Court Opinion

ID: 4512587
Source: CourtListenerOpinion
Date Created: 2020-03-04 17:01:22.584987+00
Date Added: 2024-06-11T09:37:13.348656
License: Public Domain

Slip Op. 20-28

          UNITED STATES COURT OF INTERNATIONAL TRADE

MIDWEST FASTENER CORP.,

             Plaintiff,

v.
                                                   Before: Claire R. Kelly, Judge
UNITED STATES,
                                                   Court No. 17-00231
             Defendant,

and

MID CONTINENT STEEL & WIRE, INC.,

             Defendant-Intervenor.

                            OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s remand results.]

                                                              Dated: March 4, 2020

Robert Kevin Williams and Mark Rett Ludwikowski, Clark Hill PLC, of Chicago, IL,
for plaintiff, Midwest Fastener Corp.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for defendant. With her on the brief were
Patricia M. McCarthy, Assistant Director, Jeanne E. Davidson, Director, and Joseph
H. Hunt, Assistant Attorney General. Of Counsel was Vania Y. Wang, Attorney,
Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
of Commerce, of Washington, DC.

Adam Henry Gordon and Ping Gong, The Bristol Group PLLC, of Washington, DC,
for defendant-intervenor, Mid Continent Steel & Wire, Inc.

      Kelly, Judge:   Before the court is the U.S. Department of Commerce’s

(“Commerce”) remand redetermination filed pursuant to the court’s order in
Court No. 17-00231                                                              Page 2

Midwest Fastener Corp. v. United States, 42 CIT __, __, 348 F. Supp. 3d 1297, 1306

(2018) (“Midwest I”). See Final Results of Redetermination Pursuant to Ct. Remand,

Apr. 25, 2019, ECF No. 61 (“Remand Results”).

         On August 2, 2017, Commerce issued the final scope ruling determining that

Midwest Fastener Corp.’s (“Midwest” or “Plaintiff”) strike pin anchors were included

within the scope of the antidumping duty (“ADD”) order covering certain steel nails

from the People’s Republic of China (“PRC”). See [ADD] Order on Certain Steel Nails

from the [PRC]: Final Ruling on Midwest Fastener Strike Pin Anchors, (Aug. 2, 2017),

ECF No. 21-3 (“Final Scope Ruling”); see also Certain Steel Nails from the [PRC], 73

Fed. Reg. 44,961 (Dep’t Commerce Aug. 1, 2008) (notice of [ADD] order) (“PRC Nails

Order”). In Midwest I, the court explained that the phrase “nails . . . constructed of

two or more pieces,” as it is used in the PRC Nails Order, is ambiguous and, therefore,

Commerce’s conclusion that Midwest’s strike pin anchors were in scope was

unsupported by substantial evidence. Midwest I, 42 CIT at __, 348 F. Supp. 3d at

1300–04, 1306. As a result, the court ordered Commerce to initiate a formal scope

inquiry and conduct 19 C.F.R. § 351.225(k)(2) (2017)1 analysis (“(k)(2) analysis”) on

remand. Id.    2

1   Further citations to the Code of Federal Regulations are to the 2017 edition.
2The court, however, sustained Commerce’s liquidation instructions, effective as of
August 2, 2017 (“original liquidation instructions”) on the basis of the U.S. Court of
Appeals for the Federal Circuit’s (“Court of Appeals”) implicit recognition in
Sunpreme Inc. v. United States, 892 F.3d 1186, 1194 (Fed. Cir. 2018) (“Ct. Appeals

                                                                   (footnote continued)
Court No. 17-00231                                                            Page 3

      On remand, Commerce continues to assert that the scope language covers

Midwest’s strike pin anchors. Remand Results at 7–11. Commerce also, under

respectful protest, conducted a (k)(2) analysis and likewise concludes that Midwest’s

strike pin anchors are in scope. Id. at 11–19. Finally, Commerce states that in light

of its determination on remand, it intends to instruct CBP that only the pin

component of Midwest’s strike pin anchor is dutiable under the PRC Nails Order.

