remand Determination’s comparative analysis of the “significance” of

the difference between the annual POR-average cost methodology and the quarterly-average cost

methodology, on the ground that the analysis was limited to only two quarters of the POR. In

addition, Habas dismisses Commerce’s price volatility analysis as “fatally flawed.” Pl.’s Brief at

Court No. 05-00613 Page 25

20; see also id. at 2-5, 12-17, 19-24; Pl.’s Reply Brief at 12-13; Remand Determination at 23. But

see Remand Determination at 7 & n.1, 8, 10-11, 29-30, 32; Def.’s Response Brief at 15-17, 21-23;

Def.-Ints.’ Reply Brief at 2-6.

a. Commerce’s Comparison of Two Competing Methodologies

Habas initially takes aim at Commerce’s decision to evaluate “significance” in this case by

analyzing the “significance” of the difference between the use of two different costing

methodologies. Habas contends that Commerce instead should have evaluated the “significance”

of the increase in Habas’ costs between the beginning and the end of the POR, as Commerce has

done in every other such case in the past. See, e.g., Pl.’s Reply Brief at 10-11 (noting that change

in costs over POR “was specifically articulated as the test for a shorter cost-averaging period in

Pasta from Italy”; that “[i]n all of the precedents Commerce compared the costs across the POR; it

is the core of a long-standing and clearly-articulated test”; and that “if this test is met, then the

precedents require that costing be done on a shorter cost-averaging period precisely because POR-

average costing is distortive in an environment where cost is rising rapidly”).15

15

See also Pl.’s Brief at 2 (explaining that “[t]he precedents when this review was underway

. . . required quarterly costing (or some other form of multiple cost-averaging periods) when the

respondent’s cost to acquire the input of a ‘single-primary-input’ product ‘increased significantly’

during the POR”), 3 (arguing that “the use of multiple averaging periods has always turned on

whether the respondent experienced a significant increase in cost across the POR,” and that “[t]he

standard way of measuring this, and the way used in all the precedents, is to compare beginning cost

with ending cost”), 6 (stating that, in the past, “the test for quarterly cost (‘multiple averaging

periods’) for ordinary industrial products” was whether the “change in cost during the POR . . . was

of a quality and magnitude to warrant application of costing on a period less than a full POR,” and

that “[t]he core issue was whether costs had increased or decreased markedly across the POR”), 23

(asserting that, “in every one of its previous single-primary-input multiple-costing-period cases,”

Commerce calculated difference between cost at beginning of POR and cost at end of POR; arguing

Court No. 05-00613 Page 26

Habas allows that “Commerce’s decision to analyze the difference in COM [cost of

manufacturing] rather than in raw material cost [e.g., a single primary input, as the agency has done

in the past] does not seem unreasonable.” Pl.’s Brief at 3. But, Habas maintains, Commerce should

have evaluated “whether the COM increased (or decreased) significantly across the POR” – not

whether there was a “significant” difference between the use of the two competing costing

methodologies. Id.; see also id. at 15 (observing that “in all of the previous cases, Commerce

analyzed the movement of cost across the period of review, whether the cost of a single input or the

total COM”).

that “[t]his is the normal manner of addressing the question of whether the difference between two

figures is significant,” and “there is no reason to change the method now”), 26 (noting that “Habas

experienced a 28% increase in the cost of its single primary input across the POR,” and observing

that “[u]nder Commerce’s long-standing approach, this would have satisfied the threshold inquiry

for multiple cost-averaging periods”); Pl.’s Reply Brief at 4 (stating that “[i]n all the precedents,

from Brass Sheet and Strip through Pasta from Italy, Fujitsu General and Thai Pineapple, the

fundamental issue was always whether the respondent’s cost had undergone a significant increase

across the POR”), 9 (“In Brass Sheet, as in Pasta from Italy and SRAMs from Taiwan, Fujitsu

General, . . . and Thai Pineapple, . . . the issue has been whether the respondent’s costs experienced

a significant increase (or decrease) in cost across the POR”), 10-11 (explaining that “the question

of whether a change in cost over the POR was ‘significant’ has always been the key question

underlying shorter cost-averaging periods”; “[t]his was the test applied in Brass Sheet, and it was

specifically articulated as the test for a shorter cost-averaging period in Pasta from Italy”; “[i]n all

of the precedents, Commerce compared the costs across the POR; it is the core of a long-standing

and clearly articulated test. In fact, if this test is met, then the precedents require that costing be

done on a shorter cost-averaging period precisely because POR-average costing is distortive in an

environment where cost is rising rapidly”), 11 (noting that “comparing costs at the beginning of the

POR to costs at the end of the POR . . . is precisely the way in which the test was applied in Brass

Sheet, in Pasta from Italy, and in all the other cases involving shorter cost-averaging periods”);

Remand Determination at 22 (discussing Habas’ argument that Commerce should use the same

analysis it has used in past cases – comparing costs at beginning of POR to costs at end of POR, and

noting Habas’ 28% increase in scrap costs over course of POR as well as Habas’ 21% increase in

cost of manufacturing (“COM”) over course of POR).

Court No. 05-00613 Page 27

In the Remand Determination, Commerce gave Habas’ point short shrift:

Habas continues to argue that the change in costs from the beginning of the POR to

the end is the proper method for analyzing this issue. . . . Other than the change in

cost resulting in a larger figure, this approach provides little use in assessing the

issue at hand. To simply look at costs at two points in time fails to recognize all the

production activity throughout the year. That is, it simply represents the cost at two

specific points in the POR, and calculates the percentage difference between those

two points. By calculating the percent difference in the COM based on two specific

points of time, we would be ignoring both the volume and COP [i.e., cost of

production] occurring during the remaining time in the POR. Thus, . . . Habas’

proffered analysis is [not] appropriate.

Remand Determination at 28-29; see also id. at 25-26; Def.’s Response Brief at 16-17; Def.-Ints.’

Brief at 13-15, 21. Commerce’s treatment of Habas’ argument is far too dismissive. Although the

parties differ as to the “significance” of the increase,16 no party appears to seriously dispute that

Habas’ costs escalated over the course of the POR (driven largely by a 28% increase in the cost of

scrap). Further, neither Commerce nor the Government nor the Domestic Producers contests Habas’

assertion that, in all previous cases, the first prong of Commerce’s analysis focused on the

significance of the change in a respondent’s costs over the course of the POR. And, as Habas aptly

observes, “Commerce never explains why a test that was appropriate for 20 years’ of precedent is

suddenly irrelevant” (much less, as Commerce apparently contends, affirmatively misleading). See

16

See, e.g., Pl.’s Brief at 2 (arguing that Habas’ 28% increase in scrap costs over course of

POR is “clearly significant”); Pl.’s Reply Brief at 10 (emphasizing that “[e]very way of examining

the data shows that costs at the beginning of the POR were lower than they were at the end”)

(emphasis added); Remand Determination at 9-11 (acknowledging that Habas experienced a 28%

increase in its scrap costs over the course of the POR, but concluding, based on Commerce’s price

volatility analysis, that Habas’ cost fluctuations “were not unusual or significant”); Def.’s Response

Brief at 7 n.2 (acknowledging Habas’ 28% increase in scrap costs over POR), 16 (conceding that

“the cost of production at the beginning of the period of review was lower than at the end”), 21-23

(arguing that Commerce’s price volatility analysis demonstrates that Habas’ 28% increase in scrap

costs was “not necessarily unusual or significant with respect to rebar prices in Turkey”).

Court No. 05-00613 Page 28

Pl.’s Brief at 15.

Although Commerce refers to it in the Remand Determination (in the excerpt quoted above)

as “Habas’ proffered analysis” (emphasis added), analyzing the change in cost across the POR in

fact historically has been Commerce’s approach to the analysis. To be sure, it is settled black letter

law that an agency generally has the right to change its practices and methodologies. But it is

equally well-established that the agency is obligated to fully explain and adequately justify any such

changes. See, e.g., NSK Ltd. v. United States, 510 F.3d 1375, 1381 (Fed. Cir. 2007). To the extent

that Commerce is now repudiating its past practice, Commerce must expressly acknowledge that it

is doing so, and provide a full explanation and justification for the change and for any new approach

that the agency is taking. It has not yet done so here.

Commerce’s justification as set forth in the Remand Determination is much too truncated

for the sweeping, fundamental changes that Commerce purports to make to the criteria for the use

of multiple cost-averaging periods. The Remand Determination barely acknowledges the

longstanding agency criteria that Commerce seeks to supplant, and does not address even the most

obvious questions about the changes to those criteria.17

For example, the Remand Determination fails to explain the rationale behind Commerce’s

traditional criteria for the first prong of the test for the use of multiple cost-averaging periods – the

“single primary input” criterion, and the criterion of “a significant and consistent decline or rise in

17

The Domestic Producers’ attempts to supply the missing rationale are unavailing. It is

well-settled that an agency’s decision may only “be upheld, if at all, on the same basis articulated

. . . by the agency itself.” See Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168-69

(1962).

Court No. 05-00613 Page 29

. . . cost.” See Preliminary Results, 70 Fed. Reg. 23,993. Disavowing the “single primary input”

criterion, the Remand Determination states that “it is the total COM [cost of manufacturing] that

matters, not simply one component of the total manufacturing cost, since it is the COP [cost of

production] that is used in the sales-below-cost test,” and that “[w]hile one input . . . may represent

a significant portion of the COM . . . , the other costs incurred to manufacture the finished product

are also important in analyzing the significance of cost fluctuations throughout the POR.” See

Remand Determination at 8-9. Similarly, disavowing the criterion of “a significant and consistent

decline or rise in . . . cost” between the beginning and the end of the POR, the Remand

Determination states that such an approach “simply represents the cost at two specific points in the

POR.” See Remand Determination at 29. Each of these propositions is self-evident, however, and

could not possibly have only recently occurred to Commerce – thus calling into question the

rationale behind the agency’s original criteria, as well as the rationale for and the timing of the

changes at issue here, and raising the spectre of unprincipled, ad hoc, result-oriented

decisionmaking. See, e.g., Pl.’s Reply Brief at 15 (arguing that Commerce has “demonstrated its

unyielding commitment to its result regardless of the evidence,” and predicting that agency “will

simply continue to create new tests in an effort to support its foreordained conclusion”).

