Skf USA Inc. v. United States

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,
Court No. 99-08-00473 Page 5

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
Court No. 99-08-00473 Page 14

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.
Court No. 99-08-00473 Page 15

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
Court No. 99-08-00473 Page 16

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
Court No. 99-08-00473 Page 18

“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.
Court No. 99-08-00473 Page 19

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
Court No. 99-08-00473 Page 20

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
Court No. 99-08-00473 Page 22

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
Court No. 99-08-00473 Page 26

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