Viet. Finewood Co. v. United States

• Decision Date: 20 April 2023
• Docket Number: 22-00049,Slip Op. 23-58
• Parties: VIETNAM FINEWOOD COMPANY LIMITED, FAR EAST AMERICAN, INC., AND LIBERTY WOODS INTERNATIONAL, INC., Plaintiffs, v. UNITED STATES, Defendant, and INTERGLOBAL FOREST, LLC, Consolidated-Plaintiff, and COALITION FOR FAIR TRADE IN HARDWOOD PLYWOOD, Defendant-Intervenor.
• Court: U.S. Court of International Trade

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VIETNAM FINEWOOD COMPANY LIMITED, FAR EAST AMERICAN, INC., AND LIBERTY WOODS INTERNATIONAL, INC., Plaintiffs, and INTERGLOBAL FOREST, LLC, Consolidated-Plaintiff, v. UNITED STATES, Defendant, and COALITION FOR FAIR TRADE IN HARDWOOD PLYWOOD, Defendant-Intervenor.

No. 22-00049

Slip Op. 23-58

Court of Appeals of International Trade

April 20, 2023

[Remanding the U.S. Department of Commerce's scope determination for the antidumping duty and countervailing duty orders on certain hardwood plywood from the People's Republic of China; directing Commerce to correct the administrative record; dismissing Plaintiff Vietnam Finewood Company Limited from the action.]

Gregory S. Menegaz and Vivien J. Wang, deKieffer &amp Horgan, PLLC, of Washington, DC, argued for Plaintiffs. With them on the brief were J. Kevin Horgan, Judith L. Holdsworth and Alexandra H. Salzman.

Thomas H. Cadden, Cadden & Fuller LLP, of Irvine, CA, argued for Consolidated Plaintiff.

Hardeep K. Josan, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for Defendant. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was Savannah R. Maxwell, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Stephanie M. Bell, Wiley Rein LLP, of Washington, DC, argued for Defendant-Intervenor. With her on the brief were Timothy C. Brightbill and Tessa V. Capeloto.

Before: Mark A. Barnett, Chief Judge Consol.

OPINION AND ORDER

Mark A. Barnett, Chief Judge

This consolidated action involves a challenge to a U.S. Department of Commerce ("Commerce" or "the agency") scope determination for the antidumping duty and countervailing duty orders on certain hardwood plywood from the People's Republic of China ("China"). See Compl., ECF No. 8; Confid. Final Scope Ruling ("Final Scope Ruling"), ECF No. 34-1; see also Certain Hardwood Plywood Products From the People's Republic of China, 83 Fed.Reg. 504 (Dep't Commerce Jan. 4, 2018) (am. final determination of sales at less than fair value, and antidumping duty order) ("Plywood AD Order"); Certain Hardwood Plywood Products From the People's Republic of China, 83 Fed.Reg. 513 (Dep't Commerce Jan. 4, 2018) (CVD order) ("Plywood CVD Order") (together, "the Plywood Orders").^[1] The Plywood Orders cover, inter alia,

hardwood and decorative plywood, and certain veneered panels as described below. For purposes of this proceeding, hardwood and decorative plywood is defined as a generally flat, multilayered plywood or other veneered panel, consisting of two or more layers or plies of wood veneers and a core, with the face and/or back veneer made of non-coniferous wood (hardwood) or bamboo.

Plywood AD Order, 83 Fed.Reg. at 512; Plywood CVD Order, 83 Fed.Reg. at 515.^[2]

Plaintiffs, Vietnam Finewood Company Limited ("Finewood"), Far East American, Inc. ("FEA"), and Liberty Woods International, Inc. ("Liberty") (collectively, "Plaintiffs"), and Consolidated Plaintiff InterGlobal Forest, LLC ("IGF"), challenge Commerce's interpretation of the scope of the Plywood Orders to include two-ply panels imported from China into Vietnam and Commerce's determination that hardwood plywood manufactured by Finewood in Vietnam using such Chinese two-ply remains in-scope based on the absence of a substantial transformation. Confid. Pls. Rule 56.2 Mem. in Supp. of Mot. for J. Upon the Agency R. ("Pls.' Mem."), ECF No. 31-1; Confid. Consol. Pl. [IGF] Rule 56.2 Mem. in Supp. of Mot. for J. Upon the Agency R. ("Consol. Pl.'s Mem."), ECF No. 30-1. Plaintiffs also challenge Commerce's rejection of portions of Finewood's initial scope comments. Pls.' Mem. at 24-27.

Defendant United States ("the Government") and Defendant-Intervenor Coalition for Fair Trade in Hardwood Plywood ("the Coalition") urge the court to sustain Commerce's scope ruling and deny the motions in all other respects. Confid. Def.'s Resp. to Pls.' Rule 56.2 Mot. for J. on the Agency R. ("Def.'s Resp."), ECF No. 35; Confid. Resp. to Mot. for J. on the Agency R. ("Def.-Ints.' Resp."), ECF No. 38.^[3]

For the reasons discussed herein, the court remands Commerce's determination that two-ply panels are covered by the scope of the Plywood Orders but sustains Commerce's treatment of Finewood's initial scope comments. The court further finds that certain of IGF's arguments are barred by the doctrines of waiver and administrative exhaustion, and that Finewood must be dismissed from the action.

