Torrington Co. v. U.S.

• Decision Date: 24 October 1995
• Docket Number: 95-1135,Nos. 95-1134,s. 95-1134
• Citation: 68 F.3d 1347
• Parties: The TORRINGTON COMPANY, Plaintiff-Appellant, Federal-Mogul Corporation, Plaintiff, v. The UNITED STATES, Defendant-Appellee, and SKF USA Inc. and SKF GmbH, Defendant-Appellees, and NTN Kugellagerfabrik (Deutschland) GmbH, Defendant-Appellee, and Ina Walzlager Schaeffler KG and Ina Bearing Company, Inc., Defendant-Appellees, and FAG Kugelfischer Georg Schafer KGaA, Defendant-Appellee. The TORRINGTON COMPANY, Plaintiff-Appellant, Federal-Mogul Corporation, Plaintiff, v. The UNITED STATES, Defendant-Appellee, and SKF USA Inc. and SKF Industrie, S.p.A., Defendant-Appellees, and FAG Cuscinetti S.p.A., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1347

68 F.3d 1347

17 ITRD 1961

The TORRINGTON COMPANY, Plaintiff-Appellant, Federal-Mogul Corporation, Plaintiff, v. The UNITED STATES, Defendant-Appellee, and SKF USA Inc. and SKF GmbH, Defendant-Appellees,

and

NTN Kugellagerfabrik (Deutschland) GmbH, Defendant-Appellee,

and

Ina Walzlager Schaeffler KG and Ina Bearing Company, Inc.,

Defendant-Appellees,

and

FAG Kugelfischer Georg Schafer KGaA, Defendant-Appellee.

The TORRINGTON COMPANY, Plaintiff-Appellant, Federal-Mogul Corporation, Plaintiff, v. The UNITED STATES, Defendant-Appellee, and SKF USA Inc. and SKF Industrie, S.p.A., Defendant-Appellees,

and

FAG Cuscinetti S.p.A., Defendant-Appellee.

Nos. 95-1134, 95-1135.

United States Court of Appeals, Federal Circuit.

Oct. 24, 1995.

Wesley K. Caine, Stewart & Stewart, Washington, DC, argued for plaintiff-appellant in appeal nos. 95-1134 and 95-1135. With him on the brief were Terence P. Stewart, Geert DePrest and Lane S. Hurewitz. Of counsel was James R. Cannon, Jr.

Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Department of Justice, Washington, DC, argued for defendants-appellees, The United States, in appeal nos. 95-1134 and 95-1135. With her on the brief were Frank W. Hunger, Assistant Attorney General and David M. Cohen, Director. Also on the brief were Stephen J. Powell, Chief Counsel for Import Administration, Berniece A. Browne, Senior Counsel, Thomas H. Fine and Dean A. Pinkert, Attorney-Advisors, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce. Herbert C. Shelley, Howrey & Simon, Washington, DC, argued for defendants-appellees, SKF USA Inc. and SKF GmbH, in appeal no. 95-1134. With him on the brief was Alice A. Kipel. Stephen L. Gibson, Arent Fox Kintner Plotkin & Kahn, Washington, DC, argued for defendants-appellees, INA Walzlager Schaeffler KG and INA Bearing Company, Inc., in appeal no. 95-1134. With him on the brief was Peter L. Sultan.

Max F. Schutzman, Grunfeld, Desiderio, Lebowitz & Silverman, LLP, of New York City, argued for defendant-appellee, FAG Kugelfischer Georg Schafer KGaA, in appeal no. 95-1134 and FAG Cuscinetti S.p.A., in appeal no. 95-1135. With him on the brief were Andrew B. Schroth and Mark E. Pardo. Of counsel were David L. Simon and Jeffrey S. Grimson.

Donald J. Unger, Lawrence M. Friedman and Kazumune V. Kans, Barnes, Richardson & Colburn, Chicago, IL, were on the brief for defendant-appellee, NTN Kugellagerfabrik (Deutschland) GmbH, in appeal no. 95-1134.

Before ARCHER, Chief Judge, PLAGER and BRYSON, Circuit Judges.

BRYSON, Circuit Judge.

These consolidated cases present two questions of statutory interpretation arising out of an administrative review of antidumping duty orders. The first question concerns what constitutes "good cause," within the meaning of 19 U.S.C. Sec. 1677e(b)(3)(B) (1988), to require the Commerce Department to verify the information it relied on in conducting the administrative review. The second question is whether the Commerce Department may lawfully reduce the potential antidumping duties on goods imported into this country by taking into account pre-sale transportation expenses associated with the sale of like goods in the manufacturers' home markets. We conclude that the Court of International Trade correctly resolved both questions, and we therefore affirm.

I

In 1990, the International Trade Administration of the Commerce Department (Commerce) initiated administrative reviews of antidumping duty orders covering antifriction bearings from Germany and Italy. The Torrington Company, an American manufacturer of antifriction bearings, filed requests that Commerce verify all information upon which it would base its determinations in those reviews. In response to questionnaires from Commerce, the foreign companies that were subject to the reviews submitted information regarding their production costs for the imported bearings. Torrington then filed objections to the companies' responses, arguing inter alia that several of the companies had changed their cost accounting systems for the purpose of antidumping reporting.

