Trans Texas Tire, LLC v. United States

Slip Op. 21-62
UNITED STATES COURT OF INTERNATIONAL TRADE
TRANS TEXAS TIRE, LLC,
Plaintiff,
and
ZHEJIANG JINGU COMPANY
LIMITED,
Consolidated Plaintiff,
v.
UNITED STATES,
Defendant,
and
DEXSTAR WHEEL,
Defendant-Intervenor.
Before: Gary S. Katzmann, Judge
Consol. Court No. 19-00188
OPINION
[The court sustains Commerce’s Final Determination, denies Plaintiffs’ motion for judgment on
the agency record except as to the retroactive imposition of antidumping duties, and remands for
revised instructions on the assessment of duties consistent with this opinion.]
Dated: May 18, 2021
Jordan C. Kahn, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, N.Y.
and Washington, D.C., argued for plaintiff. With him on the briefs were Ned H. Marshak, Alan
R. Klestadt, and Max F. Schutzman.
Ting-Ting Kao, White & Case LLP, of Washington, D.C. and New York, N.Y., argued for
consolidated plaintiff. With her on the briefs were Walter J. Spak and Jay C. Campbell.
Ashley Akers, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, D.C., argued for defendant. With her on the briefs were Ethan P. Davis,
Acting Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant
Director. 	Of Counsel Brandon J. Custard, Senior Attorney, Office of Chief Counsel for Trade
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Enforcement & Compliance, U.S. Department of Commerce. 	With them on the post argument
submission were Brian M. Boynton, Acting Assistant Attorney General, and Daniel J. Calhoun,
Assistant Chief Counsel.
Nicholas J. Birch, Schagrin Associates, of Washington, D.C., argued for defendant-intervenor.
With him on the brief was Roger B. Schagrin and Geert De Prest.
Katzmann, Judge: 	Was the final scope determination by the U.S. Department of
Commerce 	(“Commerce”) 	in 	an 	antidumping 	duties 	(“AD”) 	investigation 	a 	permissible
clarification or an improper scope expansion in the application of duties to a product manufactured
in China and sold at less than fair value in the American market? Was Commerce’s assessment of
retroactive duties on the product permissible or in error for failure to provide adequate notice prior
to its issuance of a final scope decision in the AD proceedings? This case involves Commerce’s
final AD determination of on steel trailer wheels from the People’s Republic of China. Mem. from
J. Maeder to J. Kessler, re: Issues and Decision Mem. for the Final Determination in the Less Than
Fair Value Investigation (Dep’t Commerce July 1, 2019), P.R. 300 (“IDM”); Certain Steel Wheels
12 to 16.5 Inches in Diameter from the People’s Republic of China: Final Affirmative
Determination of Sales at Less Than Fair Value, and Final Affirmative Determination of Critical
Circumstances, 84 Fed. Reg. 32,707 (Dep’t Commerce July 9, 2019), P.R. 302 (“Final
Determination”). Plaintiffs Trans Texas Tire, LLC (“TTT”), a domestic importer, and Zhejiang
Jingu Company Limited (“Jingu”) a Chinese manufacturer of trailer wheels, (collectively,
“Plaintiffs”), filed this suit to challenge Commerce’s Order on Certain Steel Wheels 12 to 16.5
Inches in Diameter from the People’s Republic of China, 84 Fed. Reg. 45,952 (Dep’t Commerce
Sept. 3, 2019), P.R. 308 (“Order”); Compl. of Trans Texas Tire at 1–2, Nov. 1, 2019, ECF No. 10
(“Pl.’s Compl.”); Compl. of Zhejiang Jingu, Zhejiang Jingu Co. Ltd. v. United States, No. 19-cv-
00187 (CIT Nov. 1, 2019), ECF No. 13 (“Consol.-Pl.’s Compl.”). The suit challenges the inclusion
of steel trailer wheels coated in chrome through a Physical Vapor Deposition (“PVD”) process
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(“PVD chrome wheels”) in the final AD determination and the assessment of duties back to
Commerce’s preliminary determination. 1 Pl.’s Compl. at 5–6.
Initially, Commerce excluded “certain on-the-road steel wheels that are coated entirely in
chrome” from its preliminary determination. 	Certain Steel Wheels 12 to 16.5 Inches 	from the
People’s Republic of China: Preliminary Affirmative Determination of Sales at Less Than Fair
Value, and Preliminary Affirmative Determination of Critical Circumstances, 84 Fed. Reg. 16,643,
16,646 (Dep’t Commerce Apr. 22, 2019), P.R. 255 (“Preliminary Determination”). Although the
parties’ positions differ as to the meaning of this preliminary language, Commerce determined in
the course of its investigation that its final AD scope determination included PVD chrome wheels
and excluded only electroplated chrome wheels. Final Determination at 32,710. Plaintiffs assert
that the inclusion of PVD chrome wheels in Commerce’s Final Determination is unsupported by
substantial evidence and that the retroactive assessment of duties on PVD chrome wheels is
unlawful, and move for judgment on the agency record accordingly. 	Pl.’s Mot. for J. on the
Agency R., Apr. 28, 2020, ECF No. 29 (“Pl.’s Br.”); Consol.-Pl’s Mot. for J. on the Agency R.,
Apr. 28, 2020, ECF. No. 30 (“Consol.-Pl.’s Br.”). Defendant United States (“Government”) and
Defendant-Intervenor Dexstar Wheel oppose this motion and ask the court to sustain Commerce’s
Final Determination and retroactive assessment of duties. 	Def.’s Resp. to Pl.’s Mot. for J. on
Agency R., Aug. 10, 2020, ECF No. 35 (“Def.’s Br.”); Resp. Br. of Dexstar Wheel, Aug. 10, 2020,
ECF No. 34 (“Def.-Inter.’s Br.”).
