Skf USA Inc. v. United States

United States Court of Appeals
for the Federal Circuit
__________________________

SKF USA INC., SKF FRANCE S.A., SKF
AEROSPACE FRANCE S.A.S., SKF GMBH, AND SKF
INDUSTRIE S.P.A.
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee,
AND

TIMKEN U.S. CORPORATION,
Defendant-Appellee.
__________________________

2010-1128
__________________________

Appeal from the United States Court of International
Trade in case no. 07-CV-0393, Judge Timothy C. Stanceu.
___________________________

Decided: January 7, 2011
___________________________

HERBERT C. SHELLEY, Steptoe & Johnson LLP, of
Washington, DC, argued for plaintiffs-appellants. With
him on the brief were ALICE A. KIPEL and LAURA R.
ARDITO.
SKF USA v. US 2

CLAUDIA BURKE, Trial Attorney, Commercial Litiga-
tion Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for defendant-appellee
United States. With her on the brief were TONY WEST,
Assistant Attorney General, JEANNE E. DAVIDSON, Direc-
tor, and PATRICIA M. MCCARTHY, Assistant Director. Of
counsel on the brief was JONATHAN ZIELINSKI, Office of the
Chief Counsel, United States Department of Commerce,
of Washington, DC.

GEERT DE PREST, Stewart and Stewart, of Washing-
ton, DC, argued for defendant-appellee Timken U.S.
Corporation. With her on the brief were TERENCE P.
STEWART and LANE S. HUREWITZ.

NEIL R. ELLIS, Sidley Austin LLP, of Washington, DC,
for amici curiae JTEKT Corporation and Koyo Corpora-
tion of U.S.A. With him on the brief were ERIC A.
SHUMSKY and JILL CAIAZZO.

MATTHEW P. JAFFE, Crowell & Moring LLP, of Wash-
ington, DC, for amici curiae NSK Ltd. and NSK Corpora-
tion. With him on the brief were ROBERT A. LIPSTEIN and
ALEXANDER H. SCHAEFER.
__________________________

Before GAJARSA, LINN, and DYK, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK.
Opinion Concurring in Part and Dissenting in Part filed
by Circuit Judge LINN.
DYK, Circuit Judge.
Plaintiffs SKF USA Inc., SKF France S.A., SKF Aero-
space France S.A.S., SKF GMBH, and SKF Industrie
S.p.A. (collectively “SKF” or “plaintiffs”) appeal a decision
3 SKF USA v. US

of the Court of International Trade (“Trade Court”). That
decision affirmed the final determination of the United
States Department of Commerce (“Commerce”) in its
seventeenth administrative review of antidumping duty
orders on ball bearings and parts thereof from France,
Germany, Italy, Japan, Singapore, and the United King-
dom. We conclude that Commerce had the statutory
authority to use an unaffiliated supplier’s actual costs of
production in calculating constructed value (“CV”), but we
hold that Commerce failed to adequately explain its
decision to change its methodology for calculating SKF’s
CV. We also hold that Commerce had the statutory
authority to utilize zeroing. Accordingly, we affirm in
part and vacate and remand in part.
BACKGROUND
SKF GmbH, an SKF company located in Germany,
produces and sells ball bearings and also purchases some
finished bearings from an unaffiliated German competitor
to complement its product line. SKF exports some of
these products to the United States. SKF, along with
other bearing exporters, is subject to an antidumping
duty order issued by Commerce with respect to sales of
ball bearings from Germany, among other countries. The
original antidumping order was entered in 1989. There-
after, Commerce has conducted administrative reviews.
“Recognizing that prices and costs change over the course
of time, Congress provided that Commerce shall conduct
an annual administrative review ‘if a request for such a
review [is] received.’” Dofasco Inc. v. United States, 390
F.3d 1370, 1372 (Fed. Cir. 2004). During an administra-
tive review, Commerce determines a new dumping mar-
gin. See 19 U.S.C. § 1675(a)(2)(A).
Dumping occurs when the price at which imported
merchandise is sold in the United States is less than the
SKF USA v. US 4

