CAFC Steel Scope Decision May Have Widespread Effects on AD/CV Scope Rulings

In its Sept. 7 ArcelorMittal ruling, CAFC said the ITA erred in determining that ArcelorMittal’s steel with a nominal (as ordered) thickness of 4.75mm but an actual (as delivered) thickness of less 4.75mm is within the scope of the antidumping duty order on stainless steel plate in coils from Belgium. The language of the order didn’t specify whether the minimum thickness of 4.75mm for inclusion in the AD order referred to actual or nominal thickness. So the ITA said in its scope determination that the scope was ambiguous, and looked to other factors in making its determination that the scope referred to nominal thickness. According to CAFC, the scope was not ambiguous, and the ITA should not have examined other factors. The scope referred to actual, as delivered thickness because “antidumping and countervailing duty orders apply to goods as imported, not as they may have been ordered,” CAFC said.

CAFC’s reasoning was in line with previous and current government practice regarding steel, officials said. “In the past, there have been trade related issues associated with nominal versus actual thicknesses and weights,“ said David Phelps, president of the American Institute for International Steel. Many don’t understand that the steel industry uses tolerances, and that some products are sold on a nominal basis, Phelps said. When ordering steel coil or plate, manufacturers buy based on surface area. The government, however, bases its measurements on thickness to adequately capture weight. “The government’s tariff schedules are very clear that it’s not based on nominal, it’s not based on surface area, it’s not based on anything else other than what it actually is,” Phelps said.

The ruling’s emphasis on the limits of ambiguity, however, may have a wider effect. “I think the Court of Appeals clearly put some limit on the ability of the Commerce Department to read the plain language of the orders in any way but how the language actually reads,” said LaRussa. “The decision of the Court of Appeals is pretty clear on the fact that in this case, the number means a number.”

“Basically, what the court was saying is that you can’t essentially create an ambiguity where there wasn’t one,” said an industry lawyer who represents foreign respondents in AD/CV cases. If the scope is plain on its face, then the ITA can’t read in ambiguity and look at other factors to determine whether a product is in or out of scope, he said.

Case Complicated by Changing ITA Interpretation

According to the industry lawyer, the Arcelor case was complicated by the fact that the ITA historically interpreted the scope of the order as referring to actual thickness. In 1999, within a period of three months, the ITA issued twenty AD and CV orders on stainless steel coils. Nine of these AD/CV orders were on “stainless steel plate in coils,” which stipulated that the steel coil have a thickness of 4.75mm or more, while eleven of the orders were on “stainless steel sheet and strip in coils,” which included steel coil with a thickness of less than 4.75mm.¹ “If you look at the scope of both of them, the 4.75 is the dividing line,” he said.

CAFC noted in its ArcelorMittal opinion that an ITA scope determination issued just prior to the order on stainless steel plate in coils ruled that, in a similar order that didn’t refer to actual or nominal measurements, “thickness” referred in actual thickness. And in the 2000-01 administrative review of stainless steel plate in coils from Belgium, the ITA examined ArcelorMittal’s invoices and concluded that its steel coil with a nominal thickness of 4.75mm or greater but an actual thickness of less than 4.75mm was not subject to the review, CAFC said. But after ArcelorMittal excluded similar sales from its submissions in the 2003-04 administrative review, the ITA said that such data should have been reported. According to CAFC, the ITA advised ArcelorMittal to request a scope ruling if it wanted to exclude such merchandise from the order.

The ArcelorMittal case is “colored by the fact Commerce had actually taken the same position themselves for five years,” the lawyer said. The issue is what the scope covers and what the ITA is trying to expand the scope to cover, the lawyer said. “Is what they’re trying to expand it to cover actually in the language or not?” CAFC ruled in the negative. "Because Commerce's final scope ruling is not supportable since it is contrary to the plain language of the order, we reverse," it said.

Cannon Doesn’t See Wide Implications, but says Decision is ‘Disturbing’

James Cannon of Cassidy Levy Kent, president of the Customs & International Trade Bar Association, disagreed with the notion that CAFC’s ruling would have wider implications. “I suspect the results of this case are limited to this case and, possibly, to other cases involving steel products where a minimum thickness is identified,” he said. Many steel orders do not have minimum thickness criteria, Cannon said. Non-steel products may have dimensional criteria in their respective AD/CV duty orders, but the industries do not distinguish between actual and nominal dimensions. “In such cases, the decision is not likely to have any impact on current practice,” he said.

Nonetheless, “the decision of the Federal Circuit is disturbing in its approach,” Cannon said. Following its 2002 ruling in Duferco and its 2005 ruling in Tak Fat, CAFC is putting more emphasis on whether the scope language is ambiguous, and applying the “plain language” doctrine to AD/CV duty order scopes. In ArcelorMittal, CAFC said it ruled against the ITA’s scope determination because “it is contrary to the plain language of the order.”

“Plain language,” however, is a doctrine applied to statutory construction, Cannon said. “Scope descriptions written by petitioners and adopted (with or without modification) by the Commerce Department are not comparable to statutory language.” In many cases, AD/CV duty order scopes were written before anyone understood that a “plain language” test might be applied at a future date, he said.

“While it makes sense that an administrative agency should not be able to revise the plain meaning of a statute written by Congress,” said Cannon, “it is unclear that an agency should be prevented from clarifying the meaning of scope language written by the same agency.”

(See ITT’s Online Archives 12091001 for summary of the CAFC’s ruling in the ArcelorMittal v. United States.)

¹Only five orders on stainless steel plate in coils, and four on stainless steel sheet and strip remain. All of the others have been since revoked. The only countries whose exporters are subject to both types of orders, and therefore have blanket AD or CV duty coverage on stainless steel coil, are Taiwan and Korea. Exporters in Belgium, South Africa, and Japan are subject to one type of order, but not the other.