Commerce Sends Back Scope Ruling Over Aluminum Sheet From China
The Commerce Department must reconsider its scope ruling which placed importer Valeo North America's T-series aluminum sheet under the antidumping and countervailing duty orders on aluminum sheet from China, the Court of International Trade ruled in a Dec. 21 opinion. Judge Mark Barnett sent the ruling back to Commerce after finding that the agency did not properly support its inclusion of unregistered aluminum alloys to the scope with substantial evidence. While the judge did say that Commerce properly found that Valeo's sheet is a clad product, the agency must provide further explanation over the heat treatability of 3XXX-series alloys.
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During the scope proceeding, Commerce said that Valeo's sheet was covered by the orders as "flat aluminum products" with a thickness of "6.3 mm or less, but greater than .02 mm," and "is a multi-alloy, clad aluminum sheet produced from an aluminum core that has a primary alloying element of manganese, i.e., a 3XXX-series core." Valeo argued that its goods should be excluded form the scope since they are heat-treated and thus not a clad product. The importer also said that its sheet is made from a proprietary alloy core that is not a 3XXX-series core.
Valeo claimed that Commerce erred in relying on the phrase "as designated by the Aluminum Association" in conjunction with its assessment of 3XXX-series cores since Aluminum Association designations would be made "superfluous" if Commerce interpreted the scope to include alloys unregistered with the Aluminum Association, as is Valeo's.
Valeo took to the trade court to contest the ruling, arguing that Commerce (1) "exceeded the bounds of a (k)(1) analysis"; (2) failed to support its findings that the term "3XXX-series" covers unregistered alloys, that T-series aluminum sheet is a clad product instead of a heat-treated one, and that any heat-treatment does not remove T-series aluminum sheet from being classified as a 3XXX-series alloy; and (3) failed to disclose information presented in ex parte meetings.
Barnett first addressed whether Commerce's interpretation of the terms "3XXX-series core" when linked with the phrase "as designated by the Aluminum Association" properly fits under a (k)(1) analysis. The judge said it did not. The scope is "ambiguous" over whether Commerce means the scope to cover any alloy that has a major alloying element corresponding to the Aluminum Associations' alloy groups, or whether the scope is limited to registered alloys, the judge said. Barnett found that Commerce violated the law by relying on a declaration from John Weritz, a vice president at the Aluminum Association, as evidence for its interpretation of the scope pertaining to 3XXX-series cores.
"In sum, Commerce’s interpretation of the phrase '3XXX-series' in conjunction with 'as designated by the Aluminum Association' to include unregistered aluminum alloys with a major alloying element of manganese is unlawful insofar as Commerce relied on the Weritz Declaration and is unsupported by substantial record evidence," the judge said. "Commerce’s Final Scope Ruling is therefore remanded."
However, Barnett did uphold Commerce's finding that Valeo's sheet is a clad product, though he sent back the issue over the agency's response to Valeo's argument over the heat-treatability of 3XXX-series alloys. The importer gave evidence that T-series aluminum sheet is heat-treated, placing it outside the scope of the orders. The Aluminum Association does not sort groups of alloys based on heat-treatability, looking to only aluminum content or principal alloying element instead. Looking to the principal alloying element to classify products is not enough in the face of Valeo's evidence, Barnett said. On remand, "Commerce must address evidence that Valeo’s product undergoes heat-treatment … and reconcile such evidence with evidence indicating that 3XXX-series alloys are non-heat treatable," the opinion said.
(Valeo North America v. United States, Slip Op. 22-152, CIT #21-00581, dated 12/21/22, Judge Mark Barnett. Attorneys: Daniel Cannistra of Crowell & Moring for plaintiff Valeo; Alison Vicks for defendant U.S. government; Joshua Morey of Kelley Drye for defendant-interevenor Aluminum Association)