Borusan Mannesmann Boru Sanayi v. American Cast Iron Pipe Co. ( 2021 )

Case: 20-2014 Document: 40 Page: 1 Filed: 07/20/2021
United States Court of Appeals
for the Federal Circuit
______________________
BORUSAN MANNESMANN BORU SANAYI VE
TICARET A.S.,
Plaintiff-Appellee
UNITED STATES,
Defendant
v.
AMERICAN CAST IRON PIPE COMPANY, BERG
STEEL PIPE CORP., BERG SPIRAL PIPE CORP.,
DURA-BOND INDUSTRIES, STUPP
CORPORATION, INDIVIDUALLY AND AS
MEMBERS OF THE AMERICAN LINE PIPE
PRODUCERS ASSOCIATION, GREENS BAYOU
PIPE MILL, LP, JSW STEEL (USA) INC., SKYLINE
STEEL, TRINITY PRODUCTS LLC, WELSPUN
TUBULAR LLC USA,
Defendants-Appellants
______________________
2020-2014
______________________
Appeal from the United States Court of International
Trade in Nos. 1:19-cv-00056-JAR, 1:19-cv-00080-JAR, Sen-
ior Judge Jane A. Restani.
______________________
Decided: July 20, 2021
______________________
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2 BORUSAN MANNESMANN BORU SANAYI v.
AMERICAN CAST IRON PIPE CO.
JULIE MENDOZA, Morris, Manning & Martin, LLP,
Washington, DC, argued for plaintiff-appellee. Also repre-
sented by DONALD CAMERON, JR., SABAHAT CHAUDHARY,
EUGENE DEGNAN, MARY HODGINS, BRADY MILLS, R. WILL
PLANERT, EDWARD JOHN THOMAS, III.
TIMOTHY C. BRIGHTBILL, Wiley Rein LLP, Washington,
DC, argued for defendants-appellants. Also represented by
TESSA V. CAPELOTO, LAURA EL-SABAAWI, MAUREEN E.
THORSON, ENBAR TOLEDANO.
______________________
Before MOORE, Chief Judge ∗, DYK, and REYNA, Circuit
Judges.
Opinion for the court filed by Circuit Judge REYNA.
Dissenting opinion filed by Circuit Judge DYK.
REYNA, Circuit Judge.
The American Cast Iron Pipe Company and other do-
mestic producers of large diameter welded pipe appeal a
judgment by the Court of International Trade involving
certain price adjustments that were made in the course of
an antidumping duty investigation. Appellee Borusan
Mannesmann Boru Sanayi Ve Ticaret A.S. claims that it is
entitled to a post-sale price adjustment based on the total
value of penalties it paid for late delivery of product to a
customer. The Court of International Trade agreed and re-
manded to the U.S. Department of Commerce with instruc-
tions to grant the claimed post-sale price adjustment and
recalculate the resulting antidumping duty margins. On
remand, the Department of Commerce granted the post-
sale price adjustment, which produced a de minimis anti-
dumping duty rate. This appeal followed. Because we
∗ Chief Judge Kimberly A. Moore assumed the posi-
tion of Chief Judge on May 22, 2021.
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AMERICAN CAST IRON PIPE CO.
conclude that the Department of Commerce’s original post-
sale price adjustment was supported by substantial evi-
dence and in accordance with law, we reverse.
BACKGROUND
Generally, antidumping duty rates are determined by
price comparison. The U.S. Department of Commerce
(“Commerce”) compares the price of sales of the product un-
der investigation that were made during the period of in-
vestigation in both the home (foreign) market and in the
U.S. market. The difference in the prices is referred to as
the less than fair value margin. 19 U.S.C. § 1677f-1(d).
The less than fair value margin is the basis for the estab-
lishment of antidumping duty rates.
Differences in circumstances of sale can affect the level
of prices respectively in both the U.S. market and the (for-
eign) home market, such as rebates, taxes, shipping, and
fuel. Because of these differences in circumstances, prices
must be adjusted to ensure an apples-to-apples compari-
son. Torrington Co. v. United States, 68 F.3d 1347, 1352
(Fed. Cir. 1995). Specifically, prices must be net of any
“price adjustment.” 19 C.F.R. § 351.401(c). Because post-
sale price adjustments 1 may significantly affect the level of
antidumping duty margins, post-sale price adjustments
are not permitted unless a party can show that it is entitled
to the adjustment.
This appeal involves whether Borusan Mannesmann
Boru Sanayi Ve Ticaret A.S (“Borusan”) is entitled to a
post-sale price adjustment. We start with the observation
that the record indicates that if the post-sale price adjust-
ment here is permitted, the antidumping duty margin falls
1 A post-sale price adjustment is an “adjust[ment]
due to differences in the circumstances of sales” made after
a sale. NTN Bearing Corp. of Am. v. United States,
295 F.3d 1263, 1267 (Fed. Cir. 2002).
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4 BORUSAN MANNESMANN BORU SANAYI v.
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to a de minimis level, a zero margin. If the post-sale ad-
justment is not permitted, Borusan could be subject to 5.11
percent antidumping duty margin. Whether the post-sale
price adjustment should be permitted in this case turns on
the question of whether the circumstances underlying the
adjustment were established and known to Borusan’s cus-
tomer at the time the sale was made to the customer.
