Star Pipe Products v. United States ( 2020 )

Case: 19-2381 Document: 73 Page: 1 Filed: 11/30/2020
United States Court of Appeals
for the Federal Circuit
______________________
STAR PIPE PRODUCTS,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2019-2381
______________________
Appeal from the United States Court of International
Trade in No. 1:17-cv-00229-MAB, Judge Mark A. Barnett.
______________________
Decided: November 30, 2020
______________________
KAVITA MOHAN, Grunfeld, Desiderio, Lebowitz, Silver-
man & Klestadt LLP, Washington, DC, argued for plaintiff-
appellant. Also represented by FRANCIS J. SAILER, ANDREW
THOMAS SCHUTZ; NED H. MARSHAK, DAVID M. MURPHY,
New York, NY.
PATRICIA M. MCCARTHY, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for defendant-appellee. Also
represented by ELIZABETH ANNE SPECK, JEFFREY B. CLARK,
JEANNE DAVIDSON; DANIEL CALHOUN, WILLIAM MITCHELL
PURDY, Office of the Chief Counsel for Trade Enforcement
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2 STAR PIPE PRODUCTS v. UNITED STATES
and Compliance, United States Department of Commerce,
Washington, DC.
______________________
Before O’MALLEY, REYNA, and CHEN, Circuit Judges.
Opinion for the court filed by Circuit Judge CHEN.
Opinion concurring-in-part and dissenting-in-part filed by
Circuit Judge REYNA.
CHEN, Circuit Judge.
Star Pipe Products (Star Pipe) appeals from a judg-
ment of the Court of International Trade (Trade Court) up-
holding the Department of Commerce’s (Commerce)
interpretation of an antidumping order on steel threaded
rod (STR) from the People’s Republic of China. The Trade
Court held that the STR components included in certain
Joint Restraint Kits imported by Star Pipe were subject to
the order. The Trade Court further denied as moot Star
Pipe’s challenge to a liquidation instruction issued from
Commerce to U.S. Customs and Border Protection (CBP)
following Commerce’s interpretation of the order. We af-
firm.
BACKGROUND
When participants in a domestic industry believe that
competing foreign goods are being sold in the United States
at less than their fair value, they may petition Commerce
to impose antidumping duties on the foreign goods. After
investigation and related proceedings before the Interna-
tional Trade Commission (ITC), Commerce issues an anti-
dumping duty order if “the subject merchandise is being, or
is likely to be, sold in the United States at less than its fair
value.” 19 U.S.C. §§ 1673(d)–(e). This order “includes a de-
scription of the subject merchandise, in such detail as
[Commerce] deems necessary.” 19 U.S.C. § 1673e(a)(2).
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STAR PIPE PRODUCTS v. UNITED STATES 3
Importers may seek a “scope ruling” clarifying whether
their products meet the “description of the subject mer-
chandise” set forth in an antidumping order. 19
C.F.R. § 351.225(a), (c). This case presents the question of
whether subject merchandise meeting the literal “descrip-
tion” in the antidumping order can nevertheless be ex-
cluded from that order because the subject merchandise is
packaged and imported together with non-subject mer-
chandise. Such combinations of non-subject and otherwise-
subject merchandise are referred to as “mixed media”
items.
The antidumping order at issue here is directed to cer-
tain STR imported from China. See Certain Steel Threaded
Rod from the People’s Republic of China, 74 Fed. Reg.
17,154 (Dep’t of Commerce Apr. 14, 2009) (STR Order). In
the order, Commerce described in detail the physical char-
acteristics of the STR, including shape, finish, construc-
tion, and metallurgical requirements. Id. at 17,154–55.
Commerce also prescribed several exclusions for merchan-
dise that, although would otherwise meet the order’s “de-
scription” of subject merchandise, would not be considered
subject merchandise. Id. at 17,155. None of these exclu-
sions relate to mixed media items.
On October 5, 2016, Star Pipe requested a scope ruling
to clarify whether its Joint Restraint Kits are within the
scope of the STR Order. J.A. 45–58. “These Joint Restraint
Kits are used in the water and wastewater industry to con-
nect and secure pipes and to bolt together pipe joints, so
that the pipe joints form a water[-]tight restraint to main-
tain the free and controlled flow of water/[wastewater].”
J.A. 46. The Joint Restraint Kits consist of a combination
of castings, bolts, bolt nuts, washers, and STR components,
which Star Pipe conceded “if imported alone, would be cov-
ered under the scope of the [STR] Order.” Id. (emphasis in
original). Star Pipe contended that its Joint Restraint Kits
should be excluded from the STR Order because the STR
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4 STAR PIPE PRODUCTS v. UNITED STATES
components were merely incidental components used to se-
cure the castings. J.A. 46–47.
On July 31, 2017, Commerce issued its scope ruling,
concluding that the STR components within Star Pipe’s
Joint Restraint Kits are within the scope of the STR Order.
Commerce explained that its inquiry was guided by the
framework set forth by our court in Mid Continent Nail
Corp. v. United States, 725 F.3d 1295 (Fed. Cir. 2013)
(MCN). Because Star Pipe had conceded that the STR com-
ponents of its Joint Restraint Kits are themselves subject
merchandise covered by the scope of the STR Order, Com-
merce under the MCN framework proceeded to consider
whether those STR components should be excluded be-
cause they are packaged with other components in the
Joint Restraint Kits. Commerce found nothing in the STR
Order or its history indicating that otherwise-subject mer-
chandise should be treated differently due to its packaging
with other merchandise. J.A. 263. Commerce further
noted that both the petition and an ITC ruling leading to
the STR Order emphasized that STR can be used in the
same waterworks applications for which Star Pipe’s Joint
Restraint Kits are intended. Id.; see also Certain Steel
Threaded Rod from China, USITC Inv. No. 731-TA-1145
(Apr. 2009). Commerce thus concluded that, under the
MCN framework, Star Pipe’s STR components are pre-
sumptively within the scope of the STR Order. J.A. 263.
