Slip Op. 00-28
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
__________________________________
:
SKF USA INC. and SKF GmbH, :
:
Plaintiffs, :
:
v. : Court No. 99-08-00473
:
UNITED STATES, :
:
Defendant, :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor. :
_________________________________:
Plaintiffs, SKF USA Inc. and SKF GmbH (collectively “SKF”),
move pursuant to USCIT R. 56.2 for judgment upon the agency
record challenging various aspects of the Department of
Commerce, International Trade Administration’s (“Commerce”)
final determination, entitled Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, Germany,
Italy, Japan, Romania, Sweden, and the United Kingdom; Final
Results of Antidumping Duty Administrative Reviews (“Final
Results”), 64 Fed. Reg. 35,590 (July 1, 1999).
Specifically, SKF contends that Commerce erred in: (1)
conducting a duty absorption inquiry under 19 U.S.C. §
1675(a)(4) (1994) for the ninth administrative review of the
applicable antidumping duty order; (2) determining that it
applied a reasonable duty absorption methodology and that duty
absorption had in fact occurred; (3) using aggregate data of all
foreign like products under consideration for normal value in
calculating profit for constructed value (“CV”) under 19 U.S.C.
§ 1677b(e)(2)(A) (1994); and (4) excluding below-cost sales from
the CV profit calculation.
Commerce responds that it properly: (1) conducted a duty
absorption inquiry under § 1675(a)(4); (2) used a reasonable
methodology and determined that duty absorption existed; (3)
calculated CV profit pursuant to § 1677b(e)(2)(A); and (4)
Court No. 99-08-00473 Page 2
excluded below-cost sales from the CV profit calculation. The
Torrington Company presents arguments similar to those of the
defendant.
Held: SKF’s USCIT R. 56.2 motion is denied in part and
granted in part. The case is remanded to Commerce to annul all
findings and conclusions made pursuant to the duty absorption
inquiry conducted for the subject review.
[SKF’s motion is denied in part and granted in part. Case
remanded.]
Dated: March 22, 2000
Steptoe & Johnson LLP (Herbert C. Shelley and Alice A.
Kipel) for SKF USA Inc. and SKF GmbH.
David W. Ogden, Acting Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Velta A. Melnbrencis,
Assistant Director); of counsel: David R. Mason, Office of the
Chief Counsel for Import Administration, United States
Department of Commerce, for defendant.
Stewart and Stewart (Terence P. Stewart, Wesley K. Caine,
Geert De Prest and Lane S. Hurewitz) for The Torrington Company.
OPINION
TSOUCALAS, Senior Judge: Plaintiffs, SKF USA Inc. and SKF
GmbH (collectively “SKF”), move pursuant to USCIT R. 56.2 for
judgment upon the agency record challenging various aspects of
the Department of Commerce, International Trade Administration’s
(“Commerce”) final determination, entitled Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From
Court No. 99-08-00473 Page 3
France, Germany, Italy, Japan, Romania, Sweden, and the United
Kingdom; Final Results of Antidumping Duty Administrative
Reviews (“Final Results”), 64 Fed. Reg. 35,590 (July 1, 1999).
Specifically, SKF contends that Commerce erred in: (1)
conducting a duty absorption inquiry under 19 U.S.C. §
1675(a)(4) (1994) for the ninth administrative review of the
applicable antidumping duty order; (2) determining that it
applied a reasonable duty absorption methodology and that duty
absorption had in fact occurred; (3) using aggregate data of all
foreign like products under consideration for normal value
(“NV”) in calculating profit for constructed value (“CV”) under
19 U.S.C. § 1677b(e)(2)(A) (1994); and (4) excluding below-cost
sales from the CV profit calculation.
Commerce responds that it properly: (1) conducted a duty
absorption inquiry under § 1675(a)(4); (2) used a reasonable
methodology and determined that duty absorption existed; (3)
calculated CV profit pursuant to § 1677b(e)(2)(A); and (4)
excluded below-cost sales from the CV profit calculation. The
Torrington Company (“Torrington”) presents arguments similar to
those of the defendant.
The Court will address each of these arguments in turn.
