Nippon Steel Corp. v. United States

732 F. Supp. 3d 1353, 2024 CIT 112

• Court: United States Court of International Trade
• Decided: October 10, 2024
• Docket: 21-00533 22-00183 23-00112
• Status: Published

Opinion

Slip Op. No. 24-112

UNITED STATES COURT OF INTERNATIONAL TRADE

NIPPON STEEL CORPORATION,

Plaintiff,

and

JFE SHOJI CORPORATION and JFE SHOJI AMERICA, LLC,

Plaintiff-Intervenors, Before: Stephen Alexander Vaden, Judge v. Court Nos. 1:21-cv-00533, 1:22-cv- UNITED STATES, 00183, 1:23-cv-00112 (SAV) Defendant,

NUCOR CORPORATION, STEEL DYNAMICS, INC., and SSAB ENTERPRISES, LLC,

Defendant-Intervenors.

OPINION

[Granting in Part and Denying in Part Plaintiff’s Motion for Judgment on the Agency Record in the case arising from the third administrative review; sustaining Commerce’s Remand Results in the case arising from the third administrative review; sustaining Commerce’s Final Determinations in the cases arising from the fourth and fifth administrative reviews.]

Dated: October 10, 2024 Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 2 

Shawn M. Higgins and Rajib Pal, Sidley Austin LLP, of Washington, DC, for Plaintiff Nippon Steel Corporation. With them on the briefs were Justin R. Becker and Lindsey A. Ricchi.

Brenda A. Jacobs, Jacobs Global Trade & Compliance LLC, of McLean, VA, for Plaintiff-Intervenors JFE Shoji Corporation and JFE Shoji America, LLC.

Stephen C. Tosini, Senior Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Tara K. Hogan, Assistant Director, and Kyle S. Beckrich, Trial Attorney, and David W. Richardson, Of Counsel, Department of Commerce, Office of Chief Counsel for Trade Enforcement & Compliance.

Jeffrey D. Gerrish, Schagrin Associates, of Washington, DC, for Defendant-Intervenors Steel Dynamics, Inc. and SSAB Enterprises, LLC. With him on the brief was Roger B. Schagrin.

Maureen E. Thorson, Wiley Rein LLP, of Washington, DC, for Defendant-Intervenor Nucor Corporation. With her on the brief was Alan H. Price, Christopher B. Weld, Jeffrey O. Frank, and Enbar Toledano.

Vaden, Judge: These three cases address consecutive administrative reviews

of the same antidumping duty order. Nippon Steel Corporation (Nippon Steel), a

Japanese steel importer, was a mandatory respondent in each of the reviews. In the

third administrative review, Nippon Steel failed to provide downstream sales data

from one of its affiliated resellers despite the Department of Commerce’s (Commerce)

repeated requests. Commerce applied a partial adverse inference to fill the gap left

in the record by the missing data, and Nippon Steel now protests that Commerce did

not support its determination with substantial evidence. Nippon Steel also

challenged Commerce’s calculation of its U.S price in the third administrative review

for failing to include certain revenue. Commerce requested a voluntary remand on

that issue, and no party contests its Remand Results. Finally, Nippon Steel claims Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 3  that Commerce improperly deducted Section 232 duties from its U.S. prices to

calculate the dumping margins in all three cases. Nippon Steel’s Motion for

Judgment on the Agency Record challenging the application of a partial adverse

inference is GRANTED. All others are DENIED. Commerce’s determinations in

the fourth and fifth administrative reviews are SUSTAINED in full.

BACKGROUND

Before the Court are three lawsuits brought by Nippon Steel against the

United States. The suits arise from three consecutive administrative reviews of

Commerce’s antidumping duty order on certain hot-rolled steel flat products from

Japan (the Order). Certain Hot-Rolled Steel Flat Products from Australia, Brazil,

Japan, the Republic of Korea, the Netherlands, the Republic of Turkey, and the United

Kingdom: Amended Final Affirmative Antidumping Determinations for Australia,

the Republic of Korea, and the Republic of Turkey and Antidumping Duty Orders, 81

Fed. Reg. 67,962 (Dep’t of Com. Oct. 3, 2016).

The first lawsuit arises from the third administrative review of the Order.

Nucor Corporation (Nucor); Steel Dynamics, Inc.; and SSAB Enterprises, LLC

intervened as Defendant-Intervenors. Order Granting Nucor’s Mot. to Intervene

(Nov. 5, 2021), Case No. 21-533, ECF No. 18; Order Granting Steel Dynamics and

SSAB’s Mot. to Intervene (Nov. 9, 2021), Case No. 21-533, ECF No. 23. In the second

suit arising from the fourth administrative review, Nucor again intervened as

Defendant-Intervenor; and JFE Shoji Corporation and JFE Shoji America, LLC

intervened as Plaintiff-Intervenors. Minute Order (Aug. 12, 2022), No. 22-183, ECF Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 4  No. 26; Order Granting JFE Shoji Corp. and JFE Shoji Am., LLC’s Mot. to Intervene

(Aug. 5, 2022), No. 22-183, ECF No. 20. In the third suit arising from the fifth

administrative review, Nucor alone intervened as Defendant-Intervenor. Order

Granting Nucor’s Mot. to Intervene (July 27, 2023), No. 23-112, ECF No. 20.

These three unconsolidated cases raise two issues. First, in all three cases,

Nippon Steel claims that Commerce improperly deducted Section 232 duties from

Nippon Steel’s U.S. prices. Second, solely in the case arising from the third

administrative review, Nippon Steel claims Commerce erred by drawing an adverse

inference from facts available to fill a gap left by missing downstream sales data.

Section 232 Duties

Section 232 of the Trade Expansion Act of 1962 allows for the imposition of

tariffs to remedy national security threats. 19 U.S.C. § 1862. The statute permits

Commerce to conduct investigations “to determine the effects” imported articles have

on the national security of the United States. Id. § 1862(b)(1)(A). Commerce must

“submit … a report” of its findings and recommendations to the President, including

recommended actions to address threats posed by the investigated imports. Id. §

1862(b)(3)(A). Following receipt of the report, the President may “adjust … imports”

to remedy the threat. Id. § 1862(c)(1)(A)(ii).

In 2018, Commerce submitted a report to President Trump detailing its

investigation into the effects of imported steel articles on the United States’ national

security. Off. of Tech. Evaluation, U.S. Dep’t of Com., THE EFFECT OF IMPORTS OF

STEEL ON THE NATIONAL SECURITY: AN INVESTIGATION CONDUCTED UNDER SECTION Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 5  232 OF THE TRADE EXPANSION ACT OF 1962, AS AMENDED (2018). It found that a large

volume of imports threatened to impair national security and noted the domestic

industry’s “shrinking ability to meet national security production requirements in a

national emergency.” Id. at 6, 49. To “remove the threatened impairment,”

Commerce recommended the President impose a global tariff of twenty-four percent

on imports of steel articles. Id. at 59–60.

President Trump concurred with Commerce’s finding. Proclamation 9705

Adjusting Imports of Steel into the United States, 83 Fed. Reg. 11,625, 11,626 (Mar.

15, 2018). In Proclamation 9705, the President imposed a twenty-five percent ad

valorem tariff on steel articles from all countries except Canada and Mexico, which

entered the United States on or after March 23, 2018. Id. at 11,626–27. The

Proclamation directed that the tariff be imposed “in addition to any other duties, fees,

exactions, and charges applicable to such imported steel articles.” Id. at 11,627.

Nippon Steel imported steel articles into the United States after this tariff

went into effect. Accordingly, it reported paying Section 232 duties on its U.S. sales

in each of the administrative reviews at issue. See Ex. C-1, Nippon Steel Section C

Questionnaire Resp. (June 30, 2020), No. 21-533, J.A. at 3,050–113, ECF No. 41; Ex.

C-1, Nippon Steel Section C Questionnaire Resp. (Aug. 20, 2021), No. 22-183, J.A. at

82,524–46, ECF No. 46; Ex. C-1, Nippon Steel Section C Questionnaire Resp. (Apr.