merchandise’s “normal value”—i.e. fair value in the home
market. See 19 U.S.C. §§1673, 1677b(a). When Com-
merce cannot determine “normal value” based on actual
sales of the subject merchandise in its home market, the
statute provides for calculation of CV as a proxy for the
sale price in the home market. Id. § 1677b(a)(4). One
component used in calculating CV is “the cost of materials
and fabrication or other processing of any kind employed
in producing the merchandise.” Id. § 1677b(e)(1).
During its original investigation and the next sixteen
administrative reviews of ball bearing antidumping
orders, Commerce used SKF’s acquisition costs in calcu-
lating the CV of subject ball bearings SKF sold in the
United States but obtained from its unaffiliated supplier.
During the fifteenth administrative review, the petitioner,
Timken US Corporation (“Timken”), apprised Commerce
that some respondents had acquired finished bearings
from unaffiliated suppliers and resold them in the United
States. Commerce noted that “[g]iven the statutory
emphasis on the use of actual costs of production in
calculating COP and CV, it may be appropriate” to re-
quire actual cost data. J.A. 2003. However, Commerce
deferred implementation of this change, reasoning that
the review was at too late a stage to require acquisition of
cost data from unaffiliated suppliers. Id. at 2004–05. In
the future, Commerce suggested that it might “require the
respondents to report COP and CV information for pur-
chases from their unaffiliated suppliers where facts . . .
reflect the facts in other proceedings . . . in which we have
required the COP and CV information from unaffiliated
suppliers.” Id. at 2005.
During the seventeenth review, Commerce for the
first time required respondents to produce actual COP
and CV data from their unaffiliated suppliers when a
“substantial proportion” of the respondent’s sales were
5 SKF USA v. US

“sales of merchandise produced by unaffiliated suppliers.”
J.A. 5002–03. SKF and four other respondents fell into
this category. 1 SKF’s unaffiliated supplier was also an
exporter and, therefore, a competitor that was also subject
to the antidumping order. When SKF was unable to
obtain the data, Commerce acquired the data directly
from the unaffiliated supplier. Commerce did not require
other respondents to report actual cost data because “the
relative insignificance of sales of merchandise purchased
from unaffiliated suppliers” meant it was unlikely that
using the suppliers’ actual data “will have a significant
impact on [the] margin calculations.” J.A. 5002.
Commerce proposed to use these cost data in calculat-
ing CV. SKF and other respondents objected to Com-
merce’s proposed use of this actual cost data in
calculating CV. Presumably, SKF objected because it
worried that using the unaffiliated supplier’s actual cost
data would yield a higher COP and CV than its acquisi-
tion costs, leading to a higher dumping margin. SKF
argued, inter alia, that: 1) the statute did not permit
Commerce to use the actual cost data from unaffiliated
suppliers; 2) Commerce did not adequately explain its
change in methodology; and 3) use of unaffiliated supplier
data violated due process because SKF could not compel
its supplier to cooperate and because SKF could not have
access to the data for use in the proceedings. Also, SKF
could not “knowingly price” in the United States to avoid

1 Commerce explained SKF’s percentage of unaffili-
ated supplier sales constituted a “substantial proportion”
because it was between 25 and 50 percent of home market
sales. According to SKF, the facts as to the percentage of
subject merchandise obtained from its unaffiliated sup-
plier were the same in the fourteenth, fifteenth, and
sixteenth reviews as they were when Commerce changed
the methodology in the seventeenth review.
SKF USA v. US 6

dumping because it would not know its supplier’s actual
costs.
Commerce issued its final determination using the
unaffiliated supplier’s actual production costs to calculate
CV. In the Issues and Decision Memorandum, Commerce
responded to some of SKF’s arguments. It explained that
the statutory scheme provided for calculating COP and
CV “on the basis of actual production costs.” Issues and
Decision Memorandum for the Antidumping Duty Admin-
istrative Reviews of Ball Bearings and Parts Thereof from
France, Germany, Italy, Japan, Singapore, and the United
Kingdom for the Period of Review May 1, 2005, through
April 30, 2006, at 47 (October 1, 2007) (“Decision Mem.”),
available at http://ia.ita.doc.gov/frn/summary/multiple/e7-
20151-1.pdf. It also warned that “[i]f acquisition costs do
not capture all of the actual costs of the manufacturer
supplying the bearings to the reseller, they are not an
appropriate basis for the calculation of CV and . . . the
use of such acquisition costs would distort the reseller’s
dumping margin due to the missing elements of cost.” Id.
at 48. Moreover, it claimed Commerce “has had a long-
standing practice of using the actual production costs of
unaffiliated suppliers in lieu of the exporter’s acquisition
costs to calculate COP and CV” and is “moving towards
consistency throughout its cases.” Id. at 48–49 (citing
Honey from Argentina, 66 Fed. Reg. 50611 (Dep’t of
Commerce Oct. 4, 2001) (final determination); Elemental
Sulphur from Canada, 61 Fed. Reg. 8239, 8251 (Dep’t of
Commerce Mar. 4, 1996) (final administrative review);
Fresh and Chilled Atlantic Salmon from Norway, 56 Fed.
Reg. 7661, 7665 (Dep’t of Commerce Feb. 25, 1991) (final
determination)).
Responding to SKF’s contention that it could not ac-
cess the unaffiliated supplier data, Commerce explained
that SKF’s counsel could have access to the data under an
7 SKF USA v. US

