Eckstrom Industries v. U.S.

Decision Date02 July 2001
Parties(Fed. Cir. 2001) ECKSTROM INDUSTRIES, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee. 00-1117 DECIDED:
CourtU.S. Court of Appeals — Federal Circuit

Niall P. Meagher, Powell, Goldstein, Frazer & Murphy LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were N. David Palmeter, and Susan M. Mathews.

Lucius B. Lau, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief was David M. Cohen, Director. Of counsel were Berniece A. Browne, Cindy G. Buys, and John D. McInerney, Attorneys, Department of Commerce, of Washington, DC.

Before BRYSON, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit Judge.

ARCHER, Senior Circuit Judge.

Eckstrom Industries, Inc. ("Eckstrom") appeals the judgment of the Court of International Trade, Eckstrom Industries v. United States, 70 F. Supp. 2d 1360 (Ct. Int'l Trade 1999), which affirmed the Department of Commerce's ("Commerce") final scope determination, Eckstrom Industries v. United States, Court No. 97-10-01913 (Dep't Commerce March 26, 1999) (scope determination on remand). Because this ruling is not supported by substantial evidence, we reverse.

BACKGROUND

This appeal stems from an anti-dumping order concerning stainless steel, butt-welded pipe. Certain Welded Stainless Steel Butt-Weld Pipe Fittings From Taiwan, 58 Fed. Reg. 33,250 (Dep't Commerce June 16, 1993) (final determination and antidumping duty order). The imposition of antidumping duties is governed by 19 U.S.C. § 1673 et seq. (1994); "dumping" is the sale of foreign merchandise in the United States at less than fair value. 19 U.S.C. § 1673(1). In order to curtail such dumping activity, Commerce may issue an antidumping order imposing duties on the imported merchandise. Antidumping orders may be issued when (1) an investigation by Commerce reveals that "a class or kind of merchandise is being, or likely to be" dumped in the United States; and (2) an additional investigation by the International Trade Commission ("ITC") determines that "an industry in the United States" is "materially injured" or "threatened with material injury," or "the establishment of an industry in the United States is materially retarded" by imports of that merchandise or sales of that merchandise for import. 19 U.S.C. § 1673.

On May 22, 1992, Flowline Division of Markovitz Enterprises, Inc. ("Flowline"), a U.S. producer of stainless steel butt-weld pipe fittings, filed a petition with the Department of Commerce, pursuant to the procedure authorized by 19 U.S.C. § 1673a(b), requesting antidumping investigations of certain stainless steel butt-weld pipe fittings from Taiwan and Korea. The petition described the targeted merchandise as follows:

The pipe fittings that are subject to this petition are classifiable under Item 610.8948 of the Tariff Schedules of the United States Annotated, and under 7307.23 of the Harmonized Tariff Schedule. This category covers both finished and unfinished fittings.

More specifically, the fittings subject to this petition are designated under Specification ASTM A403/A403M-1991, the standard specification for Wrought Austenitic Stainless Steel Pipe Fittings . . . . In particular, the applicable dimensional specifications are ANSI B16.9-1986 and ANSI B16.2B-1986. . . . Stainless steel butt-weld fittings are used where one or more of the following conditions is a factor in designing the piping system: (1) corrosion of the piping system will occur if material other than stainless steel is used; (2) contamination of the material in the system by the system itself must be prevented; (3) high temperatures (in excess of 300 F) are present; (4) extreme low temperatures are present; (5) high pressures are contained within the system.

In response to this petition, Commerce initiated an investigation as to whether sales of such merchandise were made at less than fair value and the ITC initiated an injury investigation. 57 Fed. Reg. 26,645 (Dep't Commerce June 15, 1992) (initiation of investigations). In conducting its injury investigation, the ITC sent questionnaires to U.S. producers, describing the merchandise subject to the investigation as "[f]ormed or forged stainless steel products used to connect pipe sections in piping systems" and further noted that such "fittings are provided for in subheading 7307.23.00 of the Harmonized Tariff Schedule of the United States (HTS)." Id.