27, 2022), No. 23-112, J.A. at 83,752–805, ECF No. 21. To calculate Nippon Steel’s

dumping margin in each review, Commerce deducted Section 232 duty payments

from the U.S. price of the subject merchandise. See Issues and Decision Mem. (Aug. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 6  23, 2021) at 10–11, No. 21-533, J.A. at 2,470–71, ECF No. 41; Issues and Decision

Mem. (May 19, 2022) at 8, No. 22-183, J.A. at 3,711, ECF No. 47; Issues and Decision

Mem. (May 1, 2023) at 10, No. 23-112, J.A. at 3,286, ECF No. 22. Dumping margins

are determined by comparing the sales price in the United States to the sales price

in Nippon Steel’s Japanese home market. See 19 U.S.C. § 1675(a)(2)(A). Anything

that reduces U.S. price makes the dumping margin rise. Therefore, Commerce’s

decision to deduct the Section 232 duties increased Nippon Steel’s dumping margin

by reducing the U.S. price.

Under 19 U.S.C. § 1677a(c)(2)(A), “[U.S. price] shall be … reduced by … the

amount, if any, included in such price, attributable to any . . . United States import

duties, which are incident to bringing the subject merchandise from the original place

of shipment in the exporting country to the place of delivery in the United States[.]”

This helps ensure an “apples [to] apples” comparison between merchandise sold in

the home market and the U.S. market by deducting costs associated with

transporting merchandise to the United States before the comparison between prices

occurs. Smith-Corona Grp. v. United States, 713 F.2d 1568, 1578 (Fed. Cir. 1983).

The Federal Circuit considered a challenge to Commerce’s deduction of Section

232 duties in Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. United States, 63

F.4th 25 (Fed. Cir. 2023). It held that duties imposed under Section 232 were

deductible from U.S. price as “United States import duties.” Borusan, 63 F.4th at 37

(quoting 19 U.S.C. § 1677a(c)(2)(A)). Proclamation 9705 requires that “the duty

newly being imposed was to add to, and not partly or wholly offset, the antidumping Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 7  duties that would be due without the new duty.” Id. at 34. The duties are to be

imposed “in addition to any other duties,” and “[a]ll anti-dumping, countervailing, or

other duties and charges applicable to such goods shall continue to be

imposed.” Proclamation 9705, 83 Fed. Reg. at 11,627, 11,629. Combining the

statutory directive on calculating the U.S. price with the Proclamation’s terms, the

Federal Circuit instructed:

[W]hen applied to an article covered by antidumping duties, the Proclamation 9705 and antidumping duties must together result in a full imposition of both duties …. i.e., by subtraction of the Proclamation 9705 duty from the U.S. price if the Proclamation 9705 duty is built into it. Otherwise, the Proclamation 9705 duty would be offset substantially or completely by a reduction in the antidumping duty itself (through an increase in the U.S. price and therefore a decrease in the dumping margin), defeating the evident “in addition to” prescription of Proclamation 9705.

Borusan, 63 F.4th at 35.

Nippon Steel argues that Borusan does not control the outcome of its three

cases. First it argues that, even under Borusan, Commerce’s decision to deduct the

Section 232 duties was not supported by substantial evidence. Pl.’s Suppl. Opening

Br.(Pl.’s Suppl. Br.) at 11, No. 21-533, ECF No. 64; Pl.’s Suppl. Reply Br. (Pl.’s Suppl.

Reply) at 3, No. 21-533, ECF No. 68. Nippon Steel points to 19 U.S.C. §

1677a(c)(2)(A), which directs Commerce to deduct from a respondent’s U.S. price any

“United States import duties” the respondent “included in” the price it ultimately

charged to its first unaffiliated customer. The company claims Commerce failed in

all three administrative reviews to make record-supported findings that the Section

232 duties Nippon Steel paid were actually “included in” the price Nippon Steel Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 8  charged its first unaffiliated customer. Compare 19 U.S.C. § 1677a(c)(2)(A), with Pl.’s

Suppl. Br. at 11–14, ECF No. 64, and Pl.’s Suppl. Reply at 7–9, ECF No. 68. The

Government and Nucor respond that Nippon Steel forfeited this argument by failing

to raise it during the administrative reviews. Def.’s Resp. to Pl.’s Suppl. Br. (Def.’s

Suppl. Resp.) at 16–20, ECF No. 65; Def.-Int. Nucor’s Suppl. Resp. Br. (Nucor’s Suppl.

Resp.) at 3–6, ECF No. 66. Nippon Steel counters that it preserved the argument by

making a “broad” claim that Commerce “improperly deducted the Section 232 steel

duties from [Nippon Steel’s] U.S. price” in its case briefs in all three administrative

proceedings and its filings in this Court. Pl.’s Suppl. Reply at 3, 6–7, ECF No. 68.

Alternatively, Nippon Steel says the Court could exercise its discretion to address the

issue. Id. at 4.

Second, Nippon Steel claims Commerce’s determination is inconsistent with

the United States’ treaty obligations — an issue Borusan did not address. Pl.’s Suppl.

Br. at 20, ECF No. 64. The United States is a signatory to the General Agreement

on Tariffs and Trade (GATT), which sets tariff rates on imports of certain goods,

including steel articles. See General Agreement on Tariffs and Trade art. II:1(a)–(b),

Oct. 30, 1947, 61 Stat. A-14, 55 U.N.T.S. 200 [hereinafter GATT] (incorporating the

updated Schedules of Concessions incorporated into the GATT, Marrakesh

Agreement, Apr. 15, 1994, 1867 U.N.T.S. 243). When it deducts the Section 232

duties from Nippon Steel’s U.S. prices, Commerce increases Nippon Steel’s dumping

margin. That increased dumping margin imposes duties on Japanese steel imports

greater than the GATT’s approved rates. See Pl.’s Mem. in Supp. of Mot. for J. on Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 9  Agency R. (Pl.’s Br.) at 31–32, No. 21-533, ECF No. 32; Pl.’s Reply in Supp. of Mot.

for J. on Agency R. (Pl.’s Reply) at 16, No. 21-533, ECF No. 39; Pl.’s Suppl. Br. at 22,

ECF No. 64. Nippon Steel argues this result is improper under the Charming Betsy

canon, which provides that a statute “ought never to be construed to violate the law

of nations if any other possible construction remains.” Murray v. Schooner Charming

Betsy, 6 U.S. (2 Cranch) 64, 118 (1804).

The Government and Nucor argue that the deduction does not violate the

United States’ treaty obligations; or if it does, it is not a matter for this Court to

remedy. Def.’s Suppl. Resp. at 21–22, ECF No. 65;1 Def-Int. Nucor’s Resp. Br.

(Nucor’s Resp.) at 28–30, No. 21-533, ECF No. 36; Nucor’s Suppl. Resp. at 6–7, ECF

No. 66. The Government explains that any conflict between a statute and the GATT

is a matter for Congress — not the judiciary. Def.’s Suppl. Resp. at 21–22, ECF No.

65. Furthermore, the Government argues that a national security exception to the

GATT applies, making Nippon Steel’s claims irrelevant. Id. at 21–22 (citing GATT

art. XXI(b)). Nucor adds that only the U.S. Government is statutorily permitted to

challenge such an action for being “inconsistent with” the GATT. Nucor’s Suppl.

Resp. at 7, ECF No. 66 (quoting 19 U.S.C. § 3512(c)(1)(B)).

Nippon Steel disputes that the GATT’s national security exception applies. See

Pl.’s Suppl. Br. at 23–25, ECF No. 64. It relies on World Trade Organization (WTO)

panel reports to support its argument that the exception only applies in times of

 1 Fellow Defendant-Intervenors Steel Dynamics, Inc. and SSAB Enterprises, LLC “endorse

and adopt the arguments raised by” the Government and Nucor. Steel Dynamics and SSAB’s Suppl. Resp. Br., No. 21-533, ECF No. 67; see also Steel Dynamics and SSAB’s Letter Supp. Nucor’s Resp., No. 21-533, ECF No. 38. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 10  “armed conflict” or “general instability.” Id. at 23–24, ECF No. 64 (quoting Panel

Report, Russia – Measures Concerning Traffic in Transit, WTO Doc. WT/DS512/R

(adopted Apr. 26, 2019)). Because the Federal Circuit did not consider how the

Charming Betsy canon might apply, Nippon Steel asserts that this Court is free to

address it. See id. at 21, ECF No. 64; Pl.’s Suppl. Reply at 10, ECF No. 68.

Third, Nippon Steel argues that Borusan was wrongly decided. See Pl.’s Suppl.

Br. at 25, ECF No. 64; Pl.’s Suppl. Reply at 12, ECF No. 68. It believes the Federal

Circuit’s decision conflicts with case precedent, principles of statutory interpretation,

and administrative law by focusing on the President’s intent instead of Congress’

intent. Pl.’s Suppl. Br. at 25–36, ECF No. 64; Pl.’s Suppl. Reply at 12–17, ECF No.

