Mid Continent Nail Corporation v. United States

Slip Op. 14-118
UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
MID CONTINENT NAIL CORP., 	:
:
Plaintiff, 	: 	Before: Nicholas Tsoucalas,
: 	Senior Judge
v. 	:
: 	Court No.: 10-00247
UNITED STATES, 	:
:
Defendant, 	:
:
and 	:
:
TARGET CORP., 	:
:
Defendant-Intervenor. :
OPINION
[Redetermination upon remand by the Department of Commerce was not
supported by substantial evidence nor in accord with the law.]
Dated: October 6, 2014
Adam 	H. 	Gordon 	and 	Jordan 	C. 	Kahn, 	Picard 	Kentz 	& 	Rowe 	LLP, 	of
Washington, DC, for Mid Continent Nail Corporation, plaintiff.
Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson,
Director, and Patricia M. McCarthy, Assistant Director, Department
of 	Justice, 	Civil 	Division, 	Commercial 	Litigation 	Branch,
Washington, 	DC, 	for 	defendant. 	Of 	counsel 	on 	the 	brief 	was
Nathaniel J. Halvorson, Attorney, Office of the Chief Counsel for
Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, DC.
Marguerite 	E. 	Trossevin 	and 	James 	J. 	Jochum, 	Jochum 	Shore 	&
Trossevin, 	PC, 	of 	Washington, 	DC, 	for 	Target 	Corporation,
defendant-intervenor.
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Tsoucalas, Senior Judge: 	before the court are the final
results 	of 	defendant 	United 	States 	Department 	of 	Commerce’s
(“Commerce”) 	redetermination 	of 	its 	scope 	ruling 	on 	nails 	within
toolkits 	imported 	by 	Target 	Corporation 	(“Target”). 	See 	Final
Results 	of 	Redetermination 	Pursuant 	to 	Remand 	Order, 	ECF 	No. 	99
(Apr. 30, 2014) (“Third Remand Results”). 	Commerce found that the
nails were outside the scope of the antidumping duty order on nails
from the People’s Republic of China (“PRC”) because they were part
of 	a 	mixed-media 	set. 	Id. 	at 	51. 	Plaintiff 	Mid 	Continent 	Nail
Corp. 	(“MCN”) 	contests 	the 	Third 	Remand 	Results 	and 	requests
another 	remand 	of 	this 	case. 	See 	Pl.’s 	Cmts. 	on 	Remand 	Results,
ECF 	No. 	104 	(June 	27, 	2014). 	Commerce 	and 	defendant-intervenor
disagree, 	insisting 	that 	Commerce 	should 	affirm 	the 	Third 	Remand
Results. 	See Def.-Int.’s Cmts. on Def.’s Redetermination Pursuant
to 	Remand 	Order, 	ECF 	No. 	103 	(June 	27, 	2014); 	Def.’s 	Cmts. 	on
Redetermination 	Pursuant 	to 	Remand 	Order, 	ECF 	No. 	113 	(July 	31,
2014).
BACKGROUND
A. Antidumping Duty Order and Initial Scope Ruling
In 	August 	2008, 	Commerce 	issued 	an 	antidumping 	order
covering steel nails from the PRC. 	See Notice of Antidumping Duty
Order: Certain Steel Nails from the PRC, 73 Fed. Reg. 44,961 (Aug.
1, 2008) (“Nails Order”). 	The Nails Order covers:
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certain 	steel 	nails 	having 	a 	shaft 	length 	up 	to 	12
inches. Certain steel nails include, but are not limited
to, 	nails 	made 	of 	round 	wire 	and 	nails 	that 	are 	cut.
Certain steel nails may be of one piece construction or
constructed 	of 	two 	or 	more 	pieces. 	Certain 	steel 	nails
may 	be 	produced 	from 	any 	type 	of 	steel, 	and 	have 	a
variety 	of 	finishes, 	heads, 	shanks, 	point 	types, 	shaft
lengths and shaft diameters. 	Finishes include, but are
not 	limited 	to, 	coating 	in 	vinyl, 	zinc 	(galvanized,
whether 	by 	electroplating 	or 	hot-dipping 	one 	or 	more
times), 	phosphate 	cement, 	and 	paint. 	Head 	styles
include, 	but 	are 	not 	limited 	to, 	flat, 	projection,
cupped, 	oval, 	brad, 	headless, 	double, 	countersunk, 	and
sinker. 	Shank 	styles 	include, 	but 	are 	not 	limited 	to,
smooth, 	barbed, 	screw 	threaded, 	ring 	shank 	and 	fluted
shank 	styles. 	Screw-threaded 	nails 	subject 	to 	this
proceeding 	are 	driven 	using 	direct 	force 	and 	not 	by
turning the fastener using a tool that engages with the
head. 	Point 	styles 	include, 	but 	are 	not 	limited 	to,
diamond, 	blunt, 	needle, 	chisel, 	and 	no 	point. 	Finished
nails may be sold in bulk, or they may be collated into
strips or coils using materials such as plastic, paper,
or wire.
Id. 	at 	44,961–62. 	The 	scope 	language 	also 	identifies 	several
exclusions 	to 	the 	Nails 	Order, 	including 	“roofing 	nails,”
“corrugated nails,” “fasteners suitable for use in power-actuated
hand 	tools,” 	“thumb 	tacks,” 	nails 	of 	certain 	size 	specifications
that are “collated with adhesive or polyester film tape back with
a 	heat 	seal 	adhesive,” 	and 	fasteners 	meeting 	certain
specifications. 	Id. at 44,962.