Court No. 99-08-00473 Page 4
BACKGROUND
On May 15, 1989, Commerce published antidumping duty orders
on antifriction bearings (other than tapered roller bearings)
and parts thereof (“AFBs”) imported from several countries,
including Germany. See Antidumping Duty Orders: Ball Bearings,
Cylindrical Roller Bearings, and Spherical Plain Bearings and
Parts Thereof From the Federal Republic of Germany, 54 Fed. Reg.
20,900. This case concerns the ninth administrative review of
the antidumping duty order on AFBs from Germany for the period
of review (“POR”) covering May 1, 1997 through April 30, 1998.
See Final Results, 64 Fed. Reg. at 35,590. In accordance with
19 C.F.R. § 351.213 (1998), Commerce initiated the ninth review
on June 29, 1998. See Initiation of Antidumping and
Countervailing Duty Administrative Reviews and Request for
Revocation in Part, 63 Fed. Reg. 35,188. On February 23, 1999,
Commerce published the preliminary results of the ninth review.
See Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof From France, Germany, Italy, Japan, Romania,
Singapore, Sweden, and the United Kingdom; Preliminary Results
of Antidumping Duty Administrative Reviews and Partial
Rescission of Administrative Reviews (“Preliminary Results”), 64
Fed. Reg. 8790. Commerce published the Final Results on July 1,
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1999. See 64 Fed. Reg. at 35,590.
Since the administrative review at issue was initiated after
December 31, 1994, the applicable law in this case is the
antidumping statute as amended by the Uruguay Round Agreements
Act (“URAA”), Pub. L. No. 103-465, 108 Stat. 4809 (1994)
(effective Jan. 1, 1995).
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).
STANDARD OF REVIEW
The Court will uphold Commerce’s final determination in an
antidumping administrative review unless it is “unsupported by
substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i) (1994).
I. Substantial Evidence Test
Substantial evidence is “more than a mere scintilla. It
means such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.” Universal Camera Corp. v.
NLRB, 340 U.S. 474, 477 (1951) (quoting Consolidated Edison Co.
Court No. 99-08-00473 Page 6
v. NLRB, 305 U.S. 197, 229 (1938)). Substantial evidence “is
something less than the weight of the evidence, and the
possibility of drawing two inconsistent conclusions from the
evidence does not prevent an administrative agency’s finding
from being supported by substantial evidence.” Consolo v.
Federal Maritime Comm’n, 383 U.S. 607, 620 (1966) (citations
omitted). Moreover, “[t]he court may not substitute its
judgment for that of the [agency] when the choice is ‘between
two fairly conflicting views, even though the court would
justifiably have made a different choice had the matter been
before it de novo.’” American Spring Wire Corp. v. United
States, 8 CIT 20, 22, 590 F. Supp. 1273, 1276 (1984) (quoting
Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 22-23 (1st Cir.
1983) (quoting, in turn, Universal Camera, 340 U.S. at 488)).
II. Chevron Two-Step Analysis
To determine whether Commerce’s interpretation and
application of the antidumping statute is “in accordance with
law,” the Court must undertake the two-step analysis prescribed
by Chevron U.S.A. Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984). Under the first step, the Court
reviews Commerce’s construction of a statutory provision to
Court No. 99-08-00473 Page 7
determine whether “Congress has directly spoken to the precise
question at issue.” Id. at 842. “To ascertain whether Congress
had an intention on the precise question at issue, [the Court]
employ[s] the ‘traditional tools of statutory construction.’”
Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir.
1998) (citing Chevron, 467 U.S. at 843 n.9). “The first and
foremost ‘tool’ is the statute’s text, giving it its plain
meaning. Because a statute’s text is Congress’s final
expression of its intent, if the text answers the question, that
is the end of the matter.” Id. (citations omitted). Beyond the
statute’s text, the tools of statutory construction “include the
statute’s structure, canons of statutory construction, and
legislative history.” Id. (citations omitted); but see Flora
Trade Council v. United States, 23 CIT __, 41 F. Supp. 2d 319,
323 n.6 (1999) (noting that “[n]ot all rules of statutory
construction rise to the level of a canon, however”) (citation
omitted).
