Timken Co. v. United States , 2014 CIT 51 ( 2014 )

Slip Op. 14- 51
UNITED STATES COURT OF INTERNATIONAL TRADE
THE TIMKEN COMPANY,
Plaintiff,
.v. Before: Jane A. Restani, Judge
UNITED STATES, Consol. Court No. 13-00069
Defendant,
CHANGSHAN PEER BEARING CO., LTD.
and PEER BEARING COMPANY,
Defendant-Intervenors.
OPINION
[Commerce’s amended final results in antidumping duty review sustained regarding Commerce’s
targeted dumping analysis and remanded for Commerce to reexamine alleged currency
conversion error.]
Dated: May 2, 2014
William A. Fennell, Terence P. Stewart, and Stephanie M. Bell, Stewart and
Stewart, of Washington, DC, for plaintiff.
Tara K. Hogan, Senior Trial Counsel, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief
were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald
T. Blades, Jr., Assistant Director. Of counsel on the brief was Justin R. Becker, Attorney, Office
of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, DC.
Herbert C. Shelley and Christopher G. Falcone, Steptoe & Johnson LLP, of
Washington, DC, for defendant-intervenors.
Restani, Judge: This matter is before the court on plaintiff The Timken
Company’s (“Timken”) and defendant-intervenors Changshan Peer Bearing Co., Ltd. and Peer
Bearing Company’s (collectively “CPZ/SKF”) motions for judgment on the agency record
Consol. Court No. 13-00069 Page 2
pursuant to USCIT Rule 56.2. The issues before the court stem from the U.S. Department of
Commerce’s (“Commerce”) amended final determination in the 2010–2011 antidumping duty
review of certain tapered roller bearings from the People’s Republic of China. Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, from the People’s Republic of China:
Final Results of Antidumping Duty Administrative Review; 2010–2011, 78 Fed. Reg. 3396(Dep’t Commerce Jan. 16, 2013) (“Final Results”), as amended by Tapered Roller Bearings and
Parts Thereof, Finished and Unfinished from the People’s Republic of China: Amended Final
Results of Antidumping Duty Administrative Review; 2010–2011, 78 Fed. Reg. 12,035 (Dep’t
Commerce Feb. 21, 2013) (“Amended Final Results”). CPZ/SKF challenges Commerce’s
failure to correct an alleged ministerial error and convert CPZ/SKF’s reported further
manufacturing costs from Thai baht to U.S. dollars. Changshan Peer Bearing Co., Ltd.’s & Peer
Bearing Co.’s Mem. of Points & Auths. in Supp. of Their Mot. for J. on the Agency R., Ct. No.
13-00095, ECF No. 36, 8–22 (“CPZ/SKF Br. in Supp.”). Timken challenges Commerce’s
targeted dumping analysis in the Amended Final Results. Pl. The Timken Co.’s Mem. of Points
& Auths. in Supp. of Its Mot. for J. on the Agency R., ECF No. 22, 12–25 (“Timken Br.”).
Defendant United States (“the government”) refutes the challenge to Commerce’s targeted
dumping analysis in the Amended Final Results and requests a partial voluntary remand to
Commerce to reexamine CPZ/SKF’s further manufacturing costs. Def.’s Resp. to the Rule 56.2
Mots. for J. on the Agency R., ECF No. 39, 11–21 (“Government Br.”). For the reasons stated
below, Commerce’s Amended Final Results are sustained in part and remanded in part.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012), which grants
Consol. Court No. 13-00069 Page 3
the court authority to review actions contesting the final determination in an administrative
review of an antidumping order. Such determinations are upheld unless they are “unsupported
by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i).
DISCUSSION
I. Ministerial Error
A. Background
In 1987, Commerce issued an antidumping duty order on tapered roller bearings
and parts thereof from the People’s Republic of China. Antidumping Duty Order; Tapered
Roller Bearings and Parts Thereof, Finished or Unfinished, from the People’s Republic of China,
52 Fed. Reg. 22,667 (Dep’t Commerce June 15, 1987). In response to requests from interested
parties, Commerce initiated an administrative review of the aforementioned antidumping duty
order. Initiation of Antidumping and Countervailing Duty Administrative Reviews, Requests for
Revocations in Part and Deferral of Administrative Reviews, 76 Fed. Reg. 45,227, 45,228–29
(Dep’t Commerce July 28, 2011). The information in dispute before the court was submitted by
CPZ/SKF to Commerce in its questionnaire response on December 12, 2011, which included
information concerning CPZ/SKF’s further manufacturing costs incurred in Thailand. SKF’s
Resp. to Dep’t’s Section C Supplemental Questionnaire, PD 108 at bar code 3045930-01 (Dec.
