OTR Wheel Eng'g, Inc. v. United States

901 F.Supp.2d 1375

OTR WHEEL ENGINEERING, INC., Plaintiff,

v. UNITED STATES, Defendant,Bridgestone Americas, Inc. and Bridgestone Americas Tire Operations, LLC, Intervenor Defendants.

Slip Op. 13–39. Court No. 11–00166.

United States Court of International Trade.

March 22, 2013.

Arthur K. Purcell, Donna L. Bade, Mark R. Ludwikowski, and Mark J. Segrist, Sandler, Travis & Rosenberg, PA, of New York, NY, for Plaintiff.

Alexander V. Sverdlov, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With him on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief were Daniel J. Calhoun and Matthew D. Walden, Attorneys, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Christopher T. Cloutier, Joseph W. Dorn, Prentiss L. Smith, and J. Michael Taylor, King & Spalding, LLP, Washington, DC, for Intervenor Defendants.

OPINION

RESTANI, Judge:

Previously, this matter was before the court on Plaintiff OTR Wheel Engineering, Inc.'s (“Plaintiff”) motion for judgment on the agency record pursuant to USCIT Rule 56.2. See OTR Wheel Eng'g, Inc. v. United States, 853 F.Supp.2d 1281, 1283 (CIT 2012). Plaintiff, an importer of pneumatic off-the-road (“OTR”) tires from the People's Republic of China (“PRC”), challenged the U.S. Department of Commerce's (“Commerce”) final scope ruling regarding an antidumping duty (“AD”) order ¹ and a countervailing duty (“CVD”) order ² (collectively the “Tire Orders”) covering certain pneumatic OTR tires from the PRC. See Antidumping Duty and Countervailing Duty Orders on Certain New Pneumatic Off–The–Road Tires from the People's Republic of China: Final Scope Ruling OTR Wheel Engineering, Inc., (Apr. 26, 2011), Pl.'s Rule 56.2(C)(3) App. of Admin. R. (“Pl.'s App.”), Ex. F (“ Final Scope Ruling ”).

The court ruled that Commerce lacked substantial evidence for its finding in the Final Scope Ruling that Plaintiff's tires did not fall within a scope exclusion to the Tire Orders for tires designed for turf, lawn, and garden application. OTR Wheel, 853 F.Supp.2d at 1290. The court further concluded that Plaintiff's request for the court to instruct Commerce to exclude the tires from the scope of the Tire Orders was not warranted. Id. Instead, the court remanded the matter to Commerce for a more in depth evaluation pursuant to the factors laid out in 19 C.F.R. § 351.225(k)(2).³Id.

Upon remand, Commerce employed the (k)(2) factors to conclude again that Plaintiff had not demonstrated that its tires fell within the scope exclusion. Final Redetermination Pursuant to Court Remand, (Nov. 9, 2010), App. of Docs Supporting Def.'s Resp. to Pl.'s Comments on Final Redetermination Pursuant to Ct. Remand, Tab 8 (“ Remand Results ”). Because Commerce complied with the court's remand instructions by providing a more thorough analysis under section 351.225(k)(2) and because Plaintiff's objections are without merit, the court sustains the Remand Results.

BACKGROUND

In September 2008, Commerce imposed the Tire Orders on certain new pneumatic OTR tires from the PRC.⁴ The identical scope language of the Tire Orders included:

new pneumatic tires designed for off-the-road (OTR) and off-highway use, subject to exceptions identified below.... The vehicles and equipment for which certain OTR tires are designed for use include, but are not limited to: (1) Agricultural and forestry vehicles and equipment, including agricultural tractors, combine harvesters, agricultural high clearance sprayers, industrial tractors, log-skidders, agricultural implements, highway-towed implements, agricultural logging, and agricultural, industrial, skid-steers/mini-loaders; (2) construction vehicles and equipment, including earthmover articulated dump products, rigid frame haul trucks, front end loaders, dozers, lift trucks, straddle carriers, graders, mobile cranes, compactors; and (3) industrial vehicles and equipment, including smooth floor, industrial, mining, counterbalanced lift trucks, industrial and mining vehicles other than smooth floor, skid-steers/mini-loaders, and smooth floor off-the-road counterbalanced lift trucks. The foregoing list of vehicles and equipment generally have in common that they are used for hauling, towing, lifting, and/or loading a wide variety of equipment and materials in agricultural, construction and industrial settings. Such vehicles and equipment, and the descriptions contained in the footnotes are illustrative of the types of vehicles and equipment that use certain OTR tires, but are not necessarily all-inclusive. While the physical characteristics of certain OTR tires will vary depending on the specific applications and conditions for which the tires are designed (e.g., tread pattern and depth), all of the tires within the scope have in common that they are designed for off-road and off-highway use. Except as discussed below, OTR tires included in the scope of the order range in size (rim diameter) generally but not exclusively from 8 inches to 54 inches.

