United States Court of Appeals 

for the Federal Circuit 

__________________________ 

SKF USA INC., SKF FRANCE S.A., SKF 

AEROSPACE FRANCE S.A.S., SKF GMBH, AND SKF 

INDUSTRIE S.P.A. 

Plaintiffs-Appellants, 

v. 

UNITED STATES, 

Defendant-Appellee, 

AND

TIMKEN U.S. CORPORATION, 

Defendant-Appellee. 

__________________________ 

2010-1128 

__________________________ 

Appeal from the United States Court of International 

Trade in case no. 07-CV-0393, Judge Timothy C. Stanceu. 

___________________________ 

Decided: January 7, 2011 

___________________________ 

HERBERT C. SHELLEY, Steptoe & Johnson LLP, of 

Washington, DC, argued for plaintiffs-appellants. With 

him on the brief were ALICE A. KIPEL and LAURA R.

ARDITO. 
SKF USA v. US 2

CLAUDIA BURKE, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of 

Justice, of Washington, DC, argued for defendant-appellee 

United States. With her on the brief were TONY WEST, 

Assistant Attorney General, JEANNE E. DAVIDSON, Director, and PATRICIA M. MCCARTHY, Assistant Director. Of 

counsel on the brief was JONATHAN ZIELINSKI, Office of the 

Chief Counsel, United States Department of Commerce, 

of Washington, DC. 

GEERT DE PREST, Stewart and Stewart, of Washington, DC, argued for defendant-appellee Timken U.S. 

Corporation. With her on the brief were TERENCE P.

STEWART and LANE S. HUREWITZ. 

NEIL R. ELLIS, Sidley Austin LLP, of Washington, DC, 

for amici curiae JTEKT Corporation and Koyo Corporation of U.S.A. With him on the brief were ERIC A.

SHUMSKY and JILL CAIAZZO. 

MATTHEW P. JAFFE, Crowell & Moring LLP, of Washington, DC, for amici curiae NSK Ltd. and NSK Corporation. With him on the brief were ROBERT A. LIPSTEIN and 

ALEXANDER H. SCHAEFER. 

__________________________ 

Before GAJARSA, LINN, and DYK, Circuit Judges. 

Opinion for the court filed by Circuit Judge DYK. 

Opinion Concurring in Part and Dissenting in Part filed 

by Circuit Judge LINN. 

DYK, Circuit Judge. 

Plaintiffs SKF USA Inc., SKF France S.A., SKF Aerospace France S.A.S., SKF GMBH, and SKF Industrie 

S.p.A. (collectively “SKF” or “plaintiffs”) appeal a decision 
3 SKF USA v. US

of the Court of International Trade (“Trade Court”). That 

decision affirmed the final determination of the United 

States Department of Commerce (“Commerce”) in its 

seventeenth administrative review of antidumping duty 

orders on ball bearings and parts thereof from France, 

Germany, Italy, Japan, Singapore, and the United Kingdom. We conclude that Commerce had the statutory 

authority to use an unaffiliated supplier’s actual costs of 

production in calculating constructed value (“CV”), but we 

hold that Commerce failed to adequately explain its 

decision to change its methodology for calculating SKF’s 

CV. We also hold that Commerce had the statutory 

authority to utilize zeroing. Accordingly, we affirm in 

part and vacate and remand in part. 

BACKGROUND

SKF GmbH, an SKF company located in Germany, 

produces and sells ball bearings and also purchases some 

finished bearings from an unaffiliated German competitor 

to complement its product line. SKF exports some of 

these products to the United States. SKF, along with 

other bearing exporters, is subject to an antidumping 

duty order issued by Commerce with respect to sales of 

ball bearings from Germany, among other countries. The 

original antidumping order was entered in 1989. Thereafter, Commerce has conducted administrative reviews. 

“Recognizing that prices and costs change over the course 

of time, Congress provided that Commerce shall conduct 

an annual administrative review ‘if a request for such a 

review [is] received.’” Dofasco Inc. v. United States, 390 

F.3d 1370, 1372 (Fed. Cir. 2004). During an administrative review, Commerce determines a new dumping margin. See 19 U.S.C. § 1675(a)(2)(A). 

