King Supply Co. v. United States

• Decision Date: 29 May 2012
• Docket Number: 2011–1253.,Nos. 2011–1252,s. 2011–1252
• Parties: KING SUPPLY COMPANY, LLC (doing business as King Architectural Metals), Plaintiff–Appellee, v. UNITED STATES, Defendant,andTube Forgings of America, Inc., Defendant–Appellant,andWeldbend Corp., Defendant–Appellant,andHackney Ladish, Inc., Defendant.
• Court: U.S. Court of Appeals — Federal Circuit

33 ITRD 2313

674 F.3d 1343

KING SUPPLY COMPANY, LLC (doing business as King Architectural Metals), Plaintiff–Appellee,

v.UNITED STATES, Defendant,andTube Forgings of America, Inc., Defendant–Appellant,andWeldbend Corp., Defendant–Appellant,andHackney Ladish, Inc., Defendant.

Nos. 2011–1252

2011–1253.

United States Court of Appeals, Federal Circuit.

March 27, 2012.Rehearing En Banc Denied May 29, 2012.

Thomas V. Vakerics, Barnes, Richardson & Colburn, of Washington, DC, argued for plaintiff-appellee. With him on the brief was Stephen W. Brophy.

Lawrence J. Bogard, Neville Peterson LLP, of Washington, DC, argued for defendant-appellant Tube Forgings of America, Inc. With him on the brief was Meredith A. Dement.

Jeffery C. Lowe, Mayer Brown LLP, of Washington, DC, argued for defendant-appellant Weldbend Corp. With him on the brief was Simeon M. Kriesberg.

Before RADER, Chief Judge, and BRYSON and REYNA, Circuit Judges.

REYNA, Circuit Judge.

Weldbend Corp. (“Weldbend”) and Tube Forgings of America, Inc. (“Tube Forgings”) appeal the decision of the Court of International Trade (“Trade Court”) reversing a scope ruling by the U.S. Department of Commerce (“Commerce”). The Trade Court concluded that King Supply Co.'s (“King”) imports of steel butt-weld pipe fittings were outside the scope of an antidumping duty (“AD”) order, reasoning that the AD order was restricted to pipe fittings used in piping systems, whereas King's pipe fittings are used only in structural contexts. Because the Trade Court gave inadequate deference to Commerce's scope ruling that the antidumping duty order did not contain such an end-use restriction,¹ we reverse.

I. Background

Generally, whenever domestic producers of a particular product believe that imports of certain competing goods are being sold in the United States at less than fair market value (i.e., being “dumped”), they may petition Commerce to impose antidumping duties on the imports of the goods. Walgreen Co. v. United States, 620 F.3d 1350, 1351 (Fed.Cir.2010). If Commerce finds a petition sufficient, Commerce initiates an investigation to preliminarily determine if there is a reasonable basis to conclude that dumping is occurring or is likely to occur. 19 U.S.C. §§ 1673a, 1673b(b)(1)(A). Concurrently, the U.S. International Trade Commission (“ITC”) investigates whether there is a reasonable indication that a domestic industry of like products is or is likely to be materially injured by virtue of the dumped imports. Id. § 1673b(a)(1)(A). If the respective investigations result in final determinations of dumping and material injury or threat of material injury, Commerce issues an AD order imposing antidumping duties on the appropriate imported merchandise. Id. § 1673d(c)(2). While petitioners and other interested parties in the investigation may propose the scope of merchandise to be investigated, Commerce alone defines the scope of the AD order.

After an AD order is issued, Commerce is often called upon to issue “scope rulings” to clarify the scope of the AD order and determine whether particular products are included within its scope. Walgreen, 620 F.3d at 1352 (quoting 19 C.F.R. § 351.225(a)). In making such scope rulings, while the plain language of the AD order is paramount, Commerce must also take into account “[t]he descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of the Secretary [of Commerce] (including prior scope determinations) and the Commission.” 19 C.F.R. § 351.225(k)(1); Walgreen, 620 F.3d at 1357.² Consequently, a scope ruling is a highly fact-intensive and case-specific determination.

A. The Original Petition and Antidumping Duty Order

In 1991 certain domestic producers submitted an antidumping duty investigation petition to Commerce and the ITC with respect to imports of butt-weld pipe fittings from China and Thailand (the “Petition”). The leading paragraph in the “product description” section of the Petition identified products subject to the investigation in terms of their physical characteristics (“carbon steel butt-weld fittings having an inside diameter of less than 360 millimeters,” and satisfying certain American Society for Testing and Materials (“ASTM”) and American National Standards Institute (“ANSI”) industry standards for materials and dimensions), and went on in subsequent paragraphs to describe how butt-weld pipe fittings are generally made, used, and sold. JA261–62. ³ For example, the second paragraph of the Petition explained that “butt-weld fittings are forged steel products used to join pipe sections in piping systems where conditions require permanent, welded connections, as distinguished from fittings based on other fastening methods (e.g., threaded, grooved, or bolted fittings).” Id.

