Deacero S.A. De C v. v. US , 817 F.3d 1332 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
DEACERO S.A. DE C.V., DEACERO USA, INC.,
Plaintiffs-Appellees
v.
UNITED STATES, ARCELORMITTAL USA, LLC,
GERDAU AMERISTEEL U.S. INC., NUCOR
CORPORATION,
Defendants-Appellants
EVRAZ ROCKY MOUNTAIN STEEL,
Defendant
______________________
2015-1362, 2015-1363, 2015-1367
______________________
Appeals from the United States Court of International
Trade in No. 1:12-cv-00345-RWG, Senior Judge Richard
W. Goldberg.
______________________
Decided: April 5, 2016
______________________
JAY CHARLES CAMPBELL, White & Case LLP, Wash-
ington, DC, argued for plaintiffs-appellees. Also repre-
sented by DAVID BOND, TING-TING KAO.
ALEXANDER V. SVERDLOV, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for defendant-appellant
2 DEACERO S.A. DE C.V. v. US
United States. Also represented by BENJAMIN C. MIZER,
ROBERT E. KIRSCHMAN, JR., REGINALD T. BLADES, JR.;
DAVID W. RICHARDSON, Office of the Chief Counsel for
Trade Enforcement and Compliance, United States De-
partment of Commerce, Washington, DC.
KATHLEEN CANNON, Kelley Drye & Warren LLP,
Washington, DC, argued for defendants-appellants Arce-
lorMittal USA, LLC, Gerdau Ameristeel U.S. Inc. Also
represented by ROBERT ALAN LUBERDA, PAUL C.
ROSENTHAL, DAVID C. SMITH, JR.
DANIEL B. PICKARD, Wiley Rein, LLP, Washington,
DC, for defendant-appellant Nucor Corporation. Also
represented by DERICK HOLT, MAUREEN E. THORSON.
______________________
Before REYNA, BRYSON, and CHEN, Circuit Judges.
REYNA, Circuit Judge.
Appellants appeal a judgment of the U.S. Court of In-
ternational Trade (“Trade Court”) affirming the U.S.
Department of Commerce’s (“Commerce”) remand deter-
mination on certain small-diameter steel wire rod. Com-
merce initiated a minor alteration anti-circumvention
inquiry and determined that certain small-diameter steel
wire rod was included within the scope of the subject
antidumping duty order. On appeal, the Trade Court
concluded that Commerce erred in its minor alterations
analysis and remanded to Commerce. On remand, Com-
merce changed its determination and found under protest
the steel wire rod excluded from the scope of the anti-
dumping duty order. The Trade Court affirmed, and
Appellants appeal. We hold that Commerce’s initial
minor alteration anti-circumvention determination was in
accordance with law and supported by substantial evi-
dence. As such, the judgment of the Trade Court is re-
versed.
DEACERO S.A. DE C.V. v. US 3
BACKGROUND
Antidumping Duty Order on Steel Wire Rod
On August 31, 2001, U.S. steel wire rod producers
filed an antidumping petition against imports of steel
wire rod from Mexico and several other countries.
J.A. 225. Steel wire rod is a hot-rolled, intermediate steel
product with a round cross-section. It is sold in wound
coils and used to manufacture steel wire and downstream
products made with steel wire. The standard specifica-
tion for steel wire rod, ASTM A510, lists nominal sizes for
steel wire rod ranging from 5.5 mm to 19 mm, each with a
tolerance of plus or minus 0.40 mm. J.A. 234, 237.
The petition set 5.00 mm as the minimum diameter of
the steel wire rod covered by the scope of the petition:
For purposes of this investigation, the merchan-
dise covered by these investigations is certain hot-
rolled, carbon steel and alloy steel products, in
coils, of approximately round cross section, be-
tween 5.00 mm (0.20 inch) and 19.0 mm (0.75
inch), inclusive, in solid cross-sectional diameter.
J.A. 229. The petition noted that “[m]ost of the industrial
quality wire rod is produced and sold in 7/32 inch (5.5
mm) diameter, which is also the smallest cross-sectional
diameter that is hot-rolled in significant commercial
quantities.” J.A. 228.
On October 1, 2002, the International Trade Commis-
sion (“ITC”) issued its final determination that a U.S.
industry was materially injured by virtue of less-than-
fair-value imports of certain steel wire rod from Brazil,
Canada, Indonesia, Mexico, Moldova, Trinidad and Toba-
go, and Ukraine. The ITC reiterated that the “like prod-
uct” subject to the investigation was “certain hot-rolled
4 DEACERO S.A. DE C.V. v. US
products of carbon steel and alloy steel, in coils, of approx-
imately round cross section, 5.00 mm or more, but less
than 19.00 mm, in solid cross-sectional diameter.” 1 On
October 15, 2002, the ITC notified Commerce of its final
determination. J.A. 222, 3045.