Commerce next considered whether the MCN pre-
sumption might be overcome on the basis of prior scope rul-
ings on an unrelated antidumping order relating to pencils.
J.A. 263; see also Certain Cased Pencils from the People’s
Republic of China, 59 Fed. Reg. 66,909 (Dep’t of Commerce
Dec. 28, 1994) (Pencils Order). Star Pipe had argued that
these Pencils Order scope rulings established a clear stand-
ard as to how Commerce handles mixed media items in the
context of scope rulings and, accordingly, the STR Order
should be read to include an implicit exception for mixed
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STAR PIPE PRODUCTS v. UNITED STATES 5
media. Finding that each of these Pencils Order scope rul-
ings were “based on the facts and circumstances in that
particular case, and did not identify a mixed media stand-
ard,” Commerce concluded that these rulings did not “sup-
port[] an interpretation of the scope of the [STR] Order that
is contrary to its literal language.” J.A. 263–64.
Following its scope ruling, Commerce issued an in-
struction to CBP to:
Continue to suspend liquidation 1 of entries of steel
threaded rod from the People’s Republic of China,
including the steel threaded rod components of
Star Pipe Products’ Joint Restraint Kits, imported
by Star Pipe Products and described above, subject
to the antidumping duty order on steel threaded
rod from the People’s Republic of China.
J.A. 281. On August 21, 2017, Star Pipe requested clarifi-
cation from Commerce as to whether the above liquidation
instruction was intended to apply antidumping duties to
STR components entered prior to the date of initiation of
the scope inquiry. J.A. 278. The pre-initiation entries of
STR components at issue were not suspended at the time
of Commerce’s scope ruling. CBP thus proceeded to liqui-
date those entries pursuant to 19 C.F.R. § 351.225(l)(3), 2
1 Suspension of liquidation is the postponement of
“the final computation or ascertainment of duties on en-
tries.” 19 C.F.R. § 159.1 (defining “liquidation”); id.
§ 351.102(b)(50).
2 19 C.F.R. § 351.225(l)(3) states, in relevant part:
“Where there has been no suspension of liquidation, the
Secretary will instruct the Customs Service to suspend liq-
uidation 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
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6 STAR PIPE PRODUCTS v. UNITED STATES
which prescribes suspension of liquidation for imports en-
tered “on or after the date of initiation of the scope inquiry,”
but not for imports entered prior to the date of initiation of
the scope inquiry.
Star Pipe also challenged Commerce’s scope ruling be-
fore the Trade Court. The Trade Court assumed jurisdic-
tion over the matter on August 30, 2017, before Commerce
responded to Star Pipe’s request for clarification of the liq-
uidation instruction. On October 3, 2017, the Trade Court
granted a preliminary injunction enjoining the liquidation
of unliquidated entries of Star Pipe’s joint restraint kits.
Before the Trade Court, Star Pipe challenged Com-
merce’s ruling that Star Pipe’s STR components were sub-
ject to the antidumping order. Star Pipe also challenged
Commerce’s instruction to CBP to “continue to suspend liq-
uidation” as a violation of 19 C.F.R. § 351.225(l)(3) be-
cause, in Star Pipe’s view, the instruction required duties
to be assessed on unliquidated entries that had been en-
tered prior to the initiation of the scope inquiry. The Trade
Court upheld Commerce’s ruling that Star Pipe’s STR com-
ponents were subject to the STR Order and found Star
Pipe’s challenge to Commerce’s liquidation instruction to
be moot because the entries at issue had already been liq-
uidated without assessment of antidumping duties. Star
Pipe appeals to this court, and we have jurisdiction under
28 U.S.C. § 1295(a)(5).
DISCUSSION
I. Commerce’s Scope Ruling
“We review the Trade Court de novo, applying the same
substantial-evidence standard of review that it applies in
reviewing Commerce’s determinations.” MCN, 725 F.3d at
consumption on or after the date of initiation of the scope
inquiry.” (emphasis added).
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STAR PIPE PRODUCTS v. UNITED STATES 7
1300. We afford “‘significant deference to Commerce’s in-
terpretation of a scope order,’ so long as Commerce’s inter-
pretation is not ‘contrary to the order’s terms’ and does not
‘change the scope of the order.’” Id. (citing Glob. Commod-
ity Grp. LLC v. United States, 709 F.3d 1134, 1138 (Fed.
Cir. 2013)).
In MCN, we set forth a particularized framework to
guide Commerce in interpreting the scope of its antidump-
ing orders as to mixed media items. Id. at 1302–03. First,
Commerce is to “determine whether the potentially-subject
merchandise included within the mixed media item is
within the literal terms of the antidumping order.” Id. at
1302. Second, if the merchandise is within the literal terms
of the order, Commerce should “determine whether the in-
clusion of that merchandise within a mixed media item
should nonetheless result in its exclusion from the scope of
the order.” Id.
The first stage of the MCN framework focuses on the
“subject merchandise” of the antidumping order—here,
whether the STR components of Star Pipe’s Joint Restraint
Kits meet the description of STR set forth in Commerce’s
antidumping order. “[T]he procedure for conducting this
inquiry is specified in our cases and Commerce’s regula-
tions,” and begins with “the language of the final order.”