Administrative Protective Order (“APO”). Commerce did
not, however, respond to SKF’s concern that it could not
“knowingly price” its products to avoid dumping. Nor did
it address SKF’s concern that it could not compel its
unaffiliated supplier to provide the data. In fact, Com-
merce stated that it might apply an adverse inference if
the producer did not provide the data (though in this
instance the supplier had provided the data). Decision
Mem. at 48.
In the final decision, Commerce also continued to util-
ize zeroing to calculate dumping margins. Zeroing refers
to a practice under which, when the export price is higher
than the normal value of the subject merchandise, Com-
merce assigns it a value of zero rather than a negative
value in calculating the average dumping margin. See
SKF USA Inc. v. United States, 659 F. Supp. 2d 1338,
1346 (Ct. Int’l Trade 2009).
SKF sought review in the Trade Court, and that court
affirmed. 2 The Trade Court agreed that the statute
allowed Commerce to use unaffiliated supplier cost infor-
mation. The Trade Court also found Commerce provided
a reasonable explanation for methodology change. It
dismissed SKF’s due process concerns because SKF’s
counsel could review the unaffiliated supplier’s data. It
did not, however, address SKF’s concerns about adverse
inferences and its inability to price its products to avoid

2 Below, SKF also challenged Commerce’s decision
to issue duty assessment and liquidation instructions to
United States Customs and Border Protection fifteen days
after publication of the final results of the administrative
reviews, arguing that Commerce was required to wait at
least thirty days to issue the instructions. Id. at 1339–40.
The Trade Court held that the policy was not in accor-
dance with law. Id. at 1352. This part of the Trade
Court’s decision is not at issue on appeal.
SKF USA v. US 8

dumping. Finally, the Trade Court held that zeroing
methodology was not impermissible. SKF timely ap-
pealed, and we have jurisdiction pursuant to 28 U.S.C. §
1295(a)(5).
DISCUSSION
I
We review Trade Court antidumping decisions de
novo, applying the same standard of review as the Trade
Court applies to Commerce’s determinations. Corus Staal
BV v. Dep’t of Commerce, 395 F.3d 1343, 1346 (Fed. Cir.
2005). Commerce’s determination must be sustained if it
is supported by substantial evidence and otherwise in
accordance with law. Id. (citing 19 U.S.C. §
1516a(b)(1)(B)(i)).
Commerce argues that, in conjunction, 19 U.S.C. §§
1677b(e), 1677b(f)(1)(A), and 1677(28) permit using unaf-
filiated suppliers’ actual cost data to calculate CV. Under
§ 1677b(e), CV is calculated by the sum of:
(1) the cost of materials and fabrication or other
processing of any kind employed in producing the
merchandise, during a period which would ordi-
narily permit the production of the merchandise
in the ordinary course of business; [and] (2)(A) the
actual amounts incurred and realized by the spe-
cific exporter or producer being examined in the
investigation or review for selling, general, and
administrative expenses, and for profits, in con-
nection with the production and sale of a foreign
like product . . . .
§ 1677b(e) (emphasis added). Then, § 1677b(f)(1)(A)
further explains that “[c]osts shall normally be calculated
based on the records of the exporter or producer of the
merchandise, if such records are kept in accordance with
9 SKF USA v. US