On October 29, 2002, Commerce issued an antidump-
ing duty order on steel wire rod from Brazil, Indonesia,
Mexico, Moldova, Trinidad and Tobago, and Ukraine. The
duty order defined the scope as steel wire rod with a
cross-sectional diameter of “5.00 mm or more, but less
than 19.00 mm.” J.A. 222. Non-individually investigated
Mexican exporters were assigned a weighted-average
margin of 20.11%. 2
Deacero S.A.P.I. de C.V. and Deacero USA, Inc. (to-
gether, “Deacero”) are Mexican manufacturers of steel
wire rod and other steel products. Deacero was not indi-
vidually investigated in the underlying antidumping duty
investigation. As such, its imports of subject merchandise
were made subject to the 20.11% “all-others” rate. After
the duty order issued, Deacero invested in, manufactured,
and ultimately imported into the United States steel wire
rod within a diameter of 4.75 mm, 0.25 mm smaller than
the steel wire rod subject to the duty order.
1 Carbon and Certain Alloy Steel Wire Rod from
Brazil, Canada, Indonesia, Mexico, Moldova, Trinidad
and Tobago, and Ukraine, Nos. 701-TA-417-421; 731-TA-
953, 954, 956-959, 961, & 962, USITC 3546 (Oct. 1, 2002)
(Final).
2 Carbon and Certain Alloy Steel Wire Rod from
Brazil, Indonesia, Mexico, Moldova, Trinidad and Tobago,
and Ukraine, 67 Fed. Reg. 65945, 65946–47 (Dep’t Com-
merce Oct. 29, 2002).
DEACERO S.A. DE C.V. v. US 5
Procedural History
On February 11, 2011, two groups of U.S. steel wire
rod producers filed separate letters requesting that Com-
merce initiate a scope inquiry to determine whether steel
wire rod with an actual diameter between 4.75 and 5.00
mm was within the scope of the antidumping duty order
on steel wire rod from Mexico. Alternatively, they re-
quested that Commerce initiate an anti-circumvention
inquiry to determine whether 4.75 mm steel wire rod
should be included within the scope of the antidumping
duty order as either “minor alterations of merchandise” or
“later-developed merchandise.” 19 U.S.C. § 1677j(c)(1),
(d)(1) (2006).
On May 31, 2011, Commerce instituted an anti-
circumvention inquiry on steel wire rod between 4.75 and
5.00 mm. Commerce determined that 4.75 to 5.00 mm
steel wire rod was a minor alteration of the subject mer-
chandise and that its import into the United States con-
stituted an affirmative circumvention of the duty order.
J.A. 193. Commerce declined to initiate a circumvention
inquiry as to whether 4.75 mm steel wire rod constituted
a later-developed product because “such small diameter
wire rod was commercially available prior to the issuance”
of the duty order. J.A. 192. Deacero appealed. Com-
merce’s later-developed product determination is not
before us on appeal.
On September 30, 2013, the Trade Court remanded
for reconsideration and redetermination. Deacero S.A. de
C.V. v. United States, 942 F. Supp. 2d 1321, 1332 (Ct. Int’l
Trade 2013). The Trade Court found that Commerce’s
affirmative circumvention determination was not sup-
ported by substantial evidence because 4.75 mm steel
wire rod fell outside the literal scope of the duty order and
was “commercially available” at the time of the original
investigation. Id. at 1324. The Trade Court relied on
Wheatland in determining that Commerce erred in ex-
6 DEACERO S.A. DE C.V. v. US
panding the duty order to cover more than “insignificantly
changed” merchandise. Id. at 1328–32 (citing and quoting
Wheatland Tube Co. v. United States, 161 F.3d 1365, 1370
(Fed. Cir. 1998)). The Trade Court remanded and in-
structed Commerce to reconsider its affirmative circum-
vention determination and to “thoroughly explain how the
record and relevant law supports that determination.” Id.
at 1332.
On January 28, 2014, Commerce changed course and
issued under protest a redetermination of negative cir-
cumvention, reasoning that it had “no alternative” to
determine otherwise after the Trade Court’s decision.
J.A. 137, 142. After another appeal, the Trade Court
remanded again, instructing Commerce to “consid-
er whether it wishes to revisit or elaborate on its finding
that small-diameter wire rod was commercially available
prior to issuance of the [subject antidumping duty order].”
Deacero S.A.P.I. de C.V. v. United States, No. 12-00345,
36 Int’l Trade Rep. (BNA) 861, 2014 Ct. Intl. Trade LEXIS
99, at *21–22 (Ct. Int’l Trade Aug. 28, 2014). Commerce
declined to revisit its findings. J.A. 172.
On December 22, 2014, the Trade Court affirmed the
negative circumvention determination. Deacero S.A.P.I.
de C.V. v. United States, No. 12-00345, 36 Int’l Trade Rep.
