CAFC Rules 'Butt-Weld' Is Ambiguous, Steel Branch Outlets Covered by AD on Butt-Weld Pipe Fittings
The term “butt-weld” is ambiguous, and the Commerce Department was right to find steel branch outlets are covered by an antidumping duty order on butt-weld pipe fittings from China, the U.S. Court of Appeals for the Federal Circuit ruled March 6.
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Judge Timothy Dyk dissented. He said Commerce erred by refusing to properly consider the regular industry definition of the term.
Importers Smith-Cooper International and Sigma -- the case’s lead importer, Vandewater International, filed for bankruptcy in 2021 -- brought their case to CAFC appealing a 2022 Court of International Trade decision that upheld as reasonable a Commerce scope ruling’s analysis of (k)(2) factors (see 2209080056). They claimed that the department never should have reached the (k)(2) stage, arguing that their products were excluded based on the plain language of the AD order.
CAFC judges Jimmie Reyna and Haldane Mayer disagreed. Writing for the two-judge majority, Reyna noted that CIT had expressed concern about the importers’ initial litigation because the parties appeared intent on “framing the appeal around the threshold (k)(0) issue” rather than attacking the department’s (k)(1) analysis as not supported by substantial evidence. He added that the trade court went on to note that, “to be perfectly candid, when the court reads the phrase ‘normal industry usage’ for a scope term such as ‘butt-weld’, it cannot help thinking that this must, in some way, implicate the (k)(2) factors.”
CIT did rule on the (k)(0) issue, determining that the term was ambiguous based on a 1992 scope ruling and on the fact Smith-Cooper International referred to its branch outlets in import documentation as “butt-weld outlets,” CAFC explained. That “conflicting evidence in the record” also “precluded a finding that the (k)(1) sources were dispositive,” CIT held, necessitating a (k)(2) analysis.
Smith-Cooper International and Sigma argued that, because there was a common industry definition of the term “butt-weld” that their products didn’t meet, Commerce never should have reached a (k)(2) analysis.
The appellate court first disagreed with the importers that Commerce could have stopped at a (k)(0) analysis. Conflicting evidence can’t establish unambiguity -- especially not at the (k)(0) stage, Reyna said.
“[I]f the CIT or this court could decide factual issues at the threshold (k)(0) inquiry, Commerce’s primacy in scope rulings, which are ‘highly fact-intensive and case-specific,’ is inappropriately minimized,” he said. “Moreover, the (k)(0) inquiry could effectively subsume the (k)(1) and (k)(2) analyses, disrupting the current design of the scope inquiry.”
Citing the same detrimental evidence as CIT, Reyna also held that (k)(1) sources were “equivocal” and thus couldn’t be dispositive of a uniform industry practice. Evidence supported either side’s argument, he said: “[f]or example, the petition and the 2016 Sunset Review note that a ‘butt-weld pipe fitting’ should have three characteristics, which are missing from Vandewater’s steel branch outlets.”
But the petition also provided examples of covered merchandise that didn’t meet those three characteristics, indicating the characteristics could be “merely exemplary, rather than necessary,” he said. The examples might also be considered similar to the importers’ products, he said.
In his dissent, Dyk said that the department, and the court, hadn’t properly considered industry usage of the term “butt-weld” when it conducted its (k)(0) analysis.
Commerce “did not consider industry practice at all” in its original scope ruling,” Dyk said. He noted it did so on the grounds that “the scope of the order makes no mention of industry standards,” saying that therefore “nothing in the scope language or the (k)(1) sources limits the scope ... to merchandise conforming to” industry standards.
“Contrary to Commerce’s conclusion, industry practice is relevant to the plain-language inquiry regardless of whether an order specifically incorporates the industry practice,” he said.
The case that established the requirement that (k)(0) analysis look to industry standards, ArcelorMittal v. United States, also involved an order that didn’t explicitly reference industry standards, he said. And in another case, OMG, Inc. v. United States, a dictionary definition was found to be enough in a (k)(0) analysis to render a term unambiguous, he said.
Dyk also took issue with the majority’s claim that “conflicting evidence” prevented (k)(1) sources from establishing industry practice.
It “is not our role to determine whether industry practices are uniform,” as Commerce is better equipped to handle the issue, he said. He explained he would have vacated the ruling and remanded to the department to make that decision.
(Vandewater International v. United States, Fed. Cir. # 23-1093, dated 3/6/2025; Judges: Timothy Dyk, Haldane Mayer and Jimmie Reyna; Attorneys: Christopher Curran of White & Case for plaintiffs-appellants Smith-Cooper International and Sigma Corporation; Meen Geu Oh for defendant U.S. government)