Target 	imports 	toolkits 	from 	the 	PRC, 	which 	include
various 	household 	tools. 	See 	Mid 	Continent 	Nail 	Corp. 	v. 	United
States, 	35 	CIT 	__, 	__, 	770 	F. 	Supp. 	2d 	1372, 	1375 	(2011) 	(“MCN
I”). 	Of 	particular 	relevance 	to 	the 	instant 	case, 	the 	toolkits
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“include a plastic container holding approximately fifty one-inch
brass coated steel nails.” 	Id., 770 F. Supp. 2d at 1375. 	Target
requested 	a 	scope 	ruling 	from 	Commerce 	that 	six 	of 	its 	tool 	kits
containing 	these 	nails 	are 	outside 	the 	Nails 	Order. 	Id.; 	770 	F.
Supp. 	2d 	at 	1375. 	Although 	it 	conceded 	that 	the 	nails 	in 	the
toolkit would be in-scope merchandise if considered on their own,
Target 	insisted 	that 	Commerce 	should 	focus 	on 	the 	toolkits 	as 	a
whole. 	In 	support 	of 	its 	argument, 	Target 	noted 	that 	the 	Nails
Order 	did 	not 	mention 	nails 	packaged 	with 	non-scope 	merchandise
and 	that 	Commerce 	previously 	considered 	similar 	“mixed 	media”
items as a whole. 	Id.
Commerce 	issued 	its 	scope 	ruling 	in 	August 	2010. 	See
Final Scope Ruling – Certain Steel Nails from the PRC, Request by
Target 	(Aug. 	10, 	2010) 	(“Scope 	Ruling”). 	Commerce 	first 	noted
that the 19 C.F.R. § 351.225(k)(1) factors (“(k)(1) factors”) were
not dispositive as to whether the scope covered brass coated steel
nails in toolkits. 	Id. at 5. 	Commerce then applied the 19 C.F.R.
§ 	351.225(k)(2) 	factors 	(“(k)(2) 	factors”), 	considering 	the 	tool
kit 	as 	a 	set 	including 	the 	subject 	merchandise. 	Id. 	Based 	on
this analysis, Commerce found that the tool kits were outside the
scope of the Nails Order. 	Id.
B. Proceedings Before the Court of International Trade and
Remand Redeterminations
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This 	Court 	rejected 	Commerce’s 	analysis 	in 	the 	Scope
Ruling, 	finding 	that 	Commerce 	failed 	to 	articulate 	adequate
reasoning 	for 	its 	decision 	to 	focus 	the 	scope 	inquiry 	on 	the
toolkits 	rather 	than 	the 	nails. 	See 	MCN 	I, 	35 	CIT 	at 	__, 	770 	F.
Supp. 2d at 1379–83. 	The Court remanded the Scope Ruling so that
Commerce 	could 	identify 	a 	test 	for 	making 	such 	a 	determination 1
and provide legal justification for that test. 	Id. at __, 770 F.
Supp. 2d at 1382–83.
On 	remand, 	Commerce 	found 	that 	it 	had 	the 	authority 	to
consider 	mixed-media 	items 	as 	a 	set. 	See 	Final 	Results 	of
Redetermination 	Pursuant 	to 	Remand 	Order 	at 	2–5 	(Oct. 	17, 	2011)
(“First Remand Results”). 	It then articulated a four-factor test
for 	answering 	the 	Walgreen 	question: 	(1) 	the 	practicability 	of
separating 	the 	component 	merchandise 	for 	repackaging 	or 	resale;
(2) the value of the component merchandise as compared to the value
of the product as a whole; (3) the ultimate use or function of the
component merchandise relative to the ultimate use or function of
the mixed-media set as a whole; and (4) any other relevant factors
that 	may 	arise 	on 	a 	product-specific 	basis. 	Id. 	at 	7–11. 	Using
this 	test, 	Commerce 	found 	that 	the 	toolkit 	as 	a 	whole 	was 	the
1 Whether Commerce should focus a mixed-media scope inquiry on the
set 	as 	a 	whole 	or 	on 	the 	individual 	component 	that 	appears 	to 	be
within 	the 	scope 	of 	the 	order 	is 	referred 	to 	as 	the 	“Walgreen
question.” 	This 	name 	refers 	to 	the 	decision 	of 	the 	Court 	of
Appeals for the Federal Circuit in Walgreen Co. of Deerfield, Inc.
v. United States, 620 F.3d 1350 (Fed. Cir. 2010).
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proper 	focus 	of 	the 	scope 	inquiry. 	Id. 	at 	11–14. 	It 	then
determined 	that 	the 	toolkit 	was 	outside 	the 	scope 	of 	the 	Nails
Order. 	Id. at 14–18.
Upon review of the First Remand Results, the Court found
that 	Commerce’s 	analysis 	was 	improper 	because 	Commerce 	did 	not
have 	the 	authority 	to 	conduct 	a 	mixed-media 	analysis. 	See 	Mid
Continent Nail Corp. v. United States, 36 CIT __, __, 825 F. Supp.
2d 	1290, 	1296 	(2012) 	(“MCN 	II”). 	The 	Court 	remanded 	for 	further
proceedings consistent with its opinion that “the nails in question
here are unambiguously subject to the Nails Order, and there is no
support in the law or the record for concluding otherwise.” 	Id.,
825 F. Supp. 2d at 1296.
In its second redetermination, Commerce issued a ruling
consistent with the Court’s decision in MCN II. 	See Final Results
of 	Redetermination 	Pursuant 	to 	Remand 	Order 	at 	5 	(Mar. 	7, 	2012)
(“Second Remand Results”). 	Specifically, Commerce found that the
nails 	in 	the 	toolkits 	were 	within 	the 	scope 	of 	the 	Nails 	Order.