Dumping occurs when the price at which imported 

merchandise is sold in the United States is less than the 
SKF USA v. US 4

merchandise’s “normal value”—i.e. fair value in the home 

market. See 19 U.S.C. §§1673, 1677b(a). When Commerce cannot determine “normal value” based on actual 

sales of the subject merchandise in its home market, the 

statute provides for calculation of CV as a proxy for the 

sale price in the home market. Id. § 1677b(a)(4). One 

component used in calculating CV is “the cost of materials 

and fabrication or other processing of any kind employed 

in producing the merchandise.” Id. § 1677b(e)(1). 

During its original investigation and the next sixteen 

administrative reviews of ball bearing antidumping 

orders, Commerce used SKF’s acquisition costs in calculating the CV of subject ball bearings SKF sold in the 

United States but obtained from its unaffiliated supplier. 

During the fifteenth administrative review, the petitioner, 

Timken US Corporation (“Timken”), apprised Commerce 

that some respondents had acquired finished bearings 

from unaffiliated suppliers and resold them in the United 

States. Commerce noted that “[g]iven the statutory 

emphasis on the use of actual costs of production in 

calculating COP and CV, it may be appropriate” to require actual cost data. J.A. 2003. However, Commerce 

deferred implementation of this change, reasoning that 

the review was at too late a stage to require acquisition of 

cost data from unaffiliated suppliers. Id. at 2004–05. In 

the future, Commerce suggested that it might “require the 

respondents to report COP and CV information for purchases from their unaffiliated suppliers where facts . . . 

reflect the facts in other proceedings . . . in which we have 

required the COP and CV information from unaffiliated 

suppliers.” Id. at 2005. 

During the seventeenth review, Commerce for the 

first time required respondents to produce actual COP 

and CV data from their unaffiliated suppliers when a 

“substantial proportion” of the respondent’s sales were 
5 SKF USA v. US

“sales of merchandise produced by unaffiliated suppliers.” 

J.A. 5002–03. SKF and four other respondents fell into 

this category.1 SKF’s unaffiliated supplier was also an 

exporter and, therefore, a competitor that was also subject 

to the antidumping order. When SKF was unable to 

obtain the data, Commerce acquired the data directly 

from the unaffiliated supplier. Commerce did not require 

other respondents to report actual cost data because “the 

relative insignificance of sales of merchandise purchased 

from unaffiliated suppliers” meant it was unlikely that 

using the suppliers’ actual data “will have a significant 

impact on [the] margin calculations.” J.A. 5002. 

Commerce proposed to use these cost data in calculating CV. SKF and other respondents objected to Commerce’s proposed use of this actual cost data in 

calculating CV. Presumably, SKF objected because it 

worried that using the unaffiliated supplier’s actual cost 

data would yield a higher COP and CV than its acquisition costs, leading to a higher dumping margin. SKF 

argued, inter alia, that: 1) the statute did not permit 

Commerce to use the actual cost data from unaffiliated 

suppliers; 2) Commerce did not adequately explain its 

change in methodology; and 3) use of unaffiliated supplier 

data violated due process because SKF could not compel 

its supplier to cooperate and because SKF could not have 

access to the data for use in the proceedings. Also, SKF 

could not “knowingly price” in the United States to avoid 

 1 Commerce explained SKF’s percentage of unaffiliated supplier sales constituted a “substantial proportion” 

because it was between 25 and 50 percent of home market 

sales. According to SKF, the facts as to the percentage of 

subject merchandise obtained from its unaffiliated supplier were the same in the fourteenth, fifteenth, and 

sixteenth reviews as they were when Commerce changed 

the methodology in the seventeenth review. 
SKF USA v. US 6

dumping because it would not know its supplier’s actual 

costs. 

Commerce issued its final determination using the 

unaffiliated supplier’s actual production costs to calculate 

CV. In the Issues and Decision Memorandum, Commerce 

responded to some of SKF’s arguments. It explained that 

the statutory scheme provided for calculating COP and 

CV “on the basis of actual production costs.” Issues and 

Decision Memorandum for the Antidumping Duty Administrative Reviews of Ball Bearings and Parts Thereof from 

France, Germany, Italy, Japan, Singapore, and the United 

Kingdom for the Period of Review May 1, 2005, through 

April 30, 2006, at 47 (October 1, 2007) (“Decision Mem.”), 

available at http://ia.ita.doc.gov/frn/summary/multiple/e7-

20151-1.pdf. It also warned that “[i]f acquisition costs do 

not capture all of the actual costs of the manufacturer 

supplying the bearings to the reseller, they are not an 

appropriate basis for the calculation of CV and . . . the 

use of such acquisition costs would distort the reseller’s 

dumping margin due to the missing elements of cost.” Id.

at 48. Moreover, it claimed Commerce “has had a longstanding practice of using the actual production costs of 

unaffiliated suppliers in lieu of the exporter’s acquisition 

costs to calculate COP and CV” and is “moving towards 

consistency throughout its cases.” Id. at 48–49 (citing 

Honey from Argentina, 66 Fed. Reg. 50611 (Dep’t of 

Commerce Oct. 4, 2001) (final determination); Elemental 

Sulphur from Canada, 61 Fed. Reg. 8239, 8251 (Dep’t of 

Commerce Mar. 4, 1996) (final administrative review); 

Fresh and Chilled Atlantic Salmon from Norway, 56 Fed. 

