Maclean Power, L.L.C. v. United States, Slip Op. 19-15

• Decision Date: 30 January 2019
• Docket Number: Slip Op. 19-15,Court No. 17-00265
• Citation: 359 F.Supp.3d 1367
• Parties: MACLEAN POWER, L.L.C., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

359 F.Supp.3d 1367

MACLEAN POWER, L.L.C., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 19-15

Court No. 17-00265

United States Court of International Trade.

Dated: January 30, 2019

Lawrence R. Pilon and Thomas M. Keating, Hodes Keating & Pilon, of Chicago, Ill., for Plaintiff MacLean Power, L.L.C.

Eric J. Singley, Trial Attorney, Civil Division, U.S. Department of Justice, of Washington D.C., for the defendant. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Caroline D. Bisk, Attorney, U.S. Department of Commerce, of Washington, D.C.

OPINION

Restani, Judge:

This action challenges a final scope ruling issued by the United States Department of Commerce, International Trade Administration ("Commerce") regarding MacLean Power, L.L.C. ("MacLean")'s pole line hardware. MacLean moves for judgment on the administrative record, seeking a holding that Commerce's determination that its pole line hardware fall within the antidumping order on certain helical spring lock washers ("HSLWs") from the People's Republic of China ("PRC") is unsupported by substantial record evidence or otherwise not in accordance with the law. See Mem. L. Supp. Pl. MacLean Power, L.C.C.'s Rule 56.2 Mo. J. Agency Record, Doc. No. 26-1 ("MacLean Br."). Accordingly, MacLean seeks exclusion from the scope of the antidumping duty order. MacLean Br. at 32–33. Commerce opposes MacLean's motion. For the following reasons, MacLean's motion is granted.

BACKGROUND

On November 23, 1993, Commerce published an antidumping duty order covering certain HSLWs from the PRC. See Antidumping Duty Order: Certain Helical Spring Lock Washers from the PRC, 58 Fed. Reg. 53,914 (Dep't Commerce Oct. 19, 1993) ; Amended Final Determination and Amended Antidumping Duty Order: Certain Helical Spring Lock Washers from the PRC, 58 Fed. Reg. 61,859 (Dep't Commerce Nov. 23, 1993) (the "Order"). Commerce defined the scope of certain HSLWs as follows:

[C]ertain 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). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive.

58 Fed. Reg. at 61,859. The Order does not mention HSLWs imported as assembled into other merchandise or as a part of a set or kit containing multiple items.

On October 11, 2016, MacLean Power, L.L.C. ("MacLean"), a manufacturer of products used by utilities for building transmission and distribution lines and substations, filed a request with Commerce for a scope ruling that its various pole line hardware products, which contain HSLWs as component parts, were outside of the scope of the Order. Scope ruling request of MacLean Power, L.L.C., Pole Line Hardware Helical Spring Lock Washers from PRC (A-570-822), P.D. 1 (Oct. 11, 2016) ("Scope Ruling Request"). MacLean's pole line hardware products include clamps and line post studs used "to attach, support, and secure the cables, wires, and related components that carry power, telephone, internet, and cable television signals in above-ground pole-based systems [ (i.e., utility poles) ]." Scope Ruling Request at 3. The clamps are combinations of steel clamping cups or jaws, attached to bolts or studs that are fastened with HSLWs and nuts. See id. at 3–6. The line studs include steel pins that attach to a HSLW, a square or hex nut, and a locknut.¹ Id. at 7. In each of MacLean's pole line hardware products, the HSLWs form only one part of a multi-part assembled good. MacLean imports and sells its pole line hardware as assembled. See MacLean Power's Resp. to the Department's 03/15/2017 Req. for Additional Information, A-570-822, P.D. 12 at Ex. AA (May 11, 2017). No comments on the Scope Ruling Request were filed by interested parties.

