FINAL RESULTS
OF REDETERMINATION
PURSUANT TO COURT REMAND
NIPPON STEEL CORPORATION V. UNITED STATES
Consol. Ct. No. 99-08-00466
Public Version
SUMMARY
The Department of Commerce (the Department) has prepared these final results of redetermination pursuant to the remand order of the U.S. Court of International Trade in Nippon Steel Corp. v. United States, Slip Op. 00-137 (October 26, 2000) ("Nippon"). This remand pertains to the Department's use of adverse facts available for the sales of products produced by Nippon Steel Corporation ("NSC") which were affected by NSC's failure to timely provide weight conversion factors for export sales made on a theoretical weight basis and compared to home market sales made on an actual weight basis. See Notice of Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 64 Fed. Reg. 24329 (May 6, 1999)( "Final Determination"). As explained below, on remand, the Department has determined, upon re-examination of the facts associated with this issue, that, as to weight conversion factors, NSC did not act to the best of its ability within the meaning of 19 U.S.C. § 1677e(b), because it could have complied with the Department's request for such factors when originally requested, and because, by failing to seek the requested data from the proper sources at the time of the original requests, it demonstrated a lack of due regard for its responsibilities in this respect and behaved in a manner below the standard for a reasonable respondent.
BACKGROUND
During the underlying investigation, the Department twice requested that NSC provide factors for converting its theoretical and actual weight sales to a common basis. Only after the Department had applied adverse facts available to the sales affected by the absence of such factors in the Preliminary Determination did NSC submit such factors on the record. The Court upheld the Department's decision to reject the untimely-submitted factors and use facts available, stating that "[i]f a submission is untimely the Department may use other facts available." Nippon, at 25.
In order to determine the appropriate "facts available" to use with respect to the affected sales, the Department first had to determine whether NSC had "failed to cooperate by not acting to the best of its ability to comply with a request for information." 19 U.S.C. § 1677e(b). When this provision is met, the Department may make an adverse inference in selecting the facts available, as it did in this case. See id. In the Final Determination, the Department found that the data requested was routinely maintained by NSC in the normal course of business, was readily available, and would not have been burdensome to produce. 64 Fed. Reg. at 24362. The Department also found that "NSC, by not submitting a theoretical weight conversion factor it could have provided when originally requested until well after the time for response had passed, failed to cooperate by not acting to the best of its ability." 64 Fed. Reg. at 24361.
The Court noted that NSC alleges that its error was "simple inadvertence." Nippon, at 24. The Court appears to accept NSC's argument that a claim of "simple inadvertence" is an adequate defense for failure to timely provide requested information, and is sufficient to shift the burden to the Department to find that something more was involved. Nippon, at 28 ("simple inadvertence is insufficient for application of an adverse inference"), citing Mannesmannrohren-Werke AG v. United States ("Mannesmann I"), 77 F. Supp. 2d 1302, 1316 (CIT 1999). As the Court explained, the problem is that "thus far, Commerce has found nothing more than a simple mistake." Nippon, at 29.
Therefore, the Court has ordered the Department to "determine whether, as to weight conversion factors, NSC acted to the best of its ability within the meaning of 19 U.S.C. § 1677e(b)." Nippon, at 37. To do so, the Department must "analyze NSC's error in the light of its overall conduct, the importance of the information, the particular time pressures of this investigation, and any other information that will bear on the determination of whether this was an excusable inadvertence on NSC's part or a demonstration of lack of due regard for its responsibilities in the investigation." Id., at 30. The Court also provided the following additional guidance on the standard the Department should apply in determining whether NSC, with respect to the weight conversion factors, failed to act to the best of its ability:
At a minimum, Commerce must find that a respondent could comply, or would have had the capability of complying if it knowingly did not place itself in a condition where it could not comply. (Citations omitted.) Commerce must also find either a willful decision not to comply or behavior below the standard for a reasonable respondent.
Nippon, at 29.
On November 29, 2000, the Department issued its draft redetermination upon remand to the parties for comment. On December 4, 2000, NSC provided timely comments; no other party provided comments. NSC's comments are addressed in the "Interested Party Comments" section of this final redetermination on remand.