Reg. 7661, 7665 (Dep’t of Commerce Feb. 25, 1991) (final 

determination)). 

Responding to SKF’s contention that it could not access the unaffiliated supplier data, Commerce explained 

that SKF’s counsel could have access to the data under an 
7 SKF USA v. US

Administrative Protective Order (“APO”). Commerce did 

not, however, respond to SKF’s concern that it could not 

“knowingly price” its products to avoid dumping. Nor did 

it address SKF’s concern that it could not compel its 

unaffiliated supplier to provide the data. In fact, Commerce stated that it might apply an adverse inference if 

the producer did not provide the data (though in this 

instance the supplier had provided the data). Decision 

Mem. at 48. 

In the final decision, Commerce also continued to utilize zeroing to calculate dumping margins. Zeroing refers 

to a practice under which, when the export price is higher 

than the normal value of the subject merchandise, Commerce assigns it a value of zero rather than a negative 

value in calculating the average dumping margin. See

SKF USA Inc. v. United States, 659 F. Supp. 2d 1338, 

1346 (Ct. Int’l Trade 2009). 

SKF sought review in the Trade Court, and that court 

affirmed.2 The Trade Court agreed that the statute 

allowed Commerce to use unaffiliated supplier cost information. The Trade Court also found Commerce provided 

a reasonable explanation for methodology change. It 

dismissed SKF’s due process concerns because SKF’s 

counsel could review the unaffiliated supplier’s data. It 

did not, however, address SKF’s concerns about adverse 

inferences and its inability to price its products to avoid 

 2 Below, SKF also challenged Commerce’s decision 

to issue duty assessment and liquidation instructions to 

United States Customs and Border Protection fifteen days 

after publication of the final results of the administrative 

reviews, arguing that Commerce was required to wait at 

least thirty days to issue the instructions. Id. at 1339–40. 

The Trade Court held that the policy was not in accordance with law. Id. at 1352. This part of the Trade 

Court’s decision is not at issue on appeal. 
SKF USA v. US 8

dumping. Finally, the Trade Court held that zeroing 

methodology was not impermissible. SKF timely appealed, and we have jurisdiction pursuant to 28 U.S.C. § 

1295(a)(5). 

DISCUSSION

I 

We review Trade Court antidumping decisions de 

novo, applying the same standard of review as the Trade 

Court applies to Commerce’s determinations. Corus Staal 

BV v. Dep’t of Commerce, 395 F.3d 1343, 1346 (Fed. Cir. 

2005). Commerce’s determination must be sustained if it 

is supported by substantial evidence and otherwise in 

accordance with law. Id. (citing 19 U.S.C. § 

1516a(b)(1)(B)(i)). 

Commerce argues that, in conjunction, 19 U.S.C. §§ 

1677b(e), 1677b(f)(1)(A), and 1677(28) permit using unaffiliated suppliers’ actual cost data to calculate CV. Under 

§ 1677b(e), CV is calculated by the sum of: 

(1) the cost of materials and fabrication or other 

processing of any kind employed in producing the 

merchandise, during a period which would ordinarily permit the production of the merchandise 

in the ordinary course of business; [and] (2)(A) the 

actual amounts incurred and realized by the specific exporter or producer being examined in the 

investigation or review for selling, general, and 

administrative expenses, and for profits, in connection with the production and sale of a foreign 

like product . . . . 

§ 1677b(e) (emphasis added). Then, § 1677b(f)(1)(A) 

further explains that “[c]osts shall normally be calculated 

based on the records of the exporter or producer of the 

merchandise, if such records are kept in accordance with 
9 SKF USA v. US

the generally accepted accounting principles of the exporting country . . . and reasonably reflect the costs associated 

with the production and sale of the merchandise.” § 

1677b(f)(1)(A) (emphasis added). Finally, § 1677(28) 

defines the term “exporter or producer” as 

the exporter of the subject merchandise, the producer of the subject merchandise, or both where 

appropriate. For purposes of section 1677b of this 

title, the term “exporter or producer” includes 

both the exporter of the subject merchandise and 

the producer of the same subject merchandise to 

the extent necessary to accurately calculate the total amount incurred and realized for costs, expenses, and profits in connection with production 

and sale of that merchandise. 

