Polites v. United States

Slip Op. 11-31

UNITED STATES COURT OF INTERNATIONAL TRADE

CONSTANTINE N. POLITES,

Plaintiff,

v.

UNITED STATES,
Before: Pogue, Chief Judge
Defendant,
Court No. 09-00387
and

THE AD HOC COALITION FOR FAIR
PIPE IMPORTS FROM CHINA, & THE
UNITED STEEL WORKERS,

Defendant-
Intervenors

OPINION AND ORDER

[Commerce’s scope determination remanded.]

Decided: March 23, 2011

Peter S. Herrick, PA (Peter S. Herrick) for Constantine N.
Polites;

Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director; Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(Michael D. Panzera and John J. Todor); Reid P. Swayze, of Counsel,
Office of Chief Counsel for Import Administration, U.S. Department
of Commerce, for the United States Department of Commerce;

King & Spalding LLP (Gilbert B. Kaplan, Brian E. McGill, &
Daniel L. Schneiderman) for Ad Hoc Coalition for Fair Pipe Imports
from China, et al.;

Schagrin Associates (Roger B. Schagrin) for United
Steelworkers, et. al.

Pogue, Chief Judge: This matter returns to court following a
Court No. 09-00387 Page 2

voluntary remand to the Department of Commerce (“the Department”

or “Commerce”) to define the exclusion for “finished scaffolding”

in the antidumping and countervailing duty orders on circular

welded carbon quality steel pipe from the People’s Republic of

China.1 On remand, Commerce defined “finished scaffolding” as

“[c]ompleted supported elevated platforms and their completed

supporting structures,” or “component parts that enter the United

States unassembled as a ‘kit.’” Final Results of Redetermination

Pursuant to Voluntary Remand (Dep’t Commerce August 26, 2010) at

2 (“Remand Results”).

Seeking review of the remand determination, Plaintiff

Constantine Polites2 (“Plaintiff” or “Polites”) challenges

Commerce’s definition of the “finished scaffolding” exception.

This court has jurisdiction pursuant to 28 U.S.C. § 1581(c).

Because Commerce’s definition renders the “finished

1
See Circular Welded Carbon Quality Steel Pipe from the
People’s Republic of China, 73 Fed. Reg. 42,547 (Dep’t Commerce
July 22, 2008) (notice of antidumping duty order); and Circular
Welded Carbon Quality Steel Pipe from the People’s Republic of
China, 73 Fed. Reg 42,545 (Dep’t Commerce July 22, 2008) (notice
of amended final affirmative countervailing duty determination
and notice of Countervailing Duty Order); Circular Welded Carbon
Quality Steel Pipe from the People’s Republic of China, 73 Fed.
Reg. 42,545 (Dep’t Commerce July 22, 2008) (notice of amended
final affirmative countervailing duty determination and notice of
countervailing duty order) (collectively, “CWP Orders” or
“Orders”).
2
Plaintiff filed the complaint under his own name, but has
appeared in the administrative proceedings prior under the name
of his company, Constantine N. Polites & Co.
Court No. 09-00387 Page 3

scaffolding” exception mere surplusage, the court remands. After

a brief review of relevant background, the agency’s determination

and the applicable standard of review, the court will explain its

conclusion.

BACKGROUND

Seeking to exclude his merchandise from the scope of the CWP

Orders, Plaintiff, on February 5, 2009, requested that Commerce

determine whether the steel pipes that he imports were barred

from inclusion in the Orders under the exclusion for “finished

scaffolding.” Polites Req. for Scope Ruling, A-570-910 (February

3, 2009) Admin. R. Pub. Doc. 1 at 2. Polites defined his

imported merchandise as “finished scaffold tube[s] without any

fittings.” Polites Resp. to Req. for Additional Information, A-

570-910, (July 14, 2010) Admin. R. Pub. Doc. 3 at 2.3

Procedurally, when determining whether merchandise falls

within the scope of an antidumping or countervailing duty order,

3
The tubes require the addition of twist lock fittings
and/or right angle couplers, both of which are also manufactured
by Polites, before they can be used in scaffolding. See Polites
Resp. to Petitioner’s Letter of June 1, 2009, (June 8, 2009)
Admin. R. Pub. Doc. 12 at 2. The parties do not dispute whether
the size and chemical composition of the tubes that Polites
imports fall within the scope of the CWP Order. The size of
Polites’s tubes fall within the specified diameter and wall
thickness requirements, and the steel used to construct them is
no more than 2% carbon, 1.8% manganese, and 2.25% silicon, by
weight, which also places them within the scope of the Orders.
See Remand Results at 14.
Court No. 09-00387 Page 4

