Slip Op. 10-133
UNITED STATES COURT OF INTERNATIONAL TRADE
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:
NSK CORPORATION, et al., :
:
Plaintiffs, :
:
and :
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FAG ITALIA S.p.A., et al., :
:
Plaintiff-Intervenors, :
: Before: Judith M. Barzilay, Judge
v. : Consol. Court No. 06-00334
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UNITED STATES, :
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Defendant, :
:
and :
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THE TIMKEN COMPANY, :
:
Defendant-Intervenor. :
:
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OPINION & ORDER
[The court sustains in part and remands in part the third remand determination of the U.S.
International Trade Commission.]
Dated: December 9, 2010
Crowell & Moring LLP (Matthew P. Jaffe, Robert A. Lipstein, and Carrie F. Fletcher), for
Plaintiffs NSK Corporation, NSK Ltd., and NSK Europe Ltd.
Consol. Court No. 06-00334 Page 2
Sidley Austin LLP (Neil R. Ellis and Jill Caiazzo), for Plaintiffs JTEKT Corporation and Koyo
Corporation of U.S.A.
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP (Max F. Schutzman and Andrew T.
Schutz), for Plaintiff-Intervenors FAG Italia S.p.A., Schaeffler Group USA, Inc., Schaeffler KG,
The Barden Corporation (U.K.) Ltd., and The Barden Corporation.
Steptoe & Johnson (Herbert C. Shelley and Alice A. Kipel), for Plaintiff-Intervenors SKF
Aeroengine Bearings UK and SKF USA, Inc.
United States International Trade Commission, James M. Lyons (General Counsel), Neal J.
Reynolds (Assistant General Counsel for Litigation), and David A.J. Goldfine, Office of the
General Counsel, for Defendant United States.
Stewart and Stewart (Terence P. Stewart, Eric P. Salonen, Philip A. Butler, and Jumana
Madanat Misleh), for Defendant-Intervenor The Timken Company.
Barzilay, Judge: The U.S. International Trade Commission’s (“the Commission”) sunset
review of antidumping duty orders covering ball bearings from France, Germany, Italy, Japan,
and the United Kingdom comes before the court for the fifth time.1 See NSK Corp. v. United
States, 34 CIT ___, 712 F. Supp. 2d 1356 (2010) (“NSK IV”) (affirming in part and remanding in
part second remand determination); NSK Corp. v. United States, 33 CIT ___, 637 F. Supp. 2d
1311 (2009) (“NSK III”) (remanding first remand determination for agency’s failure to provide
substantial evidence and failure to comply with court’s remand instructions); NSK Corp. v.
United States, 32 CIT ___, 593 F. Supp. 2d 1355 (2008) (“NSK II”) (denying motion for
rehearing); NSK Corp. v. United States, 32 CIT ___, 577 F. Supp. 2d 1322 (2008) (“NSK I”)
(affirming in part and remanding in part second sunset review). In its third remand determination
now at issue, the agency addresses three questions: (1) whether some incentive likely would
1
The court presumes familiarity with the procedural history of the case.
Consol. Court No. 06-00334 Page 3
draw a discernible amount of United Kingdom ball bearings specifically to the United States in
the absence of the antidumping duty order, thereby supporting the Commission’s decision to
cumulate the United Kingdom imports with other subject ball bearings;2 (2) whether the
cumulated subject imports likely will have a significant adverse impact on the vulnerable
domestic industry in the absence of the antidumping duty orders; and (3) whether the cumulated
subject imports likely would constitute more than a minimal or tangential cause of material
injury to the domestic industry that likely will continue or recur in the absence of the orders,
given the significant presence of, and seemingly impenetrable barrier imposed by, non-subject
imports in the United States market. See generally Views of the Commission on Remand, Inv.
Nos. 731-TA-394-A, 731-TA-399-A (Aug. 25, 2010) (“Third Remand Determination”). With its
most recent conclusions, the Commission has declined to provide a genuine discussion on
complex issues of law and has, thus, foreclosed the opportunity for meaningful judicial review of
the latest agency action. See generally Third Remand Determination. The Commission again
fails to support its determination with substantial evidence and unfortunately continues to
mischaracterize the court’s remand instructions. As explained below, the court remands the case
to the Commission for further action consistent with this and all previous opinions in this matter.