At the request of the petitioner -- Defendant-Intervenor Dexstar Wheel (“Petitioner” or
“Dexstar”) -- and in accordance with section 705(a)(1) of the Tariff Act of 1930, Commerce
aligned the final AD determination in this case with the final determination in the companion
1 Commerce’s calculation of AD rates was not raised before the court and is not considered here.
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countervailing duties case, Consol. Ct. No. 19-00189. 	Similarly, this court has considered the
cases simultaneously and publishes both cases today. 	The court sustains Commerce's AD
determination but concludes that retroactive assessment of duties was impermissible under the
circumstances here.
BACKGROUND
I. 	Legal & Regulatory Framework
To facilitate fair trade and to level the playing field for American businesses that face
foreign goods introduced into the domestic market, “[t]he Tariff Act of 1930, as amended, allows
Commerce to impose . . . duties on imports that injure domestic industries.” Guangdong Wireking
Housewares & Hardware Co. v. United States, 745 F.3d 1194, 1196 (Fed. Cir. 2014). Commerce
assesses ADs when it determines that “the subject merchandise is being, or is likely to be, sold in
the United States at less than its fair value” and the United States International Trade Commission
(“ITC”) finds that the dumping injures a domestic industry. See 19 U.S.C. § 1673d(a)(1). After
so determining, Commerce issues an AD duty order and the plain language of the order determines
its scope. 	Tak Fat Trading Co. v. United States, 396 F. 3d 1378, 1382 (Fed. Cir. 2005) (citing
Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1097 (Fed. Cir. 2002)); see generally 19 U.S.C.
§ 1673e.
The federal regulations describe the AD duty assessment process in 19 C.F.R. § 351. The
requirements for the description of the merchandise are found in 19 C.F.R. § 351.202(b)(5), and
state that “[a] detailed description of the subject merchandise that defines the requested scope of
the investigation, including the technical characteristics and uses of the merchandise and its current
U.S. tariff classification number.” 	The ITC uses the provided merchandise description to
determine the effects of the dumped or countervailed imported goods on the domestic like product.
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19 U.S.C. § 1677(4)(D); Timken Co. v. United States, 20 CIT 76, 80, 913 F.Supp. 580, 584 (1996).
II. 	Factual Background
On August 8, 2018, Dexstar Wheel Division of Americana Development, Inc. (“Dexstar”
or “Petitioner”), a domestic producer of trailer wheels, filed AD and CVD petitions on certain steel
trailer wheels from the People’s Republic of China. Petitions for the Imposition of AD and CVD
Duties on Behalf of Dexstar Wheel Division of Americana Development, Inc. Re: Certain Steel
Wheels 12 to 16.5 Inches in Diameter from the People’s Republic of China, P.R. 50, 5 (“Petition”).
Commerce initiated its AD investigation on September 5, 2018. Certain Steel Wheels 12 to 16.5
Inches in Diameter From the People’s Republic of China: Initiation of Less-Than-Fair Value
Investigation, 83 Fed. Reg. 45,095 (Dep’t Commerce Sept. 5, 2018), P.R. 72 (“Initiation Notice”).
Commerce requested and received supplemental information from Dexstar before initiating the
investigation into certain steel trailer wheels on August 28, 2018. 	Petitioner’s Response to the
Department’s August 17, 2018 Additional Questions (Aug. 20, 2018), P.R. 65. 	In October 2018,
the ITC found that there is a reasonable indication that the government of China’s subsidization of
certain steel trailer wheels and the sale of those wheels in the U.S. at less than fair value materially
injured U.S. industry. Steel Trailer Wheels from China, Inv. Nos. 701-TA-609 and 731-TA-1421
(Preliminary), USITC Pub. 4830 (Oct. 2018) (“Preliminary ITC Determination”). 	On April 22,
2019, Commerce published its preliminary AD determination finding that certain steel wheels
from China were being sold in the United States for less-than-fair value. 	Preliminary
Determination. 	On July 9, 2019, Commerce issued its final affirmative determination. 	Final
Determination. In August of 2019, the ITC found that domestic industry was materially injured
by the import of certain steel wheels from China. Steel Trailer Wheels from China, Inv. Nos. 701-
TA-609 and 731-TA-1421 (Final), USITC Pub. 4943 (Aug. 2019) (“Final ITC Determination”).
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On September 3, 2019, Commerce issued its AD order on certain steel wheels from China. Order.