Id. If the language of the final order is ambiguous as to
whether Star Pipe’s STR components are in-scope, then
Commerce under its regulations must consider the “(k)(1)”
materials: “[t]he descriptions of the merchandise contained
in the petition, [Commerce’s] initial investigation, and the
[prior] determinations of [Commerce] (including prior
scope determinations) and the [International Trade] Com-
mission.” Id. (citing 19 C.F.R. § 351.225(k)(1)). If, in turn,
“the (k)(1) materials are not dispositive, Commerce then
considers the (k)(2) criteria: ‘[t]he physical characteristics
of the product,’ ‘[t]he expectations of the ultimate purchas-
ers,’ ‘[t]he ultimate use of the product,’ ‘[t]he channels of
trade in which the product is sold,’ and ‘[t]he manner in
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8 STAR PIPE PRODUCTS v. UNITED STATES
which the product is advertised and displayed.’” Id. (citing
19 C.F.R. § 351.225(k)(2)).
This first stage of the MCN framework concludes with
a determination of whether the subject merchandise falls
within the literal scope of the order. Here, it is undisputed
that Star Pipe’s STR components are within the literal
scope of the STR Order. Appellant’s Br. at 5 (“Star Pipe
recognizes that the component STR included as part of the
Joint Restraint Kits themselves would be in scope if
imported alone.”). In this instance, then, there was no need
to consult either the (k)(1) materials or the (k)(2) criteria in
making this determination. The question then is whether
Commerce should nevertheless exclude that otherwise-
subject merchandise from the scope of the order because it
is packaged with non-subject merchandise.
To answer the question of whether the order may be
reasonably interpreted to include an exception for mixed
media sets, Commerce must again begin with the language
of the order itself. MCN, 725 F.3d at 1303. Where the or-
der itself does not provide such an exception, Commerce
must turn to the “history of the antidumping order,” i.e.,
the petition and Commerce’s initial investigation. Id. If
the order’s history likewise fails to establish that subject
merchandise should be treated differently on the basis of
its inclusion within a mixed media set, then “a presump-
tion arises that the included merchandise is subject to the
order.” Id. at 1304. Star Pipe does not contend that the
STR Order or its history provides an exception for mixed
media. The MCN presumption thus applies. 3
3 Moreover, as Commerce emphasized, the STR Or-
der’s history suggests that it was intended to encompass
STR used in waterworks applications such as Star Pipe’s
Joint Restraint Kits. J.A. 262–63. The petition and the
ITC ruling leading to the STR Order emphasized that the
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STAR PIPE PRODUCTS v. UNITED STATES 9
The MCN presumption arises because “the primary
source in making a scope ruling is the antidumping order
being applied,” and “although the scope of a final order may
be clarified, it [cannot] be changed in a way contrary to its
terms.” Id. (citing Walgreen Co. of Deerfield, IL v. United
States, 620 F.3d 1350, 1356 (Fed. Cir. 2010) and Duferco
Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir.
2002)). Although Commerce “enjoys substantial freedom
to interpret and clarify its antidumping orders,” Novosteel
SA v. United States, 284 F.3d 1261, 1269 (Fed. Cir. 2002),
that freedom is limited to interpretations that are reason-
able, reflecting the due-process principle that agencies
must “provide regulated parties fair warning of the conduct
[the order or regulation] prohibits or requires,” MCN, 725
F.3d at 1300–01 (citing Christopher v. SmithKline Bee-
cham Corp., 567 U.S. 142, 156 (2012) (internal quotations
omitted)).
“Published guidance issued prior to the date of the orig-
inal antidumping order” may suffice to overcome the pre-
sumption that the literal language of an antidumping order
governs in mixed media cases. MCN, 725 F.3d at 1304.
But, as we explained, such guidance must provide a clear
and ascertainable standard sufficient to “allow importers
to predict how Commerce would treat their mixed media
products.” Id. at 1305. Set against the backdrop of an or-
der’s silence on mixed media and the determination that
the subject merchandise is within the literal terms of the
order, any attempt to carve out a mixed media exception
faces an uphill climb to “interpret[] the order contrary to
its literal language.” Id. at 1304.
STR Order encompasses STR for “bolting together pipe
joints in the waterworks industry.” Id. Likewise, Star
Pipe’s STR components are packaged in Joint Restraint
Kits “used in the water and wastewater industry to connect
and secure pipes and to bolt together pipe joints.” J.A. 46.
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10 STAR PIPE PRODUCTS v. UNITED STATES
One source of such published guidance may be found in
Commerce’s scope determinations, if published prior to the
date of the antidumping order. Id. Star Pipe argues, as it
did at the scope inquiry before Commerce, that Commerce’s
decisions in five scope rulings 4 specific to the Pencils Order
provided clear notice that Commerce intended all anti-
dumping orders to include an unstated mixed media excep-
tion in which the mixed media is evaluated based on the
(k)(2) criteria. Specifically, Star Pipe contends that, in
these prior Pencils Order scope rulings, Commerce estab-
lished that the STR Order contains an unstated exception
for “incidental components (which, standing alone, would
be subject merchandise) contained in mixed media sets.”
Appellant’s Br. at 29–30. We have already rejected this
view of the Pencils Order scope rulings.
Commerce has not uniformly applied a particular test
in determining whether to focus its inquiry on the subject
merchandise (here the STR components) or the mixed me-
dia set as a whole (here the Joint Restraint Kits). As we
explained in MCN, Commerce’s scope rulings, including
the Pencils Order scope rulings, have been “ad hoc deter-
minations” that “lack clarity” and do not establish “‘formal
definition[s],’ ‘generally applicable criteria,’ or ‘bright line
rule[s]’ for conducting mixed media inquiries.” MCN, 725
F.3d at 1305 (citing Walgreen, 620 F.3d at 1355–56). In
MCN, Commerce “concede[d] that these ad hoc determina-
tions provided no ascertainable standard that would allow
importers to predict how Commerce would treat their
mixed media products, and that it ‘ha[d] not previously pro-
vided a complete listing of the factors it may consider when
conducting a mixed[] media analysis.’” Id.
In Walgreen, Commerce did not address whether a
component in that case was merely “incidental” to a mixed
4 For these Pencils Order scope rulings, see Appel-
lant’s Opening Br. at 30–31.
