Importers Rail Against Steel Branch Outlets Scope Ruling at Federal Circuit

The Commerce Department illegally found that Vandewater International's steel branch outlets are within the scope of an antidumping duty order on butt-weld pipe fittings, plaintiff-appellants Smith-Cooper International and Sigma Corp. argued in two Jan. 9 opening briefs at the U.S. Court of Appeals for the Federal Circuit. Both companies said that the term "butt-weld" has an unambiguous meaning according to the scope language and that the outlets at issue clearly do not fit within that definition. Smith-Cooper went on to argue that even if ambiguity is read into this term, the (k)(1) factors do not support including the outlets under the order (Vandewater International v. U.S., Fed. Cir. # 23-1093, -1141).

In October 2020, the Court of International Trade issued an opinion striking down a then-2-year-old scope finding that Vandewater's steel branch outlets used in fire protection systems are subject to the antidumping duties on carbon steel butt-weld pipe fittings from China (see 2010190031). The court found that Commerce failed to adequately explain itself, relying mostly on a previous scope ruling that doesn't fully address the issue. Upon reconsideration, Commerce continued to find that Vandewater's steel branch outlets fall within the scope of the AD order. The agency held that the physical characteristics of the steel branch outlets are similar to the characteristics of the butt-weld pipe fittings (see 2107260042).

The trade court looked at Commerce's determinations as to all five of the (k)(2) factors: the product's physical characteristics, the ultimate purchasers' expectations, the ultimate use of the good, trade channels in which the product is sold, and the manner in which the product is advertised and displayed. Looking at all five, the court found that Commerce reasonably made its findings for each, ultimately including the outlets in the AD order on the pipe fittings (see 2209080056).

Now taking to the Federal Circuit, the appellants argue that just undergoing a "(k)(zero)" analysis, as required to first happen under the law, shows that the outlets should be excluded from the order. Smith-Cooper said the outlets at issue clearly do not fall under the term "butt-weld" nor do they fall under the other unambiguous language in the scope, "which covers only goods that are (1) 'formed' or 'forged,' (2) not based on 'grooved' or 'threaded' fastening methods, and (3) designed to 'join sections in piping systems where conditions require permanent, welded connections.'"

Sigma said that given the unambiguity of the scope language, Commerce's use of a (k)(1) and (k)(2) analysis cut against the law. "Inexplicably, Commerce did not carry out the requisite (k)(zero) analysis here," the appellant said. "It was aware that butt-weld pipe fittings are produced pursuant to one industry standard, while physically distinct welded outlets are produced to a different industry standard. Commerce did not determine that the term 'butt-weld' was ambiguous, and did not consider these industry standards."

Even if the terms were ambiguous, the agency's (k)(1) analysis falls short, Smith-Cooper said. The AD petition requires that both or all edges are beveled, the fitting is designed to connect to the end of a pipe and the beveled edge of the fitting is designed to be set against another beveled edge of the connecting pipe so that the two edges create a welding channel. The petition also lists the basic shapes of subject merchandise.The welded outlets at issue "meet none of these requirements," the brief said.

"Because Commerce conducted a (k)(1) analysis without a threshold finding of ambiguity and without considering trade usage and industry standards, its determination is contrary to law," Sigma said. "Consideration of trade usage and industry standards leads to one -- and only one -- conclusion: welded outlets are not buttweld pipe fittings."