SKF USA INC., SKF FRANCE S.A., SARMA, SKF GmbH, SKF INDUSTRIE S.p.A., and SKF SVERIGE AB, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and THE TORRINGTON COMPANY, Defendant-Appellee. FAG KUGELFISCHER GEORG SCHAFER AG, FAG ITALIA S.p.A., BARDEN CORPORATION (U.K.) LTD., FAG BEARINGS CORPORATION, and THE BARDEN CORPORATION, Plaintiffs-Appellants, v. UNITED STATES Defendant-Appellee, and THE TORRINGTON COMPANY, Defendant-Appellee.
Nos. 00-1423, 00-1465
United States Court of Appeals for the Federal Circuit
AUGUST 24, 2001
263 F.3d 1369
Before MICHEL, SCHALL, and DYK, Circuit Judges.
Appealed from: United States Court of International Trade [Copyrighted Material Omitted]
Max F. Schutzman, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, New York, argued for plaintiffs-appellants in 00-1465, the Barden Corporation, et al. With him on the brief were Andrew B. Schroth, and Mark E. Pardo. Of counsel was Adam M. Dambrov. Also of counsel was Jeffrey S. Grimson, of Washington, DC.
Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant-appellee in 00-1423 and 00-1465, United States. With her on the brief was David M. Cohen, Director. Of counsel on the brief were John D. McInerney, Acting Chief Counsel for Import Administration, U.S. Department of Commerce, Berniece A. Browne, Senior Counsel, and David R. Mason.
Geert De Prest, Stewart and Stewart, of Washington, DC, argued for defendant-appellee in 00-1423 and 00-1465, the Torrington Company. With him on the brief was Terence P. Stewart. Of counsel were Wesley K. Caine, and Lane S. Hurewitz.
DYK, Circuit Judge.
These consolidated cases present the question whether the Department of Commerce (Commerce) properly calculated the profit component of a constructed value determination under
STATUTORY BACKGROUND
The antidumping statute, as amended by the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994) (URAA), governs this appeal. Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir. 1995).
Under the antidumping statute, Commerce is required to impose antidumping duties on subject merchandise1 that is being, or is likely to be, sold in the United States at less than its fair value to the detriment of a domestic industry.
In determining normal value, Commerce must use an actual exporting country price for the foreign like product, if a satisfactory price is available. The antidumping statute defines that price in pertinent part as:
[T]he price at which the foreign like product is first sold (or, in the absence of a sale, offered for sale) for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as [the United States price].
If, however, no satisfactory exporting country price is available, Commerce may base normal value (subject to certain requirements not at issue) on sales price in a third-country market, that is, the price at which the foreign like product is so sold (or offered for sale) for consumption in a country other than the exporting country or the United States . . . .
Alternatively, if no satisfactory exporting country price is available, and notwithstanding the existence of sales in a third-country market, the normal value of the subject merchandise may be the constructed value of that merchandise . . . .
It is Commerce‘s methodology for the calculation of the profit component of constructed value that is at issue. This calculation is particularly complex, as Congress has provided four separate calculational methodologies.
The first methodology refers to profit realized in connection with the production and sale of a foreign like product, in the ordinary course of trade, for consumption in the foreign country . . . .
(i) the actual amounts incurred and realized by the specific exporter or producer . . . for selling, general, and administrative expenses, and for profits, in connection with the production and sale, for consumption in the foreign country, of merchandise that is in the same general category of products as the subject merchandise, [or]
(ii) the weighted average of the actual amounts incurred and realized by exporters or producers . . . for selling, general, and administrative expenses, and for profits, in connection with the production and sale of a foreign like product, in the ordinary course of trade, for consumption in the foreign country, or
(iii) the amounts incurred and realized for selling, general, and administrative expenses, and for profits, based on any other reasonable method, except that the amount allowed for profit may not exceed the amount normally realized by exporters or producers . . . in connection with the sale, for consumption in the foreign country, of merchandise that is in the same general category of products as the subject merchandise.