68. Nippon Steel also claims it raises several distinct arguments that the parties in

Borusan did not present to the Federal Circuit. See Pl.’s Br. at 9–33, ECF No. 32

(arguing that a complete analysis of 19 U.S.C. § 1677a(c)(2)(A) requires a different

result, the temporary nature of Section 232 duties warrants treating them like special

duties, and Commerce imposes an impermissible double remedy by deducting the

Section 232 duties from U.S. prices); Pl.’s Suppl. Br. at 35, ECF No. 64 (incorporating

arguments from opening brief by reference). The Government and Nucor similarly

reject this claim, noting that the Federal Circuit’s decision binds this Court regardless

of its correctness. See Def.’s Suppl. Resp. at 23, ECF No. 65; Nucor’s Suppl. Resp. at

7, ECF No. 66. They also dispute that any of Nippon Steel’s “additional arguments”

were left unaddressed by the appellate court. See Def.’s Suppl. Resp. at 28–30, ECF

No. 65; Nucor’s Suppl. Resp. at 10–11, ECF No. 66. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 11  Downstream Sales Data

The third administrative review of the Order brings one additional issue to the

table. To calculate the dumping margin, the agency compares the U.S. price and

the normal value of the subject merchandise. 19 U.S.C. § 1675(a)(2)(A). Normal

value is the sale price of the foreign like product sold “for consumption in the

exporting country, in the usual commercial quantities and in the ordinary course of

trade.” 19 U.S.C. § 1677b(a)(1)(B)(i). In other words, Commerce must determine if

the company under investigation sells the same product in its home country for more

than its selling price in the United States.

Nippon Steel reported selling hot-rolled steel in the Japanese market to

affiliated companies who then resold it to unaffiliated customers. Nippon Steel

Section B Questionnaire Resp. (June 30, 2020) at B-5, No. 21-533, J.A. at 80,011, ECF

No. 40. The affiliates’ sales to unaffiliated customers are known as downstream sales.

“Sales to affiliated companies raise the question of whether the transactions reflect

true market price.” Saha Thai Steel Pipe Pub. Co. v. United States, 47 CIT __, 663 F.

Supp. 3d 1356, 1370 (2023). Commerce may only consider a company’s sales to

affiliates if Commerce is “satisfied that the price is comparable to the price at which

the exporter or producer sold the foreign like product to a person who is not affiliated

with the seller.” 19 C.F.R. § 351.403(c).

When examining sales to affiliated parties, Commerce applies an arm’s-

length test to determine whether the transactions were truly made in the ordinary Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 12  course of trade. See Timken Co. v. United States, 26 CIT 1072, 1079

(2002) (describing the arm’s-length test). When transactions with affiliated

customers are found to be not at arm’s length, Commerce excludes them from the

calculation of normal value, id., and may instead use the affiliates’ downstream sales

to calculate normal value. 19 C.F.R. § 351.403(d).

In its initial questionnaire, Commerce asked Nippon Steel to report the

downstream sales its affiliates made in the Japanese domestic market during the

period of review. Initial Questionnaire (May 4, 2020) at B-2, No. 21-533, J.A. at 1,041,

ECF No. 41. Nippon Steel responded by sending sales data for several affiliates but

not all.2 Nippon Steel Section B Questionnaire Resp. (June 30, 2020) at B-7, No. 21-

533, J.A. at 80,013, ECF No. 40. It claimed it made “multiple written requests and

numerous telephone calls to each of the affiliates” to track down the data. Id. at B-6,

J.A. at 80,012. It even “hired local Japanese counsel for the sole purpose of managing

the data collection efforts.” Id.

Nippon Steel stated that it “intend[ed] to continue to act to the best of its ability

to collect” the missing data but claimed Japanese law limited its actions. Id. at B-7,

J.A. at 80,013. It asserted that the Japanese Antimonopoly Act prohibited it from (1)

“threat[ening] … to cease selling to or doing business with its affiliated customers if

they did not provide downstream sales data” or (2) “[c]easing sales to affiliated

 2 Nippon Steel did not submit downstream sales data for three of its affiliates.Nippon Steel Suppl. Questionnaire Resp. (Feb. 2, 2021) at 1–2, No. 21-533, J.A. at 81,416–17, ECF No. 40. However, Nippon Steel only disputes Commerce’s determination regarding one affiliate’s downstream sales, Pl.’s Br. at 33, ECF No. 32; thus, the Court limits its discussion to the information Nippon Steel put on the record for that affiliate. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 13  customers if they do not provide downstream sales data.” Id. Nippon Steel submitted

a legal memorandum prepared by a Japanese law firm to support its position. Ex.

B-23, Nippon Steel Section B Questionnaire Resp. (June 30, 2020) (Japanese Legal

Mem.) at 1, No. 21-533, J.A. at 80,634, ECF No. 40. The memorandum assumed

Nippon Steel is in a superior bargaining position relative to its affiliated resellers.

Id. at 5, J.A. at 80,638. It concluded that Nippon Steel would unlawfully “abuse …

[its] superior bargaining position” if it threatened to stop doing business with its

resellers unless they provided the data. Id. at 4–5, J.A. at 80,637–38. The

memorandum further found that any refusal by Nippon Steel to sell to resellers

because of their failure to provide the data would constitute an “unjust refusal to

trade” under the Act. Id. at 5–6, J.A. at 80,638–39 (capitalization altered).

Commerce sent Nippon Steel a supplemental questionnaire asking for more

information about the missing data. Suppl. Questionnaire (Jan. 14, 2021) at 1, No.

21-533, J.A. at 1,174, ECF No. 41. Nippon Steel again failed to submit the

information. Nippon Steel Suppl. Questionnaire Resp. (Feb. 2, 2021) at 1–2, No.

21-533, J.A. at 81,416–17, ECF No. 40. Instead, it provided a communications log

describing the “numerous written requests and telephone calls” it made to one of the

affiliates and attached copies of emails they exchanged. Id. at 2, J.A. at 81,417; Ex.

SB-1, Nippon Steel Suppl. Questionnaire Resp. (Feb. 2, 2021) (Commc’n Log), No.

21-533, J.A. at 81,703–40, ECF No. 40. The exchange consisted of eighteen

communications, including twelve emails, exchanged over a nearly one-year period.

Id. In the emails, Nippon Steel repeatedly asked its affiliate for updates on when it Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 14  would submit the sales data Commerce requested. Id. The affiliate often failed to

respond; and when it did, it asked for more time to comply with Nippon Steel’s

request. Id. at 81,735.

In its Final Results, Commerce found that Nippon Steel sold its products to

affiliated resellers at non-arm’s-length prices so that it was necessary to use

downstream sales to calculate normal value. Issues and Decision Mem. (Aug. 23,

2021) at 13, No. 21-533, J.A. at 2,473, ECF No. 41. The agency also determined that

Nippon Steel failed to cooperate to the best of its ability in providing downstream

sales data. Id. Commerce therefore applied facts available with an adverse inference

to fill the gap left by the missing data. Id. at 14–15, J.A. at 2,474–75. It assigned the

highest unaffiliated home market price on the record to the unreported downstream

sales. Id. Assigning a higher home market price made it more likely Commerce

would find Nippon Steel was selling merchandise at higher prices in Japan than in

the United States.

Commerce reasoned that Nippon Steel’s decision to makes sales at non-arm’s-

length prices gave Nippon Steel its choice of resellers, and it was therefore free to

pick between “affiliates which would cooperate and those that will not.” Id. at 13,

J.A. at 2,473. Selling to a noncooperative affiliate could be beneficial to Nippon Steel.

Id. It could “manipulate the dumping calculations by shielding high priced home

market sales behind a wall of uncooperative affiliates.” Id. Put another way, Nippon

Steel could make sales to an affiliate at Price A, a lower price. The affiliate could

then resell the good to an unaffiliated customer at Price B, a higher price. Despite Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 15  not making the sale itself, Nippon Steel benefits from the profit off the higher price

as a partial owner of the affiliate. Thus, Commerce seeks to use the affiliate’s

downstream sale at the higher Price B to calculate Nippon Steel’s normal value and

ensure an “apples [to] apples” comparison occurs. Smith-Corona Grp., 713 F.2d at

1578. The agency dismissed Nippon Steel’s argument that coercing its affiliate to

provide the requested data would violate Japanese law. Issues and Decision Mem.