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STAR PIPE PRODUCTS v. UNITED STATES 11
media set. Instead, Commerce evaluated as a threshold
matter whether the mixed media set (a gift bag) was a
unique product or a mere aggregation of components, con-
cluding that Walgreen’s gift bag was the latter. See 620
F.3d at 1355; see also Final Scope Ruling: Antidumping
Duty Order on Certain Tissue Paper from the People’s Re-
public of China, U.S. Dep’t of Commerce Memorandum
from James C. Doyle, Director, Office 9, to Stephen J.
Claeys, Deputy Assistant Secretary for Import Administra-
tion, Scope Inquiry No. A–570–894 (Sept. 19, 2008). On the
basis of that determination, Commerce focused its scope in-
quiry on the tissue paper that fell within the literal scope
of the order rather than the gift bag as a mixed media set.
Id. at 1356–57.
In another prior scope ruling on whether a camping set
was subject to an antidumping order on certain porcelain-
on-steel items used for cooking, Commerce likewise focused
its inquiry on the cooking-ware components of the camping
set, as opposed to the camping set as a whole. Recommen-
dation Memo—Final Scope Ruling on the Request by
Texsport for Clarification of the Scope of the Antidumping
Duty Order on Porcelain–on–Steel Cooking Ware from the
People’s Republic of China, U.S. Dep’t of Commerce Memo-
randum from Richard Moreland, Director, Office of Anti-
dumping Compliance, to Joseph A. Spetrini, Deputy
Assistant Secretary for Compliance, Scope Inquiry No. A–
570–506 (Aug. 8, 1990) (Texsport). In Texsport, Commerce
assigned duties to the cooking-ware components (a frying
pan, stew pot, and coffee pot) and declined to assign duties
to the kitchenware components (plates and cups), without
consulting the (k)(2) criteria or addressing why the compo-
nents should be evaluated individually instead of in the
context of their packaging with non-subject merchandise.
Id.
Walgreen and Texsport thus undermine Star Pipe’s ar-
gument that Commerce has consistently turned to the
(k)(2) criteria when undertaking a scope ruling involving
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12 STAR PIPE PRODUCTS v. UNITED STATES
mixed media, let alone any suggestion that Commerce has
provided clear guidance that a mixed media exception
should be imported into otherwise silent orders. Nor do the
Pencils Order scope rulings provide sufficiently clear guid-
ance to establish such a generally applicable mixed media
exception. In Walgreen, we rejected the importer’s argu-
ment that “Commerce was required to consider [the im-
porter’s] product a ‘mixed media’ set and to address it
under the (k)(2) criteria,” explaining that Commerce’s Pen-
cils Order scope rulings on mixed media were “ad hoc” de-
terminations that “did not set forth a bright line rule for
determining whether imports should be analyzed as ‘mixed
media’ sets, or as combinations of products.” 620 F.3d
1350, 1355. As explained above, we reached that same con-
clusion in MCN. In view of the variance in Commerce’s
approach to mixed media across the Pencils Order scope
rulings, Walgreen, and Texsport, we agree with the govern-
ment that Commerce’s prior scope rulings do not provide
clear guidance sufficient to establish a generally applicable
exception for mixed media based on the (k)(2) criteria.
Thus, although we have acknowledged that Com-
merce’s “prior scope rulings do establish that there exists
in some circumstances an implicit mixed media exception
even in the absence of explicit language in the final order,”
MCN, 725 F.3d at 1305, the scope rulings on the Pencils
Order that Star Pipe relies upon do not provide the type of
clear guidance needed to interpret the STR Order contrary
to its literal terms.
Separately, Star Pipe argues that, because the STR Or-
der and its history do not expressly address mixed media,
this silence means that the (k)(1) materials cannot be “dis-
positive” of the scope inquiry. Citing to 19
C.F.R. § 351.225(k), Star Pipe contends that Commerce
must therefore consider the (k)(2) criteria. We disagree.
The first stage of the MCN framework already consid-
ers the (k)(2) criteria to the extent required by Commerce’s
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STAR PIPE PRODUCTS v. UNITED STATES 13
regulations. Specifically, 19 C.F.R. § 351.225(k) requires
Commerce to, “in considering whether a particular product
is included within the scope of an order,” take into account
the (k)(1) materials, and if not “dispositive,” then the (k)(2)
criteria. Likewise, at the first stage of the MCN framework
“Commerce must determine whether the potentially-sub-
ject merchandise included within the mixed media item is
within the literal terms of the antidumping order,” begin-
ning with the language of the order and proceeding to the
(k)(1) materials and (k)(2) criteria as necessary to resolve
ambiguity. MCN, 725 F.3d at 1302.