If, after employing the first prong of Chevron, the Court
determines that the statute is silent or ambiguous with respect
to the specific issue, the question for the Court becomes
whether Commerce’s construction of the statute is permissible.
Chevron, 467 U.S. at 843. Essentially, this is an inquiry into
Court No. 99-08-00473 Page 8
the reasonableness of Commerce’s interpretation. See Fujitsu
Gen. Ltd. v. United States, 88 F.3d 1034, 1038 (Fed. Cir. 1996).
Provided Commerce has acted rationally, the Court may not
substitute its judgment for the agency’s. See IPSCO, Inc. v.
United States, 965 F.2d 1056, 1061 (Fed. Cir. 1992); see also
Koyo Seiko Co. v. United States, 36 F.3d 1565, 1570 (Fed. Cir.
1994) (holding that “a court must defer to an agency’s
reasonable interpretation of a statute even if the court might
have preferred another”). The “[C]ourt will sustain the
determination if it is reasonable and supported by the record as
a whole, including whatever fairly detracts from the
substantiality of the evidence.” Negev Phosphates, Ltd. v.
United States Dep’t of Commerce, 12 CIT 1074, 1077, 699 F. Supp.
938, 942 (1988) (citations omitted). “In determining whether
Commerce’s interpretation is reasonable, the Court considers,
among other factors, the express terms of the provisions at
issue, the objectives of those provisions and the objectives of
the antidumping scheme as a whole.” Mitsubishi Heavy Indus.,
Ltd. v. United States, 22 CIT __, __, 15 F. Supp. 2d 807, 813
(1998).
Court No. 99-08-00473 Page 9
DISCUSSION
I. Commerce’s Duty Absorption Inquiry
A. Background
During an administrative review initiated two or four years
after the “publication” of an antidumping duty order, Commerce,
if requested by a domestic interested party, “shall determine
whether antidumping duties have been absorbed by a foreign
producer or exporter subject to the order if the subject
merchandise is sold in the United States through an importer who
is affiliated with such foreign producer or exporter.” 19
U.S.C. § 1675(a)(4).1 Commerce shall notify the International
Trade Commission (“ITC”) of its findings regarding such duty
absorption for the ITC to consider in conducting a five-year
(“sunset”) review under 19 U.S.C. § 1675(c), see 19 U.S.C. §
1675(a)(4), and the ITC will take such findings into account in
determining whether material injury is likely to continue or
recur if an order were revoked under § 1675(c), see 19 U.S.C. §
1675a(a)(1)(D).
On May 29, 1998 and July 29, 1998, Torrington requested that
Commerce conduct a duty absorption inquiry pursuant to 19 U.S.C.
1 Subsection (a)(4) of 19 U.S.C. § 1675 was added to the
antidumping law by the Uruguay Round Agreements Act in 1994.
See Pub. L. No. 103-465, § 220, 108 Stat. 4809, 4860.
Court No. 99-08-00473 Page 10
§ 1675(a)(4) with respect to various respondents, including SKF,
to determine whether antidumping duties had been absorbed during
the POR. See Final Results, 64 Fed. Reg. at 35,600. SKF and
other respondents objected to such an inquiry, maintaining that
Commerce was without statutory authority to conduct a duty
absorption inquiry for the subject review. See id.
In the Final Results, Commerce determined that duty
absorption had occurred for the POR. See id. at 35,601. In
asserting its authority to conduct a duty absorption inquiry
under § 1675(a)(4), Commerce first explained that for
“transition orders,” as defined in 19 U.S.C. § 1675(c)(6)(C)
(1994) (that is, antidumping duty orders, inter alia, deemed
issued on January 1, 1995), regulation 19 C.F.R. § 351.213(j)(2)
(1998) provides that Commerce will make a duty absorption
determination, if requested, for any administrative review
initiated in 1996 or 1998. See id. at 35,600-01; 19 CFR Part
351 et al., Antidumping Duties; Countervailing Duties; Final
[R]ule, 62 Fed. Reg. 27,296, 27,394 (effective June 18, 1997)
(concerning 19 C.F.R. § 351.213). Commerce, therefore,
concluded that: (1) because the antidumping duty order on the
AFBs in this case had been in effect since 1989, the order is a
“transition order” pursuant to § 1675(c)(6)(C); and (2) since
Court No. 99-08-00473 Page 11
this review was initiated in 1998 and a request was made, it had
the authority to make a duty absorption inquiry for this POR.
