United States Court of Appeals
for the Federal Circuit
__________________________
DONGBU STEEL CO., LTD.,
Plaintiff,
and
UNION STEEL MANUFACTURING CO., LTD.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee,
and
ARCELORMITTAL USA, INC.,
Defendant,
and
UNITED STATES STEEL CORPORATION,
Defendant-Appellee.
__________________________
2010-1271
__________________________
Appeal from the United States Court of International
Trade in case no. 07-CV-0125, Judge Delissa A. Ridgway.
__________________________
Decided: March 31, 2011
DONGBU STEEL v. US 2
__________________________
DONALD B. CAMERON, Troutman Sanders LLP, of
Washington, DC, argued for plaintiff-appellant. With him
on the brief were JULIE C. MENDOZA, R. WILL PLANERT,
BRADY W. MILLS and MARY S. HODGINS.
CLAUDE BURKE, Senior Trial Counsel, Commercial
Litigation Branch, Civil Division, United Stated Depart-
ment 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,
Director, and PATRICIA M. MCCARTHY, Assistant Director.
Of counsel on the brief was JONATHAN ZIELINSKI, Office of
Chief Counsel for Import Administration, United States
Department of Commerce, of Washington, DC.
ELLEN J. SCHNEIDER, Skadden, Arps, Slate, Meagher
& Flom LLP, of Washington, DC, argued for defendant-
appellee United States Steel Corporation. On the brief
were ROBERT E. LIGHTHIZER and JEFFREY D. GERRISH. Of
counsel was JAMES C. HECHT.
__________________________
Before LINN, PLAGER, and PROST, Circuit Judges.
PROST, Circuit Judge.
This is a trade case involving the Department of
Commerce’s (“Commerce’s”) practice of “zeroing” certain
negative values when calculating duties in antidumping
investigations and administrative reviews. Specifically,
this case concerns Commerce’s use of zeroing in adminis-
trative reviews. Commerce has previously argued that
the relevant statutory provision compels zeroing. This
court has opined that the statutory text applicable to both
investigations and administrative reviews—namely the
3 DONGBU STEEL v. US
term “exceeds” in 19 U.S.C. § 1677(35)(A)—is sufficiently
ambiguous to defer to Commerce’s decision of whether or
not to use zeroing in both stages of its antidumping
procedures. Corus Staal BV v. Dep’t of Commerce, 395
F.3d 1343 (Fed. Cir. 2005) (“Corus I”); Timken Co. v.
United States, 354 F.3d 1334 (Fed. Cir. 2004). We have
upheld Commerce’s use of zeroing as reasonable no fewer
than seven times over the past decade. 1
Under the facts of this case, we have come full circle
as Commerce has now decided to stop using zeroing in
investigations to comply with international treaty obliga-
tions while continuing to use it in administrative reviews.
Surely, under appropriate circumstances, Commerce may
change its position as to whether to apply zeroing. See,
e.g., SKF USA Inc. v. United States, No. 2010-1128, 2011
WL 73179, at *6 (Fed. Cir. Jan. 7, 2011) (“SKF III”).
Indeed, we have recently affirmed Commerce’s change in
its zeroing policy affecting investigations. U.S. Steel
Corp. v. United States, 621 F.3d 1351 (Fed. Cir. 2010).
The circumstances here, however, present a unique twist
because Commerce’s compliance with international treaty
obligations has lead it to interpret a single ambiguous
statutory term inconsistently during different phases of
an antidumping duty assessment, i.e., using zeroing for
administrative reviews but no longer using zeroing for
investigations. The issue presented in this case is
whether Commerce is entitled to deference when it inter-
prets 19 U.S.C. § 1677(35) inconsistently. We conclude
1 SKF USA Inc. v. United States, No. 2010-1128,
2011 WL 73179 (Fed. Cir. Jan. 7, 2011); Koyo Seiko Co. v.
United States, 551 F.3d 1286 (Fed. Cir. 2008); SKF USA
Inc. v. United States, 537 F.3d 1373 (Fed. Cir. 2008); NSK
Ltd. v. United States, 510 F.3d 1375 (Fed. Cir. 2007);
Corus Staal BV v. United States, 502 F.3d 1370 (Fed. Cir.
2007); Corus I, 395 F.3d 1343; Timken, 354 F.3d 1334.