Here, it is undisputed that Star Pipe’s STR components
are in fact within the literal terms of the antidumping or-
der. Moreover, the antidumping order and its history do
not provide any exception for mixed media. That conclu-
sion is itself sufficient to end the scope inquiry, in the ab-
sence of any pre-established, clear guidance to the
contrary. Star Pipe cannot create ambiguity simply by con-
tending that the order must be interpreted contrary to its
literal language, i.e., to carve out an exception for other-
wise-subject merchandise that is packaged with non-sub-
ject merchandise. Where, as here, “neither the text of the
order nor its history indicates that subject merchandise
should be treated differently on the basis of its inclusion
within a mixed media item,” such an exception must be
clear and ascertainable from Commerce’s prior published
guidance. Id. at 1304–05. To permit otherwise would au-
thorize the type of ad hoc determinations that fail to “allow
importers to predict how Commerce would treat their
mixed media products.” Id. at 1305. As we made clear in
MCN, it is true that Commerce has the discretion to issue
clear guidance, which may draw from, among other things,
the (k)(2) criteria, if relevant. Id. But MCN also made
clear that, absent such clear guidance, employing the (k)(2)
criteria in an effort to create an unstated exception to the
terms and history of the order is not mandatory. Id. And,
as we explained above, Star Pipe does not point to any such
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14 STAR PIPE PRODUCTS v. UNITED STATES
guidance clearly requiring Commerce to do so in every an-
tidumping order when evaluating a mixed media item. 5
Because Commerce has elected not to publish clear guid-
ance notifying regulated parties of an implicit mixed media
exception for otherwise silent antidumping orders, there is
no basis for Commerce to reach the (k)(2) criteria at the
second stage of the MCN framework because such silent
orders cannot then be reasonably read to include an im-
plicit mixed media exception. 6
Finally, Star Pipe argues that Commerce must con-
sider the (k)(2) criteria whenever it initiates a formal scope
inquiry. In Star Pipe’s view, Commerce’s failure to reach
(k)(2) violates 19 C.F.R. § 351.225(e), which provides that
Commerce will initiate a scope inquiry if the “application
5 Likewise, Star Pipe’s argument that Commerce
should have consulted the Harmonized Tariff Schedule of
the United States (HTSUS) classification system fails be-
cause Star Point points to no published guidance establish-
ing how Commerce would rely on the HTSUS classification
system to interpret its STR Order contrary to its literal
terms.
6 In MCN, we observed that “many of the problems
presented by this case could be avoided if Commerce were
to identify in its antidumping orders or in prospective reg-
ulations the factors it will consider in resolving mixed me-
dia and other cases.” Id. at 1306. We note that Commerce
recently has taken steps to promulgate regulations that
provide clear notice to regulated parties that Commerce’s
future orders will contain an implicit mixed media excep-
tion. See Regulations To Improve Administration and En-
forcement of Antidumping and Countervailing Duty Laws,
85 Fed. Reg. 49472, 49497 (Dep’t of Commerce Aug. 13,
2020) (proposing a three-factor test “to determine whether
the component product’s inclusion in the larger merchan-
dise results in its exclusion from the scope of the order”).
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STAR PIPE PRODUCTS v. UNITED STATES 15
and the descriptions of the merchandise referred to in par-
agraph (k)(1)” are not sufficient to resolve the issue of
whether a product is in-scope. We again disagree. That
the “application” submitted by a party to request a scope
ruling and the (k)(1) materials are insufficient might
simply mean that Commerce requires “further input from
the interested parties,” for example if Commerce seeks
more information on the product in question than provided
in the submitted application. J.A. 29–30. That more infor-
mation is needed does not mean that the (k)(1) materials
will not ultimately be dispositive. Thus, Commerce’s deci-
sion to initiate a scope inquiry does not itself require con-
sideration of the (k)(2) criteria. 19 C.F.R. § 351.225(e) does
not recite any such requirement. As the Trade Court noted,
“Star Pipe conflates the decision to initiate a scope inquiry
with the conclusion that the (k)(1) materials are not dispos-
itive.” J.A. 29.
For the reasons above, we agree with the Trade Court
that substantial evidence supports Commerce’s finding
that the STR components of Star Pipe’s Joint Restraint
Kits are within the scope of the STR Order. Star Pipe does
not point to any prior published guidance setting forth an
ascertainable standard for reading the STR Order against
its literal terms to include an exception for mixed media.
“[M]erchandise facially covered by an order may not be ex-
cluded from the scope of the order unless the order can rea-
sonably be interpreted so as to exclude it.” MCN, 725 F.3d
at 1301.
II. Commerce’s Liquidation Instruction
When Commerce issues a final scope ruling and liqui-
dation of the products in question has not been suspended,
then Commerce will instruct CBP to suspend liquidation
and demand a monetary deposit for duties on those unliqui-
dated products if entered “on or after the date of initiation
of the scope inquiry.” 19 C.F.R. § 351.225(l)(3). After the
final scope ruling on Star Pipe’s products, Commerce
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16 STAR PIPE PRODUCTS v. UNITED STATES
issued an instruction to CBP to “[c]ontinue to suspend liq-
uidation” of Star Pipe’s STR components:
“Continue to suspend liquidation of entries of steel
threaded rod from the People’s Republic of China,
including the steel threaded rod components of
Star Pipe Products’ Joint Restraint Kits, imported
by Star Pipe Products and described above, subject
to the antidumping duty order on steel threaded
rod from the People’s Republic of China.”
J.A. 281 (emphasis added).
Star Pipe challenges Commerce’s instruction to CBP to
“continue to suspend liquidation” as improperly assessing
duties on pre-initiation imports that were not suspended at
the time the scope inquiry was initiated. But Star Pipe’s
challenge is moot because CBP liquidated the pre-initia-
tion import entries at issue without assessing any anti-
dumping duties. See Already, LLC v. Nike, Inc., 568 U.S.
85, 91, 133 S. Ct. 721, 726, 184 L. Ed. 2d 553 (2013) (“A
case becomes moot—and therefore no longer a ‘Case’ or
‘Controversy’ for purposes of Article III—when the issues
presented are no longer live or the parties lack a legally
cognizable interest in the outcome.”). Moreover, those liq-
uidations are final, as the parties do not dispute that CBP
is time-barred from reliquidating those entries to include
the assessment of antidumping duties. See 19
U.S.C. § 1501 (permitting CBP to reliquidate “within
ninety days from the date of the original liquidation”). Re-
gardless of whether Star Pipe is correct in its interpreta-
tion of Commerce’s liquidation instruction, Star Pipe is not
at risk of any assessment of duties on the entries at issue.
Nevertheless, Star Pipe contends that its challenge to
Commerce’s liquidation instruction is not moot because of
the existence of a separate “prior disclosure” proceeding in
which Star Pipe argues it must pay antidumping duties in
order to “perfect” its prior disclosure. We disagree.