Sunpreme 2018”) that CBP can lawfully suspend liquidation of an article that it
deems to be within the scope of a relevant duty order and that Commerce can issue
instructions that CBP continue suspension of liquidation. Midwest I, 42 CIT at __,
348 F. Supp. 3d at 1304–06. Subsequently, this court’s decision regarding
Commerce’s liquidation instructions in Midwest I was called into question by
Sunpreme Inc. v. United States, 924 F.3d 1198 (Fed. Cir. 2019), rev’d in part on reh’g
en banc, 946 F.3d 1300 (Fed. Cir. 2020) (“Ct. Appeals Sunpreme 2019”). Following
Ct. Appeals Sunpreme 2019, the court asked parties to file supplemental briefing
addressing whether Ct. Appeals Sunpreme 2019 undermined the court’s decision in
Midwest I to sustain Commerce’s original liquidation instructions—and whether the
issue should be reconsidered. See Ct.’s Letter, July 9, 2019, ECF No. 70; see also
Midwest I, 42 CIT at __, 348 F. Supp. 3d at 1304–06. The parties complied. See Def.’s
Resp. Ct.’s Letter, Aug. 1, 2019, ECF No. 72; Pl.’s Resp. Ct.’s Letter, Aug. 9, 2019,
ECF No. 75; Pl.’s Reply [Def.’s Suppl. Br.], Aug. 15, 2019, ECF No. 76; [Def.’s] Reply
[Pl.’s Suppl. Br.], Aug. 23, 2019, ECF No. 77.
       Thereafter, the parties in Ct. Appeals Sunpreme 2019 petitioned the Court of
Appeals for rehearing on the matter. See Combined Pet. for Reh’g & Reh’g En Banc
[of Ct. Appeals Sunpreme 2019], [Ct. Appeals] Docket No. 2018-1116 (Fed. Cir. July
29, 2019), ECF No. 80. This court issued a stay in this proceeding, pending the Court
of Appeals’s decision on the petition for rehearing in Ct. Appeals Sunpreme 2019. See
Order, Nov. 19, 2019, ECF No. 82. On January 7, the Court of Appeals rendered its
decision in Sunpreme Inc. v. United States, 946 F.3d 1300 (Fed. Cir. 2020) (en banc)
(“Ct. Appeals Sunpreme 2020”). The Court vacated its original panel opinion and
reversed the portion of this court’s decision that relied upon it. Id. Ct. Appeals
Sunpreme 2020 held CBP acts within its authority when it interprets the scope of an
order, and therefore Commerce may order CBP to continue suspending the
liquidation of goods entered or withdrawn prior to a formal scope inquiry. In light of
the Court of Appeals’s holding in Ct. Appeals Sunpreme 2020, Midwest I’s holding
regarding liquidation stands.
Court No. 17-00231                                                            Page 4

Remand Results at 25–26. For the reasons that follow, Commerce’s determination

on remand continues to be unsupported by substantial evidence.

                                  BACKGROUND

      The court assumes familiarity with the facts as set forth in the previous

opinion and recounts the facts relevant to the issues currently before the court. See

Midwest I, 42 CIT at __, 348 F. Supp. 3d at 1299–1300. On June 8, 2017, Midwest

requested Commerce issue a scope ruling excluding its strike pin anchors from the

scope of the PRC Nails Order. See Midwest Fastener Scope Req.: Strike Pin Anchors

at 1–2, 4–12, PD 19, bar code 3579812-01 (June 8, 2017) (“Pl.’s Scope Ruling Req.”). 3

Midwest is an importer of the strike pin anchors at issue. Midwest’s strike pin

anchors have four components—a steel pin, a threaded body, a nut and a flat washer. 4

Pl.’s Scope Ruling Req. at 2; see also Final Scope Ruling at 10; Def.’s Resp. Parties’

Cmts. on [Remand Results] at 3, June 27, 2019, ECF No. 67 (“Def.’s Reply to Cmts.”).

Midwest avers that the pin component is not meant to be removed from the anchor

and can only be removed with the aid of a claw hammer or pliers. Pl.’s Scope Ruling

3 On October 11, 2017, Defendant filed the index to the administrative record
underlying Commerce’s scope inquiry. See Administrative Record, Oct. 11, 2017,
ECF No. 21-1. On May 9, 2019, Defendant filed indices to the public and confidential
administrative records of the remand proceedings. See Public/Confidential Remand
Record Index, May 9, 2019, ECF No. 62-2–3. All references to administrative record
documents in this opinion will be to the numbers Commerce assigned to the
documents in the relevant indices.
4Defendant notes that the nut and washer are a one-piece unit. See Def.’s Reply to
Cmts. at 3 (citing to Pl.’s Scope Ruling Req. at 2). Thus, the strike pin anchors may
also be considered comprised of three components.
Court No. 17-00231                                                                Page 5