A. 	The Scope Determination
The Petition filed on August 8, 2018 described the scope of the subject merchandise as
certain “on-the-road steel wheels” and included several statements excluding steels wheels coated
in chrome. Petition at I-2, I-5. The Petition did not reference specific chrome plating processes
or mention electroplating or PVD processing but did state that there are no U.S. producers of
chrome-coated steel wheels. Id. Before publication of the Initiation Notice, Commerce requested
and received clarification from Dexstar regarding whether its Petition intended to specify a
minimum chrome content or level of chrome plating. Petitioner’s Response to the Department of
Commerce’s August 10, 2018 General Issues Questionnaire (Aug. 15, 2018), P.R. 63 (“Dexstar
Petition Response”). Dexstar confirmed:
Petitioner intended that the exclusion for chrome wheels be for wheels that are
coated entirely in chrome. Petitioner is not aware of any wheels on the market that
are only partially coated in chrome. As explained in the petitions, there are no U.S.
producers of chrome-coated steel wheels as chrome coating requires a different
manufacturing process that requires the use of highly toxic chemicals, and chrome
wheels are sold at much higher prices than certain steel wheels. The scope language
has been revised to read, “Also excluded from this scope are aluminum wheels and
certain on-the road steel wheels that are coated entirely with chrome.”
Id. at 8. Commerce published its Initiation Notice of the AD investigation on September 5, 2018
containing the provision that “Excluded from this scope are the following: . . . (3) certain on the
road steel wheels that are coated entirely with chrome; . . . .” Initiation Notice at 45,100.
On October 30, 2018, Tredit Tire & Wheel Co., Inc. (“Tredit”), a U.S. importer of trailer
wheels, though not a party in these cases, suggested that the scope in the Initiation Notice was
overbroad and requested that Commerce clarify the scope to exclude “[a]ll wheels with galvanized,
chrome or PVD finishes.” 	Letter from Barnes, Richardson & Colburn to U.S. Department of
Commerce (Oct. 30, 2018), P.R. 134 at 3 (emphasis added). 	Dexstar responded that “chrome
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coated wheels have never been covered by the scope of these investigations.” Letter from Stewart
& Stewart to U.S. Department of Commerce (Nov. 15, 2019), P.R. 138 at 2 n.5. 	Further, Dexstar
repeated its assertion that there are no U.S. producers of chrome coated steel wheels due to the
highly toxic nature of the chemicals. Id. at 5. Dexstar confirmed that it “did not include chrome
coated wheels in the scope of the petitions,” and that “chrome coated wheels have never been
included in the scope of the investigations.” Id. at 5.
In the Preliminary Determination, Commerce continued to use the scope from its
September 3, 2018 Initiation Notice, including the provision that “[e]xcluded from this scope are
. . . certain on the road steel wheels that are coated entirely with chrome; . . . .” 	Preliminary
Determination at 16,646. 	In March 2019, Dexstar requested that Commerce confirm that the
chrome exclusion did not include PVD chrome wheels. 	Letter from Stewart & Stewart to U.S.
Department of Commerce (Mar. 22, 2019), P.R. 226 at 1–2, Pl.’s Compl. at 3. TTT responded in
April 2019 and submitted evidence seeking to establish that PVD chrome wheels are covered by
the exclusion. 	Letter from Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt to U.S.
Department of Commerce (Apr. 11, 2019), P.R. 247 at 2. On April 15, 2019 Commerce issued its
preliminary scope decision memorandum. Mem. from E. Begnal to G. Taverman, re: Certain Steel
Wheels 12 to 16.5 Inches in Diameter from the People’s Republic of China: Preliminary Scope
Decision Memorandum (Dep’t Commerce Apr. 15, 2019), P.R. 252 (“Preliminary Scope Memo”).
The Preliminary Scope Memo maintained the exclusion language of “coated entirely with chrome”
from the Initiation Notices. Id. at 2.
Commerce published a final scope decision memorandum on July 1, 2019 and its final AD
determination on July 9, 2019, noting in both for the first time that, “This exclusion is limited to
chrome wheels coated entirely in chrome and produced through a chromium electroplating
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process, and does not extend to wheels that have been finished with other processes, including but
not limited to Physical Vapor Deposition (PVD).” Mem. from E. Begnal to J. Maeder, re: Certain
Steel Wheels from the People’s Republic of China: Final Scope Decision Memorandum for the
Final Antidumping Duty and Countervailing Duty Determinations (Dep’t Commerce Jul. 1, 2019),
P.R. 301 at 5 (“Final Scope Memo”); Final Determination at 23,710. Commerce revised the initial
scope language to incorporate Dexstar’s clarification that the scope exclusion only applies to
electroplated chrome steel trailer wheels and not PVD chrome wheels. Def.’s Br. at 6. Following
its final determination, Commerce imposed ADs retroactively, with assessments beginning on
April 22, 2019, the date of Commerce’s Preliminary Determination. Def.’s Br. at 32.