Accordingly, this matter must be remanded to Commerce, to permit the agency to reconsider

once again whether in this case it should evaluate the significance of the difference between the use

of the two competing costing methodologies, or the significance of the increase in Habas’ costs

between the beginning and the end of the POR (as Habas urges). In addition, Commerce shall detail

Court No. 05-00613 Page 30

the rationale behind the agency’s original criteria (discussed above), as well as the rationale for and

the timing of any changes applicable in this case.18

b. Commerce’s Limitation of Its Analysis to Two Quarters

Even assuming that Commerce was not required to apply the first prong of the test for

multiple cost-averaging periods as the agency has applied it in past cases (i.e., even if Commerce

was not required to base its determination on the significance of the increase in Habas’ costs over

18

Although Commerce is not being expressly required to reopen the administrative record,

the agency clearly has the discretion to do so if appropriate. Moreover, depending on the criteria

that the agency elects to apply on remand, considerations of fundamental fairness may invalidate the

agency’s action if the record is not reopened.

Further, nothing herein should be construed to suggest that Habas is precluded from

challenging the validity of any recent change in agency criteria (either in the abstract or as applied

to Habas in this case), if circumstances warrant. It is one thing to say that an agency has the right

to change its policies and practices for prospective application. It is quite another to say that an

agency can change horses mid-stream – much less do so repeatedly, and as to virtually every single

aspect of a longstanding, multi-prong methodology and related criteria (as Commerce has done

here). Cf. Shikoku Chems. Corp. v. United States, 16 CIT 382, 387-89 & n.8, 795 F. Supp. 417, 421

& n.8 (1992) (and authorities cited there) (explaining, inter alia, that “[p]rinciples of fairness”

prevented Commerce from changing its methodology in case there at bar, that “[a]dherence to prior

methodologies is required in some circumstances,” and that “[l]ong-continued methodologies

naturally serve to provide the basis from which subjects of agency investigations adjust their

behavior”).

Finally, Habas renews its request for a directed remand requiring Commerce to recalculate

Habas’ dumping margin using Habas’ quarterly costs (rather than POR-average costs), arguing –

as noted above – that the agency “has now demonstrated its unyielding commitment to its result

regardless of the evidence,” and predicting that, given the chance, Commerce “will simply continue

to create new tests in an effort to support its foreordained conclusion.” See Pl.’s Reply Brief at 15;

see also Pl.’s Brief at 40 (requesting “an explicit instruction [to Commerce] to calculate the margin

using Habas’ quarterly costs as submitted”). Still, it cannot be said with assurance that a second

remand would be futile. See generally Nippon Steel Corp. v. United States, 458 F.3d 1345 (Fed.

Cir. 2006). Commerce is nevertheless reminded that no party is entitled to an unlimited number of

bites at the apple.

Court No. 05-00613 Page 31

the course of the POR), it does not necessarily follow that Commerce’s analysis in this case must

be sustained. Habas also argues, in the alternative, that – in evaluating the “significance” of the

difference between the two competing costing methodologies – Commerce erred by confining its

analysis to only two quarters (i.e., the first and second quarters of the POR, when Habas made its

U.S. sales). See Pl.’s Brief at 3-5, 12-17; see also Pl.’s Reply Brief at 11. But see Remand

Determination at 7 & n.1; Def.’s Response Brief at 15-17; Def.-Ints.’ Reply Brief at 3-4 & n.2.

As a threshold matter, Commerce’s analysis in the Remand Determination at least appears

to be inconsistent with the agency’s asserted rationale for declining to compare “the change in costs

from the beginning of the POR to the end” (as Habas urges). As quoted above, the Remand

Determination essentially disavowed Commerce’s longstanding practice of comparing “the change

in costs from the beginning of the POR to the end” on the grounds that – according to Commerce

– by “look[ing] at costs at two points in time,” such an approach “fails to recognize all production

activity throughout the year.” See Remand Determination at 28-29. However, Commerce here

compared quarterly cost to POR average cost in only two quarters of the POR. The Remand

Determination fails to explain how an analysis that is limited to only two quarters “recognize[s] all

production activity throughout the year.” See generally Pl.’s Brief at 3, 12-16.

Further pressing its challenge to Commerce’s logic, Habas argues that – if Commerce’s

intent is (as stated) to “recognize all the production activity throughout the year” – Commerce must

extend its analysis beyond the first two quarters, to include all four quarters of the POR. See

generally Pl.’s Brief at 3, 12-16. Habas protests that “Commerce’s examination of only the two

quarters in which Habas had US sales underscores the ad hoc nature of [the agency’s] exercise.”

Court No. 05-00613 Page 32

Pl.’s Brief at 14. And Habas asserts that the difference of approximately 5 to 10% which Commerce

finds “not significant” in the Remand Determination “arises solely because Commerce chooses not

to run its analysis across the entire POR.” Id.; Remand Determination at 8, 28.

According to Habas, extending Commerce’s analysis to all four quarters of the POR

demonstrates that “the full spread of the difference between POR-average cost and quarterly cost

is 20%” and that “the increase in quarterly cost across the POR is 21%.” See Pl.’s Brief at 13-14;

see also id. at 3. Habas thus concludes that, assuming arguendo the validity of Commerce’s

approach of evaluating the significance of the difference between the results of two different

methodologies, and extending that approach to the full year of the POR (in accordance with

Commerce’s stated goal of “recogniz[ing] all the production activity throughout the year”),

Commerce’s own methodology would show that the difference between quarterly cost and average

cost, measured across the entire POR, is actually 20% – not a “difference of approximately five to

ten percent,” as the Remand Determination indicates. See Pl.’s Brief at 3, 13-15; Remand

Determination at 8, 28. No party directly addresses Habas’ point. See Def.’s Response Brief at 16

(acknowledging, but not responding to, Habas’ argument); see also Def.-Ints.’ Reply Brief at 3 n.2.

In the Remand Determination, Commerce states that the agency limited its analysis to the

two quarters in which Habas had U.S. sales “simply because those are the only quarters where

contemporaneous comparison market sales would be used in the dumping margin calculation.”

Remand Determination at 7 n.1; see also Def.-Ints.’ Reply Brief at 3-4. However, Commerce

nowhere explains how an analysis which was limited to the first and second quarters of the POR

took into account “the surge in [Habas’] cost in the fourth quarter” of the POR. See Pl.’s Brief at

Court No. 05-00613 Page 33

4 (emphasis added). According to Habas, “[e]xamination of the quarters when US sales were made,

in isolation from the rest of the POR, conceals the full impact of POR average cost versus quarterly

cost.” Id.

Habas asserts that, by comparing quarterly cost to POR average cost in only two quarters of

the POR, Commerce fundamentally loses sight of “the central proposition” underlying the use of

multiple cost-averaging periods in appropriate cases. Pl.’s Brief at 15-16. As Habas notes, the

raison d’etre for multiple cost-averaging periods “is the concern about a mismatch between sales

and cost,” such as the mismatch that Habas alleges here – a mismatch between sales in one quarter

of the POR and the cost of production much later in the POR. Id. at 16. In the Remand

Determination, Commerce acknowledges that its test for the use of multiple cost-averaging periods

should be designed to “determin[e] whether there is a temporal mismatch between sales and costs.”

Remand Determination at 29. But Commerce accuses Habas of “oversimplif[ying] the issue,”

asserting that “[t]he difficulty in this case is to determine at what point the fluctuation in costs is

significant enough to depart from [the agency’s] normal annual average method.” Id. The Remand

Determination asks rhetorically: “Is a 10-percent difference in costs between an annual average

method and a quarterly average method the tipping point? Is it 15 percent?” Id.

As Habas notes, Commerce seems to intimate that, because of the difficulty in identifying

a precise “tipping point,” multiple cost-averaging periods can never be justified. See Pl.’s Brief at

16. Commerce stops short of throwing the baby out with the bath water, however. Habas’ point is

nevertheless well-taken. Commerce here makes no effort to define the “tipping point” which would

warrant the use of multiple cost-averaging periods under facts such as those in this case – much less

Court No. 05-00613 Page 34

to establish a standard to govern other cases, to ensure that similar cases are treated similarly.

Instead, Commerce contents itself with indicating that, whatever may be the agency’s standard (or

“tipping point”), it is not met in this case.

Habas is not entirely unsympathetic to Commerce’s plight in identifying a precise “tipping

point.” But Habas notes that the problem that Commerce faces is essentially one of the agency’s

own making: “For nearly 20 years before the Turkish rebar case, Commerce had a consistent and

predictable test [for the use of multiple cost-averaging periods]. For normal industrial products, the

single-primary input criterion was workable. . . . [and the criterion of] whether [the] cost of the input

had experienced a consistent and significant increase or decrease served well.” See Pl.’s Brief at 16-

17 (footnote omitted).19 Notwithstanding the fact that Commerce apparently now seeks to jettison

that longstanding test, Habas does not contend that Commerce must necessarily establish a precise

“tipping point” here. According to Habas, “for 20 years, Commerce had no hard numerical test, and

it does not need one to administer the statute effectively.” Id. at 17. However, Habas underscores

that “[w]hat is required” in this case “is a principled approach,” rather than what seems in critical

respects to be “ad hoc and selective decision-making.” Id. (emphasis added).20

19

Habas notes that Commerce first used multiple cost-averaging periods in the 1986-88

review of Brass Sheet and Strip from Italy. See Pl.’s Brief at 16 n.3 (citing Certain Brass Sheet and

Strip From Italy; Final Results of Antidumping Duty Administrative Reviews, 57 Fed. Reg. 9235

(March 17, 1992)).

20

As discussed above, Habas points out that – in the Remand Determination – Commerce has

abandoned its reliance on Pasta from Italy as authority for the proposition that a difference between

competing costing methodologies of approximately 5% to 10% is “not significant.” See Pl.’s Brief

at 11, 23, 26 (discussing Pasta from Italy, 2000 WL 1880666, at comment 18). Habas notes that

Commerce cited that case as precedent in the Final Results. As Habas correctly observes, however,

the gravamen of Pasta from Italy is that a 10% to 12% increase in the cost of semolina over the

Court No. 05-00613 Page 35

As the discussion above makes clear, the Remand Determination fails to adequately address

Habas’ numerous challenges to the logic and substantive validity of Commerce’s analysis and

determination as to the first prong of the agency’s test for the use of multiple cost-averaging periods,

as applied in this case. Nor does the Remand Determination adequately address the substantive

merits of Habas’ other basic claims (taking into consideration matters such as the agency’s past

practice, and the fundamental policy underlying the use of multiple cost-averaging periods) – e.g.,

Habas’ assertions that the use of “POR-average cost masks the 21% cost increase that occurred

across the POR, it forces virtually all first- and second-quarter sales to go below cost, it inflates

normal value by 14.5%, and it inflates the dumping margin by some 20 percentage points.” See Pl.’s

Brief at 17. But see Remand Determination at 18-19 (concerning 14.5% increase in normal value).