(BNA) 1515, 2014 Ct. Intl. Trade LEXIS 159, at *2 (Ct.
Int’l Trade Dec. 22, 2014). Observing that Commerce
declined to revisit its findings, the Trade Court found that
substantial evidence supports the negative circumvention
determination as to 4.75 mm steel wire rod. Id.The government, along with U.S. industry partici-
pants ArcelorMittal USA LLC, Gerdau Ameristeel U.S.
Inc., and Nucor Corporation, appeal. We have jurisdiction
under 28 U.S.C. § 1295(a)(5) (2012).
DEACERO S.A. DE C.V. v. US 7
STANDARD OF REVIEW
We review Trade Court decisions de novo, applying
the same standard used by the Trade Court when review-
ing Commerce decisions. Downhole Pipe & Equip., L.P. v.
United States, 776 F.3d 1369, 1373 (Fed. Cir. 2015) (cita-
tion omitted). Under that standard, we will uphold
Commerce’s determinations unless they are “unsupported
by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
Substantial evidence is “more than a mere scintilla”
and amounts to what a “reasonable mind might accept as
adequate to support a conclusion.” Downhole, 776 F.3d at
1374 (quoting Consol. Edison Co. of N.Y. v. NLRB, 305
U.S. 197, 229 (1938)). Our review is limited to the record
before Commerce in the particular administrative pro-
ceeding at issue and includes all “evidence that supports
and detracts” from Commerce’s conclusion. Sango Int’l
L.P. v. United States, 567 F.3d 1356, 1362 (Fed. Cir.
2009). An agency finding may still be supported by sub-
stantial evidence even if two inconsistent conclusions can
be drawn from the evidence. Downhole, 776 F.3d at 1374
(citing Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
(1966)).
DISCUSSION
The government argues that Commerce’s initial deci-
sion that Deacero’s 4.75 mm steel wire rod was a minor
alteration and that its imports circumvented the anti-
dumping duty order was reasonable and supported by
substantial evidence. According to the government,
whether a good is within the literal scope of a duty order
is not the inquiry, given that the purpose of the minor
alterations subsection is to determine whether products
not included in the literal scope of the duty order should
be deemed covered by the scope of the duty order. The
government notes that although the statute is silent on
how Commerce should determine whether an alteration is
8 DEACERO S.A. DE C.V. v. US
“minor,” Commerce’s practice has been to review five
factors identified in the statute’s legislative history when
making this determination: (1) the overall physical
characteristics of the product; (2) the expectations of the
ultimate user; (3) the end use of the product; (4) channels
of trade and advertising; and (5) the cost of modification
relative to the value of the products at issue. Nippon
Steel Corp. v. United States, 219 F.3d 1348, 1354 (Fed.
Cir. 2000); see also S. Rep. No. 100-71 (1987). The gov-
ernment argues that requiring Commerce to consider
commercial availability is not among the five factors.
The government asserts that it is immaterial that the
merchandise at issue may have been commercially avail-
able somewhere in the world at the time the petition was
filed because the subsection on minor alterations, 19
U.S.C. § 1677j(c), contains no reference to commercial
availability. Imposing a requirement to consider commer-
cial availability under § 1677j(c) would add a requirement
to the statute that is not there, and would render super-
fluous the inquiry for later-developed merchandise under
§ 1677j(d).
The government argues that the evidence demon-
strates that 4.75 mm steel wire rod was not being pro-
duced in Mexico or in the United States and was not
commercially available at the time the petition was filed.
J.A. 71–74, 136. The evidence further shows that after
Commerce issued the order, Deacero began to produce
and import into the United States 4.75 mm steel wire rod
that met the five-factor test, including that it possessed
the same physical characteristics and commercial uses as
5.00 mm steel wire rod.
Deacero counters that Commerce’s initial anti-
circumvention determination was not supported by sub-
stantial evidence. Commerce failed to account for the
antidumping duty order’s literal exclusion of small-
diameter steel wire rod and ignored its own finding that
DEACERO S.A. DE C.V. v. US 9
small-diameter steel wire rod was commercially available
in Japan in 1998, roughly two years before the petition
was filed. Deacero contends that the evidence indicates
that small-diameter steel wire rod was well known at the
time the petition was filed. Deacero asserts that the five
factors addressed by Commerce only examine whether an
alteration was minor—not whether subject merchandise
was altered in the first place. By definition, merchandise
that was well known but not included in the investigation
cannot later constitute subject merchandise that is “al-
tered.” Deacero further contends that record evidence
demonstrates that 4.75 mm steel wire rod was imported
for different commercial uses than 5.00 mm steel wire rod.
See J.A. 406–37, 693–95, 3257–88, 3621–23. We address
the parties’ arguments in turn.
I.