Req. at 3; see also Final Scope Ruling at 4; Remand Results at 4; Def.’s Reply to Cmts.

at 3. The strike pin anchor is prepared for use by first drilling a hole through an

object, and then drilling another hole into the masonry upon which the object is to be

attached. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 4–5;

Remand Results at 4; Def.’s Reply to Cmts. at 3. After the two holes are aligned, the

anchor is pushed through the hole in the object and into the hole in the masonry. See

Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand Results at

4; Def.’s Reply to Cmts. at 3. The nut and washer components are then tightened to

orient and position the anchor, and the pin component is subsequently struck with a

hammer. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand

Results at 4; Def.’s Reply to Cmts. at 3. The action of striking the pin component

expands the anchor body and results in the fastening of the desired item against the

masonry. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand

Results at 4; Def.’s Reply to Cmts. at 3.

      In Midwest I, the court determined that Commerce’s conclusion that Midwest’s

strike pin anchors are within the scope of the PRC Nails Order was unsupported by

substantial evidence. See Midwest I, 42 CIT at __, 348 F. Supp. 3d at 1300–06. The

court examined various dictionary definitions and concluded that although the

definitions could identify the physical characteristics of a nail, “none of the definitions

consulted by the court identify or define a nail that is constructed of two or more

pieces.” Id. at __, 348 F. Supp. 3d at 1302. The court held that neither the plain

language of the PRC Nails Order nor any sources identified under 19 C.F.R. §
Court No. 17-00231                                                              Page 6

351.225(k)(1) “explain what it means for a product to be a nail constructed of two or

more pieces.” Id. at __, 348 F. Supp. 3d at 1302. The court concluded that Commerce

could not support its determination that strike pin anchors are nails constructed of

two or more pieces, unless it clarifies the ambiguous phrase, “constructed of two or

more pieces,” and supported any subsequent determination with record evidence. See

id. at __, 348 F. Supp. 3d at 1303–04. The Final Scope Ruling was remanded for

Commerce to conduct a formal scope inquiry and (k)(2) analysis. See id. at __, 348 F.

Supp. 3d at 1306.

      On remand, Commerce reopened the administrative record and invited parties

to submit new factual information clarifying the PRC Nails Order’s phrase “nails . . .

constructed of two or more pieces[ ]” and addressing the function of the anchor

component in relation to the pin component. See Remand Results at 5–6; see also

PRC Nails Order, 73 Fed. Reg. at 44,961; 19 C.F.R. § 351.225(e). Commerce further

explicated its view of the scope language by interpreting the phrase “nail . . .

constructed of two or more pieces,” as nails that match the physical characteristics

enumerated in the PRC Nails Order, “plus some additional piece or pieces[,]” not

limited by function or material. See Remand Results at 10. Commerce, also, under

respectful protest, carried out a (k)(2) analysis, specifically considering the physical

characteristics of the goods, the expectations of the ultimate purchasers, the ultimate

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

in which the product is advertised and displayed, and restated its view that Midwest’s

strike pin anchors were in scope. Remand Results at 11–19. Commerce indicated
Court No. 17-00231                                                             Page 7

that it intends to instruct CBP that only the pin component of Midwest’s strike pin

anchor is subject to duties under the PRC Nails Order. See id. at 10–11, 21.

      Midwest challenges Commerce’s definition of the relevant phrase as “illogical”

and argues that Commerce has not complied with the court’s remand order because

the phrase remains ambiguous. See Pl.’s Cmts. on [Remand Results], May 28, 2019,

ECF No. 64 (“Midwest’s Cmts.”). Mid Continent challenges Commerce’s proposed

instructions, but supports Commerce’s conclusion that under a (k)(2) analysis

Midwest’s strike pin anchors are covered by the scope of the PRC Nails Order. See

Def-Int.’s Cmts. on [Remand Results] at 2–5, May 28, 2019, ECF No. 63 (“Mid

Continent’s Cmts.”).