(Aug. 23, 2021) at 14, No. 21-533, J.A. at 2,474, ECF No. 41. It found that Nippon

Steel “provided an insufficient explanation as to if and how this law would apply.”

Id. Commerce claimed it was simply applying U.S. antidumping law, “not directing

[Nippon Steel] to violate Japanese law.” Id.

Nippon Steel argues that neither the record nor Commerce’s reasoning in its

memorandum support finding that it failed to cooperate to the best of its ability as

required by statute. See 19 U.S.C. 1677e(b); Pl.’s Br. at 38–41, ECF No. 32. It claims

the record shows it made extensive efforts to obtain the missing data, including

numerous communications with its affiliate. Pl.’s Br. at 40, ECF No. 32. The

company also points to its legal analysis of how Japanese law limits its course of

action and evidence showing its “limited ownership of and lack of control over [its

affiliate].” Id. at 39–40; Pl.’s Reply at 22, ECF No. 39. Commerce wrote that Nippon

Steel chose to sell to an uncooperative affiliate, but Nippon Steel claims it could not

have anticipated its affiliate’s noncooperation because the affiliate “indicated

multiple times it would try to cooperate.” Pl.’s Br. at 39, ECF No. 32. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 16  The Government and Nucor respond that Commerce’s determination was

lawful because Nippon Steel knew Commerce would request information regarding

its affiliates’ downstream sales. Def.’s Resp. to Mot. for J. on Agency R. (Def.’s Br.)

at 28–29, No. 21-533, ECF No. 33; Nucor’s Br. at 32, ECF No. 36. Commerce had

requested similar information in past administrative reviews, and Nippon Steel

similarly was unable to provide it. See, e.g., Nippon Steel & Sumitomo Metal Corp.

v. United States, 44 CIT __, 483 F. Supp. 3d 1214, 1224–25 (2020). Nucor and

Commerce suggest Nippon Steel had other options for obtaining the data that it did

not explore, such as adding a clause to its contract with affiliates requiring them to

provide the data Commerce requests. See Def.’s Br. at 29, ECF No. 33; Nucor’s Br. at

34, ECF No. 36.

Procedural History

As noted above, these issues span three separate administrative reviews of the

same Order — the third, fourth, and fifth reviews. The third administrative review

has a period of review of October 1, 2018, through September 30, 2019. Initiation of

Antidumping and Countervailing Duty Administrative Reviews, 84 Fed. Reg. 67,712,

67,715 (Dep’t of Com. Dec. 11, 2019). It contains both issues. See Compl. ¶¶ 14–20,

No. 21-533, ECF No. 9. The fourth administrative review has a period of review of

October 1, 2019, through September 30, 2020. Initiation of Antidumping and

Countervailing Duty Administrative Reviews, 85 Fed. Reg. 78,990, 78,992–93 (Dep’t

of Com. Dec. 8, 2020). The fifth administrative review has a period of review of

October 1, 2020, through September 30, 2021. Initiation of Antidumping and Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 17  Countervailing Duty Administrative Reviews, 86 Fed. Reg. 67,685, 67,687 (Dep’t of

Com. Nov. 29, 2021). Both involve only the Section 232 duties issue. See Compl. ¶¶

13–14, No. 22-183, ECF No. 9; Compl. ¶¶ 13–18, No. 23-112, ECF No. 9. Following

USCIT Rule 1’s directive to “secure the just, speedy, and inexpensive determination

of every action,” the Court joined the three cases for hearing and decision. Scheduling

Order (July 18, 2023), No. 21-553, ECF No. 62. This opinion dispenses with the

pending motions in all three matters and allows for the immediate appeal of the cases

involving the fourth and fifth administrative reviews.

There is one final procedural wrinkle. In the case arising from the third

administrative review, Nippon Steel complains that Commerce miscalculated its net

U.S. price by failing to include certain revenue sources. Pl.’s Br. at 41–46, ECF No.

32. In the Issues and Decision Memorandum, Commerce stated its Final Results

were based on “the total revenue” Nippon Steel reported. Issues and Decision Mem.

(Aug. 23, 2021) at 21, No. 21-533, J.A. at 2,481, ECF No. 41. Commerce calculated

Nippon Steel’s total revenue by adding together two values: gross revenue and billing

adjustments. Margin Program, J.A. at 82,532–82,730, ECF 40. Nippon Steel argued

that this calculation is — likely inadvertently — incorrect. It is too low because it

overlooks revenue for extra services that Nippon Steel reported separately. Pl.’s Br.

at 42–46, ECF No. 32. Nippon Steel explains that one of its U.S. affiliates issued

separate invoices to customers for extra embossing, slitting, and cutting services. Id.

at 42, ECF No. 32. Though Nippon Steel reported its revenue from each of these extra Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 18  services in separate, corresponding revenue fields, Commerce ignored them when

making its total revenue calculation. Id. at 42–44.

Commerce requested a partial voluntary remand to reconsider the revenue for

these extra services. See Def.’s Br. at 31–32, ECF No. 33. The Court granted the

request, Order Granting Remand (July 1, 2022), No. 21-533, ECF No. 42, and

Commerce filed its Remand Results a month later. Remand Results (Aug. 1, 2022),

No. 21-533, ECF No. 43. This time, it added the revenue Nippon Steel reported for

extra services to calculate the net U.S. price. Id. at 5. No party contests the Remand

Results. See Pl.’s Comments (Aug. 15, 2022) at 2, No. 21-533, ECF No. 48 (asking the

Court to sustain the Remand Results).

Oral Argument

The Court held oral argument on May 10, 2024, and questioned the parties

about both the Section 232 and downstream sales issues. See generally Oral Arg. Tr.,

No. 21-533, ECF No. 79. Regarding Section 232 duties, the Court first turned to

Nippon Steel’s argument that Commerce failed to find Nippon Steel included the

duties in its U.S. prices. See id. at 29:6–20, ECF No. 79. Nippon Steel’s counsel was

unable to point to anything in the record showing that it raised this objection during

the agency proceedings and instead claimed “[t]here was really nothing … for [it] to

address” at the agency-level because Commerce did not make an explicit finding in

its preliminary decision memorandum. Id. at 31:11–12. The Court then asked if it

was “bound by [Borusan]” and whether “that’s the end of the matter,” to which Nippon

Steel’s counsel responded, “Right.” Id. at 42:10–11. Nippon Steel’s counsel added, Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 19  “[W]e recognize that we’re in a difficult position with this Court, and certainly if the

Court believes that its hands are tied, … we are … prepared to take this up en banc

with the Federal Circuit.” Id. at 42:11–15.

JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction pursuant to 28 U.S.C. § 1581(c), which grants the

Court exclusive jurisdiction over final antidumping duty determinations. The Court

must set aside any of Commerce’s “determination[s], finding[s], or conclusion[s]”

found to be “unsupported by substantial evidence on the record, or otherwise not in

accordance with law ….” 19 U.S.C. § 1516a(b)(1)(B)(i). “[T]he question is not whether

the Court would have reached the same decision on the same record[;] rather, it is

whether the administrative record as a whole permits Commerce’s conclusion.” See

New Am. Keg v. United States, No. 20-00008, 45 CIT __, 2021 Ct. Intl. Trade LEXIS

34, at *15 (Mar. 23, 2021). Furthermore, “the possibility of drawing two inconsistent

conclusions from the evidence does not prevent an administrative agency’s finding

from being supported by substantial evidence.” Matsushita Elec. Indus. Co. v. United

States, 750 F.2d 927, 933 (Fed. Cir. 1984) (quoting Consolo v. Fed. Mar. Comm’n, 383

U.S. 607, 620 (1966)).

When reviewing agency determinations, findings, or conclusions for

substantial evidence, the Court assesses whether the agency action is reasonable

given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345,

1350–51 (Fed. Cir. 2006); see also Universal Camera Corp. v. NLRB, 340 U.S. 474,

488 (1951) (“The substantiality of evidence must take into account whatever in the Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 20  record fairly detracts from its weight.”). The Federal Circuit has described

“substantial evidence” as “such relevant evidence as a reasonable mind might accept

as adequate to support a conclusion.” DuPont Teijin Films USA, LP v. United States,

407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.

197, 229 (1938)).