DONGBU STEEL v. US 4
that Commerce has failed to adequately explain why it
has interpreted this statutory provision inconsistently.
Accordingly, we vacate the decision of the Court of Inter-
national Trade and remand for further proceedings.
BACKGROUND
I
Dumping occurs when a foreign producer sells a prod-
uct in the United States at a price that is below that
producer’s sales price in the country of origin. If a United
States industry believes that it is being injured by unfair
competition through dumping, it may request the imposi-
tion of antidumping duties. Commerce conducts an
investigation to determine whether and to what extent
dumping is occurring. If the final determination is af-
firmative and the U.S. International Trade Commission
determines that the domestic industry is being injured, an
antidumping order is issued and antidumping duties are
assessed. Foreign producers subject to antidumping
orders may request a subsequent administrative review to
determine (1) whether the extent of dumping has changed
since the order went into effect or since the prior review
period, and (2) the actual amount of antidumping to be
assessed on the imports of subject merchandise from each
producer being reviewed.
In antidumping proceedings, Commerce determines
antidumping duties for a particular product by comparing
the product’s “normal value” (the price a producer charges
in its home market) with the export price of comparable
merchandise. 19 U.S.C. § 1677(35)(A). We have previ-
ously recognized that Commerce uses different compari-
sons at the investigation stage than at the administrative
review stage. Corus I, 395 F.3d at 1347; compare 19
5 DONGBU STEEL v. US
U.S.C. § 1677f-1(d)(1) (investigations), with 19 U.S.C.
§ 1675(a)(2)(A) (administrative reviews). Regardless of
the stage, Commerce first calculates a “dumping margin”
equal to “the amount by which the normal value exceeds
the export price or constructed export price.” 19 U.S.C.
§ 1677(35)(A). Next, Commerce calculates a weighted-
average dumping margin “by dividing the aggregate
dumping margins determined for a specific exporter or
producer by the aggregate . . . constructed export prices of
such exporter or producer.” Id. § 1677(35)(B). In this
second step, Commerce has historically used a controver-
sial methodology called “zeroing” whereby only positive
dumping margins (i.e., margins for sales of merchandise
sold at dumped prices) are aggregated and negative
margins (i.e., margins for sales of merchandise sold at
non-dumped prices) are given a value of zero. Alterna-
tively, Commerce can use “offsetting” methodology
whereby the positive and negative dumping margins are
all aggregated to reduce the final margin.
This determination of dumping margins as provided
in 19 U.S.C. § 1677(35)(A) is at the heart of the zeroing
debate. Domestic industries and the government have
previously argued that the use of the word “exceeds” in 19
U.S.C. § 1677(35)(A) limits the definition of “dumping
margin” to positive numbers. In other words, they read
the statute to require zeroing. Timken, 354 F.3d at 1340-
41. Foreign producers have argued that Commerce’s use
of zeroing is an unreasonable interpretation of the anti-
dumping statute. Id. at 1340. This court has repeatedly
addressed zeroing as it pertains to both investigations
and administrative reviews. We have held that 19 U.S.C.
§ 1677(35)(A) is ambiguous with respect to zeroing, and
we have deferred to Commerce’s reasonable interpreta-
tion of that statute to allow its use of zeroing in both
investigations and administrative reviews.
DONGBU STEEL v. US 6
We first considered Commerce’s zeroing policy in the
context of administrative reviews in Timken. Applying
Chevron U.S.A., Inc. v. Natural Resources Defense Coun-
cil, Inc., 467 U.S. 837, 842-43 (1984), we examined the
language of 19 U.S.C. § 1677(35)(A) and held that it “does
not directly speak to the issue of negative-value dumping
margins.” Timken, 354 F.3d at 1342. We concluded that
“Congress’s use of the word ‘exceeds’ does not unambigu-
ously require that dumping margins be positive num-
bers.” Id. Having found the statute ambiguous, we
evaluated whether Commerce’s use of zeroing in adminis-
trative reviews was based on a permissible statutory
construction, and concluded that the zeroing policy was
based on a reasonable interpretation of 19 U.S.C.
§ 1677(35)(A).
In Corus I, an appeal involving Commerce’s use of ze-
roing in investigations, the question posed by appellants
was whether investigations were sufficiently different
from administrative reviews to draw a distinction be-
tween these proceedings. Corus argued that zeroing is
inconsistent with the statutory scheme for investigations
and that Timken should not apply to investigations.