12, 2011), Ct. No. 13-00095, ECF No. 29 (Aug. 5, 2013). The file layout prepared by the
programmer that was used to calculate the margin listed the field name for further manufacturing
costs as “Further Manufacturing Cost (USD/PIECE).” Id. The supporting documents submitted
by CPZ/SKF that Commerce relied upon in its calculations, however, indicated that the further
Consol. Court No. 13-00069 Page 4
manufacturing costs were reported in Thai baht. See id.In its preliminary determination, Commerce treated CPZ/SKF’s further
manufacturing costs as denominated in U.S. currency and calculated a weighted-average
dumping margin of 7.74%. See Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from the People’s Republic of China: Preliminary Results of the 2010–2011
Antidumping Duty Administrative Review, Rescission in Part, and Intent to Rescind in Part, 77
Fed. Reg. 40,579, 40,585 (Dep’t Commerce July 10, 2012) (“Preliminary Results”). CPZ/SKF
did not raise the issue of the currency inconsistency following the Preliminary Results. See
CPZ/SKF Br. in Supp. 5–6. Accordingly, Commerce continued to treat CPZ/SKF’s further
manufacturing costs as denominated in U.S. currency and issued its Final Results on January 16,
2013, calculating a weighted-average dumping margin for CPZ/SKF of 15.28%. Final Results,
78 Fed. Reg. at 3397.
After Commerce disclosed its calculations for the Final Results, CPZ/SKF timely
filed its ministerial error allegation concerning CPZ/SKF’s reported further manufacturing costs.
SKF’s Ministerial Error Comments, PD 194 at bar code 3114908-01 (Jan. 15, 2013), Ct. No.
13-00095, ECF No. 29 (Aug. 5, 2013). According to CPZ/SKF, the further manufacturing costs
should have been treated as denominated in Thai baht, and Commerce thus should have applied
the Thai-baht-to-U.S.-dollar exchange rate to those costs. Id. at 2–6. On February 21, 2013,
Commerce issued its Amended Final Results with a revised weighted-average dumping margin
of 14.91%, but Commerce did not recognize the inconsistency concerning CPZ/SKF’s further
manufacturing costs incurred in Thailand as a ministerial error. See Amended Final Results, 78
Fed. Reg. at 12,036. CPZ/SKF challenges Commerce’s decision not to address the inconsistency
Consol. Court No. 13-00069 Page 5
and its subsequent use in calculations. CPZ/SKF Br. in Supp. 8–22.
B. Analysis
A “ministerial error” is defined as “an error in addition, subtraction, or other
arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and
any other similar type of unintentional error which [Commerce] considers ministerial.” 19
C.F.R. § 351.224(f) (2013); see also 19 U.S.C. § 1675(h). CPZ/SKF notes that the error in the
calculation of its reported further manufacturing costs is due to a typo by the programmer who
created the file layout used in Commerce’s calculations. CPZ/SKF Br. in Supp. 4. CPZ/SKF
asserts that Commerce’s failure to convert the further manufacturing costs to U.S. currency from
Thai baht constitutes a ministerial error, and Commerce’s refusal to correct the error is improper
due to interests in accuracy and fairness, even if the error does not constitute a ministerial error.
Id. at 8–22. The government asserts that the error does not constitute a ministerial error as
defined in the statute and for various reasons there is no binding obligation on Commerce to
correct the error. Government Br. 19–21. Notwithstanding Commerce’s contention that the
error does not constitute a ministerial error, the government requests partial remand to
Commerce to reconsider the currency discrepancy in CPZ/SKF’s reported further manufacturing
costs. Id.Generally, a request for a voluntary remand due to substantial and legitimate
agency concerns should be granted. SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed.
