Adams Thermal Sys., Inc. v. United States , 2017 CIT 161 ( 2017 )

Slip Op. No. 17-161
UNITED STATES COURT OF INTERNATIONAL TRADE
ADAMS THERMAL SYSTEMS, INC.
Plaintiff,
v.
UNITED STATES, Before: Timothy C. Stanceu, Chief Judge
Defendant, Court No. 16-00128
and
ALUMINUM EXTRUSIONS FAIR
TRADE COMMITTEE,
Defendant-Intervenor.
OPINION
[Sustaining a scope ruling of the International Trade Administration, U.S. Department of
Commerce, interpreting the scope of antidumping and countervailing duty orders on certain
aluminum extrusions from the People’s Republic of China]
Dated: December 6, 2017
Richard P. Ferrin, Drinker Biddle & Reath LLP, of Washington, D.C., argued for
plaintiff. With him on the brief were Douglas J. Heffner and William R. Rucker.
Aimee Lee, Senior Trial Counsel, Civil Division, U.S. Department of Justice, of New
York, NY, argued for defendant. With her on the brief were Chad A. Readler, Acting Assistant
Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director.
Of counsel on the brief was Zachary S. Simmons, Office of the Chief Counsel for Trade
Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.
Alan H. Price, Robert E. DeFrancesco, III, and Derick G. Holt, Wiley Rein LLP, of
Washington, D.C., for defendant-intervenor.
Stanceu, Chief Judge: Plaintiff Adams Thermal Systems (“ATS”) contests a 2016 “Final
Scope Ruling” in which the International Trade Administration, U.S. Department of Commerce
Court No. 16-00128 Page 2
(“Commerce” or the “Department”) construed the scope of antidumping and countervailing duty
orders (the “Orders”) on aluminum extrusions from the People’s Republic of China to include
certain aluminum products imported by ATS. The court sustains the Final Scope Ruling.
I. BACKGROUND
A. The Contested Determination
The determination contested in this action is Antidumping and Countervailing Duty
Orders on Aluminum Extrusions from the People’s Republic of China: Final Scope Ruling on
Adams Thermal Systems’ Certain Fittings and Related Products for Engine Cooling Systems
(July 11, 2016) (P.R. Doc. 26), available at https://enforcement.trade.gov/download/prc-
ae/scope/96-fitting-engine-cooling-systems-12jul16.pdf (last visited Dec. 1, 2017) (“Final Scope
Ruling”).1
B. The Antidumping and Countervailing Duty Orders
Commerce issued antidumping and countervailing duty orders on aluminum extrusions
from China in May 2011. Aluminum Extrusions from the People’s Republic of China:
Antidumping Duty Order, 76 Fed. Reg. 30,650 (Int’l Trade Admin. May 26, 2011) (“AD
Order”); Aluminum Extrusions from the People’s Republic of China: Countervailing Duty
Order, 76 Fed. Reg. 30,653 (Int’l Trade Admin. May 26, 2011) (“CVD Order”) (collectively, the
“Orders”).
C. The Scope Ruling Application and the Merchandise at Issue
ATS filed with Commerce an application for a scope ruling (“Scope Ruling Application”)
on October 20, 2015, in which it sought a ruling excluding from the scope of the Orders various
aluminum products produced in China, to which ATS referred as “fittings” for automotive uses.
1
All citations to documents from the administrative record are to public documents or to
the public version of confidential documents. These documents are cited as “P.R. Doc. __”.
Court No. 16-00128 Page 3
Aluminum Extrusions from the People’s Republic of China: Request for Scope Ruling for Certain
Fittings and Related Products for Engine Cooling Systems (Oct. 20, 2015) (P.R. Docs. 2-4)
(“Scope Ruling Application”). In the Scope Ruling Application, ATS argued that each fitting,
which was produced from a single piece (“blank”) of extruded aluminum alloy, was subjected to
further processing following extrusion that, according to ATS, placed it outside the scope of the
Orders. See id. at 2-6. After conducting an administrative proceeding, Commerce issued the
Final Scope Ruling, in which it ruled that the fittings are within the scope of the Orders.
D. Proceedings before the Court
ATS commenced this action on July 19, 2016. Summons (July 15, 2016), ECF No. 1;
Compl. (July 19, 2016), ECF No. 6. Now before the court is ATS’s motion for judgment on the
agency record, which is opposed by defendant United States and defendant-intervenor the
Aluminum Extrusions Fair Trade Committee. Mot. of Pl. Adams Thermal Systems, Inc. for J. on
the Agency R. under Rule 56.2 (Feb. 17, 2017), ECF No. 25; Mem. of Points and Authorities of
Pl. Adams Thermal Systems, Inc. in Support of its Mot. for J. on the Agency R. (Feb. 17, 2017),
ECF No. 28 (“Pl.’s Mem.”).2 The court held oral argument on October 26, 2017.
II. DISCUSSION
A. Jurisdiction and Standard of Review
The court exercises subject matter jurisdiction according to section 201 of the Customs
Courts Act of 1980, 28 U.S.C. § 1581(c), which grants jurisdiction over civil actions brought
2
Originally, plaintiff filed both public and confidential versions of its memorandum in
support of its motion for judgment on the agency record and its reply. At oral argument, the
court questioned whether photographs in these submissions, which depicted what plaintiff
described as representative part numbers for the merchandise at issue, qualified for confidential
treatment. In response, plaintiff refiled the memorandum and the reply, disclosing to the public
the photographs for which plaintiff previously had claimed confidential treatment.
