RHP Bearings Ltd. v. United States

Slip Op. 03-10
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
RHP BEARINGS LTD., NSK BEARINGS :
EUROPE LTD. and NSK CORPORATION, :
:
Plaintiffs, :
:
v. :
:
UNITED STATES, : Court No. 98-07-02526
:
Defendant, :
:
and :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor. :
___________________________________:
[Commerce’s Remand Results are affirmed. Case dismissed.]
Lipstein, Jaffe & Lawson L.L.P. (Robert A. Lipstein, Matthew
P. Jaffe and Grace W. Lawson) for RHP Bearings Ltd., NSK Bearings
Europe Ltd. and NSK Corporation, plaintiffs.
Robert D. McCallum, Jr., Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Lucius B. Lau); David R. Mason
Jr., Senior Attorney, Office of the Chief Counsel for Import
Administration, United States Department of Commerce, for the
United States, defendant.
Stewart and Stewart (Terence P. Stewart and Geert De Prest)
for The Torrington Company, defendant-intervenor.
Dated: January 28, 2003
Court No. 98-07-02526 Page 2
JUDGMENT
I. Standard of Review
The Court will uphold Commerce’s redetermination pursuant to
the Court’s remand 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). 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. 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).
II. Background
On July 1, 2002, this Court issued an order directing the
United States Department of Commerce, International Trade
Administration (“Commerce”), to: (1) “explain its methodology for
[the] calculation of constructed value profit . . . [;] and [(2)]
explain why that methodology comported with statutory
requirements.” RHP Bearings Ltd. v. United States (“RHP Bearings
III”), Ct. No. 98-07-02526, 2002 WL 1424571, at *1 (CIT July 1,
Court No. 98-07-02526 Page 3
2002). This order was mandated by the decision of the Court of
Appeals for the Federal Circuit (“CAFC”) in RHP Bearings Ltd. v.
United States (“RHP Bearings II”), 288 F.3d 1334 (Fed. Cir. 2002),
affirming-in-part, vacating-in-part, and remanding the judgment of
this Court in RHP Bearings Ltd. v. United States (“RHP Bearings
I"), 24 CIT ___, 120 F. Supp. 2d 1116 (2000). The CAFC based its
decision in RHP Bearings II on its prior holding in SKF USA Inc. v.
United States, 263 F.3d 1369 (Fed. Cir. 2001). The administrative
determination at issue in RHP Bearings I, RHP Bearings II, and
subject to the order of RHP Bearings III is entitled Final Results
of Antidumping Duty Administrative Reviews of Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From France,
Germany, Italy, Japan, Romania, Singapore, Sweden, and the United
Kingdom (“Final Results”), 63 Fed. Reg. 33,320 (June 18, 1998).
On September 30, 2002, Commerce, pursuant to this Court’s
order in RHP Bearings III, submitted its Final Results of
Redetermination Pursuant to Court Remand (“Remand Results”). In
particular, Commerce: (1) set forth the pertinent factual
background of its (a) model-match process, and (b) constructed
value (“CV”) profit methodology; (2) explained its application of
the term “foreign like product,” in addition to addressing the
contentions raised by RHP Bearings Ltd., NSK Bearings Europe Ltd.
and NSK Corporation (“RHP-NSK”) regarding this term; and (3)
Court No. 98-07-02526 Page 4
explained why its CV profit methodology comports with statutory
requirements.
On September 30, 2002, The Torrington Company (“Torrington”)
submitted comments on the draft results issued by Commerce
identifying certain clerical errors that were corrected by Commerce
in the final Remand Results. RHP-NSK also submitted comments on
the draft results, which were addressed by Commerce in the Remand
Results. RHP-NSK later submitted comments to this Court on
November 6, 2002, see Comments of RHP-NSK on Remand Determination
(“RHP-NSK’s Comments”), and Torrington submitted rebuttal comments,
see Rebuttal Comments of Torrington (“Torrington’s Comments”), on
November 27, 2002.
III. Contentions of the Parties
RHP-NSK propose that this Court re-remand the CV profit issue
to Commerce. According to RHP-NSK, Commerce failed to comply with
RHP Bearings III because it did not supply the Court with a
reasonable explanation regarding Commerce’s use of differing
definitions of the term “foreign like product” in its CV profit and
normal value (“NV”) price-based calculations.