DISCUSSION

The parties raise two issues. First, in the third administrative review, they

ask the Court to answer whether Commerce lawfully applied facts available with a

partial adverse inference to fill in missing information about the affiliates’

downstream sales. Second, they ask the Court to answer whether Commerce properly

deducted Section 232 duties from Nippon Steel’s U.S. prices. The Court finds

Commerce failed to support its determination regarding the downstream sales with

substantial evidence and remands the issue to Commerce. The Court sustains

Commerce’s deduction of the Section 232 duties as “United States import duties.”

I. Application of Facts Available with a Partial Adverse Inference

When a respondent fails to provide necessary information, Commerce may

draw an adverse inference from the facts available. But Commerce must support its

decision with substantial evidence. The Government and Nucor argue that

Commerce’s determination was lawful because Nippon Steel has repeatedly failed to

provide information from its resellers despite knowing Commerce would request the

information. See Def.’s Br. at 28, ECF No. 33; Nucor’s Br. at 32, ECF No. 36. They

suggest Nippon Steel could have ensured its affiliate’s compliance by making the Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 21  provision of the data a contractual obligation or otherwise refused to do business with

noncooperative affiliates. See Def.’s Br. at 29, ECF No. 33; Nucor’s Br. at 34, ECF

No. 36. Nippon Steel argues that Commerce failed to properly support its decision on

the record, and all Commerce’s contrary arguments are post hoc rationalizations. See

Pl.’s Br. at 38–41, ECF No. 32;Pl.’s Reply at 20, ECF No. 39. The Court agrees with

Nippon Steel.

A.

When foreign merchandise is sold in the United States at less than its fair

value — thereby injuring a domestic industry — the law allows Commerce to impose

antidumping duties on the merchandise. Antidumping duties equal the amount by

which the foreign market value, known as the “normal value,” of the merchandise

exceeds the U.S. price of the merchandise. 19 U.S.C. § 1677b(a). When Commerce is

missing data necessary to calculate the normal value of merchandise, the

antidumping statute provides a two-part process to fill the gap. See 19 U.S.C. §

1677e(a)–(b). The statute enables Commerce to use “facts otherwise available” in

place of the missing information if:

(1) necessary information is not available on the record, or (2) an interested party or any other person — (A) withholds information that has been requested by [Commerce], (B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, … (C) significantly impedes a proceeding under this title, or (D) provides such information but the information cannot be verified …. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 22  Id. § 1677e(a).

Separately, Commerce may apply an adverse inference when selecting from

the facts available if “an interested party has failed to cooperate by not acting to the

best of its ability to comply with a request for information from [Commerce] ….” Id.

§ 1677e(b)(1)(A). “Compliance with the ‘best of its ability’ standard is determined by

assessing whether respondent has put forth its maximum effort to provide Commerce

with full and complete answers ….” Nippon Steel Corp. v. United States, 337 F.3d

1373, 1382 (Fed. Cir. 2003). “While the standard does not require perfection and

recognizes that mistakes sometimes occur, it does not condone inattentiveness,

carelessness, or inadequate record keeping.” Id. Commerce may not draw an adverse

inference merely because a respondent “fail[ed] to respond.” Id. at 1383. Instead, it

must have been “reasonable for Commerce to expect … more forthcoming responses.”

Id.

B.

There is no question here that necessary information was missing. Commerce

asked Nippon Steel for all its downstream sales data so that it could calculate the

merchandise’s normal value, and Nippon Steel failed to provide data from an affiliate.

See Nippon Steel Section B Questionnaire Resp. (June 30, 2020) at B-7, No. 21-533,

J.A. at 80,013, ECF No. 40. Commerce was therefore free to select from facts

otherwise available to fill the gap. See 19 U.S.C. § 1677e(a). But the agency went

further and applied an adverse inference; therefore, it also must show that Nippon Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 23  Steel did not “put forth its maximum effort” to obtain the missing data. Nippon Steel,

337 F.3d at 1382. This Commerce did not do.

Nippon Steel went to some lengths attempting to obtain the missing data from

its reseller. It hired outside counsel for assistance and sent its affiliate numerous

communications requesting the data or updates on when it could expect the data. See

Nippon Steel Suppl. Questionnaire Resp. (Feb. 2, 2021) at 2, No. 21-553, J.A. at

81,417, ECF No. 40; Commc’n Log, J.A. at 81,703–40, ECF No. 40. Then it submitted

a legal memorandum explaining to Commerce why it believed Japanese law

prohibited it from taking more action to collect the data. See Japanese Legal Mem.,

J.A. at 80,634–40, ECF No. 40. These additional steps went beyond the efforts

Nippon Steel made in the past. See Nippon Steel & Sumitomo Metal, 44 CIT __, 483

F. Supp. 3d at 1225 (describing an earlier administrative review when Nippon Steel

sent only one letter to its affiliates). Commerce cannot ignore these increased efforts.

Instead, its final decision failed to discuss the communications log Nippon

Steel provided. Regarding the legal memorandum, Commerce merely asserted it was

not asking Nippon Steel to violate Japanese law. Issues and Decision Mem. (Aug. 23,

2021) at 14, No. 21-533, J.A. at 2,474, ECF No. 41. This conclusory statement fails

to engage with Nippon Steel’s six pages of legal analysis in any meaningful way. It

may be the case that the memorandum from Nippon Steel’s counsel is flawed. But

the Court does not have the benefit of Commerce’s view on what Japanese law may

require of Nippon Steel because the agency’s decision elides the issue. When the facts

change, Commerce cannot rest on its laurels and repeat the answers of yesterday. It Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 24  must instead explain how the new facts did or did not affect its analysis. See Nippon

Steel, 337 F.3d at 1383; Qingdao Sea-Line Trading Co. v. United States, 766 F.3d

1378, 1387 (Fed. Cir. 2014) (“[E]ach administrative review is a separate exercise of

Commerce’s authority that allows for different conclusions based on different facts in

the record.”). Because no such explanation is found in the Issues and Decision

Memorandum, the Court may not sustain Commerce’s determination.

C.

Commerce’s lack of an adequate explanation is confirmed by the Government

and Nucor’s having to introduce arguments not found in the Issues and Decision

Memorandum to justify the agency’s conclusions. Both argue Nippon Steel should

have been prepared to provide the data during the third administrative review

because Commerce had requested the same data in previous reviews. See Def.’s Br.

at 28, ECF No. 33; Nucor’s Br. at 32–33, ECF No. 36. But Commerce cannot rely on

what it said in past administrative reviews to fill in gaps it left here. See Shenzhen

Xinboda Indus. Co. v. United States, 44 CIT __, 456 F. Supp. 3d 1272, 1285 n.22 (2020)

(“[E]ach administrative review is a separate segment of an antidumping proceeding

and each with its own, unique administrative record ….”). If Commerce believes

Nippon Steel’s repeated failures over multiple administrative reviews prove it has

not put forth its maximum effort to comply, it should have said so in its decision here.

One post hoc rationalization is just as useless as another. The Government

and Nucor additionally argue Nippon Steel could have restructured its contract to

require its affiliate to provide sales data to Commerce or simply refused to do business Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 25  with the affiliate. See Def.’s Br. at 29, ECF No. 33; Nucor’s Br. at 34, ECF No. 36.

Nowhere in the Issues and Decision Memorandum did Commerce make this point or

respond to Nippon Steel’s counterpoint that Japanese antitrust law would prohibit it

from doing so. The Government and Nucor cannot now retroactively write a response

into the agency’s decision. See Burlington Truck Lines, Inc. v. United States, 371 U.S.

156, 168 (1962) (“The courts may not accept appellate counsel’s post hoc

rationalizations for agency action[.]”). The Court therefore REMANDS this issue to

Commerce to reconsider or further explain its decision to apply an adverse inference

to Nippon Steel’s downstream sales. As part of any explanation, Commerce should

respond to Nippon Steel’s arguments regarding (1) Japanese antitrust law and (2)

any increased efforts to engender affiliate compliance by Nippon Steel compared to

past administrative reviews.

II. Deduction of Section 232 Duties

In all three cases, Nippon Steel claims Commerce improperly deducted Section

232 duties from Nippon Steel’s U.S. prices. It raises three arguments: (1) Commerce

failed to properly support a finding that Nippon Steel included the cost of its Section

232 duties in its U.S. prices; (2) Commerce’s treatment of the Section 232 duties as

“United States import duties” is inconsistent with the United States’ treaty

obligations and therefore improper; and (3) the Federal Circuit’s Borusan opinion was

wrongly decided. As explained below, all three of these arguments necessarily fail. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 26  A. Forfeiture

Nippon Steel forfeited its argument that Commerce insufficiently supported

its finding that Nippon Steel included the cost of Section 232 duties in its prices.