Cir. 2001). Commerce’s concerns are substantial and legitimate when (1) Commerce has a
compelling justification for the remand, (2) the justification for remand is not outweighed by the
need for finality, and (3) the scope of the remand is appropriate. Ad Hoc Shrimp Trade Action
Consol. Court No. 13-00069 Page 6
Comm. v. United States, 882 F. Supp. 2d 1377, 1381 (CIT 2013). Here, Commerce has
substantial and legitimate reasons for its request for voluntary remand. Commerce has a
compelling justification because of a likely inaccurate determination. See Government Br. 9–10.
Here, the interest in protecting the administrative proceeding from material inaccuracy does not
appear to be outweighed by a need for finality, in part because Timken seeks remand on another
ground, and the other parties to the litigation desire remand to address this alleged inaccuracy.
Lastly, the scope of the remand is appropriate since it is limited to Commerce reconsidering the
currency conversion of CPZ/SKF’s reported further manufacturing costs. Because Commerce
has a substantial and legitimate concern, it is likely that an easily correctable error has occurred,
and there is no suggestion that the request for partial voluntary remand is frivolous or in bad
faith, the government’s request for voluntary remand to Commerce to reexamine the conversion
error for CPZ/SKF’s reported further manufacturing costs is granted.1
II. Targeted Dumping
A. Background
Until 2012, Commerce’s default methodology for comparing home market and
export prices in administrative reviews of antidumping orders had been the average-to-
transaction (“A-T”) methodology. See Antidumping Proceedings: Calculation of the Weighted-
Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings;
Final Modification, 77 Fed. Reg. 8101, 8101 (Dep’t Commerce Feb. 14, 2012). Commerce,
when using the A-T methodology, did not allow transactions with export prices above the home
1
As Commerce has exercised its discretion to correct this error, if it exists, it is now
immaterial whether the error is “ministerial” or not. Commerce shall correct any error in this
regard.
Consol. Court No. 13-00069 Page 7
market price to offset transactions with export prices below the home market price. Id.Commerce’s refusal to offset export prices below the home market price with export prices
above the home market price is referred to as “zeroing.”2 In February 2012, Commerce changed
its default comparison methodology in administrative reviews to the average-to-average (“A-A”)
methodology in order to comply with World Trade Organization decisions and international
obligations. See id. at 8101–02. Although Commerce eliminated the practice of zeroing from its
default methodology, Commerce did not rule out the possibility of using zeroing if the
circumstances warranted its use, such as instances of so-called “targeted dumping.” See id. at
8104, 8106–07.
Commerce uses 19 U.S.C. § 1677f-1(d)(1)(B),3 which by its terms applies to
antidumping investigations, as the threshold for determining whether to apply the A-T
methodology (likely with zeroing) instead of the default A-A methodology in reviews. See, e.g.,
Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative
Review: Circular Welded Carbon Steel Pipes and Tubes from Turkey—May 1, 2010, through
2
For a detailed explanation of the zeroing practice and its history, see Union Steel v.
United States, 823 F. Supp. 2d 1346 (CIT 2012), aff’d, 713 F.3d 1101 (Fed. Cir. 2013).
3
19 U.S.C. § 1677f-1(d)(1)(B) provides:
The administering authority may determine whether the subject merchandise is being
sold in the United States at less than fair value by comparing the weighted average
of the normal values to the export prices (or constructed export prices) of individual
transactions for comparable merchandise, if—
(i) there is a pattern of export prices (or constructed export prices) for
comparable merchandise that differ significantly among purchasers, regions,
or periods of time, and
(ii) the administering authority explains why such differences cannot be
taken into account using [the average-to-average methodology or the
transaction-to-transaction methodology].
Consol. Court No. 13-00069 Page 8
April 30, 2011, A-489-501, at 10 (Nov. 30, 2012), available at
http://enforcement.trade.gov/frn/summary/turkey/2012-29529-1.pdf (last visited Apr. 25, 2014);
Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative
Review of Tapered Roller Bearings and Parts Thereof, Finished and Unfinished from the
People’s Republic of China, A-570-601, at 8 (Jan. 8, 2013) (“I&D Memo”), available at
http://enforcement.trade.gov/frn/summary/PRC/2013-00835-1.pdf (last visited Apr. 25, 2014).4
Under the targeting statute, before Commerce can use the A-T methodology, Commerce must
first find “a pattern of export prices (or constructed export prices) for comparable merchandise
that differ significantly among purchasers, regions, or periods of time.” 19 U.S.C.
§ 1677f-1(d)(1)(B)(i). This pattern is what is commonly referred to as “targeted dumping.”
