Simpson Strong-Tie Co. v. United States, 092118 USCIT, 17-00057

Docket Nº:17-00057, Slip Op. 18-123
Opinion Judge:GARY S. KATZMANN, JUDGE.
Party Name:SIMPSON STRONG-TIE COMPANY, Plaintiff, v. UNITED STATES, Defendant, and MID CONTINENT STEEL & WIRE, INC., Defendant-Intervenor.
Attorney:George R. Tuttle, III, and Vickie Wu, The Law Offices of George R. Tuttle, of Larkspur, CA, argued for plaintiff. Stephen C. Tosini, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Chad A...
Judge Panel:Before: Gary S. Katzmann, Judge
Case Date:September 21, 2018
Court:Court of International Trade
 
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SIMPSON STRONG-TIE COMPANY, Plaintiff,

v.

UNITED STATES, Defendant,

and

MID CONTINENT STEEL & WIRE, INC., Defendant-Intervenor.

No. 17-00057

Slip Op. 18-123

Court of Appeals of International Trade

September 21, 2018

Commerce's Final Results are remanded and plaintiffs motion for judgment on the agency record is granted in part.

George R. Tuttle, III, and Vickie Wu, The Law Offices of George R. Tuttle, of Larkspur, CA, argued for plaintiff.

Stephen C. Tosini, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Chad A. Readler, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and Sosun Bae, Trial Attorney. Of counsel on the brief was Jessica DiPietro, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Adam H. Gordon, The Bristol Group PLLC, of Washington, DC, argued for defendant-intervenor. With him on the brief was Ping Gong.

Before: Gary S. Katzmann, Judge

OPINION

GARY S. KATZMANN, JUDGE.

The court today reviews another installment in the continuing mystery series, "Is It Classified As A Nail?" See OMG, Inc., v. United States, 42 CIT, Slip Op. 18-63 (May 29, 2018). Plaintiff Simpson Strong-Tie Company ("Simpson") challenges the Department of Commerce's ("Commerce") determination that zinc and nylon anchors imported by Simpson fall within the scope of the Antidumping Duty Orders on Certain Steel Nails from the People's Republic of China. Antidumping and Countervailing Duty Order on Certain Steel Nails from the People's Republic of China: Final Scope Ruling on Simpson Strong-Tie Company's (Zinc and Nylon Nailon) Anchors, 73 Fed. Reg. 44, 961 (Dep't Commerce Mar. 20, 2017), P.R. 36 ("Final Scope Ruling"); Antidumping Duty Order: Certain Steel Nails from the People's Republic of China, 73 Fed. Reg. 44, 961 (Dep't Commerce Aug. 1, 2008) and Certain Steel Nails from the People's Republic of China, 76 Fed. Reg. 30, 101 (Dep't Commerce May 24, 2011) (Final Results of Changed Circumstances Review) (collectively "the Orders"). Simpson argues that its anchors are not steel nails and, therefore, do not fall within the scope of the Orders and that Commerce's scope determination is unsupported by substantial evidence on the record and is otherwise not in accordance with law. Compl., Apr. 12, 2017, ECF No. 10; Pl.'s Mot. For J. on the Agency R. and Br. in Supp., Aug. 22, 2017, ECF No. 24 ("Pl.'s Br."); Pl.'s Reply, Jan. 30, 2018, ECF No. 30. The court concludes that Commerce's determination was not in accordance with law.

BACKGROUND

A. Legal and Regulatory Framework of Scope Reviews Generally.

Dumping occurs when a foreign company sells a product in the United States for less than fair value - that is, for a lower price than in its home market. Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046 (Fed. Cir. 2012). Similarly, a foreign country may provide a countervailable subsidy to a product and thus artificially lower its price. U.S. Steel Grp. v. United States, 96 F.3d 1352, 1355 n.1 (Fed. Cir. 1996). To empower Commerce to offset economic distortions caused by dumping and countervailable subsidies, Congress enacted the Tariff Act of 1930.1 Sioux Honey Ass'n, 672 F.3d at 1046-47. Under the Tariff Act's framework, Commerce may -- either upon petition by a domestic producer or of its own initiative -- begin an investigation into potential dumping or subsidies and, if appropriate, issue orders imposing duties on the subject merchandise. Id.

