United Steel & Fasteners, Inc. v. United States

• Decision Date: 13 January 2020
• Docket Number: 2017-2168, 2017-2188
• Citation: 947 F.3d 794
• Parties: UNITED STEEL AND FASTENERS, INC., Plaintiff-Cross-Appellant v. UNITED STATES, Defendant-Appellant Shakeproof Assembly Components Division of Illinois Tool Works, Inc., Defendant
• Court: U.S. Court of Appeals — Federal Circuit

947 F.3d 794

UNITED STEEL AND FASTENERS, INC., Plaintiff-Cross-Appellant

v. UNITED STATES, Defendant-AppellantShakeproof Assembly Components Division of Illinois Tool Works, Inc., Defendant

2017-2168, 2017-2188

United States Court of Appeals, Federal Circuit.

Decided: January 13, 2020

Ned H. Marshak, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, New York, NY, argued for plaintiff-cross-appellant. Also represented by Edward B. Ackerman ; Kavita Mohan, Andrew Thomas Schutz, Washington, DC.

Michael D. Snyder, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Robert Edward Kirschman, Jr., Patricia M. McCarthy, Joseph H. Hunt; Jessica DiPietro, Nanda Srikantaiah, Office of Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Before Moore, Reyna, and Stoll, Circuit Judges.

Reyna, Circuit Judge.

The United States Department of Commerce appeals the United States Court of International Trade’s determination that Commerce lacks authority to retroactively suspend liquidation of helical spring lock washers entered on or after the issuance date of an antidumping duty order. United Steel and Fasteners, Inc., an importer of the helical spring lock washers under investigation, cross-appeals the Court of International Trade’s affirmance of Commerce’s determination that its washers are within the scope of the antidumping duty order. Because we conclude that Commerce’s retroactivity determination was improper and substantial evidence supports Commerce’s scope ruling, we affirm.

BACKGROUND

I. The ADD Order

Shakeproof Assembly Components Division of Illinois Tool Works Inc. ("Shakeproof") is a U.S. domestic producer of lock washers. In 1992, Shakeproof filed a petition (the "Petition") for the imposition of antidumping duties on imports of certain helical spring lock washers from China. After examining the Petition, Commerce initiated an antidumping investigation. Commerce determined that imports of certain helical spring lock washers from China were being sold at less than fair value, and on October 19, 1993, it issued the antidumping duty order at issue in this appeal. See Certain Helical Spring Lock Washers From the People’s Republic of China , 58 Fed. Reg. 53,914 (Dep’t of Commerce Oct. 19, 1993), as amended , 58 Fed. Reg. 61,859 (Dep’t of Commerce Nov. 23, 1993) ("ADD Order "). Commerce’s ADD Order describes the subject merchandise as follows:

[C]ertain helical spring lock washers (HSLWs) are circular washers of carbon steel, of carbon alloy steel, or of stainless steel, heat-treated or non heat-treated, plated or non-plated, with ends that are off-line. HSLWs are designed to: (1) Function as a spring to compensate for developed looseness between the component parts of a fastened assembly; (2) distribute the load over a larger area for screws or bolts; and (3) provide a hardened bearing surface. The scope does not include internal or external tooth washers, nor does it include spring lock washers made of other metals, such as copper. The lock washers subject to this investigation are currently classifiable under subheading 7318.21.0000 of the Harmonized Tariff Schedule of the United States (HTSUS).

ADD Order , 58 Fed. Reg. at 53,914–15.

II. Scope Ruling

United Steel and Fasteners, Inc., ("US & F") is a U.S. importer of lock washers that meet the specifications of the American Railway Engineering and Maintenance-of-Way Association ("AREMA").¹ US & F imports the washers under HTSUS subheading 7318.21.0090, without declaring them subject to the ADD Order .

On April 9, 2013, US & F requested an official scope ruling from the United States Department of Commerce ("Commerce") pursuant to 19 C.F.R. § 351.225(c). In its request, US & F alleged that its washers were not covered by the ADD Order . US & F explained that United States Customs and Border Protection ("CBP") was "aware of the HTSUS clarification being utilized by US & F," and that "[a]fter reviewing US & F’s response to a CBP Notice of Proposed Action, CBP is allowing USF to continue making entry under heading 7318.21.0090[ ] with the understanding that this scope determination was being readied and shortly filed."² J.A. 70.

On July 8, 2013, without initiating a scope inquiry, Commerce issued a final scope ruling that US & F’s washers are within the scope of the ADD Order based on the factors listed in 19 C.F.R. § 351.225(k)(1). Commerce also instructed CBP to suspend liquidation of "all unliquidated entries of merchandise made on or after the first day merchandise subject to the [ADD] Order was suspended for antidumping purposes and collect cash deposits on all such entries." J.A. 396. Liquidation was suspended to October 19, 1993, the date the ADD Order was issued and the first day CBP originally suspended liquidation of merchandise subject to this order. US & F appealed Commerce’s scope ruling and its instructions to retroactively suspend liquidation to the United States Court of International Trade ("CIT"). United Steel & Fasteners, Inc. v. United States , 203 F. Supp. 3d 1235, 1241 (Ct. Int’l Trade 2017).