Commerce acknowledged that the proceeding at issue in
Timken was an administrative review rather than an
investigation, but it argued that this distinction is not
dispositive because both proceedings implicate Com-
merce’s interpretation of 19 U.S.C. § 1677(35)(A). Brief
for Defendant-Appellee, Department of Commerce at 18,
23-24, Corus I, 395 F.3d 1343 (Fed. Cir. 2005) (No. 04-
1107), available at 2004 WL 3768287 at *18, 23-24.
Commerce argued that “[t]here is no provision in the
statute for applying the definitions of ‘dumping margin’
and ‘weighted average dumping margin’ differently in an
investigation and a review.” Id. at 18. We agreed with
Commerce that the differences between investigations
7 DONGBU STEEL v. US
and administrative reviews are subsumed by 19 U.S.C.
§ 1677(35), which is applicable to both proceedings. Corus
I, 395 F.3d at 1347. Accordingly, we concluded that
Timken governed and that the Court of International
Trade was correct to find Commerce’s zeroing methodol-
ogy permissible in investigations. Id.
Although Commerce’s practice of zeroing was upheld
by this court, Commerce’s use of zeroing in investigations
was challenged by the European Communities before the
World Trade Organization’s (“WTO’s”) Dispute Settle-
ment Body. See U.S. Steel, 621 F.3d at 1354. Both the
Dispute Settlement Body and the WTO Appellate Body
concluded that the United States’ use of zeroing was
inconsistent with Article 9.3 of the Antidumping Agree-
ment and Article VI:2 of the General Agreement on Tar-
iffs and Trade 1994. See id. Commerce responded to the
adverse WTO ruling according to the two administrative
procedures laid out in the Uruguay Round Agreements
Act. See 19 U.S.C. § 3533 (“Section 123”); 19
U.S.C. § 3538 (“Section 129”). The United States Trade
Representative consulted with appropriate congressional
committees and private sector committees, and Commerce
provided for public comment before determining whether
and how to change its practice as required by Section 123.
After these consultations, Commerce determined that it
would cease its zeroing practice in new and pending
investigations. See Antidumping Proceedings: Calcula-
tion of the Weighted Average Dumping Margin During an
Antidumping Duty Investigation; Final Modification, 71
Fed. Reg. 77, 722 (Dec. 27, 2006) (“Section 123 Determina-
tion”). Commerce decided it would use offsetting method-
ology in these investigations instead of zeroing. Id. It
explicitly declined, however, to extend this offsetting
policy to other types of antidumping proceedings, includ-
ing administrative reviews. Id.
DONGBU STEEL v. US 8
In U.S. Steel, domestic producers challenged this pol-
icy change as applied to specific investigations, arguing
that the antidumping statute requires Commerce to use
zeroing in investigations. 621 F.3d at 1358-59. The
government argued that the change in Commerce’s inter-
pretation of the statute was reasonable and reflected the
political branches’ carefully tailored response to an ad-
verse WTO decision. Id. at 1360. Applying Chevron, we
again reviewed the language of the statute. We reiterated
that we are bound by our previous decisions in Timken
and Corus I, which both held that § 1677(35)(A) does not
unambiguously preclude or require Commerce to use
zeroing methodology. Id. at 1361. We then concluded
that Commerce’s use of offsetting methodology reflects a
reasonable interpretation of an ambiguous statute. Id. at
1360.
At the same time domestic producers were attacking
Commerce’s new offsetting methodology for investigations
in domestic courts, foreign producers were using the WTO
dispute process to attack Commerce’s continued use of
zeroing methodology in administrative reviews. In at
least four separate decisions, the WTO Appellate Body
has found the United States’ use of zeroing in administra-
tive reviews to be inconsistent with Article 9.3 of the
Antidumping Agreement and Article VI:2 of the General
Agreement on Tariffs and Trade 1994. See 75 Fed. Reg.