Relying on the CAFC’s holding in SKF USA, 263 F.3d at 1382-
Court No. 98-07-02526 Page 5
83,1 RHP-NSK argue that Commerce must explain its practice of
defining the same term differently within the same antidumping
proceeding. RHP-NSK urge the Court to dismiss any arguments
relating to the legislative history of the term “foreign like
product.”2 Additionally, RHP-NSK frame two issues that they claim
must be decided by the Court: (1) whether the contemporaneity rule,
under 19 U.S.C. § 1677b(a)(1)(A) (1994), is applicable to CV profit
calculations, and (2) whether a legally acceptable application of
the contemporaneity rule prevents Commerce’s use of the preferred
CV profit methodology under 19 U.S.C. § 1677b(e)(2)(A) (1994).3
1
The Court assumes that the correct case name to which
RHP-NSK refer is SKF USA Inc. v. United States, 263 F.3d at 1369,
and not FAG Kugelfischer Georg Schafer AG v. United States.
Plaintiffs supply the correct pin cite, but incorrect case name.
2 The Court disagrees with RHP-NSK’s argument because
disregarding the legislative history of the antidumping statute
would cripple the Court’s ability to determine the reasonableness
of Commerce’s interpretation of the same statute. See Timex V.I.,
Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998)
(citations omitted).
3
To prove that Commerce violated the antidumping statute
and that Commerce did not adhere to the order of RHP Bearings III,
RHP-NSK attack the following two arguments made by Commerce in the
Remand Results: (1) “. . . Congress did not intend the application
of the preferred methodology to preclude application of the
contemporaneity requirement of [19 U.S.C. § 1677b(a)(1)(A),]”
Remand Results at 21; and (2)
. . . [I]f [Commerce] were required to interpret and
apply the term ‘foreign like product’ in precisely the
same manner in the CV-profit context as in the price
context, there would be no sales of the foreign like
product upon which to base the CV-profit calculation.
Accordingly, the preferred method of calculating CV
profit established by Congress would become an
Court No. 98-07-02526 Page 6
Addressing the first issue, RHP-NSK point to Commerce’s
statement in the Remand Results that “the contemporaneity provision
of [19 U.S.C. § 1677b(a)(1)(A)] does not apply to CV[,]” Remand
Results at 37, and argue that no section of Title 19 links the
contemporaneity requirement to CV profit calculations. RHP-NSK
further argue that Commerce’s use of non-contemporaneous data, in
other words data based on the full period of review (“POR”) as
opposed to only several months, in Commerce’s CV profit computation
serves as evidence that Commerce believes that the contemporaneity
rule does not apply to cost-based calculations. RHP-NSK use this
conclusion to argue that the Remand Results ultimately reveal an
inconsistency in Commerce’s logic because Commerce rejected data
reported by RHP-NSK as non-contemporaneous while simultaneously
including other non-contemporaneous sales in the CV profit
calculation.4
inoperative provision of the statute.
Id. at 11.
4
The first argument raised by RHP-NSK is not at issue since
Commerce, at no time, claims that the contemporaneity rules applies
specifically to the sales it considers when calculating CV profit.
Instead, Commerce asserts that 19 U.S.C. § 1677b(a)(1)(A) is
relevant to Commerce’s “overall determination” of NV. Although the
Court agrees that it would be anomalous to reject data as non-
contemporaneous and then use other data that is itself non-
contemporaneous in the same proceeding, Commerce adequately
explains the relationship between its NV and CV profit calculating
methodologies.
Court No. 98-07-02526 Page 7
While attacking Commerce’s second statement, see supra note 3,
RHP-NSK further contend that substantial record evidence supports
the conclusion that the preferred methodology for calculating CV
profit under 19 U.S.C. § 1677b(e)(2)(A) is “fully operational” if
Commerce defines foreign like product in the same manner when
calculating CV profit and NV. RHP-NSK proffer that Commerce should
use all the data provided to it by RHP-NSK, instead of applying the
contemporaneity rule, and utilizing sales which only extend from
three months prior to the month of the United States sale to two
months after the month of sale. If Commerce cannot find the
necessary data to calculate CV under the preferred methodology by
extending the range of the data used, RHP-NSK propose that Commerce
calculate CV using one of the alternative methodologies listed
under 19 U.S.C. § 1677b(e)(2)(B) (1994). Accordingly, RHP-NSK
argue that Commerce’s explanation of its use of differing
definitions for the term “foreign like product” should be rejected.