Court No. 16-00128 Page 4
under section 516A of the Tariff Act of 1930, 19 U.S.C. § 1516a.3 Among the decisions that
may be contested under Section 516A is a determination of “whether a particular type of
merchandise is within the class or kind of merchandise described in an . . . antidumping or
countervailing duty order.” 19 U.S.C. § 1516a(a)(2)(B)(vi). In reviewing a contested scope
ruling, the court must set aside “any determination, finding, or conclusion found . . . to be
unsupported by substantial evidence on the record, or otherwise not in accordance with law.” Id.
§ 1516a(b)(1)(B)(i).
B. The Scope Language of the Orders, as Is Relevant to This Dispute
The scope language is set forth in the antidumping duty order and in the countervailing
duty order; each version is essentially identical. The Orders apply to “aluminum extrusions
which are shapes and forms, produced by an extrusion process, made from aluminum alloys
having metallic elements corresponding to the alloy series designations published by The
Aluminum Association commencing with the numbers 1, 3, and 6 (or proprietary equivalents or
other certifying body equivalents).” AD Order, 76 Fed. Reg. at 30,650; CVD Order, 76 Fed.
Reg. at 30,653.
Each Order also provides that “[a]luminum extrusions are produced and imported in a
wide variety of shapes and forms, including, but not limited to, hollow profiles, other solid
profiles, pipes, tubes, bars, and rods” and that “[a]luminum extrusions that are drawn subsequent
to extrusion (‘drawn aluminum’) are also included in the scope.” AD Order, 76 Fed. Reg.
at 30,650; CVD Order, 76 Fed. Reg. at 30,654.
The scope language further provides that “[a]luminum extrusions are produced and
imported with a variety of finishes (both coatings and surface treatments), and types of
3
All statutory citations herein are to the 2012 edition of the United States Code and all
regulatory citations herein are to the 2016 edition of the Code of Federal Regulations.
Court No. 16-00128 Page 5
fabrication.” AD Order, 76 Fed. Reg. at 30,650; CVD Order, 76 Fed. Reg. at 30,654. As to
fabrication, the scope language also states that “[a]luminum extrusions may also be fabricated,
i.e., prepared for assembly. Such operations would include, but are not limited to, extrusions that
are cut-to-length, machined, drilled, punched, notched, bent, stretched, knurled, swedged,
mitered, chamfered, threaded, and spun.” AD Order, 76 Fed. Reg. at 30,650; CVD Order,
76 Fed. Reg. at 30,654.
The scope language goes on to state that “[s]ubject aluminum extrusions may be
described at the time of importation as parts for final finished products that are assembled after
importation, including, but not limited to, window frames, door frames, solar panels, curtain
walls, or furniture.” AD Order, 76 Fed. Reg. at 30,650-51; CVD Order, 76 Fed. Reg. at 30,654.
“Such parts that otherwise meet the definition of aluminum extrusions are included in the scope.”
AD Order, 76 Fed. Reg. at 30,651; CVD Order, 76 Fed. Reg. at 30,654.
The scope language also provides that “[s]ubject extrusions may be identified with
reference to their end use, such as fence posts, electrical conduits, door thresholds, carpet trim, or
heat sinks (that do not meet the finished heat sink exclusionary language below).” AD Order,
76 Fed. Reg. at 30,651; CVD Order, 76 Fed. Reg. at 30,654. “Such goods are subject
merchandise if they otherwise meet the scope definition, regardless of whether they are ready for
use at the time of importation.” AD Order, 76 Fed. Reg. at 30,651; CVD Order, 76 Fed. Reg.
at 30,654.
C. The Merchandise at Issue in this Case
ATS states in the Scope Ruling Request that “[t]he fittings in question are all machined
from an extruded aluminum blank.” Scope Ruling Application at 2. “In general, the production
process starts with a rough blank made of 6 series aluminum that is formed through an extrusion
Court No. 16-00128 Page 6
press (feedstock).” Id. at 8. Each individual blank is cut from an extrusion that has a cross
section, typically in the approximate form of an “L” or in the form of a hexagon, depending on
the intended shape of the finished product. See id. at 7-16. Each fitting is the result of multiple
fabrication processes, including machining, see id.; ATS characterizes these processes as
creating “the shape and form of the fittings.” Id. at 4. Some of the machining is performed by
automated “CNC” (computer numeric control) equipment. See id. at 8-9, 11, 12, 13, 14. ATS
further describes each of the fittings as “designed in conjunction with vehicle manufacturers’
system integration teams, in order to achieve leak-free sealing points between the heat exchanger
and the vehicle subsystem within the space allotted.” Aluminum Extrusions from the People’s
Republic of China: Response to the Department’s April 28, 2016 Second Supplemental
Questionnaire on ATS Fittings for Engine Cooling Systems at 3 (May 13, 2016) (P.R. Doc. 21).
“The design process must balance the typical tight space claims demanded in today’s vehicles,
with the need for minimal resistance to fluid flow.” Id. All products are imported as finished
merchandise, with no further processing needed prior to use. Id. at 4-5.
Citing a submission by ATS, Commerce described each of the fittings at issue in the
Final Scope Ruling. Final Scope Ruling at 6-12 (citing Aluminum Extrusions from the People’s
Republic of China: Submission of Production Descriptions: Fittings for Engine Cooling Systems
(May 25, 2016) (P.R. Doc. 25)). The product descriptions, as set forth in the Final Scope Ruling,
refer to 43 products, identified by individual part numbers, each of which ATS described as
“leak free and structurally robust.” Id.