ANALYSIS
It has been the experience of the Department that the question of whether failure to produce information was due to "inadvertence" or "willfulness" is only rarely capable of objective resolution based on the administrative record, and thus is rarely an appropriate test for determining when a company acted to the best of its ability. In our opinion, this case is not one of the rare exceptions. If a simple claim of inadvertence, accepted at face value, could compel a finding that the party had acted to the best of its ability and deserved a non-adverse substitute chosen from among the data it did choose to provide, the Department's ability to obtain information would be severely curtailed. Thus, the Department, in its Final Determination, expressly made no finding on "inadvertence," stating: "it is impossible to determine whether NSC's claims of inadvertent error are valid or merely self-serving." 64 Fed. Reg. at 24361. The Department has made no new findings in this respect upon remand. See Nippon, at 28, citing Krupp Thyssen Nirosta GmbH v. United States, No. 99-08-00550, 2000 WL 1118114, at *2 -*3 (CIT July 31, 2000). This redetermination upon remand is based on findings with respect to whether NSC "could comply" with the Department's request for data and whether NSC's behavior with respect to the weight conversion factors was "below the standard for a reasonable respondent."
With regard to the application of the "reasonable respondent" standard, as discussed below we find that NSC did not behave in a reasonable manner by any measure in failing to comply with the Department's request for conversion factors. However, as a general matter, this standard must be applied in light of the circumstances surrounding the company at issue. We note, in this regard, that NSC is one of the most successful and sophisticated steel companies in the world, and one with significant prior experience with dumping proceedings. Moreover, this standard must be applied with due regard to the fact that, by its very nature, a dumping proceeding is a demanding process, but also one in which a respondent's cooperation is the only means the Department has of obtaining the information it needs to meet its statutory obligations. Thus, this standard should not prohibit application of an adverse assumption where a respondent, weighing the costs and benefits of responding, does not expend the resources necessary to do so in the most accurate way it can. In other words, it may be reasonable from a respondent's viewpoint for the respondent not to provide information where it judges a request to be too troublesome, or where it concludes that providing such information could result in a higher dumping margin. Applying a "reasonable respondent" standard in this manner would subvert the goal of calculating accurate dumping margins in the manner prescribed by the statute. For this reason, the statute requires respondents to cooperate "to the best of their ability," rather than merely requiring that they behave reasonably, or make reasonable efforts, in their attempts to cooperate.
With regard to the first question, the record clearly demonstrates that NSC "could comply" with the Department's request for data. Very shortly after the Department issued its preliminary determination, in which it made an adverse inference based on NSC's failure to timely provide the data, NSC demonstrated that it could comply by providing the very data it had claimed was impossible to produce. This was not information which became available to NSC only at that late date. Instead, the submitted factors were based on information that NSC maintained in the ordinary course of business, at the time when the factors were originally requested, at a production site which was about to be visited by verifiers for the plant tour. The fact that the data were not kept in the Tokyo office did not render it impossible for the persons completing the questionnaire to obtain them from NSC's plant and provide them to the Department. This Court has held that it is "reasonable for Commerce to charge [a respondent] with knowledge of its own operations." Mannesmannrohren-Werke AG v. United States, Slip Op. 00-126 (CIT October 5, 2000) ("Mannesmann II"), and cases cited therein. Therefore a respondent's "alleged good faith does not relieve its burden to respond to the best of its ability, and its 'ability' includes possessing knowledge of its business operations." Id.
With respect to the second question, whether NSC's behavior as to the weight conversion factors was "below the standard for a reasonable respondent," it is useful to examine NSC's treatment of the Department's weight conversion factor request throughout the period during which its reply would have been considered "timely."
Export sales and home market sale must be compared on a common basis. Because NSC made export sales that would be compared to home market sales made on a different weight basis, it was important that NSC provide the conversion factors needed to permit the Department to make its margin comparisons on a common basis.
Thus, in its October 30, 1998, questionnaire, the Department included a request for weight conversion factors, so that export sales and home market sales could be compared on a common weight basis. October 30, 1998, questionnaire, PD 63, (1) at B-19 and C-17. The Department gave NSC 52 days to respond to the questionnaire, after granting NSC's request for a two-week extension beyond the original deadline. See PD 111, Letter from Program Manager to law firm of Gibson, Dunn & Crutcher (November 19, 1998)(granting extension). NSC replied to the questionnaire on December 21, 1998. CD 40. Therein, NSC claimed that it had "[ ]" and that therefore it "did not need to arrive at a 'uniform quantity of measure.'" Id., at B-22. NSC's original claim that the conversion factor was not necessary because [ ] (Id.) soon proved to be contrary to the facts of record in NSC's own database. As indicated below, NSC later acknowledged that some of its U.S. sales of hot-rolled coil were made on a theoretical weight basis, whereas all home market sales of hot-rolled coil were made on an actual weight basis. PD 196, Supplementary Questionnaire Response of January 26, 1999, at B-25. In other words, NSC's reaction to the Department's first weight factor request was to tell the Department that it didn't need the factors. This response was incorrect, a fact which NSC would have known if it had made the necessary inquiries regarding how it sold its own products. Therefore, this response demonstrates that NSC also made no attempt to obtain the theoretical weight factor data at that time.