It will be noted that the methodologies set forth in subsections (2)(A) and (2)(B)(ii) of section 1677b(e) refer to profit realized in connection with the production and sale of a foreign like product, the same terminology used in the price provisions. (Emphasis added). As we discuss below, the statute in turn specifically defines foreign like product in
FACTUAL BACKGROUND
The two proceedings at issue involve the determination of antidumping duties for imports of anti-friction bearings (AFBs)5 from a number of countries, including France, Germany, Italy, Sweden, and the United Kingdom. Appellants SKF USA Inc., SKF France S.A., Sarma, SKF GmbH, SKF Industrie S.p.A., and SKF Sverige AB (collectively, SKF) challenge the final results of Commerce‘s administrative review of antidumping duty orders on AFBs covering the period from May 1, 1996, through April 30, 1997. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, 63 Fed. Reg. 33,320 (June 18, 1999) (SKF Final Results). Appellants FAG Kugelfischer Georg Schafer AG, FAG Italia S.p.A., Barden Corporation (U.K.) Ltd., FAG Bearings Corporation and The Barden Corporation (collectively, FAG) challenge the final results of Commerce‘s administrative review of antidumping duty orders on AFBs covering the period from May 1, 1997, through April 30, 1998. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, 64 Fed. Reg. 35,590 (July 1, 1999) (FAG Final Results).
[T]he AFB market is comprised of literally thousands of different bearing models . . . . Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al., 57 Fed. Reg. 28,360, 28,366 (June 24, 1992). The sheer number of different bearing models accordingly creates a highly complex market for AFBs. To take this complexity into account, Commerce groups specific models of AFBs into families when assessing dumping duties or conducting administrative reviews of those dumping determinations.6 Commerce defines
In the administrative reviews at issue, Commerce first sought to ascertain normal value for the AFBs using the price-based method set forth in section 1677b(a)(1)(B)(i). In making this determination, Commerce included within the ambit of the term foreign like product only sales of identical AFBs and sales of AFBs from the same family. In both reviews, Commerce concluded that there were no usable sales of the foreign like product in the comparison market during the relevant time period to determine price for normal value purposes. SKF Preliminary Results, 63 Fed. Reg. at 6,516; FAG Preliminary Results, 64 Fed. Reg. at 8,795.8 As authorized by section 1677b(a)(4),9 Commerce therefore turned to section 1677b(e)(2)(A) to calculate a constructed value for those AFBs.
It might seem obvious that the same definition of foreign like product would be used in making both the price-based calculations for normal value prescribed under
If Commerce had used the same definition of foreign like product for purposes of the constructed value calculation as in the price calculation, Commerce, having found that there were no usable sales10 of identical and same-family AFBs in the home market for purposes of the price calculation under
Use of the methodologies set forth in subsections (B)(i) and (B)(iii) of section 1677b(e)(2), of course, would require the inclusion of below-cost sales in the constructed value profit calculation. This is so because those methodologies do not require that the sales be made in the ordinary course of trade. In contrast, the sales included in the calculations set forth in subsections (A) and (B)(ii) of section 1677b(e)(2) must be in the ordinary course of trade, which excludes below cost sales. The SAA makes clear, for example, that when Commerce uses the methodology set forth in subsection (A), it may ignore sales that it disregards as a basis for normal value, such as those disregarded because they are made at below-cost prices. SAA at 839, reprinted in 1994 U.S.C.C.A.N. at 4175-76.12 Similarly, the SAA instructs that use of the methodology set forth in subsection (B)(ii) requires the use of sales in the ordinary course of trade, i.e., profitable sales. Id. at 840, reprinted in 1994 U.S.C.C.A.N. at 4176. The inclusion of below-cost sales would lower the profit calculation, reduce the constructed value and ultimately benefit the exporter by reducing the amount of the dumping margin (and the amount of any assessed dumping duties).
In the Final Results for both administrative reviews, Commerce defended its use of the broader definition of foreign like product when calculating the profit component of constructed value as a reasonable interpretation of
[W]e believe that an aggregate calculation that encompasses all foreign like products under consideration for normal value represents a reasonable interpretation of [
19 U.S.C. 1677b(e)(2)(A) ]. Moreover, we believe that, in applying the preferred method for computing [constructed value] profit under [19 U.S.C. 1677b(e)(2)(A) ], the use of aggregate data results in a reasonable and practical measure of profit that we can apply consistently in each case. By contrast, a method based on varied groups of foreign like products, each defined by a minimum set of matching criteria shared with a particular model of the subject merchandise, would add an additional layer of complexity and uncertainty to antidumping duty proceedings without necessarily generating more accurate results.
