MacLean Power, L.L.C. v. United States , 359 F. Supp. 3d 1367 ( 2019 )

Slip Op. 19-15
UNITED STATES COURT OF INTERNATIONAL TRADE
MACLEAN POWER, L.L.C.,
Plaintiff, Before: Jane A. Restani, Judge
v.
Court No. 17-00265
UNITED STATES,
Defendant.
OPINION
[Commerce’s scope ruling remanded to exclude plaintiff’s pole line hardware from scope of
antidumping duty order.]
Dated: January 30, 2019
Lawrence R. Pilon and Thomas M. Keating, Hodes Keating & Pilon, of Chicago, Ill., for
Plaintiff MacLean Power, L.L.C.
Eric J. Singley, Trial Attorney, Civil Division, U.S. Department of Justice, of
Washington D.C., for the defendant. With him on the brief were Joseph H. Hunt, Assistant
Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of
counsel on the brief was Caroline D. Bisk, Attorney, U.S. Department of Commerce, of
Washington, D.C.
Restani, Judge: This action challenges a final scope ruling issued by the United States
Department of Commerce, International Trade Administration (“Commerce”) regarding
MacLean Power, L.L.C. (“MacLean”)’s pole line hardware. MacLean moves for judgment on
the administrative record, seeking a holding that Commerce’s determination that its pole line
hardware fall within the antidumping order on certain helical spring lock washers (“HSLWs”)
from the People’s Republic of China (“PRC”) is unsupported by substantial record evidence or
otherwise not in accordance with the law. See Mem. L. Supp. Pl. MacLean Power, L.C.C.’s
Rule 56.2 Mo. J. Agency Record, Doc. No. 26-1 (“MacLean Br.”). Accordingly, MacLean seeks
Court No. 17-00265 Page 2
exclusion from the scope of the antidumping duty order. MacLean Br. at 32–33. Commerce
opposes MacLean’s motion. For the following reasons, MacLean’s motion is granted.
BACKGROUND
On November 23, 1993, Commerce published an antidumping duty order covering
certain HSLWs from the PRC. See Antidumping Duty Order: Certain Helical Spring Lock
Washers from the PRC, 58 Fed. Reg. 53,914 (Dep’t Commerce Oct. 19, 1993); Amended Final
Determination and Amended Antidumping Duty Order: Certain Helical Spring Lock Washers
from the PRC, 58 Fed. Reg. 61,859 (Dep’t Commerce Nov. 23, 1993) (the “Order”). Commerce
defined the scope of certain HSLWs as follows:
[C]ertain HSLWs are circular washers of carbon steel, of carbon alloy steel, or of
stainless steel, heat-treated or non heat-treated, plated or non-plated, with ends
that are off-line. HSLWs are designed to: (1) Function as a spring to compensate
for developed looseness between the component parts of a fastened assembly; (2)
distribute the load over a larger area for screws or bolts; and (3) provide a
hardened bearing surface. The scope does not include internal or external tooth
washers, nor does it include spring lock washers made of other metals, such as
copper. The lock washers subject to this investigation are currently classifiable
under subheading 7318.21.0000 of the Harmonized Tariff Schedule of the United
States (HTSUS). Although the HTSUS subheadings are provided for convenience
and customs purposes, our written description of the scope of this investigation is
dispositive.
58 Fed. Reg. at 61,859. The Order does not mention HSLWs imported as assembled into other
merchandise or as a part of a set or kit containing multiple items.
On October 11, 2016, MacLean Power, L.L.C. (“MacLean”), a manufacturer of products
used by utilities for building transmission and distribution lines and substations, filed a request
with Commerce for a scope ruling that its various pole line hardware products, which contain
HSLWs as component parts, were outside of the scope of the Order. Scope ruling request of
MacLean Power, L.L.C., Pole Line Hardware Helical Spring Lock Washers from PRC (A-570-
822), P.D. 1 (Oct. 11, 2016) (“Scope Ruling Request”). MacLean’s pole line hardware products
Court No. 17-00265 Page 3
include clamps and line post studs used “to attach, support, and secure the cables, wires, and
related components that carry power, telephone, internet, and cable television signals in above-
ground pole-based systems [(i.e., utility poles)].” Scope Ruling Request at 3. The clamps are
combinations of steel clamping cups or jaws, attached to bolts or studs that are fastened with
HSLWs and nuts. See id. at 3–6. The line studs include steel pins that attach to a HSLW, a
square or hex nut, and a locknut. 1 Id. at 7. In each of MacLean’s pole line hardware products,
the HSLWs form only one part of a multi-part assembled good. MacLean imports and sells its
pole line hardware as assembled. See MacLean Power’s Resp. to the Department’s 03/15/2017
Req. for Additional Information, A-570-822, P.D. 12 at Ex. AA (May 11, 2017). No comments
on the Scope Ruling Request were filed by interested parties.
