296 F.3d 1087 (Fed. Cir. 2002), 01-1443, Duferco Steel, Inc. v. U.S.

Docket Nº:01-1443.
Citation:296 F.3d 1087
Party Name:DUFERCO STEEL, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Bethlehem Steel Corporation, and U.S. Steel Group, a unit of USX Corporation (now known as United States Steel LLC), Defendants-Appellees.
Case Date:July 12, 2002
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1087

296 F.3d 1087 (Fed. Cir. 2002)

DUFERCO STEEL, INC., Plaintiff-Appellant,

v.

UNITED STATES, Defendant-Appellee,

and

Bethlehem Steel Corporation, and U.S. Steel Group, a unit of USX Corporation (now known as United States Steel LLC), Defendants-Appellees.

No. 01-1443.

United States Court of Appeals, Federal Circuit

July 12, 2002

Page 1088

Vincent Bowen, White & Case, LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Walter J. Spak and Christopher M. Curran.

John N. Maher, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee United States. On the brief were Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director; and Velta A. Melnbrencis, Assistant Director. Of counsel on the brief were John D. McInerney, Chief Counsel for Import Administration; Berniece A. Browne, Senior Counsel; and Emily Lawson, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC. Of counsel was Lucius B. Lau, Attorney, Commercial Litigation Branch, Department of Justice, of Washington, DC.

Rory F. Quirk, Dewey Ballantine LLP, of Washington, DC, argued for defendants-appellees Bethlehem Steel Corporation, et al. With him on the brief were Bradford L. Ward; Michael H. Stein; and Navin Joneja. Of counsel was Jennifer Danner Riccardi.

Before RADER, SCHALL, and DYK, Circuit Judges.

DYK, Circuit Judge.

This case presents questions concerning the interpretation of the Department of Commerce ("Commerce") 1993 orders resulting from antidumping and countervailing

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duty proceedings. Duferco Steel, Inc. ("Duferco"), an importer of carbon steel floor plate produced in Belgium, appeals from the United States Court of International Trade decision holding that its imported floor plate with "patterns in relief [i.e., raised figures at regular intervals that provide a skid-resistant surface] derived directly from rolling" was within the scope of the 1993 antidumping and countervailing duty orders ("1993 final orders" or "scope orders") regarding cut-to-length carbon steel floor plate. Duferco Steel, Inc. v. United States, 146 F.Supp.2d 913 (CIT 2001). There is no claim in the 1999 final scope ruling that the language of the 1993 final orders can be interpreted to include appellant's product. However, Commerce concluded that its 1993 final orders covered the product because the petitions that initiated the investigation included appellant's product within the scope of the requested investigation, and no language in the 1993 final orders explicitly stated that carbon steel plate with "patterns in relief was excluded from the scope of the orders, as had been done with respect to universal mill plates. The Court of International Trade affirmed.

We hold that Commerce's approach is inconsistent with fundamental principles of administrative law and with our own earlier decisions. Scope orders may be interpreted as including subject merchandise only if they contain language that specifically includes the subject merchandise or may be reasonably interpreted to include it. Because Commerce made no claim in the 1999 final scope ruling under review that the scope orders here contain such language, we reverse the decision of the Court of International Trade.

BACKGROUND

Generally, "American industries may petition for relief from imports that are sold in the United States at less than fair value ('dumped'), or which benefit from subsidies provided by foreign governments." Allegheny Ludlum Corp. v. United States, 287 F.3d 1365, 1368 (Fed.Cir. 2002) (citing 19 U.S.C. § 1675b (2000)).

Commerce determines whether there have been sales at less than fair value, 19 U.S.C. § 1673(1) (2000), or whether a subsidy has been provided, id. § 1671(a)(1); whereas, the International Trade Commission ("ITC") determines whether the imported merchandise materially injures or threatens to materially injure the pertinent domestic industry, id. §§ 1673d(b)(1), 1671d(b)(1). If both inquiries are answered in the affirmative, Commerce issues the relevant antidumping and countervailing duty orders. Id. §§ 1673d(c)(2), 1671d(c)(2); I Bruce E. Clubb, United States Foreign Trade Law §§ 21.19, 20.25 (1991).

