Diamond Sawblades Manufacturers' Coal. v. United States

• Decision Date: 19 September 2019
• Docket Number: Court No. 18-00134,Slip Op. 19-123
• Citation: 405 F.Supp.3d 1345
• Parties: DIAMOND SAWBLADES MANUFACTURERS' COALITION, Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

405 F.Supp.3d 1345

DIAMOND SAWBLADES MANUFACTURERS' COALITION, Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 19-123

Court No. 18-00134

United States Court of International Trade.

September 19, 2019

Daniel B. Pickard, Maureen E. Thorson, Stephanie M. Bell, Wiley Rein LLP, of Washington, D.C., for plaintiffs.

John J. Tudor, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Paul K. Keith, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

OPINION AND ORDER

Richard W. Goldberg, Senior Judge Goldberg, Senior Judge:

Plaintiff Diamond Sawblades Manufacturers' Coalition ("DSMC") challenges the decision of the U.S. Department of Commerce ("Commerce") to interpret the scope of an antidumping order to exclude certain cupwheels that Lyke Industrial Tool, LLC ("Lyke") imports. DSMC moves for judgment on the agency record, arguing that Commerce's determination of what constitutes a "sawblade" and the Department's application thereof to Lyke's merchandise was not supported by substantial evidence. Pl.'s Mot. for J. on Agency R., ECF No. 16 (Nov. 28, 2018); see also Pl.'s Mem. in Support of its Mot. for J. on the Agency R., ECF 16-1 (Nov. 28, 2018) ("Pl.'s Br"). Defendant United States opposes Plaintiff's motion. Def's Resp. to Pl.'s Mot. for J. on Agency R., ECF No. 21 (Mar. 22, 2019) ("Def.'s Br.").

Commerce's final scope determination on Lyke's cupwheels did not adhere to the regulatory framework pursuant to 19 C.F.R. § 351.225. Therefore, the court remands the final scope ruling to Commerce for further consideration in accordance with this opinion and order.

BACKGROUND

In November 2009, Commerce issued an antidumping order covering diamond sawblades and parts thereof from the People's Republic of China ("China" or "PRC"). See Diamond Sawblades and Parts Thereof From the People's Republic of China and the Republic of Korea , 74 Fed. Reg. 57,145 (Dep't Commerce Nov. 4, 2009) (antidumping duty order) ("Order "). The antidumping duty order includes within its Scope:

[A]ll finished circular sawblades, whether slotted or not, with a working part that is comprised of a diamond segment or segments, and parts thereof, regardless of specification or size, except as specifically excluded below. Within the scope of these orders are semifinished diamond sawblades, including diamond sawblade cores and diamond sawblade segments. Diamond sawblade cores are circular steel plates, whether or not attached to non-steel plates, with slots. Diamond sawblade cores are manufactured principally, but not exclusively, from alloy steel. A diamond sawblade segment consists of a mixture of diamonds (whether natural or synthetic, and regardless of the quantity of diamonds) and metal powders (including, but not limited to, iron, cobalt, nickel, tungsten carbide) that are formed together into a solid shape (from generally, but not limited to, a heating and pressing process).

Order , 74 Fed. Reg. at 57,145.

The Order excludes from its scope:

Sawblades with diamonds directly attached to the core with a resin or electroplated bond, which thereby do not contain a diamond segment, are not included within the scope of the order. Diamond sawblades and/or sawblade cores with a thickness of less than 0.025 inches, or with a thickness greater than 1.1 inches, are excluded from the scope of the order. Circular steel plates that have a cutting edge of non-diamond material, such as external teeth that protrude from the outer diameter of the plate, whether or not finished, are excluded from the scope of the order. Diamond sawblade cores with a Rockwell C hardness of less than 25 are excluded from the scope of the order. Diamond sawblades and/or diamond segment(s) with diamonds that predominantly have a mesh size number greater than 240 (such as 250 or 260) are excluded from the scope of the order.

Id.

