Skf USA Inc. v. United StatesSkf USA Inc. v. United States
OPINION
I
Introduction
Plaintiffs SKF USA Inc., SKF France S.A., SKF Aerospace France, SKF GmbH, and SKF Industrie S.p.A. (collectively “SKF”) challenge the United States Department of Commerce’s (“Commerce” or “the Department”) findings in Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, Singapore and the United Kingdom: Final Results of Anti-dumping Duty Administrative Reviews, 70 Fed.Reg. 54,711 (September 16, 2005) {“Final Results ”). The court has jurisdiction pursuant to 28 U.S.C. § 1581(c).
II
Background
On September 15, 2005, the Department published in the Federal Register the Final Results of its Fifteenth Review of ball bearings and parts thereof from France, Germany, Italy, Japan, Singapore, and the
Oral argument was held on January 24, 2007.
Ill
Standard of Review
This court will sustain Commerce’s determinations, findings, or conclusions unless they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B);
Magnesium Corp. of Am. v. United States,
The court must use a two-step analysis when evaluating Commerce’s statutory interpretation.
Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
When faced with a problem of statutory construction, this Court shows great deference to the interpretation given the statute by the officers or agencycharged with its administration. ‘To sustain the [agency’s] application of this statutory term, we need not find that its construction is the only reasonable one, or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings.’
Udall v. Tallman,
IV
Discussion
A
Commerce’s Decision to Revise Its Model-Matching Methodology is Supported by Substantial Evidence and is in Accordance with Law
Plaintiffs argue that Commerce’s departure from its previous methodology contravenes its long-standing policy to “ ‘maintain a stable, normal, and predictable approach’ with regards to model match, and not to alter that methodology unless compelling reasons exist.” Plaintiffs’ Rule 56.2 Motion for Judgment Upon the Agency Record (“Plaintiffs’ Motion”) at 10 (citing Polyethylene Terephthalate Film, Sheet, and Strip from the Republic of Korea; Final Results of Antidumping Duty Administrative Reviews and Notice of Revocation in Part, 61 Fed.Reg. 35,177, 35,181 (July 5, 1996) (“Polyethylene”)). Plaintiffs contend that Commerce’s decision to change the model match methodology retroactively unfairly deprived Plaintiffs of outcome predictability and that Commerce’s justification for changing the methodology departs from its own criteria that sets out when it is appropriate to change a model match methodology. Id. 2
Specifically, Plaintiffs argue that Commerce created a methodology inconsistent with the principle that model match methodologies reflect market place realities.
Id.
at 12. Plaintiffs claim that Commerce has not gained any additional expertise or knowledge of market demand or market realities and that recognizing differences in types of lubricant reflects a misunderstanding of market realities.
Id.
at 12-13. Plaintiffs also argue that Commerce violated its normal practice of refraining from altering model match criteria absent evidence that the methodology does not properly reflect the product in question, there have been industry changes to the product, or there are other compelling reasons.
Id.
at 11 (citing
Stainless Steel,
70 Fed.Reg. at 73,731;
Carbon Steel,
71 Fed.Reg. at 7,514). Plaintiffs assert that there have been no changes to the products or the industry such that the “family” match methodology previously used no longer re-
Defendant concedes that during the Second Administrative Review Commerce decided to continue applying the family method, but notes that it stated it would continue to evaluate the appropriateness of the method and make alterations when compelling reasons exist. Defendant’s Response in Opposition to Plaintiffs’ Motion for Judgment Upon the Agency Record (“Defendant’s Response”) at 5-6. Timken U.S. Corporation urged Commerce to alter its model match methodology during the Fourteenth Administrative Review and Commerce determined at that time that compelling reasons did exist for a modification. Id. at 6 (citing Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France; et al; Final Results of Antidumping Duty Administrative Reviews, 57 Fed.Reg. 28,-360, cmt.l (June 24, 1992)). “Specifically, Commerce determined that a revised methodology: 1) more accurately reflected the intent of 19 U.S.C. § 1677(16), 3 inelud-ing the statute’s preference for identifying foreign like product by selecting the single most similar product; 2) reflected the statutory preference for using price-to-price comparisons; and 3) enabled Commerce to take advantage of technological developments.” Id. (citing Memorandum from Jeffrey A. May, Deputy Assistant Sec’y for Import Admin., U.S. Dep’t of Commerce, to James J. Jochum, Assistant Sec’y for Import Admin., U.S. Dep’t of Commerce, at 4-5 (December 3, 2003) (“Model Match Memo”)). Defendant asserts that because there is sufficient evidence to support these findings, the change was reasonable and should be sustained by this court. Id. at 16.
Defendant asserts that by using the new method Commerce can identify the single most similar product because “Commerce can now capture
slight
differences in the physical characteristics of the home market and United States model being compared which are still similar enough to be considered for comparison.”