Torrington contends that RHP-NSK essentially misunderstands
Commerce’s point regarding Commerce’s use of contemporaneous sales
and urges the Court to disregard the alternative method for
calculating CV profit proposed by RHP-NSK. Torrington finds the
arguments presented by RHP-NSK irrelevant, and states that “[t]he
question is not whether it is actually possible to calculate profit
for [CV] under the interpretation supported by [RHP-NSK]. Instead,
Court No. 98-07-02526 Page 8
the question is whether Commerce’s interpretation of . . . 19
U.S.C. § 1677b(e)(2)(A) is reasonable.” Torrington’s Comments at
3 (emphasis in original).
IV. Analysis
In RHP Bearings II, 288 F.3d at 1346, the CAFC summarized that
Commerce, while calculating CV under 19 U.S.C. § 1677b(e)(2)(A) for
the POR at issue, used aggregate data for all foreign like products
rather than using “identical bearings and bearings of the same
family,” as it did for its calculation for NV. In essence, RHP-NSK
argued that this practice was “arbitrary and capricious” since
Commerce failed to apply the same definition for the term “foreign
like product” while calculating CV and NV for the same
administrative proceeding. See id.
In reaching its conclusion in RHP Bearings II, the CAFC
adhered to its prior holding in SFK USA, 263 F.3d at 1382, stating
that since Congress used the term “foreign like product” in various
sections of the antidumping statute and specifically defines the
term in 19 U.S.C. § 1677(16) (1994), it is
presume[d] that Congress intended that the term have the
same meaning in each of the pertinent sections or
subsections of the statute, and . . . that Congress
intended that Commerce, in defining the term, would
define it consistently. Without an explanation
sufficient to rebut this presumption, Commerce cannot
give the term “foreign like product” a different
definition (at least in the same proceeding) when making
Court No. 98-07-02526 Page 9
the [NV] price determination and in making the
constructed value determination. This is particularly so
because the two provisions are directed to the same
calculation, namely, the computation of normal value (or
its proxy, constructed value) of the subject merchandise.
The CAFC concluded that Commerce failed to explain its
justification for the inconsistent use of the term “foreign like
product” and outlined the explanation that Commerce must provide to
properly rebut the presumption that Commerce cannot use differing
definitions for an identical term in the same proceeding. See SKF
USA, 263 F.3d at 1382-83. In accordance with the CAFC’s decisions
on this issue in SKF USA and RHP Bearings II, this Court ordered
Commerce to explain its methodology for the calculation of CV
profit and explain why the methodology comported with statutory
requirements.
In the Remand Results, Commerce explained its unique model-
matching methodology and reporting requirements of sales
transactions used in Commerce’s calculation of NV. Commerce
explained that if it was “unable to find a sale of a comparison-
market model made in the ordinary course of trade that is identical
to or shares the family designation of the [United States] sale at
a time reasonably corresponding to the time of the [United States]
sale, [Commerce then] resort[s] to CV.” Remand Results at 7.
Commerce detailed its calculation of CV, which Commerce derived by
adhering to 19 U.S.C. § 1677b(e), and later explained why Commerce
Court No. 98-07-02526 Page 10
“interpreted and applied the statutory term ‘foreign like product’
more narrowly in its [calculation of NV] than in its calculation of
[CV] . . . under [19 U.S.C. § 1677b(e)(2)(A) . . . .” Id. at 10.
According to Commerce, the preferred method for calculating
CV, found in 19 U.S.C. § 1677b(e)(2)(A), is to be used unless
“there are no home market sales of the foreign like product or
because all such sales are at below-cost prices.” Id. at 11
(citation omitted). Commerce can use the preferred methodology
only if sales of the foreign like product exist that are within
the ordinary course of trade. See 19 U.S.C. § 1677b(e)(2)(A).