On January 4, 1999, the Department renewed its request that NSC provide a factor for converting actual and theoretical weight sales to a common basis. PD 172, Supplementary Questionnaire, at 5. The Department gave NSC an additional 21 days to provide the requested conversion factors, after granting NSC's request for a one-week extension beyond the supplemental questionnaire's original deadline. In its January 25, 1999 response, NSC did not respond to this second opportunity, but rather continued to assert that, in its opinion, the Department did not need this information. In response to a general request for conversion factors for in-scope products (i.e., one not limited only to sheet or only to coil), NSC chose to treat the Department's request as if it were a request for such information only for sheet (which NSC does not sell to the United States). Thus, even while acknowledging that some U.S. export sales of coil were made on a theoretical weight basis, NSC nevertheless responded to the Department's general request for conversion factors by stating: "We do not believe that this information would be helpful to the Department because NSC has sales of coil in the home market that should match to its sales in the U.S. market, all of which are sales of coil." Cf. PD 196, at B-25 with PD 196 at B-24.
Responding to a second question, on production quantities used to prepare cost of production (COP) and constructed value (CV) responses, NSC did address the quantities associated with its U.S. theoretical weight sales of coil. Here, however, NSC raised a second reason for not providing the factors: "NSC is unable to provide a conversion formula to actual weight, since the material was not weighed." Id., at B-25. This would likewise prove to be incorrect, as NSC demonstrated when it admitted the coils were weighed and provided the factors following the preliminary determination. This response further demonstrates that NSC did not act to the best of its ability in investigating its own production and selling practices before responding to the Department.
A "reasonable respondent," acting to the "best of its ability" to comply with the Department's request for such factors, would minimally have contacted the factory, where the steel coils were produced and where weighing was most likely to take place, to determine whether they were weighed and the weight data maintained. A "reasonable respondent" would have attempted to obtain the data when it was first requested, or at least when it was requested for the second time, rather than telling the Department, without any factual basis to support such a claim, that the respondent did not believe the Department needed the information. With respect to this issue, NSC was not acting as a "reasonable respondent" nor was it acting "to the best of its ability," as required by the statute.
The fact that NSC provided a great deal of other information during this proceeding does not entitle it to non-adverse facts available for those areas of information, such as the weight conversion factors, for which it did not act to the best of its ability in providing the information requested by the Department. See Mannesmann II, Slip Op. 00126, at 22 (finding "the overall volume of [respondent's] submissions on all issues irrelevant to whether it cooperated with the Department on the specific issues at hand"). NSC's overall behavior with respect to the weight conversion factor issue demonstrates a lack of due regard for its responsibility to provide to the Department this information, which it maintained in the normal course of business.
The Court has also asked that the Department consider the importance of the information, the time pressures of the investigation, and any other information bearing on a determination of whether failure to provide the conversions factors was an "excusable inadvertence" or a "demonstration of lack of due regard for its responsibilities." Nippon, at 30. As noted above, the conversion factors were important because without them the Department was not able to compare NSC's export sales made on a theoretical weight basis on a common basis with its home market sales, all of which were made based on actual weight. NSC's apparent failure to even inquire as to whether this information was available at the plant where the steel coils at issue were produced demonstrates a lack of due regard for its responsibility to provide this information. NSC did not even indicate that it had attempted to gather the weight factor information requested; rather, it told the Department that it did not need the requested information. Thereby, NSC substituted its own judgement for that of the Department as to what the Department needed to determine the dumping margin. This demonstrates disregard for the process the Department must follow and the obligations that the Department must fulfill in administering the dumping law. Furthermore, the scope of the Department's use of facts available was limited to the products for which the Department was unable to calculate the actual-weight-based export price because of the missing factors. Thus, the number of products affected by this problem was limited but the use of facts available for NSC was similarly limited, i.e., limited to the affected products, and these factors were important to determining the level of dumping margins on those products.
