                                   Slip Op. 01- 152

        UNITED STATES COURT OF INTERNATIONAL TRADE

                                                      :
NIPPON STEEL CORPORATION,                             :
                                                      :
           Plaintiff,                                 :
                                                      :
           v.                                         :
                                                      :
THE UNITED STATES,                                    :
                                                      :
           Defendant,                                 :
                                                      :
           and                                        :
                                                      :
BETHLEHEM STEEL CORPORATION, U.S. STEEL               :
GROUP, A UNIT OF USX CORPORATION, ISPAT               :
INLAND INC., LTV STEEL COMPANY, INC.,                 :
GALLATIN STEEL, IPSCO STEEL, INC., STEEL              :
DYNAMICS, INC., and WEIRTON STEEL                     :
CORPORATION,                                          :
                                                      :   Consolidated Court
           Defendant-Intervenors.                     :   No. 99-08-00466
                                                      :
                                                      :   Public Version
BETHLEHEM STEEL CORPORATION, U.S. STEEL               :
GROUP, A UNIT OF USX CORPORATION, ISPAT               :
INLAND INC., and LTV STEEL COMPANY, INC.,             :
                                                      :
           Plaintiffs,                                :
                                                      :
           v.                                         :
                                                      :
THE UNITED STATES,                                    :
                                                      :
           Defendant,                                 :
                                                      :
           and                                        :
                                                      :
NIPPON STEEL CORPORATION,                             :
                                                      :
           Defendant-Intervenor.                      :
                                                      :
CONSOL. COURT NO . 99-08-00466                                                          PAGE 2


[Final judgment ordering specific weight conversion factor.]

                                                           Dated: December 27th, 2001

       Gibson, Dunn & Crutcher LLP (Daniel J. Plaine, Gracia M. Berg) for plaintiff Nippon
Steel Corporation.

       Robert D. McCallum, Assistant Attorney General, David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, United States Department of Justice (Kyle
Chadwick), John D. McInerney, Elizabeth C. Seastrum, and Linda S. Chang, Office of the Chief
Counsel for Import Administration, United States Department of Commerce, of counsel, for
defendant.

        Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer and John J. Mangan)
for defendant-intervenors Bethlehem Steel Corporation, U.S. Steel Group, a unit of USX
Corporation, Ispat Inland, Inc. and LTV Steel Company, Inc.

        Schagrin Associates (Roger B. Schagrin) for defendant-intervenors Gallatin Steel, IPSCO
Steel Inc., Steel Dynamics, Inc., and Weirton Steel Corporation.


                                           OPINION

       RESTANI, Judge: Plaintiff Nippon Steel Corporation (“Nippon”) challenges the Final

Results of Redetermination Pursuant to Court Remand (“Third Remand Results”) by the United

States Department of Commerce (“Department” or “Commerce”) in Hot-Rolled Flat-Rolled

Carbon-Quality Steel Products from Japan, 64 Fed. Reg. 24,329 (Dep’t Comm. 1999) (“Final

Determ.”). Commerce’s sole charge on the third remand was to devise a new approach to

determine neutral facts available because Commerce had unreasonably selected weighted average

margins for theoretical-weight sales under its previous methodology. See Nippon Steel Corp. v.

United States, No. 99-08-00466, Slip Op. 01-122, at 11 (Ct. Int’l Trade Oct. 12, 2001) (“Nippon

III”). Nippon argues that Commerce has not developed a new methodology at all but has merely

“repackaged” its previous approach. Familiarity with the previous opinions ordering remand is
CONSOL. COURT NO . 99-08-00466                                                             PAGE 3

presumed. See Nippon Steel Corp. v. United States, 146 F. Supp. 2d 835 (Ct. Int’l Trade 2001)

(“Nippon II”); Nippon Steel Corp. v. United States, 118 F. Supp. 2d 1366 (Ct. Int’l Trade 2000)

(“Nippon I”).

       This matter stems from Nippon’s failure to timely provide weight conversion data for

U.S. sales of its products (“CONNUMs”) made on a theoretical-weight basis and Commerce’s

subsequent methodology for calculating a substitute dumping margin. It is customary for steel

customers to purchase products based upon a theoretical weight, which may be different from the

actual weight of the product delivered. The weight conversion factor is a simple ratio to reflect

this discrepancy. The weight conversion factor primarily compares the actual weight of products

upon delivery to the theoretical weight purchased by the customer. This ratio is used to

extrapolate the actual amount delivered where only theoretical information is provided so that

Commerce can calculate the proper margin. Nippon failed to initially provide weight conversion

data and Commerce, as a result, was required to fill the informational gap based on the facts

available. See Statement of Administrative Action, accompanying H.R. Rep. No. 103-826(I), at

869, reprinted in 1994 U.S.C.C.A.N. 4040, 4198 (“SAA”).

       Instead of filling this particular gap with a substitute weight conversion factor, Commerce

bypassed the weight conversion analysis entirely and created substitute margins for the

theoretical-weight sales. See Nippon III at 7.1 In doing so, the Department calculated margins

specific to the individual products. Commerce’s methodology made a distinction between

products sold entirely on a theoretical weight basis (“exclusively-theoretical CONNUMs” or

“pure CONNUMS”), and products sold based upon a combination of theoretical and actual


       1
           These steps resulted in an overall dumping margin of 18.39%.
CONSOL. COURT NO . 99-08-00466                                                                PAGE 4

weight (“mixed CONNUMs”). For each mixed CONNUM, Commerce calculated a weighted-

average margin for the theoretical-weight sales based on the same product’s actual-weight sales.

