Case Over Scope Ruling Shouldn't Be Dismissed, Given Commerce's Improper Ruling, Importer Argues

Importer Valeo North America's lawsuit seeking to compel the Commerce Department to issue a scope ruling should not be dismissed because, though Commerce did eventually issue a scope ruling, the ruling was not lawful, the company argued in a Nov. 15 brief at the Court of International Trade. Though Commerce argued that the scope ruling means CIT no longer has jurisdiction over Valeo's case, the importer says that scope ruling was invalid because it did not follow the framework set by Commerce's scope regulations (Valeo North America, Inc. v. United States, CIT #21-00426).

Valeo requested a scope ruling to see if its clad T-series aluminum sheet is covered by the antidumping and countervailing duties on common alloy aluminum sheet from China. After its scope ruling requests were denied three times for failing to meet the requirements for initiating a scope ruling, Valeo filed its case at CIT. While litigation got underway in that case, Commerce then finally ruled on a scope ruling request, finding that Valeo's T-series sheet falls within the scope of the order (see 2110200017).

This prompted a motion to dismiss the case from Commerce, which also argued that the court no longer has jurisdiction over the case, since it now rests under a different portion of the law (see 2111080036). Valeo launched its case under Section 1581(i), the court's "residual" jurisdiction. However, jurisdiction under this portion of the law can only be claimed if other remedies are inadequate. Since Commerce has now issued its final decision in the scope ruling, Valeo can seek to challenge the decision under Section 1581(c) jurisdiction, meant for antidumping duty decisions, Commerce said.

All that Commerce did was issue a memorandum finding that the T-series aluminum is subject to the AD/CVD orders, Valeo said. The agency did not follow the regulatory framework for issuing a scope ruling, as it must either issue the ruling based solely on the application and the “(k)(1)” sources or start a scope inquiry to consider “(k)(2)” sources. Here, (k)(1) sources include the materials from the investigation and other scope rulings, while the (k)(2) factors include things such as the physical characteristics of the product, the ultimate use and the expectations of the final buyers.

In Commerce's apparent (k)(1) scope ruling, the agency repeatedly turned to (k)(2) factors, a move prohibited by the regulations, Valeo argued. Also, "Commerce did not even try to claim that it considered all of the applicable (k)(1) factors, choosing instead to disregard required elements. Most notably, Commerce failed to consider the Commission’s determination, a required k(1) element," the brief said. This is a particularly troubling notion for Valeo, since the ITC determination was central to its scope ruling request.

Having argued that its case is alive and well, Valeo turned to the looming jurisdictional issue over its case. To address any potential issues, the company also submitted an amended summons and complaint "to substitute the jurisdictional basis for some of its current claims (i.e. Count One) that Commerce should have issued a lawful scope ruling or initiated a formal scope inquiry and bring additional claims under this Court’s jurisdiction in 28 U.S.C. § 1581(c) against the substance of the Decision Memorandum," the brief said. However, Valeo will continue to push for Section 1581(i) jurisdiction for its claim that Commerce lacked good cause to extend the regulatory deadlines.

Lastly, Valeo sought to consolidate its case with another complaint it just filed at CIT, also contesting the scope ruling, or lack thereof. "The difference between the two actions is that Court No. 21-00426 also challenges Commerce’s extensions for making a decision to be lacking a good cause," the brief said. "Both Court Nos. involve common questions of law and fact. Consolidation of these cases will reduce the number of duplicative filings and, therefore, will promote judicial efficiency and conserve resources for the parties."