Borusan is a Turkish producer of large diameter
welded pipe (“LD WP”), a type of welded pipe used in the
construction of oil and gas pipeline projects. J.A. 5092–94.
On September 10, 2013, Borusan and two other Turkish
LD WP producers (collectively, the “JVA members”) en-
tered into a Joint Venture Agreement (“JVA”). J.A. 17,
2277–80. Specifically, the JVA members entered into the
JVA for the purpose of bidding on a pipeline project 2 in Tur-
key, which would span hundreds of miles and required
multiple sizes of LD WP. J.A. 2915–19. The three JVA
members agreed to be jointly and severally liable for fail-
ures to perform under the contract. J.A. 17, 22–23. Each
member agreed to reimburse the other two for any dam-
ages resulting from that specific member’s failure to fulfill
its obligations. J.A. 2278.
On March 3, 2014, the JVA members entered into a
Consortium Agreement which, like the JVA, stated that
the parties would be jointly and severally responsible and
liable towards the client. J.A. 2286, 2903. The Consortium
Agreement also provided that the parties would share
equally in the award, if obtained, and would take equal
shares of responsibility for fulfilling the requirements.
J.A. 17. A copy of the original Consortium Agreement was
sent to the client. J.A. 2904.
2 The JVA referred to the pipeline project as the “cli-
ent.” See J.A. 17.
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AMERICAN CAST IRON PIPE CO.
The JVA members were successful and won the bid on
the gas pipeline project. On October 14, 2014, the JVA
members and the client entered into a sales contract titled
“Procurement Contract relating to the Supply of Line Pipes
and Hot Bends” (“Sales Contract”). J.A. 2781. The Sales
Contract incorporated the Consortium Agreement as Ap-
pendix L. J.A. 2903–04. It did not, however, incorporate
the JVA. Like the JVA and the Consortium Agreement,
the Sales Contract provided that the three JVA members
were jointly and severally liable to the client for damages
resulting from the members’ failure to fulfill their obliga-
tions. J.A. 2867–68.
Under the Sales Contract, the JVA members agreed to
provide 56” and 48” LD WP to the client per a set schedule.
The parties subsequently amended the Sales Contract to
change the amount of 56” LD WP required and to revise
the delivery and completion schedule and pricing schedule.
J.A. 4359. Due to delay, the JVA members incurred late
delivery penalties for both 56” and 48” LD WP. See, e.g.,
J.A. 4360.
On June 9, 2017, after the JVA members delivered all
the ordered 56” LD WP, the client notified the members
that it sought an amount of money as a penalty for late de-
liveries of 56” pipe. Id. The JVA members responded with
a letter requesting that the client withdraw its damages
demand, arguing that factors beyond the JVA members’
control, including the client’s own procedural changes,
caused the delivery delays. J.A. 4361.
On September 6, 2017, after all ordered 48” pipe was
delivered, the client notified the JVA members that it
sought an additional amount as a penalty for late deliveries
of the 48” pipe. Id. The members again responded the fol-
lowing month in a letter asking the client to cancel its dam-
ages demand, reiterating substantially the same
arguments they had made with respect to the late delivery
penalties for the 56” pipe. Id. Negotiations between the
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client and the JVA members regarding damages continued
well into 2018.
On January 17, 2018, the appellants, domestic produc-
ers of LD WP, requested that Commerce and the U.S. In-
ternational Trade Commission initiate antidumping duty
investigations on U.S. imports of LD WP from Turkey. Pe-
titioners alleged that the U.S. LD WP industry was mate-
rially injured by sales of imports at less than fair value
from six countries, including Turkey. 3 J.A. 85–92. Com-
merce initiated an antidumping duty investigation in Feb-
ruary 2018, covering a review period from January 1, 2017
through December 31, 2017. J.A. 85–86 (Large Diameter
Welded Pipe from Canada, Greece, India, the People’s Re-
public of China, the Republic of Korea, and the Republic of
Turkey: Initiation of Less-Than-Fair-Value Investigations,
83 Fed. Reg. 7,154 (Feb. 20, 2018)).
Commerce issued antidumping duty questionnaires to
several Turkish producers of LD WP, including Borusan.
In its initial questionnaire response dated April 23, 2018,
Borusan claimed that it was entitled to a post-sale price
adjustment to account for the late delivery penalties it had
incurred in the pipeline project. J.A. 1216. Specifically,
Borusan sought a post-sale price adjustment equal to the
entire value of the penalty and represented that it had
“agreed to pay its customer” that amount for a “disputed
penalty for late delivery on sales.” Id. Borusan, however,
had not yet made any penalty payment and, in fact, the
JVA members including Borusan were still negotiating the
penalty amount with the client. On May 28, 2018, the cli-
ent responded to the JVA members’ July 2017 and October
2017 letters stating that the client agreed that it had con-
tributed to the delivery delays and accordingly lowered the
3 The U.S. International Trade Commission’s partic-
ipation in the ensuing underlying antidumping duty inves-
tigation is not relevant to this appeal.