Commerce engages in a three step process.4 First, Commerce

examines the language of the order at issue. If the terms of the

order are dispositive, then the order governs. See Tak Fat

Trading Co. v. United States, 396 F.3d 1378, 1383 (Fed.Cir. 2005)

(The “predicate for the interpretive process is language in the

order that is subject to interpretation”).

Second, if the terms of the order are not dispositive,

Commerce must then determine whether it can make a determination

based upon the factors listed in 19 C.F.R. § 351.225(k)(1). 19

C.F.R. § 351.225(k). These factors are “the 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).

To be dispositive, the Section 351.225(k)(1) criteria “must be

‘controlling’ of the scope inquiry in the sense that they

definitively answer the scope question.” Sango Int’l v. United

States, 484 F.3d 1371, 1379 (Fed. Cir. 2007).

If a Section 351.225(k)(1) analysis is not dispositive,

Commerce then applies the five “Diversified Products” criteria as

specified in 19 C.F.R. § 351.225(k)(2): 1) The physical

characteristics of the product, 2) the expectations of the

ultimate purchasers, 3) the ultimate use of the product, 4) the

4
Here, Commerce determined that it need only apply up to two
steps of the process and that the third step was unnecessary.
Court No. 09-00387 Page 5

channels of trade in which the product is sold, and 5) the manner

in which the product is advertised and displayed. See 19 C.F.R. §

351.225(k)(2); Diversified Prods. Corp. v. United States, 572

F.Supp. 883, 889 (CIT 1983).

In conducting a scope inquiry, “the scope of a final order

may be clarified, [but] it can not be changed in a way contrary

to its terms.” Duferco Steel, Inc. v. United States, 296 F.3d

1087, 1097 (Fed. Cir. 2002) (quoting Smith Corona Corp. v. United

States, 915 F.2d 683, 686 (Fed.Cir. 1990)).

Following this process in the matter at issue here, Commere

turned first to the CWP Orders. The Orders state in part:

[T]his order covers certain welded carbon quality steel
pipes and tubes, of circular cross section . . .
regardless of . . . surface finish, . . . end finish. .
. or industry specification, [but] does not include .
. . finished scaffolding. . . . [T]he product
description, and not the Harmonized Tariff Schedule of
the United States (“HTSUS”) classification, is
dispositive of whether merchandise imported into the
United States falls within the scope of the order.

Circular Welded Carbon Quality Steel Pipe from the People’s

Republic of China, 73 Fed. Reg. 42,545 (Dep’t Commerce July 22,

2008) (notice of amended final affirmative countervailing duty

determination and notice of countervailing duty order).

Responding to Plaintiff’s claim, Commerce initially found

that Polites’s pipes fell within the scope of the CWP Orders and

therefore “finished scaffolding” need not be defined. Mem. Re.

Antidumping and Countervailing Duty Orders on Circular Welded
Court No. 09-00387 Page 6

Carbon Quality Steel Pipe from the People’s Republic of China:

Final Scope Ruling on Certain Scaffolding Tubes of Constantine N.

Polites & Co., A-570-910 (August 12, 2009), Admin. R. Pub. Doc.

15 at 10. Polites then brought this action seeking review of

Commerce’s determination.5

Before filing a response to Polites’s complaint, Commerce

requested a voluntary remand for the sole purpose of establishing

a definition for “finished scaffolding.” The court granted

Commerce’s remand request.

