Polites v. United States

• Decision Date: 23 March 2011
• Docket Number: Slip Op. 11–31.Court No. 09–00387.
• Citation: 755 F.Supp.2d 1352
• Court: U.S. Court of International Trade
• Parties: Constantine N. POLITES, Plaintiff,v.UNITED STATES, Defendant,andThe Ad Hoc Coalition for Fair Pipe Imports from China, & The United Steel Workers, Defendant–Intervenors.

755 F.Supp.2d 1352

Constantine N. POLITES, Plaintiff,

v.UNITED STATES, Defendant,andThe Ad Hoc Coalition for Fair Pipe Imports from China, & The United Steel Workers, Defendant–Intervenors.

Slip Op. 11–31.Court No. 09–00387.

United States Court of International Trade.

March 23, 2011.

Peter S. Herrick, PA (Peter S. Herrick), for Constantine N. Polites.Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael D. Panzera and John J. Todor); Reid P. Swayze, of Counsel, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for the United States Department of Commerce.King & Spalding LLP, Washington, DC (Gilbert B. Kaplan, Brian E. McGill, & Daniel L. Schneiderman), for Ad Hoc Coalition for Fair Pipe Imports from China, et al.Schagrin Associates (Roger B. Schagrin), for United Steelworkers, et. al.

OPINION AND ORDER

POGUE, Chief Judge.

This matter returns to court following a voluntary remand to the Department of Commerce (“the Department” or “Commerce”) to define the exclusion for “finished scaffolding” in the antidumping and countervailing duty orders on circular welded carbon quality steel pipe from the People's Republic of China.¹ On remand, Commerce defined “finished scaffolding” as “[c]ompleted supported elevated platforms and their completed supporting structures,” or “component parts that enter the United States unassembled as a ‘kit.’ ” Final Results of Redetermination Pursuant to Voluntary Remand (Dep't Commerce August 26, 2010) at 2 (“Remand Results”).

Seeking review of the remand determination, Plaintiff Constantine Polites ² (“Plaintiff” or “Polites”) challenges Commerce's definition of the “finished scaffolding” exception. This court has jurisdiction pursuant to 28 U.S.C. § 1581(c).

Because Commerce's definition renders the “finished scaffolding” exception mere surplusage, the court remands. After a brief review of relevant background, the agency's determination and the applicable standard of review, the court will explain its conclusion.

BACKGROUND

Seeking to exclude his merchandise from the scope of the CWP Orders, Plaintiff, on February 5, 2009, requested that Commerce determine whether the steel pipes that he imports were barred from inclusion in the Orders under the exclusion for “finished scaffolding.” Polites Req. for Scope Ruling, A–570–910 (February 3, 2009) Admin. R. Pub. Doc. 1 at 2. Polites defined his imported merchandise as “finished scaffold tube[s] without any fittings.” Polites Resp. to Req. for Additional Information, A–570–910, (July 14, 2010) Admin. R. Pub. Doc. 3 at 2.³

Procedurally, when determining whether merchandise falls within the scope of an antidumping or countervailing duty order, Commerce engages in a three step process.⁴ First, Commerce examines the language of the order at issue. If the terms of the order are dispositive, then the order governs. See Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1383 (Fed.Cir.2005) (The “predicate for the interpretive process is language in the order that is subject to interpretation”).

Second, if the terms of the order are not dispositive, Commerce must then determine whether it can make a determination based upon the factors listed in 19 C.F.R. § 351.225(k)(1). 19 C.F.R. § 351.225(k). These factors are “the descriptions of the merchandise contained in the petition, the initial investigation, and the determinations [of Commerce] (including prior scope determinations) and the Commission.” 19 C.F.R. § 351.225(k)(1). To be dispositive, the Section 351.225(k)(1) criteria “must be ‘controlling’ of the scope inquiry in the sense that they definitively answer the scope question.” Sango Int'l v. United States, 484 F.3d 1371, 1379 (Fed.Cir.2007).

If a Section 351.225(k)(1) analysis is not dispositive, Commerce then applies the five “ Diversified Products ” criteria as specified in 19 C.F.R. § 351.225(k)(2): 1) The physical characteristics of the product, 2) the expectations of the ultimate purchasers, 3) the ultimate use of the product, 4) the channels of trade in which the product is sold, and 5) the manner in which the product is advertised and displayed. See 19 C.F.R. § 351.225(k)(2); Diversified Prods. Corp. v. United States, 572 F.Supp. 883, 889 (CIT 1983).