See Final Results, 64 Fed. Reg. at 35,600.
B. Contentions of the Parties
SKF contends that Commerce lacked authority under 19 U.S.C.
§ 1675(a)(4) to undertake a duty absorption inquiry for this
POR. See SKF’s Br. Supp. Mot. J. Agency R. at 2-3, 9-15; SKF’s
Reply Br. at 2-13. In particular, SKF argues that for
conducting such an inquiry under § 1675(a)(4), the statute
clearly provides that the inquiry must occur in the second or
fourth review after publication of the antidumping duty order,
not in any other review. See SKF’s Br. Supp. Mot. J. Agency R.
at 10. SKF asserts that since Commerce conducted a duty
absorption inquiry for this POR nine years after the publication
of the applicable antidumping duty order (that is, May 15,
1989), the agency failed to satisfy § 1675(a)(4). See id. at
11.
Further, although SKF recognizes that the 1989 order is a
“transition order” as defined under the sunset review provision
19 U.S.C. § 1675(c)(6)(C), SKF asserts that corresponding §
1675(c)(6)(D), concerning “[i]ssue date for transition orders,”
Court No. 99-08-00473 Page 12
is inapplicable to a duty absorption inquiry conducted under §
1675(a)(4). See id. at 12-15. Specifically, SKF notes that
although § 1675(c)(6)(D) provides “a transition order shall be
treated as issued on the date the WTO Agreement enters into
force with respect to the United States” (that is, January 1,
1995), the provision expressly limits the deemed “issued date”
for transition orders to sunset reviews under § 1675(c). SKF
argues that since § 1675(c)(6)(D)’s January 1, 1995 issuance
date does not apply to § 1675(a)(4), the “publication” date of
the order remains unchanged at May 15, 1989 and, therefore,
Commerce is precluded from initiating a duty absorption inquiry
for a review nine years after the initial publication of the
order. See id. at 15. SKF thereby maintains that if Commerce’s
action is not authorized by statute, the agency did not have
authority to promulgate 19 C.F.R. § 351.213(j)(2) to give itself
such authority, that is, such a promulgation is ultra vires.
See SKF’s Reply Br. at 11-13.
In sum, SKF argues that since nothing in the statute nor
legislative history contradicts the plain reading of §
1675(a)(4), Commerce lacked authority to conduct a duty
absorption inquiry for the ninth administrative review of the
1989 antidumping duty order and, therefore, its inquiry should
Court No. 99-08-00473 Page 13
be vacated. See SKF’s Br. Supp. Mot. J. Agency R. at 2, 11.
Alternatively, SKF argues that even if Commerce possessed the
authority to conduct such an inquiry, Commerce’s methodology for
determining duty absorption was flawed and contrary to law and,
accordingly, the case should be remanded to Commerce to modify
its methodology. See id. at 3, 16-37.
Commerce responds that it properly: (1) construed §§ 1675(a)
and (c) as authorizing it to make duty absorption inquiries for
antidumping duty orders that were issued and published prior to
January 1, 1995; and (2) devised and applied a reasonable
methodology in determining the existence of duty absorption in
this case. See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R.
at 2, 5-25. Commerce asserts that SKF’s contention, that the
special rules under § 1675(c)(6) governing the scheduling for
sunset reviews of transition orders have no effect when Commerce
may make duty absorption findings under § 1675(a)(4), ignores
the rules of statutory construction which require that parts of
a statutory scheme should be read together so as to give effect
to the intent of Congress. See id. at 9, 11. In particular,
Commerce claims that the legislative history indicates that
Congress intended that the ITC would consider duty absorption
findings in all sunset reviews irrespective of whether the
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antidumping orders were issued before or after January 1, 1995.