On remand, as noted above, Commerce defined “finished

scaffolding”6 to cover two items. The first definition,

5
Defendant-Intervenors assert as a threshold issue that
Plaintiff’s claim is an untimely challenge to the scope
definition established by Commerce’s final determination and the
CWP Orders. Def. Int. Br. at 13 (citing 19 U.S.C.
§ 1516a(a)(2)(A)(i)(II)). Defendant-Intervenors, however,
misread the statute. 19 U.S.C. § 1516a(a)(2)(A)(i)(II) dictates
when the court may review, among others, countervailing duty
orders. Here, Polites asked for a scope determination to assess
whether the CWP Orders cover the tubes it imports, a request
which Defendant-Intervenors acknowledge is timely. Def. Int. Br.
at 13. Scope determinations are governed by 19 U.S.C.
§ 1516a(a)(2)(A)(ii), which states that such a determination must
be challenged within 30 days of the date of mailing. 19 U.S.C.
§ 1516a(a)(2)(A)(ii). Here, the scope determination was issued
on August 12, 2009 and Polites timely filed its summons on
September 12, 2009 (The date of mailing is not at issue because
the scope determination was issued on August 12, 2009 and
therefore could not have been mailed prior to that date.).
Accordingly, Polites’s summons filed on September 12, 2009 is
timely. See 19 U.S.C. § 1516a(a)(2)(A)(ii).
6
While the final CWP Orders do not include any language
regarding pipes or tubes used for scaffolding, the petition
explicitly addresses pipes used for scaffolding. Specifically,
the petition states that “[p]ipe used for the production of
Court No. 09-00387 Page 7

“completed supported elevated platforms and their completed

supporting structures made of scaffolding tubes which are

attached to each other by means of fittings, couplers, clamps,

base plate, and/or other means,” refers to actual, completed

scaffolding structures. See Remand Results at 2. Commerce also

defined “finished scaffolding” to include scaffolding kits which

contain, at the time of importation, all the necessary components

to assemble a scaffold. Id.

STANDARD OF REVIEW

Under its familiar standard of review, the court “shall

hold unlawful any determination, finding, or conclusion found ...

to be unsupported by substantial evidence on the record, or

otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i); Koyo Seiko Co. v. United States, 20 F.3d

1160, 1164 (Fed.Cir. 1994). On legal issues, the court grants

scaffolding (but not finished scaffolding) . . . are included
within the scope of th[e] investigation.” Circular Welded Carbon
Quality Steep Pipe from the People’s Republic of China, 72 Fed.
Reg. 36,663 (Dep’t Commerce July 5, 2007) (initiation of
antidumping duty investigation); Circular Welded Carbon Quality
Steep Pipe from the People’s Republic of China, 72 Fed. Reg.
36,668 (Dep’t Commerce July 5, 2007) (notice of initiation of
countervailing duty investigation) (collectively “the petition”).
At Defendant-Intervenor’s request, Commerce moved the
parenthetical reference to “finished scaffolding” to the list of
exclusions. Remand Results at 11. Concurrently, Commerce
decided to omit all reference to end use from the final order and
removed the language referring to “pipes used for scaffolding”;
nonetheless, Commerce maintains that the intent of the petition
was to include scaffolding pipes and tubes similar to those
imported by Polites. Remand Results at 11–12.
Court No. 09-00387 Page 8

“significant deference” to Commerce's scope rulings. Allegheny

Bradford Corp. v. United States, 342 F. Supp. 2d 1172, 1183 (CIT

2004). Nonetheless, the court will find a scope ruling not in

accordance with law if the scope ruling “changes the scope of an

order or interprets an order in a manner contrary to the order's

terms.” Id.; see also Duferco Steel, Inc., 296 F.3d at 1089

(“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”).

On factual issues, substantial evidence is relevant evidence

that “a reasonable mind might accept as adequate to support a

conclusion.” Consol. Edison Co. v. N.L.R.B., 305 U.S. 197, 229

(1938). Commerce's factual conclusions in a scope ruling are not

precluded from being supported by substantial evidence when two

different conclusions may be drawn from the same evidence and

need only be reasonable to be upheld. See id.; Novosteel SA v.

United States, 128 F. Supp. 2d 720, 730 (CIT 2001).