Id. 	The Court upheld the Second Remand Results in their entirety,
see Mid Continent Nail Corp. v. United States, 36 CIT __, __, Slip
Op. 12-97 at 1 (July 25, 2012), and Commerce appealed to the United
States Court of Appeals for the Federal Circuit (“CAFC”).
C. CAFC Determination
On 	appeal, 	the 	CAFC 	reversed 	the 	CIT’s 	opinion 	in 	MCN
II. 	See Mid Continent Nail Corp. v. United States, 725 F.3d 1295,
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1301 	(Fed. 	Cir. 	2013) 	(“MCN 	III”). 	Specifically, 	the 	CAFC 	found
that 	the 	CIT’s 	holding 	that 	Commerce 	lacked 	authority 	to 	conduct
a mixed-media inquiry was erroneous. 	It also found that Commerce
had 	yet 	to 	reasonably 	interpret 	the 	Nails 	Order 	in 	such 	a 	way 	as
to 	justifiably 	exclude 	the 	nails 	in 	Target’s 	toolkits 	from 	the
scope, 	noting 	that 	the 	fourth 	factor 	of 	the 	mixed-media 	test 	was
overly 	broad. 	Id. 	The 	CAFC 	provided 	Commerce 	with 	guidance 	for
its remand redetermination, stating that “any implicit mixed-media
exception 	to 	the 	literal 	scope 	of 	the 	order 	must 	be 	based 	on
preexisting 	public 	sources,” 	and 	that 	“Commerce 	may 	attempt 	to
draw 	an 	ascertainable 	standard 	from 	these 	rulings 	if 	they 	were
publicly available at the time the [Nails Order] was issued . . .
.” 	Id. at 1305.
D. Third Remand Redetermination
In its third remand results, Commerce attempted to find
a 	test 	by 	which 	it 	could 	determine 	whether 	to 	focus 	its 	scope
ruling 	on 	the 	mixed-media 	set 	as 	a 	whole 	or 	on 	the 	individual
component. 	Third Remand Results at 6–17. 	First, Commerce noted
that 	“mixed-media” 	scope 	inquiries 	“involve 	merchandise 	that
includes a component that appears to at least have some superficial
overlap with the literal language of the order, but also consists
of 	elements 	that 	do 	not 	appear 	to 	be 	covered 	by 	the 	literal
language 	of 	the 	order.” 	Id. 	at 	6. 	Commerce 	also 	noted 	that 	the
outcome 	of 	these 	scope 	inquiries 	depends 	largely 	on 	whether
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Commerce 	treats 	the 	set 	as 	a 	whole 	or 	whether 	it 	focuses 	on 	the
individual component that appears to be covered by the order. 	Id.
Next, 	Commerce 	surveyed 	the 	available 	scope 	rulings 	on
“mixed-media” 	products 	to 	determine 	whether 	there 	was 	a 	common
analytical 	framework 	for 	determining 	the 	proper 	focus 	a 	“mixed-
media” 	scope 	inquiry. 	Id. 	at 	9–16. 	Commerce 	altered 	the 	four-
factor test it previously articulated in the First Remand Results
taking 	into 	account 	these 	rulings 	and 	the 	CAFC’s 	ruling 	in 	MCN
III, listing the factors as (1) the “unique language of the order”;
(2) 	the 	“practicability 	of 	separating 	the 	component 	merchandise
for 	repackaging 	or 	resale”; 	(3) 	the 	“value 	of 	the 	component
merchandise 	as 	compared 	to 	the 	value 	of 	the 	product 	as 	a 	whole”;
and (4) the “ultimate use or function of the component merchandise
relative to the ultimate use or function of the mixed-media set as
a whole”. 	Id. at 17. 	Where Commerce finds that it should analyze
the 	product 	as 	a 	whole 	set 	it 	will 	move 	straight 	to 	the 	(k)(2)
factors, 	but 	where 	it 	will 	analyze 	the 	individual 	component
Commerce 	will 	make 	its 	scope 	determination 	based 	on 	the 	(k)(1)
factors. 	Id. at 20.
Commerce 	then 	applied 	this 	test 	to 	Target’s 	toolkits.
Id. at 23–26. 	Commerce found that the language of the Nails Order
describes 	the 	nails 	in 	question 	but 	does 	not 	address 	merchandise
contained in toolkits, the packaging of nails with other products,
or 	the 	arrangement 	of 	the 	nails 	upon 	importation. 	Id. 	at 	23–24.
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As for the relative value of the nails, Commerce found that it was
very small in light of Target’s statement that the total value of
the nails was a “small percentage” of the value of the toolkit as
a whole. 	Id. at 24. 	Commerce also determined that separating and
repackaging 	the 	nails 	was 	not 	practicable 	because 	the 	nails 	were
packaged 	with 	non-subject 	fasteners 	in 	a 	smaller 	case 	within 	the
toolkit. 	Id. 	at 	24–25. 	Finally, 	Commerce 	found 	that 	the 	use 	of
the 	nails, 	fastening 	two 	objects 	together, 	was 	complementary 	to
but 	distinct 	from 	the 	use 	of 	the 	toolkit, 	which 	was 	“provid[ing]
a convenient collections of tools and accessories for the intention
of home repair and maintenance.” 	Id. at 25. 	It added that there
was 	a 	variety 	of 	tools 	and 	accessories, 	each 	of 	which 	had
specialized 	uses, 	so 	the 	choice 	of 	toolkit 	would 	not 	be 	based
exclusively 	on 	the 	type 	of 	nail 	inside 	tool 	kit. 	Id. 	at 	25–26.
