Union Steel, LG Hausys, Ltd. v. United States

• Decision Date: 16 April 2013
• Docket Number: Nos. 2012–1248,2012–1315.,s. 2012–1248
• Citation: 713 F.3d 1101
• Parties: UNION STEEL, LG Hausys, Ltd., LG Hausys America, Inc., and Dongbu Steel Co., Ltd., Plaintiffs–Appellants, v. UNITED STATES, Defendant–Appellee, and Nucor Corporation, Defendant–Appellee, and United States Steel Corporation, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

713 F.3d 1101

UNION STEEL, LG Hausys, Ltd., LG Hausys America, Inc., and Dongbu Steel Co., Ltd., Plaintiffs–Appellants,

v.UNITED STATES, Defendant–Appellee,andNucor Corporation, Defendant–Appellee,

and

United States Steel Corporation, Defendant–Appellee.

Nos. 2012–1248, 2012–1315.

United States Court of Appeals,Federal Circuit.

April 16, 2013.

Donald B. Cameron, Morris Manning & Martin LLP, Washington, DC, argued for plaintiffs-appellants. With him on the brief were Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S. Hodgins and Jeffrey O. Frank.

L. Misha Preheim, Trial Attorney, Civil Division, Commercial Litigation Branch, United States Department of Justice, of Washington, DC, argued for defendant-appellee, United States. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Daniel J. Calhoun, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Timothy C. Brightbill, Wiley Rein LLP, of Washington, DC, argued for defendant-appellee, Nucor Corporation. With him on the brief was Alan H. Price. Of counsel were Maureen E. Thorson, Lori Scheetz, Robert E. DeFrancesco, III, and Tessa V. Capeloto.

Jeffrey D. Gerrish, Skadden, Arps, Slate, Meagher & Flom, LLP, of Washington, DC, argued for defendant-appellee, United States Steel Corporation. With him on the brief were Robert E. Lighthizer and Ellen J. Schneider.

Neil R. Ellis and Jill Caiazzo, for amici curiae, Ami JTEKT Corporation, et al. and Robert A. Lepstein and Alexander H. Schaefer counsel for NSK Corporation, et al. and Kevin M. O'Brien, Diane A. MacDonald and Christine M. Streatfield, counsel for NTN Corporation, et al.

Terence P. Stewart and Geert De Prest, Stewart and Stewart, of Washington, DC, for amicus curiae, Committee to support U.S. Trade Laws.

Before LOURIE, PLAGER, and WALLACH, Circuit Judges.

WALLACH, Circuit Judge.

In the decision now on appeal, the United States Court of International Trade affirmed the Department of Commerce's (“Commerce”) use of zeroing to determine antidumping duties in administrative reviews, even though Commerce no longer uses zeroing in investigations establishing antidumping orders. This court has twice considered whether such divergent practices constitute a reasonable construction of Commerce's governing statute, both times remanding for Commerce to provide an explanation. In the case now on appeal, Commerce has provided such an explanation.Union Steel, LG Hausys, Ltd., LG Hausys America, Inc., and Dongbu Steel Co., Ltd. (collectively, “Appellants”) appeal from the Court of International Trade's decision that, in light of this explanation, Commerce's zeroing practices are a reasonable interpretation of statute. Union Steel v. United States, 823 F.Supp.2d 1346, 1360 (Ct.Int'l Trade 2012) (“Union Steel ”). Because the Court of International Trade properly found that Commerce's interpretation of its governing statute is in accordance with law, we affirm.

Background

Dumping occurs when imported merchandise is sold for a lower price in the United States than it is sold in its home market. This practice can harm domestic producers who are selling the same goods at market value. See Sioux Honey Ass'n. v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed.Cir.2012). The antidumping duty statute provides for the imposition of remedial duties to imported merchandise sold, or likely to be sold, in the United States “at less than fair value” when the relevant domestic industry is harmed. 19 U.S.C. § 1673. “Sales at less than fair value are those sales for which the ‘normal value’ (the price a producer charges in its home market) exceeds the ‘export price’ (the price of the product in the United States) or ‘constructed export price.’ ” U.S. Steel Corp. v. United States, 621 F.3d 1351, 1353 (Fed.Cir.2010) (quoting 19 U.S.C. § 1677(35)(A)).

Commerce calculates a “dumping margin,” which is “the amount by which the normal value exceeds the export price or constructed export price.” ¹19 U.S.C. § 1677(35)(A). Commerce relies upon three comparison methods to calculate dumping margins:

(1) Average-to-transaction, in which Commerce compares the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions.

(2) Average-to-average, in which Commerce compares the weighted average of the normal values to the weighted average of the export prices (or constructed export prices).