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penalties for both the 56” pipe and the 48” pipe. J.A. 4361.
On June 11, 2018, after further discussions with the client,
the JVA members agreed to the reduced penalty amounts.
Id. That same day, the JVA members created a protocol
that allocated the total penalty among the three members
proportionally to each member’s responsibility for the de-
lay. J.A. 3003. The JVA members further agreed Borusan
would be responsible for the largest share of the total pen-
alty (“final allocation”). J.A. 3004.
On June 15, 2018, Borusan informed Commerce that it
had reached an agreement with the client and the JVA
members as to its final allocation of the penalty. J.A. 2230–
31. Borusan further stated that the penalty was subject to
an ongoing dispute among the JVA members, such that no
final payment had been made, but the penalty was being
allocated to the members proportionally to their share of
responsibility, i.e., per the final allocation. J.A. 2230–32.
Borusan explained:
Under [the Sales Contract], the [JVA] members
agreed to provide a designated quantity of various
sizes and dimensions of LD pipe as a group. No
individual agreements were made between [the cli-
ent] and the [three] producers. The [JVA] members
in the [Joint Venture Agreement] dated [Septem-
ber 10, 2013] . . . agreed that each company would
supply [one-third] of the total contracted quantity.
[The client] was not a party to this agreement and
considered the supply contract to be with [the JVA
members as an entity]. The supply contract be-
tween [the client and JVA members] includes a de-
livery schedule with deadlines (guaranteed
completion dates). Unfortunately, due to various
reasons beyond their control, none of the members
could fully comply with the contractual delivery
schedule. The majority of the delay and the liqui-
dated damages claim were due to delays by [Bo-
rusan].
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8 BORUSAN MANNESMANN BORU SANAYI v.
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J.A. 2231.
On June 29, 2018, the JVA members and the client ex-
ecuted a settlement agreement in which the members
promised to pay the agreed-upon penalty amount. In ac-
cordance with the Sales Contract, each JVA member was
billed one-third of the penalty (“initial allocation”), but Bo-
rusan assumed responsibility for its final allocation of the
total penalty, a larger sum. J.A. 4362. The members
signed a mutual release based on the settlement agree-
ment. On July 6, 2018, Borusan filed the executed settle-
ment agreement with Commerce. J.A. 5072–73. Of note,
the original Sales Contract with the client was executed in
October 2014, while this final allocation was established
years after execution of the settlement agreement.
On August 27, 2018, Commerce published a Prelimi-
nary Determination, assigning Borusan an antidumping
duty rate of 5.29 percent ad valorem. J.A. 3577 (Large Di-
ameter Welded Pipe from the Republic of Turkey: Prelimi-
nary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination, 83 Fed. Reg. 43,646,
43,647 (Aug. 27, 2018)). In September 2018 in response to
Commerce’s request, Borusan provided Commerce with
sales verification documentation pertaining to Borusan’s
payment of its share of the penalty to the client. J.A. 3580.
On February 27, 2019, Commerce published its Final
Determination in which Commerce rejected Borusan’s
claimed post-sale price adjustment and assigned Borusan
an antidumping duty rate of 5.11 percent ad valorem.
J.A. 5092 (Large Diameter Welded Pipe from the Republic
of Turkey: Final Determination of Sales at Less Than Fair
Value, 84 Fed. Reg. 6,362 (Feb. 27, 2019)); J.A. 5101. Com-
merce explained that, under its regulations, it “generally
will not consider a price adjustment that reduces or elimi-
nates dumping margins unless the party claiming such
price adjustments demonstrates that the conditions of the
adjustment were established and known to the customer at
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the time of sale.” J.A. 5071 (quoting Modification of Regu-
lations Regarding Price Adjustments in Antidumping Duty
Proceedings, 81 Fed. Reg. 15,641, 15,642 (Mar. 24, 2016)
(“Modification”)). Commerce further explained that it con-
siders a number of factors in determining whether a party
has demonstrated entitlement to a post-sale price adjust-
ment:
(1) Whether the terms and conditions of the adjust-
ment were established and/or known 4 to the
customer at the time of sale, and whether this
can be demonstrated through documentation;
(2) How common such post-sale adjustments are
for the company and/or industry;
(3) The timing of the adjustment;
(4) The number of such adjustments in the proceed-
ing; and
(5) Any other factors tending to reflect on the legit-
imacy of the claimed adjustment.
4 Although Commerce used the phrase “established
and/or known” in other sections of the Modification, Com-
merce requires that the terms and conditions be estab-
lished and known. See Modification, 81 Fed. Reg. at 15,642
(“Since enacting these regulations, the Department has
consistently applied its practice of not granting [post-sale]
price adjustments where the terms and conditions were not
established and known to the customer at the time of sale.”
(emphasis added)); id. (“[T]he Department generally will
not consider a [post-sale] price adjustment that reduces or
eliminates dumping margins unless the party claiming
such [post-sale] price adjustment demonstrates that the
terms and conditions of the adjustment were established
and known to the customer at the time of sale.” (emphasis
added)).
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J.A. 5071 (quoting Modification, 81 Fed. Reg. at 15,644–
45).