Additionally, Commerce must explain why the A-A methodology (or the rarely used transaction-
to-transaction (“T-T”) methodology)5 cannot take such differences into account. Id.
§ 1677f-1(d)(1)(B)(ii). Commerce thus may use the A-T methodology if it finds targeted
dumping and explains why the default A-A or T-T methodologies cannot take account of the
pattern.
Commerce has used the so-called Nails test to determine whether targeted
4
For further background on the statutory and regulatory framework regarding targeted
dumping, see Timken Co. v. United States, Slip Op. 14-24, 2014 Ct. Int’l Trade LEXIS 25, at
*2–8 (CIT Feb. 27, 2014).
5
Although the T-T methodology is also listed as a preferred methodology, Commerce,
for practical reasons, rarely employs this methodology. See 19 C.F.R. § 351.414(c)(2) (“The
Secretary will use the transaction-to-transaction method only in unusual situations, such as when
there are very few sales of subject merchandise and the merchandise sold in each market is
identical or very similar or is custom-made.”).
Consol. Court No. 13-00069 Page 9
dumping has occurred.6 See Certain Steel Nails from the People’s Republic of China: Final
Determination of Sales at Less than Fair Value and Partial Affirmative Determination of Critical
Circumstances, 73 Fed. Reg. 33,977 (Dep’t Commerce June 16, 2008); Certain Steel Nails from
the United Arab Emirates: Notice of Final Determination of Sales at Not Less than Fair Value,
73 Fed. Reg. 33,985 (Dep’t Commerce June 16, 2008). The Nails test proceeds in two stages,
each done on a product-specific basis (by control number or CONNUM). The first stage is
referred to as the “standard-deviation” test. I&D Memo at 10. If 33% or more of the alleged
targeted group’s (i.e., customer, region, or time period) sales of subject merchandise are at prices
more than one standard deviation below the weighted-average price of all sales under review,
those sales pass the standard deviation test and are considered in step two—the “gap” test. Id.In performing the gap test, Commerce considers whether the “gap” between the weighted-
average sales price to the targeted group and the weighted-average sales price to the next-highest
non-targeted group is greater than the average gap between the non-targeted groups. Id. at
10–11. If the gap between the targeted group and the next-highest non-targeted group is greater
than the average gap, those sales pass the gap test. Id. If more than 5% of total sales of the
subject merchandise to the alleged target pass both tests, Commerce determines that targeting
6
It appears Commerce has since adopted an entirely different test in later reviews. See,
e.g., Certain Activated Carbon from the People’s Republic of China: Issues and Decision
Memorandum for the Final Results of the Fifth Antidumping Duty Administrative Review,
A-570-904, at 21–22 (Nov. 20, 2013), available at
http://enforcement.trade.gov/frn/summary/prc/2013-28359-1.pdf (last visited Apr. 25, 2014);
Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative
Review: Welded Carbon Steel Standard Pipe and Tube Products from Turkey; 2011–2012,
A-489-501, at 38–39 (Dec. 23, 2012), available at
http://enforcement.trade.gov/frn/summary/turkey/2013-31344-1.pdf (last visited Apr. 25, 2014).
The court expresses no opinion on a test that was not employed in this case.
Consol. Court No. 13-00069 Page 10
has occurred. Id. at 11. Commerce then compares the sales that have passed the Nails test with
total U.S. sales in order to determine if the targeted sales are sufficient to warrant consideration
of the A-T methodology. Id.
Turning to the facts of the case before the court, in anticipation of Commerce’s
use of the new default methodology (i.e., A-A), Timken alleged that CPZ/SKF engaged in
targeted dumping and submitted factual information to Commerce to use in its targeted dumping
analysis along with a request for Commerce to use the alternative A-T methodology in its
preliminary determination. Timken’s Factual Submission, PD 92–93 at bar code 3044403-01
(Dec. 2, 2011), ECF No. 29 (Aug. 12, 2013); Timken’s Pre-Preliminary Comments, PD 160 at
bar code 3075802-01 (May 16, 2012), ECF No. 29 (Aug. 12, 2013). Commerce used the default
A-A methodology and did not engage in a targeted dumping analysis in the preliminary results.