Finally, with respect to the time pressures of the investigation, it is significant that, although the investigation underlying this redetermination upon remand was expedited, NSC received all of the extensions it requested for replying to both the original and supplemental questionnaires containing the conversion factor request, and at no point indicated that it required additional time to compile the weight conversion factors. No fewer than 87 days elapsed between the time the factors were first requested on October 30, 1998 and the extended deadline for the supplemental questionnaire, January 25, 1999, the last day on which NSC could have timely responded to the Department's request. In contrast, NSC submitted the factors a mere 10 days after the Department issued preliminary results which reflected its decision to apply an adverse inference to sales affected by the absence of the conversion factor. This demonstrates that, once NSC made a serious effort to comply with the Department's request, it was able to do so quickly. Thus, the Department finds that NSC's failure to provide the conversion factors within the specified deadlines was not due to the time pressures of the investigation, but rather was a "demonstration of lack of due regard for its responsibilities."
Interested Party Comments
Comment 1: NSC's rationale for claiming it lacked weight data
NSC argues that the Department has merely reiterated the findings that the Court has held are insufficient to support an adverse inference and has ignored the factual information on record. NSC claims that, because the Department did not, on remand, seek out additional factual information, the only relevant evidence of record regarding "the genesis of NSC's mistaken assertion that it did not weigh coils sold on a [theoretical] weight basis" is contained in NSC's letter of March 15, 1999 and the transcript of the oral hearings. NSC states that these documents make the following points. (1) No sales-related documents for theoretical weight sales contain the actual weight. (2) NSC's sales computer database in Tokyo does not contain the actual weight of merchandise sold on a theoretical weight basis. (3) Cut-to-length hot-rolled steel (as opposed to hot-rolled coils), is always sold at theoretical weight and never weighed. (4) The computer databases at the various mills cannot be accessed from NSC's Tokyo headquarters. (2) Thus, NSC claims, the facts of record suggest that NSC "made an honest, reasonable mistake."
Department's Position:
We do not agree that the Department has failed to carry out the Court's remand instructions or to consider the relevant facts of record. As an initial matter, the Court did not order the Department to seek new information regarding NSC's failure to place conversion factors on the record in a timely fashion. The Department has, however, revisited the facts of record and provided considerably greater detail than was contained in either the Final Determination or its brief (both of which had to address numerous other issues) as to the evidence of record, pursuant to the Court's order. That evidence demonstrates that NSC's failure to timely provide conversion factors to the Department was a "demonstration of lack of due regard for its responsibilities in the investigation." See Nippon, Slip Op. at 30.
In conducting its re-examination of the evidence, the Department has followed the Court's instructions and examined NSC's "overall conduct" with respect to this issue (see Nippon, Slip Op. at 30), despite NSC's preference for limiting the topic of the remand to "the genesis of NSC's mistaken assertion that it did not weigh coils sold on a {theoretical} weight basis." The points raised by NSC do not involve evidence of its "conduct" but rather its excuses for inaction during the period when it should have been working to obtain the requested data. NSC's narrow view of what evidence is pertinent to the remand ignores the fact that the issue before the Department and the Court is not whether this mistake is one that was "honest" or "reasonable" in its "genesis," but whether it could have been avoided or remedied in timely fashion had NSC acted to the best of its ability. Regardless of whether or not NSC's stated belief that it did not weigh the coils was characterized by good faith, its reliance on that belief, rather than taking reasonable steps to look for the data where it was most likely to be found, represents part of a pattern of conduct with respect to this issue which demonstrates that NSC was not acting to the best of its ability to provide the data requested by the Department. As discussed in the analysis section, above, NSC's "mistake" as to whether or not the coils were weighed was neither its first nor its only "mistake" with respect to this issue. NSC had earlier incorrectly asserted that it had [ ] with respect to weight. CD 40, at B-2.