SKF Final Results, 63 Fed. Reg. at 33,333; FAG Final Results, 64 Fed. Reg. at 35,611.
SKF and FAG separately challenged these determinations before the Court of International Trade. In those challenges, SKF and FAG argued, inter alia, that Commerce‘s use of aggregate data in calculating constructed value profit - i.e., Commerce‘s broad definition of the term foreign like product for purposes of that calculation - contravened the specific definition of foreign like product contained in
The Court of International Trade disagreed, and upheld Commerce‘s methodology for the calculation of constructed
In RHP Bearings, the court examined the definition of foreign like product used by Commerce when calculating constructed value to determine whether it comported with any of the definitions of foreign like product set forth in section 1677(16). The court found that Commerce‘s use of aggregate data [for the calculation of constructed value profit] matches the criteria of 1677(16)(C)‘s same general class or kind’ category. . . . 83 F. Supp. 2d at 1336. In other words, the court found that the definition of foreign like product used by Commerce when calculating the profit component of constructed value matched the definition of foreign like product set forth in
SKF and FAG timely appealed to this court, and following oral argument we consolidated these cases for purposes of decision.
DISCUSSION
I
This court has jurisdiction over this appeal pursuant to
We review questions of statutory interpretation without deference. U.S. Steel Group v. United States, 225 F.3d 1284, 1286 (Fed. Cir. 2000). In reviewing an agency‘s construction of a statute that it administers, this court addresses two questions as required by the Supreme Court‘s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). The first question is whether Congress has directly spoken to the precise question at issue. Id. at 842. If so, this court and the agency must give effect to the unambiguously expressed intent of Congress. Id. at 843. If, however, Congress has not spoken directly on the issue, this court addresses the second question of whether the agency responsible for filling a gap in the statute has rendered an interpretation that is based on a permissible construction of the statute. Id.; see also United States v. Mead Corp., 121 S. Ct. 2164, 2185 (2001); Micron Tech., Inc. v. United States, 243 F.3d 1301, 1308 (Fed. Cir. 2001). In other words, Commerce‘s interpretation will not be set aside unless it is arbitrary, capricious, or manifestly contrary to the statute. Chevron, 467 U.S. at 844.
In antidumping cases, this court has previously recognized Commerce‘s special expertise, and it has accord[ed] substantial deference to its construction of pertinent statutes. Micron Tech., Inc. v. United States, 117 F.3d 1386, 1394 (Fed. Cir. 1997).
II
The central question here is whether Commerce (when making price-based calculations for normal value) may define foreign like product to include only identical AFBs and AFBs from the same family, but then (when calculating constructed value) may define foreign like product to include aggregate data on AFBs from different families.
The antidumping statute specifically defines foreign like product. Section 1677(16) of the statute defines foreign like product as:
[M]erchandise in the first of the following categories in respect of which a determination for the purposes of part II of this subtitle can be satisfactorily made:
(A) The subject merchandise and other merchandise which is identical in physical characteristics with, and was produced in the same country by the same person as, that merchandise.
(B) Merchandise--
(i) produced in the same country and by the same person as the subject merchandise,
(ii) like that merchandise in component material or materials and in the purposes for which used, and
(iii) approximately equal in commercial value to that merchandise.
(C) Merchandise--
(i) produced in the same country and by the same person and of the same general class or kind as the subject merchandise,
(ii) like that merchandise in the purposes for which used, and
(iii) which the administering authority determines may reasonably be compared with that merchandise.