Of the 43 products, 37 are designed and manufactured for use in connection with
automotive oil coolers or, in several applications, fuel coolers. The descriptions for 33 of these
fittings refer to oil or fuel “flow path[s]” between an oil or fuel cooler (i.e., the heat exchanger)
Court No. 16-00128 Page 7
and any of various other systems on a vehicle. Final Scope Ruling at 6-11.4 These particular
fittings are designed to direct fluid into and out of the heat exchanger without imparting
excessive flow resistance to the respective system. Id. An illustration of one of the 33 products,
Part No. 824884, described by plaintiff as representative of the group, shows a fitting machined
from an L-shaped blank with square corners. See Pl.’s Mem. 7. Plaintiff describes the
fabrication process as involving grinding, milling for smoothness, CNC machining, drilling to
create the passageway for fluid, threading to allow connection to other parts, polishing, and
cleaning with ultrasonic equipment. Id. at 6. In the illustration, the finished fitting appears to
have a rectangular-shaped base with a cylindrical threaded coupling protruding from one side of
the rectangular base and a shorter, cylindrical non-threaded coupling protruding from an adjacent
side. See id. at 7. The two couplings are at right angles to each other. See id. It appears from
the illustration that the drilling is at right angles to create the flow path. See id.
Another part for use in connection with an oil cooler is a “mounting pin,” Part
No. 828105. Final Scope Ruling at 11; Pl.’s Mem. 10. This part is machined, using a CNC
lathe, from an extruded aluminum blank of hexagonal cross section, then polished and cleaned
using ultrasonic equipment. Pl.’s Mem. 10. The center area of the pin retains a hexagonal shape,
but both ends have been machined to cylindrical shapes, one threaded and the other non-threaded
and beveled at the edge. See id.
4
This description applies to Part Nos. 709151, 807603, 808963, 812129, 812246,
812247, 812929, 813138, 823108, 823377, 824026, 824741, 824884, 824885, 824886, 824970,
824971, 825710, 825741, 826146, 826152, 826153, 826184, 826431, 827240, 827782, 828391,
828434, 828694, 829217, 831197, 831198, and 832119. Antidumping and Countervailing Duty
Orders on Aluminum Extrusions from the People’s Republic of China: Final Scope Ruling on
Adams Thermal Systems’ Certain Fittings and Related Products for Engine Cooling Systems
at 6-11 (July 11, 2016) (P.R. Doc. 26), available at https://enforcement.trade.gov/download/prc-
ae/scope/96-fitting-engine-cooling-systems-12jul16.pdf (last visited Dec. 1, 2017) (“Final Scope
Ruling”).
Court No. 16-00128 Page 8
Also for use in connection with an oil cooler is a “plug,” Part No. 826142. Final Scope
Ruling at 11; Pl.’s Mem. 9-10. This small part is fabricated from an extruded aluminum blank of
hexagonal cross section by means of a grinding machine and a CNC lathe, polished, and cleaned
using ultrasonic equipment. Pl.’s Mem. 9. One end retains a hexagonal shape; the other is
cylindrical and threaded. See id. at 10. A similar fitting, Part No. 824682, is described in the
Scope Ruling as a “cap for oil cooler.” Final Scope Ruling at 8.
The remaining article for an oil cooler installation, Part No. 824879, is described as a
“threaded fastener.” Final Scope Ruling at 11-12; Pl.’s Mem. 11. The fastener is fabricated
from an extruded aluminum blank of hexagonal cross section by means of a cutting machine,
CNC lathe, polishing wheel, and ultrasonic cleaning equipment. Pl.’s Mem. 11. Most of the
length of the finished fastener is comprised of a threaded shank; the head of the fastener retains a
hexagonal shape. See id. The fastener is drilled throughout. See id.
A second group consists of four products (Part Nos. 823375, 826926, 830456,
and 830463) used in automotive air conditioning systems. Final Scope Ruling at 11; Pl.’s
Mem. 7-8. Each of these fittings is described as a “flow path between the air conditioning
system and the condenser (heat exchanger).” Final Scope Ruling at 11. Each is produced from
an extruded aluminum blank of hexagonal cross section. Pl.’s Mem. 7-8. The fabricating is
performed by a CNC lathe or milling machine. Id. Plaintiff’s representative illustration (for Part
No. 823375) shows that one end of the fitting retains a hexagonal shape, but that end is machined
to a form resembling a beveled nut and, at the very end, another hexagonal shape. See id. at 8.
The other end is cylindrical and threaded. See id. According to plaintiff’s description, “the
Court No. 16-00128 Page 9
drilling and boring processes produce a hollow area inside the fitting that allows fluid to flow
through the fitting from the condenser to the engine.”5 Id. at 7.
The third and final group consists of two products (Part Nos. 826493 and 829507) used
with automotive radiators. Final Scope Ruling at 11; Pl.’s Mem. 8-9. Each is described as a
“coolant flow path between the engine cooling system and the radiator; designed to direct
coolant into and out of the radiator without imparting excessive flow resistance to the cooling
system.” Final Scope Ruling at 11. An extruded aluminum blank is machined in a CNC lathe,
ground in a grinding machine, drilled in a CNC drilling machine, polished, and cleaned using
ultrasonic equipment. Pl.’s Mem. 8. An illustration for Part No. 826493, which plaintiff
describes as representative of the group, shows a blank in a modified L shape and a finished
fitting with a rectangular-shaped base, a cylindrical threaded coupling protruding from one side
of the rectangular base, and a longer, cylindrical non-threaded coupling protruding from an
adjacent side that is specially shaped at the tip. See id. at 9. The two couplings are at right
angles to each other. See id.