An antidumping investigation is typically initiated by a petition filed by a domestic industry requesting that Commerce conduct an investigation into possible dumping. The petition initially determines the scope of the investigation. Section 1673a(b)(1) of Title 19 provides that the "petition may be amended at such time, and upon such conditions, as [Commerce] and the [ITC] may permit." 19 U.S.C. § 1673a(b)(1) (2000). Commerce has "inherent power to establish the parameters of the investigation," so that it would not "be tied to an initial scope definition that . . . may not make sense in light of the information available to [Commerce] or subsequently obtained in the investigation." Cellular Mobile Telephones and Subassemblies From Japan; Final Determination of Sales at Less Than Fair Value, 50 Fed. Reg. 45,-447, 45,449 (Oct. 31, 1985).

Commerce makes an initial determination as to whether the petition "contains

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information . . . supporting the allegations." 19 U.S.C. § 1673a(c)(1)(A)(i) (2000). Then Commerce must make a preliminary determination "of whether there is a reasonable basis to believe or suspect that the merchandise is being sold, or is likely to be sold, at less than fair value." Id. § 1673b(b)(1)(A). This is followed by a final determination "of whether the subject merchandise is being, or is likely to be, sold in the United States at less than its fair value." Id. § 1673d(a)(1). The term "subject merchandise" is defined as "the class or kind of merchandise that is within the scope of an investigation, a review, a suspension agreement, [or] an order. . . .'' Id. § 1677(25). As noted above, the ITC makes a determination as to material injury or threat of material injury to the domestic industry.

After the issuance of the final antidumping order, id. § 1673d(c)(2), questions may arise concerning its scope. The regulations provide procedures for determining whether "a particular product is included within the scope of an . . . order. . . ." 19 C.F.R. § 351.225(a) (2001). A countervailing duty investigation follows a generally parallel procedure, but focuses on whether there is any material injury from benefits provided by foreign governments to foreign exporters. See, e.g., 19 U.S.C. §§ 1671(a), 1671a, 1671b, 1671d (2000). The orders in question here are the product of such antidumping and countervailing duty proceedings.

On June 30, 1992, Bethlehem Steel Corporation ("Bethlehem"), along with other members of the domestic steel industry, filed petitions with Commerce and the ITC asking that antidumping and countervailing duties be imposed on cut-to-length carbon steel plate from Belgium. Bethlehem and the other domestic steel producers claimed that such imported merchandise was being sold and was likely to be sold at less than fair value and that foreign governments were providing subsidies to foreign exporters, which, in turn, caused "material injury" to the domestic producers. The petitions generally described the scope of the requested investigations and the subject merchandise as covering "cut-to-length carbon steel plate," which is one class of flat-rolled carbon steel products. To further describe the scope of the requested investigations, the petitions in a footnote made reference to the definition of "flat-rolled products" provided by the Harmonized Tariff Schedule of the United States ("HTSUS"), Chapter 72, Note 1(k). The pertinent language of Note 1(k) defined "flat-rolled products" as "[r]olled products of solid rectangular (other than square) cross section," and stated that "[f]lat-rolled products include those with patterns in relief derived directly from rolling (for example, grooves, ribs, checkers, tears, buttons, lozenges) and those which have been perforated, corrugated or polished, provided that they do not thereby assume the character of articles or products of other headings." HTSUS, Chapter 72, Note 1(k) (emphases added). The petitions also described the merchandise in terms of the width and thickness of the flat-rolled products.

In July 1992, Commerce and the ITC initiated the investigations.1 In initiating

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the investigations, Commerce described "Certain Cut-to-Length Carbon Steel Plate" as including

hot-rolled carbon steel universal mill plates (i.e., flat-rolled products rolled on four faces . . . without patterns in relief) of solid rectangular (other than square) cross section . . . and certain hot-rolled carbon steel flat products in straight lengths, of solid rectangular (other than square) cross section. . . .

Notices of Initiation, 57 Fed. Reg. at 33,-492; 57 Fed. Reg. at 32,973 (emphases added). In August 1992, Commerce also set forth "proposed [product] matching criteria" that helped interested parties identify the merchandise covered by the petitions in addition to allowing parties to object to any of the identified criteria. One of the criteria specified by Commerce to describe the subject merchandise was "whether checkered or not." The parties do not dispute that "checkered" refers to "raised patterns in relief." Moreover, none of the interested parties to whom the product matching criteria were sent objected to using this criterion to identify the subject merchandise.

On November 25, 1992, prompted by a...

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