Case: 19-2381 Document: 73 Page: 17 Filed: 11/30/2020
STAR PIPE PRODUCTS v. UNITED STATES 17
An importer that fails to pay antidumping duties may
elect to initiate a “prior disclosure” proceeding by disclosing
the circumstances of its violation and tendering the owed
duties, with interest, to CBP. 19 U.S.C. § 1592(c)(4); see
also 19 C.F.R. § 162.74. By submitting a prior disclosure
“before, or without knowledge of, the commencement of a
formal investigation of that violation,” 19 C.F.R. § 162.74,
the importer can mitigate or entirely avoid penalties on its
failure to pay duties. This statutory framework presents
importers with a choice: (1) admit to violating an anti-
dumping order and pay the owed duties, 19
U.S.C. § 1592(c)(4); or (2) remain silent, and risk penalties
if CBP later determines that a violation occurred due to
“fraud, gross negligence, or negligence,” 19
U.S.C. § 1592(a)(1).
Contrary to Star Pipe’s arguments, importers are not
compelled to submit a prior disclosure. Star Pipe is free to
choose not to admit to CBP that Star Pipe imported STR in
violation of the STR Order. To the extent that Star Pipe
complains of possible penalties associated with that choice,
that is a criticism of the statutory framework enacted by
Congress and has nothing to do with Commerce’s instruc-
tion to CBP to suspend liquidations in connection with the
scope inquiry at issue in this appeal.
Even if, as Star Pipe demands, Commerce’s liquidation
instruction were clarified to state that it did not extend to
pre-initiation entries, that would not impact or prevent
CBP from pursuing an enforcement action under § 1592.
19 C.F.R. § 351.225(l)(3) only limits Commerce’s authority
to assess duties in the context of a scope inquiry; that reg-
ulation does not restrict CBP’s authority under § 1592 to
assess penalties for fraudulent or negligent violations. Re-
gardless of Commerce’s instruction to CBP to suspend and
assess liquidation in connection with Star Pipe’s scope in-
quiry, CBP may independently determine that Star Pipe
was negligent or fraudulent in its failure to pay duties on
Case: 19-2381 Document: 73 Page: 18 Filed: 11/30/2020
18 STAR PIPE PRODUCTS v. UNITED STATES
its Joint Restraint Kits, even if those Joint Restraint Kits
were imported prior to the initiation of the scope inquiry. 7
At bottom, Star Pipe contends that Commerce improp-
erly instructed CBP to suspend and assess duties on mer-
chandise entered prior to the initiation of the scope inquiry.
As the Trade Court correctly concluded, Star Pipe’s chal-
lenge was rendered moot when those pre-initiation entries
were liquidated without assessment of any antidumping
duties. 8
CONCLUSION
We have considered Star Pipe’s remaining arguments
and find them unpersuasive. For the reasons stated above,
we affirm the Trade Court’s decision affirming Commerce’s
final scope ruling and denying Star Pipe’s challenge to
Commerce’s liquidation instruction.
AFFIRMED
7 Moreover, if CBP were to pursue an enforcement
action against Star Pipe’s pre-initiation entries, Star Pipe
admits that it could raise its challenge to Commerce’s liq-
uidation instruction as a defense in that separate, hypo-
thetical proceeding. The Trade Court correctly declined to
issue an advisory opinion addressing that scenario.
8 Although Star Pipe also argues that these pre-ini-
tiation entries were liquidated in violation of the Trade
Court’s preliminary injunction, the Trade Court did not
abuse its discretion in declining to exercise its equitable
authority to void liquidations that did not result in injury
to Star Pipe. That Star Pipe suffered no injury is further
emphasized by Star Pipe’s failure to “move[] the [Trade
Court] to take any action in response to the liquidations.”
J.A. 32 n.18.
Case: 19-2381 Document: 73 Page: 19 Filed: 11/30/2020
United States Court of Appeals
for the Federal Circuit
______________________
STAR PIPE PRODUCTS,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2019-2381
______________________
Appeal from the United States Court of International
Trade in No. 1:17-cv-00229-MAB, Judge Mark A. Barnett.
______________________
REYNA, Circuit Judge, concurring-in-part and dissenting-
in-part.
I cannot join my colleagues in the majority opinion,
which I find both erroneous and unfortunate. The error
lies in a clear misapprehension of this court’s precedent.
And, unfortunately, this precedential opinion casts further
confusion on an area of trade law that we in past decisions
have bemoaned to lack clarity and predictability. But in-
stead of putting the proverbial cart back on a straight path,
we have driven it further into the bog.
I disagree with the majority’s conclusion that Com-
merce could properly find Star Pipe’s joint restraint kits to
be subject to the steel threaded rods anti-dumping duty or-
der without considering the characteristics of the kit as a
Case: 19-2381 Document: 73 Page: 20 Filed: 11/30/2020
2 STAR PIPE PRODUCTS v. UNITED STATES
whole. Because both the order and its history were silent
as to whether the order was intended to encompass the
components of mixed media products, Commerce was re-
quired under its own regulations to consider the factors set
forth in 19 C.F.R. § 351.225(k)(2) in determining whether
the kit’s steel threaded rod components should be consid-
ered individual “subject merchandise” “products” in the
context of the kit as a whole. Our decision in Mid Continent
Nail did not absolve Commerce of that obligation. Thus,
with respect to the majority opinion on Commerce’s scope
ruling, I dissent.
I
The majority’s reasoning proceeds from a flawed as-
sumption: namely, that when a party seeks a scope ruling
under 19 C.F.R. § 351.225 as to whether a “particular prod-
uct” falls within the “subject merchandise” described in a
duty order, the “product” to be compared with the “subject
merchandise” is always the individual component of the kit
rather than the kit as a whole. Under this reasoning, the
importer of an IKEA-type unassembled bookshelf with two
steel threaded rod (“STR”) components has no basis for
avoiding Commerce’s duty order, even though the importer
of an assembled shelf with the same components may very
well escape the same order. See, e.g., MacLean Power,
L.L.C. v. United States, 359 F. Supp. 3d 1367, 1372 (Ct.