D. The Scope Ruling Is Not Based on an Invalid Finding and Is Not Otherwise Contrary to Law
It is undisputed that each of the fittings at issue in this case was produced from a single
aluminum extrusion and that the extrusion was of a 6 series aluminum alloy, which is one of the
alloys specified in the scope language as covered by the Orders. Plaintiff does not contest any
other specific factual finding Commerce reached in support of its ultimate determination.
Instead, in claiming that the Final Scope Ruling is unsupported by substantial evidence and
5
This description appears to refer erroneously to the engine. Because it is described as a
part for air conditioning systems that carries refrigerant, it would appear that the fitting would
carry refrigerant from the condenser to other parts of the air conditioning system.
Court No. 16-00128 Page 10
otherwise contrary to law, ATS argues that Commerce applied an impermissible interpretation of
the scope language.
1. The Terms of the Scope Language Are Reasonably Interpreted to Include ATS’s Fittings
The Department’s regulations, in 19 C.F.R. § 351. 225(d), provide for issuance of a final
scope ruling “based upon the application” for a scope ruling. The regulations further provide, in
§ 351.225(e), that “where further inquiry is warranted,” Commerce will issue a final scope ruling
upon the conducting of a “scope inquiry.” In this case, Commerce issued the Final Scope Ruling
according to § 351.225(d), i.e., based on the application rather than on a scope inquiry. The
regulations provide that Commerce will do so “[i]f the Secretary can determine, based solely
upon the application [for a scope ruling] and the descriptions of the merchandise referred to in
paragraph (k)(1) of this section, whether a product is included within the scope of an order.”
19 C.F.R. § 351.225(d). With respect to the “descriptions of the merchandise referred to in
paragraph (k)(1) of this section,” the regulations provide that “the Secretary will take into
account . . . [t]he descriptions of the merchandise contained in the petition, the initial
investigation, and the determinations of the Secretary (including prior scope determinations) and
the [International Trade] Commission.” Id. at § 351.225(k)(1).
In Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002), the Court of
Appeals for the Federal Circuit (“Court of Appeals”) expressed the fundamental tenet that
“review of the petition and the investigation may provide valuable guidance as to the
interpretation of the final order” but “they cannot substitute for language in the order itself,”
which is “a predicate for the interpretive process.” Plaintiff relies in part on Duferco in arguing
that Commerce misconstrued the scope language to include its fittings. Pl.’s Mem. 21, 40
(“Commerce’s Final Scope Ruling is not in accordance with law because it interprets the Orders
Court No. 16-00128 Page 11
in a manner contrary to its terms.”). As plaintiff correctly notes, Duferco holds that 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.” Id.
at 40 (quoting Duferco, 296 F.3d at 1089). ATS argues that the scope language of the Orders is
not reasonably interpreted to include its fittings. The court disagrees.
Plaintiff argues, first, that the scope language must be construed to confine the Orders to
products that retain the general shape and form imparted by the extrusion process. According to
this argument, post-extrusion fabrication that significantly alters the basic cross-section profile of
the extrusion, such as that performed to produce ATS’s fittings, necessarily results in a product
outside the scope. Pl.’s Mem. 15-19. Plaintiff’s argument begins with the first sentence of the
scope language, which reads as follows:
The merchandise covered by the order is aluminum extrusions which are
shapes and forms, produced by an extrusion process, made from aluminum alloys
having metallic elements corresponding to the alloy series designations published
by The Aluminum Association commencing with the numbers 1, 3, and 6 (or
proprietary equivalents or other certifying body equivalents).
AD Order, 76 Fed. Reg. at 30,650; see also CVD Order, 76 Fed. Reg. at 30,654. ATS reads the
words “produced by an extrusion process” as a limitation on the meaning of the words “shapes
and forms” that confines the scope to articles retaining the basic shape obtained upon extrusion.
This, however, is not the only plausible interpretation. The first sentence of the scope language
also might be read in the context of the remaining scope language as signifying that the articles
subject to the Orders are those that meet three separate conditions: they must be “shapes or
forms” in the sense of goods that have been “shaped” or “formed” (not only by extrusion but also
by post-extrusion processing), they must be produced by an extrusion process (even if also
Court No. 16-00128 Page 12
produced by drawing, finishing, or fabricating), and they must be made from a specified
aluminum alloy.
In support of its interpretation, ATS points to scope language giving examples of shapes
and forms in which extrusions are produced: “Aluminum extrusions are produced and imported
in a wide variety of shapes and forms, including, but not limited to, hollow profiles, other solid
profiles, pipes, tubes, bars, and rods.” Pl.’s Mem. 16-17 (quoting AD Order, 76 Fed. Reg.
at 30,650). Plaintiff argues that these processes, and other extrusion processes not mentioned,
result in an article “that has the same cross-sectional shape as the die used to create it.” Id. at 19
(also describing “fittings” as “downstream products not identified as aluminum extrusions” that
“may use an extrusion-type shape or form as an input” but that are “subsequently reshaped
through a series of complex downstream fabrication processes into an entirely different shape”).
Even if the court were to presume, arguendo, that ATS’s interpretation of the scope
language is a reasonable one, it could not conclude that the Department’s contrary interpretation,
under which ATS’s fittings are within the scope despite having undergone post-extrusion
fabrication processes that alter the cross-sectional shape, was not reasonable. In specifying that
goods subject to the Orders may have been subjected to drawing, finishing, and fabricating
operations, the scope language plainly does not exclude those articles that are not “produced”
entirely “by an extrusion process.” In addressing the non-extrusion processes that may have
occurred, the scope language does not expressly impose the limitation on basic shape or form
that ATS espouses: it does not state that the mentioned fabricating operations, and others not
mentioned, are limited to those conducted only to an extent that does not alter, or alter
significantly, the cross section resulting from the extrusion process. Moreover, the scope
language lists, as non-exclusive examples of fabricating, extrusions that are “machined, drilled,
Court No. 16-00128 Page 13
punched, notched, bent, stretched, knurled, swedged, mitered, chamfered, threaded, and spun.”