As explained above, the Department does not need to prove that NSC's failure to timely provide these data was a result of bad faith, since it has based its resort to an adverse inference not on bad faith but on NSC's failure to act to the best of its ability, based on a lack of due regard for its responsibilities. In the interest of completeness, however, the Department will address the four points NSC has raised in support of its "honest mistake" claim. None of these arguments belies the evidence of NSC's lack of responsible action to temper its mistaken "beliefs" with the necessary attention to the relevant portions of its own business records. With respect to points (1) and (2), the absence of actual weight data in the "sales-related documents" and in "NSC's sales computer database" in the Tokyo corporate office neither absolved NSC of the need to provide factor data nor precluded NSC from obtaining the data from its mills, just as NSC obtained other data from the mills. With respect to point (3), the fact that cut-to-length hot-rolled steel is always sold at theoretical weight and never weighed may have created a reason for suspecting that hot-rolled coils sold on a theoretical basis likewise were not weighed. See NSC' draft remand comments, at 5. But the fact that hot-rolled coils are rarely sold on a theoretical weight basis (id., at 11) should have alerted NSC to the fact that there were differences in how these two products were sold, such that they could not rely on practices with respect to cut-to-length steel to provide reliable guidance with respect steel in coils. Finally, with respect to point (4), although NSC may have been unable to directly call up mill databases from the Tokyo offices, this did not render the data completely inaccessible to NSC. NSC cannot claim that its Tokyo office was not able to communicate with its mills and exchange data when necessary - it simply did not exercise that ability with respect to these data until well past the deadline for doing so.
Comment 2: Consideration of the importance of the information and of other factors
NSC argues that the Department has not complied with the Court's instructions regarding consideration of the factors listed at page 30 of the Nippon opinion, but makes specific arguments with respect to only one of those factors. NSC claims that the Department ignored the factor "importance of the information," even though the Court expressly directed it to consider this factor. In support of this claim, NSC notes that the draft remand results do not consider whether NSC would have obtained any benefit if the Department had calculated the margin using the data as provided by NSC, i.e., without converting the theoretical weights to a common basis before comparing them to the actual weights. Similarly, NSC states, the draft remand results do not explain why the weight conversion factors were more significant than the correct information that NSC did provide which might have lowered its margin. NSC claims that the Department's decision to make an adverse inference rests on the assumption that NSC concluded that providing the factors could result in a higher dumping margin, and implies that this presumed assumption was unsupported by the record.
Department's Position:
We disagree. NSC's argument is based on a series of misapprehensions. First, the Department did not ignore the "importance of the information" factor. On page 4 and again on page 5, the Department explained that the conversion factors were important because, without them, the Department could not compare on a common basis those of NSC's export sales made on a theoretical weight basis with its home market sales, all of which were made on an actual weight basis. The Courts have long recognized that the principle of comparison on a common basis is an important one. E.g., Smith-Corona Group v. United States, 713 F.2d 1568, 1578 (Fed. Cir. 1983)("One of the goals of the statute is to guarantee that the administering authority makes the fair value comparison on a fair basis - comparing apples with apples").
Second, we disagree that information can only be deemed "important" (or that failure to produce it can only justify use of an adverse inference) if the Department affirmatively demonstrates that the respondent would have obtained a benefit from withholding it. Information necessary to the calculation of an antidumping duty margin is important whether it raises or lowers the margin. Thus, the Department requests that parties provide all necessary information, not just information that will raise margins. NSC's standard for "importance" is also illogical because it would require the Department to use information not on the record to justify the importance of the information withheld. In this case, the Court agreed that the Department can enforce the reasonable time limits for submitting data by rejecting late data. Nippon, Slip. Op. at 25. Because the weight factor data in this case were not on the record (and missing data in many cases are never even submitted), neither the Department nor the Court can consider that non-record data. Thus, NSC's premise that the Department must prove that NSC would have obtained a benefit by withholding the data is incorrect and flies directly in the face of the principle of review on the record. (3)
Similarly, NSC's premise that the Department's decision to make an adverse inference was based on the "unstated presumption" that NSC concluded providing the factors could result in a higher dumping margin is incorrect. The portion of the draft remand results NSC cites as the basis for the alleged "unstated assumption" does not even attribute this particular "conclusion" to NSC, much less make it the basis of its decision to use adverse inferences in this case. (4) Instead, the Department's decision to make an adverse inference was based on the empirical fact that NSC could have complied with the Department's request and on the finding that NSC demonstrated a lack of due regard for its responsibilities by not asking the mills whether they maintained the requested data, and thus failed to act to the best of its ability as required by the statute. Draft remand results, passim.
Third, just as the statute does not require the Department to prove that data withheld from the Department would have increased the respondent's margin before it can make an adverse assumption, it also does not require that the Department prove that such withheld information is "more significant" than the information a respondent has chosen to provide. Respondents are required to provide not only the "more significant" information, but all information necessary to the calculation of margins pursuant to the statute. Thus, this Court has recognized that only the cooperation with respect to the "specific issues at hand" is relevant to determining whether a respondent acted to the best of its ability as to those issues. See Mannesmannrohren-Werke AG v. United States, Slip Op. 00-126 (CIT October 5, 2000) ("Mannesmann II"), at 22.
