Midwest Fastener Corp. v. United States

494 F.Supp.3d 1335

MIDWEST FASTENER CORP., Plaintiff,

v. UNITED STATES, Defendant,andMid Continent Steel & Wire, Inc., Defendant-Intervenor.

Slip Op. 21-7

Court No. 17-00231

United States Court of International Trade.

January 21, 2021

Robert Kevin Williams and Mark Rett Ludwikowski, Clark Hill PLC, of Chicago, IL, for plaintiff, Midwest Fastener Corp.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. Also on the briefs were Patricia M. McCarthy, Assistant Director, Jeanne E. Davidson, Director, Ethan P. Davis, Acting Assistant Attorney General, and Jeffrey Bossert Clark, Acting Assistant Attorney General. Of Counsel were Vania Y. Wang and Jared Cynamon, Attorneys, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Adam Henry Gordon and Ping Gong, The Bristol Group PLLC, of Washington, DC, for defendant-intervenor, Mid Continent Steel & Wire, Inc.

OPINION AND ORDER

Kelly, Judge:

Before the court is the U.S. Department of Commerce's ("Commerce") second remand redetermination filed pursuant to the court's order in Midwest Fastener Corp. v. United States, 44 CIT ––––, 435 F. Supp. 3d 1262 (2020) (" Midwest II"). See Final Results of Redetermination Pursuant to Ct. Remand [in Midwest II ], June 17, 2020, ECF No. 87-1 ("Second Remand Results"). In Midwest II, the court remanded for a second time Commerce's determination that Midwest Fastener Corp.’s ("Midwest" or "Plaintiff") strike pin anchors are within the scope of the antidumping duty ("ADD") order covering certain steel nails from the People's Republic of China ("PRC"). See Midwest II, 44 CIT at ––––, 435 F. Supp. 3d at 1272 ; see also Midwest Fastener Corp. v. United States, 42 CIT ––––, ––––, 348 F. Supp. 3d 1297, 1302 (2018) (" Midwest I"); [ADD] Order on Certain Steel Nails from the [PRC]: Final Ruling on Midwest Fastener Strike Pin Anchors, (Aug. 2, 2017), ECF No. 21-3 ("Final Scope Ruling"); Final Results of Redetermination Pursuant to Ct. Remand, Apr. 25, 2019, ECF No. 61 ("Remand Results"); Certain Steel Nails from the [PRC], 73 Fed. Reg. 44,961 (Dep't Commerce Aug. 1, 2008) (notice of [ADD] order) ("PRC Nails Order"). Commerce, under respectful protest,¹ continued to find that Midwest's strike pin anchors fall within the scope of the PRC Nails Order. See generally Second Remand Results. On August 28, 2020, the Court of Appeals for the Federal Circuit ("Court of Appeals") decided OMG, Inc. v. United States, 972 F.3d 1358 (Fed. Cir. 2020), aff'g 43 CIT ––––, 389 F. Supp. 3d 1312 (2019) (" OMG"), interpreting nearly identical language in the ADD and countervailing duty ("CVD") orders covering certain steel nails from, in pertinent part, the Socialist Republic of Vietnam ("Vietnam"). For the following reasons, the court reconsiders its ruling in Midwest I, and remands Commerce's Second Remand Results with instructions to render its determination in conformity with OMG.

BACKGROUND

The court assumes familiarity with the facts as set forth in its previous opinion and recounts the facts relevant to the issues currently before the court. See Midwest II, 44 CIT at ––––, 435 F. Supp. 3d at 1265–66. On August 1, 2008, Commerce issued the PRC Nails Order, which covers, in pertinent part, "nails ... constructed of two or more pieces." See PRC Nails Order, 73 Fed. Reg. at 44,961. Midwest is an importer of strike pin anchors.² On August 2, 2017, Commerce, at Midwest's request, issued a final scope ruling determining that Midwest's strike pin anchors are unambiguously covered by the scope of the PRC Nails Order based on the plain language of the order, as well as its analysis of sources enumerated under 19 C.F.R. § 351.225(k)(1) (2017).³ See Final Scope Ruling at 10–13. As such, Commerce did not perform an analysis of factors enumerated under § 351.225(k)(2) ("(k)(2) analysis"). Id.

In Midwest I, the court remanded Commerce's determination, holding that neither the plain language of the PRC Nails Order, nor Commerce's analysis under 19 C.F.R. § 351.225(k)(1) "explain what it means for a product to be a nail constructed of two or more pieces." Midwest I, 42 CIT at ––––, 348 F. Supp. 3d at 1302 (discussing Commerce's reliance on prior scope determinations and a report of the U.S. International Trade Commission). After consulting dictionary definitions of the terms "nails" and "constructed", the court concluded that Commerce's determination that the PRC Nails Order unambiguously covers strike pin anchors is unsupported by substantial evidence and remanded for Commerce to conduct a formal scope inquiry and (k)(2) analysis. Midwest I, 42 CIT at ––––, 348 F. Supp. 3d at 1306.