Nippon Steel’s argument is premised on the language of 19 U.S.C. § 1677a(c)(2)(A),

which states that the respondent’s U.S. price “shall be … reduced by … the amount,

if any, included in such price, attributable to … United States import duties”

(emphasis added). In other words, Commerce should only deduct the duties if the

respondent included the cost of them in the prices it ultimately charged its U.S.

customers. In theory, a respondent could absorb the cost of the duties and not pass

them on to its customers. Commerce would not deduct the duties from the

respondent’s U.S. price in that case, which in turn would result in a decreased

dumping margin for the respondent.

The Government and Nucor argue Nippon Steel forfeited the argument by

waiting to raise it for the first time in its supplemental brief to this Court. See Def.’s

Suppl. Resp. at 16–20, ECF No. 65; Nucor’s Suppl. Resp. at 3–6, ECF No. 66. Nippon

Steel disagrees. It claims it could not have made the argument earlier because

Commerce failed to make explicit findings in its preliminary decision memorandums

that the duties were included in Nippon Steel’s prices. But compare Pl.’s Suppl. Reply

at 6, ECF No. 68, with Issues and Decision Mem. (Aug. 23, 2021) at 8, No. 21-533,

J.A. at 2,468, ECF No. 41 (final decision concluding that “[Nippon Steel] included

section 232 duties in the price of subject merchandise sold to unaffiliated customers

in the United States ….”), Issues and Decision Mem. (May 19, 2022) at 8, No. 22-183, Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 27  J.A. at 3,711, ECF No. 47 (same), and Issues and Decision Mem. (May 1, 2023) at 7,

No. 23-112, J.A. at 3,283, ECF No. 22 (same). Furthermore, it says the issues it raised

during the administrative proceedings were broad enough to include the specific

argument it now presents. See Pl.’s Suppl. Reply at 3–4, ECF No. 68. Nippon Steel

finally notes that the Court can exercise its discretion to reach the argument even if

it would otherwise be forfeited. Id. at 4–6.

The Court “shall, where appropriate, require the exhaustion of administrative

remedies.” 28 U.S.C. § 2637(d). An interested party challenging the final results of

an administrative review “must present all arguments” it considers “relevant” in its

case brief at the agency-level. 19 C.F.R. § 351.309(c)(2). The purpose of this

requirement is threefold. First, the rule “recognizes that an agency ought to have an

opportunity to correct its own mistakes with respect to the programs it administers

before it is haled into federal court.” Ellwood City Forge Co. v. United States, 46 CIT

__, 582 F. Supp. 3d 1259, 1272 (2022) (internal quotations omitted). Second,

exhaustion “promotes judicial efficiency because it requires parties to make

arguments first before the agency that the agency may then moot before they reach

court.” Id. Third, where the issue is not resolved at the administrative level,

“exhaustion still produces a useful record for subsequent judicial consideration,

especially in a complex or technical factual context.” Id. (internal quotations

omitted).

The Court asked Nippon Steel’s counsel to point to where in the record it raised

the argument it now presents. See Oral Arg. Tr. at 29:14–15, No. 21-533, ECF No. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 28  79. Nippon Steel’s counsel failed to do so. Id. at 30:8–38:24. Indeed, the record

contains no such argument. Nippon Steel attempts to shift the burden by claiming it

had “nothing … to address,” id. at31:11–12, but its attempt is unavailing. It ignores

the plain text of the regulation, which requires that “all arguments” be presented to

Commerce in a party’s brief. See 19 C.F.R. § 351.309(c)(2); Dorbest Ltd. v. United

States, 604 F.3d 1363, 1375 (Fed. Cir. 2010) (“Commerce regulations require the

presentation of all … arguments in a party’s administrative case brief.”). The

statute’s text is similarly plain that Commerce must find that Nippon Steel included

Section 232 duties in its U.S. prices before Commerce may deduct the duties. As this

is a statutorily required finding, any lack of evidence on point would be a fatal error

on Commerce’s part: The agency would have failed to meet its required burden of

proof. It is hardly unreasonable to require a party to timely claim that Commerce

has failed to meet the minimum evidentiary burden. See Boomerang Tube LLC v.

United States, 856 F.3d 908, 913 (Fed. Cir. 2017) (holding that the CIT abused its

discretion by not requiring exhaustion when the parties knew what data was “in the

record prior to Commerce’s preliminary determination” but failed to object in their

agency brief). Therefore, it is “appropriate” to require Nippon Steel to raise its

objection first before the agency. See 28 U.S.C. § 2637(d).

This is not a new legal requirement. See 19 U.S.C. § 1677a(c)(2)(A) (“The price

… shall be … reduced by … the amount … included in such price, attributable to …

United States import duties ….”) (1994). Indeed, the Federal Circuit recognized this

requirement in Borusan. Borusan raised many arguments about why Section 232 Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 29  duties should not be deducted from its U.S. price, but the Federal Circuit noted that

Borusan did not contest whether the duties were “included in” its prices. Borusan,

63 F.4th at 31 (“There is no properly preserved dispute before us about Commerce’s

determination … that the duty imposed by Proclamation 9705 was in fact included in

Borusan’s U.S. prices.”); id. n.3 (“Borusan did not challenge that determination before

the [CIT] …. Nor did Borusan challenge the determination in this court until its reply

brief, … which was too late.”). Just as in Borusan, it was Nippon Steel’s burden to

object if it believed the record evidence did not support a finding that it included the

duties in its prices. See 19 C.F.R. § 351.309(c)(2). Waiting until its supplemental

brief to this Court is too late. Compare Pl.’s Suppl. Reply at 6, ECF No. 68, with

Borusan, 63 F.4th at 31 n.3.

Nippon Steel cannot save itself by retroactively discovering its new argument

among the claims it did make to Commerce. To preserve an argument, a litigant’s

brief must “alert[] the agency to the argument with reasonable clarity and avail[] the

agency with an opportunity to address it.” Luoyang Bearing Corp. v. United States,

28 CIT 733, 761 (2004); see also Navneet Educ. Ltd. v. United States, 47 CIT __, No.

1:22-cv-00132, 2023 Ct. Intl. Trade LEXIS 194, at *41–43 (Dec. 29, 2023) (citing

Qingdao SeaLine Trading Co. v. United States, 36 CIT 451, 470–71 (2012)) (“An

undeveloped claim made before an agency … is forfeited.”). “[V]ague, unsupported

allegations do not serve to preserve a later hyper-specific, technical claim ….”

Navneet, 47 CIT __, 2023 Ct. Intl. Trade LEXIS 194, at *41–43 (rejecting respondent’s

attempt to turn “a three-sentence argument before Commerce into a multi-page Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 30  attack in court”); see also Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191

(Fed. Cir. 1990) (rejecting argument as forfeited for failure to raise it before the

agency despite claim that the argument was “simply another angle to an issue which

it did raise”).

Nippon Steel challenged the preliminary results in each administrative review

because “[Commerce] improperly deducted Section 232 duties from [Nippon Steel’s]

U.S. prices.” Nippon Steel’s Admin. Br. at 5, No. 21-533, J.A. at 83,005, ECF No. 40

(capitalization altered); Nippon Steel’s Admin. Br. at 5, No. 22-183, J.A. at 85,203,

ECF No. 46 (same); Nippon Steel’s Admin. Br. at 5, No. 23-112, J.A. at 85,854, ECF

No. 21 (same). This statement is too vague for Nippon Steel’s current purposes. It

does not “alert[] [Commerce] … with reasonable clarity” to Nippon Steel’s new

challenge — that Commerce made insufficient factual findings about whether Nippon

Steel included the Section 232 duties in its prices. Luoyang Bearing, 28 CIT at 761.

Like the Federal Circuit held in Borusan, the challenge is not “properly preserved”

by Plaintiff’s broad arguments. Borusan, 63 F.4th at 31.

To conclude otherwise would open a Pandora’s box of permissible arguments a

litigant could raise for the first time in court. Such a result would be unfair to

agencies, which cannot be blamed for failing to reply to arguments parties never

raised. See Unemployment Comp. Comm’n v. Aragon, 329 U.S. 143, 155 (1946). As

this Court has previously observed, “Congress does not ‘hide elephants in

mouseholes[]’” so that “[l]itigants should not either.” Navneet, 47 CIT __, 2023 Ct.