Finally, we note that, contrary to NSC's vague claims, the Department also complied with the Court's instructions by considering, in addition to "importance," each of the other factors listed at page 30 of the Nippon opinion. The Department considered NSC's "overall conduct" in detail at pages 3-5 of the draft remand results, and considered the time pressures of the investigation and other information bearing on the determination at pages 5-6 of the draft remand results. With respect to the time pressures of the investigation, see Comment 3, below.
Comment 3: Consideration of time pressures
NSC claims that the draft remand results are mistaken in asserting that NSC "at no point indicated that it required additional time to compile the weight conversion factors." This claim is based on the fact that NSC requested extensions on both the original and supplemental questionnaires and generally protested the acceleration of the investigation. NSC also claims that the statement that NSC "received all of the extension it requested for replying to both the original and supplemental questionnaires containing the conversion factor" is mistaken, noting that on two occasions during the investigation the Department granted NSC only half the time by which it sought to have a deadline extended. NSC's main claim in this respect, however, is that the Department missed the point of the time pressure issue the Court requested it to analyze. Because it believed that the coils sold on a theoretical weight basis were not weighed, NSC argues, "it had no reason to request additional time" to check on the accuracy of that point, and, NSC claims, the Department's expedited schedule eliminated any time NSC might have had to check and recheck information.
Department's Position:
The Department properly determined that NSC's failure to timely provide the weight conversion factors was not due to inadequate time in which to do so. NSC's requests for extensions on the questionnaire responses and its general objection to the expedited schedule do not constitute claims that it required additional time to compile the weight conversion factors. As detailed in the "Analysis" section of the final and the draft remand results, NSC's response to both the original and the supplemental questionnaire was not that it needed more time to obtain these data, but that the Department did not need the data. The supplemental questionnaire response added a second unsupported claim, that the data did not exist. For the same reason, the fact that the Department granted NSC a partial, rather than a full, extension of the time requested for replying to the supplemental questionnaire was not responsible for NSC's failure to provide these particular data to the Department. (5)
NSC itself states that it "had no reason to request additional time" with respect to the weight factors, because it was relying on its "belief" that the coils were never weighed. NSC Comments, at 9. Antidumping duty investigations, however, must be based on empirical, verifiable data, not "beliefs." By not contacting the mills to ascertain whether the company's data supported this "belief," even after the Department had requested the information for a second time, NSC demonstrated that it had a lack of due regard for its responsibilities and was not acting to the best of its ability with respect to this matter. As noted in Mannesmann II, "ignorance of its own business operations is no excuse for . . . failure to respond to Commerce's questionnaires." Slip Op. 00-126, at 18. NSC's claims that the Department's deadlines deprived it of the opportunity to "check and recheck" information similarly is misplaced, since the failure to provide conversion factors derived not from a copying mistake that might have been caught had NSC "checked and rechecked" the information, but from NSC's failure to request the information in the first place. Thus, NSC has failed to demonstrate that the Department's decision to conduct the investigation on a somewhat expedited schedule, while allowing parties the full time required by the statute for all responses, caused NSC's failure to contact the mills to obtain the data needed for the weight factors.
Comment 4: Availability of the factor data
NSC claims that the Department's statement, in the draft remand results, that the factor data were "readily available" is not supported by the record. NSC states that the actual weight of the hot-rolled coils sold on a theoretical weight basis was not available on any sales-related document, was not available on any computer in NSC's Tokyo headquarters, where the questionnaire responses were prepared, and was not available on any computer that was linked to headquarters. Thus, NSC argues, NSC's Export Sales Department was unaware of the existence of these data.
Department's Position:
There is no statutory provision pursuant to which the Department is constrained to request, and expect to receive, only data maintained at a corporate headquarters. If the personnel group that prepared the sales questionnaire responses were unaware of the existence of weight data at the mills where these very large coils were produced and weighed, it is because they did not inquire. Personnel are not required to have at their fingertips all the details of their business, but they are required to make logical inquiries when they lack requested data. They did not do so in this case. Furthermore, NSC's claims focus on sales data, yet NSC was, at the same time, preparing responses to the cost portions of the questionnaire, which includes aspects of plant operations. Indeed, NSC claims to have discovered that the weight data was available when making plans for the verification of cost data at the mills. Thus, the fact that data are maintained at the mills rather than at the corporate headquarters in Tokyo cannot be considered a bar to obtaining such data.
