Court: Court of Appeals for the Federal Circuit; July 12, 2002; Federal Appellate Court
The case involves Duferco Steel, Inc., which appeals a decision from the United States Court of International Trade regarding the interpretation of Department of Commerce orders related to antidumping and countervailing duties. Duferco, an importer of carbon steel floor plate from Belgium, argues that its product, featuring 'patterns in relief' for skid resistance, should not fall under the 1993 orders pertaining to cut-to-length carbon steel floor plate. The Court of International Trade ruled that Duferco's product was covered by the orders, citing that the original petitions included it and that the 1993 orders did not explicitly exclude such products, unlike universal mill plates. However, the appellate court finds that the interpretation used by Commerce contravenes basic administrative law principles and previous rulings. It asserts that scope orders can only include products if they explicitly state so or can be reasonably interpreted to do so, which was not established in the 1999 final scope ruling. Consequently, the appellate court reverses the lower court's decision.
American industries can seek relief from imported goods sold at less than fair value (dumped) or benefiting from foreign government subsidies. The U.S. Department of Commerce assesses whether these goods are sold at less than fair value or if subsidies exist, while the International Trade Commission (ITC) evaluates any resulting material injury to domestic industries. If both agencies find in the affirmative, Commerce issues antidumping and countervailing duty orders.
Antidumping investigations begin with a petition from domestic industries, which may be amended under certain conditions. Commerce has the authority to define the investigation's scope, ensuring it remains relevant as new information emerges. Initially, Commerce determines if the petition supports the allegations and if there is reasonable suspicion of unfair pricing. This leads to a preliminary and then final determination regarding the pricing of the subject merchandise, defined as the goods under investigation.
The ITC examines the material injury or threat to domestic industries. After final orders are issued, questions may arise about their scope, which are addressed through established regulatory procedures. Countervailing duty investigations parallel these processes but focus on the impact of subsidies from foreign governments on domestic industries.
On June 30, 1992, Bethlehem Steel Corporation and other domestic steel producers filed petitions with the Department of Commerce and the International Trade Commission (ITC) to impose antidumping and countervailing duties on cut-to-length carbon steel plate imported from Belgium. They argued that these imports were being sold below fair value and received government subsidies, causing "material injury" to the domestic industry. The petitions detailed the scope of the investigations, focusing on cut-to-length carbon steel plate, a type of flat-rolled carbon steel product, referencing the Harmonized Tariff Schedule of the United States (HTSUS) definition of flat-rolled products. This definition includes solid rectangular products and those with certain surface patterns, provided they do not change classification. The petitions also specified the dimensions of the products in question. Following this, in July 1992, investigations were initiated, with Commerce defining the subject merchandise as hot-rolled carbon steel universal mill plates and flat products in straight lengths. In August 1992, proposed product matching criteria were established to assist in identifying the covered merchandise, including a criterion regarding whether the products were "checkered," referring to raised patterns, which went unchallenged by the interested parties.
On November 25, 1992, petitioners amended their petitions following an inquiry from a foreign manufacturer regarding the inclusion of products with beveled edges in ongoing investigations. The amendments specified that 'carbon steel flat, rolled products with beveled edges or nonrectangular cross-section' were to be included. On January 25, 1993, the Department of Commerce published a memorandum proposing to broaden the investigation's scope to include nonrectangular cross-section products, despite these not being previously covered. After a preliminary investigation, Commerce determined that certain cut-to-length carbon steel plate from Belgium was likely being sold in the U.S. at less than fair value and identified subsidies provided to Belgian manufacturers of certain steel products. In July 1993, Commerce issued final scope determinations for the antidumping and countervailing duty investigations, reaffirming its preliminary findings. The Final AD Determination referenced Appendix I of the final Argentine antidumping duty determination to define the merchandise scope, which included 'Certain Cut-to-Length Carbon Steel Plate' and specified that the written descriptions of scope were authoritative. Appendix I explicitly included flat-rolled products of nonrectangular cross-section, particularly those modified post-rolling. It clarified that unless explicitly excluded, all products under the cited HTSUS items were included in the scope, and addressed the status of nonrectangular cross-section products, noting that the petitions did not exclude such products.
Commerce interpreted the petitioners' 1992 scope amendment to limit the scope to flat-rolled products with nonrectangular cross-sections modified after the rolling process, specifically those that have been "worked after rolling," such as beveled or rounded products. Only products with nonrectangular cross-sections formed after rolling are included in the investigations. Appendix I specifies that the scope orders encompass hot-rolled carbon steel universal mill plates, defined as flat-rolled products exceeding 150 millimeters in width, not exceeding 1,250 millimeters in width, and at least 4 millimeters thick, which are not in coils, devoid of relief patterns, and uncoated with any metal. Additionally, certain hot-rolled carbon steel flat-rolled products in straight lengths, also rectangular, must be a thickness of 4.75 millimeters or more, with a width exceeding 150 millimeters and measuring at least twice the thickness, are included.