B. 	Procedural History
Subsequently, on November 1, 2019, TTT initiated this case to challenge Commerce’s
inclusion of PVD chrome wheels in its final order and its retroactive imposition of ADs on PVD
wheels as of the date of the Preliminary Determination. Pl.’s Compl. at 1, 5–6. On November 22,
2019, Petitioner Dexstar Wheel joined the action as a defendant intervenor. 	Order Granting
Consent Mot. to Intervene, Nov. 22, 2019, ECF No. 15. Foreign producer Jingu then joined TTT’s
action as a Consolidated-Plaintiff to challenge the scope of its final order and the assessment of
duties back to the preliminary determination date. Order Granting Mot. to Consolidate, Dec. 11,
2019, ECF No. 21. On April 28, 2020, TTT and Jingu each filed Rule 56.2 motions for judgment
on the agency record. 	Pl.’s Br., Consol.-Pl.’s Br. 	On August 10, 2020, the Government and
Dexstar Wheel (collectively, “Defendants”) filed their responses to the Rule 56.2 motions. Def.’s
Br.; Def.-Inter.’s Br. On October 13, 2020, TTT and Jingu filed their reply briefs. Reply Br. of
TTT, Oct. 13, 2020, EFC No. 42 (“Pl.’s Reply”); Reply Br. of Zhejiang Jingu Co., Ltd., Oct. 13,
2020, ECF No. 43 (“Consol.-Pl.’s Reply”). Prior to oral argument, the court issued questions to
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the parties, and the parties responded on January 21, 2021. Letter Concerning Questions for Oral
Arg., Jan. 12, 2021, ECF No. 51; Dexstar’s Resp. to the Court’s Questions, Jan. 21, 2021, ECF
No. 52 (“Def.-Inter.’s OAQ Resp.”); Pl.’s Resp. to the Court’s Questions, Jan. 21, 2021, EFC No.
53 (“Pl.’s OAQ Resp.”); Resp. to Court’s Order re Oral Arg. Questions, Jan. 21, 2021, ECF No.
54 (“Def.’s OAQ Resp.”); Zhejiang Jingu’s Resp. to Oral Arg. Questions, Jan. 21, 2021, ECF No.
55 (“Consol.-Pl.’s OAQ Resp.”). The court held oral argument on January 25, 2021. Oral Arg.,
Jan. 25, 2021, ECF No. 56. 	The parties, except for the Government, filed supplemental briefs
following oral argument. Post Arg. Submission, Jan. 29, 2021, ECF No. 56 (“Consol.-Pl.’s Suppl.
Br.”); Resp. to Court’s Order Permitting Post-Arg. Submission, Jan. 29, 2021, ECF No. 57 (“Def.-
Inter.’s Suppl. Br.”); Post-Arg. Submission, Jan. 29, 2021, ECF No. 58 (“Pl.’s Suppl. Br.”).
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction over this action pursuant to 19 U.S.C. § 1516a and 28 U.S.C. §
1581(c). The standard of review is set forth in 19 U.S.C. § 1516a(b)(1)(B)(i) which provides “[t]he
court should hold unlawful any determination, finding, or conclusion found . . . to be unsupported
by substantial evidence on the record, or otherwise not in accordance with law.” 	Substantial
evidence is “more than a mere scintilla. 	It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” Consol. Edison Co. of New York v. N.L.R.B.,
305 U.S. 197, 229 (1938).
When reviewing Commerce’s determinations, however, the court may not “reweigh the
evidence or . . . reconsider questions of fact anew.” Shandong Rongxin Imp. & Exp. Co. v. United
States, 41 CIT __, __,203 F. Supp. 3d 1327, 1336 (2017) (quoting Downhole Pipe & Equip., L.P.
v. United States, 776 F.3d 1369, 1377 (Fed. Cir. 2015)). 	The “possibility of drawing two
inconsistent conclusions from the evidence does not preclude [Commerce’s] finding from being
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supported by substantial evidence. Id. (quoting ABB Inc. v. United States, 190 F. Supp. 3d 1159,
1166–67 (2016)). 	Even where Commerce’s decision is “of less than ideal clarity,” the court is
obligated to sustain the decision when Commerce’s “path may reasonably be discerned.” CS Wind
Vietnam Co. v. United States, 832 F.3d 1367, 1376 (Fed. Cir. 2016) (quoting Bowman Transp.,
Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)). Commerce’s explanation must
simply “reasonably tie the determination under review to the governing statutory standard and to
the record evidence.” Id. (quoting Bowman, 419 U.S. at 286). This standard allows the court to
fulfill its “review function” and “avoid making choices reserved to the agency,” thereby upholding
the principles in SEC v. Chenery, 318 U.S. 80, 88 (1943). Id. These principles further require that
the reviewing court “may not affirm on a basis containing any element of discretion -- including
discretion to find facts and interpret statutory ambiguities -- that is the not the basis the agency
used, since that would remove the discretionary judgment from the agency to the court.” Id.
(quoting ICC v. Brotherhood of Locomotive Eng’rs, 482 U.S. 270, 283 (1987).