Int’l Trade 2019). Indeed, under the majority’s reasoning,
the unassembled shelf is legally indistinguishable from a
package of assorted rods and nails that contains 100 STRs
and five nails. All mixed media imports are treated as ag-
gregations of “products” for which Commerce must assess
individual duties, regardless of how peripheral a given
component is to the kit as a whole.
That was not Commerce’s assumption when it issued
the anti-dumping duty order at issue here in 2008. Nor
was it the expectation of importers or domestic manufac-
turers. Rather, the traditional starting point of
Case: 19-2381 Document: 73 Page: 21 Filed: 11/30/2020
STAR PIPE PRODUCTS v. UNITED STATES 3
Commerce’s mixed-media analysis was the question of
whether the kit or its components should be treated as the
“product” for comparison to the “subject merchandise.” Our
decision in MCN acknowledged this:
This case presents the question of whether other-
wise-subject merchandise (nails) that is packaged
and imported together with non-subject merchan-
dise (assorted household tools) as part of a so-called
“mixed media” item (a tool kit) is subject to an an-
tidumping order that in terms covers the included
merchandise, and makes no exception for mixed
media items. Commerce has historically treated
the answer to this question as depending on
whether the mixed media item is to be treated as a
single, unitary item, or a mere aggregation of sep-
arate items.
Mid Continent Nail Corp. v. United States, 725 F.3d 1295,
1298 (Fed. Cir. 2013) (“MCN”). This approach was con-
sistent with the overall purpose of scope rulings, namely to
assess whether a given product falls within the realm of
what a duty order was intended to cover and whether the
product in its imported form constitutes an attempt to cir-
cumvent the literal language of the order. See
19 C.F.R. § 351.225(a). Where the face of a duty order is
silent on whether and when it encompasses individual com-
ponents of a mixed media product, Commerce must resolve
that ambiguity through its established protocols for scope
inquiries.
Under Commerce’s own regulations, where a scope in-
quiry raises an issue not addressed by the face of the order,
Commerce turns first to the regulatory history of the order
and investigation for guidance on the intended scope of the
order. Where those sources provide no “dispositive” an-
swer, Commerce has turned to—and indeed has required
itself to consider—a set of practical, fact-based factors re-
lating to the characteristics of the product and the nature
Case: 19-2381 Document: 73 Page: 22 Filed: 11/30/2020
4 STAR PIPE PRODUCTS v. UNITED STATES
of its commercialization. This two-step process of analyz-
ing the so-called (k)(1) and (k)(2) factors is set forth in
19 C.F.R. §§ 351.225(k)(1) and (k)(2):
[I]n considering whether a particular product is in-
cluded within the scope of an order or a suspended
investigation, the Secretary will take into account
the following:
(1) The descriptions of the merchandise contained
in the petition, the initial investigation, and the de-
terminations of the Secretary (including prior
scope determinations) and the Commission.
(2) When the above criteria are not dispositive, the
Secretary will further consider:
(i) The physical characteristics of the product;
(ii) The expectations of the ultimate purchas-
ers;
(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 adver-
tised and displayed.
19 C.F.R. § 351.225(k) (emphasis added).
Nothing in MCN suggests that the court intended to
exempt mixed media inquiries from this codified analysis.
The court instead recognized in MCN that when a final
duty order does not explicitly address whether and when
mixed media items are included, the order is ambiguous on
that question, such that Commerce has the authority to in-
terpret the order as excluding mixed media items in a scope
ruling. 725 F.3d at 1301–02. The court further required
Commerce, in conducting that interpretive inquiry, to con-
sider the (k)(1) materials in assessing whether a compo-
nent’s inclusion in a mixed media item takes it outside the
Case: 19-2381 Document: 73 Page: 23 Filed: 11/30/2020
STAR PIPE PRODUCTS v. UNITED STATES 5
scope of the order. Id. at 1302. When the (k)(1) materials
are silent, the court opined that “a presumption arises that
the included merchandise is subject to the order.” Id.
at 1304.
This “presumption” in MCN does not render otherwise
silent (k)(1) materials “dispositive” of a scope inquiry. The
fact that the court left room for Commerce to find exclusion
in such situations means that when the (k)(1) materials are
silent as to mixed media, they are not “dispositive” of
whether an order that is facially silent on mixed media en-
compasses a given mixed media product. Commerce is
therefore obligated under the plain text of § 351.225(k) to
consider the (k)(2) factors with respect to the mixed media
product. This includes consideration of how the physical
characteristics of the kit, the expectations of its consumers,
its intended use, and its channels of trade differ from that
of STRs. This has been Commerce’s standard practice un-
der its regulations, and MCN does not vitiate that practice.
II
Contrary to Commerce’s suggestion, this court’s state-
ment in MCN that the agency “may . . . rely on the (k)(2)
factors” in determining whether the presumption of inclu-
sion is overcome does not override the express regulatory
requirement that Commerce “will further consider” those
factors whenever the (k)(1) materials are not dispositive.
Compare MCN, 725 F.3d at 1305, with 19 C.F.R.
§ 351.225(k)(2). In accepting Commerce’s position, the ma-
jority renders the MCN presumption un-rebuttable by the
interested parties. Under the majority’s holding, Com-
merce alone wields the prerogative of seeking to overcome
the MCN presumption. Even though the rationale under-
lying the interpretive framework in MCN was rooted in the
regulated parties’ right to fair notice, see 725 F.3d at 1300,
the majority’s decision precludes affected importers from
compelling Commerce to consider the same factors it had
previously considered in a scope analysis so long as
Case: 19-2381 Document: 73 Page: 24 Filed: 11/30/2020
6 STAR PIPE PRODUCTS v. UNITED STATES
Commerce, in its “discretion,” declines to “issue clear guid-
ance” defending an approach for doing so. Slip. Op. 13–14.