Comment 5: Assertions that factors were not needed
NSC argues that the Department's assertion that NSC told the Department it did not need the requested information is erroneous. In support thereof, NSC states that in the Supplemental Questionnaire Response, as in its initial questionnaire, it explained that it had reported its sales of coil on an actual weight basis, "as it did in the normal course of business." In the same questionnaire, NSC further explained that, therefore, it did not "believe that {a theoretical-to-actual weight conversion factor} would be helpful to the Department" because NSC's home market coil sales should match to its coil sales in the U.S. market. NSC argues that it then "qualified this general statement by carefully explaining" that NSC was unable to provide a conversion factor for the very few U.S. export sales made on a theoretical weight basis. According to NSC, this submission accurately stated that the Department did not need a conversion factor for the vast majority of its sales, while pointing out - mistakenly - that it did not have the data necessary to provide a factor for the remainder of the sales.
Department's Position:
The Department stands by its position that NSC responded to its queries by asserting that the Department did not need the requested factors. NSC refers briefly to the Initial Questionnaire response in its comments, stating that its Initial Questionnaire response, as well as the Supplemental Questionnaire response, explained that it reported sales of coil on an actual weight basis, "as it did in the normal course of business." However, NSC's reference to the Initial Questionnaire response ignores the fact that it also contained the very explicit statement that NSC "[ ]" and that therefore it "did not need to arrive at a 'uniform quantity of measure.'" CD 40, at B-22. Because the stated purpose of the request for the conversion factor was to arrive at a uniform quantity of measure, NSC was, in effect, telling the Department that it believed it was not necessary to provide the factor because it was not necessary to make any conversions to arrive at a uniform quantity of measure, given its (erroneous) assumption that [
].
By the time it submitted its Supplemental Questionnaire Response, NSC was clearly aware that some of its U.S. sales had been made on a theoretical weight basis, and acknowledged this in its response. PD 196, at B-25. Nevertheless, NSC still continued to assert that "We do not believe that a {theoretical-to-actual weight conversion factor} would be helpful to the Department because NSC has sales of coil in the home market that should match to its sales in the U.S. market, all of which are sales of coil." Comments on the draft remand results, at 11; see also PD 196, at B-24. Saying that it does not believe that conversion factors would be helpful to the Department is tantamount to saying the Department does not need them. NSC now claims that it was "accurately" stating that the Department did not need factors for "the vast majority of its sales," i.e., those U.S. sales that had been made on an actual weight basis. NSC's statement in the Supplemental Questionnaire Response, however, was not, in fact, limited to the actual weight U.S. sales, and NSC continued to report unadjusted weight values for the theoretical weight sales that were being compared to home market sales made on an actual weight basis. Most importantly, however, NSC's argument in its comments ignores the fact the NSC had not been asked to provide factors for use in connection with the U.S. sales made on an actual weight basis. Instead, the Department asked for factors for use in adjusting the weight values for those U.S. sales made on a theoretical weight basis. Thus, while a claim that the Department did not need factors to adjust the weight values of the actual weight sales may have been "accurate" it was also irrelevant.
Comment 6: Alleged strict liability standard
NSC claims that the Department has imposed upon it a standard of "perfection" and "strict liability" contrary to the standard enunciated by the Court. NSC argues that, because the draft remand results refer to NSC as a "sophisticated" and "experienced" company, the Department is thereby advancing the flawed thesis that its failure to provide the requested information is per se unreasonable. Such a theory, NSC argues, would mean that whenever a respondent can be termed "sophisticated" or "experienced" the Department would be justified in automatically taking an adverse inference without engaging in the requisite fact-finding and analysis. NSC claims that the Department has made an "implicit assertion" that a company with NSC's resources "can never commit an honest mistake," and that this view represents an unlawful standard.
Department's Position:
NSC appears to have misperceived the standard applied by the Department. The Department did not apply a standard of "perfection" or of "strict liability" in the draft remand results - neither term appears anywhere in the draft remand results - and has not done so in these final results. Instead, the Department has repeatedly referenced and applied the statutory "best of ability" standard (see 19 U.S.C. § 1677e(b)) and a standard used by the Court in Nippon: whether, with respect to the weight conversion factors, NSC demonstrated "lack of due regard for its responsibilities in the investigation" (see Nippon, at 30). When the standard being applied is related to the "ability" of a company to respond, that "ability" is at issue, and judgments as to the level of a company's ability are relevant.