Id.
at 18. Defendant also argues that Commerce is not required “to ensure that home market models are technically substitutable, purchased by the same type of customers, or applied to the same end as the U.S. model.”
Id.
at 18 (citing Memorandum from Barbara E. Tillman, Acting Deputy Assistant Sec’y for Import Admin., U.S. Dep’t of Commerce, to Ronald K. Lorentzen,
Plaintiffs contend that changes in technology should not be considered because “Commerce never stated it was in some way technologically limited from more accurately calculating similar merchandise” when it created the family method. Plaintiffs’ Motion at 16. Defendant counters that technological advancements are merely the means by which Commerce is able to implement a more accurate revised methodology and that as such, Commerce implicitly recognized these limitations in its original methodology. Defendant’s Response at 21-22. Plaintiffs also argue that it is not valid to assert that technological constraints prohibited Commerce from selecting the most similar model in prior reviews because Commerce had been making such selections in older cases and because Commerce used a most similar method in the original investigation. Plaintiffs’ Motion at 15,19.
Defendant-Intervenor argues that the new method enhances Commerce’s role in model match and data collection. Response of Timken U.S. Corporation to the Rule 56.2 Motion of SKF USA Inc., et al. (“Timken’s Response”) at 19. Timken states that, using the new method, U.S. sales of models that differ only in size or load rating are no longer excluded if the models match on the first four “most fundamental” characteristics. Id. at 20. Additionally, when using the family method Commerce was dependent on the family code provided by respondents to match similar products, whereas when using the new method Commerce performs the matching itself using additional data reported by respondents and the program designed by the agency. Id. Commerce selects the appropriate comparison products on the basis of physical characteristics, variable costs of manufacturing, and the reported date of sale and level of trade. Id. at 9.
The parties disagree as to whether it was proper to apply the new methodology retroactively. Plaintiffs state that a fair administration of antidumping laws has required Commerce, in certain circumstances, to adhere to methodologies it sought to alter.
4
Reply Brief in Support of SKF’s Rule 56.2 Motion for Judgment Upon the Agency Record (“Plaintiffs’ Reply”) at 12-13, (citing
Shikoku Chems. Corp. v. United States,
Defendant asserts that retroactivity is not a basis for challenge and that requiring Commerce to apply changes only to prospective reviews and not to prospective entries “would paralyze Commerce’s ability to change its own practices.” Defendant’s Response at 24. Defendant contends that the antidumping scheme is constructed in such a way as to always apply Commerce’s decisions retroactively.
Id.
at 24-25 (citing
Abitibi-Consol. Inc. et al., v. United States,
The standard by which this court reviews Commerce’s decision is whether Commerce reasonably determined that there were compelling reasons to revise the model match methodology.
Hangzhou Spring Washer Co. v. United States,
In
Timken Company v. United States,
The new methodology also enables Commerce to take advantage of technological advancements. When the family method was developed over sixteen years ago technological resources were far less powerful than they are today. See Model Match Memo at 3. Commerce used an offsite mainframe computer that was significantly slower and much more expensive than desktop computers in use today. Id. Running the program for just one of the large bearing companies often required three to four hours of processing time and in the first several reviews analysts had to use special terminals just to access the mainframe computer. Id. New terminals were available, they were expensive to use, and the cost was a function of the amount of central processing time used. Id. Had Commerce employed a more complex model match methodology to identify the single most similar model, “it would have been prohibitively expensive and time consuming.” Id. Today, much more powerful personal computers are used by Commerce to run all new margin-calculation programs. Id. at 4. All analysts can work simultaneously on their own computers without processing charges. Id. These technological advancements are the means by which Commerce is able to implement a more accurate model match methodology. Plaintiffs are incorrect in their assertion that Commerce did not consider technological constraints when the family method was created. Technological constraints were strongly implied when Commerce explained that it was creating a family methodology to “minimize the necessity for comparisons among an exceptionally large number of bearing models.” Letter from Bernard T. Carreau, Div. Dir., Office of Antidumping Compliance, U.S. Dep’t of Commerce (July 13, 1990). Because these constraints have been lifted, Commerce is free to develop a more accurate methodology so long as that methodology is reasonable.
Moreover, because technological constraints made it difficult for Commerce to select the most similar model in prior reviews, it is within Commerce’s expertise and discretion to update its methodology for both increased accuracy and ease of use.
See S. Cal. Edison Co. v. United States,
In assessing the reasonableness of its decision, the court observes that Commerce made the changes only after providing the parties with an opportunity to submit comments and after they received reasonable notice of the implementation of the revised methodology, as required by statute. Model Match Memo at 6-7. Indeed, Commerce extended the comment period and made modifications to its methodology based on the parties’ comments and continued to employ the old
While Plaintiffs’ assert that Commerce informed the parties on July 7, 2004 that precision grade would be a defining characteristic in its new methodology, in fact, Commerce had stated it would consider precision grade, if appropriate, on a case by case basis. See Plaintiffs’ Motion at 6; Notice of Revised Methodology at 7.