Because 	each 	factor 	of 	the 	test 	indicated 	that 	Commerce 	should
evaluate 	the 	toolkits 	as 	a 	whole, 	Commerce 	determined 	that 	it
should 	focus 	the 	scope 	inquiry 	on 	the 	toolkits 	rather 	than 	the
steel nails. 	Id. at 26.
Because 	it 	was 	focusing 	on 	the 	toolkits 	as 	a 	whole,
Commerce moved directly to an analysis of the (k)(2) factors. 	Id.
Commerce 	analyzed 	each 	of 	the 	six 	toolkits 	at 	issue, 	determining
that 	they 	“include 	some 	merchandise 	that 	at 	least 	superficially
meets 	the 	physical 	description 	of 	the 	merchandise 	subject 	to 	the
Nails 	Order 	and 	some 	merchandise 	which 	clearly 	does 	not 	meet 	the
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physical description of the merchandise subject to the Nails Order.
Id. 	at 	26–29. 	Commerce 	also 	noted 	that 	the 	brass 	coated 	nails
contained 	within 	the 	toolkits 	comprise, 	at 	most, 	a 	tangential
feature 	in 	the 	advertising” 	of 	Target’s 	toolkits. 	Id. 	at 	29–30.
Commerce also noted that the display of the toolkits varied across
Target stores: in some cases the toolkits were displayed alongside
subject nails, but in other stores the toolkits were not displayed
by subject nails. 	Id. at 30. 	Commerce also found that the channels
of trade factor was inconclusive, as the toolkits and nails shared
certain 	channels 	of 	trade, 	but 	there 	were 	also 	channels 	of 	trade
that 	were 	distinct 	for 	the 	two 	products. 	Id. 	at 	30–31.
Additionally, Commerce found that the expectations of the ultimate
purchaser 	differed 	as 	between 	toolkits 	and 	nails, 	because 	the
purchaser of the former expected to purchase an assortment of tools
for 	an 	assortment 	of 	functions 	at 	a 	price 	of 	$25 	to 	$60, 	while 	a
purchaser 	of 	in-scope 	nails 	would 	expect 	more 	nails 	and 	a 	lower
price. 	Id. at 31. 	Commerce noted that the majority of the tools
in Target’s toolkits are not used with nails. 	Id. 	Commerce made
similar 	findings 	with 	regard 	to 	the 	ultimate 	use 	of 	the 	product,
as Target’s toolkits serve to “aid in various repair tasks” in the
home, while the in-scope nails are used to hang or fasten objects.
Id. 	at 	32. 	Noting 	that 	three 	of 	the 	five 	(k)(2) 	factors 	support
a 	finding 	that 	the 	toolkits 	are 	outside 	the 	scope 	of 	the 	Nails
Order, and that the other two factors were inconclusive, Commerce
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found 	that 	Target’s 	toolkits 	were 	outside 	the 	scope 	of 	the 	Nails
Order. 	Id. at 32.
Commerce 	also 	addressed 	comments 	by 	the 	parties 	on 	its
determination relevant to the instant litigation. 	First, Commerce
rejected 	MCN’s 	assertion 	that 	the 	determination 	was 	unauthorized
rule 	making 	because 	it 	was 	simply 	resolving 	a 	gap 	in 	the 	statute
and regulations by clarifying existing procedures and providing a
justification for those procedures. 	Id. at 35. 	Second, Commerce
rejected 	MCN’s 	argument 	that 	the 	prior 	scope 	rulings 	were 	not
publicly available because they the scope rulings were “available
in [Commerce]’s Central Records Unit public reading room and listed
in 	the 	quarterly 	published 	list 	of 	scope 	rulings.” 	Id. 	at 	38.
Finally, 	Commerce 	found 	that, 	contrary 	to 	MCN’s 	insistence, 	both
the 	mixed-media 	analysis 	and 	the 	(k)(2) 	factors 	analysis 	were
supported by substantial evidence and consistent with law. 	Id. at
42–51.
JURISDICTION and STANDARD OF REVIEW
The 	Court 	has 	jurisdiction 	pursuant 	to 	28 	U.S.C. 	§
1581(c) (2006) and section 516A(a)(2)(B)(vi) of the Tariff Act of
1930, 2 as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2006).
2 All further references to the Tariff Act of 1930 will be to the
relevant 	provisions 	of 	Title 	19 	of 	the 	United 	States 	Code, 	2006
edition, and all applicable supplements thereto.
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The 	Court 	must 	uphold 	Commerce’s 	scope 	determination
unless 	it 	is 	“unsupported 	by 	substantial 	evidence 	on 	the 	record,
or 	otherwise 	not 	in 	accordance 	with 	law.” 	19 	U.S.C. 	§
1516a(b)(1)(B)(i). 	When reviewing a scope ruling, the Court grants
“significant 	deference 	to 	Commerce’s 	interpretation 	of 	its 	own
orders.” 	Allegheny 	Bradford 	Corp. 	v. 	United 	States, 	28 	CIT 	830,
842, 342 F. Supp. 2d 1172, 1183 (2004). 	“However, Commerce cannot
‘interpret’ an antidumping order so as to change the scope of that
order, nor can Commerce interpret an order in a manner contrary to
its terms.” 	Duferco Steel, Inc. v. United States, 296 F.3d 1087,
1095 	(Fed. 	Cir. 	2002) 	(citing 	Eckstrom 	Indus., 	Inc. 	v. 	United
States, 254 F.3d 1068, 1072 (Fed. Cir. 2001)).