See id. at 12. Commerce additionally claims that a strong
indication that Congress intended that the statutory provisions
regarding duty absorption and the scheduling for sunset reviews
of transition orders should be construed together is found in
the explicit reference to subsection (c) of § 1675 contained in
the last sentence of § 1675(a)(4). See id. at 12-13. Commerce
also contends that failure to consider these provisions
collectively would lead to absurd results because Commerce would
be precluded from making duty absorption determinations in
administrative reviews of transition orders, and the ITC would
be unable to consider duty absorption findings for sunset
reviews of hundreds of transition orders. See id. at 13.
Torrington generally agrees with the positions taken by
Commerce. See Torrington’s Resp. to Pls.’ Mot. J. Agency R. at
2-3, 10-30. Torrington acknowledges that § 1675 addresses the
timing of sunset reviews of pre-URAA antidumping duty orders
(that is, “transition orders”), but does not directly speak to
the timing of duty absorption inquiries in the context of
administrative reviews of pre-URAA orders. See id. at 25.
Torrington, nevertheless, argues that such an omission does not
support SKF’s restrictive reading of § 1675(a)(4). See id.
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Rather, Torrington contends, inter alia, that “‘[w]hether the
specification of one matter means the exclusion of another is a
matter of legislative intent for which one must look to the
statute as a whole.’” Id. at 26 (quoting Massachusetts Trustees
of E. Gas & Fuel Assocs. v. United States, 312 F.2d 214, 220
(1st Cir. 1963)). Torrington claims that the antidumping
provisions taken together and the accompanying URAA legislative
history show that a duty absorption inquiry is: (1) a critical
factor both in the context of Commerce’s determination whether
dumping is likely to continue or recur and the ITC’s
determination whether injury is likely to continue or recur; and
(2) as relevant to transition orders as it is to post-URAA
orders. See id. at 19-26. Further, Torrington asserts that
there is no indication in § 1675(a)(4) and § 1675(c)(6)(D),
through omission or otherwise, that Congress intended to limit
a duty absorption inquiry of post-URAA orders to only the second
and fourth year after the issuance of such orders. See id.
Torrington also asserts that the statutory omissions concerning
duty absorption inquiries of pre-URAA orders have less
interpretative force in the administrative setting where the
Court must defer to Commerce’s interpretation of the antidumping
statute unless Congress has directly spoken to the question at
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issue. See id. at 25 (citation omitted).
C. Analysis
The issue primarily presented is whether 19 U.S.C. §
1675(a)(4) authorizes Commerce to conduct a duty absorption
inquiry for a pre-URAA antidumping duty order, that is, a
transition order.
Title 19, United States Code, § 1675(a)(4) specifically
states that Commerce, if requested, shall conduct a duty
absorption inquiry for any review under subsection (a)
“initiated 2 years or 4 years after the publication of an
antidumping duty order under section 1673e(a) of this title . .
. . [Commerce] shall notify the [ITC] of its findings regarding
such duty absorption for the [ITC] to consider in conducting a
review under subsection (c) of this section.” See 19 U.S.C. §
1673e(a) (concerning Commerce’s publication of antidumping duty
order). In addition, § 1675(c)(6)(C) provides that, for
purposes of § 1675, “the term ‘transition order’ means . . . an
antidumping duty order . . . which is in effect on the date the
WTO Agreement enters into force with respect to the United
States.” Section 1675(c)(6)(D) further provides that “[f]or
purposes of this subsection, a transition order shall be treated
Court No. 99-08-00473 Page 17
as issued on the date the WTO Agreement enters into force with
respect to the United States, if such order is based on an
investigation conducted by both [Commerce] and the [ITC].” The
“WTO Agreement,” see 19 U.S.C. § 3501(9) (1994), entered into
force for the United States on January 1, 1995, see 19 U.S.C. §
3511(b) and note (1994) (Proclamation No. 6780 para. 2 (Mar. 23,
1995), in 60 Fed. Reg. 15,845).