In addition, Commerce’s decision to consider lubricant type in its new methodology, based on its observation that differences in lubricants had a significant effect on cost, is within its discretion to make a modification.
See S. Cal. Edison Co.,
Commerce does indeed express its preference for maintaining a stable methodology across reviews
unless
compelling reasons exist.
Polyethylene,
61 Fed.Reg. at 35, 181. It is also Commerce’s policy to make changes where compelling reasons exist and this court will review Commerce’s decision for reasonableness.
Hangzhou Spring Washer,
Plaintiffs cite
Shikoku Chems.
as requiring Commerce to adhere to a methodology on the basis of fairness. In
Shikoku Chems.,
the court determined that Commerce had “abused its discretion in adopting a slightly improved allocation methodology in the face of years of acceptance of the prior approach.”
Shikoku Chems.,
In sum, Commerce acted within its own discretion and in accordance with law. Substantial evidence exists to support a finding that Commerce acted reasonably. Accordingly, Commerce’s determination is sustained.
Commerce’s Use of its Zeroing Methodology is Supported by Substantial Evidence and in Accordance with Law
SKF argues that Commerce’s practice of assigning a zero margin to export price (“EP”) or constructed export price (“CEP”) sales made above normal value (“NV”) is a violation of the plain language of the statute and international agreements, is unsupported by an agency explanation, and is unjustified as a measure to combat masked dumping. Plaintiffs’ Reply at 14. SKF further argues that
stare decisis
is inapplicable here because different statutory provisions were at issue in previous challenges to zeroing that were struck down by the Federal Circuit. Plaintiffs’ Motion at 22;
see also Corus Staal, BV v. United States,
Defendant counters that Commerce’s treatment of nondumped sales has been repeatedly sustained by this court and the Federal Circuit. Defendant’s Response at 26.
Plaintiff notes that
“stare decisis
is not ‘an inexorable command; rather it is a principle of policy and not a mechanical formula of adherence to the latest decision.’ ” Plaintiffs’ Motion at 22-23 (quoting
Payne v. Tennessee,
Although the Federal Circuit in
Corns Staal
did not hold that the statute “unambiguously requires providing for zeroing negative margin transactions,” as Plaintiff argues, such a directive is not necessary for Commerce’s interpretation to be upheld.
See
Plaintiffs’ Motion at 25 (quoting
Timken,
Plaintiff also proposes that the Federal Circuit cases which upheld the practice of zeroing should have curtailed their analysis at step one of the
Chevron
inquiry because the plain language of the statute is clear and because “Congress has spoken directly to the question at issue and its intent that Commece use both negative and positive values is clear....” Plaintiffs’ Motion at 25, 27. SKF also argues that because the Government states its zeroing methodology is “not mandated by statute or regulation,” any deference is unwarranted.
Id.
at 26. Absent any new information which shows circumstances have changed, or some reason for a different
Chevron
analysis, there is no need to reexamine zeroing at this time.
See Paul Muller Industrie GmbH v. United States,
Because zeroing has been affirmed and settled by the Federal Circuit in
Corns Staal
and
Timken,
there is no reason to overturn Commerce’s zeroing practice based upon a ruling by the WTO “unless and until such ruling has been adopted pursuant to the specified statutory scheme.”
Paul Muller,
Y
Conclusion
For the above stated reasons, Commerce’s determination in Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, Singapore and the United Kingdom: Final Results of Antidump-ing Duty Administrative Reviews, 70 Fed. Reg. 54,711 (September 16, 2005) is sustained.
ORDER AND JUDGMENT
This case having come before the court upon the Rule 56.2 Motion for Judgment Upon the Agency Record filed by SKF USA Inc., SKF France S.A., SKF Aerospace France, SKF GmbH and SKF In-dustrie S.p.A.; the court having reviewed all pleadings and papers on file herein, having heard oral argument, and after due deliberation, having reached a decision herein; now, in conformity with said decision, it is hereby
ORDERED ADJUDGED AND DECREED that Plaintiffs Motion is DENIED; and it is further
ORDERED ADJUDGED AND DECREED that the decision of the U.S. Department of Commerce (“Commerce”) in Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, Singapore and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews, 70 Fed.Reg. 54,711 (September 16, 2005) is hereby SUSTAINED; and it is further
ORDERED that all parties shall review the court’s Opinion in this matter and notify the court in writing on or before Friday, June 8, 2007, whether any information contained in the Opinion is confidential, identify any such information, and request its deletion from the public version of the Opinion to be issued thereafter. The parties shall suggest alternative language for any portions they wish deleted. If a party determines that no information needs to be deleted, that party shall so notify the court in writing on or before June 8, 2007.