Commerce issued a final scope ruling on October 5, 2017, concluding that MacLean's HSLWs, as a component of pole line hardware, fell within the scope of the Order. Final Scope Ruling On MacLean Power, L.L.C.'s Pole Line Hardware Products, A-570-822, P.D. 18 at 8–10 (Oct. 5, 2017) ("Scope Ruling"). Commerce asserts it used its "discretion to determine that [the pole line hardware was] a set of related products [that were] merely a combination of subject and non-subject merchandise, and not a unique product." Id. at 10. Thus, Commerce further asserted, "[b]ecause the [HSLWs] [were] included in a mixed media item that includes a mixture of potentially subject merchandise and non-subject merchandise," it used the mixed media analysis outlined in Mid Continent Nail Corp. v. United States, 725 F.3d 1295 (Fed. Cir. 2013). Id. at 7. In accordance with the purportedly applicable analysis for "mixed media" items articulated in Mid Continent, Commerce first found that the HSLWs were subject merchandise "as outlined in the literal terms of the [Order]." Id. at 9. Commerce then determined that the inclusion of HSLWs into pole line hardware should not exclude them from the scope of the Order. Id. Commerce found "no basis in the language of the order" or "other scope-related sources" to exclude HSLWs when incorporated into pole line hardware. Id. at 9–10.

MacLean challenges Commerce's determination that the imported pole line hardware constituted a mixed media product. MacLean argues that Commerce's characterization of its imported goods as "mixed media" is unsupported both by record evidence and Commerce's prior mixed media determinations. MacLean Br. at 19–24. MacLean contends that the Department's reliance on Mid Continent is misplaced because the HSLWs included in MacLean's pole line hardware are components of a unique good as opposed to mixed media items, and therefore a mixed media approach like that taken in Mid Continent is inapplicable. Id.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court has authority to review "whether a particular type of merchandise is within the class or kind of merchandise described in an ... antidumping or countervailing duty order." 19 U.S.C. § 1516a(a)(2)(B)(vi). Commerce's final scope determination will be upheld unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Legal Framework

After an antidumping duty order is published, importers may seek " ‘scope rulings’ that clarify the scope of an order ... with respect to particular products." 19 C.F.R. § 351.225(a), (c). In making a typical scope determination, Commerce follows a sequential analysis. Commerce must first analyze the language of the antidumping order itself and determine if the product is covered by the order. See Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097–98 (Fed. Cir. 2002) (stating that the language of an order is the "cornerstone of [a court's] analysis" of an order's scope). If the language of the order is ambiguous regarding the product at issue, Commerce next considers the (k)(1) factors, which include "[t]he 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). If these sources are sufficient to determine that the product falls within the scope of the order, a final scope ruling is issued. Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005). However, if the sources in (k)(1) are not dispositive, Commerce must consider the additional (k)(2) factors, which are "(i) [t]he physical characteristics of the product; (ii) [t]he expectations of the ultimate purchasers; (iii) [t]he ultimate use of the product; (iv) [t]he channels of trade in which the product is sold; and (v) [t]he manner in which the product is advertised and displayed." 19 C.F.R. § 352.225(k)(2).

Although courts grant significant deference to Commerce's interpretation of its own orders, Commerce "cannot ‘interpret’ an antidumping order so as to change the scope of that order, nor can Commerce interpret an order in a manner contrary to its terms." See Duferco Steel, 296 F.3d at 1095 (quoting Eckstrom Indus., Inc. v. United States, 254 F.3d 1068, 1072 (Fed. Cir. 2011) ). Moreover, "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." Id. at 1089.

II. MacLean's Pole Line Hardware

Commerce incorrectly determined that the HSLWs in MacLean's pole line hardware fall within the scope of the Order because the HSLWs were neither imported alone nor as part of a set or kit, but rather as unique assembled products. An antidumping duty order reflects a determination by Commerce that a "subject merchandise is being, or is likely to be, sold in the United States at less than its fair value." 19 U.S.C. § 1673d(a)(1) ; See also Duferco Steel, 296 F.3d at 1096 ("Commerce's final determination reflects the decision that has been made as to which merchandise is within the final scope of the investigation and is subject to the order."). The term "subject merchandise" is defined as "the class or kind of merchandise that is within the scope of an investigation, a review,...