81534 (discussing WTO dispute findings of non-
compliance). Foreign producers have pointed to these
WTO decisions in proceedings before this court, arguing
that Commerce’s use of zeroing in administrative reviews
is unreasonable because the practice is inconsistent with
the United States’ international obligations. See e.g., SKF
III, 2011 WL 73179 at *8; Koyo Seiko Co. v. United States,
551 F.3d 1286, 1290-91 (Fed. Cir. 2008); NSK Ltd. v.
United States, 510 F.3d 1375, 1379-80 (Fed. Cir. 2007);
9 DONGBU STEEL v. US
Corus Staal BV v. United States, 502 F.3d 1370, 1374-75
(Fed. Cir. 2007) (“Corus II”). In response to these argu-
ments, we have repeatedly indicated that adverse WTO
decisions have no bearing on the reasonableness of Com-
merce’s actions. We have explained that this court “‘will
not attempt to perform duties that fall within the exclu-
sive province of the political branches,’” thus this court
will not “‘overturn Commerce’s zeroing practice based on
any ruling by the WTO or other international body unless
and until such ruling has been adopted pursuant to the
specified statutory scheme.’” Corus II, 502 F.3d 1370
(quoting Corus I, 395 F.3d at 1349). 2
While we have repeatedly addressed whether Com-
merce’s use of zeroing in administrative reviews is unrea-
sonable in light of the adverse WTO decisions, we have
not yet considered the issue presented by Plaintiff-
Appellant Union Steel Manufacturing Co., Ltd. (“Union”)
in the present case. Union argues that it is unreasonable
under Chevron for Commerce to construe the identical
statutory provision—19 U.S.C. § 1677(35)—to have oppo-
site meanings in investigations and administrative re-
views where (1) nothing in the statutory language
indicates that different interpretations were intended and
(2) this court has rejected the claim that the meaning of
§ 1677(35) depends on the stage of the antidumping
proceeding.
2 Commerce is in the process of determining
whether and how to modify its zeroing practice to address
these WTO decisions. See 75 Fed. Reg. 81533-36. The
government has represented to this court that this poten-
tial policy change is not relevant to the present appeal or
its disposition.
DONGBU STEEL v. US 10
II
In 2005, Commerce initiated the twelfth administra-
tive review of certain corrosion-resistant carbon steel flat
products from the Republic of Korea. Initiation of Anti-
dumping and Countervailing Duty Administrative Re-
views and Request for Revocation in Part, 70 Fed. Reg.
56,631 (Sept. 28, 2005). The administrative review cov-
ered the period between August 1, 2004 and July 31,
2005. Id. In September 2006, Commerce published the
preliminary results. Certain Corrosion-Resistant Carbon
Steel Flat Products from the Republic of Korea, 71 Fed.
Reg. 53,370 (Sept. 11, 2006). On March 20, 2007, Com-
merce published the final determination. Notice of Final
Results of the Twelfth Administrative Review of the Anti-
dumping Duty Order on Certain Corrosion-Resistant
Carbon Steel Flat Products from the Republic of Korea, 72
Fed. Reg. 13,086 (March 20, 2007). In its administrative
case briefs, Union did not raise the issue of zeroing, and
at the time Commerce issued the preliminary results,
Commerce’s policy was to use zeroing in both investiga-
tions and administrative reviews. After the preliminary
results but before issuance of the final results, Commerce
changed its zeroing policy with respect to investigations.
Union submitted a letter to Commerce on January 11,
2007 challenging Commerce’s decision to continue using
zeroing in administrative reviews after abandoning its
use in investigations. Commerce rejected the letter as
untimely. Despite the policy change with respect to
investigations, Commerce continued to use zeroing meth-
odology in the final results at issue in this case. 3
3 The parties agree that it does not matter that
Commerce used zeroing in the investigations underlying
the antidumping order in the present case. Oral Argu-
ment at 00:44-3:03; 27:16-31:58, available at
11 DONGBU STEEL v. US
Union contested Commerce’s final results, asserting
that the agency’s use of zeroing methodology in the ad-
ministrative review was impermissible. The Court of
International Trade sustained Commerce’s final results.
Dongbu Steel Co. v. United States, No. 07-00125, slip op.
at 23 (Ct. Int’l Trade Feb. 4, 2010). The court acknowl-
edged that “the Court of Appeals has not squarely con-
fronted the precise arguments” presented by Union, but it
nonetheless concluded that the “the thrust of the Court of
Appeals’ jurisprudence is clear.” Id. at 21. Relying on
Corus II, NSK, Koyo Seiko, and SKF USA Inc. v. United
States, 537 F.3d 1373 (Fed. Cir. 2008) (“SKF II”), the
court held that neither Commerce’s change in methodol-
ogy for investigations nor the adverse WTO rulings re-
garding administrative reviews rendered Commerce’s use
of zeroing in administrative reviews unreasonable. Id. at
19-21. The court also held that Timken and Corus I did
not foreclose Commerce’s inconsistent use of zeroing in
administrative reviews and investigations. Id. at 21.