DISCUSSION
I. Commerce’s Methodology
MCN contests the following aspects of Commerce’s method
for 	answering 	the 	Walgreen 	question 	in 	its 	Third 	Remand 	Results:
(1) 	Whether 	Commerce’s 	refusal 	to 	conduct 	notice 	and 	comment
rulemaking 	was 	consistent 	with 	the 	requirements 	of 	the 	APA; 	(2)
whether 	Commerce 	complied 	with 	the 	direction 	of 	the 	CAFC 	in 	MCN
III when deriving the mixed media test; and (3) whether Commerce’s
application 	of 	its 	four 	factor 	mixed 	media 	test 	was 	supported 	by
substantial evidence.
A. Commerce was not required to conduct notice-and-comment
rule making.
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The 	first 	issue 	before 	the 	court 	is 	whether 	Commerce’s
attempt to answer the Walgreen’s question through its adoption of
the 	four-factor 	mixed 	media 	test 	violated 	the 	notice-and-comment
rule 	making 	procedures 	required 	under 	the 	Administrative
Procedures Act (“APA”).
MCN 	argues 	that 	Commerce’s 	adoption 	of 	the 	four-factor
mixed 	media 	test 	was 	improper 	because 	Commerce 	promulgated 	a 	new
rule without the notice-and-comment rulemaking procedures required
under the APA. 	Pl.’s Cmts. at 6. 	MCN insists that the APA mandates
that a test of this nature must “occur with particularized notice
and 	comment” 	procedures. 	Id. 	MCN 	also 	insists 	that 	the 	CAFC
recognized the benefit of formal rule-making for this issue in MCN
III and that Commerce could have reasonably foreseen the need for
such 	rule-making 	given 	the 	need 	to 	“address 	mixed 	media 	scope
inquiries in a comprehensive manner.” 	Id. at 10.
The 	court 	must 	reject 	MCN’s 	arguments. 	The 	CAFC
specifically spoke to this issue in MCN III, stating that “Commerce
may attempt to draw an ascertainable standard” from “pre-existing
public 	sources” 	as 	long 	as 	they 	were 	publicly 	available 	at 	the
time the Nails Order was issued. 	MCN III, 725 F.3d at 1305. 	Thus,
the 	CAFC 	explicitly 	granted 	Commerce 	the 	ability 	to 	attempt 	to
support 	a 	mixed 	media 	standard 	without 	conducting 	notice-and-
comment 	under 	the 	APA 	in 	their 	Third 	Remand 	Results, 	so 	long 	as
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Commerce’s test complied with the CAFC’s MCN III guidelines. 	See
id.
B. Commerce’s mixed media test failed to comply with the
direction of the CAFC in MCN III
The 	next 	issue 	before 	the 	court 	is 	whether 	Commerce’s
mixed media test complied with the CAFC’s instructions in MCN III.
As discussed above, in MCN III, the CAFC instructed Commerce that
“any 	implicit 	mixed-media 	exception 	to 	the 	literal 	scope 	of 	the
order 	must 	be 	based 	on 	preexisting 	public 	sources,” 	and 	that
“Commerce may attempt to draw an ascertainable standard from these
rulings 	if 	they 	were 	publicly 	available 	at 	the 	time 	the 	[Nails
Order] was issued . . . .” 	MCN III, 725 F.3d at 1305.
The court must first address whether Commerce relied on
publicly 	available 	scope 	determinations 	issued 	before 	the 	Nails
Order to support its mixed media test in the Third Remand Results.
The 	scope 	rulings 	Commerce 	relied 	on 	were 	published 	quarterly 	in
the 	Federal 	Register, 	and 	were 	available 	for 	public 	viewing 	in
Commerce’s 	Public 	File 	Room. 	See 	Third 	Remand 	Results 	at 	18.
Because these scope rulings were publically available, this court
will allow Commerce to attempt to support its mixed media analysis
based 	on 	sources 	that 	were 	publically 	available 	at 	the 	time 	the
Nails Order was issued.
Commerce 	constructed 	its 	mixed 	media 	test 	in 	order 	to
answer 	the 	Walgreen 	question, 	which 	addresses 	whether 	Commerce
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Court No. 10-00247 	Page 15
should focus its scope ruling on the mixed media set as a whole or
on the individual components. 	Third Remand Results 6–17. 	Commerce
relied on prior scope rulings in order to construct the mixed media
test 	from 	a 	common 	set 	of 	analytical 	principles. 	Id. 	at 	9–17.
The 	mixed 	media 	test 	consisted 	of 	four 	factors: 	(1) 	the 	“unique
language of the order”; (2) the “practicability of separating the
component 	merchandise 	for 	repackaging 	or 	resale”; 	(3) 	the 	“value
of 	the 	component 	merchandise 	as 	compared 	to 	the 	value 	of 	the
product as a whole”; and (4) the “ultimate use or function of the
component merchandise relative to the ultimate use or function of
the 	mixed-media 	set 	as 	a 	whole.” 	Id. 	at 	17. 	Commerce 	insists
that 	“these 	four 	factors 	articulate 	the 	common 	principles 	relied
upon 	in 	[its] 	prior 	scope 	rulings 	and 	throughout 	[its] 	past
practice.” 	Id. at 17.