In order to effectively combat circumvention of anti-
dumping duty orders, Commerce may determine that
certain types of articles are within the scope of a duty
order, even when the articles do not fall within the order’s
literal scope. See Target Corp. v. United States, 609 F.3d
1352, 1355 (Fed. Cir. 2010) (quoting Wheatland, 161 F.3d
at 1370). The Tariff Act identifies four articles that may
fall within the scope of a duty order without unlawfully
expanding the order’s reach: (1) merchandise completed
or assembled in the United States with components
produced in a foreign country subject to the duty order (19
U.S.C. § 1677j(a)); (2) merchandise completed or assem-
bled in foreign countries using merchandise subject to a
duty order (id. § 1677j(b)); (3) merchandise “altered in
form or appearance in minor respects . . . whether or not
included in the same tariff classification” (id. §
1677j(c)(1)); and (4) later-developed merchandise that
would have been included in the order (id. § 1677j(d)).
The Trade Court erred in interpreting Wheatland to
mean that if an article is not expressly included within
10 DEACERO S.A. DE C.V. v. US
the literal terms of the scope of the duty order, that article
cannot be subject to an anti-circumvention inquiry. In
Wheatland, we held that minor alteration inquiries are
inappropriate when the antidumping duty order expressly
excludes the allegedly altered product. Wheatland, 161
F.3d at 1369–70. In that case, the final determination of
less-than-fair-value sales contained an express exclusion
that made clear what merchandise was not covered:
The scope is not limited to standard pipe and
fence tubing, or those types of mechanical and
structural pipe that are used in standard pipe ap-
plications. All carbon steel pipes and tubes within
the physical description outlined above are in-
cluded within the scope of this investiga-
tion, except line pipe, oil country tubular goods,
boiler tubing, cold-drawn or cold-rolled mechani-
cal tubing, pipe and tube hollows for redraws, fin-
ished scaffolding, and finished rigid
conduit. Standard pipe that is dual or triple certi-
fied/stenciled that enters the U.S. as line pipe of a
kind used for oil or gas pipelines is also not in-
cluded in this investigation.
Id. at 1367 (emphases in Wheatland opinion) (citation
omitted). We reasoned in Wheatland that including the
excluded standard pipe products would “frustrate the
purpose of the antidumping laws because it would al-
low Commerce to assess antidumping duties on products
intentionally omitted from the ITC’s injury investigation.”
Id. at 1371.
In Nippon Steel, we concluded that Commerce could
institute an anti-circumvention inquiry on products with
chemical weights exceeding the literal scope of the duty
order. Nippon Steel Corp. v. United States, 219 F.3d
1348, 1350, 1356–57 (Fed. Cir. 2000). The duty order
covered steel products not exceeding 0.0008% boron. Id.
at 1350. We distinguished Wheatland because the extra
DEACERO S.A. DE C.V. v. US 11
boron above 0.0008% did not significantly alter the mer-
chandise at issue. Id. at 1356–57 (citation omitted). We
also observed that the explicit exclusions in Wheatland
“were well known when the order was issued” and
amounted to more than “insignificant alterations to an
existing product.” Id. at 1356.
Unlike Wheatland, the duty order at issue contains no
explicit exclusion of small-diameter steel wire rod. Alt-
hough the scope of the duty order sets a cross-sectional
range (5.00 mm to 19.00 mm), that cannot be read to
expressly exclude for purposes of anti-circumvention
inquiries all products outside that range. J.A. 222. The
purpose of minor alteration anti-circumvention inquiries
is to determine whether articles not expressly within the
literal scope of a duty order may nonetheless be found
within its scope as a result of a minor alteration to mer-
chandise covered in the investigation. To conclude other-
wise would render meaningless Congress’s intent to
address circumvention concerns. Here, the duty order
explicitly excludes certain metallic compositions of steel
wire rod, but goes no further. Thus, while the duty order
provides a cross-sectional range, it does not provide that
steel wire rod less than 5.00 mm diameter should neces-
sarily be excluded from its scope.
II.
We conclude that Commerce’s initial minor alteration
anti-circumvention determination was supported by
substantial evidence. Specifically, substantial evidence
supports Commerce’s conclusion that the smallest diame-
ter steel wire rod produced in the investigated countries
at the time the petition was filed was 5.5 mm. That some
quantity of small-diameter steel wire rod may have been
in existence at some time in non-investigated countries
does not limit Commerce’s minor alteration analysis in
the proceeding under review.
12 DEACERO S.A. DE C.V. v. US
CONCLUSION
Commerce’s initial minor alteration anti-
circumvention affirmative determination is in accordance
with law and supported by substantial evidence. The
decision of the Trade Court is hereby reversed and Com-
merce’s initial affirmative circumvention determination is
reinstated.
REVERSED
COSTS
Each party shall bear its own costs.