The CIT affirmed Commerce’s scope ruling and re-versed and remanded Commerce’s retroactivity determination. Id. at 1247–48. The CIT determined that Commerce exceeded its regulatory authority by ordering retroactive suspension of liquidation back to 1993 and ordered that Commerce draft new suspension of liquidation instructions. Id. at 1248, 1255. On remand, Commerce issued new instructions to suspend liquidation on or after July 8, 2013, the date when Commerce issued the final scope ruling regarding US & F’s washers. The CIT determined that Commerce’s new suspension instructions complied with its remand order and entered judgment.

Commerce now appeals the CIT’s judgment on retroactivity and US & F cross-appeals the CIT’s affirmance of Commerce’s scope ruling. We have jurisdiction under 28 U.S.C. § 1295(a)(5).

DISCUSSION

We review decisions of the CIT de novo , applying the same substantial evidence standard the CIT uses in reviewing Commerce’s antidumping duty determinations. AMS Assocs., Inc. v. United States , 737 F.3d 1338, 1342 (2013). We have consistently emphasized that Commerce is entitled to substantial deference when interpreting its own antidumping duty orders because the meaning and scope of such orders is within Commerce’s particular expertise and special competence. King Supply Co., LLC v. United States , 674 F.3d 1343, 1348 (Fed. Cir. 2012) (citing Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005) ; and Sandvik Steel Co. v. United States, 164 F.3d 596, 600 (Fed. Cir. 1998) ). As a result, parties challenging Commerce’s scope determinations under substantial evidence review confront a high barrier to reversal. Id . (quoting Nippon Steel Corp. v. United States, 458 F.3d 1345, 1352 (Fed. Cir. 2006) ). That the evidence in the record could result in two inconsistent conclusions does not, alone, prevent Commerce’s conclusion from being supported by substantial evidence. Id . (quoting Am. Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed. Cir. 2001) ). Because the retroactivity issue depends upon whether US & F’s washers are covered by the ADD Order , we address the scope ruling issue first.

I. Scope Ruling

When issues arise as to whether a product is within the scope of an antidumping duty order, Commerce "issues ‘scope rulings’ that clarify the scope of an order ... with respect to particular products." 19 C.F.R. § 351.225(a). An interested party may submit an application with Commerce for a scope ruling. Id. at § 351.225(c)(1). Relevant to this case, Commerce may render a scope ruling with or without a "scope inquiry," a broader inquiry as to whether a product is included within the scope of an antidumping duty order. Commerce’s decision to initiate a scope inquiry turns on whether it can render a scope ruling based solely upon a party’s application for a scope ruling and the descriptions of the subject merchandise referred to in § 351.225(k)(1). Id. at § 351.225(e). Paragraph (k)(1) provides that Commerce will consider the "descriptions of the merchandise contained in the petition [for imposition of an antidumping duty order], the initial investigation, and the determinations of the Secretary (including prior scope determinations) and the [International Trade] Commission." Id . at § 351.225(k)(1). If Commerce can render a ruling on that basis, it will issue a scope ruling. If not, it will initiate a scope inquiry and will further consider:

(i) The physical characteristics of the product;

(ii) The expectations of the ultimate purchasers;

(iii) The ultimate use of the product;

(iv) The channels of trade in which the product is sold; and

(v) The manner in which the product is advertised and displayed.

Id. at § 351.225(k)(2). Commerce’s analysis of the (k)(1) sources against the product in question produces "factual findings reviewed for substantial evidence." Meridian Prods., LLC v. United States , 851 F.3d 1375, 1382 (Fed. Cir. 2017) (citing Fedmet Res. Corp. v. United States , 755 F.3d 912, 919–22 (Fed. Cir. 2014) (reviewing Commerce’s analysis under § 351.225(k)(1) for substantial evidence)). Here, Commerce determined that US & F’s washers were within the scope of the ADD Order based solely on the (k)(1) sources and, thus, did not initiate a scope inquiry. J.A. 393.

US & F argues that its washers have a distinct design and function from helical spring lock washers subject to the scope of the ADD Order . Commerce responds that US &F ’s washers are "spring" washers, "helical" in nature, and function as lock washers, and, thus, within the scope of the ADD Order . As previously noted, the ADD Order covers "certain helical spring lock washers (HSLWs)." ADD Order at 58 Fed. 53,914 (emphasis added). The parties do not dispute that US & F’s washers are spring lock washers. Instead, t...