On May 18, 1992, Commerce issued a final affirmative determination that the products at issue were indeed being dumped. Final Determination of Sales at Less Than Fair Value: Certain Carbon Steel Butt–Weld Pipe Fittings From the People's Republic of China, 57 Fed.Reg. 21,058 (May 18, 1992). This final determination included a description of the subject products tracking the language used in the first two paragraphs of the Petition:

The products covered by this investigation are carbon steel butt-weld pipe fittings, having an inside diameter of less than 14 inches, imported in either finished or unfinished form. These formed or forged pipe fittings are used to join sections in piping systems where conditions require permanent, welded connections, as distinguished from fittings based on other fastening methods ( e.g., threaded, grooved, or bolted fittings).

Id.⁴

In June 1992, the ITC concluded that the domestic industry was materially injured by virtue of the dumped imports. Carbon Steel Butt–Weld Pipe Fittings from China and Thailand, Invs. Nos. 731–TA–520 and 521, USITC Pub. 2528 (Int'l Trade Comm'n June 25, 1992) (“ ITC Final Determination ”). The ITC explained that “the like product is all domestically produced carbon steel butt-weld pipe fittings having an inside diameter of less than 14 inches, whether finished or unfinished.” Id. at 4, 5, I–16. The ITC's investigation also revealed that in addition to their use in piping systems to convey gases or liquids in various contexts, the butt-weld pipe fittings at issue were also used in “structural applications” as support members, including in “fences, guardrails, playground equipment, and scaffolding.” Id.

In July 1992, Commerce issued an AD order imposing antidumping duties on the subject merchandise, mirroring the operative language from Commerce's final determination:

The products covered by this order are carbon steel butt-weld pipe fittings, having an inside diameter of less than 14 inches, imported in either finished or unfinished form. These formed or forged pipe fittings are used to join sections in piping systems where conditions require permanent, welded connections, as distinguished from fittings based on other fastening methods ( e.g., threaded, grooved, or bolted fittings).

Certain Carbon Steel Butt–Weld Pipe Fittings from China, 57 Fed.Reg. 29,702–03 (July 6, 1992) (“AD Order”).

B. King's Imported Products and Commerce's Scope Ruling

In March 2009, King requested that Commerce issue a scope ruling that butt-weld pipe fittings imported by King from China are outside the scope of the AD Order. King's request indicated that its imported butt-weld pipe fittings are physically identical to those subject to the AD Order. JA908, JA913 (“The physical characteristics of the subject merchandise and King Architectural's imports are the same.”). King argued that the second sentence of the AD Order was an end-use restriction that “expressly limits the scope [of the AD Order ] to pipe fittings used to join sections of piping systems.” JA910. By contrast, King's imported butt-weld pipe fittings were “for structural use in applications such as handrails, fencing, and guardrails.” JA908.

Commerce issued its scope ruling on October 21, 2009, concluding that King's imports were included within the scope of the AD Order. Final Scope Ruling: Antidumping Duty Order on Carbon Steel Butt–Weld Pipe Fittings from the People's Republic of China (“PRC”), Scope Inquiry No. A–570–814 (Oct. 20, 2009) (the “ Scope Ruling ”); JA1187–93. Commerce emphasized that not only were King's products physically identical to the products described in the first sentence of the AD Order, but evidence also showed King's products met the same ASTM and ANSI industry standards as were referenced in the Petition. Scope Ruling, at 5; JA1192. Commerce found further support in the ITC's final determination, which defined the domestic like products as including “ all pipe fittings having an inside diameter of less than 14 inches, whether finished or unfinished regardless of use.” Id. at 5–6; JA1192–93 (emphases added).

Commerce rejected King's arguments that its products were outside the scope of the AD Order because they were not “used to join sections in piping systems,” explaining that the second sentence was not an end-use restriction but merely a statement that “distinguished butt-welding from other types of fastening methods.” Id. at 5; JA1192. Commerce elaborated as follows:

Specifically, we find that this sentence uses piping systems as an example of an instance where a permanent, welded connection is desired. We find that the language “are used” does not mean that the use identified is necessarily the exclusive use. Thus, we conclude that the second sentence does not contain an end-use exclusion, but a description of a possible end-use.

Id. Accordingly, Commerce concluded that King's pipe fittings were subject to the AD Order. Id.

King challenged the Scope Ruling at the Trade Court, continuing to contend that the second sentence of the AD Order is an end-use restriction which places King's products outside of its scope. The Trade Court agreed with King, focusing on the ...