Preliminary Results, 77 Fed. Reg. at 40,582. Commerce explained that it applied the newly
adopted default methodology in order to afford the parties an opportunity to comment on its
application in the context of this review and stated that it intended to consider whether an
alternative methodology was appropriate under the circumstances of this review. Id.
In its post-preliminary analysis, Commerce found that an insufficient number of
sales passed the Nails test to warrant using the A-T methodology. Post-Preliminary Calculation
Memorandum at 2, PD 183 at bar code 3109493-01 (Dec. 7, 2012), ECF No. 29 (Aug. 12, 2013).
After the parties submitted their comments, Commerce continued to find that an insufficient
number of sales passed the Nails test and thus refused to depart from the default A-A
methodology. I&D Memo at 10–14. In its justification, Commerce noted that the use of the
word “may” in 19 U.S.C. § 1677f-1(d)(1)(B) gave Commerce the discretion not to depart from
Consol. Court No. 13-00069 Page 11
the default A-A methodology even if both prongs of the Nails test were satisfied. Id. at 12.
Timken challenges Commerce’s determination regarding Timken’s targeted
dumping allegation, arguing that Commerce deviated from its past practice in its application of
the Nails test and that Commerce provided no explanation regarding its application of its
sufficiency determination.7 See Timken Br. 12–25. The government maintains that Commerce’s
determination was consistent with its prior applications of the Nails test and that Commerce
makes its determinations regarding whether to use the A-T methodology on a case-by-case basis
rather than employing a specific de minimis threshold. See Government Br. 11–18. CPZ/SKF
argues that Commerce has not departed from its past practice and has provided a sufficient
explanation for its final determination.8 See Resp. Br. of Changshan Peer Bearing Co., Ltd. &
Peer Bearing Co. Opp. the Rule 56.2 Mot. of The Timken Co., ECF No. 36, 11–28 (“CPZ/SKF
Br. in Opp’n”).
B. Analysis
1. Consistency with Past Practice
Timken first argues that Commerce’s decision to compare the results of the Nails
7
Timken refers to Commerce’s sufficiency determination as a de minimis test. See
Timken Br. 23–24. The government denies that Commerce created a de minimis test. See
Government Br. 15–18. Because of this disagreement in labeling the step in Commerce’s
analysis as a de minimis test, the court will refer to Commerce’s determination as a sufficiency
determination.
8
CPZ/SKF maintains its position that Commerce lacks the statutory authority to engage
in a targeted dumping analysis in an administrative review, but does not appeal Commerce’s
decision to engage in such an analysis in this case because it concurs with Commerce’s final
determination. Resp. Br. of Changshan Peer Bearing Co., Ltd. & Peer Bearing Co. Opp. the
Rule 56.2 Mot. of The Timken Co., ECF No. 36, 12 n.5. The court rejected this same argument
in Timken Co. v. United States, 2014 Ct. Int’l Trade LEXIS 25, at *18 n.7, and CP Kelco Oy v.
United States, Slip Op. 14-42, at 8–13 (CIT Apr. 15, 2014).
Consol. Court No. 13-00069 Page 12
test to total U.S. sales when determining whether a sufficient pattern exists as part of the targeted
dumping analysis is inconsistent with Commerce’s past practice in applying the Nails test. See
Timken Br. 12–18. According to Timken, Commerce’s prior decisions have established a
practice of considering any sales that have passed the Nails test as constituting a pattern, thereby
warranting a comparison between the resulting margins under the A-A methodology and the A-T
methodology. Id. at 14–18. Timken alleges that Commerce explicitly had declined in four other
cases to engage in a de minimis inquiry in determining whether a pattern exists for purposes of
19 U.S.C. § 1677f-1(d)(1)(B). Id. (citing Issues and Decision Memorandum for the Final
Determination in the Antidumping Duty Investigation of Multilayered Wood Flooring from the
People’s Republic of China, A-570-970 (Oct. 11, 2011), available at
http://enforcement.trade.gov/frn/summary/prc/2011-26932-1.pdf (last visited Apr. 25, 2014);
Issues and Decision Memorandum for the Less than Fair Value Investigation of Certain Steel
Nails from the United Arab Emirates, A-520-804 (Mar. 19, 2012),
available at http://enforcement.trade.gov/frn/summary/uae/2012-7067-1.pdf (last visited Apr. 25,
2014); High Pressure Steel Cylinders from the People’s Republic of China: Issues and Decision
Memorandum for the Final Determination, A-570-977 (Apr. 30, 2012), available at
http://enforcement.trade.gov/frn/summary/prc/2012-10952-1.pdf (last visited Apr. 25, 2014);
Issues and Decision Memorandum for the Antidumping Duty Investigation of Large Residential
Washers from the Republic of Korea, A-580-868 (Dec. 18, 2012), available at
http://enforcement.trade.gov/frn/summary/korea-south/2012-31104-1.pdf (last visited Apr. 25,
2014)). Timken argues that remand is necessary due to Commerce’s divergence from past
practice and its failure to provide a justification for its change in practice. Id. at 18–22.