Commerce issued a final scope ruling on October 5, 2017, concluding that MacLean’s
HSLWs, as a component of pole line hardware, fell within the scope of the Order. Final Scope
Ruling On MacLean Power, L.L.C.’s Pole Line Hardware Products, A-570-822, P.D. 18 at 8–10
(Oct. 5, 2017) (“Scope Ruling”). Commerce asserts it used its “discretion to determine that [the
pole line hardware was] a set of related products [that were] merely a combination of subject and
non-subject merchandise, and not a unique product.” Id. at 10. Thus, Commerce further
asserted, “[b]ecause the [HSLWs] [were] included in a mixed media item that includes a mixture
of potentially subject merchandise and non-subject merchandise,” it used the mixed media
analysis outlined in Mid Continent Nail Corp. v. United States, 725 F.3d 1295 (Fed. Cir. 2013).
Id. at 7. In accordance with the purportedly applicable analysis for “mixed media” items
articulated in Mid Continent, Commerce first found that the HSLWs were subject merchandise
1
Images of the pole line hardware as submitted to Commerce are available in an appendix to this
opinion. See Scope Ruling Request at 3–7.
Court No. 17-00265 Page 4
“as outlined in the literal terms of the [Order].” Id. at 9. Commerce then determined that the
inclusion of HSLWs into pole line hardware should not exclude them from the scope of the
Order. Id. Commerce found “no basis in the language of the order” or “other scope-related
sources” to exclude HSLWs when incorporated into pole line hardware. Id. at 9–10.
MacLean challenges Commerce’s determination that the imported pole line hardware
constituted a mixed media product. MacLean argues that Commerce’s characterization of its
imported goods as “mixed media” is unsupported both by record evidence and Commerce’s prior
mixed media determinations. MacLean Br. at 19–24. MacLean contends that the Department’s
reliance on Mid Continent is misplaced because the HSLWs included in MacLean’s pole line
hardware are components of a unique good as opposed to mixed media items, and therefore a
mixed media approach like that taken in Mid Continent is inapplicable. Id.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court has authority to
review “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).
Commerce’s final scope determination will be upheld unless it is “unsupported by substantial
evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Legal Framework
After an antidumping duty order is published, importers may seek “‘scope rulings’ that
clarify the scope of an order . . . with respect to particular products.” 19 C.F.R. § 351.225(a), (c).
In making a typical scope determination, Commerce follows a sequential analysis. Commerce
must first analyze the language of the antidumping order itself and determine if the product is
Court No. 17-00265 Page 5
covered by the order. See Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097–98 (Fed.
Cir. 2002) (stating that the language of an order is the “cornerstone of [a court’s] analysis” of an
order’s scope). If the language of the order is ambiguous regarding the product at issue,
Commerce next considers the (k)(1) factors, which include “[t]he descriptions of the
merchandise contained in the petition, the initial investigation, and the determinations of
[Commerce] (including prior scope determinations) and the Commission.” 19 C.F.R. §
351.225(k)(1). If these sources are sufficient to determine that the product falls within the scope
of the order, a final scope ruling is issued. Tak Fat Trading Co. v. United States, 396 F.3d 1378,
1382 (Fed. Cir. 2005). However, if the sources in (k)(1) are not dispositive, Commerce must
consider the additional (k)(2) factors, which are “(i) [t]he physical characteristics of the product;
(ii) [t]he expectations of the ultimate purchasers; (iii) [t]he ultimate use of the product; (iv) [t]he
channels of trade in which the product is sold; and (v) [t]he manner in which the product is
advertised and displayed.” 19 C.F.R. § 352.225(k)(2).
Although courts grant significant deference to Commerce’s interpretation of its own
orders, Commerce “cannot ‘interpret’ an antidumping order so as to change the scope of that
order, nor can Commerce interpret an order in a manner contrary to its terms.” See Duferco
Steel, 296 F.3d at 1095 (quoting Eckstrom Indus., Inc. v. United States, 254 F.3d 1068, 1072
(Fed. Cir. 2011)). Moreover, “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 1089.
II. MacLean’s Pole Line Hardware
Commerce incorrectly determined that the HSLWs in MacLean’s pole line hardware fall
within the scope of the Order because the HSLWs were neither imported alone nor as part of a
set or kit, but rather as unique assembled products. An antidumping duty order reflects a
Court No. 17-00265 Page 6
determination by Commerce that a “subject merchandise is being, or is likely to be, sold in the
United States at less than its fair value.” 19 U.S.C. § 1673d(a)(1); See also Duferco Steel, 296
F.3d at 1096 (“Commerce’s final determination reflects the decision that has been made as to
which merchandise is within the final scope of the investigation and is subject to the order.”).
