TMB 440AE, Inc. v. United States

TMB 440AE, INC. (FORMERLY KNOWN AS ADVANCE ENGINEERING CORPORATION), Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 20-44 Court No. 18-00095

UNITED STATES COURT OF INTERNATIONAL TRADE

April 6, 2020

Before: Jane A. Restani, Judge

OPINION AND ORDER

[Commerce's Final Results of Remand Redetermination are remanded]

Ned H. Marshak, Jordan C. Kahn , and David M. Murphy, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of New York, NY and Washington D.C., and Dale E. Stackhouse and Meghann C. T. Supino, Ice Miller LLP, of Indianapolis, IN for Plaintiff TMB 440AE, Inc.

Elizabeth Speck, Senior Trial Counsel, Civil Division, U.S. Department of Justice, of Washington D.C., for the defendant. With them on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Vania Wang, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Restani, Judge: Before the court is the United States Department of Commerce's ("Commerce") Final Results of Remand Redetermination, ECF No. 44-1 (Nov. 11, 2019) ("Remand Results") following the court's opinion and order in TMB 440 AE, Inc. v. United States, 399 F. Supp. 3d 1314 (CIT 2019) ("Remand Order"). The court ordered Commerce to reconsider its decision finding that seamless pipe imported by TMB 440AE, Inc. (formerly known as Advance Engineering Corporation) ("AEC") was within the scope of antidumping and countervailing duty orders on certain seamless pipe from the People's Republic of China ("PRC"). Id. at 1316; see also Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from the People's Republic of China: Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order, 75 Fed. Reg. 69,052 (Dep't Commerce Nov. 10, 2010) ("ADD Order"); Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from the People's Republic of China: Amended Final Affirmative Countervailing Duty Determination and Countervailing Duty Order, 75 Fed. Reg. 69,050 (Dep't Commerce Nov. 10, 2010) ("CVD Order") (collectively, the "Orders"). The court required Commerce to consider the sources listed in 19 C.F.R. § 351.225(k)(1)¹ ("(k)(1) sources") in making its assessment of the scope of the Orders and to proceed to consider the factors listed in 19 C.F.R. § 351.225(k)(2) ("(k)(2) factors") if these sources were not dispositive. Remand Order at 1322. Following remand, and after consulting those (k)(1) sources, at least in part, Commerce continues to find that AEC's pipe is within the scope of the orders. See Remand Results at 5. For the reasons stated below, Commerce's decision is remanded.

BACKGROUND

The court presumes familiarity with the facts of this case and will recount them only as necessary. The Orders cover certain seamless pipe from the PRC,² but exclude:

(1) All pipes meeting aerospace, hydraulic, and bearing tubing specifications; (2) all pipes meeting the chemical requirements of ASTM A-335, whether finished or unfinished; and (3) unattached couplings. Also excluded from the scope of the order are all mechanical, boiler, condenser and heat exchange tubing, except when such products conform to the dimensional requirements, i.e., outside diameter and wall thickness of ASTM A-53, ASTM A-106 or API 5L specifications.

ADD Order, 75 Fed. Reg. at 69,052-53; CVD Order, 75 Fed. Reg. at 69,051. AEC was not identified by petitioning domestic industry during the underlying investigations by Commerce and the U.S. International Trade Commission ("ITC") and did not participate in the creation of the Orders. Although the Orders were issued on November 10, 2010, AEC did not receive a Notice of Action from United States Customs and Border Protection until October 3, 2016, informing AEC that it was subject to duties pursuant to the Orders. See Remand Results at 27. AEC requested a scope ruling from Commerce on October 20, 2017. Id. at 3.

AEC contended that its pipe either (1) properly fell within the "aerospace exclusion" because its pipe is threaded to meet a particular aerospace threading standard following importation or (2) should be excluded because its pipe is specialized, and the Orders are intended to apply solely to commodity pipe. See Remand Order at 1319. Without consulting the (k)(1) sources, Commerce determined that the Orders were unambiguous and clearly included AEC's pipe. Id. at 1320. The court held that Commerce was required to consult these sources to determine whether AEC pipe was properly included in the scope of the Orders and remanded for reconsideration. Id. at 1322.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012).³ The court has authority to review Commerce's decision that merchandise falls within an antidumping or countervailing duty order. 19 U.S.C. § 1516a(a)(2)(B)(vi). Commerce's 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). "The results of a redetermination pursuant to court remand are also reviewed for compliance with the court's remand order." Xinjiamei Furniture (Zhangzhou) Co. v. United States, 968 F. Supp. 2d 1255, 1259 (CIT 2014) (internal quotation and citation omitted).

