Court Opinion

ID: 9494881
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:49:07.558755+00
Date Added: 2024-06-11T17:56:40.766115
License: Public Domain

DYK, Circuit Judge,
dissenting in part.
The appellant’s briefs are virtually awash in frivolous or unmeritorious arguments, which are properly rejected by the majority. However, I fear that the appellant’s single meritorious argument has been lost in the shuffle.
On appeal to this court, the Department of Commerce (“Commerce”) does not claim that the product is clearly within the 1993 antidumping and countervailing duty orders (“Plate Orders”); it asserts only that the Plate Orders are ambiguous, making resort to the Diversified Products criteria appropriate. The appellant disagrees, urging that the Plate Orders are not ambiguous and that its products are not within the scope of the Plate Orders. In my view, the disagreement here is not about the scope of the Plate Orders. Rather, Commerce has simply failed to make the necessary factual investigation to determine whether the product is within the agreed scope of the Plate Orders. In my view, the majority errs in concluding that the ambiguity in the Plate Orders is established by ambiguity in the present record. I do not think that the inadequacy in the present record makes the Plate Orders ambiguous.
I
Our decisions with respect to scope orders have established three propositions: (1) that Commerce has discretion to interpret its scope orders, see Ericsson GE Mobile Communications, Inc. v. United States, 60 F.3d 778, 782 (Fed.Cir.1995); (2) that Commerce cannot construe its scope *1275orders to include products that are outside those orders, see Smith Corona Corp. v. United States, 915 F.2d 683, 686 (Fed.Cir.1990); and (3) that if a scope order is ambiguous, Commerce can resort to the Diversified Products criteria to determine whether the product is within the order, see id.
All parties appear to assume that the relevant question under the Plate Orders here is whether appellant’s product is “flat-rolled” within the meaning of the Orders, 58 Fed. Reg. 43,756 (Aug. 17, 1993); 58 Fed. Reg. 44,170 (Aug. 19, 1993), and that “flat-rolled” is properly construed by reference to Harmonized Tariff Schedule of the United States (“HTSUS”), Chapter 72, Note l(k), which in turn refers to HTSUS, Chapter 72, Note l©.1 Thus, the parties assume that the question of whether appellant’s product was “flat-rolled” depends on whether appellant’s product was “further worked.” I also agree that the Court of International Trade properly defined “further worked” as “to subject an existing product to some process of development, treatment, or manufacture beyond primary hot-rolling.” Novosteel SA v. United States, 128 F.Supp.2d 720, 729 (CIT 2001) (citing Winter-Wolff, Inc. v. United States, 996 F.Supp. 1258, 1265 (CIT 1998)).
II
Commerce’s conclusion as to whether the products were “further worked” was far from clear. In the Preliminary Scope Determination, Commerce stated that “it is not clear whether the Reiner Brach profile slabs qualify as flat-rolled products covered by the Plate Orders. To answer this question, we examined the Diversified Products criteria enumerated in section 351.225(k)(2).” Preliminary Scope Determination Regarding Profile Slabs — Anti-dumping and Countervailing Duty Orders on Certain CuNto-Length Carbon Steel Plate from Germany, U.S. Department of Commerce Internal Memorandum from Roland MacDonald to Joseph Spetrini, at 5 (March 23, 1999) (“Preliminary Scope Determination ”). However, in the Final Scope Determination under review, Commerce concluded that “record evidence indicates that Reiner Brach profile slabs are indeed further processed, and thus do not fall within the definition of excluded products at Note I®) ....” Final Scope Determination Regarding Profile Slabs— Antidumping and Countervailing Duty Orders on Certain Cut>~to-Length Carbon Steel Plate from Germany, U.S. Department of Commerce Internal Memorandum from Roland MacDonald to Joseph Spetri-ni, at 4 (May 18, 1999) {“Final Scope Determination”).
Apart from evidence that Novosteel was able to manufacture its profile slabs within close flatness tolerances, the evidence of “further working” was (1) Reiner Brach’s sales brochure, which explicitly stated that “[a] hydraulic press as well as a five roll flattening machine are employed to back up this guaranty” of “[f|latness within close tolerances;” and (2) ultrasonic testing which suggested that its profile slabs were sold as finished products. See Final Scope Determination at 7-8. At oral argument in this court, the government did not rely on the flatness tolerances as showing “further working” and conceded that the ultrasonic testing (item 2) itself did not constitute “further working.” With respect to *1276the hydraulic press and the five-roll flattening machine (item 1), Commerce urged at oral argument that these machines showed the “capability]” to engage in “further working.”