In the first set of scope rulings relied on by Commerce
to 	support 	its 	mixed 	media 	test, 	Commerce 	focused 	on 	the 	product
as a whole and found the requested product to be outside the class
or 	kind 	of 	merchandise 	subject 	to 	the 	order. 	See 	Final 	Scope
Ruling – Antidumping Duty Order on Certain Cased Pencils from the
PRC 	– 	Request 	by 	Creative 	Designs 	Naturally 	Pretty 	(February 	9,
1998) (concluding that pencils contained within a vanity set were
not subject to the order on pencils from the PRC)(“Vanity Set Scope
Ruling”); 	See 	Final 	Scope 	Ruling 	– 	Antidumping 	Duty 	Order 	on
Certain 	Cased 	Pencils 	from 	the 	PRC 	– 	Request 	by 	Dollar 	General
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Corporation 	at 	3, 	(April 	6, 	2001) 	("The 	issue 	presented 	by 	this
scope inquiry is whether Dollar’s [stationery sets], which include
a 	3 	1/4-inch 	or 	4 	1/2-inch 	pencil, 	are 	within 	the 	scope 	of 	the
order 	on 	certain 	cased 	pencils 	from 	the 	PRC.”) 	(“Stationery 	Sets
Scope 	Ruling”); 	See 	Final 	Scope 	Ruling 	– 	Antidumping 	Duty 	Order
on 	Certain 	Cased 	Pencils 	from 	the 	PRC 	– 	Request 	by 	Target
Corporation Regarding “Hello Kitty Fashion Totes” at 4, (September
29, 2004) ("[Commerce] observe[d] that the Totes include a single
pencil which, considered individually, is covered by the scope of
the order. The Totes are multimedia sets, however . . . [and] the
scope of the order does not contemplate mixed-media sets.”)(“Totes
Scope 	Ruling”); 	See 	Final 	Scope 	Ruling 	- 	Antidumping 	Duty 	Order
on 	Certain 	Cased 	Pencils 	from 	the 	PRC 	- 	Request 	by 	Target
Corporation, (March 4, 2005) (concluding that art sets containing
subject 	pencils 	and 	other 	non-subject 	art 	supplies 	were 	outside
the scope of the order) (“Art Sets Scope Ruling”); 	See Final Scope
Ruling - Antidumping Duty Order on Certain Cased Pencils from the
PRC - Request by Fiskars Brands, Inc., (June 3, 2005) (concluding
that 	compasses 	containing 	subject 	pencils 	were 	outside 	the 	scope
of 	the 	order) 	(“Compass 	Scope 	Ruling”) 	See 	Final 	Scope 	Ruling 	-
Antidumping 	Duty 	Order 	on 	Certain 	Lined 	Paper 	Products 	from 	the
People's 	Republic 	of 	China, 	Request 	by 	Avenues 	in 	Leather, 	Inc.,
(May 	8, 	2007) 	(concluding 	that 	padfolio 	containing 	subject 	lined
paper pads were outside the scope of the order) (“Padfolios Scope
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Court No. 10-00247 	Page 17
Ruling”) 	See 	Certain 	Lined 	Paper 	Products 	from 	the 	People's
Republic 	of 	China 	- 	Davis 	Group 	of 	Companies 	Corp. 	Scope 	Ruling
Request, (February 21, 2008) (concluding that padfolios containing
subject 	lined 	paper 	pads 	were 	outside 	the 	scope 	of 	the 	order)
(“Davis Padfolios Scope Ruling”).
In the second set of scope rulings relied on by Commerce
to support its mixed media test, Commerce focused on the component
and found the requested product to be within the class or kind of
the merchandise subject to the order. 	See Recommendation Memo --
Final Scope Ruling on the Request by Texsport for Clarification of
the 	Scope 	of 	the 	Antidumping 	Duty 	Order 	on 	Porcelain-on-Steel
Cooking 	Ware 	from 	the 	PRC, 	(August 	8, 	1990) 	(concluding 	that
porcelain-on-steel cookware imported as part of a camping set was
subject 	to 	the 	order) 	(“Cookware 	Scope 	Ruling”); 	See 	Final
Determination 	of 	Sales 	at 	Less 	Than 	Fair 	Value: 	Fresh 	Cut 	Roses
from 	Ecuador, 	60 	Fed. 	Reg. 	7019, 	(February 	6, 	1995) 	(roses
individually 	dutiable 	in 	mixed 	flower 	bouquet) 	(“Bouquets 	Scope
Ruling”).
MCN 	argues 	that 	the 	scope 	rulings 	Commerce 	relied 	upon
to 	articulate 	the 	four-factor 	test 	it 	used 	in 	the 	Third 	Remand
Results “cannot and do not create a generally applicable analytical
framework” for addressing the Walgreen question. 	Id. at 17. 	MCN
insists 	that 	the 	scope 	rulings 	are 	isolated, 	contradictive, 	and
generally do not provide any guidance to respondents. 	Id.
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Court No. 10-00247 	Page 18
MCN 	notes 	that, 	in 	MCN 	III, 	the 	CAFC 	recognized 	a
presumption 	that 	components 	of 	a 	mixed 	media 	set 	that 	meet 	the
physical specifications of an order are presumed to be within the
scope 	of 	that 	order. 	Id. 	at 	10. 	MCN 	also 	notes 	that 	Commerce
recognized that the nails in Target’s toolkits, if analyzed alone,
would be subject to the Nails Order. 	Id. 	MCN argues that Commerce
failed to overcome this presumption, instead providing an “outcome
determinative” 	analysis 	that 	relied 	on 	scope 	rulings 	that 	were
“entirely 	devoid 	of 	reasoning 	that 	could 	provide 	guidance 	for
future 	cases.” 	Id. 	at 	11. 	Ultimately, 	MCN 	concludes 	that 	the
“ad-hoc” 	determinations 	did 	not 	provide 	a 	standard 	or 	consistent
practice 	upon 	which 	to 	base 	Commerce’s 	methodology. 	Id. 	at 	12–
13. 	MCN also argues that Commerce should have relied on evidence
like the Harmonized Tariff Schedule of the United States (“HTSUS”)
to consider whether there was sufficient evidence to overcome the
presumption 	that 	the 	nails 	in 	Target’s 	toolkits 	were 	subject 	to
the Nails Order.