Consol. Court No. 13-00069 Page 13
The government argues that Commerce’s determination was consistent with its
prior decisions and a reasonable exercise of its discretion. Government Br. 12–18. Commerce
cited three prior cases in which it engaged in a similar sufficiency analysis, notwithstanding the
fact that some sales had passed the Nails test. I&D Memo at 11–12 (citing Certain Stilbenic
Optical Brightening Agents from Taiwan: Preliminary Determination of Sales at Less than Fair
Value and Postponement of Final Determination, 76 Fed. Reg. 68,154 (Dep’t Commerce Nov. 3,
2011); Ball Bearings and Parts Thereof from France, Germany, and Italy: Final Results of
Antidumping Duty Administrative Reviews; 2010–2011, 77 Fed. Reg. 73,415 (Dep’t Commerce
Dec. 10, 2012); Circular Welded Carbon Steel Pipes and Tubes from Turkey; Final Results of
Antidumping Duty Administrative Review; 2010 to 2011, 77 Fed. Reg. 72,818 (Dep’t
Commerce Dec. 6, 2012)). The government also argues that Commerce’s determination was a
reasonable exercise of its discretion and otherwise in accordance with law. Government Br.
17–18. Although Commerce stated that a sufficient pattern under the Nails test did not exist in
this case, Commerce further supported its decision to use the A-A methodology by relying on its
discretionary authority granted by the statute. Commerce noted that 19 U.S.C.
§ 1677f-1(d)(1)(B) states that Commerce “may” use the A-T methodology if it finds targeted
dumping, but it is not required to do so. I&D Memo at 12. Commerce also noted it had
previously indicated that it would proceed on a case-by-case basis in determining when to use
the A-T methodology and explained that its prior cases did not preclude the analysis undertaken
here. Id.
CPZ/SKF argues that Commerce had no duty to explain any departure from its
past practice because the cases cited by Timken do not reflect a well-established practice from
Consol. Court No. 13-00069 Page 14
which Commerce would be obligated to explain a departure. CPZ/SKF Br. in Opp’n 11–16.
CPZ/SKF argues further that Commerce’s targeted dumping methodology does not warrant a
presumption of continuity because its methodology has been in a state of flux in recent years and
Commerce had indicated an intention to proceed on a case-by-case basis. Id. at 16–17.
Timken’s argument regarding past practice is essentially the same argument that
was presented in Timken Co. v. United States, Slip Op. 14-24, 2014 Ct. Int’l Trade LEXIS 25
(CIT Feb. 27, 2014). In that case, the court treated Commerce’s sufficiency determination as an
exercise of its discretionary authority granted by 19 U.S.C. § 1677f-1(d)(1)(B) and found that the
cases cited by Timken, which are also cited by Timken in this case, did not create any
meaningful inconsistencies. See id. at *23–28. As indicated, here, Commerce invoked its
discretionary authority granted by 19 U.S.C. § 1677f-1(d)(1)(B) in its decision to not use the A-T
methodology. I&D Memo at 12. As the court held in Timken Co., there is little, if any,
inconsistency with the cases cited by Timken when Commerce’s sufficiency determination is
understood as an exercise of its discretionary authority. Timken Co., 2014 Ct. Int’l Trade
LEXIS 25, at *23. Because Timken’s arguments on this issue mirror the arguments that were
rejected in Timken Co., the court, for the reasons stated in Timken Co., continues to find that
Commerce’s prior practice does not preclude it from engaging in a sufficiency determination as
part of its exercise of discretionary authority. See id. at *13–29.
2. Commerce’s Explanation of Its Sufficiency Determination
Timken also argues that Commerce failed to explain the purpose of its additional
sufficiency determination and what amount of sales it considers sufficient. Timken Br. 23–25.