"Scope 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." Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1089 (Fed. Cir. 2002). Further, Commerce has the authority to clarify the scope of a prior order, but it cannot interpret an order "in a way contrary to its terms." Whirlpool Co. v. United States, 890 F.3d 1302, 1308 (Fed. Cir. 2018) (internal quotation and citation omitted).

DISCUSSION

By the text of the Orders alone without the context of the investigation, AEC pipe would appear to fall within their scope. On remand, Commerce considered the (k)(1) sources to ascertain the intended meaning of "aerospace specifications," Remand Results at 6-12, and the ASTM A-335 exclusion, id. at 16-18, and found that AEC's pipe was not within either. Id. AEC argues that the remand redetermination is not supported by substantial evidence because the (k)(1) sources do not support Commerce's narrow reading of the "aerospace specifications"exclusion and because the (k)(1) sources reveal that specialized pipe was not meant to be included in the scope of the Orders. Pl.'s Cmts. On Final Remand Redetermination, ECF No. 47 at 8-26 (Jan. 9, 2020) ("AEC Br."). In the alternative, AEC argues that the (k)(1) sources do not clarify the Orders and that Commerce was required to conduct a full scope inquiry and consider the factors listed in 19 C.F.R. § 351.225(k)(2). Finally, if AEC pipe is found within the scope of the Orders, AEC contends that the agency cannot impose antidumping and countervailing duties retroactively. Id. at 26-33.

I. "Aerospace Specifications" Exclusion

Commerce claims that the "aerospace specifications" exclusion originated during the investigation following a recommendation made by Salem Steel North America LLC ("Salem Steel") to exclude "aviation tubing" from the Orders. Remand Results at 7-8. In a subsequent letter, Salem Steel⁴ elaborated that "[a]viation, or aerospace material, seamless tubing" all "must conform to certain Aerospace Material Specifications" and that this included producing tubing to the "AMS-T-6736A standard," which requires the use of "one of two specific alloys - either 4130 chromium molybdenum steel alloy or 8630 alloy." Letter from Dorsey & Whitney LLP to the Sec'y of Commerce on behalf of Salem Steel re "Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from the People's Republic of China; Response to CommerceDepartment's June 23 Proposal to Change Scope Language to Exclude Mechanical Tubing," A-570-956, C-570-957, at 6-7 (June 30, 2010) ("Salem Steel June 30 Letter")). Commerce further contends, based on the same documents, that the aerospace exclusion was meant to apply "only to CD mechanical tubing," which additionally requires adherence to AMS2253E, a standard defining dimensional tolerances for mechanical tubing. Remand Results at 8-9 & n.22 (citing Salem Steel June 30 Letter, at 7). Given the absence of other record information about aerospace specifications, Commerce states that it "implicitly accepted Salem Steel's description of aerospace standards," which meant adopting AMS-T-6736A as defining the chemical requirements and AMS2253E as defining the dimensional requirements of pipe meeting "aerospace specifications" for the purposes of the exclusion. Id. at 11.

According to Commerce, AEC pipe does not satisfy these requirements as it does not contain the requisite percent of molybdenum or chromium to satisfy the AMS-T-6736A standard and does not meet the "tight dimensional requirements" to meet the AMS 2253E standard. Id. at 12-13. Commerce rejected AEC's contention that the threading its pipe undergoes after importation, which meets aerospace threading standard SAE AS71051B, requires Commerce to find that the pipe fits within the "aerospace specification" exclusion. Id. at 13-15.

AEC asserts that Commerce is "invent[ing] a definition that never existed on the record" and that it is now improperly defines "aerospace specifications" too narrowly. AEC Br. at 8. It asserts that Salem Steel never purported to define the term. Id. at 8-9. Further, rather than implicitly accepting Salem Steel's proposal, Commerce rejected Salem Steel's proposed exclusion language, "seamless aviation tubing conforming to AMS-T-6736A and AMS 2253E," in favor of the broader standard evinced by all pipes meeting aerospace, hydraulic, and bearing tubing specifications. See id. at 14 (citing Salem Steel June 30 Letter, at 9). AEC continues...