On remand, Commerce continued to assert that the PRC Nails Order unambiguously covers Midwest's strike pin anchors, Remand Results at 7–11, but conducted a (k)(2) analysis under protest. Id. at 11–19. In Midwest II, the court held Commerce's position that the scope of the order unambiguously covers Midwest's strike pins anchors was unsupported by substantial evidence because Commerce's analysis did not reasonably demonstrate how the phrase "nails ... constructed of two or more pieces" encompasses the strike pin anchors. See Midwest II, 44 CIT at ––––, 435 F. Supp. 3d at 1267–71 ; see also PRC Nails Order, 73 Fed. Reg. at 44,961. The court also held that Commerce's (k)(2) analysis erred in several respects, see Midwest II, 44 CIT at ––––, 435 F. Supp. 3d at 1271–72, and rejected Commerce's attempt to find only the pin component dutiable. See id. at ––––, 435 F. Supp. 3d at 1273.

For its second remand redetermination, Commerce again maintained that the PRC Nails Order is unambiguous, but conducted a revised (k)(2) analysis in light of Midwest II. See Second Remand Results at 6–28. However, after briefing on the Second Remand Results before this court concluded, the Court of Appeals issued OMG. See generally 972 F.3d 1358. In OMG, the Court of Appeals affirmed a decision of this Court disposing of an appeal from Commerce's final ruling clarifying the scope of ADD and CVD orders covering certain steel nails from, in pertinent part, Vietnam. See generally id.; see also Certain Steel Nails from [Vietnam], 80 Fed. Reg. 41,006 (Dep't Commerce July 14, 2015) ([CVD] order) ("Vietnam CVD Order"); Certain Steel Nails from the Republic of Korea, Malaysia, the Sultanate of Oman, Taiwan, and [Vietnam], 80 Fed. Reg. 39,994 (Dep't Commerce July 13, 2015) ([ADD] orders) ("Vietnam ADD Order") (collectively, "Vietnam Orders").

As with the PRC Nails Order, the pertinent language from the Vietnam Orders states that the orders cover "[c]ertain steel nails ... of one piece construction or constructed of two or more pieces." Compare Vietnam CVD Order, 80 Fed. Reg. at 41,006 (citations omitted), and Vietnam ADD Order, 80 Fed. Reg. at 39,995 (citations omitted), with PRC Nails Order, 73 Fed. Reg. at 44,961.⁴ As such, the court requested the parties brief their respective positions on the relevance of OMG to the disposition of this action. See Letter Req. Suppl. Briefing, Sept. 8, 2020, ECF No. 93.

In their responses, all parties indicated that whether Midwest's anchors fall within the scope of the order should be reconsidered in light of OMG. See Def.’s Resp. Ct.’s Order on Suppl. Briefing, Nov. 3, 2020, ECF No. 97; Def.-Intervenor's Resp. Ct.’s Order on Suppl. Briefing, Nov. 3, 2020, ECF No. 98; Pl.’s Resp. Ct.’s Order on Suppl. Briefing, Nov. 4, 2020, ECF No. 99.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction over Plaintiff's challenge to Commerce's scope determination pursuant to section 516A of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2012),⁵ and 28 U.S.C. § 1581(c) (2012), which grant the court authority to review actions contesting scope determinations that find certain merchandise to be within the class or kind of merchandise described in an ADD or CVD order. See 19 U.S.C. § 1516a(a)(2)(B)(vi) ; 28 U.S.C. § 1581(c) (2012). The court will uphold Commerce's determination 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

The language of an antidumping duty order dictates its scope. See Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002) (" Duferco") (citing Ericsson GE Mobile Commc'ns, Inc. v. United States, 60 F.3d 778, 782 (Fed Cir. 1995) (" Ericsson GE Mobile")). Commerce's regulations authorize it to issue scope rulings to clarify whether a particular product is within the scope of an order. See 19 C.F.R. § 351.225(a). To determine whether a product is within the scope of an ADD order, Commerce looks at the plain language of that order. See Duferco, 296 F.3d at 1097. When considering the scope language, Commerce will take into account descriptions of the merchandise contained in: (1) the petition; (2) the initial investigation; and (3) past determinations by the Commission and by Commerce, including prior scope determinations (collectively "(k)(1) sources"). 19 C.F.R. § 351.225(k)(1) ; see also 19 C.F.R. § 351.225(d). When the (k)(1) sources are not dispositive, Commerce will initiate a formal scope inquiry and further consider:

(i) The physical characteristics of the product;

(ii) The expectations of the ultimate purchasers;

(iii) The ultimate use of the product;

(iv) The channels of trade in which the product is sold; and

(v) The manner in which the product is advertised and displayed.

19 C.F.R. § 351.225(k)(2).

Commerce has broad authority "to interpret and clarify its antidumping duty orders." Ericsson GE Mobile, 60 F.3d at 782 ; see also King Supply Co., LLC v. United States, 674 F.3d 1343, 1348 (Fed. Cir. 2012) (stating that "Commerce is entitled to substantial deference with regard to its interpretations of its own antidumping orders."). However, Commerce may not interpret an order "so as to change the...