DISCUSSION

While Commerce has latitude in interpreting the CWP Orders,

it may not render parts of the Order “mere surplusage.” Eckstrom

Industries, Inc. v. United States, 254 F.3d 1068, 1073 (Fed. Cir.

2001); see also Duncan v. Walker, 533 U.S. 167, 174 (2001) (“a

statute ought, upon the whole, to be so construed that, if it can
Court No. 09-00387 Page 9

be prevented, no clause, sentence, or word shall be superfluous,

void, or insignificant.”); Orlando Food Corp. v. United States,

423 F. 3d 1318, 1324 (Fed Cir. 2005) (the rule against surplusage

is a rebuttable presumption). Therefore, Commerce must, at the

least, define the finished scaffolding exclusion such that it

encompasses merchandise which may be imported into the United

States and thus is potentially subject to the CWP Order.

Polites asserts that defining “finished scaffolding” as

fully assembled scaffolding is unreasonable because merchandise

fitting this description would be impractical to import into the

United States. Pl.’s Comments on Dep’t. Commerce’s Determination

(“Plaintiff’s Comments”). Polites further contends that the

petition and orders do not mention kits and therefore kits should

not be included within the exclusion.7 Polites Draft Remand

Determination Comments, A-570-910 (August 9, 2010) Admin. R. Pub.

Doc. 6 at 2 (“Polites Draft Remand Comments”). Polites’s first

argument is correct.

Commerce’s first definition, fully assembled scaffolding, is

unreasonable for the purposes of the CWP Order because nothing in

7
Polites argues that the definition of “finished
scaffolding” which encompasses “completed supported elevated
platforms and their completed supporting structures” does not
represent merchandise which is imported into the United States
and therefore the definition must include “disassembled,
finished scaffolding.” Plaintiff’s Comments at 2. Commerce
argues correctly that such a definition is already encompassed
within the definition of a “kit.” Remand Results at 18.
Court No. 09-00387 Page 10

the record demonstrates merchandise matching this definition is

imported into the United States or is even possibly imported into

the United States. Polites asserts that such merchandise could

never be imported into the United States and Commerce does not

disagree. See Remand Results at 17–18. Rather, both Commerce

and Polites acknowledge that fully constructed scaffolding is

merchandise that would be prohibitively expensive and impractical

to import. Remand Results at 17; Polites Draft Remand Comments

at 2.

It follows that, in the context of the CWP Orders,

Commerce’s literal definition of “finished scaffolding” renders

the “finished scaffolding” exclusion mere surplusage. The terms

of an antidumping and countervailing duty order are triggered

when merchandise is imported into the United States. An

exclusion from a scope determination must therefore encompass

merchandise which is or may be imported into the United States in

order to act as a meaningful exclusion; anything less renders the

exclusion hollow and improperly changes the meaning of the

exclusion in the CWP Orders. See Allegheny, 342 F.Supp.2d at

1183.

With regard to its second definition, Commerce asserts

correctly that it has discretion to include scaffold kits in the

definition of “finished scaffolding” even when such kits are not

listed in the Petition. See Smith-Corona Group v. United States,
Court No. 09-00387 Page 11

713 F.2d 1568, 1571 (Fed. Cir. 1983). However, if Commerce is to

include kits in the definition of “finished scaffolding,” its

decision must be supported by the record. See Matsushita Elec.

Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984).

Commerce argues that record evidence shows that scaffolding

may be imported as a kit. Remand Results at 18 (“record evidence

indicates that ‘finished scaffolding’ may be sold as a kit, which

. . . contains, at the time of importation, all of the necessary

component parts to fully assemble a final, finished

scaffolding”). However, the portions of the record that Commerce

relies on merely show that scaffolding kits are sold within the

United States. See Request for Additional Information, A-570-910

(July 7, 2010) Admin. R. Pub. Doc. 3 at Attach. 5. While Polites

acknowledges that such kits could be considered finished

scaffolding, Polites Resp. to Req. for Additional Information at

2, he also asserts that such kits have never been imported into

the United States. See Def. Resp. Br. at 15. In response,

Commerce simply states that there is a market in the United

States for scaffolding kits and that nothing on the record shows

that any or all scaffolding kits are manufactured domestically.

