                                        Slip Op. 19-98

                UNITED STATES COURT OF INTERNATIONAL TRADE

  COLUMBIA FOREST PRODUCTS, ET AL.,

                        Plaintiffs,

                  v.
                                                      Before: Jane A. Restani, Judge
  UNITED STATES,

                        Defendant,                    Court No. 18-00098

                  and

  SHELTER FOREST INTERNATIONAL
  ACQUISITION, INC., ET AL.,

                        Defendant-Intervenors.


                                          OPINION

[Commerce’s determination not to initiate an anticircumvention inquiry is sustained]

                                                                          Dated: July 30, 2019

       Timothy C. Brightbill, Wiley Rein LLP, of Washington, DC, for Plaintiffs Columbia
Forest Products, Commonwealth Plywood Inc., States Industries, Inc., and Timber Products
Company. With him on the brief were Tessa V. Capeloto, Stephanie M. Bell, and Elizabeth S.
Lee.

        Joshua E. Kurland, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, DC, for the defendant. With him on the brief were Joseph H. Hunt,
Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant
Director. Of counsel was Caroline D. Bisk, Office of the Chief Counsel for Trade Enforcement
& Compliance, U.S. Department of Commerce.

      Daniel L. Porter, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, DC, for
Defendant-Intervenor Shelter Forest International Acquisition, Inc. With him on the brief was
Gina M. Colarusso.

       Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, DC, for Defendant-
Intervenors Linyi Chengen Import and Export Co., Ltd., Linyi City Shenrui International Trade
Co., Ltd., Linyi Jiahe Wood Industry Co., Ltd., Linyi Sanfortune Wood Co., Ltd., Shandong
Court No. 18-00098                                                                         Page 2


Dongfang Bayley Wood Co., Ltd., Shanghai Futuwood Trading Co., Ltd., Suqian Hopeway
International Trade Co., Ltd., Suzhou Oriental Dragon Import and Export Co., Ltd., Xuzhou
Jiangyang Wood Industries Co., Ltd., Xuzhou Longyuan Wood Industry Co., Ltd., Xuzhou
Shengping Imp and Exp Co., Ltd., and Far East American, Inc. With him on the brief were J.
Kevin Horgan and Alexandra H. Salzman.

       Kirsten Smith, Sandler Travis & Rosenberg, PA, of Washington, DC, for Defendant-
Intervenor IKEA Supply AG. With her on the brief were Arthur Purcell, of New York, NY, and
Sarah E. Yuskaitis, of Washington, DC.

       Jeffrey S. Grimson, Mowry & Grimson, PLLC, of Washington, DC, for Defendant-
Intervenors Concannon Corporation, Fabuwood Cabinetry Corporation, Laminate Technologies,
Inc., Masterbrand Cabinets, Inc., Northwest Hardwoods, Inc., Taraca Pacific, Inc., Patriot
Timber Products, Inc., and USPLY LLC. With him on the brief were Jill A Cramer and Bryan P.
Cenko.

       Restani, Judge: This case involves an attempt by plaintiffs Columbia Forest Products,

Commonwealth Plywood Inc., States Industries, Inc., and Timber Products Company

(collectively “Columbia Forest”) to expand unfair trade orders covering plywood with at least

one hardwood veneer to cover plywood with no hardwood veneer, i.e., softwood veneered

plywood. It fails.

       The matter is before the court on a motion for judgment upon the agency record by

Columbia Forest. Columbia Forest seeks a remand to the United States Department of

Commerce (“Commerce”) with instructions to perform a minor alterations anticircumvention

analysis on softwood veneered plywood or provide legally sufficient reasons for why such an

analysis is unnecessary. See Pls. Columbia Forest’s Mem. in Supp. of their R. 56.2 Mot. for J.

on the Agency Record, ECF No. 60-1 (Nov. 21, 2018) (“Columbia Forest Br.”). Defendant

United States (“the government”) and Defendant-Intervenors argue that Commerce’s

determination not to initiate such an inquiry is supported by substantial evidence and otherwise

lawful. See Def.’s Mem. in Opp. to Pls.’ R. 56.2 Mot. for J. upon the Agency Record, ECF No.

66 (Mar. 21, 2019) (“Gov. Br.”); Def.-Ints.’ Resp. to Mot. for J. on the Agency Record, ECF No.
Court No. 18-00098                                                                           Page 3


67 (Mar. 21, 2019) (“Chengen Br.”); Def. Int. Shelter Forest Acquisition, Inc.’s Mem. in Opp’n

to Pls.’ R. 56.2 Mot. for J. on the Agency Record, ECF No. 68 (Mar. 21, 2019) (“Shelter Br.”);

Def.-Ints. Concannon Corp., Fabuwood Cabinetry Corporation, Laminate Technologies, Inc.,

Liberty Woods International, Inc., Masterbrand Cabinets, Inc., Northwest Hardwoods, Inc.,

Taraca Pacific, Inc., Patriot Timber Products Inc. and USPLY LLC Resp. in Opp’n Pls.’ Mot.

For J. Upon the Agency Record, ECF No. 69 (Mar. 21, 2019) (“Concannon Br.”); Resp. Br. of

Def.-Int. IKEA Supply AG, ECF No. 70 (Mar. 21, 2019) (“Ikea Br.”). For the following

reasons, the court grants the government’s motion for summary judgment and denies Columbia

Forest’s motion for summary judgment.