NSC errs, however, in attributing to the Department any claim that it could automatically make an adverse inference with respect to any company it deemed "sophisticated" or "experienced." The Department, furthermore, did not make an automatic assumption in this case. Instead, the Department noted that NSC had acknowledged that it had the requested information in its business records and thus was capable of providing it. The Department also determined that NSC would have been able to provide the factors to the Department in a timely fashion if it had requested the information at the mills instead of repeatedly making unfounded assertions that the information was not needed and then relying on an unsupported "belief" that the coils at issue were not weighed. Because the Department looked at the facts of NSC's conduct, as reflected in its submissions, and engaged in the legal analysis dictated by the statute, it properly determined to apply an adverse inference with respect to this matter because NSC had "failed to cooperate by not acting to the best of its ability to comply with a request for information." 19 U.S.C. § 1677e(b).
Finally, the Department has not made any "implicit assertion" that a company with NSC's resources "can never commit an honest mistake." To the contrary, the Department declined to address the question of whether NSC's failure to provide the data was "willful" (or its mistakes "honest") because such questions are "only rarely capable of objective resolution," and instead
based its decision based on the empirical evidence that lends itself to analysis under the statutory "best of ability" standard. Some degree of correction is a normal part of an antidumping duty proceeding, and the Department permitted NSC to make numerous corrections to submitted databases in the course of this proceeding without adopting adverse inferences with respect to those items. See, e.g., NSC's Supplemental Questionnaire Response of January 25, 1999, PD 196, at B-4 (noting that, in addition to responding to the requests in the Department's Supplemental Questionnaire (many of which served to remedy deficiencies in information already requested), NSC had also corrected clerical errors discovered during its preparation of the revised and supplemental U.S. and home market sales files); NSC Sales Verification Report, PD 300, at 2 (noting three areas of minor errors pointed out by company officials at the beginning of verification); NSC Cost Verification Report, PD 303, at 3 (noting seven areas of minor corrections pointed out by company officials at the beginning of verification). With respect to the factors issue, however, NSC did not submit the factors when they were originally requested, ignored the second chance the Supplemental Questionnaire offered to submit the factors, and otherwise demonstrated a lack of due regard for its responsibility to obtain these factors. For this reason, the Department applied an adverse inference with respect to the products affected by the missing factors.
Final Results of Redetermination
For the foregoing reasons, the Department determines, on remand, that NSC could have complied with the Department's request for the conversion factors, and that its failure to provide these factors was a "demonstration of lack of due regard for its responsibilities." Therefore, the Department determines that NSC failed to cooperate by acting to the best of its ability as to this issue, such that the Department, pursuant to 19 U.S.C. § 1677e(b), properly used an adverse inference in selecting from the facts otherwise available with respect to the export prices of the affected products.
_________________________ _________________________
Joseph A. Spetrini Date
Acting Assistant Secretary
for Import Administration
1. Documents on the public record of the underlying investigation are designated with the initials "PD"; documents on the business proprietary record are designated with the initials "CD."
2. NSC's comments, at page 5, state that "computer databases at the various mills, which do not (emphasis added by the Department) contain actual weight information; cannot be accessed from NSC's headquarters {punctuation as per original NSC comments}." It is unclear what is meant by this statement. NSC has never before claimed that the weight data at the mills were not in computerized form, and does not do so in the more extensive discussion on this argument at page 10 of its comments.
3. It is the Department's position that the Court should not consider NSC's quantification, in its comments, of the effect the use of its unadjusted data would have had on the margin, since this is based on data the Court has agreed is not part of the record and neither is, nor should be, a basis for the Department's decision. We note, however, that [
]. See NSC's comments on the draft remand results, at 6, fn.2.
4. The cited portion of page 3 of the remand results states that "it may be reasonable from a respondent's viewpoint not to provide information where it judges a request to be too troublesome, or where it concludes that providing such information could result in a higher margin." This argument addressed the concern that it would be inappropriate to formulate a general rule that adverse inferences could never be used if it were "reasonable" from a respondent's viewpoint-for any of a number of reasons--for that respondent to provide certain information, and that thus the statutory "best of ability" was the proper standard.
5. Although NSC refers to two occasions on which the Department did not grant it the full extension requested, the other request involved a response to a Section A (general information) questionnaire, and was totally unrelated to the Department's request for the weight factors.