                JURISDICTION AND STANDARD OF REVIEW

      The Court has jurisdiction pursuant to section 516A(a)(2)(B)(vi) of the Tariff

Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) and 28 U.S.C. § 1581(c)

(2012), 5 which grant the court authority to review actions contesting scope

determinations that find certain merchandise to be within the class or kind of

merchandise described in an antidumping or countervailing duty order. See 19

U.S.C. § 1516a(a)(2)(B)(vi); 28 U.S.C. § 1581(c). The court will uphold Commerce’s

determination 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). “The results

5 Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2012 edition. Further citations to Title 28 of
the United States Code are to the 2012 edition.
Court No. 17-00231                                                             Page 8

of a redetermination pursuant to court remand are also reviewed ‘for compliance with

the court’s remand order.’” Xinjiamei Furniture (Zhangzhou) Co. v. United States,

38 CIT __, __, 968 F. Supp. 2d 1255, 1259 (2014) (quoting Nakornthai Strip Mill

Public Co. v. United States, 32 CIT 1272, 1274, 587 F. Supp. 2d 1303, 1306 (2008)).

                                   DISCUSSION

      Plaintiff argues that Commerce failed to comply with the court’s instructions

to clarify the ambiguous phrase “constructed of two or more pieces.” See Midwest’s

Cmts. at 1–2. Plaintiff further argues that Commerce’s (k)(2) analysis is unsupported

by substantial evidence.    See id. at 3–5.   Defendant responds that Commerce’s

remand redetermination is supported by substantial evidence and complies with the

court’s remand order. See Def.’s Reply to Cmts. at 6–16. For the reasons that follow,

Commerce’s determination that Midwest’s strike pin anchors are within the scope of

the PRC Nails Order is unsupported by substantial evidence.

      The language of an antidumping duty order dictates its scope. See Duferco

Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002) (citing Ericsson GE

Mobile Commc’ns, Inc. v. United States, 60 F.3d 778, 782 (Fed Cir. 1995)).

Commerce’s regulations authorize it to issue scope rulings to clarify whether a

particular product is within the scope of an order. See 19 C.F.R. § 351.225(a). To

determine whether a product is within the scope of an antidumping order, Commerce

looks at the plain language of that order. See Duferco, 269 F.3d at 1097. When

considering the scope language, Commerce will take into account descriptions of the

merchandise contained in: (1) the petition; (2) the initial investigation; and (3) past
Court No. 17-00231                                                               Page 9

determinations by the Commission and by Commerce, including prior scope

determinations (collectively “(k)(1) sources”). 19 C.F.R. § 351.225(k)(1); see 19 C.F.R.

§ 351.225(d). When the (k)(1) sources are not dispositive, Commerce will initiate a

formal scope inquiry and further consider:

      (i) The physical characteristics of the product;
      (ii) The expectations of the ultimate purchasers;
      (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 advertised and displayed.

19 C.F.R. § 351.225(k)(2).

      Commerce has broad authority “to interpret and clarify its antidumping duty

orders.” Ericsson GE Mobile, 60 F.3d at 782; see also King Supply Co., LLC v. United

States, 674 F.3d 1343, 1348 (Fed. Cir. 2012) (stating that “Commerce is entitled to

substantial deference with regard to its interpretations of its own antidumping

orders.”). However, Commerce may not interpret an order “so as to change the scope

of that order, nor can Commerce interpret an order in a manner contrary to its terms.”

Eckstrom Indus., Inc. v. United States, 254 F.3d 1068, 1072 (Fed. Cir. 2001) (citing

Wheatland Tube Co. v. United States, 161 F.3d 1365, 1370 (Fed. Cir. 1998)).

Furthermore, “[s]cope 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.” Duferco, 296 F.3d at 1089. Although

the petition and the investigation proceedings may aid in Commerce’s interpretation

of the final order, the order itself “reflects the decision that has been made as to which
Court No. 17-00231                                                                Page 10

merchandise is within the final scope of the investigation and is subject to the order.”

Id. at 1096.

       The relevant scope language of the PRC Nails Order provides that

       [t]he merchandise covered by this proceeding includes certain steel nails
       having a shaft length up to 12 inches . . . Certain steel nails may be of
       one piece construction or constructed of two or more pieces. Certain steel
       nails may be produced from any type of steel, and have a variety of
       finishes, heads, shanks, point types, shaft lengths and shaft diameters.
       Finishes include, but are not limited to, coating in vinyl, zinc
       (galvanized, whether by electroplating or hot-dipping one or more
       times), phosphate cement, and paint.

PRC Nails Order, 73 Fed. Reg. at 44,961.

