Importer Says Commerce Skirted Key Admin Law Principle in Misusing Definitional Source in Scope Ruling

Importer Valeo North America told the U.S. Court of Appeals for the Federal Circuit that the Commerce Department violated a "foundational principle of administrative law" in concluding the company's T-series aluminum sheet was covered by antidumping and countervailing duty orders. Commerce failed to follow its "well-established legal framework" in making the scope decision, neglecting its duty as an administrative agency to provide coherent, ascertainable guidance so that regulated parties may anticipate how agencies enforce their rules and regulations," Valeo said (Valeo North America v. United States, Fed. Cir. # 24-1189).

Filing a reply brief on May 17, the importer responded to claims attacking its argument that Commerce failed to consider the numerical designation system for wrought aluminum and wrought aluminum alloys published by the Aluminum Association, dubbed the "Teal Sheets," as a definitional "(k)(0)" source.

The applicable AD/CVD orders cover 3XXX-series alloy "as designated by the Aluminum Association." Valeo argued that the inclusion of this phrase in the orders' scope makes the Teal Sheets a foundational reference document that is crucial to any scope ruling (see 2401290037).

In its reply brief, Valeo said the government mischaracterizes the Teal Sheets as a (k)(1) source. The importer argued that the Teal Sheets give the proper trade usage of the terms found in the scope since they define the meaning of the term "as designated by the Aluminum Association." As such, the source should have been used to interpret the scope. Instead, Commerce used (k)(1) sources to change the scope of the order -- something the appellate court denounced last week in Saha Thai Steel Pipe Public Co. v. United States (see 2405150027).

All parties agree that the Teal Sheets establish that Valeo's goods fall within the scope of the orders. "The scope analysis should have ended here," the brief said. "There is no need to follow Commerce down the rabbit hole of its tortured and unreasonable analysis of the term 'designate' in isolation."

Valeo added that Commerce's analysis is "unreasonable and convoluted." The government claimed that Commerce's conclusion that there's a general interpretation of the phrase "as designated by" was a reasonable alternative interpretation listed in the Teal Sheets.

The importer said this is "factually incorrect." The agency didn't say there's a general interpretation of the phrase "as designated by," but instead Commerce found that "designate" is a general term that can be used in the common vernacular, Valeo said. But there's no alternative that doesn't run against the Court of International Trade's decision that said the phrase is a "single phrase for interpretation."

The government's error shows that the agency interpreted the term "designate" in a void without surrounding language or trade usage. "Doing so cuts against the bulwark of caselaw on scope interpretation," the brief said.