§ 1677(28) (emphases added). CV requires calculation of 

the “cost of materials and fabrication or other processing 

of any kind employed in producing the merchandise,” 

§ 1677b(e)(1), which should be based on the “records of the 

exporter or producer” of the merchandise, § 1677b(f)(1)(A), 

which, in turn, includes “both the exporter of the subject 

merchandise and the producer,” § 1677(28). 

On the face of these provisions, Commerce can utilize 

unaffiliated suppliers’ records for cost of production data 

in lieu of the exporter’s acquisition cost. The statute 

explicitly provides that costs should be “based on the 

records of the exporter or producer of the merchandise,” § 

1677b(f)(1)(A), and defines exporter or producer as “both 

the exporter of the subject merchandise and the producer 

of the same subject merchandise to the extent necessary 

to accurately calculate the total amount incurred and 

realized for costs,” § 1677(28). Additionally, legislative 

history––the Statement of Administrative Action accompanying the Uruguay Round Agreements Act––explained 
SKF USA v. US 10

that the purpose of § 1677(28) was “to clarify that where 

different firms perform the production and selling functions, Commerce may include the costs . . . of each firm in 

calculating [COP] and [CV].” See H.R. Rep. No. 103–826, 

pt. 1, at 77 (1994) (incorporating Statement of Administrative Action into committee report). Notably, for selling, 

general, and administrative expenses and profits (other 

components of CV), the statute explicitly limits the source 

of data to “the specific exporter or producer being examined in the investigation or review.” 19 U.S.C. § 

1677b(e)(2)(A). This suggests that cost of production data 

is not so limited. Therefore, although the statute does not 

mandate that Commerce must use actual cost data, it 

unambiguously allows Commerce to prefer the actual 

production costs of unaffiliated suppliers of finished 

subject merchandise over acquisition costs. 

 However, SKF argues that other provisions of the 

statute, 19 U.S.C. § 1677b(f)(2) and (3), indicate “that 

sales by unaffiliated suppliers adequately represent the 

required cost of production data.” Appellant’s Br. 16. 

Subsection 1677b(f)(2) provides that the transaction price 

(i.e., acquisition cost) “between affiliated persons may be 

disregarded if” that price “does not fairly reflect the 

amount usually reflected in sales of merchandise under 

consideration.” § 1677b(f)(2) (emphasis added). In that 

case, if “no other transactions are available for consideration,” Commerce calculates the amount based on “what 

the amount would have been if the transaction had occurred between [unaffiliated parties].” Id. SKF contends 

that, therefore, transactions with unaffiliated parties are 

sufficiently arm’s length to “reasonably reflect the costs 

associated with the production and sale of [subject] merchandise” under § 1677b(f)(1)(A). 

Similarly, subsection 1677b(f)(3)—termed the “major 

input rule”—provides that “[i]f, in the case of a transac-
11 SKF USA v. US

tion between affiliated persons involving the production 

by one of such persons of a major input to the merchandise, [Commerce] has reasonable grounds to believe or 

suspect the amount represented as the value of such input 

is less than the cost of production,” then Commerce may 

utilize actual cost of the input. But it does so only if that 

cost is greater than the price if the transaction had occurred between unaffiliated parties. Id.; see also 19 

C.F.R. § 351.407(b). Again, SKF argues, this provision 

demonstrates that transaction prices between unaffiliated 

parties are generally sufficient proxies for cost. 

We cannot agree that sections 1677b(f)(2) and (3) bar 

Commerce from using unaffiliated supplier cost data. 

Those sections on their face relate only to affiliated party 

transactions. They do not require that Commerce always 

use the transaction price between unaffiliated parties as 

the measure for production costs. They merely allow 

Commerce to use the unaffiliated party transaction price 

as a proxy for cost in a specific set of circumstances where 

a transaction between affiliated entities does not appear 

to adequately represent the true amount. 