For each exclusively-theoretical CONNUM, Commerce calculated a weighted average based on

the actual-weight sales from all of the mixed CONNUMs.

       The court recognized that Commerce may adopt a new methodology to complete its

margin calculation instead of directly replacing the missing information so long as that

methodology is reasonable. See Nippon III at 9 n.5. The court rejected Commerce’s

methodology in Nippon III because the substitute margins calculated by the Department were

contrary to the evidence and were unreasonable. See id. at 8-9. The court found that the margins

necessarily contained an implicit weight conversion factor that suggested Nippon had delivered

several times more steel than U.S. customers actually purchased. See id. at 8 n.4. Because that

illogical result was inherently punitive and, therefore, not appropriate in a neutral facts available

context, Commerce was ordered to devise a new approach.

       In the Third Remand Results, Commerce largely maintained its previous methodology.

Commerce’s approach to mixed CONNUMs is identical to that in Nippon III. Commerce

continued to apply the margin based on each product’s actual-weight sales. Commerce’s only

substantive change was in calculating the margin for exclusively-theoretical CONNUMs.

Commerce modified its approach by substituting a margin based on a weighted average of all

reported U.S. actual-weight sales instead of a weighted average of Nippon’s few actual-weight

sales. Nippon argues that Commerce has not meaningfully changed its methodology as ordered.

Nippon claims that by changing only the exclusively-theoretical CONNUM methodology,

Commerce did not address the majority of products at issue here and, therefore, failed to comply
CONSOL. COURT NO . 99-08-00466                                                               PAGE 5

with the court’s order.2 Nippon overstates the breadth of the court’s directive. The court did not

require that Commerce completely overhaul its entire methodology. The court merely required

Commerce to bring its assumptions more in line with reality.

       Nonetheless, the court takes no position on whether Commerce’s methodology is

reasonable as a general matter. In this case, Commerce must bear the responsibility for its

conduct. Commerce attempts to justify its previous approach, which it largely continues, by

attempting to rebut Nippon’s prior argument that Commerce’s substitute margin contained a

grossly inflated implicit weight conversion factor.3 Commerce now argues that Nippon’s

calculations determining the implicit weight conversion factor were incorrect.4 In advance of

oral argument, Commerce was specifically asked to address the implicit weight conversion factor

at oral argument and it failed to do so in any meaningful way. Because Nippon had raised this

specific argument at the agency level without meaningful response, and because Commerce then

ignored the court’s explicit request for a response, the court in Nippon III deemed it futile to ask

Commerce again to justify its methodology in this regard. In this fourth installment, the court



       2
         Nippon points out that, of the [ ] CONNUMs at issue here, only [ ] are exclusively-
theoretical CONNUMs. Those [ ] exclusively-theoretical CONNUMs represent only [ ]
percent of the quantity of combined products in this matter.
       3
          In Nippon III, the court noted that Commerce’s margin contained an implicit weight
conversion factor of [      ] suggesting that Nippon delivered approximately [ ] times more
steel than its U.S. customers ordered.
       4
         Commerce argues that a proper application of a theoretical-to-actual weight conversion
factor would also include adjustments to other variables besides quantity, including gross unit
price and expenses. Commerce now explains that the quantity is multiplied by the weight
conversion factor while the combined gross unit price and expense amount is divided by the
weight conversion factor. Commerce argues that Nippon’s calculations included only the former
and are, therefore, incorrect.
CONSOL. COURT NO . 99-08-00466                                                                 PAGE 6

refuses to further extend litigation by reopening the issue. It would be fundamentally unfair to

prolong litigation and require Nippon to substantively respond to Commerce’s belated

justifications, regardless of their merit. Therefore, without rejecting Commerce’s methodology

in general, the court rejects its application here.

        Nippon requests that the court direct Commerce to use a particular margin by adopting

Nippon’s suggested weight conversion factor of [             ]. This court previously declined to

adopt Nippon’s untimely submitted weight conversion data stating that, “[d]epending on

necessity, it is Commerce’s decision whether to use this data.” Nippon III at 10 n.6. The court

notes, however, that Nippon’s suggested weight conversion factor is only [             ] lower than

the imputed weight conversion factor of [             ] found by Commerce in the Third Remand

Results. Because the difference is slight and because Commerce is not permitted to extend

litigation by ignoring court inquiries, the court will put the matter to rest by directing Commerce

to use Nippon’s weight conversion factor. It should be noted that Nippon’s initial error was a

technical one of inadvertent untimely submission. There is no reason to believe its data is

incorrect. At this point, Commerce’s right to protect the efficiency of its administrative

proceedings must yield to the rights of the parties and the court to meaningful adjudication of

disputes.
CONSOL. COURT NO . 99-08-00466                                                      PAGE 7



                                         Conclusion

      Commerce is ordered to substitute a weight conversion factor of [   ] to determine

Nippon’s margins.




                                           ____________________________

                                                   Jane A. Restani

                                                      JUDGE

Dated: New York, New York

       This 27th day of December, 2001