       Commerce’s remand determination that the phrase “nails . . . constructed of

two or more pieces” unambiguously includes “a nail which would otherwise satisfy

the definition of the scope, were it imported as a stand-alone single-piece nail, plus

some additional piece or pieces[,]” Remand Results at 10, is unsupported by the

record. On remand Commerce reopened the record and solicited information from

the parties concerning the meaning of the phrase “nails . . . constructed of two or more

pieces.” See id. at 7. 6 Midwest submitted “the ASTM Standard Specification for

Driven Fasteners: Nails, Spikes, and Staples[,]” Id. (internal quotations omitted).

Commerce did not address this standard in its analysis other than to list the types of

6 In its remand Commerce did not rely upon any new evidence but rather returned to
its citation to the ITC report and agreed with the Defendant-Intervenors’
understanding of the meaning of nails constructed of two or more pieces as a very
general phrase that “encompasses a wide variety of types of nails[.]” See Remand
Results at 8. Commerce contends that record evidence demonstrates that the
“additional pieces” are “not limited with respect to materials or function . . . in relation
to the product as a whole.” Id.
Court No. 17-00231                                                              Page 11

nails listed in the standard. 7 Mid Continent did not provide new evidence, id. at 7–

8, though it did offer its own definition in its comments to the agency. Id. (quoting

Letter from Mid Continent Resp. Scope Remand Req. Information at 3, RPD 6, bar

code 3790351-01 (Feb. 6, 2019) (“Mid Continent’s (k)(2) Cmts.”)). 8

         Although Commerce does not discuss any new evidence in the record, it

contends the PRC Nails Order covers a wide variety of nail types. PRC Nails Order,

7   The Remand Results note the following examples given in the ASTM standards:

         Umbrella Head Roofing Nails, which consist of a leak-resistant umbrella
         head atop a steel nail (Table 29); Cap Nail-Hand Driven Roofing Nails,
         which consist of a round or square steel cap atop a steel nail (Table 31);
         Cap Nail Power-Tool Driven Roofing Nails, which consist of a round or
         square steel cap atop a steel nail (Table 32); Washered-Aluminum
         Roofing Nail, which consist of an aluminum roofing nail with a neoprene
         washer (Table 33); and Washered-Steel Roofing Nails, which consist of
         a steel roofing nail with a elastomer washer (Table 34).

Remand Results at 7–8 n. 28 (citing Midwest’s Cmts. on Draft Remand Results at Ex.
1, Feb. 6, 2019, RPD 7, bar code 3790475-01 (Feb. 6, 2019)).

8   Mid Continent identified that:

         A nail of two or more pieces, as the very name indicates, consists of a
         nail with a one or more components or “pieces.” The additional
         components are joined, affixed or otherwise combined with the nail. A
         variety of nails are produced and sold in this manner. Some have plastic
         or metal washers affixed underneath the head of the nail. Others, like
         decorative upholstery nails, have a decorative cap attached to the top of
         the head of the nail. Others have a felt washer underneath the head.
         Others have anchors made of steel, zinc, or plastic affixed to the nail.
         The phrase “of two or more pieces” is necessarily general and is used to
         cover all types of such nails.

Mid Continent’s (k)(2) Cmts. at 3.
Court No. 17-00231                                                            Page 12

73 Fed. Reg. at 44,961. 9 Commerce points to the phrasing as general and “used to

cover all types of such nails,” Remand Results at 8, and reasons that nails may

therefore have different physical characteristics. See id. Commerce also notes that

the scope language has few exclusions and does not indicate that a “scope nail would

be excluded from the scope based on it being constructed with an additional piece or

pieces.” Id. at 9. Commerce also asserts that the “record provides numerous examples

of nails which could be considered ‘nails . . . constructed of two or more pieces[,]’”

which could aid in clarifying the phrase at issue. Remand Results at 9. Commerce

does not provide these examples or a citation to them. Commerce does not explain

how these examples support its interpretation.               Ultimately, Commerce’s

interpretation posits that any fastener that has a nail incorporated within it is within

scope. See Remand Results at 11. Commerce’s clarification of the phrase “nails . . .

constructed of two or more pieces” cannot withstand scrutiny.

      First, the actual words of the scope do not support Commerce’s interpretation.