SKF also argues that Commerce’s approach violates 

due process because SKF cannot review its unaffiliated 

supplier’s cost data and cannot compel an unaffiliated 

company to provide such data. Therefore, it risks “a 

determination of adverse facts available as a consequence 

of an unaffiliated competitor’s failure to comply with a 

request” for cost data. Appellant’s Br. 28. While, as 

discussed below, SKF’s concerns raise questions as to the 

adequacy of Commerce’s explanation for its change in 

approach, they do not constitute a due process violation. 

A due process objection can be raised only in the particular case where there has been a violation. See Thorpe v. 

Housing Auth. of Durham, 393 U.S. 268, 284 n.49 (1969) 

(declining to address plaintiff’s claim that it would be due 
SKF USA v. US 12

process violation to evict her arbitrarily because, under 

the facts on review, she had not yet been evicted). Here, 

SKF’s counsel had access to and a chance to review the 

data under APO procedures, and the supplier provided 

the data; Commerce did not utilize adverse facts available. Although counsel’s access to the data without an 

ability to consult with the respondent creates a disadvantage, it is not so substantial as to raise any constitutional 

concerns. Thus, there was no due process violation. 

II 

SKF also asserts that Commerce did not provide a 

reasonable explanation for its change in methodology 

after sixteen administrative reviews. During the prior 

reviews, SKF and other respondents submitted their 

acquisition cost for finished bearings purchased from 

unaffiliated suppliers as representative of its costs for 

that merchandise. Commerce apparently approved of this 

practice. In its 1988 Request for Information to the 

respondents, Commerce explained that the “[c]ost of 

materials should include the purchase price, transportation charges, duties and all other expenses normally 

associated with the material costs.” J.A. 256 (emphasis 

added). For related suppliers, Commerce required “the 

actual costs of the bearings [to be] obtained from [the] 

suppliers,” but it made no similar comment with respect 

to unrelated suppliers. Id. 

When an agency changes its practice, it is obligated to 

provide an adequate explanation for the change. See

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. 

Auto. Ins. Co., 463 U.S. 29, 42 (1983). In State Farm, the 

Court found the Department of Transportation did not 

adequately explain its decision to rescind a regulation 

that vehicles be equipped with passive restraints (airbags 

or automatic seatbelts), in large part because the agency 
13 SKF USA v. US

too quickly dismissed other alternatives and the safety 

benefits of retaining the existing rule. Id. at 46–56.3 We 

have held that the State Farm requirement applies to 

Commerce’s antidumping proceedings. See SKF USA, 

Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir. 

2001). In SKF USA, we stated that the antidumping 

statute is “highly complex” and “[t]he more complex the 

statute, the greater the obligation on the agency to explain its position with clarity.” Id. at 1382–83. 

We think that Commerce has adequately explained 

why a change would serve legitimate objectives. Commerce concluded using unaffiliated supplier data to calculate CV would allow it to “capture all of the actual costs of 

the manufacturer,” while using acquisition costs would 

“distort the reseller’s dumping margin due to the missing 

elements of cost.” Decision Mem. at 48. Commerce also 

noted its “longstanding practice of using the actual production costs of unaffiliated suppliers in lieu of the exporter’s acquisition costs to calculate COP and CV” and 

its “mov[e] towards consistency.” Id. at 48–49. Indeed, 

Commerce cited numerous cases where it required unaffiliated supplier data, including Individual Quick Frozen 

Red Raspberries from Chile, 69 Fed. Reg. 47869, 47872 

(Dep’t of Commerce Aug. 6, 2004) (preliminary administrative review results), in which it explained that “[w]here 

the sale to an exporter or reseller is finished subject 

merchandise, the Department’s practice is to rely on the 

 3 Under State Farm, factors to consider when determining whether agency action is arbitrary and capricious are: “if the agency has relied on factors which 

Congress has not intended it to consider, entirely failed to 

consider an important aspect of the problem, offered an 

explanation for its decision that runs counter to the 

evidence before the agency, or is so implausible that it 

could not be ascribed to a difference in view or the product 

of agency expertise.” Id. at 43. 
SKF USA v. US 14

COP of the producer.”4 We agree with Commerce that 

consistency is an important interest and that it was 

understandable for it to change methodologies in an 

attempt to align this case with its past practice.5 

Nevertheless, Commerce still failed to comply with its 

State Farm obligation to provide an adequate explanation. 