Applying these factors, Commerce determined that Bo-
rusan was entitled to a post-sale price adjustment for the
penalties paid to the client. J.A. 5073. Commerce, how-
ever, calculated the post-sale price adjustment on the basis
of one-third of the full penalty amount (the initial alloca-
tion) and not Borusan’s final allocation of the penalty. Id.
Commerce used the one-third figure because it determined
that the one-third allocation method was the allocation es-
tablished and known to the client at the time of the sale.
Commerce noted that the JVA members did not begin to
negotiate the final allocation until after the date of sale,
and the final allocation was not agreed upon until June
2018. J.A. 5071–74, 5053. For these reasons, Commerce
concluded, final allocation of the penalty among the JVA
members could not have been established and known to the
client at the time of sale. J.A. 5071–72.
Commerce further explained that using the JVA mem-
bers’ final allocation of the penalty would give Borusan an
opportunity to manipulate the post-sale price adjustment
“because the terms of the amount and allocation were not
fixed at the time of sale and the consortium did not deter-
mine the final apportionment until after the initiation of
the investigation.” J.A. 5074. Commerce expressed con-
cern about the legitimacy of the claimed adjustment be-
cause Borusan, for example, “changed the amount of this
adjustment, at times significantly, in its home market
sales database, with little or no explanation”; had “pro-
vided no exhibits, supporting documentation, or calcula-
tion worksheets” for these modifications; and did not report
the final amount of late delivery damages owed until a “lit-
tle over a month before the Preliminary Determination.”
J.A. 5072–73. Thus, consistent with the “terms and condi-
tions of the adjustment [that] were established and known
to the customer at the time of sale,” Modification, 81 Fed.
Reg. at 15,644–45, Commerce determined a post-sale price
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adjustment based on the initial allocation (one-third of the
total penalty), which it considered a “reasonable way to ad-
dress” its concerns regarding any potential manipulation
by Borusan, J.A. 5073–74.
Borusan filed suit in the U.S. Court of International
Trade (“CIT”) on May 2, 2019, pursuant to 19 U.S.C.
§ 1516a(a)(2)(A)(i)(II). Borusan alleged, among other
things, that Commerce had erroneously determined Bo-
rusan’s post-sale price adjustment based on the one-third
initial allocation rather than Borusan’s final allocation of
the penalty. J.A. 8. Defendants-appellants also filed suit
in the CIT, alleging that Commerce erred in its determina-
tion that Borusan was entitled to any post-sale price ad-
justment. J.A. 8, 16. Specifically, the appellants argued
that Commerce should have applied an adverse inference
based on “facts otherwise available” under 19 U.S.C.
§ 1677e to determine Borusan’s entitlement to an adjust-
ment because Borusan was not forthcoming during the in-
vestigation about circumstances involving the post-sale
adjustment. J.A. 16. The CIT consolidated the two cases
and both parties subsequently moved for judgment on the
agency record. J.A. 8.
* * *
On January 7, 2019, the CIT issued its decision sus-
taining Commerce’s determination to grant Borusan a
post-sale price adjustment. See J.A. 20. The CIT, however,
concluded that Commerce erred by basing the post-sale
price adjustment on the initial one-third allocation of the
total penalty assumed by the three JVA members. J.A. 26–
27, 35. The CIT noted that, prior to the sales in question,
the JVA established that penalties for the JVA members’
failure to perform under the contract would be apportioned
among the JVA members based on their responsibility.
J.A. 21–23. The CIT stated that the JVA was incorporated
by reference into the Sales Contract, and therefore the cli-
ent should be deemed aware of the JVA’s provisions
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12 BORUSAN MANNESMANN BORU SANAYI v.
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because that provision was established and known to the
client at the time of sale. Id. The CIT further reasoned
that it was only necessary that the “terms and conditions”
be established at the time of sale, not the final amount ac-
tually allocated to Borusan. J.A. 23.
The CIT acknowledged Commerce’s concern about the
potential for Borusan to manipulate the post-sale price ad-
justment, but it rejected Commerce’s concern because
“Commerce point[ed] to nothing that suggests an improper
manipulation of the adjustment.” J.A. 26. The CIT con-
cluded that Commerce “would have accepted the full pen-
alty adjustment” had Borusan not been a party to the JVA.
Id. The CIT remanded for Commerce to review the record
and recalculate the post-sale price adjustment “for what-
ever amount [Borusan] established it was liable for and ac-
tually paid or was credited, as authorized by the pre-
investigation contract obligations, unless Commerce has
evidence not previously cited that shows” manipulation by
Borusan. J.A. 26–27 (emphasis added).
On March 9, 2020, Commerce issued its remand deter-
mination. J.A. 5413. “Consistent with the [CIT’s] remand,
and under protest,” Commerce granted Borusan a post-sale
price adjustment based on Borusan’s final allocated share
of the penalty. J.A. 5418–19. As a result, Borusan’s
weighted-average dumping margin was reduced to a de
minimis amount. J.A. 5413. As a result, Borusan’s anti-
dumping duty margin dropped from 5.11 percent to zero.
The CIT affirmed Commerce’s redetermination on May 22,
2020. J.A. 36–49. This appeal followed. We have jurisdic-
tion under 28 U.S.C. § 1295(a)(5).
