United Steel and Fasteners v. United StatesUnited Steel and Fasteners v. United States
NED H. MARSHAK, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, New York, NY, argued for plaintiff-cross-appellant. Also represented by EDWARD B. ACKERMAN; KAVITA MOHAN, ANDREW THOMAS SCHUTZ, Washington, DC.
MICHAEL D. SNYDER, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by ROBERT EDWARD KIRSCHMAN, JR., PATRICIA M. MCCARTHY, JOSEPH H. HUNT; JESSICA DIPIETRO, NANDA SRIKANTAIAH, Office of Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.
Before MOORE, REYNA, and STOLL, Circuit Judges.
The United States Department of Commerce appeals the United States Court of International Trade‘s determination that
BACKGROUND
I. The ADD Order
Shakeproof Assembly Components Division of Illinois Tool Works Inc. (“Shakeproof“) is a U.S. domestic producer of lock washers. In 1992, Shakeproof filed a petition (the “Petition“) for the imposition of antidumping duties on imports of certain helical spring lock washers from China. After examining the Petition, Commerce initiated an antidumping investigation. Commerce determined that imports of certain helical spring lock washers from China were being sold at less than fair value, and on October 19, 1993, it issued the antidumping duty order at issue in this appeal. See Certain Helical Spring Lock Washers From the People‘s Republic of China, 58 Fed. Reg. 53,914 (Dep‘t of Commerce Oct. 19, 1993), as amended,
[C]ertain helical spring lock washers (HSLWs) are circular washers of carbon steel, of carbon alloy steel, or of stainless steel, heat-treated or non heat-treated, plated or non-plated, with ends that are off-line. HSLWs are designed to: (1) Function as a spring to compensate for developed looseness between the component parts of a fastened assembly; (2) distribute the load over a larger area for screws or bolts; and (3) provide a hardened bearing surface. The scope does not include internal or external tooth washers, nor does it include spring lock washers made of other metals, such as copper. The lock washers subject to this investigation are currently classifiable under subheading
7318.21.0000 of the Harmonized Tariff Schedule of the United States (HTSUS).
ADD Order,
II. Scope Ruling
United Steel and Fasteners, Inc., (“US&F“) is a U.S. importer of lock washers that meet the specifications of the American Railway Engineering and Maintenance-of-Way Association (“AREMA“).1 US&F imports the washers under HTSUS subheading
On April 9, 2013, US&F requested an official scope ruling from the United States Department of Commerce (“Commerce“) pursuant to
On July 8, 2013, without initiating a scope inquiry, Commerce issued a final scope ruling that US&F‘s washers are within the scope of the ADD Order based on the factors listed in
The CIT affirmed Commerce‘s scope ruling and reversed and remanded Commerce‘s retroactivity determination. Id. at 1247-48. The CIT determined that Commerce exceeded its regulatory authority by ordering retroactive suspension of liquidation back to 1993 and ordered that Commerce draft new suspension of liquidation instructions. Id. at 1248, 1255. On remand, Commerce issued new instructions to suspend liquidation on or after July 8, 2013, the date when Commerce issued the final scope ruling regarding US&F‘s washers. The CIT determined that Commerce‘s new suspension instructions complied with its remand order and entered judgment.
Commerce now appeals the CIT‘s judgment on retroactivity and US&F cross-appeals the CIT‘s affirmance of Commerce‘s scope ruling. We have jurisdiction under
DISCUSSION
We review decisions of the CIT de novo, applying the same substantial evidence standard the CIT uses in reviewing Commerce‘s antidumping duty determinations. AMS Assocs., Inc. v. United States, 737 F.3d 1338, 1342 (2013). We have consistently emphasized that Commerce is entitled to substantial deference when interpreting its own antidumping duty orders because the meaning and scope of such orders is within Commerce‘s particular expertise and special competence. King Supply Co., LLC v. United States, 674 F.3d 1343, 1348 (Fed. Cir. 2012) (citing Tak Fat Trading Co. v. United States, 396 F.3d 1378, 1382 (Fed. Cir. 2005); and Sandvik Steel Co. v. United States, 164 F.3d 596, 600 (Fed. Cir. 1998)). As a result, parties challenging Commerce‘s scope determinations under substantial evidence review confront a high barrier to reversal. Id. (quoting Nippon Steel Corp. v. United States, 458 F.3d 1345, 1352 (Fed. Cir. 2006)). That the evidence in the record could result in two inconsistent conclusions does not, alone, prevent Commerce‘s conclusion from being supported by substantial evidence. Id. (quoting Am. Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed. Cir. 2001)). Because the retroactivity issue depends upon whether US&F‘s washers are covered by the ADD Order, we address the scope ruling issue first.
When issues arise as to whether a product is within the scope of an antidumping duty order, Commerce “issues ‘scope rulings’ that clarify the scope of an order ... with respect to particular products.”
- (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.