Commerce did not sufficiently explain why two of SKF’s 

concerns about the use of unaffiliated suppliers’ actual 

cost data were not implicated or why they were outweighed by competing considerations. Under State Farm, 

an agency explanation may be unreasonable if the agency 

“entirely failed to consider an important aspect of the 

 4 SKF cites only one case in which Commerce specifically declined to use unaffiliated supplier data. Diamond Sawblades and Parts Thereof from the Republic of 

Korea, 71 Fed. Reg. 29310, 29311 (Dep’t of Commerce 

May 22, 2006) (final determination) (adopting Issues and 

Decisions Memorandum for the Final Determination, 71 

ITADOC 29310, at cmt. 56 (May 22, 2006)). In that case, 

Commerce declined to require actual cost data because 

the quantity of products resold by the exporter was “negligible,” id., which is perfectly consistent with Commerce’s 

decision here in the seventeenth review to require such 

data only when a “substantial proportion” of sales were of 

finished merchandise acquired from an unaffiliated 

supplier. 

5 We note that Commerce uses producer cost data 

for finished products, but when an unaffiliated supplier 

provides only an input, and not finished merchandise, 

Commerce apparently uses acquisition cost. The Trade 

Court has held that “[p]rices [a respondent] pays for 

materials are part of its costs. Thus, what it pays for 

inputs [i.e. the acquisition cost] must be used to calculate 

constructed value, unless the sale of the input is by a 

related party,” which would be governed by the major 

input rule at § 1677b(f)(3). Consolidated Int’l Auto., Inc. 

v. United States, 809 F. Supp. 125, 128 (Ct. Int’l Trade 

1992). There is no occasion here to consider the propriety 

of using producer cost data in the context of major inputs. 
15 SKF USA v. US

problem.” 463 U.S. at 43. Accordingly, Commerce also 

has an “obligation” to address important factors raised by 

comments from petitioners and respondents. See Timken 

U.S. Corp. v. United States, 421 F.3d 1350, 1358 (Fed. Cir. 

2005); see also Nat’l Mining Ass’n v. Mine Safety & Health 

Admin., 116 F.3d 520, 549 (D.C. Cir. 1997) (stating that 

an “agency is . . . required to respond to comments that 

are relevant to the agency's decision and which, if 

adopted, would require a change in an agency's proposed 

rule [because they] cast doubt on the reasonableness of a 

position taken by the agency” (internal quotation marks 

omitted)). In Timken, we rejected the International Trade 

Commission’s argument that “its obligation is limited to 

addressing statutorily enumerated factors” and that it 

was not compelled to consider adverse effects of its decision, calling the position “untenable” and “not consistent 

with State Farm.” Id. at 1358. 

In this case, Commerce did not address two significant concerns raised by SKF. The first of these was that 

it could not change its pricing to avoid dumping because it 

would have no knowledge of its unaffiliated supplier’s 

actual production costs. Essentially, SKF “will never be 

able to adjust its sales or pricing, or even its acquisition 

policies, in an effort to increase its compliance with the 

U.S. antidumping law and decrease its dumping liability.” 

Appellant’s Br. 29. Even the petitioner, Timken, admitted at oral argument that it is difficult for an exporter to 

know whether it is dumping or to change its pricing 

practice to avoid dumping when it does not know or 

control its unaffiliated supplier’s costs. The ability to 

control pricing to avoid dumping is also important because, under 19 C.F.R. § 351.222(b), (d), (e)(1), and (f), 

exporters and producers who avoid dumping for three 

consecutive years become eligible to have their antidumping orders revoked. If SKF cannot adjust its pricing to 
SKF USA v. US 16

avoid dumping, it becomes more difficult to gain eligibility 

for revocation. As amici (other respondents under the ball 

bearing antidumping order) point out, such a result would 

undermine the remedial purpose of the antidumping laws. 

See NTN Bearing Corp. v. United States, 74 F.3d 1204, 

1208 (Fed. Cir. 1995) (“[T]he antidumping laws are remedial not punitive.”). Commerce did not address SKF’s 

concern that it could not control its pricing to avoid dumping in its Issues and Decision Memorandum or explain 

why this concern was unjustified or why it was outweighed by other considerations. 

Similarly, Commerce did not address SKF’s concern 

that Commerce would apply an adverse inference if the 

unaffiliated supplier failed to provide cost data. While no 

such adverse inference was drawn here, this concern must 

be considered in assessing the overall reasonableness of 

Commerce’s approach. SKF’s concern was not misplaced. 