In conducting a scope inquiry, “the scope of a final order may be clarified, [but] it can not be changed in a way contrary to its terms.” Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed.Cir.2002) (quoting Smith Corona Corp. v. United States, 915 F.2d 683, 686 (Fed.Cir.1990)).

Following this process in the matter at issue here, Commerce turned first to the CWP Orders. The Orders state in part:

[T]his order covers certain welded carbon quality steel pipes and tubes, of circular cross section ... regardless of ... surface finish, ... end finish ... or industry specification, [but] does not include ... finished scaffolding.... [T]he product description, and not the Harmonized Tariff Schedule of the United States (“HTSUS”) classification, is dispositive of whether merchandise imported into the United States falls within the scope of the order.

Circular Welded Carbon Quality Steel Pipe from the People's Republic of China, 73 Fed.Reg. 42,545 (Dep't Commerce July 22, 2008) (notice of amended final affirmative countervailing duty determination and notice of countervailing duty order).

Responding to Plaintiff's claim, Commerce initially found that Polites's pipes fell within the scope of the CWP Orders and therefore “finished scaffolding” need not be defined. Mem. Re. Antidumping and Countervailing Duty Orders on Circular Welded Carbon Quality Steel Pipe from the People's Republic of China: Final Scope Ruling on Certain Scaffolding Tubes of Constantine N. Polites & Co., A–570–910 (August 12, 2009), Admin. R. Pub. Doc. 15 at 10. Polites then brought this action seeking review of Commerce's determination.⁵

Before filing a response to Polites's complaint, Commerce requested a voluntary remand for the sole purpose of establishing a definition for “finished scaffolding.” The court granted Commerce's remand request.

On remand, as noted above, Commerce defined “finished scaffolding” ⁶ to cover two items. The first definition, “completed supported elevated platforms and their completed supporting structures made of scaffolding tubes which are attached to each other by means of fittings, couplers, clamps, base plate, and/or other means,” refers to actual, completed scaffolding structures. See Remand Results at 2. Commerce also defined “finished scaffolding” to include scaffolding kits which contain, at the time of importation, all the necessary components to assemble a scaffold. Id.

STANDARD OF REVIEW

Under its familiar standard of review, the court “shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i); Koyo Seiko Co. v. United States, 20 F.3d 1160, 1164 (Fed.Cir.1994). On legal issues, the court grants “significant deference” to Commerce's scope rulings. Allegheny Bradford Corp. v. United States, 342 F.Supp.2d 1172, 1183 (CIT 2004). Nonetheless, the court will find a scope ruling not in accordance with law if the scope ruling “changes the scope of an order or interprets an order in a manner contrary to the order's terms.” Id.; see also Duferco Steel, Inc., 296 F.3d at 1089 (“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”).

On factual issues, substantial evidence is relevant evidence that “a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). Commerce's factual conclusions in a scope ruling are not precluded from being supported by substantial evidence when two different conclusions may be drawn from the same evidence and need only be reasonable to be upheld. See id.; Novosteel SA v. United States, 128 F.Supp.2d 720, 730 (CIT 2001).

DISCUSSION

While Commerce has latitude in interpreting the CWP Orders, it may not render parts of the Order “mere surplusage.” Eckstrom Industries, Inc. v. United States, 254 F.3d 1068, 1073 (Fed.Cir.2001); see also Duncan v. Walker, 533 U.S. 167, 174, 121 S.Ct. 2120, 150 L.Ed.2d 251 (2001) (“a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.”); Orlando Food Corp. v. United States, 423 F.3d 1318, 1324 (Fed.Cir.2005) (the rule against surplusage is a rebuttable presumption). Therefore, Commerce must, at the least, define the finished scaffolding exclusion such that it encompasses merchandise which may be imported into the United States and thus is potentially subject to the CWP Order.

Polites asserts that defining “finished scaffolding” as fully assembled scaffolding is unreasonable because merchandise fitting this description would be impractical to import into the United States. Pl.'s Comments on Dep't. Commerce's Determination (“Plaintiff's Comments”). Polites further contends that the petition and orders do not mention kits and therefore kits should not be included within the exclusion.⁷ Polites Draft Remand Determination Comments, A–570–910 (August 9, 2010) Admin. R. Pub. Doc. 6 at 2 (“Polites Draft Remand Comments”). Polites's first argument is correct.

Commerce's first definition, fully assembled scaffolding, is unreasonable for the purposes of the CWP Order because nothing in the record demonstrates merchandise matching this definition is imported into the United States or is even possibly imported into the United States. Polites asserts that such merchandise could never be...