The scope “includes certain steel nails. . . of one piece construction or constructed of

two or more pieces.” PRC Nails Order, 73 Fed. Reg. at 44,961. The use of the phrase

“constructed of two or more pieces” signifies a product which itself is a nail, rather

than a nail with other parts. The word “constructed” means something that is built

or put together with other parts. See Construct, The American Heritage Dictionary

9Referring to language in the PRC Nails Order that in scope are nails up to 12 inches
in length, round wire or cut nails, nails produced from any type of steel, nails with a
variety of finishes, heads, shanks, point types, shaft lengths, and shaft diameters.
PRC Nails Order, 73 Fed. Reg. at 44,961.
Court No. 17-00231                                                            Page 13

of the English Language 404 (3d ed. 1996); Constructed, Webster’s Third New

International Dictionary 489 (Philip Babcock Gove, Ph.D. & Merriam-Webster

Editorial    Staff     eds.    1993);     Construct,      oed.com,     available     at

https://www.oed.com/view/Entry/39894?rskey=d9ZITS&result=1&isAdvanced=false

#eid   (last visited Feb. 28, 2020); Construct, Merriam-Webster.com, available at

https://www.merriam-webster.com/dictionary/constructed (last visited Feb. 28,

2020). 10 Commerce’s interpretation that such language includes a nail which would

otherwise satisfy the definition of the scope, were it imported as a stand-alone single

piece, plus some additional piece or pieces, ignores the word “constructed” in the scope

language. The nail covered by the scope must be one that is constructed of pieces, not

one where a nail is merely part of another object.

       Second, Commerce asserts that the record provides numerous examples of

nails which could be considered nails constructed of two or more pieces, yet Commerce

does not provide those examples, nor any citation to where the court could find those

examples. See Remand Results at 9, 12. Commerce does not explain how those

examples might support its view other than to say that they do. See Remand Results

at 9, 12. Indeed evidence in the record would appear to detract from Commerce’s

conclusion. The ASTM Standard Specification for Driven Fasteners: Nails, Spikes

10 The American Heritage Dictionary of the English Language defines “construct” as
“[t]o form by assembling or combining parts; build”; Webster’s Third New
International Dictionary defines “construct” as “to form, make, or create by combining
parts or elements”; the Oxford English Dictionary defines “construct” as “[t]o make
or form by fitting the parts together; to frame, build, erect”; Merriam-Webster defines
“construct” as “to make or form by combining or arranging parts or elements[.]”
Court No. 17-00231                                                             Page 14

and Staples provides the standard specifications for a large range of “nails, spikes,

staples and other fasteners[;]” neither an anchor nor a strike pin anchor are among

the variations of nail products that the ASTM recounts. See Midwest’s Cmts. on Draft

Remand Results at 5–7, Feb. 6, 2019, RPD 7, bar code 3790475-01 (Feb. 6, 2019)

(“Midwest’s (k)(2) Cmts.”). Moreover, the examples of nails given there would seem

to support a narrower interpretation of the phrase than that proffered by Commerce.

Specifically, the ASTM lists:

      Umbrella Head Roofing Nails, which consist of a leak-resistant umbrella
      head atop a steel nail; Cap Nail-Hand Driven Roofing Nails, which
      consist of a round or square steel cap atop a steel nail; Cap Nail Power-
      Tool Driven Roofing Nails, which consist of a round or square steel cap
      atop a steel nail; Washered-Aluminum Roofing Nail, which consist of an
      aluminum roofing nail with a neoprene washer; and Washered-Steel
      Roofing Nails, which consist of a steel roofing nail with a elastomer
      washer

See Remand Results at 7–8 n. 28 (citing Midwest’s (k)(2) Cmts. at Ex. 1)

(parentheticals omitted). In each, it would appear that the shank or pin component

serves to secure the fastener. Commerce does not address these examples provided

by the plaintiff. Commerce must address record evidence that detracts from its

conclusion that the strike pin anchors are nails. See Universal Camera Corp. v.

NLRB, 340 U.S. 474, 488 (1951) (noting that “[t]he substantiality of evidence must

take into account whatever in the record fairly detracts from its weight.”).

      Commerce, in recommitting to its original position that the scope

unambiguously covers the strike pin anchors, lists key physical characteristics that
Court No. 17-00231                                                               Page 15

“additional pieces” 11 may have, contending that these characteristics exemplify the

wide variety of additional pieces covered by the PRC Nails Order. Remand Results

at 10, 24–25. Commerce, however, fails to include a cite where in the record the

characteristics are established. 12 The court, therefore, cannot assess whether or not