Although the antidumping duty order in dispute is a
transition order under § 1675(c)(6)(C), the Court finds that the
deemed January 1, 1995 issuance date of § 1675(c)(6)(D) is
inapplicable to the order. The plain language of §
1675(c)(6)(D) specifically applies such a date “[f]or purposes
of . . . subsection” (c) of § 1675, that is, for purposes of
sunset reviews, rather than for duty absorption inquiries under
subsection (a). While the Court should avoid interpreting
statutes that render language superfluous and should consider
parts of a statutory scheme together to ascertain congressional
intent, such “canons of construction are no more than rules of
thumb that help courts determine the meaning of legislation, and
in interpreting a statute a court should always turn first to
one, cardinal canon before all others.” Connecticut Nat’l Bank
v. Germain, 503 U.S. 249, 253 (1992). In particular, this Court
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“must presume that a legislature says in a statute what it means
and means in a statute what it says there. When the words of a
statute are unambiguous, then, this first canon is also the
last: ‘judicial inquiry is complete.’” Id. at 253-54 (quoting
Rubin v. United States, 449 U.S. 424, 430 (1981)); see VE
Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1579
(Fed. Cir. 1990) (“It is axiomatic that statutory interpretation
begins with the language of the statute. If . . . the language
is clear and fits the case, the plain meaning of the statute
will be regarded as conclusive.”) (citations omitted).
Because the text of § 1675(c)(6)(D) unambiguously and
specifically applies the new issuance date of transition orders
to subsection (c), the Court disagrees with Commerce and
Torrington that subsection (a) and (c) must be read as one.
Moreover, the Court finds that the last sentence of §
1675(a)(4)’s notice requisite is irrelevant because the first
condition precedent of the statute, that there exists a review
“initiated 2 years or 4 years after the publication of
antidumping duty order,” must be satisfied before conducting a
duty absorption inquiry. The Court, therefore, concludes that
the publication and effective date of antidumping duty order at
issue remains greater than four years, that is, May 15, 1989.
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Since 19 U.S.C. § 1675(c)(6)’s special transition rules do
not support Commerce’s authority to conduct a duty absorption
inquiry for a pre-URAA antidumping duty order, the Court must
consider whether there is clear congressional intent that 19
U.S.C. § 1675(a)(4) should be applied retrospectively (as
opposed to prospectively) to such an order.
In Landgraf v. USI Film Prods., 511 U.S. 244 (1994), and
Lindh v. Murphy, 521 U.S. 320 (1997), the Supreme Court
articulated the following three-part test for determining
whether a statute may be lawfully be applied retrospectively.
See Craig v. Eberly, 164 F.3d 490, 493-94 (10th Cir. 1998);
Mathews v. Kidder, Peabody & Co., 161 F.3d 156, 159-66 (3rd Cir.
1998). First, a court must “determine whether Congress has
expressly prescribed the statute’s proper reach,” and if it has,
the court must give effect to congressional will, subject only
to constitutional restraints. Landgraf, 511 U.S. at 280.
Second, if Congress did not expressly speak to the issue, the
court employs normal rules of statutory construction to
ascertain the statute’s temporal scope. See Lindh, 521 U.S. at
326; In re Minarik, 166 F.3d 591, 597 (3rd Cir. 1999). Third,
in situations where rules of statutory construction do not
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clarify the statute’s temporal scope, “the court must determine
whether the new statute would have retroactive effect, i.e.,
whether it would impair rights a party possessed when he acted,
increase a party’s liability for past conduct, or impose new
duties with respect to transactions already completed.”
Landgraf, 511 U.S. at 280. If the court finds that the statute
has retroactive effect, it triggers the traditional judicial
“presumption against statutory retroactivity,” id. at 272,
“absent clear congressional intent favoring such a result,” id.
at 280.
The Supreme Court further clarified that “[a] statute does
not operate ‘retrospectively’ merely because it is applied in a
case arising from conduct antedating the statute’s enactment or
upsets expectations based in prior law. Rather, the court must
ask whether the new provision attaches new legal consequences to
events completed before its enactment.” Id. at 269-70 (citation
and footnote omitted); see American Permac, Inc. v. United
States, 191 F.3d 1380, 1381 (Fed. Cir. 1999); Travenol Lab.,
Inc. v. United States, 118 F.3d 749, 752-53 (Fed Cir. 1997);
Goodyear Tire & Rubber Co. v. Dep’t of Energy, 118 F.3d 1531,
1536-37 (Fed. Cir. 1997).