See AD Order, 76 Fed. Reg. at 30,650; CVD Order, 76 Fed. Reg. at 30,654. Indeed, the
unqualified mention of some of the processes, including, for example, bending and stretching,
implies more than a minor or incidental change in the cross-sectional shape obtained by
extrusion alone.
ATS next argues that the fabrication processes contemplated by the scope language are
only those that “prepare” the extrusion for “assembly.” Pl.’s Mem. 23-29. Plaintiff bases this
argument on the following scope language: “Aluminum extrusions may also be fabricated, i.e.,
prepared for assembly.” See AD Order, 76 Fed. Reg. at 30,650; CVD Order, 76 Fed. Reg.
at 30,654. ATS reads the words “prepared for assembly” to refer only to fabrication “processes
that assist in the fitting together of the extrusions into a complete machine, structure, or unit of a
machine.” Pl.’s Mem. 24-25. According to plaintiff, the Department’s interpretation of the
scope language renders the scope term “prepared for assembly” as “mere surplusage.” Id.
at 30-31.
Here again, the court cannot conclude that plaintiff’s narrow interpretation is the only
reasonable one. The words “fabricated, i.e., prepared for assembly” as used in the scope
language also reasonably could be interpreted to refer to any post-extrusion, pre-assembly
fabrication, on the premise that assembly, or a similar end use of an article of subject
merchandise, ordinarily would occur only after the part has been “prepared” by being fabricated
into its final form. In addition, the reference in the scope language to which ATS directs the
court’s attention, which begins with the words “[a]luminum extrusions may also be
fabricated . . . ,” follows a broader reference to finishing and fabrication, as follows: “Aluminum
extrusions are produced and imported with a variety of finishes (both coatings and surface
Court No. 16-00128 Page 14
treatments), and types of fabrication.” AD Order, 76 Fed. Reg. at 30,650; CVD Order, 76 Fed.
Reg. at 30,654 (emphasis added). When read in the entirety, the plain meaning and context of
the references to fabrication in the scope language do not compel the narrow interpretation of the
words “fabricated, i.e., prepared for assembly” that ATS advocates.
ATS argues, further, that the scope language recognizes that “[a]t some point, the further
fabrication of an extruded aluminum product must result in a substantial transformation” and that
“otherwise, the scope language would be more definitive and could have stated that it ‘includes
all products made from or out of aluminum extrusions.’” Pl.’s Mem. 34. Plaintiff submits that
its fittings, when compared to the aluminum extrusions from which they were fabricated, have
undergone a substantial transformation because they have a “new name, character, and
{/or}use.” Id. (quoting United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267, 273 (1940)).
Because of the way in which the scope language is written, the court need not reach the issue of
whether ATS’s fittings underwent a “substantial transformation” following extrusion. Although
the scope language throughout refers to subject merchandise as “extrusions,” it does not
expressly confine the scope of the Orders to goods that have not been processed so as to have a
name, character, or use different than that of an aluminum extrusion that has not undergone
significant post-extrusion processing. As to name and use, the scope language specifically
includes articles “described at the time of importation as parts for final finished products that are
assembled after importation,” albeit only if they “otherwise meet the definition of aluminum
extrusions,” which definition refers to “shapes and forms, produced by an extrusion process.”
AD Order, 76 Fed. Reg. at 30,650-51; CVD Order, 76 Fed. Reg. at 30,653-54. The scope
language also places within the scope articles “identified with reference to their end use” (again,
only if they otherwise meet the “scope definition,” which apparently is a reference to the
Court No. 16-00128 Page 15
definition of aluminum extrusions also). AD Order, 76 Fed. Reg. at 30,651; CVD Order, 76 Fed.
Reg. at 30,654. Given the explicit references to how in-scope articles may be “described” or
“identified,” and to products that have been fabricated after extrusion to make them suitable for
particular end uses, the court cannot agree plaintiff’s argument that the concept of substantial
transformation, as explicated in Gibson-Thomsen and subsequent decisions, required Commerce
to exclude its fittings from the scope of the Orders.
In addition to Gibson-Thomsen, plaintiff relies on Crawfish Processors All. v. United
States, 483 F.3d 1358 (Fed. Cir. 2007), arguing that “[t]he Federal Circuit has held that the
substantial transformation concept can be used to determine whether an imported product has
been so fundamentally changed as to be outside the scope of an antidumping duty order.” Pl.’s
Mem. 34 (citing Crawfish Processors All., 483 F.3d at 1363-64). This case is inapposite. In
Crawfish Processors Alliance, the issue was whether an order that applied to “crawfish tail
meat,” regardless of how “preserved or prepared,” included a cooked product that included
crawfish tail meat as one of a significant number of combined ingredients. The case before the
court does not involve a mixture or combination including the good named in the scope
language.
In summary, plaintiff has not made the case that Commerce unreasonably construed the
scope language of the Orders so as to include articles having undergone fabrication that
significantly altered their cross-sectional shape, that did more than “prepare” an extrusion “for
assembly” (in plaintiff’s conception of the term), or that resulted in a “substantial
transformation” in the Gibson-Thomsen sense.