Union timely appealed, and we have jurisdiction pursuant
to 28 U.S.C. § 1295(a)(5).
DISCUSSION
I
We review the Court of International Trade’s decision
de novo, applying the same standard of review applied by
the Court of International Trade in its review of the
administrative record. U.S. Steel, 621 F.3d 1351. We will
uphold Commerce’s antidumping determination unless it
is “unsupported by substantial evidence on the record or
http://www.cafc.uscourts.gov/oral-argument-
recordings/2010-1271/all.
DONGBU STEEL v. US 12
otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i).
We review questions of statutory interpretation with-
out deference. SKF USA Inc. v. United States, 263 F.3d
1369, 1378 (Fed. Cir. 2001) (“SKF I”). When reviewing an
agency’s construction of a statute that it administers, we
apply the analysis outlined in Chevron, 467 U.S. at 842-
43. We first determine “whether Congress has directly
spoken to the precise question at issue.” Id. at 842. If so,
the unambiguously expressed intent of Congress governs.
Id. at 843. If Congress has not spoken directly on the
issue, we must determine whether the agency responsible
for filling a gap in the statute has rendered an interpreta-
tion that “is based on a permissible construction of the
statute.” Id.; see also United States v. Mead Corp., 533
U.S. 218, 253 (2001). We will not set aside Commerce’s
interpretation unless it is “arbitrary, capricious, or mani-
festly contrary to the statute.” Chevron, 467 U.S. at 844.
II
The central question here is whether it is reasonable
for Commerce to use zeroing in administrative reviews
even though it no longer uses this methodology in investi-
gations. We have repeatedly held that the pertinent
statute—19 U.S.C. § 1677(35)—is ambiguous with respect
to zeroing. Timken, 354 F.3d at 1342; U.S. Steel, 621 F.3d
at 1361. We have also held that because 19 U.S.C.
§ 1677(35) is applicable to both investigations and admin-
istrative reviews, it is equally ambiguous in both contexts.
Corus I, 395 F.3d 1347. We have upheld Commerce’s use
of zeroing in both investigations and administrative
reviews as a reasonable interpretation of this ambiguous
statute; however, we have never considered whether it is
reasonable under the second step of Chevron for Com-
13 DONGBU STEEL v. US
merce to use inconsistent interpretations of the same
statutory language.
Citing Clarke v. Martinez, 543 U.S. 371 (2005), and
SKF I, 263 F.3d 1369, Union argues that it is unreason-
able to construe a single statutory provision that applies
to both investigations and administrative reviews as
having opposite meanings depending on the nature of the
antidumping proceeding. It contends that nothing in the
statutory language supports or even contemplates incon-
sistent interpretations. Union also argues that the fact
that Commerce changed its interpretation of the statute
with respect to investigations to comply with treaty
obligations does not suffice as a reasonable explanation
for its inconsistent interpretation of the same statutory
language. According to Union, once Commerce an-
nounced its new interpretation of 19 U.S.C. § 1677(35)—
even though Commerce intended the new interpretation
to apply only to investigations—it may not rely on an
entirely inconsistent interpretation of the exact same
statutory provision to justify zeroing in this administra-
tive review.
The government responds that this court has already
considered and affirmed Commerce’s conflicting statutory
interpretations in Corus II. As further support for the
reasonableness of Commerce’s interpretation in the case
at hand, the government points to the long line of cases
discussed above in which we have upheld Commerce’s use
of zeroing in administrative reviews. Finally, it argues
that Commerce’s interpretation is reasonable because the
inconsistency has been caused by Commerce’s Section 123
Determination implementing a change in methodology in
response to an adverse WTO decision regarding zeroing in
investigations.
DONGBU STEEL v. US 14
We first address whether our prior case law has re-
solved the Chevron step two question presented in this
case. We then consider whether Commerce’s use of
inconsistent interpretations is reasonable.
III
The government contends that this court has previ-
ously addressed the issue presented here. We disagree.