DISCUSSION
Standard of Review
This court reviews decisions of the CIT de novo and ap-
plies the standard of review the CIT applies in its review of
appeals of Commerce’s antidumping duty determinations.
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AMERICAN CAST IRON PIPE CO.
See, e.g., PPG Indus., Inc. v. United States, 978 F.2d 1232,
1236 (Fed. Cir. 1992). Under the applicable standard, we
affirm a decision by Commerce where it is supported by
substantial evidence and in accordance with the law.
19 U.S.C. § 1516a(b)(1)(B)(i); Micron Tech., Inc. v. United
States, 243 F.3d 1301, 1307–08 (Fed. Cir. 2001). “Substan-
tial evidence” is “more than a mere scintilla” and is “such
relevant evidence as a reasonable mind might accept as ad-
equate to support a conclusion.” Ta Chen Stainless Steel
Pipe, Inc. v. United States, 298 F.3d 1330, 1335 (Fed. Cir.
2002). Reasonable minds may differ on the outcome, but
“a determination does not fail for lack of substantial evi-
dence on that account.” See, e.g., Pastificio Lucio Garofalo,
S.p.A. v. United States, 783 F. Supp. 2d 1230, 1233 (Ct. Int’l
Trade 2011) (citation and quotation omitted). To deter-
mine if substantial evidence supports a decision by the
CIT, we review the record as a whole, including evidence
that adds to, and evidence that detracts from, the “substan-
tiality of the evidence.” Ta Chen, 298 F.3d at 1335 (citation
and quotation omitted).
That highly deferential review standard recognizes
Commerce’s special expertise in antidumping duty investi-
gations. Heveafil Sdn. Bhd. v. United States, 58 F. App’x
843, 847 (Fed. Cir. 2003). Commerce has “broad discretion
in executing” antidumping law, Smith-Corona Grp. v.
United States, 713 F.2d 1568, 1571 (Fed. Cir. 1983), and we
afford “tremendous deference” to Commerce’s administra-
tion of those laws, id. at 1582. As we explained in Fujitsu
Gen. Ltd. v. United States:
Antidumping and countervailing duty determina-
tions involve complex economic and accounting de-
cisions of a technical nature, for which agencies
possess far greater expertise than courts. This def-
erence is both greater than and distinct from that
accorded the agency in interpreting the statutes it
administers, because it is based on Commerce’s
technical expertise in identifying, selecting and
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14 BORUSAN MANNESMANN BORU SANAYI v.
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applying methodologies to implement the dictates
set forth in the governing statute, as opposed to in-
terpreting the meaning of the statue itself where
ambiguous.
88 F.3d 1034, 1039 (Fed. Cir. 1996) (citations omitted).
Factual determinations supporting antidumping margins
are thus “best left to the agency’s expertise,” F.lli De Cecco
Di Filippo Fara S. Martino S.p.A. v. United States, 216
F.3d 1027, 1032 (Fed. Cir. 2000), so we review those deter-
minations for substantial evidence, 19 U.S.C.
§ 1516a(b)(1)(B)(i).
* * *
Commerce determines sales price in antidumping duty
calculations net of any post-sale price adjustment that is
reasonably attributable to sale of the subject merchandise
made during the applicable period of investigation.
19 U.S.C. § 351.401(c). The CIT has recognized that post-
sale price adjustments, as in this case, present opportunity
for manipulation by investigated parties, which arises from
“the possibility that companies would grant rebates after it
became known that certain sales would be subject to [anti-
dumping duty] review, thus decreasing an already estab-
lished sales price, and thus decreasing margins.” China
Steel Corp. v. United States, 393 F. Supp. 3d 1322, 1347
(Ct. Int’l Trade 2019). To avoid such manipulation, Com-
merce’s regulations provide that an investigated party
seeking a post-sale price adjustment must prove that “buy-
ers were aware of the conditions to be fulfilled and the ap-
proximate amount of the rebates at the time of sale.” Id.(internal citation and quotation omitted).
We hold that Commerce’s original Final Determination
that Borusan was entitled to a post-sale price adjustment
based on the one-third initial allocation agreed to by the
JVA members because the one-third allocation was known
and established at the time of sale is supported by substan-
tial evidence and in accordance with the law.
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Commerce determined that the circumstances sur-
rounding the timing of the agreement allocating the total
penalty fee weighed against valuing the post-sale price ad-
justment based on the full amount of Borusan’s final pen-
alty allocation. We agree. In its Final Determination,
Commerce specifically analyzed whether the JVA mem-
bers’ allocation of the total penalty fee was established and
known to the client at the time of sale. J.A. 5071–72; see
also Large Diameter Welded Pipe from the Republic of Tur-
key: Final Determination of Sales at Less Than Fair Value,
84 Fed. Reg. 6,362 (Feb. 27, 2019). Commerce determined
that the final allocation method was not established or
known to the client “because the parties negotiated their
shares of the fee after the fee was imposed.” J.A. 5072.