DISCUSSION
Plaintiffs argue that Commerce (1) unlawfully expanded the scope of its investigation; and
(2) improperly assessed AD duties retroactively to the preliminary determination date without
adequate notice. 	Pl.’s Br. at 26, 37; Consol.-Pl.’s Br. at 18, 39. Defendants respond in support of
Commerce’s Final Determination by: (1) highlighting Commerce’s extensive authority to
determine the scope of an order; (2) supporting Commerce’s AD assessment back to the date of
the preliminary determination after a proper clarification of scope; and (3) stating that the chrome
exclusion was never intended to exclude PVD chrome wheels. 	Def.’s Br. at 12, 27, 30; Def.-
Inter.’s Br. at 9, 16, 24. The court concludes that, while Commerce’s final scope determination
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was supported by substantial evidence and in accordance with law, Commerce’s retroactive
assessment of ADs without adequate notice was unlawful.
I. 	Commerce’s Final Scope Determination Was Supported by Substantial
Evidence and in Accordance with Law
Plaintiffs challenge Commerce’s final scope determination on two grounds. 	First,
Plaintiffs allege that the Government failed to comply with statutory requirements, given that the
ITC injury determination only found domestic injury with respect to steel trailer wheels not coated
in chrome. 	Pl.’s Br. at 4–5, 36–37; Consol.-Pl.’s Br. at 6, 25–26. Second, Plaintiffs argue that
Commerce’s ultimate inclusion of PVD chrome wheels constitutes an expansion of scope, not a
permissible clarification, and is therefore unlawful. Pl.’s Br. at 11, 19–20; Consol.-Pl.’s Br. at 31–
34.
Defendants respond by arguing that Dexstar at no point intended to include PVD chrome
wheels in the scope exclusion and thus never conveyed such intent to the ITC, and further that the
ITC in fact considered PVD chrome wheels in its injury determination in the context of “coated,
painted, and galvanized wheels.” Def.’s Br. at 17; Def.-Inter.’s Br. at 20. Defendants further argue
that Commerce’s explicit inclusion of PVD chrome wheels in the final scope determination falls
within Commerce’s discretion to clarify the scope of its investigations, given that PVD chrome
wheels were never intended to be the subject of the exclusion for chrome-coated steel wheels.
Def.’s Br. at 14; Def.-Inter.’s Br. at 13.
Defendants are correct. Commerce “has an inherent power to establish the parameter of
[its investigations] so as to carry out its mandate to administer the law effectively and in accordance
with its intent.” Mitsubishi Elec. Corp. v. United States, 12 CIT 1025, 1035, 700 F. Supp. 538,
547 (1988), aff’d 898 F.2d 1577 (Fed. Cir. 1990). 	Accordingly, “Commerce retains broad
discretion to define and clarify the scope” of its investigations “in a manner which reflects the
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intent of the petition.” Mitsubishi Heavy Indus., Ltd. v. United States, 21 CIT 1227, 1232, 986 F.
Supp. 1428, 1432 (1997) (quoting Minebea Co. v. United States, 16 CIT 20, 22, 782 F. Supp. 117,
120 (1992)) (upholding a scope clarification made after notice of initiation as supported by
substantial evidence). 	Here, Commerce has provided adequate evidence in support of its final
scope determination and has not exceeded its discretion. The court therefore affirms Commerce’s
determination.
Commerce provided adequate explanation for its decision in the final scope memorandum,
and its clarification of the inclusion of PVD chrome wheels is therefore permissible. Commerce
explained that the Petition excluded chrome wheels that are produced through a highly toxic
process, not performed in the United States, and require the welding of disc and rim after chrome
coating. 	Final Scope Memo at 12; Petition I–13. 	Neither the toxic process nor post-coating
welding are required in the manufacture of PVD chrome wheels. Final Scope Memo at 12; Def.’s
Br. at 13. 	In addition, Commerce cited substantive differences between PVD chrome and
electroplated chrome including weight, color tint, and the higher cost of PVD chrome. Final Scope
Memo at 15. Further, Commerce stated that PVD processing involves a powder base and a clear
coat. Id. at 12, 14. 	Considering these differences, Commerce reasonably found that the Petition
intended the scope to exclude only electroplated chrome wheels, and not PVD chrome wheels.
Contrary to Plaintiffs’ arguments, the statute did not require Petitioner to amend its initial
petition to the ITC in light of the inclusion of PVD chrome wheels. Def.’s Br. at 27. There is no
evidence that the ITC failed to consider PVD chrome wheels in its injury determination. In fact,
the preliminary injury determination expressly addressed the incorporation of coated, painted, and
galvanized steel wheels. Def.’s Br. at 19; Steel Trailer Wheels from China, Inv. Nos. 701-TA-609
and 731-TA-1421, USITC 4830, (Sept. 28, 2018) at I-9, I-14. 	Commerce’s final scope
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determination clarified that PVD chrome wheels are included within the broader category of
“coated” wheels, as PVD chrome coating involves “applying a powder coat, metallic coat . . . and
a clear coat to the wheel.” Final Scope Memo at 15. Thus, although the ITC’s preliminary injury
determination incorporated the Petition’s language regarding the exclusion of wheels “coated in
chrome,” Petition at I-5, there is no indication that the determination failed to consider whether
PVD chrome wheels “materially injured” domestic injury as required under 19 U.S.C. §
1671(a)(2).
Nor did Commerce impermissibly deviate from its established practice by treating the
inclusion of PVD chrome wheels as a clarification, not expansion, of scope and therefore not
requiring amendment of the petition. It is established that Commerce can “alter the scope of the
investigation until the final order.” Kyocera Solar, Inc. v. United States, 41 CIT __, __, 253 F.