Citing Timken, Corus II, NSK, and Koyo Seiko, the gov-
ernment argues that “this court has squarely addressed
the reasonableness of Commerce’s zeroing methodology in
administrative reviews time and again and has unequivo-
cally held that zeroing is reasonable.” Defendant-
Appellee’s Br. 9. Although Timken squarely addressed
the reasonableness of zeroing in administrative reviews,
Commerce was using zeroing methodology in both inves-
tigations and administrative reviews at that time. In
Corus II, NSK, and Koyo Seiko, we refused to use adverse
WTO decisions as a basis for determining that Com-
merce’s use of zeroing in administrative reviews was
unreasonable. Thus, while we have repeatedly upheld
Commerce’s use of zeroing in administrative reviews, we
have never considered the reasonableness of interpreting
19 U.S.C. § 1677(35) in different ways depending on
whether the proceeding is an investigation or an adminis-
trative review.
More specifically, the government characterizes our
opinion in Corus II as holding that Commerce’s continued
use of zeroing in administrative reviews is reasonable
despite Commerce’s change in methodology for investiga-
tions. Id. at 10. This is an overbroad reading of Corus II.
We framed the issue in that case as follows:
15 DONGBU STEEL v. US
Corus does not directly challenge our deci-
sions upholding Commerce’s use of zeroing.
Rather, Corus notes that Commerce issued its fi-
nal determination for the second administrative
review in April 2005, and it argues that subse-
quent events [i.e., Commerce’s announcement of
its intent to abandon zeroing in investigations]
show that Commerce has adopted a new policy
with regard to zeroing and that the new policy
should be applied to the second administrative re-
view.
Corus II, 502 F.3d at 1372. The second administrative
review at issue in Corus II occurred long before Commerce
actually implemented changes to its zeroing methodology
in investigations. Relying upon statements of intention
by Commerce to abandon zeroing in investigations after
the WTO’s adverse determination regarding zeroing in
investigations, Corus argued that we should remand the
case so that Commerce could reconsider whether to also
abandon zeroing in the final results of the underlying
second administrative review. Id. at 1373. We declined
to remand, noting that the change in methodology imple-
mented by the Section 123 Determination was not retro-
spective. Id. at 1374. We recognized that Commerce had
limited its policy change to investigations, but we did not
consider whether this limitation was reasonable under
Chevron. Id. We also rejected Corus’s contention that an
adverse WTO decision addressing zeroing in administra-
tive reviews presented a subsequent event that warranted
remand.
Although we have considered Commerce’s zeroing pol-
icy in administrative reviews on numerous occasions—see,
e.g., Timken, Koyo Seiko, SKF II, NSK, and Corus II—we
agree with Union that this court has never addressed the
DONGBU STEEL v. US 16
reasonableness of Commerce’s interpretation of 19 U.S.C.
§ 1677(35) with respect to administrative reviews now
that Commerce is no longer using a consistent interpreta-
tion. Accordingly, we are not bound by the prior cases
and apply the Chevron step two analysis anew.
IV
We now turn to the reasonableness of interpreting the
same statutory provision to have opposite meanings
depending on the nature of the antidumping proceeding.
The government asserts that inconsistent interpretations
are permissible and contemplated by Congress. Defen-
dant-Appellee’s Br. 14, 16, 18; Oral Argument at 20:14-
20:58. However, this court has expressly adopted the
position taken by the government in earlier cases that
there is no statutory basis for interpreting 19 U.S.C.
§ 1677(35) differently in investigations than in adminis-
trative reviews. Corus I, 395 F.3d at 1347; Brief for
Defendant-Appellee, Department of Commerce at 18, 23-
24, Corus I, 395 F.3d 1343 (Fed. Cir. 2005) (No. 04-1107),
available at 2004 WL 3768287 at *18, 23-24. We thus
address the reasonableness of Commerce’s inconsistent
interpretation against this background.
We have indicated that an agency action is arbitrary
when the agency offers insufficient reasons for treating
similar situations differently. See, e.g., Nat’l Org. of
Veterans’ Advocates, Inc. v. Sec’y of Veterans Affairs, 260
F.3d 1365, 1379-80 (Fed. Cir. 2001) (remanding an agency
determination to allow the agency to provide a reasonable
explanation for its decision to interpret virtually identical
statutory language in related statutes inconsistently).
