CAFC Rebukes CIT, Says Dual-Stenciled Pipe Fit Under AD Order on Thai Steel Pipes

The U.S. Court of Appeals for the Federal Circuit on May 15 said the scope of the antidumping duty order on circular welded carbon steel pipes and tubes from Thailand unambiguously includes dual-stenciled pipe, reversing the Court of International Trade's decision.

The AD order's scope language included standard pipe but excluded line pipe, and exporter Saha Thai Steel Pipe Public Co.'s dual-stenciled pipes fit the industry specifications for both line and standard pipe. Two of the three judges deciding the case -- Judges Alan Lourie and Jimmie Reyna -- found that "meeting an additional specification" for line pipe "does not strip away the qualification of these pipes as standard pipes."

Judge Raymond Chen dissented, keying in on the phrase in the order's scope saying it covers pipes "known in the industry as standard pipes and tubes." Chen said it's "far from clear" whether "people in the relevant industry refer to dual-stenciled pipe as standard pipe." With this ambiguity, Chen then turned to the (k)(1) factors, concluding that he supports the exclusion of dual-stenciled pipe.

The order was issued in 1986 and, at the petitioner's request, included standard pipe but excluded line pipe because no Thai exporters shipped line pipe at that time. The petitioner originally sought to include line pipe but partially withdrew its petition. The original petition included tariff lines only for standard pipe, though the scope language was amended three years later to reflect the adoption of the Harmonized Tariff Schedule.

In 2019, domestic firm Wheatland Tube sought a circumvention ruling against Saha Thai, claiming that it was avoiding AD duties on its dual-stenciled products that are subject to the order. The exporter said because its goods meet the industry specifications for line pipe, and line pipe was explicitly excluded from the order, its goods can enter AD duty free. The trade court agreed, ultimately sustaining Commerce's decision on remand to exclude the dual-stenciled pipe (see 2208260024).

In the decision, CIT Judge Stephen Vaden said the Federal Circuit has "arguably" provided two methods for finding whether a scope's language insufficiently ambiguous so that Commerce must use (k)(1) materials. The first, the OMG approach, says the first step is to find whether the governing language is ambiguous and then turn to the (k)(1) factors; the second, the Meridian approach, says Commerce must use the (k)(1) factors to assess whether the scope language is ambiguous.

Lourie and Reyna disagreed, saying "there is only one framework, which starts with "a review of the scope language itself." If the scope can't be clearly discerned based on the scope language itself, then the agency must use the (k)(1) materials.

Reyna, who wrote the decision, said the scope plainly covers dual-stenciled pipe. While there's no dispute that the pipe meets the specifications for both standard and line pipe, this doesn't preclude dual-stenciled pipe from the scope of the order. Standard pipe means "what it plainly says" -- standard pipe. "It cannot be reasonably read to mean, as Saha contends, an unidentified subset within standard pipes that remains after another unidentified subset is excluded." The list of tariff codes that the scope says it covers, while not including dual-stenciled pipe, isn't exhaustive, the judge said.

Reyna said there's "no basis to exclude products covered by the plain text of the Order." To find otherwise "would allow foreign producers and exporters to circumvent antidumping duty orders by simply stamping their products with an additional mark." This would "take the teeth out of antidumping duty orders," the judge said.

The majority also addressed the (k)(1) factors, finding that none of the "historical documents" have any "qualifier restricting the definition of standard pipes or carves out any subset of standard pipes based on additional specifications they may meet." So long as the pipes meet the industry specifications for standard pipes, "they are considered standard pipes."

Reyna noted that Saha Thai relied on its interpretation of the petitioners' intention in their partial withdrawal and the exclusions in other trade remedy proceedings involving standard and line pipe. "Neither is persuasive," the majority said. While the petitioners may have meant to include an exclusion for dual-stenciled pipes, Commerce sets the scope and included no restriction excluding "standard pipes dually stenciled as line pipes." As for the other AD investigations, the orders there explicitly excluded dual-stenciled or triple-stenciled pipes, "which the Thailand Order does not do."

Chen disagreed with the majority nearly every step of the way, finding that there's ambiguity as to whether the underlying scope language excludes dual-stenciled pipe. He said it's reasonable to either find that the scope includes "any pipe certified as standard pipe" or that the scope only includes "pipes commonly called 'standard pipe' and that dual-stenciled pipes commonly go by a different naming convention: 'dual-stenciled pipe.'"

The majority says little on the "commonly referred to" requirement in the scope, though dual-stenciled pipe's additional certification under industry specifications for line pipe could "change how the industry commonly refers to such pipes." Thus, the court shouldn't conclude as a matter of law that dual-stenciled pipe fits under the order, Chen said.

The dissent then turned to the (k)(1) materials as a result of the ambiguity, disagreeing with the majority's reading of them. Chen saw the petitioner's removal of tariff codes under which dual-stenciled pipe was imported at the time of the final AD order as "deliberate." He also said that express exclusions of dual-stenciled in other AD orders don't preclude the Thailand order from being read to "exclude dual-stenciled pipes."

(Saha Thai Steel Pipe Public Co. v. United States, Fed. Cir. # 22-2181, dated 05/15/24; Judges: Alan Lourie, Jimmie Reyna, Raymond Chen; Attorneys: James Durling of Curtis Mallet-Prevost for plaintiff-appellee Saha Thai; Christopher Cloutier of Schagrin Associates for defendant-appellant Wheatland Tube Co.)