AD Order, 73 Fed. Reg. at 51,624–25 (footnotes with definitions omitted). The Tire Orders also excluded certain tires from the scope including, “tires of a kind designed for use on ... vehicles for turf, lawn and garden ... applications.” Id. at 51,625.

In February 2011, Plaintiff filed a scope ruling request, asking Commerce to find that Trac Master and Traction Master tires imported by Plaintiff fall within this exclusion. Scope Ruling Request: OTR Wheel Engineering, Inc. Lawn & Garden Tires, (Feb. 11, 2011) Pl.'s App., Ex. A, at 4. Plaintiff argued that the plain scope language was dispositive in excluding Plaintiff's Trac Master and Traction Master tires. Id. Bridgestone Americas, Inc. and Bridgestone Americas Tire Operations, LLC (collectively “Bridgestone”) filed comments opposing Plaintiff's exclusion request.⁵

In April 2011, Commerce issued its Final Scope Ruling, finding that the tires were not excluded from the Tire Orders. Final Scope Ruling at 8. Pursuant to 19 C.F.R. § 351.225(k)(1), Commerce stated that it found the description of the merchandise contained in the petition, the initial investigation, and the determinations of the Secretary of Commerce and the ITC to be dispositive. Id. at 6. Using data from the Tire and Rim Association (“TRA”) and the ITC's injury determination, Commerce decided that tires with R–1 and R–4 type treads, like Plaintiff's, are used for farming, light industrial service, and highway mowing and therefore are not excluded from the scope of the Tire Orders. Id. at 7–8. As a result, Commerce found it unnecessary to conduct further analysis considering the additional factors contained in 19 C.F.R. § 351.225(k)(2). Id. at 5. Plaintiff did not argue that its tires fall outside the general scope of the Tire Orders, merely that they are within the exclusion for turf, lawn, and garden applications. See OTR Wheel, 853 F.Supp.2d at 1285.

Pursuant to the court's remand in OTR Wheel, Commerce conducted a more expansive analysis under 19 C.F.R. § 351.225(k)(2). See Remand Results at 12–23. After agreeing with the court's opinion that the analysis under 19 C.F.R. § 351.225(k)(1) was not dispositive of whether the Trac Master and Traction Master tires were “designed for use” on vehicles for turf, lawn, and garden applications, Commerce undertook the five-factor (k)(2) test. Remand Results at 11. Guided by new record evidence regarding the physical characteristics of the tires and the way in which Plaintiff marketed its tires and consumers used the tires, Commerce concluded that the tires do not fall within the scope exclusion. Id. at 18.

Plaintiff again challenges Commerce's findings, citing errors in Commerce's 19 C.F.R. § 351.225(k)(2) analysis and requesting reevaluation under 19 C.F.R. § 351.225(k)(1). See Comments on Final Results of Redetermination Pursuant to Court Remand (“OTR Comments”) at 24. Defendant United States (“Defendant”) responds that Commerce's determination was supported by substantial evidence, and the record fails to establish that Plaintiff's tires are “unambiguously designed for use on vehicles for turf, lawn, and garden appliances.” Def.'s Resp. to Pl.'s Comments (“Def.'s Resp.”) at 18. Defendant therefore requests that the court sustain Commerce's Remand Results. Id.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). Commerce's final scope determination will be upheld unless it is found “to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

Plaintiff submits that the scope question may be resolved under a (k)(1) analysis in light of the recent decision in Legacy Classic Furniture, Inc. v. United States, 867 F.Supp.2d 1321 (CIT 2012).⁶ OTR Comments at 21–22. Plaintiff also argues that, should the court find that a (k)(2) analysis is necessary, Commerce's redetermination is not supported by substantial evidence. Id. In Plaintiff's opinion, “it appears that the Department has additional arbitrary and capricious distinctions in store with which to unlawfully enlarge the scope of the subject Tire Orders.” Id. at 4.

I. Reconsideration of (k)(1) Criteria

Plaintiff argues that the court should revisit the (k)(1) analysis in light of Legacy Classic. OTR Comments at 20–24. Plaintiff claims that because the Tire Orders' exclusion of tires for “turf, lawn, and garden” applications is unqualified, the exclusion applies to all tires designed for such use, even if those tires may also be designedfor other uses. Id. Defendant successfully counters this assertion on exhaustion grounds. Def.'s Resp. at 6–8. Legacy Classic was issued in September 2012. Assuming arguendo Legacy Classic altered the legal landscape, Plaintiff was required to raise...