Id.

Commerce’s assertion that scaffolding kits may be imported

into the United States is not supported by substantial evidence

because Commerce has failed to put forth any evidence
Court No. 09-00387 Page 12

demonstrating that complete scaffolding kits are imported or are

even possibly imported into the United States. Rather, Commerce

simply makes the unsupported, conclusory determination that these

kits are not only imported, but imported as complete kits with

all the components necessary to build a scaffold. Remand Results

at 18.

The evidence in the record consists of product descriptions

extracted from four separate internet websites, each selling

scaffolding kits. Request for Additional Information at Attach.

5. None of the pages from the four websites indicate the country

of origin for the scaffolding kits. Absent any showing that

scaffolding kits are or may be imported into the United States as

complete kits, this definition of the “finished scaffolding”

exclusion is also rendered mere surplusage. Commerce’s

definition of “finished scaffolding” must include merchandise

that is at least potentially subject to the CWP Orders.8 Indeed,

the definition provided by Commerce refers to components that

must be present “at the time of importation” in order to qualify

for the exclusion.

Finally, the court finds that, in the context here, the

8
Plaintiff raises additional arguments, including, among
others, whether tariff classification and end use should factor
into Commerce’s consideration of whether the pipes it imports
fall within the general scope of the CWP Orders. The court
declines to address these arguments because the only issue
currently before it is whether Commerce’s definition of “finished
scaffolding” is reasonable and supported by the record.
Court No. 09-00387 Page 13

term, “finished scaffolding” may be ambiguous and therefore if

Commerce is unable to obtain substantial evidence showing that

scaffolding kits are or may be imported into the United States,

the § 351.225(k)(2) factors must be taken into account. The term

“finished scaffolding” first appeared in the petition, which

stated that “pipe used for the production of scaffolding (but not

finished scaffolding) . . . are included within the scope of

th[e] investigation.” Circular Welded Carbon Quality Steep Pipe

from the People’s Republic of China, 72 Fed. Reg. 36,663 (Dep’t

Commerce July 5, 2007) (initiation of antidumping duty

investigation); Circular Welded Carbon Quality Steep Pipe from

the People’s Republic of China, 72 Fed. Reg. 36,668 (Dep’t

Commerce July 5, 2007) (notice of initiation of countervailing

duty investigation). Commerce, apparently using the

§ 351.225(k)(1) factors in its analysis, attempts to support its

definition of the exclusion by finding that the intent of the

petition was to include scaffolding pipes similar to the

merchandise imported by Polites. Remand Results at 11–12.

However, Commerce’s attempt to define the exclusion based on the

§ 351.225(k)(1) factors has resulted in a definition that renders

the exclusion surplusage and is unsupported by substantial

evidence. Absent substantial evidence showing that scaffolding

kits are or may be imported into the United States, the (k)(1)

factors are not dispositive and the term, “finished scaffolding”
Court No. 09-00387 Page 14

remains ambiguous. Therefore, the court remands this issue to

Commerce so that it may 1) provide substantial evidence to

support its assertion that “finished scaffolding” means

scaffolding kits, or 2) progress to the next step of analysis and

consider the § 351.225(k)(2) factors when determining the proper

meaning of “finished scaffolding.” See Sango, 484 F.3d at 1382

(holding that Commerce’s definition using § 351.225(k)(1)

criteria is unsupported by substantial evidence and therefore

analysis using § 351.225(k)(2) criteria is required).

Conclusion

Accordingly, Commerce’s definition of “finished scaffolding”

is remanded for further consideration in accordance with this

opinion. Commerce shall have until May 9, 2011 to complete and

file its remand determination. Plaintiffs shall have until May

23, 2011 to file comments. Defendant and Defendant-Intervenors

shall have until June 6, 2011 to file any reply.

It is SO ORDERED.

/s/ Donald C. Pogue
Donald C. Pogue, Chief Judge

Dated: March 23, 2011
New York, NY