Background

This matter arose following U.S. Customs and Border Protection's ("CBP") issuance of a covered merchandise referral to Commerce as part of EAPA^[4]Investigation No. 7252 concerning possible evasion of the Plywood Orders. See Placement of Covered Merch. Referral Docs. on the R. (Jan 21, 2020), PR 9-11, CJA Tab 6 (attaching CBP referral letter, dated Sept. 16, 2019 ("CBP Referral")). Section 1517 of Title 19 grants CBP authority to investigate allegations of evasion of antidumping duty or countervailing duty orders. 19 U.S.C. § 1517 (2018).^[5] "Evasion" is defined as:

entering covered merchandise into the customs territory of the United States by means of any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material, and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties being reduced or not being applied with respect to the merchandise.

Id. § 1517(a)(5)(A). "Covered merchandise" means "merchandise that is subject to" antidumping duty or countervailing duty orders issued pursuant to 19 U.S.C. § 1673e or 19 U.S.C. § 1671e, respectively. Id. § 1517(a)(3).

In the underlying proceeding, CBP was unable to determine whether Finewood's "[two]-ply cores of Chinese origin, which are further processed in Vietnam to include the face and back veneers of non-coniferous wood, are within the scope of [the Plywood Orders]." CBP Referral at 2. Under those circumstances, the statute directs CBP to "refer the matter to [Commerce] to determine whether the merchandise is covered merchandise pursuant to [Commerce's authority] under subtitle IV [of the Tariff Act of 1930]." 19 U.S.C. § 1517(b)(4)(A)(i). On January 17, 2020, Commerce initiated a scope inquiry. Certain Hardwood Plywood From the People's Republic of China, 85 Fed.Reg. 3,024 (Dep't Commerce Jan. 17, 2020) (notice of covered merch. Referral and initiation of scope inquiry).

To resolve the covered merchandise referral from CBP, Commerce applied its regulation governing the issuance of scope rulings. See Final Scope Ruling at 6-7. That regulation recognizes that, because the descriptions of merchandise covered by the scope of an antidumping or countervailing duty order must be written in general terms, questions may arise as to whether a particular product is included within the scope of an order. See 19 C.F.R. § 351.225(a) (2020).^[6] In order to resolve such questions, including in the context of CBP covered merchandise referrals, Commerce issues "scope rulings" that clarify whether the product is in-scope. See id.; Final Scope Ruling at 6-7. Although there are no specific statutory provisions that govern Commerce's interpretation of the scope of an order, Commerce is guided by case law and agency regulations. See Meridian Prods., LLC v. United States, 851 F.3d 1375, 1381 (Fed. Cir. 2017) ("Meridian 2017"); 19 C.F.R. § 351.225.

Commerce's inquiry begins with the relevant scope language. See, e.g., OMG, Inc. v. United States, 972 F.3d 1358, 1363 (Fed. Cir. 2020). If the scope language is unambiguous, "the plain meaning of the language governs." Id. Commerce further interprets the scope "with the aid of" the sources set forth in 19 C.F.R. § 351.225(k)(1) (referred to as a "(k)(1) analysis," "(k)(1) sources," or "(k)(1) materials"). Meridian 2017, 851 F.3d at 1382 (citation omitted). Subsection (k)(1) directs Commerce to consider the descriptions of the subject merchandise in the petition, initial investigation, and prior determinations by Commerce (including scope determinations) or the U.S. International Trade Commission ("ITC"). 19 C.F.R. § 351.225(k)(1). If the (k)(1) sources are dispositive, Commerce may issue its ruling based solely on the party's application and the (k)(1) sources. 19 C.F.R. § 351.225(d).^[7] In all other cases, Commerce will initiate a scope inquiry and may consider the factors enumerated in subsection (k)(2) of the regulation. See Meridian 2017, 851 F.3d at 1382 (citing 19 C.F.R. § 351.225(k)(2)).^[8]

When Commerce "finds that a scope inquiry presents an issue of significant difficulty, the [agency] will issue a preliminary scope ruling" and will allow time for initial and rebuttal comments. 19 C.F.R. § 351.225(f)(3). Commerce issued its preliminary scope ruling in this case on August 26, 2021. Prelim. Scope Ruling (Aug. 26, 2021), CR 128, PR 110, CJA Tab 2. After finding the scope ambiguous and consulting the (k)(1) sources, Commerce preliminarily concluded that the Chinese two-ply panels are within the scope of the Plywood Orders. Id. at 1. Commerce further determined that hardwood plywood produced by Finewood in Vietnam using Chinese two-ply was not substantially transformed in Vietnam and, thus, entered the United States as a product of China. Id.

Commerce allowed interested parties to file comments on the preliminary scope ruling. See Prelim. Scope Ruling at 31. Commerce subsequently rejected Finewood's initial comments based on the inclusion of untimely new factual information. See Letter Re: [Finewood]...