The source of the confusion is that the statute provides that the definition of foreign like product set forth in section 1677(16) is to be used for purposes of part II of subtitle IV of the statute. That part of the statute, entitled Imposition of Antidumping Duties, prescribes procedures for the initiation of antidumping duty investigations and the assessment of dumping duties. But section 1677b appears in part IV of subtitle IV of the statute, entitled General Provisions. In other words, the definition of foreign like product set forth in
This seeming anomaly is easily resolved. The term foreign like product does not appear at all in part II of subtitle IV of the statute. Again, part II requires Commerce to determine in the first instance whether dumping has occurred and, if so, to calculate the amount of the dumping duty. Congress obviously contemplated that in doing so Commerce would use the calculational methodologies for normal value (or constructed value) of part IV, where the term foreign like product is used. While it might have been better for Congress to refer specifically to part IV in
The parties challenging the definition of foreign like product used by Commerce when calculating constructed value profit make a number of unconvincing arguments in suggesting that the language of the statute bars Commerce from aggregating more than one product in the category of foreign like product.13 Indeed, the definition of foreign like product set forth in
Nonetheless, appellants’ main argument is substantial. Although the statutory definition of foreign like product is ambiguous in many respects, and Commerce certainly has an important role in resolving those ambiguities and considerable discretion in defining foreign like product,14 its discretion is not absolute. The question here is whether Commerce can utilize different definitions for determining price (as is required when determining normal value under
The appellants’ arguments may be summarized as follows. When Congress uses a technical term in a statute, it is presumed that it has intended that the term have the same meaning in each of the sections or subsections. In Gustafson v. Alloyd Co., Inc., 513 U.S. 561 (1995), for example, the Supreme Court concluded that the term prospectus, which it characterized as a term of art in the securities industry, id. at 576, had the same meaning under two different sections of the Securities Act of 1933. In reaching that conclusion, the Court relied on the normal rule of statutory construction’ that identical words used in different parts of the same act are intended to have the same meaning.’ Id. at 570 (quoting Dep‘t of Revenue of Ore. v. ACF Indus., Inc., 510 U.S. 332, 342 (1994)).15 This normal rule of statutory construction applies with particular force where Congress has specifically defined the term. In Sorenson v. Treasury, 475 U.S. 851 (1986), for example, the Supreme Court rejected a taxpayer‘s argument that the definition of the term overpayment in one section of the Internal Revenue Code did not apply to the use of the term in a separate but related code section. In reaching this conclusion, the Supreme Court reasoned, in pertinent part, that:
The normal rule of statutory construction assumes that identical words used in different parts of the same act are intended to have the same meaning.’ That the Internal Revenue Code includes an explicit definition of overpayment’ in the same subchapter strengthens the presumption. And that both subsections concern the tax-refund treatment of [overpayments] is especially damaging to any claim that the words, though in the same act, are found in such dissimilar connections as to warrant the conclusion that they were employed in the different parts of the act with different intent.’
Id. at 860 (internal citations omitted) (emphasis added) (brackets in original).
In the antidumping statute Congress has used the term foreign like product in various sections, and has specifically defined it in
Commerce‘s response to appellants’ argument is not persuasive. The agency spends most of its effort arguing that the aggregated definition of foreign like product it uses when calculating constructed value profit is a reasonable interpretation of
Commerce is required to explain why it uses different definitions of foreign like product for price purposes and when calculating constructed value, and that explanation must be reasonable. As the District of Columbia Circuit has noted, it is well-established that an agency action is arbitrary when the agency offer[s] insufficient reasons for treating similar situations differently. Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C. Cir. 1996). In a recent decision, we specifically held that the Department of Veterans Affairs was required to explain why two of its regulations had interpreted virtually identical language contained in related veterans’ benefits statutes in conflicting ways. Nat‘l Org. of Veterans’ Advocates, Inc. v. Sec‘y of Veterans Affairs, 260 F.3d 1365 (Fed. Cir. Aug. 16, 2001). We accordingly vacate the decisions below and remand for further proceedings so that Commerce may attempt to better explain its approach.
In doing so, it will be necessary for Commerce to explain the factual settings for the calculations at issue, and explain exactly how those calculations are made. The antidumping statute is highly complex and often confusing, and we accordingly rely on Commerce in its antidumping determinations to make sense of that statute. The more complex the statute, the greater the obligation on the agency to explain its position with clarity. If the Court of International Trade and this court are to play their statutorily required roles in reviewing Commerce‘s determinations, it is important that we have clear guidance from Commerce as to what is actually happening.
Once Commerce explains its actual methodology for the calculation of constructed value profit, it should explain why its methodology comports with the statute. In doing so, Commerce must carefully consider the intersection of that methodology with the definitions of foreign like product in
CONCLUSION
For the foregoing reasons, the decisions of the Court of International Trade in the consolidated cases are vacated and remanded for further proceedings consistent with this opinion.
COSTS
No costs.