Although the client was aware that the three members
would eventually evenly split responsibility for any dam-
ages, the client was not aware of the method the JVA mem-
bers actually adopted. Commerce reached this conclusion
based not only on the timeline of the contracts, but also be-
cause Borusan repeatedly changed its claimed post-sale
price adjustment amount during the investigation without
providing “exhibits, supporting documentation, or calcula-
tion worksheets,” instead relying “only [on] vague state-
ments.” Id. Commerce stated that the changing terms
after the initiation of the investigation cast “significant
doubt on the legitimacy of the allocation.” Id.Borusan admitted that the JVA members’ agreement
on the penalty allocation did not materialize until June
2018, “well after the initiation of this investigation.” Id.(noting that the investigation was initiated on January 17,
2018, and the penalty was not finalized until June 2018).
Commerce found that only after the final penalty amount
was determined “did the [JVA] members apportion among
themselves the penalties for which each [JVA] member was
responsible.” Id. Indeed, the JVA members “negotiated
their shares of the fee after the fee was imposed.”
J.A. 5071–72.
Case: 20-2014 Document: 40 Page: 16 Filed: 07/20/2021
16 BORUSAN MANNESMANN BORU SANAYI v.
AMERICAN CAST IRON PIPE CO.
Commerce’s determination that the final allocation
was not established and known to the client at the time of
sale is supported by substantial evidence. Only the JVA—
not the Consortium Agreement or the Sales Contract—pro-
vided that any penalties the JVA members incurred would
be reimbursed by the party failing to fulfill its obligations.
J.A. 2278. The client was not a party to the JVA, J.A. 2231
(Borusan admitting that the client “was not a party to [the
joint venture] agreement”); the client did not receive the
full JVA, J.A 2776, 2903–04; Opening Br. 17–19; and the
client was not informed of the final allocation method prior
to the investigation, Response Br. at 14 (“[N]either the
Sales Contract nor the Consortium Agreement documents
addressed at all the issue of allocation.”). The CIT incor-
rectly concluded that “[t]he Sales Contract expressly incor-
porates the [JVA] by reference,” J.A. 21–23, when in fact it
was the Consortium Agreement, Appendix L, not the JVA,
that was incorporated by reference into the Sales Contract.
J.A. 2903–04 (the Consortium Agreement, Appendix L to
the Sales Contract). The Consortium Agreement does not
provide that the parties would apportion the penalties
among themselves according to blame or reimburse one an-
other. Rather, the Consortium Agreement incorporated
into the Sales Contract assigns each JVA member a one-
third share of responsibility and provides that the JVA
members shall be jointly and severally liable towards the
client. Id.; Response Br. 14. Thus, the client did not have
before it the provisions in the JVA regarding apportion-
ment by blame and therefore could not have known at the
time of sale of those provisions. That the client understood
that allocation among the JVA members would be in equal
shares is supported by the record evidence that the client
billed all three JVA members an equal share of the total
penalty. J.A. 5173.
Commerce’s determination of the post-sale price ad-
justment was also in accordance with law. See Modifica-
tion, 81 Fed. Reg. at 15,645. We disagree that there must
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BORUSAN MANNESMANN BORU SANAYI v. 17
AMERICAN CAST IRON PIPE CO.
be actual manipulation of post-sale price adjustment data
in order for Commerce to reject a proposed post-sale price
adjustment. Commerce’s regulation speaks to potential,
not actual, manipulation of data. To be clear, this does not
mean that Commerce can or must reject a proposed post-
sale price adjustment solely upon a showing of potential
manipulation. Whether or not to accept a proposed post-
sale price adjustment must be based, as it is in this case,
on the circumstances surrounding the proposed post-sale
price adjustments. Here, Commerce determined, in the
course of applying the proper factors provided in its regu-
lations, that a potential existed for manipulating the post-
sale price adjustment because the claimed adjustment was
not tethered to what was established and known to the cli-
ent at the time of sale. Consistent with its legitimate goal
of avoiding such manipulation, Commerce correctly set the
post-sale price adjustment in a reasonable manner, based
on evidence that existed at the time of sale, that addressed
its manipulation concerns. J.A. 5073–54. Commerce’s de-
termination is supported by substantial evidence, and we
find no reason to disturb that determination.
CONCLUSION
We hold that Commerce’s Final Determination assign-
ing Borusan one-third the full penalty in the post-sale price
adjustment calculation and a 5.11 percent antidumping
duty rate was supported by substantial evidence and in ac-
cordance with the law. Accordingly, we reverse the CIT’s
judgment to the contrary. The court has considered the
parties’ remaining arguments and does not find them per-
suasive.
REVERSED
COSTS
No costs.
Case: 20-2014 Document: 40 Page: 18 Filed: 07/20/2021
United States Court of Appeals
for the Federal Circuit
______________________
BORUSAN MANNESMANN BORU SANAYI VE
TICARET A.S.,
Plaintiff-Appellee
UNITED STATES,
Defendant
v.