Court No. 16-00128 Page 16
2. The Department’s Application of the § 351.225(k)(1) Factors
In the Final Scope Ruling, Commerce rejected ATS’s argument that the scope language
limited the scope of the Orders based upon the degree or type of fabrication performed on an
extrusion. See Final Scope Ruling at 23-26. Commerce specifically rejected ATS’s contention
that the “prepared for assembly” language, which ATS highlights before the court, accomplishes
such a limitation, as well as the argument that the final shape of subject merchandise must be
imparted by the extrusion process. Id. at 23-24. In doing so, Commerce relied on two of its
prior scope rulings, the “Machine Parts Scope Ruling” and the “Motor Cases Scope Ruling,”
both of which it issued in 2012. Id. at 24 (citing Antidumping Duty (AD) and Countervailing
Duty (CVD) Orders: Aluminum Extrusions from the People’s Republic of China (PRC): Final
Scope Ruling on Precision Machine Parts (Mar. 28, 2012), available at
https://enforcement.trade.gov/download/prc-ae/scope/13-IDEX-Precision-Machine-Parts-
20120328.pdf (last visited Dec. 1, 2017) (“Machine Parts Scope Ruling”) and Antidumping Duty
(AD) and Countervailing Duty (CVD) Orders: Aluminum Extrusions from the People’s Republic
of China (PRC): Final Scope Ruling on Motor Cases (July 6, 2012), available at
https://enforcement.trade.gov/download/prc-ae/scope/14-UQM-Motor-Cases-20120706.pdf (last
visited Dec. 1, 2017) (“Motor Cases Scope Ruling”)).
Commerce stated in the Final Scope Ruling that in the Machine Parts Scope Ruling “the
Department explained that ‘We find that the investigation contemplated that subject merchandise
would undergo specialized machining processes, and did not include a limit on the amount or
specialty of the fabrication (emphasis added).’” Id. (citing Machine Parts Scope Ruling at 15).
Commerce also stated in the Final Scope Ruling that it had found in the Motor Cases Scope
Ruling “that [the] CNC production process used to produce motor cases is a fabrication process
Court No. 16-00128 Page 17
that does not result in a product being distinct from subject merchandise included [in] the scope
of the Orders.” Id. at 25 (citing Motor Cases Scope Ruling at 14-15).6
Responding to defendant’s position that Commerce reached a decision supported by the
factors in 19 C.F.R. § 351.225(k)(1), plaintiff argues in its reply brief that these factors do not
support the “overbroad” interpretation of the scope advocated by defendant. Reply Br. of Pl.
Adams Thermal Systems, Inc. in Supp. of its Mot. for J. on the Agency R. 6 (June 19, 2017),
ECF No. 34 (“Pl.’s Reply”). The court is not persuaded by this argument.
ATS looks for support for its argument in the preliminary and final determinations of the
U.S. International Trade Commission (“ITC”) in the investigation, citing passages in which the
ITC states that aluminum extrusions are produced by forcing heated aluminum billets in a
“hydraulic extrusion process” that uses a metal die, that almost any shape can be produced
“based on the ‘design of the die,’” and that “[p]roduction can be shifted between different shapes
merely by changing the die[].” Id. (citing Certain Aluminum Extrusions from China, USITC
Pub. 4153, Inv. Nos. 701-TA-475 and 731-TA-1177 (June 2010), available at
https://www.usitc.gov/sites/default/files/publications/701_731/pub4153.pdf (last visited
Dec. 1, 2017) (Preliminary Determination); Certain Aluminum Extrusions from China, USITC
Pub. 4229, Inv. Nos. 701-TA-475 and 731-TA-1177 (May 2011), available at
https://www.usitc.gov/sites/default/files/publications/701_731/pub4229.pdf (last visited
Dec. 1, 2017) (Final Determination)). In these quoted statements, the ITC described the
extrusion process, not post-extrusion machining processes, and therefore did not address the
specific issue raised by this case. ATS also quotes language from the petition to the effect that
6
In the Final Scope Ruling, Commerce also addressed and rejected the arguments ATS
made before it concerning substantial transformation, Final Scope Ruling at 25, and due process,
id. at 26, both of which arguments ATS raises before the court.
Court No. 16-00128 Page 18
the extrusion process enables the formation of a wide variety of shapes and forms, id. at 7, but
this quotation also fails to address the question of whether ATS’s merchandise must be
considered to be outside the scope because of the nature and extent of post-extrusion fabrication.
While ATS argues that “the ITC report and the Petition do not support the Department’s
interpretation, because those sources all emphasize that the shape and form is produced by the
extrusion process, as opposed to some post-extrusion manufacturing step,” id. at 7, these sources
do not support a conclusion that the final shape and form of a subject article must be that created
by the extrusion process.
Plaintiff also argues that the Machine Parts Scope Ruling is “neither binding nor
persuasive.” Id. at 15-16. As to the former, ATS argues that “neither the Federal Circuit nor this
Court has ever reviewed the Machine Parts Scope Ruling.” Id. at 15. As to persuasiveness, ATS
argues that this ruling, like the one it is challenging here, “was based on an unreasonable
interpretation of the scope language.” Id. These arguments miss the point. The Department’s
consideration of the Machine Parts Scope Ruling (and the Motor Cases Scope Ruling) was in the
context of the application of one of the criteria of 19 C.F.R. § 351.225(k)(1) (“The descriptions
of the merchandise contained in . . . the determinations of the Secretary (including prior scope
determinations)”). The Machine Parts Scope Ruling involved an aluminum housing for a
vacuum pump assembly and aluminum bodies for certain high pressure valves. Machine Parts
Scope Ruling at 2. The “products at issue start with an extruded block of aluminum upon which
various cutting, edging, and drilling operations are performed by means of a computer numerical
control (CNC) precision machine process.” Id. at 3. ATS’s disagreement with it
notwithstanding, the ruling is directly relevant to the issue Commerce confronted when
considering ATS’s Scope Ruling Application. Similarly, the subject of the Motor Cases Scope
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Ruling was “inner and outer motor cases . . . for use in connection with high-efficiency,
water-cooled electric motors,” the “feedstock” for which “consist[ed] of extruded aluminum
alloy tubing that is subsequently cut into motor casings by means of a computer numerical
controlled (CNC) precision machine process.” Motor Cases Scope Ruling at 2. The applicant
described the necessary machining as “complex and expensive.” Id. at 7. Because these rulings
are on point, and because the scope language is reasonably interpreted to include ATS’s fittings,
it was permissible under § 351.225(k)(1) for Commerce, on this record, to rely on them in
support of its conclusion that the post-extrusion processing performed on ATS’s fittings did not
result in articles that are outside the scope of the Orders.