Contrary to Commerce’s claims, the Remand Determination does not establish that the use of POR-

course of the POR is not significant. Commerce in that case did not evaluate the significance of the

difference between two competing costing methodologies (as the agency did in both the Final

Results and the Remand Determination here). Pasta from Italy thus does not stand for the

proposition that a 5% to 10% difference between the results of two competing costing

methodologies is “not significant.” See generally Pl.’s Brief at 8-9; Remand Determination at 24-25.

But see Def.-Ints.’ Brief at 15-16 (acknowledging that Pasta from Italy “compared the difference in

the cost of semolina over the POR, rather than the difference between quarterly and POR-wide

costs,” but arguing that the case nevertheless supports Commerce’s decision in the Remand

Determination); Remand Determination at 27 (summarizing Domestic Producers’ position as to

relevance of Pasta from Italy).

As Habas emphasizes, the Remand Determination identifies no precedent or other authority

for Commerce’s determination that a difference between competing costing methodologies of

approximately 5% to 10% is “not significant.” See Pl.’s Brief at 11. On remand (as discussed

further below), Commerce shall detail its rationale for its determination that any particular difference

is or is not sufficiently “significant” so as to warrant the use of multiple cost-averaging periods, and

shall ensure that its determination is supported by substantial evidence in the record and justified

by reference to the agency’s past practice and its determinations in other cases (as well as any other

relevant authority).

Court No. 05-00613 Page 36

average cost is “more accurate” than quarterly costs in this case. See Remand Determination at 6.

Commerce’s determination thus cannot be sustained on this record.

As section III.A.2.a explains, this issue must be remanded to Commerce once again, for

further consideration by the agency. On remand, Commerce shall reconsider the substantive merits

of the first prong of its current analysis as reflected in the Remand Determination – in particular, the

legitimacy of its evaluation of the significance of the difference between two competing costing

methodologies (including its limitation of its analysis to only two quarters of the POR) – taking into

consideration (and specifically addressing) each of Habas’ claims. Thus, to the extent that

Commerce adheres to its current analysis (or to the extent that the matters otherwise remain

relevant), Commerce shall explain, inter alia, how its analysis (limited to only the first two quarters

of the POR) recognizes all production activity throughout the year, and how the analysis takes into

account the surge in Habas’ costs in the fourth quarter of the POR. In addition, Commerce shall

specifically address the validity of Habas’ extension of Commerce’s analysis to all four quarters of

the POR. Commerce shall ensure that its redetermination on remand sets forth the agency’s

rationale in detail and is supported by substantial evidence in the administrative record.21

21

As indicated above, Habas also makes the argument that – even if Commerce’s approach

in the Remand Results were to be sustained (i.e., even if evaluating the difference in the results of

two competing costing methodologies for only two quarters of the POR were determined to be a

legitimate test for the use of multiple cost-averaging periods) – Commerce erred in concluding that

a difference “of approximately five to ten percent” is “not significant.” Compare Pl.’s Brief at 2-4,

17-27; Remand Determination at 23-25; with Remand Determination at 8, 19, 26-32; see also Def.’s

Response Brief at 17-21; Def.-Ints.’ Brief at 15-16; Def.-Ints.’ Reply Brief at 2-4.

The remand mandated by the foregoing analysis (above) essentially obviates (at least for the

moment) any need to reach the merits of Habas’ claims as to the “significance” of any such

difference. It is, however, worth noting that, in the Remand Determination, Commerce characterizes

Court No. 05-00613 Page 37

the 25% market distortion benchmark used in the agency’s hyperinflationary economy analyses as

“[t]he only percentage threshold [cited by Habas] that is close to being on point here” (although

Commerce goes on to assert that Habas could not satisfy a 25% standard in this case). See Remand

Determination at 31-32; compare Pl.’s Brief at 4 (arguing that quarterly costing would be justified

here under a standard of 25%, “as Habas’ cost increase far exceeded 25% per annum (6.25% per

quarter) during no less than half of the . . . POR”), 18-19 (arguing that “Commerce erroneously

claims that the 25% threshold is not reached in the present case,” and explaining that “application

of the [25%] test for hyperinflation would require quarterly costing rather than POR-average costing

in the present case,” because “25% annual inflation implies 2.08% monthly inflation”), 23 (arguing

that “[t]o reach its desired result, Commerce . . . ignores . . . its own consistent practice regarding

hyperinflation”), 26 (arguing that Habas’ “28% increase in scrap cost that drove the 21% increase

in COM . . . more than satisfies the most closely related regulatory tests,” including “the rule for

hyperinflationary economies”); with Def.’s Response Brief at 18-20 (criticizing Habas’ reliance on

25% benchmark, asserting that Habas’ argument should be barred under the doctrine of exhaustion

of administrative remedies, that “Commerce has always made hyperinflation determinations upon

an annual basis and never upon a monthly or quarterly basis, as advocated by Habas,” and that a

2.08% monthly threshold for use of shorter cost-averaging periods “would undermine Commerce’s

legitimate policy goal of using a consistent methodology that is predictable from case to case”); and

Def.-Ints.’ Reply Brief at 4 (criticizing Habas’ reliance on 25% benchmark, asserting that Habas’

argument should be barred under the doctrine of exhaustion of administrative remedies, and that use

of that benchmark “would result in more cases being determined on multiple averaging periods . .

. than not,” and that “[Commerce’s] 25 percent test for inflationary economies is annualized”).

In a Notice of Subsequent Authority, Habas points out that – in the ninth administrative

review of rebar from Turkey – Commerce expressly adopted by analogy that 25% threshold as the

test for the use of multiple cost-averaging periods. See Notice of Subsequent Authority (Nov. 14,

2008) (citing Issues and Decision Memorandum for the Antidumping Duty Administrative Review

on Certain Steel Concrete Reinforcing Bars from Turkey – April 1, 2006 through March 31, 2007,

2008 WL 4899081 (Nov. 3, 2008) (“Ninth Review Decision Memorandum”), at comment 2).

Commerce there stated:

While an increase of 25 percent in the cost of production during the POR, due to the

rapid increase in the cost of a primary input, is not the same as high inflation, the 25

percent [benchmark used in the agency’s hyperinflationary economy analyses] would

be a reasonable percentage to establish the threshold for significance in this case. It

is high enough to ensure that we do not move away from our normal practice without

good cause and forgoing the benefits of using an annual average cost, but would

allow for a change in methodology when significantly changing input costs are

clearly affecting our annual average cost calculations.

Court No. 05-00613 Page 38

Ninth Review Decision Memorandum, 2008 WL 4899081, at comment 2. Although Commerce

determined that the respondent in question in the ninth administrative review did not meet the 25%

benchmark, Habas asserts that the methodology that Commerce employed in the ninth review differs

from that employed by the agency in the Remand Determination here, and that – if the methodology

employed in the ninth review were used in this case – Habas would meet the 25% benchmark. See

Notice of Subsequent Authority at 2; but see Def.-Ints.’ Response to Notice of Supplemental

Authority at 1 (disputing Habas’ assertion).

The Government and the Domestic Producers strenuously object to any consideration in this

administrative review of Commerce’s methodology and standard in the ninth administrative review,

arguing – in essence – that they were “not part of the administrative record considered by

Commerce” in reaching its Remand Determination here. See Def.’s Response to Notice of

Subsequent Authority; see also Def.-Ints.’ Response to Notice of Supplemental Authority.

However, this is not a case where a party seeks to supplement the record with additional “facts”; and

Commerce’s practices, methodologies, and standards are not themselves “evidence” per se. The

Government’s reliance on Hoogovens, Rhone Poulenc, and Becker is thus misplaced. See Def.’s

Response to Notice of Subsequent Authority (citing Hoogovens Staal BV v. United States, 22 CIT

139, 143-44, 4 F. Supp. 2d 1213, 1218 (1998); Rhone Poulenc, Inc. v. United States, 13 CIT 218,

222, 710 F. Supp. 341, 345 (1989), aff’d, 899 F.2d 1185 (Fed. Cir. 1990); Becker Indus. Corp. v.

United States, 7 CIT 313, 315 (1984)). Cf. Pl.’s Brief at 25-26 (arguing, as to related point, that “the

agency had full discretion to consider its own findings from the immediately following period of

review,” that “[i]t would have been lawful and appropriate for Commerce to acknowledge the

information and expertise it had gained in the interim between its first consideration of the 2003-04

review and its consideration of that review on remand,” that the information cited by Habas “is part

of Commerce’s own published determinations in the review; it is the government’s own

determination on the record,” and that “Commerce does not hesitate to cite later-developed

precedent when it so desires”).

In any event, as with the general issue of the “significance” of a difference of “approximately

5 to 10%,” there is no need to here decide the implications (if any) for this case of Commerce’s

methodology and standards in the ninth administrative review. Commerce may consider the matter

in the first instance on remand, as it reevaluates the proper methodology and standard to be applied

in this case (just as Commerce may, if appropriate, consider any other relevant developments,

including any ongoing efforts on the part of the agency to “develop a predictable methodology to

determine when, due to the occurrence of significant cost changes throughout the . . . POR, the use

of shorter cost-averaging periods would be more appropriate than the established practice of using

annual cost averages”). See Ninth Review Decision Memorandum, 2008 WL 4899081, at comment

2 (citing Antidumping Methodologies for Proceedings That Involve Significant Cost Changes

Throughout the Period of Investigation (POI)/Period of Review (POR) That May Require Using

Shorter Cost Averaging Periods; Request for Comment, 73 Fed. Reg. 26,364 (May 9, 2008)).

Court No. 05-00613 Page 39

3. The Second Prong of Commerce’s Test for Multiple Cost-Averaging Periods

Commerce fares only slightly better on its analysis of the second prong of the test for shorter

cost-averaging periods – i.e., the linkage between Habas’ costs and its sales prices. See generally

Remand Determination at 6, 11-14, 33-40; see also Pl.’s Brief at 5, 27-38; Pl.’s Reply Brief at 1, 3-9,

11-14; Def.’s Response Brief at 8-15, 21-26; Def.-Ints.’ Brief at 11, 17-21; Def.-Ints.’ Reply Brief

at 1, 6-13.