The term “subject merchandise” is defined as “the class or kind of merchandise that is within the
scope of an investigation, a review, a suspension agreement, [or] an order.” 19 U.S.C.
§ 1677(25). Thus, Commerce is required to determine whether the product as imported falls
under the “class or kind of merchandise” encompassed by the language of the order. See Smith
Corona Corp. v. United States, 915 F.2d 683, 685 (Fed. Cir. 1990).
It is an ancient principle of “customs law that ‘[i]n order to produce uniformity in the
imposition of duties, the dutiable classification of articles imported must be ascertained by an
examination of the imported article itself, in the condition in which it is imported.’” Ford Motor
Co. v. United States, 254 F. Supp. 3d 1297, 1317 (CIT 2017) (quoting Worthington v. Robbins,
139 U.S. 337, 341 (1891)). While the issue before the court is not one of classification, the duty
to consider the merchandise in the condition in which it is imported applies to additional unfair
trade duties. It is the merchandise as imported that is judged in relation to the term of the order,
which for these purposes substitutes for tariff classification terms.
MacLean’s pole line hardware, although it contains HSLWs, is imported as distinct
assembled products for use in the attachment of cables and wires onto utility poles. Commerce
provides no support for its failure to treat the pole line hardware as unique manufactured
products. Commerce did not decide whether the pole line hardware, as assembled, falls under
the class or kind of merchandise contemplated in the language of the Order. It did not analyze
Court No. 17-00265 Page 7
the components of the pole line hardware to determine whether they were parts of sets or
separate dutiable items. Had it done so, the outcome would have been different.
Here, the language of the Order covered HSLWs imported individually and makes no
mention of the importation of HSLWs as assembled as a component of a larger product. See 58
Fed. Reg. at 61,859. The Order gives further guidance by stating that the subject HSLWs “are
currently classifiable under subheadings 7318.21.0000, 7318.21.0030, and 7318.21.0090 of the
[Harmonized Tariff Schedule of the United States (“HTSUS”)].” 2 Scope Ruling at 2. Those eo
nomine designations refer plainly to “spring washers and other lock washers.” See HTSUS
7318.21.00. Moreover, at the time of the Order, the HTSUS contained a subheading, not
referenced in the Order, for “Bolts and bolts and their nuts or washers entered or exported in the
same shipment.” See HTSUS 7318.15.20. At minimum, this indicates an awareness that
HSLWs may be attached to their bolts, along with nuts or other hardware components,
suggesting that the language of the order was not intended to include washers entered as
assembled with threaded fasteners, such as bolts. Indeed, as MacLean argues, Commerce did not
provide an explanation as to why the pole line hardware would be distinguished from “all
manner of other manufactured goods that are held together with threaded fasteners secured by
HSLWs.” See MacLean Br. at 19. The Order covers washers, not assembled items that include
washers, whether those assemblies are pole line hardware, refrigerators, automobiles, or
airplanes. Accordingly, Commerce failed to support by substantial evidence the determination
that the pole line hardware were not unique products.
2
HTSUS Heading 7318 provides for “Screws, bolts, nuts, coach screws, screw hooks, rivets,
cotter, cotter pins, washers (including spring washers) and similar articles, or iron or steel.” See
HTSUS 7318.
Court No. 17-00265 Page 8
In reaching its erroneous conclusion, Commerce treated the washers as part of a kit or set,
such that the “two-part” analysis outlined in Mid Continent would be applicable. 3 The scope
ruling in Mid Continent concerned sets or kits of subject and non-subject merchandise “packaged
and imported together.” 725 F.3d at 1298. That court built its reasoning on Commerce’s prior
treatment of similarly packaged goods. See, e.g., Final Scope Ruling: Antidumping Duty Order
on Certain Tissue Paper from the PRC, A-570-894 (Sept. 19, 2008) (“Walgreen Scope Ruling”)
(tissue paper packaged in gift bag sets and gift bag wrap kits); Final Scope Ruling-Antidumping
Duty Order on Certain Cased Pencils from the PRC--Request by Fiskars Brands, Inc., A-570-827
(June 3, 2005) (a pencil attached to a drawing compass); Final Scope Ruling-Antidumping Duty
Order on Certain Cased Pencils from the PRC--Request by Target Corporation, A-570-827 (Mar.
4, 2005) (pencils in a portable plastic case that also included markers, crayons, and paper).