the generally accepted accounting principles of the export-
ing country . . . and reasonably reflect the costs associated
with the production and sale of the merchandise.” §
1677b(f)(1)(A) (emphasis added). Finally, § 1677(28)
defines the term “exporter or producer” as
the exporter of the subject merchandise, the pro-
ducer of the subject merchandise, or both where
appropriate. For purposes of section 1677b of this
title, the term “exporter or producer” includes
both the exporter of the subject merchandise and
the producer of the same subject merchandise to
the extent necessary to accurately calculate the to-
tal amount incurred and realized for costs, ex-
penses, and profits in connection with production
and sale of that merchandise.
§ 1677(28) (emphases added). CV requires calculation of
the “cost of materials and fabrication or other processing
of any kind employed in producing the merchandise,”
§ 1677b(e)(1), which should be based on the “records of the
exporter or producer” of the merchandise, § 1677b(f)(1)(A),
which, in turn, includes “both the exporter of the subject
merchandise and the producer,” § 1677(28).
On the face of these provisions, Commerce can utilize
unaffiliated suppliers’ records for cost of production data
in lieu of the exporter’s acquisition cost. The statute
explicitly provides that costs should be “based on the
records of the exporter or producer of the merchandise,” §
1677b(f)(1)(A), and defines exporter or producer as “both
the exporter of the subject merchandise and the producer
of the same subject merchandise to the extent necessary
to accurately calculate the total amount incurred and
realized for costs,” § 1677(28). Additionally, legislative
history––the Statement of Administrative Action accom-
panying the Uruguay Round Agreements Act––explained
SKF USA v. US 10

that the purpose of § 1677(28) was “to clarify that where
different firms perform the production and selling func-
tions, Commerce may include the costs . . . of each firm in
calculating [COP] and [CV].” See H.R. Rep. No. 103–826,
pt. 1, at 77 (1994) (incorporating Statement of Adminis-
trative Action into committee report). Notably, for selling,
general, and administrative expenses and profits (other
components of CV), the statute explicitly limits the source
of data to “the specific exporter or producer being exam-
ined in the investigation or review.” 19 U.S.C. §
1677b(e)(2)(A). This suggests that cost of production data
is not so limited. Therefore, although the statute does not
mandate that Commerce must use actual cost data, it
unambiguously allows Commerce to prefer the actual
production costs of unaffiliated suppliers of finished
subject merchandise over acquisition costs.
However, SKF argues that other provisions of the
statute, 19 U.S.C. § 1677b(f)(2) and (3), indicate “that
sales by unaffiliated suppliers adequately represent the
required cost of production data.” Appellant’s Br. 16.
Subsection 1677b(f)(2) provides that the transaction price
(i.e., acquisition cost) “between affiliated persons may be
disregarded if” that price “does not fairly reflect the
amount usually reflected in sales of merchandise under
consideration.” § 1677b(f)(2) (emphasis added). In that
case, if “no other transactions are available for considera-
tion,” Commerce calculates the amount based on “what
the amount would have been if the transaction had oc-
curred between [unaffiliated parties].” Id. SKF contends
that, therefore, transactions with unaffiliated parties are
sufficiently arm’s length to “reasonably reflect the costs
associated with the production and sale of [subject] mer-
chandise” under § 1677b(f)(1)(A).
Similarly, subsection 1677b(f)(3)—termed the “major
input rule”—provides that “[i]f, in the case of a transac-
11 SKF USA v. US

tion between affiliated persons involving the production
by one of such persons of a major input to the merchan-
dise, [Commerce] has reasonable grounds to believe or
suspect the amount represented as the value of such input
is less than the cost of production,” then Commerce may
utilize actual cost of the input. But it does so only if that
cost is greater than the price if the transaction had oc-
curred between unaffiliated parties. Id.; see also 19
C.F.R. § 351.407(b). Again, SKF argues, this provision
demonstrates that transaction prices between unaffiliated
parties are generally sufficient proxies for cost.
We cannot agree that sections 1677b(f)(2) and (3) bar
Commerce from using unaffiliated supplier cost data.
Those sections on their face relate only to affiliated party
transactions. They do not require that Commerce always
use the transaction price between unaffiliated parties as
the measure for production costs. They merely allow
Commerce to use the unaffiliated party transaction price
as a proxy for cost in a specific set of circumstances where
a transaction between affiliated entities does not appear
to adequately represent the true amount.
SKF also argues that Commerce’s approach violates
due process because SKF cannot review its unaffiliated
supplier’s cost data and cannot compel an unaffiliated
company to provide such data. Therefore, it risks “a
determination of adverse facts available as a consequence
of an unaffiliated competitor’s failure to comply with a
request” for cost data. Appellant’s Br. 28. While, as
discussed below, SKF’s concerns raise questions as to the
adequacy of Commerce’s explanation for its change in
approach, they do not constitute a due process violation.
A due process objection can be raised only in the particu-
lar case where there has been a violation. See Thorpe v.
Housing Auth. of Durham, 393 U.S. 268, 284 n.49 (1969)
(declining to address plaintiff’s claim that it would be due
SKF USA v. US 12