With respect to the petition, plaintiff makes the additional point that the final scope
language differed from that originally proposed by the petitioner, which did not contain the
“prepared for assembly” language. Pl.’s Mem. 28-29; Pl.’s Reply 11. ATS argues that the
change, proposed by the petitioner during the investigation in response to a request by
Commerce for clarification of the proposed scope of the investigation, demonstrates the
petitioners’ intent that the scope of the Orders would be limited in the way ATS advocates. Pl.’s
Mem. 28-29; Pl.’s Reply 11. The difficulty with this argument is plaintiff’s reading too much
into the petition amendment. As plaintiff stated in its brief, “[i]n its April 9, 2010 scope
amendment letter, petitioners stated that ‘{w}e have changed the scope language [in] relation to
fabrication to clarify that such processing prepares the extrusion for assembly and does not
include final finished goods containing subject aluminum extrusions.’” Pl.’s Mem. 29 (citation
omitted). Responding to defendant’s emphasizing the words “does not include final finished
goods containing subject aluminum extrusions,” plaintiff argues that “the petition amendment
had two purposes: (1) clarification that the in-scope ‘fabrication’ processing contemplated only
Court No. 16-00128 Page 20
prepares the aluminum extrusion for assembly; and (2) clarification that the in-scope processing
language is not intended to include final finished goods within the scope.” Pl.’s Reply 11-12.
The court is unconvinced by this argument because the change made by the petition amendment
does not establish that petitioners intended the term “prepared for assembly” to have the narrow
meaning plaintiffs would now attribute to it. As the court discussed earlier in this Opinion, the
term “prepared for assembly” might refer to any post-extrusion fabrication that results in a good
ready for assembly. The petitioners’ intent regarding the specific issue this case presents is made
even less clear by the reference to “final finished goods,” which is a reference to goods
“containing subject aluminum extrusions,” i.e., assemblies.
In summary, plaintiff has not shown that Commerce misapplied the factors in 19 C.F.R.
§ 351.225(k)(1) in support of an “overbroad” interpretation of the scope language. As a related,
and alternative, argument, ATS submits that “[g]iven the fact that Commerce has never
interpreted the phrase ‘prepared for assembly,’ at a minimum, Commerce should not have
resolved this scope question on the basis of the (k)(1) factors” and should have applied the
factors of 19 C.F.R. § 351.225(k)(2). Pl.’s Mem. 45. This argument presumes that Commerce
misapplied the (k)(1) criteria in concluding that ATS’s fittings are subject to the Orders. Rather
than misapply the (k)(1) criteria, Commerce reached the sound conclusion that ATS’s fittings are
within the scope of the Orders. Under its regulations, Commerce is to resort to the (k)(2) criteria
“[w]hen the above [i.e., (k)(1)] criteria are not dispositive.” 19 C.F.R. § 351.225(k)(2). As the
court has discussed, Commerce reasonably relied upon the Machine Parts Scope Ruling and the
Motor Cases Scope Ruling, both of which presented the same basic question as that raised by
ATS’s Scope Ruling Application and resolved it in a way that supports the decision in the Final
Scope Ruling and refutes the construction of the scope language plaintiff advocates. Plaintiff’s
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reliance on certain language in the petition, the petition amendment, and the ITC determinations
is misplaced because these sources do not support the arguments it makes in favor of limits on
the degree of fabrication that subject merchandise may undergo.
3. The Final Scope Ruling Is Not Unlawful for Vagueness or for Lack of Notice or Due Process
Plaintiff’s final argument is that the court should reject the Department’s “overbroad”
interpretation of the scope language because it results in a “single vague order” that does not give
importers adequate notice of what is subject to antidumping or countervailing duties. Pl.’s
Mem. 39-44. ATS argues that the “extreme interpretation” underlying the Department’s position
on the scope of the Orders, which, in its view, would place within the scope all shapes and forms
of covered aluminum alloys that went through an extrusion machine at any point in the
production process, “would lead to results that are not only absurd, but also violate any
reasonable norms of notice and due process.” Id. at 44. Plaintiff adds that “[f]or example, with
the aluminum extrusion blanks that ATS uses as feedstock to reduce to finished fittings, not only
would the fittings be deemed to be subject merchandise under Commerce’s overbroad definition,
but also the scrap shavings from the lathe and machining process would be considered to be
subject merchandise, if those shavings were imported into the United States.” Id. According to
plaintiff, “scrap shavings are ‘shapes and forms’ read in the same overbroad sense that
Commerce applied to the Orders” and “[t]he scrap shavings of the aluminum went through the
extruding machine, just like the finished fittings.” Id. Responding to defendant’s argument that
Commerce reasonably construed the scope language, ATS argues that Commerce interprets the
scope language of the Orders “in the broadest possible manner, which is unreasonable because it
does not give importers fair notice of what is and is not covered.” Pl.’s Reply 22. ATS argues,
further, that “[t]he Court should remand with instructions to Commerce to interpret the scope
Court No. 16-00128 Page 22
language in a manner that provides a reasonable limit on the types of further manufacturing that
extruded aluminum may undergo and still remain subject merchandise.” Pl.’s Mem. 44. For
several reasons, plaintiff’s arguments do not convince the court that the interests of notice and
due process compel the court to remand the Final Scope Ruling to Commerce.