Ill
There is no substantial evidence in this record to support a finding that the appellant’s product was “further worked.” The majority appears to agree, stating:
In a sense, a short brochure might seem like a slender reed on which to base a scope determination, especially one in which the appellate record alone includes more than 1300 pages. After all, one might think that the government or the Defendant-Intervenors could have had an expert (or several experts) examine one of Reiner Braeh’s profile slabs and determine one way or the other whether the steel exhibited signs of additional treatment or processes beyond primary hot rolling. Or that an expert could have examined other evidence, like the Reiner Brach brochure, and concluded that the statements in that brochure showed that the steel profile slab was “flat-rolled” within the technical meaning of that term.
Ante at 1272 (emphases added).
To be sure, as I discuss below, there is evidence that the product might have been “further worked,” but that is not evidence of “further working.” It is well established that speculation does not constitute “substantial evidence.” As the Supreme Court noted in Bowen v. American Hospital Ass’n: “Agency deference has not come so far” that agency action is upheld “whenever it is possible to ‘conceive a basis’ for administrative action.” 476 U.S. 610, 626, 106 S.Ct. 2101, 90 L.Ed.2d 584 (1986); see also SEC v. Chenery Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 87 L.Ed. 626 (1943) (“The Commission’s action cannot be upheld merely because findings might have been made and considerations disclosed which would justify its order.... There must be such a responsible finding.”). Under these circumstances, Commerce’s conclusion that there was evidence of “further working” necessarily falls.
IV
The majority appears to sustain Commerce on a ground not articulated by the agency — that the uncertainty as to “further working” renders the Plate Orders ambiguous. Quite apart from its apparent failure to abide by the Chenery rule, barring affirmance of agency decisions based on new arguments by counsel, 318 U.S. at 95, 63 S.Ct. 454, the majority’s theory is, I think, incorrect. The majority states that “the Commerce Department and the Court of International Trade ... considered the brochure’s statements for the limited purpose of determining whether the Orders unambiguously included or excluded the Reiner Brach profile slab .... ” Ante at 1272-73. To support its conclusion that Commerce properly found an ambiguity, the majority cites evidence of possible “further working” by noting that “Reiner Brach could possibly have had additional treatment done on its profile slabs so as to have that steel product ‘flat-rolled,’ i.e., ‘further worked.’ ” Id. at 1272 (emphasis added). The majority further states that Commerce
could read these other statements [in the brochure regarding the market for the profile slabs and the ultrasonic testing] to confirm that Reiner Brach may indeed have undertaken processes to help refine and test its steel .... This inference is further bolstered by the admission that Novosteel apparently made in its brief about Reiner Brach having its profile slab produced at a “two high reversing mill,” a mill that is capable of *1277producing the type of steel covered by the Plate Orders.
Id. at 1272 (emphases added).
The •possibility that these products were “further worked” does not render the Plate Orders ambiguous. In other words, the existence of an inadequate record concerning the characteristics of these products does not create an ambiguity as to the scope of the Plate Orders. We should not approve an approach under which Commerce can simply fail to investigate, and then declare a resulting ambiguity as to whether a product is within the scope of an order. In light of this skeletal record, the appropriate recourse is to remand this case to Commerce for a determination of the “further working” issue on an adequate record.
For the foregoing reasons, I respectfully dissent in part.

. Note l(k) defined "flat-rolled" as "rolled products ... that do not conform to the definition at [Note] l(ij).” Note 1 (ij) defined "semi-finished products" as products that "have not been further worked [other] than subjected to primary hot-rolling ...." In light of the parties' agreement, I do not reach the question of whether the use of the definition of "flat-rolled” provided in the notes is appropriate.