process violation to evict her arbitrarily because, under
the facts on review, she had not yet been evicted). Here,
SKF’s counsel had access to and a chance to review the
data under APO procedures, and the supplier provided
the data; Commerce did not utilize adverse facts avail-
able. Although counsel’s access to the data without an
ability to consult with the respondent creates a disadvan-
tage, it is not so substantial as to raise any constitutional
concerns. Thus, there was no due process violation.
II
SKF also asserts that Commerce did not provide a
reasonable explanation for its change in methodology
after sixteen administrative reviews. During the prior
reviews, SKF and other respondents submitted their
acquisition cost for finished bearings purchased from
unaffiliated suppliers as representative of its costs for
that merchandise. Commerce apparently approved of this
practice. In its 1988 Request for Information to the
respondents, Commerce explained that the “[c]ost of
materials should include the purchase price, transporta-
tion charges, duties and all other expenses normally
associated with the material costs.” J.A. 256 (emphasis
added). For related suppliers, Commerce required “the
actual costs of the bearings [to be] obtained from [the]
suppliers,” but it made no similar comment with respect
to unrelated suppliers. Id.
When an agency changes its practice, it is obligated to
provide an adequate explanation for the change. See
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 42 (1983). In State Farm, the
Court found the Department of Transportation did not
adequately explain its decision to rescind a regulation
that vehicles be equipped with passive restraints (airbags
or automatic seatbelts), in large part because the agency
13 SKF USA v. US

too quickly dismissed other alternatives and the safety
benefits of retaining the existing rule. Id. at 46–56. 3 We
have held that the State Farm requirement applies to
Commerce’s antidumping proceedings. See SKF USA,
Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir.
2001). In SKF USA, we stated that the antidumping
statute is “highly complex” and “[t]he more complex the
statute, the greater the obligation on the agency to ex-
plain its position with clarity.” Id. at 1382–83.
We think that Commerce has adequately explained
why a change would serve legitimate objectives. Com-
merce concluded using unaffiliated supplier data to calcu-
late CV would allow it to “capture all of the actual costs of
the manufacturer,” while using acquisition costs would
“distort the reseller’s dumping margin due to the missing
elements of cost.” Decision Mem. at 48. Commerce also
noted its “longstanding practice of using the actual pro-
duction costs of unaffiliated suppliers in lieu of the ex-
porter’s acquisition costs to calculate COP and CV” and
its “mov[e] towards consistency.” Id. at 48–49. Indeed,
Commerce cited numerous cases where it required unaf-
filiated supplier data, including Individual Quick Frozen
Red Raspberries from Chile, 69 Fed. Reg. 47869, 47872
(Dep’t of Commerce Aug. 6, 2004) (preliminary adminis-
trative review results), in which it explained that “[w]here
the sale to an exporter or reseller is finished subject
merchandise, the Department’s practice is to rely on the

3 Under State Farm, factors to consider when de-
termining whether agency action is arbitrary and capri-
cious are: “if the agency has relied on factors which
Congress has not intended it to consider, entirely failed to
consider an important aspect of the problem, offered an
explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it
could not be ascribed to a difference in view or the product
of agency expertise.” Id. at 43.
SKF USA v. US 14

COP of the producer.” 4 We agree with Commerce that
consistency is an important interest and that it was
understandable for it to change methodologies in an
attempt to align this case with its past practice. 5
Nevertheless, Commerce still failed to comply with its
State Farm obligation to provide an adequate explanation.
Commerce did not sufficiently explain why two of SKF’s
concerns about the use of unaffiliated suppliers’ actual
cost data were not implicated or why they were out-
weighed by competing considerations. Under State Farm,
an agency explanation may be unreasonable if the agency
“entirely failed to consider an important aspect of the