Court No. 99-08-00473 Page 21
The first step under the Landgraf/Lindh test then is to look
at the statutory text of the URAA and determine whether Congress
has expressly prescribed whether 19 U.S.C. § 1675(a)(4) should
be applied prospectively or retrospectively. Section 291 of the
URAA specifies that, “[e]xcept as provided in section 261,” the
URAA amendments “shall take effect on . . . the date on which
the WTO Agreement . . . enters into force with respect to the
United States,” that is, January 1, 1995, and “apply with
respect to . . . reviews initiated under section 751 of [the
Tariff Act of 1930],” that is, administrative reviews of
determinations under 19 U.S.C. § 1675. URAA § 291(a)(2), (b),
108 Stat. at 4931; see 19 U.S.C. § 1671 note (1994) (URAA
effective dates); Torrington Co. v. United States, 68 F.3d 1347,
1352 (Fed. Cir. 1995) (citing URAA § 291(a)(2), (b) (noting
effective date of URAA amendments)). The Court first notes that
§ 261 of the URAA is inapplicable here. Second, the Court finds
that § 291's language provides an “unambiguous directive,”
Landgraf, 511 U.S. at 263, from Congress as to the temporal
reach of the URAA amendment § 1675(a)(4), specifically, that it
must be applied prospectively on or after January 1, 1995 for 19
U.S.C. § 1675 reviews. Since § 291 contains an express command
from Congress on the temporal reach of § 1675(a)(4), the Court
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must follow it and our inquiry is done.
Accordingly, the Court finds that Commerce lacked statutory
authority to conduct a duty absorption inquiry for the pre-URAA
antidumping duty order at issue and, therefore, declines to
address Commerce’s methodology for determining duty absorption.
Moreover, the Court finds that since 19 C.F.R. § 351.213(j) is
inconsistent with 19 U.S.C. § 1675(a)(4), this part of the
regulation is invalid. See Aerolineas Argentinas v. United
States, 77 F.3d 1564, 1575 (Fed. Cir. 1996) (holding that "a
regulation cannot override a clearly stated statutory
enactment”) (citing Brush v. Office of Personnel Management, 982
F.2d 1554, 1560 (Fed. Cir. 1992) (noting that a “regulation must
be held to be invalid since it does not comport with the clear
statutory mandate”)); see also United States v. Larionoff, 431
U.S. 864, 873 (1977) (concluding that a regulation is valid only
if it is consistent with the statute under which it was
promulgated); Killip v. Office of Personnel Management, 991 F.2d
1564, 1569 (Fed. Cir. 1993) (holding that “[t]hough an agency
may promulgate . . . regulations pursuant to authority granted
by Congress, no such . . . regulation can confer on the agency
any greater authority than that conferred under the governing
statute”) (citing Bowen v Georgetown Univ. Hosp., 488 U.S. 204,
Court No. 99-08-00473 Page 23
208 (1988); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 213-14
(1976)).
II. Commerce’s CV Profit Calculation
A. Background
For this POR, Commerce “used CV as the basis for NV when
there were no usable sales of the foreign like product in the
comparison market.” Preliminary Results, 64 Fed. Reg. at 8795.
Commerce calculated the profit component of CV using the
statutorily preferred methodology of 19 U.S.C. § 1677b(e)(2)(A).2
See Final Results, 64 Fed. Reg. at 35,611. In applying the
preferred methodology for calculating CV profit under §
1677b(e)(2)(A), Commerce determined that the use of “an
aggregate calculation that encompasses all foreign like products
under consideration for NV represents a reasonable
interpretation of [§ 1677b(e)(2)(A)].” Id. Commerce also
determined that the use of such “aggregate data results in a
reasonable and practical measure of profit that [it] can apply
2Specifically, in calculating constructed value, Commerce
is required to calculate an amount for profit based on “the
actual amounts incurred and realized by the specific exporter or
producer being examined in the investigation or review . . . in
connection with the production and sale of a foreign like
product [made] in the ordinary course of trade.” 19 U.S.C. §
1677b(e)(2)(A).