Commerce originally scheduled on-site verifications for several of the companies. It subsequently canceled the verifications, however, citing as one factor the outbreak of the Persian Gulf War, which had made European air travel less safe for Commerce Department personnel. Torrington objected to the cancellations and suggested that Commerce postpone the verifications until after air travel was safer or, in the alternative, that it conduct verification of the pertinent data in Washington, D.C. Commerce declined to pursue either option, stating that it was satisfied with the responses it had received.

Torrington filed complaints in the Court of International Trade, challenging Commerce's failure to conduct the verifications. In addition, Torrington argued that it was improper for Commerce to deduct an importer's pre-sale home-market transportation expenses from the calculation of foreign market value, a key element in determining the antidumping duty.

The Court of International Trade affirmed Commerce on both questions but remanded to the agency on other issues. Torrington Co. v. United States, 832 F.Supp. 365 (Ct.Int'l Trade 1993) (Italy); Torrington Co. v. United States, 832 F.Supp. 379 (Ct.Int'l Trade 1993) (Germany). Following the proceedings on remand, Torrington asked the Court of International Trade to reconsider its ruling on pre-sale home-market transportation expenses in light of this court's intervening decision in Ad Hoc Comm. of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 13 F.3d 398 (Fed.Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 67, 130 L.Ed.2d 23 (1994) ("Ad Hoc I "). The court declined to do so, holding that Ad Hoc I did not address the question presented in this case. Torrington Co. v. United States, 850 F.Supp. 7 (Ct.Int'l Trade 1994) (Italy); Torrington Co. v. United States, 850 F.Supp. 12 (Ct.Int'l Trade 1994) (Germany). After a further remand for clarification of Commerce's policy on home-market transportation expenses, the Court of International Trade once again upheld Commerce's treatment of those expenses. Torrington Co. v. United States, 866 F.Supp. 581 (Ct.Int'l Trade 1994) (Germany); Torrington Co. v. United States, 866 F.Supp. 1434 (Ct.Int'l Trade 1994) (Italy).

Torrington took this appeal. It contends that the Court of International Trade erred in upholding Commerce's decision not to conduct verifications and in allowing Commerce to deduct pre-sale home-market transportation expenses from the calculation of foreign market value.

II

The statute on which Torrington relies for its claim that Commerce was obligated to conduct the verifications is 19 U.S.C. Sec. 1677e(b) (1988). That statute provides that upon receiving a request from an interested party, Commerce must verify the information on which it relies in an administrative review if either (1) the two immediately preceding administrative reviews were conducted without verification, or (2) "good cause for verification is shown." 19 U.S.C. Sec. 1677e(b)(3)(B) (1988).

Because these were the first administrative reviews of the antidumping duty orders for antifriction bearings, verification was not required unless there was a showing of "good cause for verification" within the meaning of section 1677e(b)(3)(B). Torrington argues that the "good cause" standard set forth in the statute is an objective one and that the standard was met in this case. Commerce, however, has promulgated a regulation that interprets the "good cause" standard as subjective. The pertinent regulation, found at 19 C.F.R. Sec. 353.36(a)1(iv), states that the "Secretary will verify all factual information the Secretary relies on in ... [t]he final results of an administrative review ... if the Secretary decides that good cause for verification exists." In order to prevail on its view that the "good cause" standard is objective, Torrington must establish that the regulation is contrary to the terms of the statute and therefore beyond the Department's power to adopt.

When we review a regulation that the Commerce Department has promulgated in interpreting the antidumping laws, the first question is whether Congress has spoken to the precise question at issue. See Torrington Co. v. United States, 44 F.3d 1572, 1577 (Fed.Cir.1995); Koyo Seiko Co. v. United States, 36 F.3d 1565, 1571 (Fed.Cir.1994); see generally Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). Nothing in the language of the statute addresses the question whether the "good cause" standard is subjective or objective. Nor is there anything in the legislative history that supports Torrington's claim that Congress intended to create an objective test for "good cause."

Torrington cites one piece of legislative history--a House report commenting that "[g]ood cause could be such factors as a significant issue of law or fact, changed or special circumstances, discrepancies found in previous verifications, or the likelihood of a significant impact on the result." H.R.Rep. No. 725, 98th Cong., 2d Sess. 43 (1984). That report, however, does not speak in objective or mandatory terms; it merely lists some factors that could constitute "good cause."

In the absence of clear direction from the statute, we must ask the second question: whether the Commerce Department's regulation is based on a permissible interpretation of the statute. See Chevron, 467 U.S. at 843 & n. 11, 844, 104 S.Ct. at 2781 & n. 11, 2782; Suramerica De Aleaciones Laminadas, C.A. v. United States, 966 F.2d 660, 665 (Fed.Cir.1992). In antidumping cases, we accord substantial deference to Commerce's statutory interpretation, as the International Trade Administration is the "master" of the antidumping laws. Daewoo Elecs. Co. v. International Union, 6 F.3d 1511, 1516 (Fed.Cir.1993), cert....