4 SKF cites only one case in which Commerce spe-
cifically declined to use unaffiliated supplier data. Dia-
mond Sawblades and Parts Thereof from the Republic of
Korea, 71 Fed. Reg. 29310, 29311 (Dep’t of Commerce
May 22, 2006) (final determination) (adopting Issues and
Decisions Memorandum for the Final Determination, 71
ITADOC 29310, at cmt. 56 (May 22, 2006)). In that case,
Commerce declined to require actual cost data because
the quantity of products resold by the exporter was “neg-
ligible,” id., which is perfectly consistent with Commerce’s
decision here in the seventeenth review to require such
data only when a “substantial proportion” of sales were of
finished merchandise acquired from an unaffiliated
supplier.
5 We note that Commerce uses producer cost data
for finished products, but when an unaffiliated supplier
provides only an input, and not finished merchandise,
Commerce apparently uses acquisition cost. The Trade
Court has held that “[p]rices [a respondent] pays for
materials are part of its costs. Thus, what it pays for
inputs [i.e. the acquisition cost] must be used to calculate
constructed value, unless the sale of the input is by a
related party,” which would be governed by the major
input rule at § 1677b(f)(3). Consolidated Int’l Auto., Inc.
v. United States, 809 F. Supp. 125, 128 (Ct. Int’l Trade
1992). There is no occasion here to consider the propriety
of using producer cost data in the context of major inputs.
15 SKF USA v. US

problem.” 463 U.S. at 43. Accordingly, Commerce also
has an “obligation” to address important factors raised by
comments from petitioners and respondents. See Timken
U.S. Corp. v. United States, 421 F.3d 1350, 1358 (Fed. Cir.
2005); see also Nat’l Mining Ass’n v. Mine Safety & Health
Admin., 116 F.3d 520, 549 (D.C. Cir. 1997) (stating that
an “agency is . . . required to respond to comments that
are relevant to the agency's decision and which, if
adopted, would require a change in an agency's proposed
rule [because they] cast doubt on the reasonableness of a
position taken by the agency” (internal quotation marks
omitted)). In Timken, we rejected the International Trade
Commission’s argument that “its obligation is limited to
addressing statutorily enumerated factors” and that it
was not compelled to consider adverse effects of its deci-
sion, calling the position “untenable” and “not consistent
with State Farm.” Id. at 1358.
In this case, Commerce did not address two signifi-
cant concerns raised by SKF. The first of these was that
it could not change its pricing to avoid dumping because it
would have no knowledge of its unaffiliated supplier’s
actual production costs. Essentially, SKF “will never be
able to adjust its sales or pricing, or even its acquisition
policies, in an effort to increase its compliance with the
U.S. antidumping law and decrease its dumping liability.”
Appellant’s Br. 29. Even the petitioner, Timken, admit-
ted at oral argument that it is difficult for an exporter to
know whether it is dumping or to change its pricing
practice to avoid dumping when it does not know or
control its unaffiliated supplier’s costs. The ability to
control pricing to avoid dumping is also important be-
cause, under 19 C.F.R. § 351.222(b), (d), (e)(1), and (f),
exporters and producers who avoid dumping for three
consecutive years become eligible to have their antidump-
ing orders revoked. If SKF cannot adjust its pricing to
SKF USA v. US 16

avoid dumping, it becomes more difficult to gain eligibility
for revocation. As amici (other respondents under the ball
bearing antidumping order) point out, such a result would
undermine the remedial purpose of the antidumping laws.
See NTN Bearing Corp. v. United States, 74 F.3d 1204,
1208 (Fed. Cir. 1995) (“[T]he antidumping laws are reme-
dial not punitive.”). Commerce did not address SKF’s
concern that it could not control its pricing to avoid dump-
ing in its Issues and Decision Memorandum or explain
why this concern was unjustified or why it was out-
weighed by other considerations.
Similarly, Commerce did not address SKF’s concern
that Commerce would apply an adverse inference if the
unaffiliated supplier failed to provide cost data. While no
such adverse inference was drawn here, this concern must
be considered in assessing the overall reasonableness of
Commerce’s approach. SKF’s concern was not misplaced.
Commerce stated in its Issues and Decision Memorandum
that “in those instances where the producer did not pro-
vide the requested cost data, the Department has found it
appropriate to make an adverse inference.” Decision
Mem. at 48. In fact, SKF’s fears proved well founded
when, during the eighteenth review, Commerce applied
“facts otherwise available and an adverse inference” when
SKF’s supplier did not timely submit its data. See SKF
USA, Inc. v. United States, 675 F. Supp. 2d 1264, 1268
(Ct. Int’l Trade 2009). Even though the Trade Court
overturned the application of an adverse inference, 6
6 The Trade Court found Commerce acted contrary
to law by drawing an adverse inference because
“[a]llowing an interested party's failure to cooperate to
affect adversely the dumping margin of another inter-
ested party who is a party to the proceeding, about whom
Commerce did not make a finding of non-cooperation,
violates the Department's obligation to treat fairly every
participant in an administrative proceeding.” Id. at 1276.
17 SKF USA v. US