2
In NSK IV, the court did “not believe that the existing record, taken as a whole, c[ould]
support an affirmative discernible adverse impact finding” on ball bearings from the United
Kingdom and invited the Commission to “reopen the record and obtain additional data on this
issue in the next remand proceeding, if it so chooses.” NSK IV, 34 CIT at ___, 712 F. Supp. 2d at
1367; accord id. at ___, 712 F. Supp. 2d at 1368 (“[T]he Commission may reopen the record and
obtain additional data on the issue.”).
Consol. Court No. 06-00334 Page 4
I. Standard of Review
The Court will not sustain an agency determination “unsupported by substantial evidence
on the record.” 19 U.S.C. § 1516a(b)(1)(B)(i). An agency supports its findings with substantial
evidence when the record exhibits “more than a mere scintilla” of relevant and reasonable
evidence to buttress its conclusion. See Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).
To provide the requisite support, the agency must present more than mere conjecture. See NMB
Sing. Ltd. v. United States, 557 F.3d 1316, 1319-20 (Fed. Cir. 2009) (citation omitted). Though
the court does not require perfect explanations from the agency, the path taken by the
administrative body “must be reasonably discernible.” Id. at 1319 (citation omitted). At a
minimum, the agency must explain the standards that it applied and rationally connect them to
the conclusions it made from the record. See Matsushita Elec. Indus. Co. v. United States, 750
F.2d 927, 933 (Fed. Cir. 1984).
II. Discussion
A. Ball Bearings from the United Kingdom
Despite the court’s invitation in NSK IV to reopen the record, 34 CIT at ___, 712 F. Supp.
2d at 1367-68, the Commission declined to do so in its redetermination of whether ball bearings
from the United Kingdom likely would have a discernible adverse impact on the domestic
industry in the absence of the antidumping duty order. Status Report and J. Scheduling Order at
2, NSK Corp. v. United States, No. 06-00334 (CIT filed May 12, 2010).3 Nevertheless, the
3
Notwithstanding the court’s explicit conclusion to the contrary, the agency later stated
that it would not reopen the record because the existing record supported its finding that the
United Kingdom imports likely would leave the requisite impact on the industry. Third Remand
Consol. Court No. 06-00334 Page 5
Commission has now chosen not to cumulate the United Kingdom ball bearings with those from
the other four subject countries.4 Third Remand Determination at 12. The agency also reasoned
that subject imports from the United Kingdom alone likely would not have significant volume or
price effects on the domestic industry upon revocation of the order. Id. at 13. The Commission
in turn found that ball bearings from the United Kingdom likely would not lead to the
continuation or recurrence of material injury absent the order. Id.
Plaintiffs NSK Corporation, NSK Ltd., and NSK Europe Ltd. (together, “NSK”) and
Defendant-Intervenor The Timken Company (“Timken”) urge the court to affirm the
Commission’s decisions on United Kingdom ball bearings, though for separate reasons.5 NSK
Comments 2-5; Timken Comments 5-6. NSK argues that the agency could not offer substantial
evidence for an affirmative finding on either the discernible adverse impact or likely material
injury analysis and, therefore, the Commission reached the correct result. NSK Comments 2-4.
NSK also notes that it does not believe that the court compelled the Commission to make a
particular finding. NSK Comments 4-5. While it does not explicitly state that it agrees with the
agency’s view of the court’s instructions in NSK IV, Timken explains that it “understands” the
Determination at 2 n.8, 11-12. The court interprets this as a finding that reopening the record
would cause no significant change to the relevant body of evidence.
4
The agency notes that it “would not have made these findings in the absence of the
Court’s conclusion in NSK IV that the record taken as a whole cannot establish that the subject
imports from the United Kingdom would likely have a discernible adverse impact upon
revocation.” Third Remand Determination at 12.
5
Plaintiffs JTEKT Corporation and Koyo Corporation of U.S.A. (collectively, “JTEKT”)
take no position on the cumulation issue and instead focus their comments exclusively on the
likely impact of subject imports on the domestic industry and the role of non-subject imports in
the United States market. JTEKT Comments 4-6 & n.2.
Consol. Court No. 06-00334 Page 6
Commission’s conclusion that it had to reverse its position. Timken Comments 6. Timken also
shares the Commission’s belief that the current record could support an affirmative finding on
the discernible adverse impact of United Kingdom ball bearings. Timken Comments 6.
The court sustains the Commission’s determination. Ordinarily, the Commission retains
the sole discretion as to whether it will reopen the record and make certain factual findings.