Because Commerce allegedly failed to provide such an explanation, Timken argues that remand
Consol. Court No. 13-00069 Page 15
is necessary. Id.9
In response to Timken’s arguments regarding the purpose of the sufficiency
determination, the government explains that it is within Commerce’s discretion to continue to
employ the A-A methodology, even if targeted dumping is found, and that Commerce uses the
additional sufficiency determination in exercising that discretion. Government Br. 13–18. The
government explains further that Commerce is proceeding on a case-by-case basis rather than
establishing a de minimis threshold, and Commerce uses the additional sufficiency determination
in its case-by-case analysis in deciding when to exercise its discretion. Id. at 15–17. The
government additionally argues that Commerce’s experience in conducting the Nails test has
informed its judgment in determining whether the A-T methodology is appropriate. Id. at 18.
Again, the same issue and arguments were presented to the court in Timken Co.
As explained in Timken Co., the purpose of the sufficiency test is clear. Commerce relies on the
word “may” in the statute, and, as a result, the additional sufficiency determination used by
Commerce is easily understood as a tool in determining whether Commerce should exercise its
discretion to depart from the default A-A methodology. Timken Co., 2014 Ct. Int’l Trade
LEXIS 25, at *31–32. Only when a significant number of sales pass the Nails test, when
compared to total U.S. sales, will Commerce consider invoking its discretion to depart from the
default A-A methodology. Id.; I&D Memo at 11.
9
The court notes that Timken also suggests that comparing the number of sales that pass
the Nails test to all U.S. sales is unreasonable because the Nails test fails to capture all targeted
sales. Timken Co.’s Reply Br., ECF No. 42, 18–20. To the extent that Timken may be relying
on this argument to attack directly Commerce’s determination, Timken failed to raise this
argument in its opening brief and did not present it to the agency. The court therefore will not
consider it. See KYD, Inc. v. United States, 836 F. Supp. 2d 1410, 1413–14 (CIT 2012).
Consol. Court No. 13-00069 Page 16
To support its argument that remand is necessary because Commerce was
required—but failed to—explain what amount of sales would be considered “sufficient,” Timken
cites Washington Red Raspberry Commission v. United States, which held in the then absence of
a statute or regulation defining de minimis that Commerce “may find that dumping margins less
than 0.50 percent are de minimis, but only if [Commerce] explains the basis for its decision.”
Wash. Red Raspberry Comm’n v. United States, 859 F.2d 898, 903 (Fed. Cir. 1988). The
government argues that Commerce satisfied its obligation to explain by (1) conducting the Nails
test, (2) evaluating the volume of sales passing the Nails test relative to all U.S. sales, and
(3) determining whether the facts justified employing the A-A methodology. Government Br. 18
(citing I&D Memo at 11).
Commerce generally has a duty to explain the grounds for its determination.
NMB Singapore Ltd. v. United States, 557 F.3d 1316, 1319 (Fed. Cir. 2009); see also 19 U.S.C.
§ 1677f(i)(3)(A) (requiring Commerce to include an explanation of the basis for its
determination). If an agency’s explanation is not perfectly presented, a court may find that the
agency adequately explained its determination if the agency’s line of reasoning is “reasonably
discernable.” NMB Singapore Ltd., 557 F.3d at 1319. When proceeding on a case-by-case basis
in exercising discretionary authority, as Commerce does here, “Commerce is not required to
justify its determination in terms of past alternatives,” as long as it acts reasonably. Qingdao
Taifa Grp. Co. v. United States, 780 F. Supp. 2d 1342, 1350 (CIT 2011).
