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Slip. Op. 99 -51

THE UNITED STATES, Court No. 96-06-01529


[Remand Results of the U. S. Department of Commerce remanded.]

Dated: June 16, 1999

Hale & Dorr, LLP (Gilbert B. Kaplan, Michael D. Esch,
Paul W. Jameson, and Cris R. Revaz), for plaintiff Micron
Technology, Inc. David W. Ogden, Acting Assistant Attorney General;
David M. Cohen, Director, Commercial Litigation Branch,
Civil Division, United States Department of Justice
(Velta A. Melnbrencis); Office of the Chief Counsel for
Import Administration, United States Department of Commerce
(Patrick V. Gallagher, Jr.), of counsel, for defendant.

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1 See Remand Redeterminations (visited June 8, 1999)
2 Familiarity with the Court's earlier opinion is presumed.

Kaye, Scholer, Fierman, Hays & Handler, LLP (Michael P. House
and Raymond Paretzky), for defendant-intervenors LG Semicon Co.,
and LG Semicon America, Inc.

The Court reviews the Department of Commerce's
(" Commerce") Final Results of Redetermination Pursuant to Court
Remand (Mar. 31, 1999) (" Remand Results"), 1 filed with the Court
in accordance with its opinion and order in Micron Technology,
Inc. v. United States, No. 99-12 (CIT Jan. 28, 1999). 2 The Court
found in Micron that it was unclear whether Commerce used the
same methodology to calculate total R& D expenses for LG Semicon
Co., and LG Semicon America, Inc. (collectively, "LG Semicon"),
as it used to calculate purchased R& D expenses. Therefore, the
Court remanded in part, with instructions that Commerce
articulate "the precise methodology it . . . used to calculate
total R& D expenses." Micron, No. 99-12, slip op. at 10-11 (CIT
Jan. 28, 1999). Importantly, when crafting its remand
instruction, the Court cautioned that "Commerce should ensure
that its clarified methodology is non-distortive and that it

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accurately and reasonably reflects costs. In particular, the
Court notes that if Commerce continues to base its total R& D
figure on those costs expensed in 1993, it should refrain from
including in this figure those R& D costs expensed in 1993, yet
incurred prior to 1993. Basing the total R& D figure on costs
actually incurred and expensed in 1993 plus costs expensed in
1993, yet incurred prior to 1993 conflates the amortizing and
expensing methodologies and is plainly distortive. It
effectively results in double counting and, as such, should be
rejected." Id., slip op. at 11 (CIT Jan. 28, 1999).
On remand, Commerce clarified its methodology for
calculating R& D expenses and recalculated LG Semicon's dumping
margin in accordance with this methodology. As a result, LG
Semicon's margin remained at 0.00% for the first review period.
Substantively, however, Commerce ignored the Court's remand
instruction. In its revised total R& D figure, Commerce included
R& D costs actually incurred and expensed in 1993 and R& D costs
expensed in 1993, though incurred and amortized prior to 1993.
Commerce is wrong.
The court will sustain Commerce's remand determination if it
is supported by substantial evidence on the record and is

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otherwise in accordance with law. See 19 U. S. C. 1516a( b)( 1)( B)
As the Court plainly emphasized in Micron, it is distortive
and, indeed, punitive to base LG Semicon's total R& D figure on
those costs that were expensed and incurred in 1993 plus those
costs that were expensed in 1993, though incurred prior to 1993.
This approach "effectively results in double counting" costs
incurred by LG Semicon. Micron, No. 99-12, slip op. at 11 (CIT
Jan. 28, 1999) (emphasis added).
Commerce maintains its approach does not result in double
counting because Commerce "has never before included these
particular R& D expenses [i. e., those expensed in 1993, yet
incurred prior to that year] in [LG Semicon's] costs." Remand
Results, at 5. Commerce is literally correct in that under its
proposed methodology, the same expenses are not double counted,
but this hyper-technical analysis misses the point. Commerce has
taken a fully inclusive set of current period costs and lumped on
a set of prior period costs. And, importantly, the prior period
costs constitute a substantial portion of the total revised R& D
figure because the remainder of amortized costs were expensed in
full in 1993 due to an accounting change. Indeed, Commerce

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acknowledges that by adding the prior period costs "[ t] his
appreciably increases total R& D expenses." Remand Results, at 6.
The Court's review of the confidential Remand Results confirms
this statement to be absolutely true. The increase in total R& D,
resulting from the shift in methodology, is significant. On the
facts of this case, the Court continues to find that by combining
the costs that were currently expensed and the costs that were
amortized, though expensed in full due to the accounting change,
Commerce in effect double counted LG Semicon's total R& D costs.
Commerce's approach distorts LG Semicon's total R& D beyond what
might be considered historically accurate for a given period of
time and, hence, does not remotely, much less reasonably, reflect
the company's actual costs of production.
Commerce's principal concern in adopting the methodology
used in the Remand Results appears to be that if previously
incurred amounts are not included in the total R& D figure here,
they will never be included in any review. This is a red
herring. Many past expenses, including past production costs,
might not be captured in any given review. To validate
Commerce's reasoning would allow the agency to include past
expenses simply because they were not captured in a previous

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review or investigation. The object of the cost of production
exercise is not to capture all past expenses, but rather those
expenses that reasonably and accurately reflect a respondent's
actual production costs for a period of review.
In the Remand Results, Commerce also expresses its concern
that if it were to follow the Court's instruction, LG Semicon
might again switch its accounting procedures to achieve favorable
treatment for antidumping purposes. Commerce's concern in this
regard is overstated. It makes little, if any, business sense to
switch accounting systems on an annual basis; the Court is
skeptical that a company might engage in such practice solely to
ensure that more beneficial dumping calculations might inure.
Finally, plaintiff Micron argues that the revised
methodology should be sustained because to do otherwise would
result in an approach inconsistent with the methodology used to
calculate purchased R& D. The Court does not agree. Review of
the record shows that all of the purchased R& D LG Semicon
expensed in 1993 was also incurred in 1993. See Remand Results,
at 4 n. 1; see also Micron, No. 99-12, slip op. at 10 n. 3 (CIT
Jan. 28, 1999).
To remedy Commerce's error, LG Semicon urges the Court to

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vacate the Remand Results and, instead, to reinstate and sustain
the Notice of Final Results of AD Administrative Review: DRAMs
from the Republic of Korea, 61 Fed. Reg. 20,216 (May 6, 1996).
The Court recognizes that additional delay will result from a
further remand and sympathizes with LG Semicon's frustration on
this issue. Commerce's decision on remand has wasted the Court's
time as well as that of the litigants. But, the proper course of
action is to have the agency rectify its error in an expedited
fashion. Therefore, Commerce shall conduct its second remand
according to the following Order.
Upon consideration of Commerce's Remand Results, and the
comments filed by parties to this action, upon all other papers
and proceedings had herein, and upon due deliberation; it is
ORDERED that the Remand Results are remanded to Commerce,
which should revise its total R& D methodology to exclude R& D
costs that were incurred prior to 1993, yet expensed in 1993 and,
if necessary, recalculate the margin for LG Semicon;
ORDERED that Commerce shall file its Remand Results with the
Clerk of the Court within thirty (30) days from the date of this
Order. Any comments or responses by the parties to the Remand

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Results are due on or before five (5) days thereafter, and shall
be limited to fifteen (15) pages. Any rebuttal comments are due
on or before five (5) days thereafter, and shall again be limited
to fifteen (15) pages; and it is further
ORDERED that no extensions of time to this schedule will be

_________________________________ Richard W. Goldberg
Dated: June 16, 1999 New York, New York.
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