In the Remand Determination, Commerce explains that – even if the agency reached an

affirmative determination on the first prong of its test for multiple cost-averaging periods (discussed

in section III.A.2, above) – the use of quarterly costs nevertheless still would not be warranted

absent “evidence of the direct linkage between the resulting quarterly-average costs and sales

prices,” because (compared to the agency’s standard use of POR average costs to determine sales

below cost) “a more accurate sales-below-cost test only results if the sales during the shorter

averaging period can be directly linked with the [cost of production] during the shorter averaging

Finally, the broad nature of this remand similarly obviates the need to here parse the specifics

of the parties’ arguments as to the validity of Commerce’s price volatility analysis, which the agency

relies on to bolster its conclusion that Habas’ cost increases were not sufficiently “significant” to

warrant the use of quarterly costs. See Remand Determination at 10-11, 23, 29-30, 32; Pl.’s Brief

at 4-5,19-23; Pl.’s Reply Brief at 12-13; Def.’s Response Brief at 17, 21-23; Def.-Ints.’ Reply Brief

at 2-3, 5-6. However, just as with all other issues subsumed in the first prong of Commerce’s test

for multiple cost-averaging periods, the parties are cautioned to exercise care on remand to ensure

that a full record is developed on Commerce’s price volatility analysis (to the extent that it remains

relevant), and that all related arguments are fleshed out in detail.

Although Commerce is not being expressly required to reopen the administrative record, the

agency clearly has the discretion to do so – and, indeed, should do so if necessary to ensure Habas’

rights (as discussed more fully above).

Court No. 05-00613 Page 40

period.” Remand Determination at 11. Commerce notes that “[i]f one’s objective is to determine

whether sales within a given quarter were made above the cost to produce those same products in

that quarter, production and sale should occur within the same quarter.” Id.

The Remand Determination boldly concludes that, here, “there is no evidence . . . which

supports the proposition that production costs in each quarter were directly related to those sales

reported in that same quarter.” Id. (emphasis added). Commerce overstates its case.

Habas provided Commerce with an analysis of its costs and prices over the POR, which

Habas asserts demonstrates that its home market sales prices “precisely and consistently” tracked

its costs in the same quarter, “lockstep.” See Remand Determination at 12 (citation omitted). In the

Remand Determination, Commerce faulted Habas’ analysis in two respects, a critique to which

Habas does not directly respond. See Remand Determination at 12-13; Pl.’s Reply Brief at 5-6; see

also Def.’s Response Brief at 10; Def.-Ints.’ Brief at 18; Def.-Ints.’ Reply Brief at 7.22

To further evaluate Habas’ claims of a “lockstep” relationship between its costs and its

prices, Commerce looked to the price volatility analysis that the agency conducted on remand,

discussed briefly in section III.A.2, above. See generally Remand Determination at 13, 33-34, 36-

22

It is worth noting that one of Commerce’s two criticisms was that, based on Commerce’s

determination in SSSSC from France, Habas’ analyses should have compared quarterly indices of

total COM [cost of manufacturing] (rather than just scrap prices). See Remand Determination at

12-13 (citing Issues and Decision Memorandum for the Final Results of the Administrative Review

of the Antidumping Duty Order on Stainless Steel Sheet and Strip from France (2003-2004), 2006

WL 297170 (Jan. 30, 2006) (“SSSSC from France”), at comment 2. But it is not clear from the

record whether, in fact, Habas could fairly have been on notice that total COM – rather than scrap

prices – was now the focus of Commerce’s test. As the Remand Determination itself notes, SSSSC

from France – apparently the case in which Commerce first focused on total COM, rather than a

single primary input – was “a case that was conducted concurrently with this case.” See Remand

Determination at 9.

Court No. 05-00613 Page 41

37; see also Def.’s Response Brief at 10-11, 21-23; Def.-Ints.’ Reply Brief at 2 n.1, 7, 13 n.10.

Commerce reasoned that, “[i]f Habas’ quarterly home market prices and costs did in fact track each

other in ‘lockstep’ . . . , one would expect [Habas’] quarterly profit percentage on home market sales

to be consistent.” Remand Determination at 36. However, the results of Commerce’s analysis

indicated that Habas’ profits did not remain constant, as prices did not “increase in relatively the

same amount as costs.” Id. Indeed, Commerce found that “prices within a given quarter . . .

fluctuate[d] by more than costs fluctuate[d] over the entire annual POR.” Id. at 36-37.

Habas minimizes Commerce’s price volatility evaluation as a mere “secondary analysis,”

with “no bearing on whether Habas’ prices and costs were sufficiently correlated to warrant

application of multiple cost-averaging periods.” See Pl.’s Brief at 37. Even more to the point,

Habas asserts that Commerce’s analysis is methodologically flawed, in that it fails to account for

the fact that Habas’ sales database is prepared on a daily basis, while its cost database is presented

on a quarterly basis. Thus, according to Habas, “[i]f the sales are not evenly distributed within a

quarter, then the correlation with price will be diminished and . . . profitability will fluctuate.” Id.;

see also Remand Determination at 33. Neither the Government nor the Domestic Producers point

to anything to refute Habas’ critique.

The centerpiece of Habas’ case on the relationship between its costs and its prices, however,

is its “correlation coefficient” analysis. Specifically, Habas’ brief uses data from the record –

presented in the form of tables and graphs – to depict both the quarterly indices of price and cost for

key product models during each quarter of the POR, and the actual quarterly prices and costs across

the POR. See generally Pl.’s Brief at 28-35. Habas contends that “any fair comparison of the price

Court No. 05-00613 Page 42

and cost curves . . . shows a substantial correlation between and costs across the POR.” Pl.’s Brief

at 30. In fact, according to Habas, “the overall correlation coefficient between price and quarterly

[cost of manufacturing] for all [product models] is 0.9928, and for individual [models], the

coefficient of correlation is above 0.97 for all but one.” See Pl.’s Brief at 30; see also id. at 30 n.8

(explaining that a correlation coefficient of 1 indicates a “perfect linear relationship” between two

variables).23 Habas concludes that “a correlation coefficient of 0.992 definitively shows that price

and cost are closely correlated.” See Pl.’s Brief at 31.24

23

“CONNUMS” is the acronym for “control numbers,” which refer to the precise “model

numbers” of different types of the product at issue in an investigation (i.e., in this case, the model

numbers of different, specific types of rebar sold by Habas). See Remand Determination at 7; Def.-

Ints.’ Reply Brief at 5 n.5.

24

On remand, Habas also sought to rely on a finding that Commerce made in a post-

preliminary determination in the ninth administrative review of rebar from Turkey, which addressed

U.S. industry allegations that Turkish producers had conspired to manipulate prices for scrap and

rebar. Specifically, Commerce there concluded, inter alia, that Turkish producers keep inventory

levels low to ensure that costs and prices are closely matched. See Remand Determination at 33

(citation omitted); see also id. at 23-24, 26-27, 30-31 (discussing same agency determination, in

different context); Pl.’s Brief at 24-26 (same) (citing agency’s post-preliminary determination by

title and date, and noting that Commerce there also found that “home market prices . . . did appear

to move with changes in the price of scrap” and, further, that “Commerce found a close correlation

between the cost and price of rebar, not only for the Turkish industry, but for Habas in particular”);

Def.’s Response Brief at 20 n.4 (discussing same agency determination, in different context); Def.-

Ints.’ Reply Brief at 4 n.4 (same).

The Remand Determination acknowledges Habas’ reliance on that finding, but does not

otherwise address it in any fashion. See Remand Determination at 33. Indeed, it appears that no

party has specifically addressed the admissibility or relevance of that particular finding by

Commerce, although the agency, the Government, and the Domestic Producers have objected to

Habas’ attempts to rely on the same determination for other purposes, arguing (in essence) that it

is not part of the administrative record underlying the Final Results in the administrative review at

issue here. See Remand Determination at 26-27, 30-31; Def.’s Response Brief at 20 n.4; Def.-Ints.’

Reply Brief at 4 n.4.

Court No. 05-00613 Page 43

In a related set of figures, Habas also depicts Commerce’s POR average cost, graphically

illustrating the extent to which the use of POR average cost (as Habas puts it) “introduces significant

inaccuracies in every quarter,” particularly in those quarters where the change in cost was most

pronounced. See Pl.’s Brief at 33-35. Based on the information presented in its tables and graphs,

Habas questions what Commerce could possibly mean when the agency finds that the use of POR-

average cost is “more accurate” than quarterly costs. See Pl.’s Brief at 35. According to Habas, the

evidence depicted in its brief demonstrates overwhelmingly that “[p]rice is correlated with quarterly

cost, while POR-average cost significantly distorts the price-cost relationship in every quarter of the

POR.” Pl.’s Brief at 35.

Habas notes, however, that Commerce itself cites information that post-dates the Final

Results “when it so desires”; and “sauce for the goose is sauce for the gander.” See Pl.’s Brief at

26 (citing Remand Determination at 4, which in turn cites a 2006 administrative determination by

Commerce in an entirely different proceeding). Moreover, as Habas emphasizes, the information

here at issue is a determination by Commerce itself, rendered in a closely-related proceeding. See

Pl.’s Brief at 25-26. And the general policy behind limiting parties in a case such as this to the

record compiled before the agency is not to give the agency carte blanche to take inconsistent

positions. Nor is the purpose of the policy to shield the agency from being required to explain

seeming discrepancies and disparities in its determinations, policies, procedures, practices,

methodologies, and standards. Finally, any potential for unfairness is minimized, if not entirely

obviated, where the parties to the two proceedings are the same (as appears to be the case here).

In the course of the second remand (ordered herein), Commerce will have the opportunity

to address Habas’ reliance on the agency’s finding in the post-preliminary determination in the ninth

administrative review that Turkish producers keep inventory levels low to ensure that costs and

prices are closely matched. In addition, Commerce will have the opportunity – more generally – to

reevaluate the appropriateness of considering in this matter other agency findings from that

determination as well as other similar determinations that Habas has cited, in light of the various

policy considerations (some of which are outlined above) underpinning the general principle that

parties’ arguments must be confined to the administrative record.

Court No. 05-00613 Page 44

Invoking the doctrine of exhaustion of administrative remedies, the Government and the

Domestic Producers protest that Habas’ statistical correlation argument should be disregarded on

the grounds that it is “entirely new.” See Def.-Ints.’ Reply Brief at 7-9, 13 n.10; see also Def.’s

Response Brief at 25. It is unclear, however, exactly what is assertedly “new” – Habas’ reliance on

the statistical concept of a correlation coefficient, Habas’ use of graphic formats (i.e., tables and

graphs) to present record evidence, or something else.25 Certainly neither the Domestic Producers

nor the Government claim to be surprised by Habas’ basic contention; as the Domestic Producers

candidly acknowledge, Habas has consistently argued that “[its] cost and sales [prices] were

sufficiently matched or correlated.” See Def.-Ints.’ Reply Brief at 8.