11Commerce asserts that the “two or more pieces” language from the PRC Nails Order
refers to pieces with the following characteristics:
      x   The additional piece(s) is/are not limited to steel, but may be made
          of plastic, zinc, rubber, neoprene, or any other material;
      x   The additional piece(s) is/are not limited to any single part of a nail,
          including a nail head, but can consist of a cap, washer, an outer-body
          anchor, or any other piece;
      x   The additional piece(s) is/are joined, affixed, or otherwise combined
          with the nail; and
      x   The additional piece(s) may serve different functions. For example,
          the piece(s) may be decorative (as is the case with the head of an
          upholstery nail), be used to seal the nail-hole (as is the case with nails
          with washers), or assist in the overall function of the product as a
          whole.
Remand Results at 10.
12Commerce references the same “key characteristics” in its (k)(2) analysis and cites
the U.S. International Trade Commission’s (“ITC”) final material injury
determination (“ITC Report”) as a source from which the characteristics can be
reasonably discerned. See Remand Results at 13–15; see also Certain Steel Nails
from the [PRC] at I-9, Inv. No. 731-TA-1114, USITC Pub. No. 4022 (July 2008)
available at https://www.usitc.gov/publications/701_731/pub4022.pdf (last visited
Feb. 28, 2020) (“ITC Report”). It is not clear to the court, however, whether
Commerce, when it interprets the plain language of the PRC Nails Order outside the
(k)(2) analysis, is similarly relying on the ITC Report and if it is, which parts of the
ITC Report are relevant to its analysis. Given the number of key characteristics
Commerce invokes, the voluminous nature of the ITC Report, and Commerce’s lack
of analysis, the court cannot reasonably discern the basis for Commerce’s
interpretation. NMB Sing. Ltd. v. United States, 557 F.3d 1316, 1319–20, 1326 (Fed.

                                                                     (footnote continued)
Court No. 17-00231                                                            Page 16

the key characteristics Commerce identifies provide substantial evidence in support

of Commerce’s interpretation of the relevant phrase. 13

      More importantly, Commerce’s contention that because the PRC Nails Order

includes nails that have different physical characteristics, the phrase “nails . . .

constructed of two or more pieces” must mean that the additional pieces can be

physically different from the nail component, see Remand Results at 8–9, is

unpersuasive. The fact that the PRC Nails Order broadly defines the properties of a

nail provides no guidance on how the court is to evaluate whether a product is a nail

“constructed of two or more pieces” or what properties the “additional pieces” can

possess. Commerce’s contention, likewise, provides no meaningful explanation for

Cir. 2009) (the court must be able to reasonably discern the path of an agency’s
decision). Furthermore, to the extent that Commerce continues to rely on the fact
that the ITC Report provides a masonry anchor as an example when discussing nails
produced of two or more pieces, see Remand Results at 13, such reliance is not helpful
because the words of the PRC Nails Order do not clarify which of the products listed
in the ITC Report the order encompasses. See Midwest Fastener Corp., 42 CIT at __,
348 F. Supp. 3d at 1302 n.5.
13  Commerce’s invocation of Mid Continent Nail Corp. v. United States, 725 F.3d
1295 (Fed. Cir. 2013) (“Mid Continent Nail”) is unpersuasive. Remand Results at 9–
10 (arguing that it must “examine the ‘literal terms’ of the order to determine whether
a component of a ‘mixed-media’ product is within the scope of an order when it is
combined with non-subject components.” (citing Mid Continent Nail, 725 F.3d at
1302, 1304)). The product at issue in Mid Continent Nail was unambiguously covered
by the scope of the order and the scope inquiry resolved whether the product, when
packaged with other non-subject merchandise in a tool kit, took it out of scope. See
Mid Continent Nail, 725 F.3d at 1298. By contrast, a plain reading of the PRC Nails
Order does not reveal which products qualify as nails “constructed of two or more
pieces” and there is no suggestion, either from Commerce or the record, that
Midwest’s strike pin anchors are part of a “mixed-media” product. See Remand
Results at 20–21 (noting that a “‘mixed-media’ analysis is not necessary in this case”);
see also id. at 14, 20 (noting that the “outer-body anchor is permanently affixed to the
nail piece”).
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why a multi-component product is within the scope of the PRC Nails Order if just one

of its components is a nail. See Remand Results at 10.

      Commerce’s (k)(2) analysis also fails to support its determination. Specifically,

Commerce found that physical characteristics of the product were similar because the

pin in the strike pin anchor would be considered a nail if it were imported by itself.

Remand Results at 12; see also 19 C.F.R. § 351.225(k)(2)(i). Commerce therefore

compares the physical characteristics of one part of the strike pin anchor to nails.