(3) Transaction-to-transaction, in which Commerce compares the normal value of an individual transaction to the export price (or constructed export price) of an individual transaction.

See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103–316, vol. 1, at 842–43, reprinted in 1994 U.S.C.C.A.N. 3773 (“SAA”).

Commerce calculates dumping margins both in investigations, which establish an antidumping order, and in subsequent administrative reviews of that order. Following an investigation, Commerce issues an antidumping order which imposes a duty based upon the dumping margin. See19 U.S.C. §§ 1673a, 1673b(b), 1673b(d), 1673d(a), 1673d(c). Any exporter of the goods subject to the antidumping order may annually request an administrative review to determine the exact amount by which the foreign market value exceeds the U.S. price and assess the precise amount of duties owed for their exports. ²See19 U.S.C. §§ 1675(a)(1), 1675(a)(2)(A).

As explained in the SAA accompanying the Uruguay Round Agreements Act (“URAA”) Commerce had a practice of using average-to-transaction comparisons to calculate dumping margins in both investigations and administrative reviews. SAA at 842. After adoption of the URAA in 1995, Commerce switched to using average-to-average or transaction-to-transaction comparisons in antidumping duty investigations.³Id.;19 U.S.C. § 1677f–1(d)(1)(A). Commerce continued to use average-to-transaction comparisons as its general practice in administrative reviews.

In calculating the weighted average dumping margin, Commerce has historically used a methodology called “zeroing” where negative dumping margins (i.e., margins of sales of merchandise sold at nondumped prices) are given a value of zero and only positive dumping margins (i.e., margins for sales of merchandise sold at dumped prices) are aggregated. “That is, after [Commerce] computed an average dumping margin for each averaging group, if that averaging group ... product did not have a positive dumping margin, Commerce set the margin at zero rather [than] at a negative number that would offset a positive margin for another averaging group.” ⁴Union Steel, 823 F.Supp.2d at 1350. The applicable statute, 19 U.S.C. § 1677(35)(A), does not mention zeroing. However, as authority for this method, Commerce has emphasized the part of the statute stating that the dumping margin “means the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise.” 19 U.S.C. § 1677(35)(A) (emphasis added).

This court has repeatedly addressed zeroing and has held 19 U.S.C. § 1677(35)(A) ambiguous and deferred to Commerce's reasonable interpretation of that statute. Timken Co. v. United States, 354 F.3d 1334, 1342 (Fed.Cir.2004) (applying Chevron analysis to determine that Commerce's practice of using zeroing in administrative reviews was a reasonable interpretation of the statute); Corus Staal BV v. Dep't. of Commerce, 395 F.3d 1343, 1347 (Fed.Cir.2005) (“Corus ”) (extending Timken to encompass Commerce's practice of zeroing in investigations). Zeroing is controversial because some parties claim it does not fully account for all of the comparable export transactions, and so is not a “fair comparison” between export price and normal value as required by Article 2.4 and 2.4.2 of the Anti–Dumping Agreement. See Panel Report, United States—Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), ¶¶ 7.32, 7.33, WT/DS294/R (Oct. 31, 2005); aff'd Appellate Report, United States—Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), ¶ 146, WT/DS294/AB/R (Apr. 18, 2006); see also Dongbu Steel Co. v. United States, 635 F.3d 1363, 1366 (Fed.Cir.2011) (characterizing zeroing as “controversial”).

Commerce's use of zeroing with average-to-average comparisons in certain antidumping duty investigations was challenged by the European Communities before the World Trade Organization's (“WTO”) Dispute Settlement Body. See Panel Report, ¶¶ 7.32, 7.33. The WTO found Commerce's practice inconsistent with the United States' international obligations, and Commerce determined that it would cease using zeroing methodology in new and pending investigations. See Antidumping Proceedings: Calculation of the Weighted–Average Dumping Margin During an Antidumping Investigation; Final Modification, 71 Fed. Reg. 77,722 (Dec. 27, 2006). Instead, Commerce started using a method of “offsetting” to account for sales made at less than fair value, such that some of the dumping margins used to calculate a weighted average dumping margin would be negative. U.S. Steel, 621 F.3d at 1355.

In 2011, this court considered a challenge to Commerce's continuing use of zeroing in administrative reviews in an earlier review of the same antidumping duty order at issue in this case. In Dongbu, appellant Union Steel argued “that it is unreasonable to construe a single statutory provision [19 U.S.C. § 1677(35) ] that applies to both investigations and administrative reviews as having opposite meanings depending on the nature of the antidumping proceeding.” Dongbu, 635 F.3d at 1370. The court determined that “[a]lthough 19 U.S.C. § 1677(35) is ambiguous with respect to zeroing and Commerce plays an important role in resolving this gap in the statute, Commerce's discretion is not absolute. ...