Moreover, as Habas points out, Commerce itself “opened the door” to Habas’ correlation

coefficient analysis by introducing the concept of “correlation” for the first time in the Remand

Determination. See Pl.’s Reply Brief at 14; Remand Determination at 6 (stating that “there must be

a close correlation between the costs to produce the product during the shorter period and the sales

price of that same merchandise during the same period”). Further, the application of exhaustion

principles in trade cases is a matter of judicial discretion. See Corus Staal BV v. United States, 502

F.3d 1370, 1381 (Fed. Cir. 2007) (and cases cited there); see also Def.-Ints.’ Reply Brief at 8

(acknowledging that application of doctrine of exhaustion is committed to court’s discretion).

25

See, e.g., Def.’s Response Brief at 25 (noting that “Commerce has never seen these tables

and never had the opportunity to respond to this complicated analysis”) (emphases added); Def.-

Ints.’ Reply Brief at 9 (emphasizing need for agency to have first opportunity to evaluate “[t]he type

of statistical analysis Habas presents”) (emphasis added).

Court No. 05-00613 Page 45

On the merits of Habas’ correlation coefficient analysis, the Government and the Domestic

Producers argue that even a perfect one-to-one correlation does not necessarily establish causation,

as a matter of logic. See Def.’s Response Brief at 11; Def.-Ints.’ Reply Brief at 9-10. As the

Domestic Producers phrase their point: “[W]hile correlation coefficients measure the strength and

direction of a relationship between two variables, they do not demonstrate the cause of the

relationship, and in particular, cannot suffice to demonstrate that the correlation is caused by direct

temporal links between input costs and output prices within a quarter.” See Def.-Ints.’ Brief at 10.

The Government makes the same argument: “[E]ven if . . . costs and prices . . . moved in the same

direction, and . . . appeared to correlate to each other, it does not mean that one caused the other.”

See Def.’s Response Brief at 11.

Habas argues that there has been no “substantive reply” to its “proof of a strong statistical

correlation between its costs and its prices,” and that the absence of a “substantive refutation . . . is

an admission that Habas is correct.” See Pl.’s Reply Brief at 1, 8, 11, 14. And, on a more basic

level, Habas questions the fundamental fairness of yet another constantly moving target – i.e., a test

for cost/price relationship that initially required Habas to demonstrate a “direct relationship”

between its production costs and its sales within a quarter, which was then subsequently recast to

require proof of a “correlation,” and which is now seemingly being transformed into a requirement

that Habas establish actual “causation.”26 Habas asserts that it is being singled out, and is, in effect,

26

See Pl.’s Reply Brief at 14 (quoting Draft Remand Results at 11, where Commerce asserted

that there was no evidence that production costs in a quarter were “directly related” to sales in the

same quarter, as well as the Remand Determination at 6, where Commerce asserted that the test for

multiple cost-averaging periods requires “a close correlation” between production costs and sales

prices during the same period); id. at 7 (quoting Def.’s Response Brief at 11, which argues, inter

Court No. 05-00613 Page 46

being forced to “satisf[y] a more rigorous test than any [ever] propounded previously for quarterly

costing.” Pl.’s Reply Brief at 8.27

The parties also debate the state of the record on Habas’ purchasing, inventory management,

alia, “[t]he idea that correlation proves causation is a logical fallacy”).

Even within the four corners of the Remand Determination, Commerce is at best fuzzy and

imprecise (and arguably even inconsistent) as to the requisite relationship between production costs

and sales prices within the proposed shorter cost-averaging period. Then, of course, there is the

further question of the consistency of Commerce’s standard in this case with the standard that the

agency has applied in other, prior cases. Compare, e.g., Remand Determination at 6 (asserting that

“there must be a close correlation between the costs to produce the product during the shorter period

and the sales price of that same merchandise during the same period”) (emphasis added), 11 (arguing

that “sales during the shorter averaging period” must be “directly linked with the COP [cost of

production] during the shorter averaging period,” and that “production costs in each quarter” must

be “directly related to . . . sales reported in that same quarter”), 12 (requiring “a linkage of . . . sales

prices and cost”) (emphases added), 13 (examining “how well . . . quarterly prices and costs track

each other,” and whether “prices and costs are . . . , in fact, moving in ‘lockstep’”) (emphases added),

14 (inquiring whether “prices and costs for the shorter periods” can be “accurately matched”)

(emphasis added), 33 (asserting that “production costs in each quarter” must be “directly related to

the sales reported in that same quarter”), 35 (emphasizing that, in Brass Sheet and Strip from the

Netherlands, respondent “linked its raw material input purchases to its related sales transactions in

its normal books and records,” and that its “monthly cost and price fluctuations were in ‘absolute

lockstep’ with one another” and that “prices and costs for the shorter periods could be accurately

matched”), 37 (asserting that, in Brass Sheet and Strip from the Netherlands, respondent “directly

tie[d] input metal purchased to specific sales of subject merchandise”).

27

The Domestic Producers appear to go so far as to suggest that it would not be enough for

Habas to prove that the merchandise that it sold within a quarter was produced from scrap purchased

in the same quarter, but – rather – that Habas is actually required to establish the tie between “the

input costs for a given piece of rebar and [the] sales price for that same piece.” See Def.-Ints.’ Brief

at 11 (emphasis added); see also id. at 17 (arguing that Habas “must show that for a given piece of

rebar, the input costs (incurred during the shorter period) ‘can be directly tied’ with the sales price

of that same piece of rebar in the same shorter period”) (citation omitted) (emphasis added), 19

(arguing that Habas’ evidence must “tie individual input purchases to particular sales”), 20 (asserting

that Habas must produce “documentation sufficient to tie the input costs and sales prices for each

unit of rebar sold,” and must “link the input costs for a given sale of rebar to the sale price of that

rebar in the same quarter”) (emphases added); Def.-Ints.’ Reply Brief at 6 (asserting that Habas must

demonstrate that “the cost to produce . . . [a specific] piece of rebar can be directly tied to its sales

price within the same quarter”).

Court No. 05-00613 Page 47

production, and sales practices, and what that record evidence actually shows vis-a-vis the

relationship between Habas’ quarterly costs and sales prices. See generally Remand Determination

at 6, 11-13, 33-35, 37-40; see also Pl.’s Brief at 35-37; Pl.’s Reply Brief at 1, 4-9, 13-14; Def.’s

Response Brief at 10-15, 23-24; Def.-Ints.’ Brief at 11, 17-20; Def.-Ints.’ Reply Brief at 6, 12-13.

In the Remand Determination, Commerce seeks to contrast this case with Brass Sheet and

Strip from the Netherlands, asserting that – unlike the respondent in that case – Habas here cannot

“actually connect the merchandise [sold] during . . . [specific] quarters to merchandise produced

during the same quarters.” See Remand Determination at 32; see also id. at 13-14, 35, 37

(comparing case at bar to Brass Sheet and Strip from the Netherlands, 65 Fed. Reg. 742). According

to Commerce:

[T]he facts here are not similar to those in Brass Sheet and Strip from Netherlands,

in which the respondent could make a contemporaneous comparison of metal values

and sales prices which resulted in a more accurate calculation of the dumping margin

in that instance because the respondent linked its raw material input purchases to its

related sales transactions in its normal books and records. . . . The respondent in

Brass Sheet and Strip from Netherlands was able to show [Commerce] that its

monthly cost and price fluctuations were in “absolute lockstep” with one another. .

. . Accordingly, in Brass Sheet and Strip from Netherlands, [Commerce] determined

it appropriate to deviate from calculating costs on an annual-average basis over the

entire cost reporting period because record evidence showed that cost fluctuations

had a significant impact on the total COM during the period and prices and costs for

the shorter periods could be accurately matched.

Remand Determination at 35.28

28

Commerce and the Domestic Producers seemingly seek to enshrine Brass Sheet and Strip

from the Netherlands as the embodiment of the second prong of the test for the use of multiple cost-

averaging periods (i.e., the linkage between cost and price), intimating that – to satisfy the second

prong of the test – Habas must be able to tie specific, individual purchases of raw material inputs

to specific, individual sales of its merchandise (as did the respondent in Brass Sheet and Strip). See,

e.g., Remand Determination at 13-14, 35; Def.-Ints.’ Reply Brief at 6-7. But no party contends that

Court No. 05-00613 Page 48

In addition, although their exact status is far from clear, the Remand Determination identifies

eight factors which, according to Commerce, may “affect the relationship of . . . sales transactions

and costs”:

1) the raw material inventory turnover period; 2) the inventory valuation method

used by the company (e.g., last-in, first-out versus first-in, first-out versus weighted-

average, etc.); 3) the extent to which raw materials are purchased pursuant to long-

term contracts; 4) whether finished merchandise is sold to order or from inventory;

5) the finished goods inventory holding period; 6) sales made pursuant to long-term

contracts; 7) the extent to which monthly accruals are made; and 8) year-end

adjustments . . . .

Remand Determination at 6; see also id. at 11-12. Commerce reasons that, due to factors such as

these, “a shorter cost reporting period creates uncertainty as to how accurately the average costs

during the shorter period relate to the merchandise sold during that same shorter period,” and that

“[s]imply shortening the cost-averaging period does not automatically result in a more accurate

comparison of sales and costs” so as to justify the use of multiple, shorter cost-averaging periods.

See Remand Determination at 39; id. at 12.

In the Remand Determination, Commerce found that Habas had addressed only three of the

eight identified factors, and that – even as to those three – the evidence was inconclusive:

Habas’ relatively short inventory holding period for billets [is not] evidence of a

direct link between sales and [cost of production] in a given quarter. . . . While on

average it appears from the turnover ratio Habas calculated that it generally holds

billets in inventory for a short period of time, this does not establish when the scrap

in inventory used to produce rebar was purchased. Habas points to the only scrap

purchase explicitly on the record as a spot contract. . . . However, one contract for

one purchase during the POR does not qualify as evidence of the company’s

purchasing experience. Lastly, Habas states that it does not sell to home market

such a requirement has been imposed in all other similar cases in the past; nor could any party

honestly so claim.

Court No. 05-00613 Page 49

customers pursuant to long-term contracts which would appear to indicate a shorter

lag time between date of sale and shipment. . . . However, the question of whether

the shipped rebar was produced in the same quarter in which it was sold remains an

open question with no direct answer on the record.

Remand Determination at 39-40.