US&F argues that its washers have a distinct design and function from helical spring lock washers subject to the scope of the ADD Order. Commerce responds that US&F‘s washers are “spring” washers, “helical” in nature, and function as lock washers, and, thus, within the scope of the ADD Order. As previously noted, the ADD Order covers “certain helical spring lock washers (HSLWs).” ADD Order at
In determining that US&F‘s washers are “helical,” Commerce looked to the Petition, a (k)(1) source, and concluded that “helical” means “both a description of appearance, i.e., in the form of a helix, and a spring-like attribute or locking function to prevent loosening which is present when the helix is compressed.” J.A. 391 (citing Petition at 5-6). Commerce then noted that the “pictures provided by US&F clearly show the helical aspect of AREMA washers.” J.A. 392 (citing US&F‘s Scope Request). Commerce also noted that “[a] significant portion” of helical spring lock washers of “larger sizes are used for installation of railroad tracks.” J.A. 392 (quoting Petition at 3). Commerce noted that this is precisely the type of application for which the US&F‘s washers are designed. Taken together, this is substantial evidence that supports Commerce‘s conclusion
US&F argues that Commerce failed to consider that US&F‘s washers are used only in the rail industry, unlike the helical spring lock washers subject to the ADD Order, which are used for mechanical applications, such as in machinery and vehicles. We reject this argument. Commerce acknowledged that US&F‘s washers are used for railways but that this trade usage did not exclude them from the scope of the ADD Order. Commerce explained that, given the language of the ADD Order and the Petition, the subject helical spring lock washer is not defined by a specific trade or industry but by its physical and functional “helical” characteristic. Moreover, as noted above, the Petition even mentions that a “significant” portion of larger sized helical spring lock washers are used for railway purposes, evincing that subject helical spring lock washers are used in the railway industry in addition to mechanical applications.
US&F next argues that Commerce improperly disregarded a “critical” physical difference between the cross-sections of the subject helical spring lock washers and US&F‘s washers, with the former being trapezoidal and the latter, rectangular. We disagree. Commerce explicitly acknowledged that “helical spring lock washers are generally designed with a trapezoidal cross section,” but that “this attribute does not change the basic function of the washer; it simply adds to the spring or locking function the helix provides.” J.A. 392. Commerce also noted that there was no evidence that helical spring lock washers were always trapezoidal.
US&F finally argues that Commerce failed to properly consider that its washers, certified pursuant to AREMA standards, were neither described in the Petition nor subject to the initial antidumping duty investigation in 1992. In particular, US&F argues that because the Petition and the investigation record reference the American Society of Mechanical Engineers (“ASME“) certification standards instead of the AREMA certification standards, this is evidence that its washers do not fall within the scope of the ADD Order. This argument is not persuasive. As Commerce explained, the language of the ADD Order, the Petition, and the record of the initial investigation did not specify that subject helical spring lock washers must be designed to meet ASME or any other specific industry specification or that lock washers designed to meet AREMA standards were excluded. Thus, the fact that AREMA certification standards were not described in the Petition or in the investigation record does not mean that US&F‘s AREMA washers are excluded from the scope of the ADD Order.
In sum, because we find that Commerce‘s scope determination is supported by substantial evidence, we affirm.
II. Retroactivity
The second issue on appeal concerns whether Commerce‘s retroactive suspension of liquidation was lawful. The parties do not dispute that, after Commerce issues a final affirmative scope ruling, Commerce may retroactively suspend liquidation for all unliquidated entries entered on or after the initiation date of the scope inquiry.
An agency‘s interpretation of its own ambiguous regulation is controlling unless it is “plainly erroneous or inconsistent with the regulation.” Auer v. Robbins, 519 U.S. 452, 461 (1997). The Supreme Court recently clarified in Kisor v. Wilkie that a court should not afford Auer deference unless “the regulation is genuinely ambiguous.” 139 S. Ct. 2400, 2415 (2019). “[I]f there is only one reasonable construction of a regulation ... then a court has no business to deferring to any other reading.” Id. If a genuine ambiguity remains, then the agency‘s reading must still be reasonable in order to receive Auer deference. Id.
Commerce‘s regulatory authority concerning suspension of liquidation following a final affirmative scope ruling is contained at
(3) If the Secretary issues a final scope ruling, under either paragraph (d) or (f)(4) of this section, to the effect that the product in question is included within the scope of the order, any suspension of liquidation under paragraph (l)(1) or (l)(2) of this section will continue. Where there has been no suspension of liquidation, the Secretary will instruct the Customs Service to suspend liquidation and to require a cash deposit of estimated duties, at the applicable rate, for each unliquidated entry of the product entered, or withdrawn from warehouse, for consumption on or after the date of initiation of the scope inquiry. If the Secretary‘s final scope ruling is to the effect that the product in question is not included within the scope of the order, the Secretary will order any suspension of liquidation on the subject product ended and will instruct the Customs Service to refund any cash deposits or release any bonds relating to this product.
Supporting our interpretation is AMS, in which we determined that identical language in another subsection of
Here, like in AMS, Commerce did not initiate a scope inquiry and yet issued instructions to CBP to retroactively suspend liquidation to October 19, 1993, the issuance date of the ADD Order. Thus, Commerce‘s instructions are “clearly inconsistent with the limited prospective authority provided” by
Even if
Here, the regulatory history of
Commerce argues that its interpretation of
Commerce also argues that its interpretation of
CONCLUSION
We hold that Commerce exceeded its regulatory authority under
AFFIRMED
COSTS
No costs.