In the administrative proceeding giving rise to this case, the Department’s responsibility
was to decide whether the fittings described in the Scope Ruling Application were within the
scope of the Orders. Commerce was not required to announce an interpretation resolving future
questions as to that scope, and the Final Scope Ruling did not do so. Nor does the court agree
that Commerce, in this case, unreasonably has interpreted the scope language “in the broadest
manner possible.” Id. at 40. The “scrap shavings” example ATS offers to illustrate its argument
is misguided in assuming that such a product necessarily would be found to be within the scope
of the Orders according to the Department’s interpretation. The reasoning of the Final Scope
Ruling does not compel the conclusion that the scrap shavings ATS describes, which are not
produced so as to achieve a specific shape or form, would be “aluminum extrusions” as defined
by the scope language.
Where scope language in an order is ambiguous as to whether a particular good is
covered, the importer may resort to the Department’s procedures for obtaining a scope ruling.
See 19 C.F.R. § 351.225(a) (Introducing scope ruling procedures and informing parties that
issues can arise as to whether a particular product is included within the scope of an antidumping
or countervailing duty order “because the descriptions of subject merchandise contained in the
Department’s determinations must be written in general terms.”). ATS has sought and obtained
such a scope ruling here. Dissatisfied with that ruling, plaintiff would have the court require
Commerce to formulate a narrower scope that defines a “reasonable limit on the types of further
Court No. 16-00128 Page 23
manufacturing” a subject good may undergo, but regarding a “reasonable limit,” plaintiff’s
proffered interpretation of the scope language would require Commerce to decide in each case
whether a given degree of post-extrusion fabricating impermissibly altered the basic cross-
sectional shape, exceeded that which “prepared” the article “for assembly,” or resulted in a
“substantial transformation.” See Pl.’s Mem 44. Such an approach would introduce
considerable vagueness and unpredictability, particularly as compared to the interpretation
Commerce adopted in the Final Scope Ruling. A narrower scope is not necessarily a better
defined one.
ATS cites various judicial decisions in support of its notice and due process argument,
but these decisions do not establish a principle upon which the court must hold the Final Scope
Ruling unlawful. Plaintiff relies, for example, upon Mid Continent Nail Corp. v. United States,
725 F.3d 1295, 1300-01 (Fed. Cir. 2013) for its explanation that the Duferco principle, which
ensures that antidumping duties are imposed on merchandise only by an order that reasonably
may be interpreted to include such merchandise, is grounded in the due process requirement of
fair warning to regulated parties. Pl.’s Mem. 40. Also, plaintiff quotes a sentence from the
opinion in ArcelorMittal Stainless Belgium N.V. v. United States, 694 F.3d. 82, 90
(Fed. Cir. 2012), “Commerce’s discretion to define and clarify the scope of an investigation is
limited by concerns for transparency of administrative actions.” Id. at 41. ATS opines,
additionally, that because the scope language relied upon by Commerce in the Final Scope
Ruling is “convoluted and vague,” the court “should insist on construing the scope narrowly, so
as to avoid lack of notice to importers, just as courts generally construe ambiguities in insurance
contracts against the insurer.” Pl.’s Reply 22 (citations omitted).
Court No. 16-00128 Page 24
Plaintiff’s reliance on Mid Continent Nail Corp. and Duferco is unavailing because
Commerce did not base the Final Scope Ruling on an unreasonable or impermissibly broad
interpretation of the scope language. The sentence from ArcelorMittal upon which ATS relies,
when read in context, is seen to be not on point. The Court of Appeals was addressing an
antidumping duty order on stainless steel plate “4.75 mm or more in thickness.” ArcelorMittal,
694 F.3d. at 83. Commerce previously had interpreted the dimension as a measurement that
excluded merchandise with an actual thickness of less than 4.75 mm. Id. at 88-89. The case
arose because Commerce, changing its position, began to interpret the scope language to include
stainless steel plate of a nominal thickness of 4.75 mm, regardless of the actual thickness.
Concluding that Commerce “was not justified in finding the order ambiguous,” the Court of
Appeals reasoned that “Commerce is not at liberty to ignore the plain terms of an order in what
appears to be, in retrospect, an effort to better reflect the intent of the petitioners.” Id. at 90.7
Finally, plaintiff’s argument that scope language should be construed narrowly, and against
Commerce as the drafter, misstates the law as to interpretation of scope language, which is
governed by the principles set forth in Duferco and subsequent, related decisions of the Court of
Appeals, and in the Department’s regulations.
III. CONCLUSION
The court concludes that the Final Scope Ruling is based on a reasonable interpretation of
the scope language and that Commerce permissibly applied the criteria of 19 C.F.R.
§ 351.225(k)(1) in determining that ATS’s fittings are within the scope of the Orders. Therefore,
7
ATS also cites certain opinions of the Court of International Trade, none of which is on
point.
Court No. 16-00128 Page 25
the court will deny plaintiff’s motion for judgment on the agency record and enter judgment
sustaining the Final Scope Ruling.
/s/ Timothy C. Stanceu
Timothy C. Stanceu, Chief Judge
Dated: December 6, 2017
New York, NY