Habas contends that Commerce and the Government fundamentally distort the holding and

significance of Brass Sheet and Strip from the Netherlands (as well as its progeny), by relying on

the case as authority ostensibly requiring proof that costs within the shorter cost-averaging period

be directly linked to prices during that shorter period. See Pl.’s Reply Brief at 4, 6-7. According

to Habas, “[t]his new-found ‘test’ was merely an evidentiary fact in Brass Sheet, and . . . was never

even mentioned in Pasta from Italy, SRAMs from Taiwan, Fujitsu General, or Thai Pineapple.” See

Pl.’s Reply Brief at 4.29 Habas emphasizes:

[I]n Brass Sheet Commerce used a shorter cost-averaging period because costs

increased significantly across the POR. The respondent passed its cost of brass

through to the customer, but the core of the case was the increase in cost of brass

across the POR.

Pl.’s Reply Brief at 6-7. Indeed, Habas asserts that “[i]n all the precedents, from Brass Sheet and

Strip through Pasta from Italy, Fujitsu General and Thai Pineapple, the fundamental issue was

always whether the respondent’s cost had undergone a significant increase [or decrease] across the

POR,” and “whether that increase [or decrease] causes a mismatch between sales and costs when

costs are averaged on a POR basis rather than calculated more contemporaneously with sales” – not

29

See also Pl.’s Reply Brief at 9 (noting that “[i]n Brass Sheet, as in Pasta from Italy and

SRAMs from Taiwan, Fujitsu General, . . . and Thai Pineapple, . . . the issue has always been

whether the respondent’s costs experienced a significant increase (or decrease) in cost across the

POR . . . . Indeed, in all these cases except Brass Sheet, the entire issue of linkage between cost and

price has . . . been conspicuously absent.”).

Court No. 05-00613 Page 50

whether costs within the shorter cost-averaging period were directly linked to prices during that

same period. See Pl.’s Reply Brief at 4, 6-7.

Habas similarly takes the Government to task for its statement that Commerce rejected

Habas’ request for the use of quarterly costs “due to [the eight] factors” enumerated above. See Pl.’s

Reply Brief at 8-9 (quoting Def.’s Response Brief at 13; emphasis added by Habas). Although

Habas argued in its opening brief that the Remand Determination applied the eight factors as

“individual mandatory criteria for multiple cost-averaging periods,” Habas’ Reply Brief treats the

issue of the status of the eight factors rather differently. Compare Pl.’s Brief at 35-36 (emphasis

added) with Pl.’s Reply Brief at 8-9. Specifically, Habas’ Reply Brief characterizes the eight factors

as merely “a group of secondary factors that Commerce occasionally cites as a counterweight to

shorter cost-averaging periods.” Pl.’s Reply Brief at 9.

Whatever significance Commerce now seeks to accord them, Habas emphasizes that “[t]here

is no reference to [the eight] factors in the original Brass Sheet cases where the use of shorter cost-

averaging periods originated,” and that the eight factors “have never been posited as tests for shorter

costing periods.” See Pl.’s Reply Brief at 9 (emphasis added); see also Pl.’s Brief at 36 (asserting

that none of the eight factors “constituted a test” for use of shorter cost-averaging periods in any

previous case). Habas further maintains that “the eight secondary factors are absent from the Pasta

[from Italy] analysis,” and that “[i]n Brass Sheet as in Pasta from Italy and SRAMs from Taiwan,

Fujitsu General, . . . and Thai Pineapple . . . , the issue has been whether the respondent’s costs

experienced a significant increase (or decrease) in cost across the POR.” See Pl.’s Reply Brief at

9. In fact, Habas concludes flatly that “the eight factors have been irrelevant to the outcome” in each

Court No. 05-00613 Page 51

of those cases. See Pl.’s Reply Brief at 9.

In any event, Habas contends that – in the case at bar – Habas’ correlation coefficient

analysis renders the eight-factor “secondary test[] superfluous,” and, moreover, that if Commerce

nevertheless now requires evidence on the eight factors to establish a relationship between sales and

costs within a given quarter, the onus was on Commerce to specifically request that Habas provide

the necessary information. See Pl.’s Brief at 36; see also Remand Determination at 37.

Commerce and the Domestic Producers correctly point out that, ordinarily, it is a party’s

responsibility to make its own case. See Remand Determination at 38-39.30 But these are no

ordinary circumstances. As outlined above, the derivation of, and the standards or criteria for, the

asserted second prong of Commerce’s test for multiple cost-averaging periods (including the exact

status of the eight factors) even now remain unclear. A party is not required to proactively and

affirmatively anticipate, and adduce evidence to satisfy, any and all potentially conceivable

formulations of standards and criteria that an agency may possibly ultimately decide to impose.

Commerce may not have been obligated to specifically request information as to the eight factors.

But, if Habas must address the eight factors to establish a right to the use of quarterly costs, Habas

was at least entitled to both clear, advance notice of the need to address the factors and an adequate

opportunity to submit relevant evidence for the record.

30

The Domestic Producers also object that “there is no [indication] . . . that Habas sought to

place additional evidence on the record during the remand” to address the eight factors. See Def.-

Ints.’ Reply Brief at 12. But that argument has a very hollow ring, in light of the Domestic

Producers’ repeated and consistent objections to any attempts by Habas to supplement the record

here or to rely on extra-record information not available at the time the Final Results issued. See,

e.g., Def.-Ints.’ Reply Brief at 4 n.4; Remand Determination at 26-27. The Domestic Producers

cannot fairly blow both hot and cold on such matters.

Court No. 05-00613 Page 52

As to the merits, Habas argues that the existing record evidence addresses at least three of

the eight factors, and establishes that Habas has a holding period of approximately one week for

billet, that it has a holding period of less than a month for finished rebar, and that all of its home

market sales are made directly from inventory on a “spot” basis (i.e., not pursuant to long-term

contracts). See Pl.’s Brief at 36-37; Pl.’s Reply Brief at 1, 6-7, 14. Habas contrasts that showing

with Commerce’s “bottom line” assessment of Habas’ evidence – the Remand Determination’s

conclusion that “the question of whether the shipped rebar was produced in the same quarter in

which it was sold remains an open question with no direct answer on the record.” See Pl.’s Brief

at 37 (quoting Remand Determination at 40). As Habas points out, as a matter of logic, “if [Habas’]

billet holding period is a week and its rebar holding period is a month, and all sales are spot sales

(with no long-term contracts), then every bit of evidence points to a lead time of less than a month

between billet production and rebar sale. There is absolutely no evidence to the contrary.” See Pl.’s

Brief at 37; see also Remand Determination at 37-38.

On the other hand, the evidence that Habas cites (summarized immediately above) does not

speak to one significant part of the equation – in particular, the issue of when Habas’ purchases of

scrap (and other relevant inputs, if any) were made. The Remand Determination specifically found

that Habas had not “establish[ed] when the scrap in inventory used to produce rebar was purchased.”

See Remand Determination at 39; see also id. at 38 (noting Domestic Producers’ argument that

Habas’ evidence on inventory management does not “link any scrap purchased to the product

produced and sold within a quarter”); Def.’s Response Brief at 10 (speculating that “the raw material

inputs used to manufacture . . . [specific] rebar were purchased at prices drastically different from

Court No. 05-00613 Page 53

those in effect during the quarters when the sales were made”); Def.-Ints.’ Reply Brief at 7

(hypothesizing that “rebar sold in a given quarter” could have been “produced out of inputs

purchased prior to the quarter in which the sale occurred”).31

The record on this particular point is not only thin, but also quite unclear. In finding that

Habas had failed to “establish when the scrap in inventory used to produce rebar was purchased,”

the Remand Determination acknowledged that Habas had “point[ed] to the only scrap purchase

explicitly on the record as a spot contract.” See Remand Determination at 39 (emphasis added); see

also Def.’s Response Brief at 24 (referring to scrap purchase contract on the record as a “spot

contract[]”); Def.-Ints.’ Reply Brief at 12 (same). Yet just two pages earlier, the Remand

Determination stated that “the only scrap purchase on the record indicates that [the scrap] was

purchased pursuant to a long-term contract.” See Remand Determination at 37 (emphasis added).

Those two statements by Commerce are irreconcilably in conflict.

31

Habas quite properly points out that – as a practical matter – there is always some “carry-

over,” even when Commerce uses annual POR-average costs:

Commerce’s methodologies always involve an element of carryover from a previous

period, because Commerce compares home market selling prices in the POR with the

production costs incurred within the same period. This means that, in every case,

goods sold on the first day of the POR are treated as if they were produced within

the POR, even if the goods sold from inventory on the first day were actually

produced prior to the POR. Similarly, goods produced in the last days of the POR

will almost always be sold in the following period, but the costs are applied in the

period under review. Thus, in every case, there are timing assumptions that affect

both the beginning and the end of the period . . . .

Pl.’s Reply Brief at 4 (emphasis added).

Court No. 05-00613 Page 54

Putting aside for the moment whether the scrap contract at issue was in fact a spot contract

or a long term contract, Commerce determined, in any event, that a single contract was insufficient:

“[O]ne contract for one purchase during the POR does not qualify as evidence of [Habas’]

purchasing experience.” See Remand Determination at 39; see also Def.’s Response Brief at 24;

Def.-Ints.’ Reply Brief at 12. Similarly, as to Habas’ evidence concerning short inventory periods,

the Domestic Producers argue that – even if it is the sole record evidence on Habas’ production,

inventory management, and sales practices – “in light of all the other record evidence suggesting that

costs and prices are not directly linked, short inventory periods simply do not constitute substantial

evidence.” See Def.-Ints.’ Reply Brief at 12-13; see also Remand Determination at 39 (finding that

“Habas’ relatively short holding period” is not “evidence of a direct link between sales and [cost of

production] in a given quarter”). In the Remand Determination, Commerce concluded that Habas

failed to “sufficiently address[ ] the [eight] factors,” and that “[a]s any one of the [factors] . . . can

have an impact on the accuracy of matching sales and costs during a given quarter, ignoring any one

of them results in uncertainty.” See Remand Determination at 39.

Although in other circumstances the question might be a much closer call, the fact that this

matter must be remanded to Commerce on the first prong of the agency’s analysis, together with the

continued “morphing” of Commerce’s test on this second prong (i.e., the relationship between

Habas’ quarterly costs and its sales prices), tips the balance decisively in favor of returning this issue

too to Commerce. Further, as the Government and the Domestic Producers point out, Habas’

correlation coefficient analysis, in particular, “is necessarily fact-intensive and . . . woefully ill-

suited for efficient review by the Court in the absence of an opportunity for the agency to first

Court No. 05-00613 Page 55

evaluate the claim.” See Def.-Ints.’ Reply Brief at 9; see also Def.’s Response Brief at 25 (arguing

that “Commerce has never seen [Habas’] tables and never had the opportunity to respond to . . .

[Habas’] complicated [correlation coefficient] analysis, either in the underlying administrative

review, or in its response to Habas’ comments to the draft remand [results]”).