Supp. 3d 1294, 1316 (2017) (citing Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1096 (Fed.
Cir. 2002)). Indeed, although Commerce attempts to limit alterations to scope during the course
of an investigation, it nevertheless expressly allows parties to request permission to submit
additional information regarding the scope of an investigation at any point during the proceedings.
Initiation Notice at 45,100. 	Furthermore, although Commerce retains and has exercised the
discretion to reject late-stage requests to alter the scope of an investigation, see, e.g., Mem. from
S. Claeys to D. Spooner, re: Issues and Decision Mem. for the Antidumping Duty Investigation of
Certain Orange Juice from Brazil: Final Determination of Sales at Less Than Fair Value, 71 Fed.
Reg. 2,183 (Dep’t Commerce Jan. 13, 2006), 11(citing Allegheny Bradford Corp. v. United States,
28 CIT 830, 848, 342 F. Supp. 2d 1172, 1188–89 (2004)), it also has “broad discretion to define
and clarify the scope of an . . . investigation in a manner which reflects the intent of the petition,”
AMS Assocs. v. United States, 36 CIT 1660, 1666, 881 F. Supp. 2d 1374, 1380 (2012), aff’d 737
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F.3d 1338 (Fed. Cir. 2013). That Commerce chose to exercise the latter power and not the former
in this case does not provide a basis for overturning its final scope determination.
The case law supports deference to Commerce’s scope determinations. 	In Kyocera, the
plaintiff challenged Commerce’s departure from its practice of using a single country of origin test
to define the scope of an investigation of a particular class or kind of merchandise. 253 F. Supp.
3d 	at 	1305. 	Consolidated 	Plaintiff 	SunEdison 	further 	challenged 	Commerce’s 	scope
determination, arguing that by altering the country of origin rule, Commerce impermissibly
brought certain sales within the scope of the final order that were not previously implicated by the
investigation. Id. at 1315–16. On remand, Commerce explained that its apparent deviation from
the country-of-assembly test applied in its earlier investigation of solar cells from Taiwan was
reasonable in light of the specific harm alleged in the investigation before the court: while the
former investigation addressed harm originating in the assembly of solar panels in China, the latter
addressed harm originating with the construction of solar cells in Taiwan. Id. at 1309. Finding
that Commerce adequately explained its apparent deviation from past practice, and “reasonably
tailored” its determination to the specific investigations, the court upheld Commerce’s scope
determination. 	The court also rejected SunEdison’s argument, finding that “Commerce has the
authority . . . to modify the scope language until the final order is issued, based on the agency’s
findings during the course of the investigation.” Id. at 1315 (citing Duferco Steel, Inc., 296 F.3d
at 1096).
Similarly, in Minebea Co. v. United States, 16 CIT 20, 782 F. Supp. 117 (1992), the court
addressed whether rod ends and rod end bearings were properly included in Commerce’s
investigation despite “scant reference to rod ends, per se” in the initial petition. 16 CIT at 23, 782
F. Supp at 120. 	Minebea, a producer of rod ends and rod end bearings, appealed Commerce’s
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denial of its exclusion request, arguing that because “rod ends without rolling elements were not
specifically named in the petition” they “should have been excluded.” 16 CIT at 22, 782 F. Supp
at 120. The court found that Commerce reasonably interpreted the petition to intend the inclusion
of rod ends and rod end bearings despite the absence of explicit language, because (1) “[t]he
petition clearly included spherical plain bearings and housed bearing units”; (2) both “rod ends
and rod end bearings are used in aerospace applications, an area of interest specifically mentioned
in the petition”; and (3) “petitioner’s submissions . . . in response to . . . requests to clarify the
scope of the petition, unequivocally indicate that the petitioner intended for rod ends and rod end
bearings to be included as well.” 16 CIT at 23, 782 F. Supp. at 122 (citations omitted).
As in Kyocera and Minebea, the court here defers to Commerce’s broad discretion to define
the scope of its investigation and its reasonable interpretation of the underlying petition.
Commerce provided a reasonable explanation for its inclusion of PVD chrome wheels, and for its
understanding of Petitioner’s intent. 	Nor is there any basis for a determination that Commerce
failed to comply with the statutory process underlying its investigation. 	The court therefore
sustains Commerce’s Final Determination as supported by substantial evidence and in accordance
with law.
II. 	Commerce Unlawfully Assessed ADs Back to the Original Suspension of
Liquidation Because Commerce Did Not Provide Adequate Notice
Plaintiffs further argue that even if the inclusion of PVD chrome was lawful in the Final
Determination, Commerce erred by assessing antidumping duties retroactively on PVD chrome
imports back to the date of its Preliminary Determination. Pl.’s Br. at 37; Consol.-Pl.’s Br. at 39.