Remand Results at 14–15. Commerce’s comparison ignores the language of 19 C.F.R.

§ 351.225(k)(2) which calls for the comparison of the physical characteristics of the

product, not the physical characteristics of part of the product. If Commerce were to

compare the physical characteristics of the product it must consider not only the pin,

but also the anchor body, the hex nut and the flat washer. It should also consider

how those physical characteristics function. Comparison of physical characteristics

logically includes a comparison of the function of those characteristics. Commerce

must address record evidence that demonstrates it is the anchor body of the strike

pin anchor, not the pin, that provides the fastening function. See Pl.’s Scope Ruling

Req. at 8.

      As for the expectations of the ultimate purchasers, Commerce contends that

those expectations vary. Remand Results at 15; see also 19 C.F.R. § 351.225(k)(2)(ii).

Commerce emphasizes, however, that purchasers expect to hit a nail with a hammer

to fasten one object to another. Remand Results at 16. Although purchasers will

expect to hammer the strike pin anchor at some point, strike pin anchor purchasers
Court No. 17-00231                                                            Page 18

must also expect to drill holes into masonry, align holes, insert anchors and tighten

nuts. See Pl.’s Scope Ruling Req. at 3, 9; see also Final Scope Ruling at 5; Remand

Results at 4; Def.’s Reply to Cmts. at 3.        Commerce does not address these

expectations. Commerce does not address record evidence that the ultimate product

use for strike pin anchors at issue here is specific. See Pl.’s Scope Ruling Req. at 9.

They are used to fasten objects to masonry. Id. (“Strike Pin Anchors are used to fasten

an object to a masonry wall, floor or ceiling.”); see also Midwest’s (k)(2) Cmts. at 2;

Mid Continent’s (k)(2) Cmts. at 4, 7, 9. Also, the ultimate use involves the expansion

of the anchor to fasten rather than the simple fastening of a nail. Id.

      Commerce also appears to have ignored evidence that strike pin anchors are

advertised and marketed differently than nails.       See Remand Results at 18–19

(concluding that strike pin anchors and nails are advertised in a similar manner

because record evidence demonstrates that both can be advertised online); but see

Midwest’s (k)(2) Cmts. at 4–5, Exs. 3, 4 (demonstrating that although anchors and

nails “fall within the general fastener category in the hardware section of retail

outlets[,]” “anchors are typically treated as separate and distinct articles of commerce

by fastener distributors and retailers.”).

      Commerce’s proposal to instruct CBP that only the pin component of Midwest’s

strike pin anchor, and no other components, is dutiable under the PRC Nails Order,

see Remand Results at 10–11, highlights the flaw in Commerce’s reasoning.

Commerce explains that it “may instruct CBP to assess duties on only a portion of a

unitary, assembled article[.]” See Remand Results at 22–23 & n.77 (citing CBP
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Clarification – Correct Use of the ADD/CVD Special Value Fields, Multiple Entry

Line and Set Provisions, CSMS #18-000379 (June 6, 2018) available at

https://csms.cbp.gov/docs/23578_922344688/Special_Value_Memo_Attachment.pdf

last visited Feb. 28, 2020) (“CBP Clarification”)). The CBP Clarification, however,

provides no support for the proposition that Commerce can identify a component in a

distinct unitary article and apply an antidumping duty to that component. To the

contrary, the CBP Clarification explains how to account for ADD on the entry

summary when the scope of an order includes components of a product. CBP

Clarification, Example 1. The scope of the order in this case does not reach nails

included within other products.         The scope reaches nails, whether one piece, or

constructed of two or more pieces. Either the entire strike pin anchor is a nail, or it

is not.

                                      CONCLUSION

          For the foregoing reasons, it is

          ORDERED that Commerce’s remand redetermination is further remanded for

reconsideration consistent with this opinion; and it is further

          ORDERED that Commerce shall file its remand redetermination with the

court within 90 days of this date; and it is further

          ORDERED that the parties shall have 30 days thereafter to file comments on

the remand redetermination; and it is further

          ORDERED that the parties shall have 30 days thereafter to file their replies

to comments on the remand redetermination; and it is further
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      ORDERED that the parties shall have 14 days thereafter to file the Joint

Appendix; and it is further

      ORDERED that Commerce shall file the administrative record within 14 days

of the date of filing of its remand redetermination.

                                                /s/ Claire R. Kelly
                                               Claire R. Kelly, Judge
Dated:       March 4, 2020
             New York, New York