The court finds that Commerce failed to comply with the
direction of the CAFC for the following reasons. 	First, Commerce
failed 	to 	demonstrate 	how 	the 	“unique 	language 	of 	the 	order” 	is
relevant to its mixed media test. 	Commerce supported the inclusion
of 	this 	factor 	by 	attempting 	to 	identify 	a 	standard 	derived 	from
the Cookware Scope Ruling and Bouquets Scope Ruling. 	Third Remand
Results at 7–11.
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Court No. 10-00247 	Page 19
The 	prior 	scope 	rulings 	Commerce 	relies 	on 	to 	support
including the unique language of the order as a factor in its mixed
media test fail to support an ascertainable mixed media standard.
Unlike in the instant case where the scope language is silent, in
both the Cookware Scope Ruling and the Bouquets Scope Ruling, the
language 	of 	the 	order 	clearly 	addresses 	all 	of 	the 	relevant
merchandise in the mixed media set. 	For instance, in the Cookware
Scope 	Ruling, 	Commerce 	determined 	whether 	“kitchenware” 	and
“cookware” 	imported 	together 	as 	part 	of 	a 	mixed 	media 	set 	were
subject 	to 	the 	order. 	Commerce 	found 	that 	only 	the 	“cookware”
within 	the 	set 	was 	dutiable 	because 	“kitchenware” 	was
“specifically excluded from the order.” 	Cookware Scope Ruling at
4. 	Because 	the 	scope 	language 	was 	clear, 	Commerce 	declined 	to
conduct 	a 	mixed 	media 	analysis. 	Id. 	at 	2. 	Similarly, 	in 	the
Bouquets 	Scope 	Ruling, 	Commerce 	once 	again 	avoided 	conducting 	a
mixed 	media 	analysis 	when 	determining 	whether 	roses 	imported
within bouquets including non-dutiable flowers would be subject to
the order at issue. 	Bouquets Scope Ruling, 60 Fed. Reg. at 7022.
The 	language 	of 	the 	order 	contemplated 	bouquets, 	eliminating 	any
need for Commerce to conduct a mixed media analysis. 	Id.
In 	the 	Third 	Remand 	Results, 	Commerce 	insists 	that 	the
language 	of 	the 	order 	controls 	the 	mixed 	media 	analysis 	and
“informs 	the 	application” 	of 	the 	remaining 	factors 	in 	its 	mixed
media 	test. 	Third 	Remand 	Results 	at 	21. 	Commerce 	argues 	that
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Court No. 10-00247 	Page 20
“[b]y 	looking 	at 	the 	language 	of 	the 	order, 	[Commerce] 	can
determine 	where 	such 	an 	analysis 	is 	warranted, 	either 	from 	the
silence 	of 	the 	order 	or 	language 	in 	the 	order 	speaking 	to 	these
factors.” 	Id. 	Commerce failed to support this contention. 	Apart
from 	the 	fact 	that 	both 	of 	these 	scope 	rulings 	involve 	a 	mixed
media 	set, 	neither 	scope 	ruling 	contemplated 	a 	mixed 	media
analysis. 	Furthermore, 	it 	is 	well 	established 	that 	“the 	process
must 	begin 	with 	the 	language 	of 	the 	order, 	which 	provides 	the
‘predicate for the interpretive process,’” but these scope rulings
do not provide guidance with regards to how this factor is relevant
to 	a 	mixed 	media 	analysis. 	MCN 	III 	725 	F.3d 	at 	1303 	(citing
Duferco 	Steel, 	Inc. 	v. 	United 	States, 	296 	F.3d 	1087, 	1097 	(Fed.
Cir. 	2002)). 	Where 	the 	scope 	language 	is 	clear, 	like 	in 	the
Cookware 	Scope 	Ruling 	and 	Bouquets 	Scope 	Ruling, 	“scope 	analysis
[is] at an end.” 	See id.
Secondly, 	the 	Cookware 	Scope 	Ruling 	and 	Bouquets 	Scope
Ruling 	cannot 	be 	reconciled 	with 	the 	seven 	other 	scope 	rulings
Commerce cited in its Third Remand Results. 	None of the remaining
scope 	rulings 	contain 	orders 	which 	clearly 	address 	the 	subject
merchandise 	or 	the 	mixed 	media 	set. 	The 	remaining 	scope 	rulings
appear 	to 	be 	isolated 	examples 	of 	how 	the 	test 	is 	outcome
determinative 	as 	to 	whether 	Commerce 	finds 	that 	the 	mixed 	media
set 	is 	subject 	to 	the 	order. 	All 	of 	the 	remaining 	scope 	rulings
contain an ambiguous order, and rely on the (k)(2) factors in order
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Court No. 10-00247 	Page 21
to justify excluding the subject merchandise from the scope of the
order. 	Additionally, 	the 	nine 	scope 	rulings 	rely 	on 	a 	number 	of
different bases for excluding a product from the scope of an order.