Nippon Steel Corp. v. Int’l Trade Comm’n, 345 F.3d 1379, 1382 (Fed. Cir. 2003). That the court
may have limited the Commission’s options on remand is of no moment; “[e]ven though a
reviewing court’s decision that substantial evidence does not support a particular finding may
have the practical effect of dictating a particular outcome, that is not the same as the court’s
making its own factual finding.” Nucor Corp. v. United States, 371 F. App’x 83, 90 (Fed. Cir.
2010) (unpublished). As the record presently constituted does not support a decision to cumulate
United Kingdom imports and the Commission has declined to reopen the record, the court
upholds the agency’s negative conclusions on ball bearings from the United Kingdom.
B. The Cumulated Subject Imports
In the context of a sunset review, the Commission assesses whether revocation of the
antidumping duty order under review likely would lead to continuation or recurrence of material
injury.6 19 U.S.C. § 1675a(a)(1). As part of that analysis, the agency examines the likely
6
At the heart of this provision lies a causation inquiry, whereby the Commission must
determine whether the cumulated subject imports likely would constitute more than a minimal or
tangential cause of material injury to the domestic industry that likely will continue or recur in
the absence of the orders. NSK IV, 34 CIT at ___, 712 F. Supp. 2d at 1367-68; see NSK II, 32
CIT at ___, 593 F. Supp. 2d at 1363-67; Usinor v. United States, 26 CIT 767, 794-95 (2002) (not
reported in F. Supp.); Neenah Foundry Co. v. United States, 25 CIT 702, 710-11, 155 F. Supp.
2d 766, 773-74 (2001).
Consol. Court No. 06-00334 Page 7
volume, price effect, and impact of subject imports on the domestic industry. Id. The
Commission addressed these factors on remand, using only data on the cumulated imports from
France, Germany, Italy, and Japan in its analysis. Third Remand Determination at 12 n.56, 13-
39. The court reviews the elements below.
1. The Conditions of Competition in the United States Market and the Likely
Volume and Price Effects of Cumulated Subject Imports
In the Third Remand Determination, the agency reassessed the conditions of competition
within the domestic industry and the likely volume and price effects of cumulated subject
imports. Id. at 13-23. The Commission modeled its discussion of these factors after its earlier
presentation of the same elements in NSK I, basing its conclusions on nearly-identical grounds.
Compare id. at 13-23, with NSK I, 32 CIT at ___, 577 F. Supp. 2d at 1338-47. When the court
first heard this case, it affirmed the agency’s determinations on these issues as supported by
substantial evidence, despite reservations about some evidence offered by the Commission. NSK
I, 32 CIT at ___, 577 F. Supp. 2d at 1338-47. NSK raises anew concerns on likely volume and
price effects of the subject imports, NSK Comments 10-16, while Timken supports the
Commission’s current analyses as sufficiently analogous to its previous determinations. Timken
Comments 7-13. Although NSK has identified gaps in the agency record that normally would
merit further discussion, the court already has concluded that these problems do not undercut the
substantial evidence in support of the Commission’s conclusions. NSK I, 32 CIT at ___, 577 F.
Supp. 2d at 1338-47. Moreover, NSK has not shown how the subtraction of United Kingdom
imports from the equations alters the agency’s previous determinations. For these reasons, the
court sustains the Commission’s results on these points.
Consol. Court No. 06-00334 Page 8
2. Non-Subject Imports, the Likely Significant Adverse Impact of the Cumulated
Subject Imports on the Vulnerable Domestic Industry, and the Causation Inquiry
A brief discussion of the structure of the United States ball bearing market will highlight
the importance of non-subject imports in this case. Two crucial facts characterize the domestic
market: (1) the high degree of substitutability between domestic ball bearings, subject imports,
and non-subject imports and (2) the important role of price in purchase decisions. Third Remand
Determination at 33, 36; Views of the Commission on Remand, Inv. Nos. 731-TA-394-A, 731-
TA-399-A, at 43 (Jan. 5, 2010) (“Second Remand Determination”). Because price plays such a
crucial role in the market, it follows that a drop in price for one group i.e., domestic ball
bearings, subject imports, or non-subject imports likely will affect the prices at which another
group sells the subject merchandise. Therefore, to understand the consequences of price changes
in the domestic ball bearing industry, the Commission must focus on the market as a whole and
examine the effects of each group on the others.