In support of this contention, TTT points to the court’s decision in Tai-Ao Aluminum (Taishan)
Co. v. United States, 43 CIT __, __, 391 F. Supp. 3d 1301, 1313–15 (2019) (“Tai-Ao I”), aff’d
983 F.3d 487 (Fed. Cir. 2020) (“Tai-Ao II”) for the principle that “Commerce is prohibited from
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assessing retroactive AD/CVD liability without providing sufficient notice.” Pl.’s Br. at 38. Both
Plaintiffs argue that notice of the inclusion of PVD wheels was inadequate as of the initiation of
the investigation, and that duties should be assessed only prospectively following the clarification
of scope: i.e., from the publication of the Final Determination. Pl.’s Br. at 42; Consol.-Pl.’s Br. at
39.
Defendants respond by maintaining that chrome wheels were always within the scope and
original intent of the Petition and arguing that ADs for PVD wheels should be assessed back to the
suspension of liquidation with the February 25, 2019 publication of the Preliminary Determination.
Def.’s Br. at 29–31; Def.-Inter.’s Br. at 24. 	The Government relies on the argument that
Commerce followed its own regulations as provided in 19 U.S.C. §§ 1671b and 1673b and
attempts to distinguish the analysis of adequate notice in the context of scope rulings and of
retroactive assessment of duties to the suspension of liquidation. 	Def.’s Br. at 30. 	Defendant-
Intervenor asserts that as Commerce’s scope modification was a clarification, assessment of duties
back to the start of suspension of liquidation -- here, the issuance of the Preliminary Determination
-- was consistent with the provisions of 19 U.S.C. § 1673b(d)(2). Def.-Inter.’s Br. at 24.
At the initiation of an AD investigation, Commerce is required to provide notice of the
investigation through the publication of an initiation notice in the Federal Register. 19 C.F.R. §
351.203(c)(1). Commerce must also provide a public version of the petition to all known exporters
“as soon as practicable” after the initiation. 19 C.F.R. § 351.203(c)(2). Once Commerce makes a
preliminary AD determination, it must publish the affirmative or negative decision in the Federal
Register and order the suspension of liquidation of the subject merchandise. 	19 C.F.R. §
351.205(c)–(d); 	19 	U.S.C. 	§ 	1673b(e)(2). 	Similarly, 	Commerce 	must 	publish 	its 	final
determinations and orders in the Federal Register. 19 C.F.R. § 351.210(b)–(c). Such publication
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provides legal notice of Commerce’s investigations and the potential AD liability that may result
to importers. See, e.g., Target Corp. v. United States, 33 CIT 760, 779–80, 626 F. Supp. 2d 1285,
1301 (2009), aff’d 609 F. 3d 1352 (Fed. Cir. 2010) (citing 44 U.S.C. § 1507; Fed. Corp Ins. Corp.
v. Merrill, 332 U.S. 380, 384–85 (1947)). 	In particular, publication of the initiation notice is
intended to ensure that “any reasonably informed party should be able to determine, . . . whether
particular entries in which it has an interest may be affected by the administrative review.” Tai-
Ao I, 391 F. Supp. 3d at 1314 (quoting Transcom, Inc. v. United States, 182 F.3d 876, 882–83
(Fed. Cir. 1999)).
In other words, as the Federal Circuit noted, “the notice requirement is designed to avoid
unfairness to importers and foreign exporters.” Tai-Ao II, 983 F.3d at 494. Commerce is therefore
expected to make “a reasonable attempt . . . to balance respondents’ concerns for finality and the
fairness 	of 	Commerce’s 	investigation 	with 	the 	statutory 	duty 	to 	issue 	an 	effective 	and
administrable . . . order.” Mitsubishi Heavy Indus., Ltd., 21 CIT at 1233, 986 F. Supp. at 1434.
Accordingly, although Commerce has broad discretion “to define and clarify the scope of an
investigation”, that discretion “is limited in part by concerns for the finality of administrative
action, which cautions against including a product that was understood to be excluded at the time
the investigation began.” Allegheny Bradford Corp., 28 CIT at 848, 342 F. Supp. 2d at 1187–88
(quoting Mitsubishi Heavy Indus., Ltd., 21 CIT at 1232, 986 F. Supp. at 1433). 	In this case,
Commerce failed to provide adequate notice upon the initiation of the AD proceedings that PVD
chrome wheels would not qualify for the exclusion for steel trailer wheels coated in chrome.
Commerce’s assessment of retroactive duties on PVD chrome wheels is therefore unlawful.