Commerce stated in its Issues and Decision Memorandum 

that “in those instances where the producer did not provide the requested cost data, the Department has found it 

appropriate to make an adverse inference.” Decision 

Mem. at 48. In fact, SKF’s fears proved well founded 

when, during the eighteenth review, Commerce applied 

“facts otherwise available and an adverse inference” when 

SKF’s supplier did not timely submit its data. See SKF 

USA, Inc. v. United States, 675 F. Supp. 2d 1264, 1268 

(Ct. Int’l Trade 2009). Even though the Trade Court 

overturned the application of an adverse inference,6

 6 The Trade Court found Commerce acted contrary 

to law by drawing an adverse inference because 

“[a]llowing an interested party's failure to cooperate to 

affect adversely the dumping margin of another interested party who is a party to the proceeding, about whom 

Commerce did not make a finding of non-cooperation, 

violates the Department's obligation to treat fairly every 

participant in an administrative proceeding.” Id. at 1276. 
17 SKF USA v. US

Commerce has not stated that it will abandon the practice 

of using adverse inferences. Use of adverse inferences 

may be unfair considering SKF has no control over its 

unaffiliated supplier’s actions. Again, Commerce must 

explain why SKF’s concern is unwarranted or is outweighed by other considerations. 

In failing to consider these two problems, we find that 

Commerce failed to adequately explain its change of 

methodology after sixteen reviews. See Pub. Citizen v. 

Fed. Motor Carrier Safety Admin., 374 F.3d 1209, 1217 

(D.C. Cir. 2004) (holding that the failure to consider an 

important aspect of the problem was alone “dispositive” 

and required reversal under State Farm). 

III 

Finally, SKF argues that Commerce improperly used 

zeroing in calculating its weighted-average dumping 

margin because it is prohibited by the World Trade Organization (“WTO”). Commerce changed its practice for 

original investigations and no longer uses zeroing for 

calculation of weighted average dumping margins, but it 

continues to use zeroing during administrative reviews. 

See Antidumping Proceedings: Calculation of the 

Weighted Average Dumping Margin During an Antidumping Duty Investigation; Final Modification, 71 Fed. Reg. 

77722, 77724 (Dec. 27, 2006). In Timken Co. v. United 

States, 354 F.3d 1334, 1341–45 (Fed. Cir. 2004), the court 

held that its governing statute did not forbid the use of 

zeroing. In U.S. Steel Corp. v. United States, 621 F.3d 

1351 (Fed. Cir. 2010), we upheld Commerce’s application 

of its new policy not to use zeroing in original investiga-

 

On remand, Commerce relied on SKF’s acquisition cost 

(as it had during the first sixteen reviews) because it 

could not acquire the actual cost data or draw an adverse 

inference. J.A. 15501. 
SKF USA v. US 18

tions. Even after Commerce changed its policy with 

respect to original investigations, we have held that 

Commerce’s application of zeroing to administrative 

reviews is not inconsistent with the statute. See Corus 

Staal BV v. United States, 502 F.3d 1370, 1375 (Fed. Cir. 

2007). Moreover, we have held that WTO decisions do not 

change United States law unless implemented pursuant 

to an express statutory scheme. See, e.g., NSK Ltd. v. 

United States, 510 F.3d 1375, 1379–80 (Fed. Cir. 2007); 

Corus Staal BV, 395 F.3d at 1349. The WTO decisions 

cited by SKF have not been so implemented. 

IV 

For the foregoing reasons, we affirm the Trade Court’s 

decision that Commerce has the authority to use unaffiliated suppliers’ actual costs of production in calculating 

CV and to utilize zeroing. However, we conclude that 

Commerce in two respects did not provide a reasonable 

explanation for its decision to depart from its prior methodology in this particular case. Accordingly, we affirm-inpart and vacate-in-part and remand. 

AFFIRMED-IN-PART AND VACATED-IN-PART 

AND REMANDED 

COSTS

 No costs. 
United States Court of Appeals 

for the Federal Circuit 

__________________________ 

SKF USA INC., SKF FRANCE S.A., SKF 

AEROSPACE FRANCE S.A.S., SKF GMBH, AND SKF 

INDUSTRIE S.P.A. 

Plaintiffs-Appellants, 

v. 

UNITED STATES, 

Defendant-Appellee, 

AND

TIMKEN U.S. CORPORATION, 

Defendant-Appellee. 

__________________________ 

2010-1128 

__________________________ 

Appeal from the United States Court of International 

Trade in case no. 07-CV-0393, Judge Timothy C. Stanceu. 

__________________________ 

LINN, Circuit Judge, concurring in part and dissenting in 

part. 