A second remand will afford Commerce the opportunity to consider Habas’ correlation

coefficient analysis in the first instance, in the light of all other relevant evidence of record. In

addition, Commerce will have the opportunity on remand to clarify, clearly articulate, and properly

explain and support whatever methodologies, tests, or standards it determines to be applicable to

evaluate the relationship between quarterly costs and sales prices in this case (weighing, inter alia,

Habas’ arguments here, the agency’s past practice, and any other appropriate considerations and

developments), and to apply those methodologies, tests, or standards to the evidence herein (fully

articulating the rationale for its determination and supporting it with substantial evidence in the

record). At the same time, Commerce shall ensure that Habas has adequate advance notice of all

relevant methodologies, tests, or standards, as well as sufficient opportunity to demonstrate its

satisfaction of them.32

32

Although Commerce is not being expressly required to reopen the administrative record,

the agency clearly has the discretion to do so if circumstances warrant. Moreover, depending on the

methodologies, tests, and/or standards that the agency elects to apply on remand, considerations of

fundamental fairness may invalidate the agency’s action if the record is not reopened.

Further, nothing herein should be construed to suggest that Habas is precluded from

challenging the validity of any recent change in agency methodology or applicable tests or standards

(either in the abstract or as applied to Habas in this case), if circumstances warrant. See, e.g.,

Shikoku Chems. Corp., 16 CIT at 387-89 & n.8, 795 F. Supp. at 421 & n.8 (and authorities cited

there) (explaining, inter alia, that “[p]rinciples of fairness” prevented Commerce from changing its

methodology in case there at bar, that “[a]dherence to prior methodologies is required in some

Court No. 05-00613 Page 56

B. Commerce’s Determination on Date of Sale

Commerce’s Remand Determination on the date of sale issue is the subject of a separate

challenge, lodged by the Domestic Producers. See generally Def.-Ints.’ Brief at 3-11, 21; Def.-Ints.’

Reply Brief at 1, 13-15; but see Def.’s Response Brief at 4, 26-32. Reversing its earlier

determination in the Final Results, Commerce concluded on remand that the appropriate date of sale

for Habas’ U.S. sales is the date of contract. See generally Remand Determination at 1-2, 19-21,

40-49. The Domestic Producers contend that the Remand Determination is not supported by

substantial evidence and is otherwise not in accordance with law, because Habas did not submit all

of its sales documentation to Commerce and because Habas assertedly failed to establish that the

material terms of its contracts were not subject to change. See Def.-Ints.’ Brief at 3; Def.-Ints.’

Reply Brief at 13-15.

The Domestic Producers urge that this issue be remanded to Commerce once again, arguing

that the agency’s use of contract date as the date of sale “utterly fail[s] to reflect the weight of either

Departmental or judicial precedent.” Def.-Ints.’ Brief at 4; see also Def.-Ints.’ Reply Brief at 15.

The Domestic Producers maintain that invoice date – rather than contract date – best reflects the date

on which Habas and its U.S. buyers reached a meeting of the minds on the material terms of sale,

and that invoice date therefore should be used as the date of sale for purposes of Commerce’s

antidumping duty analysis. See Def.-Ints.’ Brief at 3, 6-8, 10-11. The Domestic Producers’

arguments, however, are without merit.

circumstances,” and that “[l]ong-continued methodologies naturally serve to provide the basis from

which subjects of agency investigations adjust their behavior”).

Court No. 05-00613 Page 57

The antidumping statute on its face does not specify the manner in which Commerce is to

determine the date of sale. However, by enacting the Uruguay Round Agreements Act, Congress

“incorporated the trade agreements adopted by the World Trade Organization at the Uruguay Round

negotiations into United States law.” Allied Tube and Conduit Corp. v. United States, 24 CIT 1357,

1367-68, 127 F. Supp. 2d 207, 216 (2000). One such WTO agreement expressly provides that

“[n]ormally, the date of sale would be the date of contract, purchase order, order confirmation or

[the date of] invoice, whichever establishes the material terms of sale.” See Agreement on

Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Art. 2.4.1 n.8

(emphases added). Further, the Statement of Administrative Action accompanying the Uruguay

Round Agreements Act expressly defines date of sale as the “date when the material terms of sale

are established.” See Statement of Administrative Action, H.R. Doc. No. 103-316, at 810 (1994),

reprinted in 1994 U.S.C.C.A.N. 4040, 4153. Through the Uruguay Round Agreements Act and the

Statement of Administrative Action, Congress thus “expressed its intent that, for antidumping

purposes, the date of sale be flexible so as to accurately reflect the true date on which the material

elements of sale were established.” Allied Tube, 24 CIT at 1370, 127 F. Supp. 2d at 219 (emphases

added).

Consonant with Congress’ intent, Commerce’s regulations provide that invoice date is the

presumptive date of sale, but with an express caveat for situations where – as Commerce determined

here – another date better reflects the date on which the material terms of sale were established:

In identifying the date of sale of the subject merchandise or foreign like product, the

Secretary normally will use the date of invoice, as recorded in the exporter or

producer’s records kept in the ordinary course of business. However, the Secretary

may use a date other than the date of invoice if the Secretary is satisfied that a

Court No. 05-00613 Page 58

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) (emphasis added). In the Preamble to its date of sale regulation, Commerce

underscored that invoice date is merely the presumptive date of sale, and that the focus of an agency

date of sale analysis is to determine when the contracting parties reached a “meeting of the minds”

on the material terms of sale. See Antidumping Duties; Countervailing Duties: Final Rule, 62 Fed.

Reg. 27,296, 27,349 (May 19, 1997) (emphasizing that invoice date is merely the presumptive date

of sale, and that “[i]f 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”; and noting further that the test for date of sale is when “the

terms are truly ‘established’ in the minds of the buyer and seller”).

In the Final Results in this case, Commerce determined that Habas had failed to establish that

the material terms of sale were established as of the contract date. See Decision Memorandum at

28-29; see also Remand Determination at 19-20. The basis for Commerce’s finding was a change

to the price specified in one of Habas’ contracts, which was reflected in the form of a “billing

adjustment.” Decision Memorandum at 28; see also Remand Determination at 20. Habas

maintained that the price change reflected in the billing adjustment was actually a penalty for late

delivery, specifically provided for under the terms of the contract, and thus was not a change to the

material terms of the contract. See Habas, 31 CIT at ____, 2007 WL 3378201 * 6; see also Remand

Determination at 20. The date of sale issue was remanded to Commerce in Habas, because – in

reaching its determination in the Final Results – Commerce had not considered Habas’ explanation

for the billing adjustment, such that the record before the court in Habas “provide[d] no rationale

Court No. 05-00613 Page 59

to serve as a basis for judicial review of the agency’s action.” Habas, 31 CIT at ____, 2007 WL

3378201 * 7.

On remand, Commerce found that “the billing adjustment in question was, in fact, directly

related to a late delivery clause contained in the contract between Habas and its U.S. customer.”

Remand Determination at 21. Thus, absent any record evidence that the material terms of Habas’

U.S. sales either had changed or were subject to change, and in light of the fact that there had been

no such indication in any prior segments of the proceeding, Commerce reversed itself and concluded

that – as Habas had claimed all along – the date of contract was the appropriate date of sale for use

in Commerce’s antidumping analysis. See Remand Determination at 21, 45, 48. Commerce

recalculated Habas’ dumping margin accordingly. See Remand Determination at 1-2, 21, 49.

The Domestic Producers attack the Remand Determination on two grounds. Invoking

Hornos Electricos, the Domestic Producers assert that, “[i]n order to overcome [the] regulatory

presumption in favor of using invoice date as the date of sale, a party must: (1) ‘produce sufficient

evidence’ by establishing a complete record that includes all relevant sales documents, and (2)

demonstrate that the material terms [of its contracts] were neither changed nor subject to change

during the POR.” Def.-Ints.’ Brief at 5 (quoting Hornos Electricos De Venezuela, S.A. v. United

States, 27 CIT 1522, 1537, 285 F. Supp. 2d 1353, 1367 (2003)); see also Def.-Ints.’ Reply Brief at

13-15. According to the Domestic Producers, Habas failed on both scores. See generally Def.-Ints.’

Brief at 3-11; Def.-Ints.’ Reply Brief at 13-15.

Court No. 05-00613 Page 60

Emphasizing that Habas provided complete documentation for only one sale,33 the Domestic

Producers contend that Commerce lacked sufficient evidence to conclude that contract date is the

appropriate date of sale. See Def.-Ints.’ Brief at 6-7. According to the Domestic Producers,

Commerce “has clearly stated that providing only a sample set of sales documentation . . . is not

enough to overcome the [regulatory] presumption . . . in favor of invoice date as the date of sale.”

Def.-Ints.’ Brief at 6 (citing Issues and Decision Memo for the Administrative Review of Oil

Country Tubular Goods from Korea - 8/1/97 through 7/31/98, 2000 WL 365756 (March 13, 2000)

(“Oil Country Tubular Goods from Korea”), at comment 1). Indeed, the Domestic Producers go so

far as to argue that “the information necessary for justifying a move away from invoice date includes

provision of sales documents for all [period of review] U.S. sales.” Def.-Ints.’ Brief at 9 (emphasis

added); see also id. at 5 (asserting that party seeking date of sale other than invoice date must, inter

alia, “establish[ ] a complete record that includes all relevant sales documents” (emphasis added)).

As Commerce noted in the Remand Determination, however, “it is not the Department’s

general practice to require respondents to submit complete sales documentation for all sales.”

Remand Determination at 46-47 (referring to antidumping questionnaire). The instructions for

Section A of the antidumping questionnaire (issued to all respondents in an antidumping proceeding)

instruct respondents to provide “a copy of each type of agreement and all sales-related

33

The Domestic Producers seek to make much of the fact that Habas had only three U.S. sales

during the period of review, intimating that it would not have been unduly burdensome for Habas

to submit (and for Commerce to review) all of Habas’ sales documentation. See Def.-Ints.’ Brief

at 9 n.2. What the Domestic Producers overlook, however, is that the fact that only three U.S. sales

are at issue means that the sample sales documentation that Habas submitted to Commerce actually

represents a full one-third of Habas’ U.S. contracts.

Court No. 05-00613 Page 61

documentation . . . for a sample sale.” See Remand Determination at 47 (emphasis added). Habas

here complied fully with those instructions.

The Domestic Producers assert that a respondent seeking a departure from invoice date as

the date of sale (i.e., a discretionary adjustment) is obligated to provide additional evidence to

Commerce to satisfy its burden of proof, above and beyond the evidence required of respondents

in general. See Def.-Ints’ Brief at 9 n.2. As a general proposition of law, that is indisputably true.