Tai-Ao 	I, 	a 	review 	of 	scope 	interpretation 	and 	notice 	in 	an 	anti-circumvention
investigation, is instructive in the treatment of retroactive duties. 	Tai-Ao I, 391 F. Supp. 3d at
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1305. 	In Tai-Ao I, the court found there was substantial record evidence for Commerce’s final
scope determination but inadequate notice to plaintiffs of the applicable scope upon issuance of
the initiation notice. Id. at 1313–15. Specifically, the court found that notice that “the Department
intends to consider whether the inquiry should apply” to a specific product, 391 F. Supp. 3d at
1314 (emphasis in original), was inadequate to allow retroactive assessment of duties because it
“does not certainly provide Plaintiffs notice that they are subject to the inquiry,” 391 F. Supp. 3d
at 1315 (emphasis in original) (citing Aluminum Extrusions from the People's Republic of China:
Initiation of Anti-Circumvention Inquiry, 81 Fed. Reg. 15,039, 15,042 (Dep’t Commerce Mar. 21,
2016)). Typically, affirmative anticircumvention investigations result in assessment of duties back
to the date of the initiation notice pursuant to 19 U.S.C. § 1677j(f). Due to the inadequate notice
of scope as of initiation, the court in Tai-Ao I instead required that Commerce impose retroactive
duties beginning upon the date the importers were given adequate notice -- in that case, the date of
the preliminary determination. 391 F. Supp. 3d at 1313–14. The Federal Circuit recently affirmed
the court’s decision in Tai-Ao II, where the sole issue on appeal was whether adequate notice was
provided by Commerce’s initiation notice. 983 F.3d at 492, 497. Although the case cites to the
anti-circumvention regulations, which are not at issue in this case, the Federal Circuit nevertheless
emphasized the importance of fairness to affected importers in the assessment of duties. Id. at 494
(“[T]he notice requirement is designed to avoid unfairness to importers and foreign exporters.”).
Although the facts are not perfectly analogous to this case, Tai Ao I and Tai Ao II clearly show
that adequate notice is essential where Commerce attempts to apply retroactive duties.
In this case, the meaning of “coated entirely with chrome” is at the center of the dispute.
Both the Initiation Notice and Preliminary Determination as published excluded from the
investigation “certain on-the-road steel wheels that are coated entirely with chrome.” 	Initiation
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Notice at 45,100; Preliminary Determination at 16,646. It was not until the publication of the Final
Scope Memo and Final Determination that Commerce clarified that PVD chrome wheels did not
fall within the limits of the exclusion. Final Scope Memo at 5 (“This exclusion is limited to chrome
wheels coated entirely in chrome and produced through a chromium electroplating process, and
does not extend to wheels that have been finished with other processes, including but not limited
to Physical Vapor Deposition (PVD)”); Final Determination at 23,710. Nor did Dexstar use more
precise language in its petition. Petition at I-5, I-4, n.6 (“Except for those coated with chrome.”)
In response to Commerce’s request for further clarification of the intended chrome content,
Dexstar did not elaborate on the type of chrome coating intended by the Petition. Dexstar Petition
Response at SGQ-4. Although the additional information provided in Dexstar’s Petition Response
regarding the manufacture of the excluded chrome wheels ultimately supported Commerce’s
determination that PVD chrome was not an intended part of the exclusion, none of this information
was included in Commerce’s Initiation Notice or Preliminary Determination. 	Accordingly, the
question before the court is whether the stated exclusion of wheels “coated entirely with chrome”
was sufficient to provide importers of PVD chrome wheels with notice of their product’s inclusion.
Although Defendants seemingly argue that the standard for notice in this case should be
different from that applied in scope ruling requests, Commerce is nevertheless required to provide
adequate notice to any reasonably informed importer that their product is subject to duty before
any retroactive assessment of duties may obtain. Transcom, 182 F.3d at 882–83. If, during the
course of the investigation, a reasonably informed importer could not be sure of the inclusion of
its products in the investigation, then the court must find that adequate notice was not given at that
stage. 	Tai-Ao I, 391 F. Supp. 3d at 1313–14. 	Here, a reasonably informed importer was not
“certainly provide[d] . . . notice” by the language of the Initiation Notice and Preliminary
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Determination that PVD chrome wheels, despite being coated entirely in chrome, were not
properly the subject of the exclusion. Id. at 1315 (emphasis in original). Thus, Commerce did not
provide adequate notice of AD liability until the publication of the Final Scope Memo, and later
the Final Determination, which included language clarifying the limits of the exclusion and
specifying the inclusion of wheels coated in PVD chrome. The court does not question, nor is it
germane, whether some importers could have anticipated the limits of the exclusion. However,
the 	court 	concludes 	that, 	given 	the 	language 	of 	the 	Initiation 	Notice 	and 	Preliminary
Determination, reasonably informed importers were not provided clear or meaningful notice of the
inclusion of PVD chrome wheels until the publication of the Final Scope Memo.
Ultimately, “the notice requirement is designed to avoid unfairness to importers and foreign
exporters.” 983 F.3d at 494. Retroactively assessing duties where importers received inadequate
notice of their products’ inclusion in the scope of an AD investigation would be unfair.
Accordingly, duties should have been assessed from the date of the Final Scope Memo, when
Plaintiffs first received notice that PVD chrome wheels were not subject to the exclusion, rather
than the date of the Preliminary Determination and suspension of liquidation.
CONCLUSION
For the foregoing reasons, the court sustains Commerce's determination that the scope of
its final AD order properly includes PVD chrome wheels and excludes only electroplated chrome
wheels. However, the court finds that Commerce's decision to assess duties retroactive to the date
of the Preliminary Determination was not in accordance with law because the language in the
Initiation Notice and Preliminary Determination did not provide adequate notice of the inclusion
of PVD chrome wheels. The court remands to Commerce to reformulate its instructions consistent
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with this opinion and directs that such action be taken within 30 days of the publication of this
opinion.
SO ORDERED.
/s/ 	Gary S. Katzmann
Judge
Dated: May 18, 2021
New York, New York
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