I am pleased to join the majority’s holding that Commerce has the authority to use unaffiliated suppliers’ 

actual costs of production in calculating CV and to utilize 

zeroing. I respectfully dissent only from the portion of the 

opinion concluding that Commerce failed to comply with 

its obligation under Motor Vehicle Manufacturers Association of the United States, Inc. v. State Farm Mutual 
SKF USA v. US 2

Automobile Insurance Co. (State Farm), 463 U.S. 29, 42 

(1983) and remanding to Commerce for further explanation. 

The majority held that Commerce failed to satisfy its 

State Farm obligation by insufficiently explaining why 

two of SKF’s concerns about the use of unaffiliated suppliers’ actual cost data were not implicated or why they 

were outweighed by competing considerations. Maj. Op. 

at 14-17. Under State Farm, an agency explanation may 

be unreasonable if the agency “entirely failed to consider 

an important aspect of the problem.” 463 U.S. at 42 

(emphasis added). “[T]he fact that certain information is 

not discussed in a Commission determination does not 

establish that the Commission failed to consider that 

information. Rather, the Commission need only discuss 

material issues of law or fact.” Timken U.S. Corp. v. 

United States, 421 F.3d 1350, 1355-56 (Fed. Cir. 2005) 

(internal citations and quotations omitted). This court 

should “uphold a decision of less than ideal clarity if the 

agency's path may reasonably be discerned.” State Farm, 

463 U.S. at 43 (internal citations and quotations omitted). 

The majority vacates the Trade Court’s decision and 

remands for Commerce to provide additional responses to 

two of SKF’s asserted concerns. In my view, neither of 

SKF’s concerns amount to an important aspect of the 

problem or a material issue of law or fact. 

SKF’s first concern is that it could not change its pricing to avoid dumping because it would have no knowledge 

of its unaffiliated suppliers’ actual production costs. SKF, 

however, offers no explanation why it could not simply 

require the actual cost of production data from an unaffiliated supplier as a condition for purchase. Further, 

Commerce did not entirely fail to consider this argument. 

Commerce considered this concern in its response to 
3 SKF USA v. US

SKF’s assertion that it faced a catch-22 of either sharing 

confidential information with a competitor, risking an 

antitrust violation, or “attempt[ing] to price [its] products 

without any apparent reference point for normal value.” 

Decision Mem. at 48. Commerce thus considered, but 

“disagree[d] with[,] SKF’s assertion.” Id.

SKF’s second concern relates to the potential for 

Commerce to draw adverse inferences if the unaffiliated 

supplier fails to provide cost data. In this case, Commerce 

did not draw such adverse inferences. Although “Commerce has not stated that it will abandon the practice of 

using adverse inferences,” Maj. Op. at 17, when Commerce attempted to do so during the eighteenth review, 

the Trade Court overturned the drawing of adverse inferences as “contrary to law.” Maj. Op. at 16-17 n.6. SKF’s 

concern is no longer relevant to this investigation, and 

any further explanation by Commerce would be advisory 

at best. Moreover, Commerce did not entirely fail to 

consider this argument either. Commerce briefly addressed its practice of adverse inferences and simply 

determined that it would not apply it in this case. See

Decision Mem. at 48-49. 

In light of the foregoing, it is my view that neither of 

SKF’s concerns raises an important aspect of the problem 

or a material issue warranting a vacatur and remand. 

Commerce has adequately explained its change in practice, adequately considered SKF’s concerns, and Commerce’s path may reasonably be discerned from its 

decision. Commerce explained that its decision was based 

upon the statutory emphasis on the use of actual costs, 

the Statement of Administrative Action’s language contemplating the same, the inability of acquisition costs to 

properly capture the actual costs of the manufacturer in 

this situation, and the need for more consistency. Decision Mem. at 47-49. Not only did Commerce provide a 
SKF USA v. US 4

reasoned explanation for its change in practice after 

sixteen years, but Commerce warned SKF during the 

fifteenth administrative review that it would be changing 

to this methodology and did not implement the change 

until two review years later, during the seventeenth 

administrative review. Even if Commerce’s explanation 

of the two concerns raised by SKF and found wanting by 

the majority lacked ideal clarity, a point with which I 

disagree, this court should “uphold a decision of less than 

ideal clarity if the agency's path may reasonably be discerned.” State Farm, 463 U.S. at 43. 

Because Commerce sufficiently addressed all material 

concerns and its path can be reasonably discerned, I see 

no need to remand for further explanation and would 

affirm.