On August 18, 1993, the International Trade Commission (ITC) determined that imports of certain subsidized flat-rolled carbon steel products were causing material injury to domestic industries. The ITC referenced Commerce's 1993 final antidumping and countervailing duty orders, which included non-rectangular cross-section plates shaped by hot-rolling processes. Duferco sought a scope ruling from Commerce on October 7, 1999, arguing that 'Cut-to-Length Carbon Steel Plate From Belgium' orders did not include hot-rolled floor plates with non-rectangular cross-sections created during rolling.
The focus of the proceedings was on whether Duferco's floor plates, characterized by 'patterns in relief' for skid resistance, fell within the scope of the orders. On November 22, 1999, Commerce ruled that these items were included under the 1993 final orders, despite acknowledging no explicit language in those orders that covered floor plates with patterns in relief. Commerce maintained that the original scope definition was decisive, as it did not specify exclusions for such patterns, indicating an intention to include textured surfaces.
Commerce supported its conclusion with three factors: the original petition referenced an HTSUS definition including products with rolling-derived patterns, no objections were raised regarding the inclusion of 'whether checkered or not' in product criteria, and unlike universal mill plates, there was no exclusionary language regarding patterns in relief in the 1993 orders. Duferco subsequently moved for a judgment on the agency record, and the Court of International Trade agreed with Commerce's scope ruling, particularly on the first two supporting factors. However, it found Commerce's reliance on the third factor concerning universal mill plates unreasonable, as the referenced language only defined universal mill plates and did not clarify the scope of investigation. Ultimately, the court upheld Commerce's ruling as supported by substantial evidence and compliant with the law, leading to the current appeal, with jurisdiction established under 28 U.S.C. § 1295(a)(5).
Significant deference is granted to Commerce's interpretation of scope orders, but such interpretations cannot alter the orders' terms or scope. The case addresses whether scope orders can cover merchandise not explicitly mentioned or reasonably inferable from the orders. The language of Appendix I specifies that only flat-rolled products with nonrectangular cross-sections achieved after rolling are included. Products with patterns in relief formed during the rolling process do not meet this criterion, as they are inherently nonrectangular. Commerce acknowledged that the patterns create a nonrectangular cross-section and that such features were not achieved post-rolling. In its 1999 ruling, Commerce relied on the original petitions’ references and the lack of specific exclusion but admitted the 1993 final orders lacked explicit language supporting its ruling. The Court of International Trade established that Commerce must first consider the petitions to determine scope, followed by examining related determinations and publications if ambiguity exists. However, the court's reasoning was challenged, asserting that the focus should be on whether the final orders included the merchandise rather than the petitions' initial coverage. The final scope is set by the order itself, emphasizing that absence of exclusion does not confer authority to include products outside the defined scope.
Scope orders in antidumping cases must be articulated in general terms, allowing the Commerce Department considerable discretion in their interpretation and clarification, as outlined in relevant regulations. Interpretation relies on the antidumping petition, factual findings, legal conclusions from investigations, and the preliminary order, but cannot replace the explicit language of the final order itself. The agency, not the petition initiators, is responsible for defining the scope of these final orders.
No claim exists in the 1999 final scope ruling that the 1993 final orders can be interpreted to encompass additional products. Court decisions consistently affirm that while clarifications of a final order's scope are permissible, alterations contrary to the order's language are not. For instance, in the Ericsson case, Commerce's attempt to clarify a cellular mobile telephone subassembly exclusion was deemed an impermissible modification, leading to the vacating of its scope ruling by the Court of International Trade. Similarly, in Eckstrom, the court emphasized that the final order's language is crucial for determining the subject merchandise, rejecting broader interpretations not supported by the order's terms.
Section 1677j of Title 19 further underscores the necessity of defining the scope of antidumping and countervailing duty orders based on their precise language, preventing circumvention through minor alterations to products. Congress has not allowed for the inclusion of products outside the explicit language of these orders, reinforcing that the language itself governs their scope.
Commerce improperly expanded the scope of the original 1993 final orders to include products not originally specified. The 1999 final scope ruling, which interpreted the 1993 orders to encompass imported floor plates with patterns derived from the rolling process, is deemed invalid. Consequently, the decision of the Court of International Trade is reversed. There are no costs associated with this ruling. Relevant references include the initiation of antidumping duty investigations and countervailing duty investigations for various steel products published in the Federal Register in 1992.
