CAFC Affirms Use of Zeroing in AD Admin Reviews But Not Investigations
In its long-awaited ruling in Union Steel v. U.S., the Court of Appeals for the Federal Circuit affirmed on April 16 the Court of International Trade’s approval of the practice of zeroing in antidumping administrative reviews, but not investigations.
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The divergent methodologies had been in use since Commerce stopped zeroing in investigations in 2007, in response to an adverse World Trade Organization ruling (see 07010825). The WTO had found that Commerce’s use of zeroing, or disregarding sales data where the U.S. price actually exceeded foreign home country prices, was not a “fair comparison” as required by WTO rules because it didn’t fully account for all transactions. The agency’s zeroing policy had been under fire because, according to some, it artificially inflates AD rates. Commerce continued to use zeroing in administrative reviews.
In 2011, the appeals court remanded to Commerce in two cases, Dongbu (see 11040408 and JTEKT (see 11071237), to explain why it interprets the same statute on calculating dumping margins differently in the two types of proceedings. CIT upheld Commerce’s explanation in February 2012 (see 12030543). Several cases on zeroing in administrative reviews were put on hold pending CAFC’s decision on the appeal of CIT’s decision (see, for example, 13031916 and 12121204).
In February 2012, Commerce ended its practice of zeroing in administrative reviews, so the appeals court’s decision only applies to proceedings that began during the five-year period where investigations and administrative reviews differed (see 12021329.
In its required explanation, Commerce said the use of zeroing in investigations had been previously affirmed as an acceptable interpretation of the law in earlier cases, and its decision not to use zeroing in investigations was only made because of the government’s international obligations. The agency was free to make this limited change, without upending its entire interpretation of the statute, it said. Finally, the policy could be explained by the different objectives of administrative reviews, Commerce said. Reviews use more precise price calculations than investigations, use month-specific average home market prices and transaction-specific U.S. sales prices, and generate specific monetary assessments; investigations use average prices, and are intended merely to evaluate a party’s “overall selling behavior.”
Noting that it had only asked for an explanation, and had not said the divergent application of zeroing was in itself illegal, the appeals court affirmed. “No rule of law precludes Commerce from interpreting 19 USC 1677(35) differently in different circumstances as long as it provides an adequate explanation,” the court said.
(Union Steel v. U.S., Appeal Nos. 2012-1248 and 2012-1315, dated 04/16/13)
(Attorneys: Donald Cameron of Morris Manning for plaintiffs-apppellants Union Steel, LG Hausys, Ltd., LG Hausys America, Inc., and Dongbu Steel Co., Ltd.; Misha Preheim for defendant-appellee U.S. government; Timothy Brightbill of Wiley Rein for defendant-appellee Nucor Corporation; Jeffrey Gerrish of Skadden Arps for defendant-appellee United States Steel Corporation)