Court No. 99-08-00473 Page 24
consistently where there are sales of the foreign like product
in the ordinary course of trade.” Id. Also, in rejecting
respondents’ interpretation of “foreign like product” as being
limited to the product which is identical or similar to the
subject merchandise for purposes of calculating CV profit,
Commerce reasoned as follows:
In accordance with the definition of foreign like
product under [19 U.S.C. § 1677(16) (1994)], it is
clear that “foreign like product” is not limited to
the product which is identical in physical
characteristics to the subject merchandise ([§
1677(16)(A)]) or even to the product that is similar
to the subject merchandise ([§ 1677(16)(B)]).
Merchandise of the “same general class or kind” as the
subject merchandise ([§ 1677(16)(C)]) will qualify as
the “foreign like product” in cases where either the
identical or the similar merchandise is not available.
There is no indication that, by referring to “a
foreign like product” in [§ 1677b(e)(2)(A)], Congress
intended that profit be calculated upon the basis of
merchandise that is identical or similar to the
subject merchandise. If Congress had such intentions,
then the “preferred” method provided in [§
1677b(e)(2)(A)] would rarely be applicable since CV
ordinarily becomes necessary for determining normal
value when identical or similar home market
merchandise is not available for comparison to the
U.S. merchandise.
Id. Also, in calculating CV profit under § 1677b(e)(2)(A),
Commerce excluded below-cost sales from the calculation which it
disregarded in the determination of NV pursuant to 19 U.S.C. §
1677b(b)(1) (1994). Commerce excluded such below-cost sales
because: (1) § 1677b(e)(2)(A) requires Commerce “to use the
Court No. 99-08-00473 Page 25
actual amount for profit in connection with the production and
sale of a foreign like product in the ordinary course of trade”;
and (2) 19 U.S.C. § 1677(15) (1994) provides that below-cost
sales disregarded under § 1677b(b)(1) are considered to be
outside the ordinary course of trade. Id. at 35,612.
B. Contentions of the Parties
SKF contends that Commerce’s use of aggregate data that
encompasses all foreign like products under consideration for NV
for calculating CV profit is contrary to § 1677b(e)(2)(A) and to
the explicit hierarchy established by § 1677(16) for selecting
“foreign like product” for the CV profit calculation. See SKF’s
Br. Supp. Mot. J. Agency R. at 37-58. In addition, SKF argues,
inter alia, that Commerce’s CV profit calculation under §
1677b(e)(2)(A) is unlawful in that it excluded below-cost sales
from the calculation. See id. at 3-4; SKF’s Reply Br. at 25-48.
Commerce responds that it applied a reasonable
interpretation of § 1677b(e)(2)(A) and properly based CV profit
for SKF on aggregate profit data of all foreign like products
under consideration for NV. See Def.’s Mem. in Opp’n to Mot. J.
Agency R. at 2, 25-42. Also, Commerce argues that it properly
excluded below-cost sales. See id. at 2-3, 39. Torrington
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generally agrees with Commerce. See Torrington’s Resp. to Pls.’
Mot. J. Agency R. at 4, 30-36.
C. Analysis
In RHP Bearings Ltd. v. United States, 23 CIT ___, ___, Slip
Op. 99–134, at 9-38 (Dec. 16, 1999), this Court upheld
Commerce’s CV profit methodology of using aggregate data of all
foreign like products under consideration for NV as being
consistent with the antidumping statute. See id. at ___, Slip
Op. 99–134, at 32-38. Since SKF’s arguments and the methodology
at issue in this case are practically identical to those
presented in RHP Bearings, the Court adheres to its reasoning in
RHP Bearings and, therefore, finds that Commerce’s CV profit
methodology and exclusion of below-cost sales to be supported by
substantial evidence and in accordance with law.
III. Other Issues
We have considered SKF’s other challenges to the Final
Results, but find them unpersuasive.
Court No. 99-08-00473 Page 27
CONCLUSION
For the foregoing reasons, the case is remanded to Commerce
to annul all findings and conclusions made pursuant to its duty
absorption inquiry conducted for the subject review. Commerce’s
final determination is affirmed in all other respects.
______________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: March 22, 2000
New York, New York