Commerce indeed is entitled to require such respondents to supply additional documentation, and

the agency has done so in the past where circumstances warrant – as illustrated by Oil Country

Tubular Goods from Korea and Certain Cold-Rolled and Corrosion-Resistant Steel from Korea, two

cases that the Domestic Producers cite as evidence of agency precedent. See Def.-Ints’ Brief at 5-6,

9; Def.-Ints.’ Reply Brief at 14; Oil Country Tubular Goods from Korea, 2000 WL 365756, at

comment 1; Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea:

Final Results of Antidumping Duty Administrative Reviews, 64 Fed. Reg. 12,927, 12,933-35 (March

16, 1999).34

34

The Domestic Producers argue that, by not requiring Habas to submit complete

documentation as to all U.S. sales, Commerce departed from agency precedent without the requisite

reasoned explanation. See Def.-Ints.’ Brief at 8 (citing Allegheny Ludlum Corp. v. United States,

24 CIT 452, 458, 112 F. Supp. 2d 1141, 1147-48 (2000)). However, contrary to the Domestic

Producers’ claims, this case does not represent a departure from “precedent” such as Oil Country

Tubular Goods from Korea or Certain Cold-Rolled and Corrosion-Resistant Steel from Korea, the

two cases on which the Domestic Producers rely. See Def.-Ints.’ Brief at 6. Both cases are clearly

distinguishable on their facts from the case at bar.

In Oil Country Tubular Goods from Korea, for example, there was record evidence of

changes to material contract terms, as well as evidence indicating that some of the sample sales

documents were incomplete. See Oil Country Tubular Goods from Korea, 2000 WL 365756, at

comment 1. Commerce therefore requested full documentation from the respondent before

Court No. 05-00613 Page 62

In contrast, in the instant case, Commerce found no indicia which prompted the agency to

require Habas to submit further documentation. And the Domestic Producers cite nothing that

suggests that Commerce in fact has required all respondents in similar cases in the past to produce

complete documentation of all their U.S. sales; nor could the Domestic Producers do so.35

Apart from their contention that Habas should have been required to submit complete

documentation as to all its U.S. sales, the Domestic Producers also argue that Habas failed to

considering any change to the use of invoice date as the presumptive date of sale. See Oil Country

Tubular Goods from Korea, 2000 WL 365756, at comment 1; see also Remand Determination at 46.

Similarly, in Certain Cold-Rolled and Corrosion-Resistant Steel from Korea, Commerce

requested additional sales documentation due to the “significant amount of time” between the

“shipment [of goods] from Korea and invoicing of the unaffiliated customer” observed in prior

reviews. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea:

Final Results of Antidumping Duty Administrative Reviews, 64 Fed. Reg. 12,927, 12,933-35 (March

16, 1999) (explaining that “both the settling of essential terms of sale and the amount of time

between shipment and invoicing are . . . relevant”).

35

The Domestic Producers assert that Commerce’s failure to require submission of all of

Habas’ sales documentation is contrary to “judicial precedent,” and intimate that Hornos Electricos

and/or Allied Tube so held. See Def.-Ints.’ Brief at 5 (citing Hornos Electricos, 27 CIT at 1537, 285

F. Supp. 2d at 1367; Allied Tube and Conduit Corp. v. United States, 25 CIT 23, 25, 132 F. Supp.

2d 1087, 1090 (2001)). But, contrary to the Domestic Producers’ implication, no court has ruled that

all respondents seeking to overcome the regulatory presumption on date of sale are required to

submit all documentation as to all of their U.S. sales. See Nucor, 33 CIT at ____, 2009 WL 762367

* 32 (rejecting claim that respondent seeking to overcome regulatory presumption on date of sale

is required to submit all documentation as to all of its U.S. sales, and noting that “a review of various

cases in which Commerce has used a date of sale other than invoice date suggests that a number (if

not all) of them involved administrative records that did not [include all documentation as to all of

the U.S. sales at issue]”).

Even more to the point, there is nothing whatsoever in the statute, or in the legislative

history, or in Commerce’s regulation which specifies that respondents seeking to establish a date

of sale other than invoice date are required to submit all documentation as to all of their U.S. sales.

Given the ease with which Congress or Commerce could have set forth such a hard-and-fast

requirement had they wished to do so, their silence speaks volumes.

Court No. 05-00613 Page 63

establish that the material terms of Habas’ sales were not subject to change after the date of contract.

See Def.-Ints.’ Brief at 6-11; Def.-Ints.’ Reply Brief at 14-15. In particular, the Domestic Producers

point to a proprietary contract clause in Habas’ sample sale documentation as evidence that material

terms of Habas’ contracts indeed were subject to change. See Def.-Ints.’ Brief at 7, 10; Def.-Ints.’

Reply Brief at 14-15.

There is no dispute, however, that Commerce was fully cognizant of the verbiage on which

the Domestic Producers rely. Nor is there any dispute that Commerce analyzed that verbiage and

made a studied determination that it did not “represent anything more than standard contract

language,” and that neither Habas nor its U.S. customer had in fact changed the contract at issue in

any way. See Remand Results at 46-47. The Domestic Producers cite no evidence to the contrary

– no facts, and no authority as to the legal effect of the language in question.

Apparently the Domestic Producers simply disagree with Commerce’s determination that

the clause at issue was mere routine contract “boilerplate,” of no real significance.36 But it is

Commerce that Congress has charged with the administration of the antidumping statute; and it is

Commerce that Congress has endowed with the discretion to use a date of sale other than invoice

date when the agency determines that the other date better reflects when the material terms of sale

were established. See 19 U.S.C. § 351.401(i); see also Koyo Seiko Co. v. United States, 551 F.3d

1286, 1292 (Fed. Cir. 2008) (determination as to sufficiency of proof “lies primarily within

36

In essence, although the Domestic Producers view the proprietary contract clause as

“evidence” that the material terms of Habas’ contracts were subject to change, Commerce –

exercising its expert judgment – determined that the clause was not such “evidence” of that fact.

In other words, the contract clause would constitute “evidence” that material contract terms could

change only if the clause was of significance; and Commerce here determined that it was not.

Court No. 05-00613 Page 64

Commerce’s discretion,” particularly in case such as this, where the operative standard is “if the

Secretary is satisfied”); Def.’s Response Brief at 31 (citing Hornos Electricos, 27 CIT at 1535, 285

F. Supp. 2d at 1366-77); SeAH Steel Corp., Ltd. v. United States, 25 CIT 133, 134-35 (2001) (citing

Thai Pineapple Canning Industry Corp., Ltd. v. United States, 24 CIT 107, 109 (2000), aff’d in part

and rev’d in part, 273 F.3d 1077 (Fed. Cir. 2001)).

The Government underscores the extreme nature of the Domestic Producers’ position on the

effect of the contract clause at issue:

[E]ven if a company never modified its prices or other material terms . . . the

existence of an unremarkable standard contract violation clause buried in an

agreement between the company and its United States customer would require

Commerce to apply date of invoice instead of date of contract, when, in fact, under

any reasonable reading of the contract, the material terms were set [as of the date of

contract].

Def.’s Response Brief at 31. Neither the courts nor Commerce have ever applied such a restrictive

test. See Nucor, 33 CIT at ____, 2009 WL 762367 * 33-34 (expressly rejecting claim that “the

regulatory presumption of invoice date can be overcome only if a foreign producer establishes that

there were no changes whatsoever to any material term of any contract at issue (and, moreover, that

there was no possibility of any such change”); Def.’s Response Brief at 31. Rather, as the

Government notes, the courts have consistently recognized the expertise and discretion that

Commerce must necessarily exercise in making its fact-intensive date of sale determinations. See

Def.’s Response Brief at 31.

The Domestic Producers protest that, on remand, Commerce “simply pretend[ed] that neither

the test nor the precedents exist.” Def.-Ints.’ Reply Brief at 15. But the Domestic Producers’ rigid

position cannot be reconciled with the facts of this case or others in the past, which reflect

Court No. 05-00613 Page 65

Commerce’s case-specific approach to its date of sale determinations, and demonstrate the agency’s

flexibility in analyzing relevant facts (consonant with Congressional intent). See Issues and

Decision Memorandum for the Antidumping Duty Investigation of Sulfanilic Acid from Portugal;

Final Determination, 2002 WL 31493754 (Sept. 18, 2002), at comment 1 (using contract date as date

of sale, even though the contract was subsequently renegotiated when certain production quantities

could not be met); Circular Welded Non-Alloy Steel Pipe from the Republic of Korea; Final Results

of Antidumping Duty Administrative Review, 63 Fed. Reg. 32,833 32,836 (June 16, 1998) (finding

that material terms of sale were fixed on contract date, where subsequent changes were usually

immaterial in nature or, if material, rarely occurred, and where there was no information on the

record indicating that terms of sale changed frequently enough to give buyers and sellers any

expectation that final terms would differ from those agreed to in contract); Issues and Decision

Memorandum for the Antidumping Duty Administrative Review of Certain Welded Carbon Steel

Pipes and Tubes from Thailand, 65 ITADOC 60,910 (Oct. 13, 2000), at comment 1 (using contract

date as date of sale, even though quantity changed for virtually all contracts, and some changes

exceeded contract tolerances).

Commerce’s determination must be sustained “when it is reasonable and supported by the

record as a whole, even where there is evidence which detracts from the substantiality of the

evidence.” Mitsubishi Materials Corp. v. United States, 17 CIT 301, 304, 820 F. Supp. 608, 613

(1993) (citing Atlantic Sugar, Ltd. v. United States, 744 F.2d 1556, 1562-63 (Fed. Cir. 1984)). Here,

Commerce adequately explained its determination to use contract date as the date of sale for Habas’

U.S. sales. Moreover, that determination is amply supported by the record evidence, and reinforced

Court No. 05-00613 Page 66

by its consistency with the agency’s determinations in other, prior cases. Commerce’s Remand

Determination as to the date of sale for Habas’ U.S. sales must therefore be sustained.

IV. Conclusion

For all the reasons set forth above, Commerce’s Remand Determination must be sustained

as to the agency’s determination to use contract date as the date of sale for Habas’ U.S. sales.

However, the issue of the use of annual POR-average costs versus quarterly costs in Commerce’s

“sales-below-cost” analysis must be remanded to the agency once again, for further action not

inconsistent with this opinion.

A separate order will enter accordingly.

/s/ Delissa A. Ridgway

___________________________________

Delissa A. Ridgway

Judge

Dated: June 15, 2009

New York, New York