In NSK IV, the court summarized its concerns expressed in earlier opinions over the role
of non-subject imports in the United States market. The court noted that “[n]on-subject imports
have ‘become a significant and price-competitive factor’ in the United States ball bearing market,
amply increased their market share in terms of value at the expense of domestic and subject ball
bearings, and have undersold the domestic like product and subject imports in at least two-thirds
of the possible price comparisons.” NSK IV, 34 CIT at ___, 712 F. Supp. 2d at 1368 (citing
Second Remand Determination at 69-70). The court explained that “the facts of this case
necessitate that the Commission confirm that subject imports likely will reach the requisite level
of causation despite the significant presence of, and seemingly impenetrable barrier imposed by,
Consol. Court No. 06-00334 Page 9
non-subject imports in the United States market.” Id. at ___, 712 F. Supp. 2d at 1367-68. The
court asked the Commission to answer two questions on remand in light of the data on non-
subject imports: in the absence of the antidumping duty orders, “whether the cumulated subject
imports likely will have a significant adverse impact on the vulnerable domestic industry” and
“whether the cumulated subject imports constitute more than a minimal or tangential cause of
injury to the domestic industry which will likely continue or recur.” Id. at ___, 712 F. Supp. 2d
at 1367.
In the Third Remand Determination, the Commission again has failed to account
adequately for the role of non-subject imports when analyzing likely impact and causation. With
respect to likely impact, the agency offered two sentences in support of its affirmative
determination:
Upon reviewing the Court’s instructions on this issue as well as the pertinent
record evidence, we find that revocation of the orders will likely have a significant
adverse impact on the vulnerable domestic ball bearing industry. Given our
findings on the subject imports’ likely significant volume, likely significant
underselling and likely significant price effects, the substitutability between
domestic and subject bearings, and the domestic industry’s vulnerability, it
necessarily follows that revocation of the orders would likely have a significant
adverse impact on the domestic industry.
Third Remand Determination at 31. The conspicuous absence of any discussion on the effects of
non-subject imports underscores the Commission’s refusal to accurately examine the three-part
structure of the domestic market. While the Commission might have reached the correct
conclusions on likely volume, underselling, and price effects of unrestrained subject imports, id.,
it ignored the influence of non-subject imports in the market, as NSK and JTEKT also discuss in
their comments. NSK Comments 5-16; JTEKT Comments 12-27. On this record, it appears to
Consol. Court No. 06-00334 Page 10
the court that if subject producers lower the prices of their imports, then the non-subject
producers almost certainly will also drop their prices. As a result, the non-subject imports likely
would negate any potential significant adverse effect of lower-priced subject imports, thereby
preventing the latter from achieving the requisite level of impact. Without more, the court
cannot determine whether the cumulated subject imports likely will have a significant adverse
impact on the vulnerable domestic industry in the absence of the antidumping duty orders.
On the issue of causation, the Commission correctly framed the question that lies at the
heart of the court’s remand instructions:
whether any impediment imposed by the significant presence of low-priced non-
subject imports in the U.S. market will likely inhibit the subject imports from
capturing additional market share from the domestic industry such that the subject
imports are thereby precluded from having a likely significant adverse impact on
the condition of the domestic industry if the orders were revoked.
Third Remand Determination at 32. However, despite this cogent articulation, the agency did not
offer any meaningful discussion on non-subject imports in its causation analysis or directly
address the question posed by the court in its remand instructions. See id. at 32-39. Instead, the
Commission based its affirmative causation determination on seven grounds: (1) the continued
presence of subject imports in the domestic market; (2) the excess capacity of subject producers;
(3) the likely return of more aggressive volume and underselling strategies of the subject
producers that occurred prior to the imposition of the order; (4) the fungibility between the
domestic like product and subject merchandise; (5) the importance of price in purchase
decisions; (6) the inelastic demand of ball bearings; and (7) the likely significant volumes of
subject imports in the absence of the order. Id. at 32-34. The rationale offered by the
Commission fails for many reasons. That subject imports maintain a continued presence in the
Consol. Court No. 06-00334 Page 11
domestic market does not mean that subject merchandise would achieve the requisite level of
causation in the absence of the order. Contrary to the agency’s conclusion, unexplained
inferences from a continuation of market share, measured either in terms of quantity or value,
will not necessarily prove that subject imports likely would cause material injury to the domestic
industry. The same holds true for the agency’s arguments on excess capacity, fungibility, the
importance of price, and inelastic demand, none of which alone can prove cause. The third
justification does not consider that changed market conditions, i.e., a large increase in non-
subject imports’ market share, likely would render past volume and underselling strategies
unworkable. Finally, the evidence on likely volumes of subject imports does not pass muster
because, as previously explained, it unreasonably narrows its analysis to only certain segments of
the domestic market. With each of these justifications, the agency centers its reasoning on the
relationship between subject imports and the domestic industry. For the reasons previously
explained, “the non-subject imports may prevent the subject imports from achieving the requisite
level of causation and, therefore, serve as an impenetrable barrier that precludes the agency from
affirmatively finding injury in this sunset review.” NSK IV, 34 CIT at ___, 712 F. Supp. 2d at
1368. Without a more thorough examination of non-subject imports, the court cannot determine
whether the cumulated subject imports constitute more than a minimal or tangential cause of
injury to the domestic industry which will likely continue or recur.