Here, however, Mid Continent and the “mixed media” cases are not instructive because
the pole line hardware, as discussed above, are assembled items composed of HSLWs and other
hardware to create a unique product. 4 This multipart assembly into a distinct product with a
specific purpose distinguishes the pole line hardware from the tool box in Mid Continent and
3
Commerce put the cart before the horse. It began a “mixed media” analysis by drawing
language from Mid Continent that such an analysis is applicable where a “potentially subject
merchandise is included in a mixed media item that includes a mixture of potentially subject
merchandise and non-subject merchandise.” Scope Ruling at 7 (quoting Mid Continent, 725
F.3d at 1302). That language is not useful for deciding what the imported item is, as it
presupposes that the product in question is appropriately considered a “mixed media” item.
Before applying the various guidance in Mid Continent, Commerce was first required to address
the pole line hardware as imported in its assembled condition.
4
In upholding the determination that tissue paper was within the scope of the order, the Court of
Appeals for the Federal Circuit in Walgreen Co. v. United States observed that “the components
of the gift bag sets did not interact in any way or otherwise represent a unique product.” 620
F.3d 1350, 1356 (Fed. Cir. 2010). Commerce considered the gift bag items “to be individual
items simply packaged together” and “could be used independently of one another and at
different times.” Walgreen Scope Ruling at 11.
Court No. 17-00265 Page 9
from other mixed media items. Commerce unconvincingly attempts to equate MacLean’s pole
line hardware with the household tool kits. It asserted that a “mixed media” analysis was
appropriate because:
[a]s in Mid Continent, here, the HSLWs were unmodified and clearly remain
HSLWs in appearance; likewise, the nails at issue in Mid Continent were
unmodified and remained nails in appearance. Neither product was welded or
adhere in any way to non-subject merchandise. In fact the HSLWs are easily
separated from non-subject merchandise; likewise, the nails were also easy to
separate from the non-subject merchandise.
Scope Ruling at 8. Although Commerce found the HSLWs, like the tool box nails, to be
“unmodified,” “not welded or adhered” and “easily separated” from the rest of the hardware, it
failed to address the fact that, unlike the nails in Mid Continent, the HSLWs are assembled into
clamps and studs, interact with the other parts of the clamps and studs, and are not sold for use
independent of the other component pieces. 5 See Scope Ruling Request at 3–7, 12–13.
Moreover, the HSLWs subject to the Order are designed to function as a spring to compensate
for looseness in a fastened assembly, distribute load for screws and bolts, and provide a hardened
bearing surface. Scope Ruling at 2. Thus, by definition, they will not be found modified,
welded, or adhered in any way to non-subject merchandise. Commerce’s use of such factors to
find the pole line hardware analogous to tool kits was unreasonable. A tool box retains its
essential character when it excludes nails, as do the nails by themselves. But the HSLWs at issue
here are not alleged to be imported for use in anything other than the pole line hardware. 6 The
5
Nothing in the record suggests some economic rationale for treating these products
disassembled when they are imported assembled.
6
If an interested party believes that the products containing HSLWs are actually intended for
another purpose, then anti-circumvention statutes may provide remedies for the risks that
component pieces are imported as assembled only to avoid anti-dumping or countervailing duty
orders. See 16 U.S.C. § 1677j. Additionally, interested parties can file a petition for an
antidumping investigation and order that includes broader terms, including HSLWs as assembled
Court No. 17-00265 Page 10
pole line hardware cannot perform their intended functions without the HSLWs, or the remainder
of their components functioning together. Because the pole line hardware products cannot
reasonably be considered HSLWs themselves or sets or kits containing HSLWs, their HSLWs do
not fall under the scope of the Order. 7
CONCLUSION
For the foregoing reasons, MacLean’s motion for judgment on the agency record is
GRANTED. The matter is remanded for Commerce to issue a determination that the HSLWs
incorporated into MacLean’s pole line hardware are excluded from the scope of the Order.
Commerce shall file its remand redetermination with the court on or before 45 days of the
issuance of this opinion. As there is no new action possible that could require further briefing,
the court does not set a further schedule, but will enter judgment upon receipt of the conforming
determination.
/s/ Jane A. Restani
Jane A. Restani, Judge
Dated: January 30, 2019
New York, New York
into larger hardware, if those are the items being sold at less their fair value. See 19 U.S.C.
§ 1673a.
7
No party has alleged that there is a conflict between the scope language and any of the (k)(1)
sources. In fact, the International Trade Commission determination makes it clear that the
corresponding domestic industry makes helical spring lock washers. Certain Helical Spring
Lockwashers from the [PRC] and Taiwan, USITC Pub. No. 2526, Inv. Nos. 731-TA-624 & 625
(Preliminary) (October 1992) at I-9.