AMERICAN CAST IRON PIPE COMPANY, BERG
STEEL PIPE CORP., BERG SPIRAL PIPE CORP.,
DURA-BOND INDUSTRIES, STUPP
CORPORATION, INDIVIDUALLY AND AS
MEMBERS OF THE AMERICAN LINE PIPE
PRODUCERS ASSOCIATION, GREENS BAYOU
PIPE MILL, LP, JSW STEEL (USA) INC., SKYLINE
STEEL, TRINITY PRODUCTS LLC, WELSPUN
TUBULAR LLC USA,
Defendants-Appellants
______________________
2020-2014
______________________
Appeal from the United States Court of International
Trade in Nos. 1:19-cv-00056-JAR, 1:19-cv-00080-JAR, Sen-
ior Judge Jane A. Restani.
______________________
DYK, Circuit Judge, dissenting.
Case: 20-2014 Document: 40 Page: 19 Filed: 07/20/2021
2 BORUSAN MANNESMANN BORU SANAYI v.
AMERICAN CAST IRON PIPE CO.
As the United States Court of International Trade
(Trade Court) held, I think that the Department of Com-
merce’s decision here was not supported by substantial ev-
idence and, on its face, was arbitrary and capricious. I
respectfully dissent.
I
In antidumping proceedings, the prices used by Com-
merce to calculate normal value are subject to several ad-
justments. See 19 C.F.R. § 351.401(b). One such
adjustment is a price adjustment, which is defined as “a
change in the price charged for subject merchandise or the
foreign like product, such as a discount, rebate, or other
adjustment, including, under certain circumstances, a
change that is made after the time of sale . . . , that is re-
flected in the purchasers net outlay.” Id. § 351.102(b)(38)
(citing id. § 351.401(c)). When determining normal value
on the basis of home-market sales prices, Commerce “nor-
mally will use a price that is net of price adjustments . . .
that are reasonably attributable to the subject merchan-
dise or the foreign like product (whichever is applicable).”
Id. § 351.401(c). However, Commerce “will not accept a
price adjustment that is made after the time of sale unless
the interested party demonstrates, to the satisfaction of
[Commerce], its entitlement to such an adjustment.” Id.
Commerce adopted “a non-exhaustive list of factors
that it may consider in determining whether to accept a
price adjustment that is made after the time of sale.” Mod-
ification of Regulations Regarding Price Adjustments in
Antidumping Duty Proceedings, 81 Fed. Reg. 15,641,
15,641 (Mar. 24, 2016). Commerce concluded that,
[i]n determining whether a party has demon-
strated its entitlement to such an adjustment, the
Department may consider: (1) Whether the terms
and conditions of the adjustment were established
and/or known to the customer at the time of sale,
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BORUSAN MANNESMANN BORU SANAYI v. 3
AMERICAN CAST IRON PIPE CO.
and whether this can be demonstrated through
documentation; (2) how common such post-sale
price adjustments are for the company and/or in-
dustry; (3) the timing of the adjustment; (4) the
number of such adjustments in the proceeding; and
(5) any other factors tending to reflect on the legit-
imacy of the claimed adjustment. The Department
may consider any one or a combination of these fac-
tors in making its determination, which will be
made on a case-by-case basis and in light of the ev-
idence and arguments on each record.
Id. at 15,644–45. The purpose of the rule, as applied here,
is to avoid manipulation. Id. at 15,644 (“These final modi-
fications continue to . . . prevent the potential manipula-
tion of dumping margins through certain post-sale price
adjustments.”). The concern with manipulation arises be-
cause decreases in the home-market price (normal value)
as a result of a downward price adjustment reduce the
magnitude of dumping.
II
To understand the arbitrary nature of Commerce’s de-
cision in this case, it is necessary to briefly describe the un-
derlying facts. This case centers around the sale of
large-diameter pipe to construct a pipeline in Turkey. On
September 10, 2013, almost four-and-a-half years prior to
the filing of the petition for the antidumping investigation,
Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. and
two other suppliers signed a joint venture agreement form-
ing a consortium to bid on a solicitation for large-diameter
pipe. In this agreement, each of the consortium members
agreed to be responsible for any damages payments to the
customer stemming from the pipeline project contract that
was caused by that individual member’s failure to perform
its obligations. Each party was responsible for about one-
third of the deliverables.
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4 BORUSAN MANNESMANN BORU SANAYI v.
AMERICAN CAST IRON PIPE CO.
Shortly thereafter, on October 14, 2014, over three
years prior to the filing of the petition for antidumping in-
vestigation, the consortium members entered into the sales
agreement with the customer for the pipes. This agree-
ment included a liquidated damages clause (governing the
delayed delivery of goods), a joint and several liability
clause, and a summary of the consortium’s 2013 joint ven-
ture agreement (titled, “Consortium Agreement”), among
other provisions. The summary did not address how the
consortium members planned to split any damages flowing
from breach of the customer agreement. The liquidated
damages clause required the consortium to pay the cus-
tomer an established penalty rate for each day that the de-
livery of goods was delayed. The joint and several liability
clause stated that the consortium members were jointly
and severally responsible for the obligations under the
sales agreement.
