Following up on this post, here is another decision (JTEKT CORP v. US, released yesterday) from the CAFC that talks about whether the Department of Commerce can take an inconsistent approach to zeroing (no zeroing in investigations, but zeroing in administrative reviews):
V. Commerce’s Use of Zeroing
We have long held that Commerce’s practice of zeroing is a reasonable statutory interpretation entitled to deference. See, e.g., Timken Co. v. United States, 354 F.3d 1334, 1342 (Fed. Cir. 2004). Zeroing is the practice whereby the values of positive dumping margins are used in calculating the overall margin, but negative dumping margins are included in the sum of margins as zeroes. Dongbu Steel Co. Ltd. v. United States, 635 F.3d 1363, 1366 (Fed. Cir. 2011). Historically, Commerce used zeroing in both the initial investigation to determine whether dumping occurred, and in the subsequent administrative reviews of its dumping determination. But this practice has changed. In response to pressure from the World Trade Organization (WTO), Commerce changed its practice with respect to investigations and no longer zeroes in that phase. Id. at 1367.
We addressed Commerce’s conflicting treatment of zeroing in investigations and administrative reviews in Dongbu. Due to the procedural posture in Dongbu, Commerce had provided no justification for using zeroing in administrative reviews and not in investigations. In that case, we vacated and remanded in order for Commerce to explain its reasoning for such disparate treatment. Id. at 1373.
NTN argues that Dongbu requires that we vacate and remand this case in order for Commerce to provide reasoning for its current practice. Appellee Timken argues that NTN failed to properly raise this issue on appeal. Further, appellees argue that Dongbu does not require vacatur because Commerce, unlike in Dongbu, provided reasons for its zeroing practice in this case.
As an initial matter, NTN did not waive this argument. NTN focuses a significant portion of its brief to challenging Commerce’s use of zeroing. Although NTN acknowledges that we have consistently upheld the practice, NTN nonetheless raised the issue and specifically pointed out the contradiction of using zeroing in administrative reviews, but not in investigations. NTN Appellant’s Br. 34. NTN did not have the benefit of the Dongbu opinion before filing its briefs and thus could not have argued that the case requires us to vacate, but it nonetheless preserved the issue on appeal by arguing that Commerce’s continuing practice of zeroing in administrative reviews, but not in investigations, is unreasonable.
We agree with NTN that Dongbu requires us to vacate and remand. Appellees argue that, unlike Dongbu, Commerce explained its reasoning for continuing to zero in administrative reviews, but not in investigations. Appellees are correct that Commerce attempted to address the exact issue in this case:
Antidumping investigations and administrative reviews are different proceedings with different purposes. Specifically, in antidumping investigations, the Act specifies particular types of comparisons . . . . In antidumping investigations, the Department generally uses average-to-average comparisons whereas in administrative reviews the Department generally uses average-totransaction comparisons.
The purpose of the dumping-margin calculation also varies significantly between antidumping investigations and reviews. In antidumping investigations, the primary function of the dumping margin is to determine whether an antidumping duty order will be imposed on the subject imports. In administrative reviews, in contrast, the dumping margin is the basis for the assessment of antidumping duties on entries of subject merchandise to the antidumping duty order
J.A. 173-74 (citations omitted). While Commerce did point to differences between investigations and administrative reviews, it failed to address the relevant question—why is it a reasonable interpretation of the statute to zero in administrative reviews, but not in investigations? It is not illuminating to the continued practice of zeroing to know that one phase uses average-to-average comparisons while the other uses average-to-transaction comparisons. In order to satisfy the requirement set out in Dongbu, Commerce must explain why these (or other) differences between the two phases make it reasonable to continue zeroing in one phase, but not the other. Thus, we vacate and remand in order for Commerce to provide its reasoning.