Notes
. Imports of these products are classified under the following Harmonized Tariff Schedule of the United States (HTSUS) subheadings:
3926.90.45, 4016.93.00, 4016.93.10,
4016.93.50, 6909.19.5010, 8431.20.00,
8431.39.0010, 8482.10.10, 8482.10.50,
8482.80.00, 8482.91.00, 8482.99.05,
8482.99.2580, 8482.99.35, 8482.99.6595,
8483.20.40, 8483.20.80, 8483.50.8040,
8483.50.90, 8483.90.20, 8483.90.30,
8483.90.70, 8708.50.50, 8708.60.50,
8708.60.80, 8708.70.6060, 8708.70.8050,
8708.93.30, 8708.93.5000, 8708.93.6000,
8708.93.75, 8708.99.06, 8708.99.31,
8708.99.4960, 87083.99.50, 8708.99.5800,
8708.99.8080, 8803.10.00, 8803.20.00,
8803.30.00, 8803.90.30, and 8803.90.90.
Final Results, 70 Fed.Reg. at 54,712.
. Commerce has articulated that "[i]t is appropriate to consider changes [to a methodology] when additional expertise and knowledge with regard to the market demands and market realities of the products ... indicate that such changes allow more accurate comparison of U.S. and normal value products.” Structural Beams from Korea: Notice of Final Results of Antidumping Duty Administrative Reviews, 70 Fed.Reg. 6,837, 6,838 (February 9, 2005) ("Structural Beams ”). Additionally, Commerce’s "normal practice is to refrain from revising the model match criteria absent evidence establishing that the model match is not reflective of the merchandise in question, there have been industry changes to the product that merit a modification, or there is some other compelling reason to require a change.” Stainless Steel Sheet and Strip in Coils from Germany; Notice of Final Results of Anti-dumping Duty Administrative Review, 70 Fed. Reg. 73,729, 73,731 (December 13, 2005) ("Stainless Steel"); see also Notice of Final Results of the Eleventh Review of the Anti-dumping Duty Order on Certain Coirosion-Resistant Carbon Steel Flat Products from the Republic of Korea, 71 Fed.Reg. 7,513 (February 13, 2006) (“Carbon Steel ”).
. 19 U.S.C. § 1677(16) defines the term “foreign like product” as follows:
(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.
. Plaintiffs do not elaborate on these circumstances.
. 19 U.S.C. § 1677m(g) states:
Information that is submitted on a timely basis to the administering authority or the Commission during the course of a proceeding under this subtitle shall be subject to comment by other parties to the proceeding within such reasonable time as the administering authority or the Commission shall provide. The administering authority and the Commission, before making a final determination under section [] 167Id, 1673d, 1675, or 1675b of this title shall cease collecting information and shall provide the parties with a final opportunity to comment on the information obtained by the administering authority or the Commission (as the case may be) upon which the parties have not previously had an opportunity to comment. Comments containing new factual information shall be disregarded.
. Plaintiff further argues that Commerce’s use of zeroing in a review conflicts with 19 U.S.C. §§ 1677(35)(A), 1675(a)(2), and 1673e(c)(3). Plaintiffs' Motion at 29-30. In sustaining Commerce’s treatment of nondumped sales, the Federal Circuit in both
Timken
and
Corns Staal
expressly addressed 19 U.S.C. § 1675(a)(2) and § 1677(35)(A) and presumably considered the entire statute.
Timken,
. On October 31, 2005, a World Trade Organization ("WTO”) Panel found,
inter alia,
that Commerce’s practice of zeroing when calculating dumping margins using average-to-average comparisons in investigations was inconsistent with U.S. obligations under the WTO Antidumping Agreement. Panel Report, United States — Laws, Regulations and Methodology for Calculating Dumping Margins, ¶¶ 7.32, 7. 1, WT/DS294/R (October 31, 2005) ("U.S. — Zeroing Panel Report”). The United States did not appeal the Report and in March 2006 started to implement the WTO's findings by initiating a proceeding under Section 123(g) of the Uruguay Round Agreements Act ("URAA”), 19 U.S.C. § 3533(g) ("Section 123”), in which it stated that it “will abandon” the use of zeroing in average-to-average computations and that it would change its margin computation methodology to bring certain challenged reviews into compliance with the WTO’s findings.
Antidumping Proceedings: Calculation of the Weighted Average Dumping Margin During an Antidumping Duty Investigation,
71 Fed.Reg. 11,189 (March 6, 2006). On December 27, 2006, Commerce published in the Federal Register its final Section 123 determination, ending the practice of zeroing in antidumping investigations using average-to-average comparisons, and scheduling the effective date for adoption of the new policy for January 16, 2007.
See Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping Investigation; Final Modification,
71 Fed.Reg. 77,722 (December