In February 2018, Lyke requested a scope ruling to determine whether two of its products, diamond sawblades and cupwheels, fell within the scope of the Order. Lyke Scope Request 2, P.R. 1 (Feb. 23, 2018). Commerce determined that Lyke's finished diamond sawblades are covered by the scope of the order, and so, only one product remains at issue today: Lyke's cupwheels. Final Scope Determination for Scope Request from Lyke Industrial Tool, LLC 8, P.R. 23 (May 17, 2018) ("Final Scope Ruling"). In the scope ruling request, Lyke requested that the agency find that cupwheels are not diamond sawblades and should be excluded from the antidumping duty order. Lyke Scope Request 2. Lyke noted that in-scope diamond sawblades have the following characteristics: (1) they must contain circular plates; (2) diamond segments must be installed on the outer periphery of the core; and (3) the sawblades must be used to cut materials. Id. at 11. According to Lyke, its cupwheels did not satisfy these requirements. First, while the diamond segments in diamond sawblades "are [ ] installed in the outer diameter (periphery) of the cores," the diamond segments in a Lyke cupwheel are "installed on the flat surface of the cores." Id. at 10. Additionally, "[a] cupwheel does not cut through the materials on which it is working," and instead works to "polish or clean the surface." Id. Therefore, Lyke argued, the cupwheels do not satisfy the requirements of an in-scope diamond sawblade and fall outside of the scope of the Order. Id.

Thereafter, Commerce requested additional information from Lyke concerning its scope ruling request and Lyke responded by way of a revised scope ruling request. Lyke Industrial Supplemental Questionnaire, P.R. 11 (Mar. 22, 2018); Revised Scope Ruling Request, P.R. 13 (Apr. 3, 2018). Specifically, Lyke stated in its supplemental questionnaire response that Lyke's cupwheels are not grinding wheels because "the steel core spins parallel rather than perpendicular to the material being cut; therefore there is no rubbing." Revised Scope Ruling Request 15. After a subsequent exchange of comments and rebuttal comments from DSMC and Lyke, respectively, Commerce issued its scope determination.

In its final scope ruling, Commerce concluded that Lyke's cupwheels fall outside of the scope of the Order based primarily on their use and their physical characteristics. See Final Scope Ruling. At the outset, Commere "clarified that, for the scope of the investigation, diamond segments [of the merchandise] must be attached to the outer periphery of the core to be within the scope." Id. at 9. As to the product, Commerce first explained that "Lyke's cupwheels have diamond segments attached to the bottoms of the cores, not the outer periphery." Id. Second, because the cupwheels "are designed to rotate parallel, rather than perpendicular, ... to the plane of the material," "Lyke's cupwheels, in contrast to diamond sawblades ..., do not have an ‘attacking edge’ to ‘penetrate the material.’ " Id. at 10. Commerce recognized that "while the scope language does not describe in-scope merchandise ... by their cutting function, grinding function, or spin direction, statements from the petitioner and the ITC in the investigation stage ... clarify that a product that does not have an attacking edge that penetrates the material is not subject merchandise." Id. Therefore, Commerce concluded that "[a]lthough the scope language covers diamond sawblades regardless of specification," because Lyke's cupwheels are "physically distinguishable from diamond sawblades," they are not covered by the Order. Id. at 9-10.

DSMC moved for judgment on the agency record, arguing that Commerce's finding that Lyke's cupwheels are out of scope was not supported by substantial evidence, and that Commerce's failure to obtain sufficient information regarding Lyke's cupwheels renders its determination unsupported by substantial evidence. See generally Pl.'s Br.

JURISDICTION

The court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) and will sustain Commerce's determinations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

"Commerce is entitled to substantial deference with regard to its interpretations of its own antidumping duty orders." 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) ). "This broad deference is not unlimited, however, since ‘Commerce cannot interpret an antidumping duty order so as to change the scope of that order, nor can Commerce interpret an order in a manner contrary to its terms.’ " Id. (quoting Walgreen Co. v. United States , 620 F.3d 1350, 1354 (Fed. Cir. 2010) ). "Substantial evidence requires ‘more than a mere scintilla,’ but is satisfied by ‘something less than the weight of the evidence.’ " Altx, Inc. v. United States , 370 F.3d 1108, 1116 (Fed. Cir. 2004) (citations omitted). Commerce's consideration should reflect a sound decision-making process, see Burlington Truck Lines v. United States , 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962), taking into account all evidence on the record, including that which may detract from the ultimate conclusion, CS Wind Vietnam Co. v. United States , 832 F.3d 1367, 1373 (Fed. Cir. 2016). But, whatever the result, the agency's rationale must not be arbitrary, capricious, or an abuse of discretion. Wheatland Tube Co. v. United States , 161 F.3d 1365, 1369 (Fed. Cir. 1998).

DISCUSSION

The court remands Commerce's scope ruling. Although the text of the scope order is "susceptible to interpretation," Meridian Prods., LLC v. United States , 851 F.3d 1375, 1381 (Fed. Cir. 2017) (citing Mid Continent Nail Corp. v. United States , 725 F.3d 1295,...