Tai-Ao Aluminium (Taishan) Co. v. United States, Slip Op. 19-70

• Citation: 391 F.Supp.3d 1301
• Decision Date: 07 June 2019
• Docket Number: Slip Op. 19-70,Consol. Court No. 17-00216
• Parties: TAI-AO ALUMINIUM (TAISHAN) CO., LTD. and Taal America Ltd., Plaintiffs, and Regal Ideas Inc., Consolidated Plaintiff, v. UNITED STATES, Defendant, and The Aluminum Extrusions Fair Trade Committee, Defendant-Intervenor.
• Court: U.S. Court of International Trade

391 F.Supp.3d 1301

TAI-AO ALUMINIUM (TAISHAN) CO., LTD. and Taal America Ltd., Plaintiffs,

and

Regal Ideas Inc., Consolidated Plaintiff,

v.UNITED STATES, Defendant,andThe Aluminum Extrusions Fair Trade Committee, Defendant-Intervenor.

Slip Op. 19-70

Consol. Court No. 17-00216

United States Court of International Trade.

June 7, 2019

Jordan C. Kahn, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of New York, NY, argued for plaintiffs. With him on the brief were Ned H. Marshak and Peter W. Klestadt.

Arthur K. Purcell and Kristen Smith, Sandler, Travis & Rosenberg, PA, of Washington, DC, argued for consolidated plaintiff. With them on the brief were David J. Craven and Emi Ito Ortiz.

Amie Lee, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel was Jessica M. Link, Assistant Chief Counsel, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Robert E. DeFrancesco, III, Wiley Rein LLP, of Washington, DC, argued for defendant-intervenor. With him on the brief was Alan H. Price.

Before: Gary S. Katzmann, Judge

OPINION

Katzmann, Judge:

This case involves issues of scope interpretation and notice in an anticircumvention investigation. Tai-Ao Aluminum Company ("Tai-Ao") and Regal Ideas, Inc. ("Regal") (collectively, "Plaintiffs") are importers of heat-treated 5050-grade aluminum extrusions from the People's Republic of China ("PRC"). The United States Department of Commerce ("Commerce") had issued antidumping and countervailing duty orders on extrusions made from aluminum alloys with the Aluminum Association designations of series 1xxx, 3xxx, and 6xxx. Aluminum Extrusions from the People's Republic of China: Antidumping Order, 76 Fed. Reg. 30,650 (Dep't Commerce May 26, 2011) ; Aluminum Extrusions from the People's Republic of China: Countervailing Duty Order, 76 Fed. Reg. 30,653 (Dep't Commerce May 26, 2011) (collectively, "the Orders"). The scope of the Orders specifically excludes extrusions made from alloys designated as 5xxx. After the Orders' publication, Commerce determined, pursuant to an anticircumvention inquiry, that imports of 5050-grade extrusions exported by a Chinese company were later-developed merchandise circumventing the Orders. Commerce also ordered Customs and Border Patrol ("CBP") to suspend liquidation on heat-treated 5050-grade extrusions retroactive to the initiation of the anticircumvention inquiry.

Plaintiffs contend that Commerce's determination is unsupported by substantial evidence and contrary to law. They also argue that the anticircumvention inquiry's initiation notice did not provide adequate notice that their products were subject to the inquiry and therefore that liquidation should not have been suspended as of that date. The court sustains Commerce's anticircumvention determination but concludes that retroactive suspension of liquidation was impermissible under the circumstances here.

BACKGROUND

I. Legal and Regulatory Framework for Anticircumvention Inquiries.

Dumping occurs when a foreign company sells a product in the United States for less than fair value – that is, for a lower price than in its home market. Sioux Honey Ass'n v. Hartford Fire Ins., 672 F.3d 1041, 1046 (Fed. Cir. 2012). Similarly, a foreign country may provide a countervailable subsidy to a product and thus artificially lower its price. U.S. Steel Grp. v. United States, 96 F.3d 1352, 1355 n.1 (Fed. Cir. 1996). To empower Commerce to prevent foreign products from undercutting the domestic market and to offset economic distortions caused by dumping and countervailable subsidies, Congress enacted the Tariff Act of 1930. Canadian Solar, Inc. v. United States, 918 F.3d 909, 913 (Fed. Cir. 2019) ; Sioux Honey Ass'n, 672 F.3d at 1046–47. Under the Tariff Act's framework, Commerce may -- either upon petition by a domestic producer or of its own initiative -- begin an investigation into potential dumping or subsidies and, if appropriate, issue orders imposing duties on the subject merchandise. Sioux Honey Ass'n, 672 F.3d at 1047.