On June 9, 2017, and September 6, 2017, prior to the
initiation of the antidumping investigation, the customer
informed the consortium that, based on delayed deliveries,
it calculated that the consortium owed it millions of dollars
in damages stemming from the sales agreement’s liqui-
dated damages clause. Commerce initiated the present in-
vestigation on February 9, 2018. On May 28, 2018, the
customer adjusted its demand downward by about 50% of
the original total. Following receipt of the lowered de-
mand, the customer and the consortium reached an agree-
ment to settle the liquidated damages claim for an even
lesser amount on or around June 11, 2018, and on that
same day, the consortium members agreed to a protocol di-
viding the customer’s damages claim based on the delay
caused by each consortium member as they had agreed in
their joint venture agreement. Borusan was responsible
for more than one-third of the liquidated damages because
it was responsible for more than one-third of the late deliv-
eries. The required payments to the customer were made
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BORUSAN MANNESMANN BORU SANAYI v. 5
AMERICAN CAST IRON PIPE CO.
in late June 2018, and Borusan reimbursed its joint-ven-
ture partners in early July 2018. On August 20, 2018,
Commerce issued its preliminary determination decision
memorandum.
III
Commerce determined that, while Borusan was enti-
tled to a post-sale price adjustment equal to one-third of
the amount paid to the customer, Borusan was not entitled
to the amount that it actually paid (over twice the one-third
amount) by virtue of its agreement with its joint venture
partners. If Commerce had granted the post-sale adjust-
ment as claimed by Borusan in the first instance, Borusan
would have had a de minimis dumping margin (as evi-
denced by Commerce’s decision on remand).
Commerce did not rely on factors (2), (3), and (4) of the
rule in rejecting the claimed adjustment. There is no sug-
gestion that that the type of liquidated damages penalty at
issue here (delay damages) would be uncommon in this in-
dustry (factor (2)); the timing the adjustment itself was not
suspect (factor (3)); and this was the only adjustment (fac-
tor (4)). Commerce’s decision relying on the other two fac-
tors is without a reasonable basis for at least three reasons.
First, Commerce denied Borusan’s claimed post-sale
price adjustment as inappropriate because the adjustment
was not determined in the customer agreement (factor (1)).
But Commerce failed to explain why there was any rele-
vant difference between a sales agreement with a customer
and a consortium agreement among suppliers. In anti-
dumping investigations, like all other areas of agency ac-
tion, “it is well-established that ‘an agency action is
arbitrary when the agency offer[s] insufficient reasons for
treating similar situations differently.’” SKF USA Inc. v.
United States, 263 F.3d 1369, 1382 (Fed. Cir. 2001) (alter-
ation in original) (quoting Transactive Corp. v. United
States, 91 F.3d 232, 237 (D.C. Cir. 1996)). Commerce’s
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6 BORUSAN MANNESMANN BORU SANAYI v.
AMERICAN CAST IRON PIPE CO.
rationale for distinguishing between the two agreements
here was completely unexplained.
In particular, Commerce provided no rationale as to
why the consortium agreement between suppliers, as com-
pared to the agreement between the suppliers and the cus-
tomer, was more susceptible to manipulation and thus
should be discounted. Much like the sales agreement with
the customer, which was signed over three years prior to
the antidumping investigation, Borusan and the other two
suppliers signed the consortium agreement over four years
before the antidumping investigation. The terms of the
consortium agreement as signed could not be, and were
not, changed as a result of the investigation.
Second, Commerce’s suggestion that the amount paid
by Borusan was suspect (factor (5))—because it was not cal-
culated until the investigation began—is inconsistent with
Commerce’s willingness to accept a post-investigation cal-
culation of the amount paid to the customer as “legitimate,”
J.A. 5073, even though calculated after the proceeding be-
gan. In each case, the principle governing the calculation
was established before the proceeding began.
Third, contrary to the majority’s conclusion, the record
does not support Commerce’s characterization that the
changing terms of Borusan’s requested price adjustment
was somehow suspicious (factor (5)). Commerce concluded
that “[t]he changing terms of the late penalty fee after the
initiation of the investigation cast[] significant doubt on
the legitimacy of the allocation of this expense among the
consortium members.” Id. at 5072. The timeline, however,
simply shows that Borusan was negotiating the liquidated
damages penalty that led to the requested adjustment with
its customer in an attempt to reduce the penalty as the in-
vestigation was ongoing and periodically reported this to
Commerce. This reduction resulted in a higher normal
value, which would have been unfavorable to Borusan in
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BORUSAN MANNESMANN BORU SANAYI v. 7
AMERICAN CAST IRON PIPE CO.
the antidumping proceeding. The amount of Borusan’s re-
quested adjustment changed because the customer’s de-
mand changed and because Borusan did not reach a
settlement agreement with the customer until on or around
June 11, 2018.
Commerce also faults Borusan because it “did not file
the final settlement agreement until July 6, 2018, which
was little over a month before the Preliminary Determina-
tion.” Id. at 5072–73. This ignores that Borusan did not
reach a final settlement agreement with the customer until
around mid-June and did not make the payment required
by the settlement to the customer until late June 2018.
There was no delay in providing Commerce with the rele-
vant information. And, as emphasized by the Trade Court,
Commerce “independently verified [Borusan’s] post-sale
price adjustment based upon information that [Borusan]
placed on the record.” Id. at 25.
CONCLUSION
In my view, Commerce’s determination that Borusan
was not entitled to a post-sale price adjustment in the
amount claimed was not supported by substantial evidence
and was arbitrary and capricious. I respectfully dissent.