On June 16, 1993, Commerce issued the final version of its antidumping order ("Order") concerning the stainless steel butt-weld piping. Certain Welded Stainless Steel Butt-Weld Pipe Fittings From Taiwan, 58 Fed. Reg. 33,250 (Dep't. Commerce June 16, 1993) (final determination and antidumping duty order). The text of the Order repeats language from the petition and the injury investigation questionnaires, describing the subject merchandise as follows:

The products subject to this investigation are certain stainless steel butt-weld pipe fittings, whether finished or unfinished, under 14 inches inside diameter.

Certain welded stainless steel butt-weld pipe fittings (pipe fittings) are used to connect pipe sections in piping systems where conditions require welded connections. The subject merchandise is used where one or more of the following conditions is a factor in designing the piping system: (1) Corrosion of the piping system will occur if material other than stainless steel is used; (2) contamination of the material in the system by the system itself must be prevented; (3) high temperatures are present; (4) extreme low temperatures are present; (5) high pressures are contained within the system.

Pipe fittings come in a variety of shapes . . . . The pipe fittings subject to this investigation are classifiable under subheadings 7307.23.00 of the Harmonized Tariff Schedule of the United States (HTSUS).

Although the HTSUS subheading is provided for convenience and customs purposes, our written description of the scope of these investigations is dispositive.

Id.

On August 14, 1997, Eckstrom filed a request with Commerce seeking a ruling that its cast fittings, imported from Taiwan, were not within the scope of the Order. Cast stainless steel products, such as those imported by Eckstrom, are generally considered to be inferior to wrought stainless steel products. Cast stainless steel products are produced by simply pouring molten metal into a mold to form the desired finished product. Wrought stainless steel products, in contrast, are formed by working or shaping solid stainless steel into the desired end product. The Making, Shaping and Treatment of Steel (W. Lannkford, Jr., N. Samways, R. Craven eds., 10th ed. 1985).

On September 29, 1997, Commerce responded to Eckstrom's request, determining that Eckstrom's cast fittings were within the scope of the Order. Eckstrom appealed this ruling to the Court of International Trade ("CIT"). After a hearing on the merits, the CIT ruled that Commerce's initial scope determination was not supported by substantial evidence. Eckstrom Indus. v. United States, 27 F. Supp. 2d 217 (Ct. Int'l Trade 1998). The CIT further found, however, that it could not conclude that cast pipe fittings were unambiguously excluded from the scope of the Order. Therefore, the CIT remanded the matter to Commerce for reconsideration. Id.

On remand, Commerce initiated a formal scope inquiry, inviting comments from all interested parties, including Eckstrom and Flowline. Eckstrom was the only party to submit comments. Upon completion of this inquiry, Commerce concluded once again that Eckstrom's cast pipe fittings were within the scope of the Order, and issued a preliminary determination, again inviting interested parties to comment on this determination. Again, Eckstrom was the only party to submit any comments. Commerce then issued its Final Scope Determination, finding Eckstrom's cast fittings within the scope of the Order. Eckstrom Indus. v. United States, Court No. 97-10-01913 (Dep't Commerce March 26, 1999) (scope determination on remand). Eckstrom appealed this determination to the CIT, and the CIT affirmed. Eckstrom, 70 F. Supp. 2d 1360. Eckstrom then appealed to this court.

Eckstrom asserts error in Commerce's determination that Eckstrom's cast pipe fittings are included within the scope of the Order.

DISCUSSION

In reviewing a decision by the CIT affirming a final determination of the agency, "we apply anew the court's statutorily-mandated standard of review to the administrative review." Wheatland Tube Co. v. United States, 161 F.3d 1365, 1369 (Fed. Cir. 1998) (citing Torrington Co. v. United States, 82 F.3d 1039, 1044 (Fed. Cir. 1996)). Accordingly, we will reverse Commerce's final determination only where this determination is unsupported by substantial evidence on the record or otherwise not in accordance with the law. 19 U.S.C. § 1516a(b)(1)(B)(i) (1994). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984) (citing Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). In addition, "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Id. (citing Consolo v. Fed. Maritime Comm'n, 383 U.S. 607, 619-20 (1966)).

The determination of whether a particular product is included within the scope of an antidumping order is governed by regulations published at 19 C.F.R. § 351.225 (2000). According to these regulations, in interpreting an order, Commerce must take into account "[t]he descriptions of the merchandise contained in the petition, the initial investigation, and the...

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