In light of the foregoing, the court finds that the record evidence cannot support
affirmative significant adverse impact or causation determinations. Consequently, the court
concludes that the record cannot support an affirmative finding of material injury. The
Commission may reopen the record and obtain additional data on the issue at its discretion.
Consol. Court No. 06-00334 Page 12
III. Conclusion
In the Third Remand Determination, the Commission has presented a host of reasons to
support its conclusions. The court sustains the agency’s decisions dealing with United Kingdom
ball bearings. However, amid the myriad of justifications produced by the agency, the court
cannot discern the necessary connection between the facts found and the agency’s conclusions on
likely impact and causation. As the court stated in NSK II, the consideration of interchangeable
non-subject imports is an important aspect of the causation analysis. 32 CIT at ___, 593 F. Supp.
2d at 1363-67, 1369 (citing Mittal Steel Point Lisas Ltd. v. United States, 542 F.3d 867 (Fed Cir.
2008); Bratsk Aluminum Smelter v. United States, 444 F.3d 1369 (Fed. Cir. 2006); Gerald
Metals, Inc. v. United States, 132 F.3d 716 (Fed. Cir. 1997)). These decisions all stand clearly
for the proposition that the agency, in a case of this type, must rationally account for non-subject
imports before it may issue an affirmative injury determination. For the foregoing reasons, it is
ORDERED that the court SUSTAINS IN PART and REMANDS IN PART the
Commission’s Third Remand Determination. More specifically, it is
ORDERED that the court SUSTAINS the Commission’s decision not to cumulate ball
bearings from the United Kingdom with other subject merchandise; it is further
ORDERED that the court SUSTAINS the agency’s determination that revocation of the
antidumping duty order on subject imports from the United Kingdom likely would not lead to
continuation or recurrence of material injury to the domestic industry within a reasonably
foreseeable time; it is further
Consol. Court No. 06-00334 Page 13
ORDERED that the court SUSTAINS the Commission’s conclusions on the conditions
of competition within the domestic industry and the likely volume and price effects of cumulated
subject imports; it is further
ORDERED that the court REMANDS the likely significant adverse impact analysis to
the Commission. The agency must determine whether the cumulated subject imports likely will
have a significant adverse impact on the vulnerable domestic industry in the absence of the
antidumping duty orders. In so doing, the Commission must account for the tripartite nature of
the United States ball bearing market and decide whether the interplay and competition between
subject imports, non-subject imports, and domestic ball bearings would prevent subject imports
from achieving the requisite level of impact. Because the court finds that the existing record,
taken as a whole, cannot support an affirmative finding on likely significant adverse impact, the
Commission may reopen the record and obtain additional data on the issue; it is further
ORDERED that the court REMANDS the causation inquiry to the Commission. The
agency must determine whether the cumulated subject imports constitute more than a minimal or
tangential cause of injury to the domestic industry that likely will continue or recur in the absence
of the antidumping duty orders, given the significant presence of, and seemingly impenetrable
barrier imposed by, non-subject imports in the United States market. Once again, the
Commission must account for the three-part composition of the domestic ball bearing market and
decide whether the interplay and competition between subject imports, non-subject imports, and
domestic ball bearings would prevent subject imports from achieving the requisite level of cause.
Because the court concludes that the existing record, taken as a whole, cannot support an
Consol. Court No. 06-00334 Page 14
affirmative finding on causation, the Commission may reopen the record and obtain additional
data on the issue; it is further
ORDERED that, in completing its analysis of the likely significant adverse impact and
causation inquiries on remand, the Commission must address the court’s concerns over non-
subject imports as noted in NSK IV, NSK III, NSK II, and NSK I; and it is further
ORDERED that the Commission shall provide a status report to the court by December
20, 2010, that explains whether the agency will re-open the record on the likely significant
adverse impact and causation issues. The parties also shall file a joint scheduling order
consistent with Court and Chambers rules at that time.
Dated: December 9, 2010 /s/ Judith M. Barzilay
New York, New York Judith M. Barzilay, Judge