In order to provide producers and importers with notice as to whether their products fall within the scope of an antidumping or countervailing duty order, Congress has authorized Commerce to issue scope rulings clarifying "whether a particular type of merchandise is within the class or kind of merchandise described in an existing . . . order." 19 U.S.C. § 1516a(a)(2)(B)(vi). As "no specific statutory provision govern[s] the interpretation of the scope of antidumping or countervailing orders," Commerce and the courts developed a three-step analysis. Shenyang Yuanda Aluminum Indus. Eng'g Co. v. United States, 776 F.3d 1351, 1354 (Fed. Cir. 2015); Polites v. United States, 35 CIT ___, ___, 755 F.Supp.2d 1352, 1354 (2011); 19 C.F.R. § 351.225(k).

Because "[t]he language of the order determines the scope of an antidumping duty order[, ]" any scope ruling begins with an examination of the language of the order at issue. Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005) (citing Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002)). If the terms of the order are unambiguous, then those terms govern. Id. at 1382-83.

However, if Commerce determines that the terms of the order are either ambiguous or reasonably subject to interpretation, then Commerce "will take into account . . . the descriptions of the merchandise contained in the petition, the initial investigation, and [prior] determinations [of Commerce] (including prior scope determinations) and the [International Trade] Commission." 19 C.F.R. § 351.225(k)(1) ("(k)(1) sources"); Polites, 755 F.Supp.2d at 1355; Meridian Prod., 851 F.3d 1375, 1382 (Fed. Cir. 2017). To be dispositive, the (k)(1) sources "must be 'controlling' of the scope inquiry in the sense that they definitively answer the scope question." Polites, 755 F.Supp.2d at 1355 (quoting Sango Int'l v. United States, 484 F.3d 1371, 1379 (Fed. Cir. 2007)). If Commerce "can determine, based solely upon the application and the descriptions of the merchandise referred to in paragraph (k)(1) of . . . section [351.225], whether a product is included within the scope of an order . . . [Commerce] will issue a final ruling[.]" 19 C.F.R. § 351.225(d).

If section 351.225(k)(1) analysis is not dispositive, Commerce will initiate a scope inquiry under § 351.225(e), and apply the five criteria from Diversified Prods. Corp v. United States, 6 CIT 155, 162, 572 F.Supp. 883, 889 (1983) as codified in 19 C.F.R. § 351.225(k)(2).2

B. The Petition and Nail Orders.

On May 29, 2007, Mid Continent Steel & Wire ("Mid Continent") and other producers of steel nails petitioned Commerce to impose antidumping duties on certain steel nails from the United Arab Emirates and the People's Republic of China. Letter from Grunfeld Desiderio Lebowitz Silverman Klestadt, LLP to Sec'y of Commerce Pertaining to Fastenal Scope Comments, P.R. 17 (Nov. 15, 2016) at Ex. 11, Petition for the Imposition of Antidumping Duties against Certain Steel Nails from the People's Republic of China and United Arab Emirates (May 29, 2007) ("Petition"). Commerce later determined that dumping was occurring, but first advised Customs and Border Patrol ("CBP") in Commerce Message 8213213 -- issued on July 31, 2008, a day prior to the issuance of the Orders -- that articles classified under HTSUS 7907.00.6000 ("Other articles of zinc: other") were excluded from the scope of the Orders and advised CBP to liquidate entries on such products without the assessment of antidumping duties. Letter from Law Offices of George R. Tuttle to Sec'y of Commerce, P.R. 3-4 (July 21, 2016) ("Scope Ruling Request") at Attach. 3. Thereafter, on August 1...

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