Here, Commerce has explained adequately its analysis in reaching its
determination that the sales found to have passed the Nails test were insufficient to warrant
consideration of the alternative A-T methodology. The default methodology in reviews is the
Consol. Court No. 13-00069 Page 17
A-A methodology. 19 C.F.R. § 351.414(c)(1). The statutory provision that Commerce uses as
guidance in reviews in deciding whether to deviate from the default methodology states that
Commerce “may” use the A-T methodology in the context of a targeted dumping analysis if
certain conditions are met. 19 U.S.C. § 1677f-1(d)(1)(B). Even when those conditions are
satisfied, however, Commerce is not required to abandon the A-A methodology. Id. Unlike the
situation in Washington Red Raspberry Commission, upon which Timken heavily relies, the
relevant statutory provision in this case expressly gives Commerce the discretion to ignore a
targeted dumping finding and continue to employ the A-A methodology. The court gives
substantial deference to Commerce in choosing whether to invoke such discretion. Cf. AK Steel
Corp. v. United States, 28 CIT 1408, 1417, 346 F. Supp. 2d 1348, 1355 (2004) (declining to
require Commerce to prove that respondent cooperated to the best of its abilities when it refuses
to use adverse facts available because statute expressly stated that Commerce “may” use adverse
facts when respondent fails to cooperate to best of its abilities, not that it must). Commerce
found that the results of the Nails test were insufficient to warrant consideration of the A-T
methodology because the percentage of sales found to be targeted was extremely small.10 In its
briefs submitted to the court, Timken argues that the A-T methodology is warranted if any sales
pass the Nails, but Timken fails to put forth any detailed and specific argument as to why the
amount of sales in this case should otherwise be considered sufficient. Although Commerce did
not set an amount of sales it considers sufficient, no reasonable person could find the minuscule
percentage of sales found to be targeted in this case to be sufficient to require Commerce to
10
For the exact percentages, see Response Brief of Changshan Peer Bearing Co., Ltd. and
Peer Bearing Co. Opposing the Rule 56.2 Motion of The Timken Co., ECF No. 35, 25
(confidential version).
Consol. Court No. 13-00069 Page 18
invoke its discretion to abandon the default A-A methodology in favor of the A-T
methodology.11 Commerce explained its analytical steps and considered and rejected Timken’s
arguments before the agency regarding why the amount of targeted sales should be considered
sufficient in this case. I&D Memo at 10–13. Under the facts of this case, this was an adequate
explanation.12
The court does not hold that Commerce is excused from providing an explanation
for its sufficiency determinations. The court holds rather that because Commerce relied on the
default A-A methodology, the percentage of sales that were targeted was very small, and Timken
has failed to present a detailed argument to the court why the small number of targeted sales in
11
This does not mean that Commerce necessarily was precluded from invoking such
discretion.
12
The court recognizes that the court remanded another recent targeted dumping case for
Commerce to further explain the application of its de minimis test. See CP Kelco Oy, Slip Op.
14-42. In CP Kelco, Commerce summarily rejected the respondent’s claim that the amount of
sales that passed the Nails test should be considered de minimis. Id. at 19. The court remanded
to Commerce for a reasoned explanation for rejecting the respondent’s de minimis claim. Id. at
20–21.
The case currently before the court is distinguishable in two important and related
respects. First, Commerce in this case refused to depart from the default A-A methodology. In
contrast to CP Kelco, where Commerce “used an exceptional methodology to generate Kelco’s
margins,” here, Commerce chose not to deviate from the default methodology to increase
margins. See id. at 21 n.14. Second, the court in CP Kelco did not decide whether the targeted
sales were de minimis, although the percentage there was much greater. See id. The court here,
in contrast, finds that the amount of sales passing the Nails test are so small that no reasonable
person could conclude that Commerce would be required to invoke its discretion to apply the
“exceptional” A-T methodology and increase margins. In fact, Timken never explained in its
briefs to the court why the amount of targeted sales in this case should be considered sufficient,
aside from arguing that any sales that pass the Nails test should be considered sufficient as part
of its attack on Commerce’s general ability to engage in an additional sufficiency inquiry. To
the extent that Timken raised any such arguments before the agency, they appear to have been
addressed by Commerce in the I&D Memo, and Timken has not challenged directly those
explanations. See I&D Memo at 13.
Consol. Court No. 13-00069 Page 19
this case should be considered sufficient to require use of the A-T methodology, Commerce’s
explanation was adequate for the court to determine that it acted reasonably.
CONCLUSION
For the foregoing reasons, the government’s request for voluntary remand is
granted for Commerce to reexamine the alleged currency conversion error for CPZ/SKF’s
reported further manufacturing costs. In all other respects, the Amended Final Results are
sustained. Commerce shall complete and file its remand determination by June 2, 2014. Timken
and CPZ/SKF shall have until July 2, 2014 to file objections, and the government shall have until
July 18, 2014 to file its response.
/s/ Jane A. Restani
Jane A. Restani
Judge
Dated: May 2 , 2014
New York, New York