Commerce has not stated that it will abandon the practice
of using adverse inferences. Use of adverse inferences
may be unfair considering SKF has no control over its
unaffiliated supplier’s actions. Again, Commerce must
explain why SKF’s concern is unwarranted or is out-
weighed by other considerations.
In failing to consider these two problems, we find that
Commerce failed to adequately explain its change of
methodology after sixteen reviews. See Pub. Citizen v.
Fed. Motor Carrier Safety Admin., 374 F.3d 1209, 1217
(D.C. Cir. 2004) (holding that the failure to consider an
important aspect of the problem was alone “dispositive”
and required reversal under State Farm).
III
Finally, SKF argues that Commerce improperly used
zeroing in calculating its weighted-average dumping
margin because it is prohibited by the World Trade Or-
ganization (“WTO”). Commerce changed its practice for
original investigations and no longer uses zeroing for
calculation of weighted average dumping margins, but it
continues to use zeroing during administrative reviews.
See Antidumping Proceedings: Calculation of the
Weighted Average Dumping Margin During an Antidump-
ing Duty Investigation; Final Modification, 71 Fed. Reg.
77722, 77724 (Dec. 27, 2006). In Timken Co. v. United
States, 354 F.3d 1334, 1341–45 (Fed. Cir. 2004), the court
held that its governing statute did not forbid the use of
zeroing. In U.S. Steel Corp. v. United States, 621 F.3d
1351 (Fed. Cir. 2010), we upheld Commerce’s application
of its new policy not to use zeroing in original investiga-

On remand, Commerce relied on SKF’s acquisition cost
(as it had during the first sixteen reviews) because it
could not acquire the actual cost data or draw an adverse
inference. J.A. 15501.
SKF USA v. US 18

tions. Even after Commerce changed its policy with
respect to original investigations, we have held that
Commerce’s application of zeroing to administrative
reviews is not inconsistent with the statute. See Corus
Staal BV v. United States, 502 F.3d 1370, 1375 (Fed. Cir.
2007). Moreover, we have held that WTO decisions do not
change United States law unless implemented pursuant
to an express statutory scheme. See, e.g., NSK Ltd. v.
United States, 510 F.3d 1375, 1379–80 (Fed. Cir. 2007);
Corus Staal BV, 395 F.3d at 1349. The WTO decisions
cited by SKF have not been so implemented.
IV
For the foregoing reasons, we affirm the Trade Court’s
decision that Commerce has the authority to use unaffili-
ated suppliers’ actual costs of production in calculating
CV and to utilize zeroing. However, we conclude that
Commerce in two respects did not provide a reasonable
explanation for its decision to depart from its prior meth-
odology in this particular case. Accordingly, we affirm-in-
part and vacate-in-part and remand.
AFFIRMED-IN-PART AND VACATED-IN-PART
AND REMANDED
COSTS
No costs.
 United States Court of Appeals
for the Federal Circuit
__________________________

SKF USA INC., SKF FRANCE S.A., SKF
AEROSPACE FRANCE S.A.S., SKF GMBH, AND SKF
INDUSTRIE S.P.A.
Plaintiffs-Appellants,
v.
UNITED STATES,
Defendant-Appellee,
AND

TIMKEN U.S. CORPORATION,
Defendant-Appellee.
__________________________

2010-1128
__________________________

Appeal from the United States Court of International
Trade in case no. 07-CV-0393, Judge Timothy C. Stanceu.
__________________________