Title 19 of the United States Code and the Statement of
Administrative Action (“SAA”)5 establish that only when “no above-
cost sales [exist] in the ordinary course of trade in the foreign
market under consideration will Commerce [then] resort to [CV].”
SAA at 833 (emphasis in original). Accordingly, Commerce argues
that if it were to use the same definition of the term “foreign
5
The SAA represents “an authoritative expression by the
Administration concerning its views regarding the interpretation
and application of the Uruguay Round agreements.” H.R. Doc. 103-
316, at 656 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. “[I]t is
the expectation of the Congress that future Administrations will
observe and apply the interpretations and commitments set out in
this Statement.” Id.; see also 19 U.S.C. § 3512(d) (1994) (“The
statement of administrative action approved by the Congress . . .
shall be regarded as an authoritative expression by the United
States concerning the interpretation and application of the Uruguay
Round Agreements and this Act in any judicial proceeding in which
a question arises concerning such interpretation or application”).
Court No. 98-07-02526 Page 11
like product” for the NV and CV profit calculations, it would
eliminate all sales of the foreign like product upon which to base
the CV profit calculation and would mandate that Commerce use one
of the alternative methods listed under 19 U.S.C. §
1677b(e)(2)(B)(i) through (iii) to calculate CV. See Remand
Results at 11; see also SKF USA, 263 F.3d at 1376-77. Commerce
explained that this outcome is common in every situation where
foreign like product is interpreted in the same manner for both
price and CV profit determinations. See Remand Results at 12.
Thus, “under a rigidly uniform interpretation of the term ‘foreign
like product,’ the preferred methodology for calculating CV-profit
would never be applied in any case.” Id.Commerce further explains that differing categories of
merchandise can satisfy the meaning of the term “foreign like
product,” depending on the specific facts of each antidumping
proceeding, and illustrates this point by explaining its usual
practice of deriving different values, including NV. See id. 12-
14. In determining the viability of a comparison market for NV
under 19 U.S.C. § 1677b(a)(1)(C) (1994), Commerce adds that it
normally employs the definition of the term “foreign like product”
provided under § 1677(16)(C). See Remand Results at 15; Proposed
Rule of Antidumping Duties; Countervailing Duties, 61 Fed. Reg.
7307, 7333 (Feb. 27, 1996). To find foreign like products that
Court No. 98-07-02526 Page 12
would fit into the definition provided under § 1677(16)(A)
(identical products versus products of the “same general class or
kind”), and to use such products in its viability determination
would require Commerce to perform a “product-specific matching
analysis, and other analyses,” requiring data not yet available to
Commerce. See Remand Results at 15-16. The SAA makes clear that
“Commerce must determine whether the home market is viable at an
early stage in the [antidumping] proceeding to inform exporters
which sales to report.” SAA at 821. Commerce poses a similar
argument when explaining its normal practice of calculating whether
reasonable grounds to believe or suspect below cost sales exist
under 19 U.S.C. § 1677b(b)(2)(A)(i) (1994), and adds that it
defines the term “foreign like product” consistently in determining
CV profits. See Remand Results at 20-25.
Contrary to the contentions espoused by RHP-NSK, the Court
finds that the Remand Results provide sufficient explanation to
rebut the presumption that Commerce cannot use differing
definitions for an identical term in the same proceeding. Commerce
adequately explained why the differing use of the same term is
necessary to establish NV and CV profit in the same antidumping
proceeding. Commerce set out the factual background of its
calculations and provided the Court with an adequate and reasonable
explanation of why the methodology at issue enables it to comply
Court No. 98-07-02526 Page 13
with the statute on a whole. Accordingly, Commerce followed the
mandate of RHP Bearings III.
V. Conclusion
The Court finds that Commerce sufficiently met its burden to
explain why a differing definition of the term “foreign like
product” is used in calculating NV and CV profit for RHP-NSK.
Therefore, having reviewed the Remand Results, it is hereby
ORDERED that the Remand Results are affirmed in their
entirety, and it is further
ORDERED that since all other issues have been decided, this
case is dismissed.
_________________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: January 28, 2003
New York, New York
Erratum
Slip Opinion 03-10
RHP Bearings Ltd. v. United States, Court No. 98-07-02526
On page 2, the heading “JUDGMENT” should be replaced with
the heading “ORDER”.
February 5, 2003.