Anticircumvention inquiries "prevent foreign producers from circumventing existing findings or orders through the sale of later-developed products or of products with minor alterations that contain features or technologies not in use in the class or kind of merchandise imported into the United States at the time of the original investigation." S. Rep. No. 100–71, at 101 (1987) (quoted in Wheatland Tube Co. v. United States, 161 F.3d 1365, 1370 (Fed. Cir. 1998) ); see 19 U.S.C. § 1677j. "Congress has provided that Commerce's consideration of certain types of articles within the scope of an order will be a proper clarification or interpretation of the order instead of improper expansion or change even where these products do not fall within the order's literal scope." Wheatland Tube, 161 F.3d at 1370. Of relevance here, Commerce may properly consider "later-developed products that would have been included in the order" had they existed at the time the order was issued. Id. (citing 19 U.S.C. § 1677j(d) ).

When determining whether a product is later-developed, Commerce considers whether the merchandise was commercially available at the time the order was issued. See Target Corp. v. United States ("Target III"), 609 F.3d 1352, 1357 (Fed. Cir. 2010). Commerce defines¹ commercial availability as "products either present in the commercial market or fully developed, i.e., tested and ready for production." Id. at 1358. When determining whether a later-developed product would have been included in the original order, Commerce must consider whether: (1) the later-developed product "has the same general physical characteristics" as the products "with respect to which the order was originally issued"; (2) the purchasers of the products have the same expectations; (3) the ultimate uses for the products are the same; (4) the same channels of trade are used; and (5) the products are advertised and displayed in a similar way. 19 U.S.C. § 1677j(d)(1). If Commerce determines that a later-developed product is circumventing the scope of an order and the product constitutes a "significant technological advancement or significant alteration of an earlier product," it must notify the International Trade Commission ("ITC"). 19 U.S.C. § 1677j(e)(1)(C).

When Commerce initiates an anticircumvention inquiry, it must provide notice by publishing the inquiry in the Federal Register. 19 C.F.R. § 351.225(f). Importers are charged with knowledge of regulations as of the date they are published. See Target Corp. v. United States ("Target II"), 33 C.I.T. 760, 779–80, 626 F. Supp. 2d 1285, 1301 (2009), aff'd, 609 F.3d 1352 (Fed. Cir. 2010) (citing 44 U.S.C. § 1507 ; Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384–85, 68 S.Ct. 1, 92 L.Ed. 10 (1947) ). By regulation, the notice must contain "[a] description of the product that is the subject of the scope inquiry." 19 C.F.R. § 351.225(f)(1)(i). When Commerce reaches an affirmative preliminary determination, any suspension of liquidation will continue. 19 C.F.R. § 351.225(l)(2). "[I]f liquidation has not been suspended[,]" Commerce will instruct CBP "to suspend liquidation ... [retroactive to] the date of initiation of the scope inquiry." Id.

II. Background of the Aluminum Extrusions Anticircumvention Order.

In 2011, Commerce investigated and then issued antidumping and countervailing duty orders on aluminum extrusions from the PRC. Orders. The Orders covered aluminum extrusions made from "alloy series designations published by [t]he Aluminum Association commencing with 1, 3, and 6" but excluded "[a]luminum extrusions made from aluminum alloy with an Aluminum Association series designation commencing with the number 5." Orders at 30,650–51. The 6xxx designation covers alloys containing between .1% and 2% magnesium and .1% to 3% silicon. Id. The 5xxx designation covers alloys containing more than 1% magnesium. Id.

Pursuant to the Orders, Commerce issued a scope ruling on a heat-treated 5050-grade aluminum extrusion product which found them to be outside the Orders' scope. See Final Scope Ruling on Aluminum Rails for Showers and Carpets (Dep't Commerce Sept. 6, 2012). Then, in 2016, Commerce initiated an anticircumvention inquiry in response to a request by the Aluminum Extrusions Fair Trade Committee ("AEFTC") to determine if heat-treated 5050-grade extrusions were later-developed merchandise circumventing the Orders. Aluminum Extrusions from the People's Republic of China: Initiation of Anti-Circumvention Inquiry, 81 Fed. Reg. 15,039 (Dep't Commerce Mar. 21, 2016), AD PD 164 ("Initiation Notice"). The Initiation Notice stated that "[t]his anti-circumvention inquiry covers extruded aluminum products that meet the chemical specifications for 5050-grade aluminum alloy, which are heat-treated, and exported by Zhongwang" and that Commerce "intends to consider whether the inquiry should apply to all imports of [5050-grade] extruded aluminum ... regardless of producer, exporter, or importer, from the PRC." Id. at 15,042. The Initiation Notice also stated that Commerce was conducting the anticircumvention inquiry pursuant to § 1677j(d), later-developed products. Id. The AEFTC contended, as summarized by Commerce, Commerce that:

the scope of the Orders creates an overlap between the chemical composition standards in that there is a narrow window in which a 5xxx series alloy may and does exist that is comprised of more than one percent but less than two percent magnesium by weight, and that in order to use 5xxx-series alloy (i.e., 5050 alloy) in an extrusion application, the metal would have to be heat-treated to achieve the mechanical properties that make 6xxx-series alloy so attractive for

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