Intl. Trade LEXIS 194, at *43 (quoting Whitman v. Am. Trucking Ass’ns, 531 U.S. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 31  457, 468 (2001)). Nippon Steel’s argument is forfeited, and the Court declines to

exercise its discretion to consider it.3

B. Application of International Law

Nippon Steel’s arguments concerning international law also fall short. To

obtain relief, Nippon Steel would have the Court step beyond its proper role and

interfere in a foreign policy matter on which Congress has spoken. The Court declines

to do so.

The Charming Betsy canon provides that a statute “ought never to be construed

to violate the law of nations if any other possible construction remains.” Schooner

Charming Betsy, 6 U.S. (2 Cranch) at 118. In other words, a court engaged in

 3 No exception to the exhaustion doctrine applies. Nippon Steel first claims that the intervening judicial decision exception applies because the Federal Circuit issued Borusan while these cases were pending. Pl.’s Supp. Reply at 5, ECF No. 68. This argument is unavailing. The statutory requirement that U.S. price be reduced by the amount of “United States import duties” that was “included in such price” is not new, see 19 U.S.C. § 1677a(c)(2)(A) (1994), and Borusan did not reinterpret this language. Nippon Steel was not ‘“surprised’ by a twist of the law that [wa]s impossible to predict.” Risen Energy Co. v. United States, 47 CIT __, No. 23-00153, 2023 Ct. Intl. Trade LEXIS 170, at *5 (Nov. 30, 2023) (citation omitted) (declining to apply the intervening judicial decision exception).

Second, Nippon Steel claims it could not have raised the issue during the agency proceedings because Commerce waited until publishing its final Issues and Decision Memorandums to find that Nippon Steel included the cost of Section 232 duties in its U.S. prices. Pl.’s Suppl. Reply at 5–6, ECF No. 68; see also Jiaxing Brother Fastener Co. v. United States, 34 CIT 1455, 1466 (2010) (stating that the Court “will decide an unexhausted issue on the merits when the party raising the issue had no opportunity to do so before the agency”). But as the Court has already explained, Commerce necessarily found that Nippon Steel included Section 232 duties in its U.S. prices when Commerce stated in its preliminary decision memorandums that Nippon Steel’s Section 232 duties should be treated as “United States import duties” under the statute and deducted from U.S. price. See, e.g., Prelim. Decision Mem. (Feb. 18, 2021) at 17, No. 21-533, J.A. at 2,449, ECF No. 41. If Nippon Steel believed there was a dearth of evidence to support this mandatory finding, the time to object was then. See Boomerang Tube, 856 F.3d at 913 (holding that, because the parties knew what data was “in the record prior to Commerce’s preliminary determination,” at “that point” the parties knew what evidence Commerce could use and thus should have made their objection in their brief to the agency); see also 19 C.F.R. § 351.309(c)(2). Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 32  statutory construction should presume Congress did not intend to violate

international law unless Congress says otherwise. The Charming Betsy canon is a

canon of statutory interpretation — not a matter of constitutional law — and

therefore it is “not [a] mandatory rule[].” Chickasaw Nation v. United States, 534

U.S. 84, 94 (2001); see also Antonin Scalia & Bryan A. Garner, READING LAW 59 (2012)

(“No canon of interpretation is absolute.”). Congress is free to override the canon via

legislation. Cf. Chickasaw Nation, 534 U.S. at 94 (noting that “other circumstances

evidencing congressional intent can overcome their force”).

Nippon Steel asks the Court to apply the Charming Betsy canon to find that

Commerce’s determination is inconsistent with the United States’ treaty obligations

under the GATT. See Pl.’s Br. at 30–33, ECF No. 32; Pl.’s Reply at 16, ECF No. 39;

Pl.’s Suppl. Br. at 20–23, ECF No. 64. It explains that GATT Articles II:1(a) and (b)

require members to comply with the GATT’s bound tariff schedule. Pl.’s Br. at 23,

ECF No. 32; Pl.’s Reply at 16, ECF No. 39; Pl.’s Suppl. Br. at 23, ECF No. 64; see also

GATT art. II:1(a)–(b). This schedule sets a limit on the tariffs the United States can

apply to steel imports from Japan. See Schedule of Concessions and Commitments,

WTO Doc. No. WT/Let/493 (May 17, 2005) (current Schedule). By reading 19 U.S.C.

§ 1677a(c)(2)(A) to allow for the deduction of Section 232 duties from a respondent’s

U.S. prices, Commerce increases a respondent’s dumping margin; and that increased

dumping margin imposes duties on Japanese steel imports greater than the GATT’s

bound tariff rates. According to the Plaintiff, that renders the Federal Circuit’s

reading of the statute improper under the Charming Betsy canon because it conflicts Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 33  with international law. See Pl.’s Br. at 30–33, ECF No. 32; Pl.’s Reply at 16, ECF No.

39; Pl.’s Suppl. Br. at 22–23, ECF No. 64. Nippon Steel adds in support that WTO

panels have narrowly construed the GATT’s national security exception, see GATT

art. XXI(b)(iii), so that it cannot apply to save the Section 232 duties. See Pl.’s Reply

at 16–18, ECF No. 39.

The Government and Nucor respond that a conflict between a statute and the

GATT is not a matter for the courts to decide. See Nucor’s Resp. at 28–30, ECF No.

36; Def.’s Suppl. Resp. at 21–22, ECF No. 65; Nucor’s Suppl. Resp. at 6–7, ECF No.

66. Additionally, Nucor claims that companies like Nippon Steel are statutorily

prohibited from challenging a government agency for taking actions inconsistent with

the GATT. See Nucor’s Suppl. Resp. at 7, ECF No. 66 (citing 19 U.S.C. §

3512(c)(1)(B)). Even if this Court could address Nippon Steel’s challenge, the

Government argues that the GATT’s national security exception nonetheless applies.

See Def.’s Suppl. Resp. at 21–22, ECF No. 65.

Nippon Steel’s arguments fail because Congress has spoken. The Charming

Betsy canon is merely an interpretive aide that Congress is free to override. Congress

has done so here in two separate ways, leaving the Charming Betsy canon foundered

at sea. First, Congress passed 19 U.S.C. § 3512(c)(1)(B), which prohibits Nippon Steel

from challenging Commerce’s determination on the ground that it does not comply

with the United States’ treaty obligations. The statute provides:

No person other than the United States … may challenge, in any action brought under any provision of law, any action or inaction by any department, agency, or other instrumentality of the United States, any Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 34  State, or any political subdivision of a State on the ground that such action or inaction is inconsistent with such agreement.

19 U.S.C. § 3512(c)(1)(B). One “such agreement” is the GATT. See 19 U.S.C. §

3511(d)(1) (identifying “The General Agreement on Tariffs and Trade 1994” as a trade

agreement under the same part). Thus, Congress has determined that the question

of whether the United States is in compliance with the GATT is not judicially

cognizable unless the United States is the plaintiff. As Nippon Steel is not the federal

government, it cannot raise this argument in court.

Second, Congress has passed another statute confirming Nippon Steel’s

challenge fails. 19 U.S.C. § 2504(a) provides, “No provision of any trade agreement

…, nor the application of any such provision to any person or circumstance, which is

in conflict with any statute of the United States shall be given effect under the laws

of the United States.” Thus, Congress determined what happens when a federal

statute and the GATT conflict — the statute wins. In the legal hierarchy, treaties

and federal statutes are of equal authority. Foster v. Neilson, 27 U.S. (2 Pet.) 253,

314 (1829) (Marshall, C.J.) (“Our constitution declares a treaty to be the law of the

land. It is, consequently, to be regarded in courts of justice as equivalent to an act of

the legislature, whenever it operates of itself without the aid of any legislative

provision.”). But in the United States, treaties are not self-executing unless their text

explicitly provides otherwise, nor are they given special status in federal law.

Medellin v. Texas, 552 U.S. 491, 505 (2008) (quoting Igartua-De La Rosa v. United

States, 417 F.3d 145, 150 (1st Cir. 2005) (en banc)) (“[W]hile treaties ‘may comprise

international commitments . . . they are not domestic law unless Congress has either Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 35  enacted implementing statutes or the treaty itself conveys an intention that it be

“self-executing” and is ratified on these terms.’”). A treaty receives “the Advice and

Consent of the Senate” to be ratified; and it typically becomes operative American

law when both houses of Congress enact legislation implementing the treaty. U.S.