LINN, Circuit Judge, concurring in part and dissenting in
part.
I am pleased to join the majority’s holding that Com-
merce has the authority to use unaffiliated suppliers’
actual costs of production in calculating CV and to utilize
zeroing. I respectfully dissent only from the portion of the
opinion concluding that Commerce failed to comply with
its obligation under Motor Vehicle Manufacturers Associa-
tion of the United States, Inc. v. State Farm Mutual
SKF USA v. US 2

Automobile Insurance Co. (State Farm), 463 U.S. 29, 42
(1983) and remanding to Commerce for further explana-
tion.
The majority held that Commerce failed to satisfy its
State Farm obligation by insufficiently explaining why
two of SKF’s concerns about the use of unaffiliated sup-
pliers’ actual cost data were not implicated or why they
were outweighed by competing considerations. Maj. Op.
at 14-17. Under State Farm, an agency explanation may
be unreasonable if the agency “entirely failed to consider
an important aspect of the problem.” 463 U.S. at 42
(emphasis added). “[T]he fact that certain information is
not discussed in a Commission determination does not
establish that the Commission failed to consider that
information. Rather, the Commission need only discuss
material issues of law or fact.” Timken U.S. Corp. v.
United States, 421 F.3d 1350, 1355-56 (Fed. Cir. 2005)
(internal citations and quotations omitted). This court
should “uphold a decision of less than ideal clarity if the
agency's path may reasonably be discerned.” State Farm,
463 U.S. at 43 (internal citations and quotations omitted).
The majority vacates the Trade Court’s decision and
remands for Commerce to provide additional responses to
two of SKF’s asserted concerns. In my view, neither of
SKF’s concerns amount to an important aspect of the
problem or a material issue of law or fact.
SKF’s first concern is that it could not change its pric-
ing to avoid dumping because it would have no knowledge
of its unaffiliated suppliers’ actual production costs. SKF,
however, offers no explanation why it could not simply
require the actual cost of production data from an unaf-
filiated supplier as a condition for purchase. Further,
Commerce did not entirely fail to consider this argument.
Commerce considered this concern in its response to
3 SKF USA v. US

SKF’s assertion that it faced a catch-22 of either sharing
confidential information with a competitor, risking an
antitrust violation, or “attempt[ing] to price [its] products
without any apparent reference point for normal value.”
Decision Mem. at 48. Commerce thus considered, but
“disagree[d] with[,] SKF’s assertion.” Id.
SKF’s second concern relates to the potential for
Commerce to draw adverse inferences if the unaffiliated
supplier fails to provide cost data. In this case, Commerce
did not draw such adverse inferences. Although “Com-
merce has not stated that it will abandon the practice of
using adverse inferences,” Maj. Op. at 17, when Com-
merce attempted to do so during the eighteenth review,
the Trade Court overturned the drawing of adverse infer-
ences as “contrary to law.” Maj. Op. at 16-17 n.6. SKF’s
concern is no longer relevant to this investigation, and
any further explanation by Commerce would be advisory
at best. Moreover, Commerce did not entirely fail to
consider this argument either. Commerce briefly ad-
dressed its practice of adverse inferences and simply
determined that it would not apply it in this case. See
Decision Mem. at 48-49.
In light of the foregoing, it is my view that neither of
SKF’s concerns raises an important aspect of the problem
or a material issue warranting a vacatur and remand.
Commerce has adequately explained its change in prac-
tice, adequately considered SKF’s concerns, and Com-
merce’s path may reasonably be discerned from its
decision. Commerce explained that its decision was based
upon the statutory emphasis on the use of actual costs,
the Statement of Administrative Action’s language con-
templating the same, the inability of acquisition costs to
properly capture the actual costs of the manufacturer in
this situation, and the need for more consistency. Deci-
sion Mem. at 47-49. Not only did Commerce provide a
SKF USA v. US 4

reasoned explanation for its change in practice after
sixteen years, but Commerce warned SKF during the
fifteenth administrative review that it would be changing
to this methodology and did not implement the change
until two review years later, during the seventeenth
administrative review. Even if Commerce’s explanation
of the two concerns raised by SKF and found wanting by
the majority lacked ideal clarity, a point with which I
disagree, this court should “uphold a decision of less than
ideal clarity if the agency's path may reasonably be dis-
cerned.” State Farm, 463 U.S. at 43.
Because Commerce sufficiently addressed all material
concerns and its path can be reasonably discerned, I see
no need to remand for further explanation and would
affirm.