Third 	Remand 	Results 	at 	9–16. 	For 	instance, 	in 	the 	Vanity 	Set
Scope Ruling Commerce found as a “threshold matter” that it would
treat 	the 	vanity 	set 	as 	a 	whole 	set, 	rather 	than 	analyzing 	the
pencils included in the set individually. 	See Third Remand Results
at 	11; 	Vanity 	Set 	Scope 	Ruling 	at 	4. 	Commerce 	determined 	the
answer 	to 	the 	Walgreen 	question 	on 	the 	basis 	that 	the 	pencil
included within the vanity set was only a “minor component” of the
mixed media set. 	Vanity Set Scope Ruling at 4. 	This resulted in
Commerce 	limiting 	its 	analysis 	of 	the 	(k)(2) 	factors 	to 	only 	the
whole 	set, 	and 	thus, 	Commerce 	determined 	that 	the 	vanity 	set 	was
excluded from the scope of the order on pencils from the PRC. 	Id.
at 4–8. 	Furthermore, in the Compass Scope Ruling, Commerce chose
to 	answer 	the 	Walgreen 	question 	primarily 	by 	weighing 	the 	(k)(2)
factors 	and 	concluding 	that 	the 	purchaser’s 	ultimate 	expectation
was to obtain a “drawing tool” as opposed to obtaining a pencil to
be 	used 	for 	writing. 	Compass 	Scope 	Ruling 	at 	8. 	Contrary 	to
Commerce’s 	assertions, 	these 	scope 	rulings 	appear 	to 	answer 	the
Walgreen 	question 	based 	on 	the 	facts 	and 	circumstance 	in 	each
particular case, and do not identify a broader ascertainable mixed
media standard.
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Court No. 10-00247 	Page 22
Thirdly, 	Commerce 	argues 	that 	its 	mixed 	media 	test
occurs 	“within 	the 	context” 	of 	the 	(k)(1) 	factors. 	Third 	Remand
Results 	at 	36. 	It 	is 	unclear 	to 	the 	court 	how 	this 	test 	occurs
within the (k)(1) factors. 	Commerce relies on scope rulings which
answer 	the 	Walgreen’s 	question 	based 	on 	the 	(k)(2) 	factors. 	See
Vanity Set Scope Ruling; Stationery Sets Scope Ruling; Totes Scope
Ruling; 	Art 	Sets 	Scope 	Ruling; 	Compass 	Scope 	Ruling; 	Padfolios
Scope 	Ruling; 	Davis 	Padfolios 	Scope 	Ruling. 	Thus, 	in 	the 	Third
Remand 	Results, 	Commerce 	attempts 	to 	imbed 	its 	test 	within 	the
(k)(1) factors by using “ad-hoc” determinations that do not provide
an 	“ascertainable 	standard 	that 	would 	allow 	importers 	to 	predict
how 	Commerce 	would 	treat 	their 	mixed 	media 	products.” 	MCN 	III,
725 F.3d at 1305.
Furthermore, 	MCN 	correctly 	notes 	that 	in 	MCN 	III 	the
CAFC did in fact recognize a presumption that components of a mixed
media 	set 	that 	meet 	the 	physical 	specifications 	of 	an 	order 	are
presumed 	to 	be 	within 	the 	scope 	of 	that 	order. 	See 	MCN 	III, 	725
F.3d at 1304. 	In this case, neither party disputes the fact that
the 	nails 	contained 	in 	Target’s 	toolkits 	“meet 	the 	physical
characteristics 	of 	the 	nails 	subject 	to 	the 	scope 	of 	the 	Nails
Order.” 	Third Remand Results at 28–29. 	The CAFC stated that “[i]n
order 	to 	overcome 	this 	presumption 	Commerce 	must 	identify
published 	guidance 	issued 	prior 	to 	the 	date 	of 	the 	original
antidumping order . . . that provides a basis for interpreting the
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Court No. 10-00247 	Page 23
order contrary to its literal language.” 	See MCN III, 725 F.3d at
1304. 	Here, 	Commerce 	failed 	to 	explicitly 	address 	how 	its 	mixed
media 	test 	reflects 	this 	presumption 	at 	any 	point 	in 	the 	Third
Remand Results.
Ultimately, Commerce’s mixed media test fails to comply
with 	the 	instructions 	the 	CAFC 	articulated 	in 	MCN 	III, 	which
required 	Commerce 	to 	draw 	an 	ascertainable 	mixed 	media 	standard
from 	information 	that 	was 	publically 	available 	at 	the 	time 	the
Nails Order was issued. 	These nine scope rulings do not identify
a 	coherent 	and 	ascertainable 	standard 	encompassing 	all 	of 	the
factors 	in 	Commerce’s 	mixed 	media 	test, 	and 	thus, 	they 	do 	not
provide guidance that would allow importers to predict how Commerce
would 	treat 	their 	mixed 	media 	products. 	Because 	Commerce’s 	test
is inconsistent with MCN III, this court declines to find whether
Commerce’s 	application 	of 	its 	four-factor 	mixed 	media 	test 	was
supported by substantial evidence.
Conclusion
For 	the 	reasons 	discussed 	above, 	this 	case 	is 	remanded
to Commerce for further proceedings consistent with this opinion,
it is hereby
ORDERED 	that 	the 	Final 	Results 	of 	Redetermination
Pursuant 	to 	Remand 	Order 	is 	to 	be 	remanded 	to 	the 	United 	States
Department 	of 	Commerce 	for 	reconsideration 	of 	its 	mixed 	media
standard in accordance with the United States Court of Appeals for
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Court No. 10-00247 	Page 24
the 	Federal 	Circuit’s 	decision 	in 	Mid 	Continent 	Nail 	Corp. 	v.
United States, 725 F.3d 1295 (Fed. Cir. 2013).
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated:
New York, New York
October 6, 2014
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