Our prior decision in SKF I is particularly on point. In
SKF I, this court held that Commerce’s interpretation of
the term “foreign like product” in two different ways
17 DONGBU STEEL v. US
within the same antidumping proceeding without expla-
nation conflicted with rules of statutory construction. 263
F.3d at 1382. We concluded, “Commerce is required to
explain why it uses two different definitions [of the same
term], and that explanation must be reasonable.” Id.
This case is even more straightforward than SKF I and
National Organization of Veterans’ Advocates because
here Commerce is construing the exact same statutory
provision and concluding that it can be interpreted to
have different meanings depending on the type of anti-
dumping proceeding when it has previously argued the
opposite. Although 19 U.S.C. § 1677(35) is ambiguous
with respect to zeroing and Commerce plays an important
role in resolving this gap in the statute, Commerce’s
discretion is not absolute. Commerce must provide an
explanation for why the statutory language supports its
inconsistent interpretation.
Commerce’s final determination does not contain any
rationale for its inconsistent interpretations due to the
procedural way in which the issue was raised. Oral
Argument at 15:13-15:33. Recognizing this deficiency in
the record, the government proffers a single explanation
for Commerce’s inconsistent interpretation: The method-
ology for investigations was changed in response to an
adverse WTO report though the Section 123 Determina-
tion. Basically, the government concedes that “it’s the
same statute, the same provision, the same issue to be
determined in both initial investigations and administra-
tive reviews,” but the government has made the determi-
nation to implement a WTO decision with respect to
investigations. Id. at 23:30-24:47. The government
further contends that the reasonableness of this policy
change for investigations is not before the court. Defen-
dant-Appellee’s Br. 18.
DONGBU STEEL v. US 18
To the extent that the government is arguing that it is
permissible and contemplated by Congress that Com-
merce may change its interpretation of gaps in the anti-
dumping statute, we agree. Commerce is entitled to
change its interpretation to respond to an adverse WTO
decision though a Section 123 proceeding or may change
its interpretation for other reasonable reasons. Indeed,
we recently upheld Commerce’s methodological change
with respect to investigations because Commerce supplied
a reasonable explanation for its new interpretation. U.S.
Steel, 621 F.3d at 1360. That we have upheld the reason-
ableness of Commerce’s changed methodology does not
necessarily lead to the conclusion that Commerce’s use of
zeroing in administrative reviews remains reasonable.
Furthermore, the political branches’ decision to comply
with the WTO ruling only as to investigations does not
mean that it is lawful to give inconsistent constructions to
the same statutory language. Rather, Commerce’s inter-
pretation of the statute must comply with domestic law
including reasonably interpreting statutes. Chevron, 467
U.S. at 842-43. In other words, the government’s decision
to implement an adverse WTO report standing alone does
not provide sufficient justification for the inconsistent
statutory interpretations.
The government argues, without explanation, that
Congress contemplated that inconsistent interpretations
might occur through the process of complying with ad-
verse WTO decisions. We are not persuaded that Con-
gress’s intent is so clear. In addition, the government has
not pointed to any basis in the statute for reading 19
U.S.C. § 1677(35) differently in administrative reviews
than in investigations. Indeed, as noted above, it has
previously argued the opposite. In the absence of suffi-
cient reasons for interpreting the same statutory provi-
sion inconsistently, Commerce’s action is arbitrary.
19 DONGBU STEEL v. US
In sum, our prior case law does not address the situa-
tion at hand where Commerce has decided to interpret 19
U.S.C. § 1677(35) differently based on the nature of the
antidumping proceeding at issue. Applying Chevron step
two to this ambiguous statute, we conclude that the
agency has not provided a reasonable explanation for why
the statute supports such inconsistent interpretations.
See also National Organization of Veterans’ Advocates,
260 F.3d at 1379-80. We accordingly vacate the decision
of the Court of International Trade and remand for fur-
ther proceedings to give Commerce the opportunity to
explain its reasoning. It may be that Commerce cannot
justify using opposite interpretations of 19 U.S.C.
§ 1677(35) in investigations and in administrative re-
views. Under such circumstances, Commerce is of course
free to choose a single consistent interpretation of the
statutory language.
CONCLUSION
We vacate the judgment of the Court of International
Trade sustaining the twelfth administrative review of
certain corrosion-resistant carbon steel flat products from
the Republic of Korea and remand this case for further
proceedings consistent with this opinion.
COSTS
Each party shall bear its own costs.
VACATED AND REMANDED