The fact that Commerce has decided to throw in the towel
on the mixed media exclusion here (after its failed efforts
to defend its prior mixed media approaches in court) essen-
tially means that all mixed media items containing STR
automatically fall under the scope of the STR antidumping
duty order, in clear incongruity with Commerce’s interpre-
tive practice at the time it issued its order.
The majority contends that importers never had a le-
gitimate expectation of a fact-based (k)(2) analysis even be-
fore MCN because Commerce had ignored the factors in the
past. This is incorrect. The cases cited by the majority for
this position are inapposite. In Walgreen, the (k)(1) mate-
rials were not silent on mixed media: the I&D memo ex-
pressly stated that “all subject merchandise—cut-to-length
tissue paper—is subject to this proceeding, whether or not
it is sold or shipped with non-subject merchandise.”
Walgreen Co. of Deerfield, IL v. United States,
620 F.3d 1350, 1357 (Fed. Cir. 2010) (emphasis added).
Commerce was not obligated to consider the (k)(2) factors
because the (k)(1) materials were “dispositive.” The same
is true in Texsport, in which Commerce “found it unneces-
sary to address the four-additional criteria” because the
(k)(1) materials clearly defined the product at issue. Rec-
ommendation Memo—Final Scope Ruling on the Request
by Texsport for Clarification of the Scope of the Antidump-
ing Duty Order on Porcelain–on–Steel Cooking Ware from
the People’s Republic of China, U.S. Dep’t of Commerce
Memorandum from Richard Moreland, Director, Office of
Antidumping Compliance, to Joseph A. Spetrini, Deputy
Assistant Secretary for Compliance, Scope Inquiry No. A–
570–506, at 3 (Aug. 8, 1990) (“Texsport”). Again, stated dif-
ferently, because the (k)(1) factors were dispositive, it was
not necessary for Commerce to address the (k)(2) factors.
However, had the analysis of the (k)(1) factors not been
Case: 19-2381 Document: 73 Page: 25 Filed: 11/30/2020
STAR PIPE PRODUCTS v. UNITED STATES 7
dispositive, it would have been necessary for Commerce to
review the (k)(2) factors.
In contrast, as Star Pipe asserted in its briefing before
both Commerce and this court, there is a considerable body
of scope rulings on the “Pencils Order,” in which Commerce
repeatedly relied on the (k)(2) factors in assessing whether
various mixed media items fell within the scope of a duty
order that was silent on mixed media. See Appellant’s
Br. 30–31; see also INTERNATIONAL TRADE
ADMINISTRATION, CASED PENCILS FROM THE PEOPLE
REPUBLIC OF CHINA, https://legacy.trade.gov/enforce-
ment/operations/scope/country/china/products/prc-cased-
pencils-ad.asp (“Pencils Order Rulings”). For example,
Commerce determined that a 10-piece vanity set including
two pencils was not subject to the Pencils Order because
the set as a whole was physically comprised of components
other than writing instruments and its purchasers bought
the product primarily for purposes other than writing. See
Final Scope Ruling—Antidumping Duty Order on Certain
Cased Pencils from the People’s Republic of China (PRC)—
Request by Creative Designs International, Ltd., A-570-827
(Dep’t of Commerce Feb. 9, 1998). Applying similar anal-
yses, Commerce determined that the following mixed me-
dia products also fell outside the scope of the duty order:
(1) a tote bag of various fashion items including pencils; (2)
a “color set” of markers, pencils, crayons, and paper in a
portable plastic storage case; (3) a compass and pencil set;
and (4) a Valentine’s card set with pencils. See Pencils Or-
der Rulings.
Although, as the majority notes, this court concluded
in Walgreen and MCN that these rulings were “ad hoc” and
“did not set forth a bright line rule for determining whether
imports should be analyzed as ‘mixed media’ sets, or as
Case: 19-2381 Document: 73 Page: 26 Filed: 11/30/2020
8 STAR PIPE PRODUCTS v. UNITED STATES
combinations of products,” 1 Commerce did not raise, and
we did not consider, whether the Pencils Order Rulings
evinced a consistent practice by Commerce of considering
the (k)(2) factors in mixed media analysis when the order
and (k)(1) materials are silent. Walgreen, 620 F.3d
at 1355–56; see also MCN, 725 F.3d at 1305. Indeed, in
light of the explicit language in its regulation, there was
little question at the time that the (k)(2) factors were man-
datory considerations in that context.
Thus, pursuant to both Commerce’s past practice and
the plain terms of its own regulations, Commerce was obli-
gated in this case to apply the (k)(2) factors to the joint re-
straint kits in determining whether the kits were subject
to the STR order. Because Commerce plainly neglected
that obligation here, I dissent.
I concur with the majority that the retroactive liquida-
tion issue in this case is moot.
1 The majority renews a criticism by this court that
Commerce’s analytical framework for scope rulings lacks
clarity or predictability. The majority thus joins prior calls
by this court urging Commerce to establish a bright line
rule that would effectively resolve scope questions of the
trade community in one fell swoop. Slip Op. at 14 n.6 (cit-
ing MCN, 725 F.3d at 1306). This court, however, has not
offered a solution or otherwise described what this bright
line test should look like. Commerce, to its credit, is seek-
ing to codify an analytical framework the draft of which, in
my view, looks strikingly similar to the (k)(2) factors. See
Regulations To Improve Administration and Enforcement
of Antidumping and Countervailing Duty Laws, 85 Fed.
Reg. 49472, 49497 (Dep’t of Commerce Aug. 13, 2020).