CONST. art. II, § 2; see also Foster, 27 U.S. (2 Pet.) at 314 (“[W]hen the terms of the

stipulation import a contract, when either of the parties engages to perform a

particular act, … the legislature must execute the contract before it can become a rule

for the Court.”). How a treaty is implemented is Congress’s prerogative. Here,

Congress has directed that, when the GATT and a federal statute collide, the statute

governs, sinking the Charming Betsy canon in the process. No precept of

international law permits the Court to ignore the legislated directives of Congress.

Nippon Steel’s reliance on WTO panel decisions is unavailing for the same

reason. If the text of a treaty cannot countermand a Congressional statute, neither

can the opinions of international arbitrators. See 19 U.S.C. § 2504(a); Corus Staal

BV v. Dep’t of Com., 395 F.3d 1343, 1348 (Fed. Cir. 2005) (quoting Timken Co. v.

United States, 354 F.3d 1334, 1344 (Fed. Cir. 2004)) (“WTO decisions are ‘not binding

on the United States, much less this court.’”). Past practice confirms that it is

Congress — not the courts — that determines whether and how to bring United

States trade laws into accord with the nation’s treaty obligations.

Most items imported into the United States must disclose the item’s country of

origin to its “ultimate purchaser” — the last person in the United States to receive

the product in the same form in which it was imported. 19 U.S.C. § 1304(a); 19 C.F.R. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 36  § 134.1(d). In 2009, the U.S. Department of Agriculture (USDA) finalized a rule

making it more difficult for importers to label certain imported meats as originating

from the United States. See Mandatory Country of Origin Labeling of Beef, Pork,

Lamb, Chicken, Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable

Agricultural Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts, 74 Fed.

Reg. 2,658 (USDA Jan. 15, 2009) (codified at 7 C.F.R. § 65.260). Meat that was

packaged in the United States but came from animals that were born or raised

elsewhere could no longer be labeled as originating from the United States. 7 C.F.R.

§ 65.260(a)(1).

This change started a chain reaction. Canada and Mexico initiated

proceedings at the WTO, claiming that the country-of-origin labeling regulations

violated the United States’ treaty obligations. See Panel Report, United States –

Certain Country of Origin Labelling (COOL) Requirements, ¶¶ 1.4, 3.1–3.4, WTO Doc.

WT/DS384/R, WT/DS386/R (adopted July 23, 2012). A WTO dispute settlement panel

agreed and found that the COOL regulations improperly treated domestic products

more favorably than imports. Id. ¶ 8.3. The United States appealed to the then-

extant WTO Appellate Body, and the Appellate Body also found in favor of Canada

and Mexico. See Appellate Body Report, United States – Certain Country of Origin

Labelling (COOL) Requirements, ¶ 496, WTO Doc. WT/DS384/AB/R, WT/DS386/AB/R

(adopted July 23, 2012). The Dispute Settlement Body allowed Canada and Mexico

to compel the United States’ compliance by authorizing them to impose over $1 billion

in retaliatory tariffs annually against the United States. Arbitration Decision, Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 37  United States – Certain Country of Origin Labelling (COOL) Requirements, ¶ 7.1,

WTO Doc. WT/DS384/R, WT/DS386/R (Dec. 7, 2015). Congress reacted. Days later,

it repealed all COOL requirements on certain meat products. See Consolidated

Appropriations Act, Pub. L. No. 114-113, 129 Stat. 2285 (2016). Years later, the

USDA appears to have reignited the fight. In March 2024, it finalized a new rule

amending the country-of-origin labeling regulations to approximate the language it

adopted in 2009. Voluntary Labeling of FSIS-Regulated Products with U.S.-Origin

Claims, 89 Fed. Reg. 19,470 (USDA Mar. 18, 2024). Canada and Mexico have once

again threatened to retaliate against the United States.Tobias Burns, “Made in the

USA” Meat Rule Sparks Trade Battle, THE HILL (Mar. 15, 2024), bit.ly/4dyKKCW

(last visited Oct. 4, 2024).

Notably, at no point in this sequence did a federal court intervene. Nor should

it have. Cf. Hernandez v. Mesa, 589 U.S. 93, 113 (2020) (“Foreign policy and national

security decisions are ‘delicate, complex, and involve large elements of prophecy’ for

which ‘the Judiciary has neither aptitude, facilities[,] nor responsibility.’”) (quoting

Jesner v. Arab Bank, PLC, 584 U.S. 241, 284 (2018) (Gorsuch, J., concurring)).

Congress has spoken clearly. When federal statutes and U.S. treaty obligations

under the GATT collide, federal statutes win. 19 U.S.C. § 2504(a). Parties aggrieved

by the collision must bring their cases to Congress, not to the courts. See 19 U.S.C. §

3512(c)(1)(B). Exercising power expressly granted it by the Constitution, Congress

has made its statutes supreme and reserved to itself the ability to settle any

international conflict of laws. See U.S. CONST. art. I, § 8, cl. 3 (“The Congress shall Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 38  have Power … To regulate Commerce with foreign Nations[.]”). Accordingly, this

Court rejects Nippon Steel’s invitation to interfere with a dispute whose resolution is

committed to the political branches.

C. The Effect of Borusan

Nippon Steel’s arguments also fail because the Court is bound by the Federal

Circuit’s recent decision in Borusan. While this case was pending, the Federal Circuit

held in Borusan that Section 232 duties should be considered “United States import

duties” under 19 U.S.C. § 1677a(c)(2)(A) and accordingly deducted from U.S. price.

Borusan, 63 F.4th at 37. Nippon Steel now argues that Borsusan does not apply

because it was wrongly decided. See Pl.’s Br. at 9–30, ECF No. 32; Pl.’s Reply at 2–

16, ECF No. 39; Pl.’s Suppl. Br. at 35, ECF No. 64. The Government and Nucor

respond that this Court is bound by the Federal Circuit’s precedent, which addressed

all of Nippon Steel’s arguments. Def.’s Suppl. Resp. at 28–30, ECF No. 65; Nucor’s

Suppl. Resp. at 10–11, ECF No. 66. The Court agrees.

This Court cannot disregard Federal Circuit precedent no matter how much

Nippon Steel may disagree with the Federal Circuit’s reasoning. See Nature’s Touch

Frozen Foods (West) Inc. v. United States, 47 CIT __, 639 F. Supp. 3d 1287, 1311

(2023). Even Nippon Steel acknowledges that the Court’s hands are tied. See Oral

Arg. Tr. at 42:10–11, No. 21-533, ECF No. 79 (The Court: “I’m bound by [Borusan],

and that’s the end of the matter?” Nippon Steel’s Counsel: “Right.”). Nippon Steel

can therefore make its argument that the Federal Circuit is wrong to one of two courts

in the country that has the power to agree with it. Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV) Page 39  CONCLUSION

Nippon Steel is correct that Commerce did not adequately respond on the record

to its argument that its efforts to gain the cooperation of its affiliate were enough to

avoid Commerce’s drawing an adverse inference against it. The Court therefore

GRANTS Nippon Steel’s Motion for Judgment on the Agency Record on that issue in

Case Number 21-533 covering the third administrative review. This Court does not,

however, have the power to review decisions of the Federal Circuit or to adjudicate

alleged conflicts between federal law and the General Agreement on Tariffs and

Trade. Nippon Steel’s remaining Motions are therefore DENIED, and the Court

SUSTAINS Commerce’s determinations in the fourth and fifth administrative

reviews as well as the remaining portions of the third administrative review.

Accordingly, it is hereby:

ORDERED that Commerce shall file its Remand Determination in Case

Number 21-533 with the Court within 90 days of today’s date; and it is further

ORDERED that Defendant shall supplement the administrative record with

all additional documents considered by Commerce in reaching its decision in the

Remand Determination;

ORDERED that Plaintiff shall have 30 days from the filing of the Remand

Determination to submit comments to the Court;

ORDERED that Defendant shall have 30 days from the date of Plaintiff's filing

of comments to submit a response; Court Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112.(SAV) Page 40

ORDERED that Defendant-Intervenors shall have 21 days from the date of

Defendant's filing to submit their responses; and

ORDERED that Plaintiff shall have 14 days from the date of Defendant-

Intervenors' filings to submit an optional reply.

SO ORDERED.

Dated: e)4 /'EJ, 2i,z.', NewYmk, New York