                                        BACKGROUND

       On November 18, 2016, the Coalition for Fair Trade in Hardwood Plywood

(“Petitioners”), of which Columbia Forest Products, Commonwealth Plywood Inc., States

Industries, Inc., and Timber Products Company are members, filed antidumping duty (“AD”) and

countervailing duty (“CVD”) petitions covering certain hardwood and decorative plywood

products (“hardwood plywood”) from the People’s Republic of China (“PRC”). See Certain

Hardwood Plywood Products from the PRC: Petition for the Imposition of Antidumping and

Countervailing Duties, A-570-051 & C-570-052 (Nov. 18, 2016) (“Petition”). The Petition

defined “hardwood and decorative plywood” as “a flat panel composed of an assembly of two or

more layers or plies of wood veneers in combination with a core[,] . . . [that] must have at least

either the face or back veneer composed of one or more species of hardwood or bamboo.” Id. at

4. The Petition also claimed that “[h]ardwood and decorative plywood may include products

that meet the American National Standard for Hardwood and Decorative Plywood . . .” Id.
Court No. 18-00098                                                                         Page 4


       On December 8, 2016, Commerce initiated AD and CVD investigations and solicited

interested party input regarding the scope of the investigations. See Certain Hardwood Plywood

Products from the PRC: Initiation of Less-Than-Fair-Value Investigation, 81 Fed. Reg. 91,125

(Dep’t Commerce Dec. 16, 2016); Certain Hardwood Plywood Products from the PRC: Initiation

of Countervailing Duty Investigation, 81 Fed. Reg. 91,131 (Dep’t Commerce Dec. 16, 2016).

After receiving scope comments, Commerce issued a preliminary scope decision memorandum

on certain hardwood plywood products from the PRC. See Certain Hardwood Plywood Products

from the PRC: Scope Comments Decision Memorandum for the Preliminary Determinations

(Dep’t Commerce Apr. 17, 2017) (“Preliminary Scope Memorandum”).

       Based on the Petition and the analysis set forth in its Preliminary Scope Memorandum,

Commerce described the scope of the investigations, in relevant part, as follows:

       The merchandise subject to this investigation is hardwood and decorative
       plywood, and certain veneered panels as described below. For purposes of this
       proceeding, hardwood and decorative plywood is defined as a generally flat,
       multilayered plywood or other veneered panel, consisting of two or more layers or
       plies of wood veneers and a core, with the face and/or back veneer made of non-
       coniferous wood (hardwood) or bamboo. The veneers, along with the core may
       be glued or otherwise bonded together. Hardwood and decorative plywood may
       include products that meet the American National Standard for Hardwood and
       Decorative Plywood, ANSI/HPVA HP-1-2016 (including any revisions to that
       standard).

       For purposes of this investigation a “veneer” is a slice of wood regardless of
       thickness which is cut, sliced or sawed from a log, bolt, or flitch. The face and
       back veneers are the outermost veneer of wood on either side of the core
       irrespective of additional surface coatings or covers as described below.

       The core of hardwood and decorative plywood consists of the layer or layers of
       one or more material(s) that are situated between the face and back veneers. The
       core may be composed of a range of materials, including but not limited to
       hardwood, softwood, particleboard, or medium-density fiberboard (MDF).

       All hardwood plywood is included within the scope of this investigation
       regardless of whether or not the face and/or back veneers are surface coated or
Court No. 18-00098                                                                          Page 5


       covered and whether or not such surface coating(s) or covers obscures the grain,
       textures, or markings of the wood. . .

       All hardwood and decorative plywood is included within the scope of this
       investigation, without regard to dimension . . . However, the most common panel
       sizes of hardwood and decorative plywood are 1219 x 1829 mm (48 x 72 inches),
       1219 x 2438 mm (48 x 96 inches), and 1219 x 3048 mm (48 x 120 inches).

       ...

       The scope of the investigation excludes the following items: (1) Structural
       plywood . . . manufactured to meet [certain U.S. Products Standards] and which
       has both a face and a back veneer of coniferous wood; (2) products which have a
       face and back veneer of cork; (3) multilayered wood flooring, as described in the
       antidumping duty and countervailing duty orders on Multilayered Wood Flooring
       from the [PRC] . . . (4) multilayered wood flooring with a face veneer of bamboo
       or composed entirely of bamboo; (5) plywood which has a shape or design other
       than a flat panel, with the exception of any minor processing described above; (6)
       products made entirely from bamboo and adhesives . . . ; and (7) Phenolic Film
       Faced Plyform (PFF), also known as Phenolic Surface Film Plywood (PSF)[.]1

See Certain Hardwood Plywood Products from the PRC: Preliminary Affirmative CVD

Determination, Preliminary Affirmative Critical Circumstances Determination, in Part, and

Alignment of Final Determination with Final Antidumping Duty Determination, 82 Fed. Reg.

19,022, 19,024–25 (Dep’t Commerce Apr. 25, 2017) (“CVD Preliminary Determination”);

Certain Hardwood Plywood Products from the PRC: Preliminary Affirmative Determination of

Sales at Less Than Fair Value, Preliminary Affirmative Determination of Critical Circumstances,

in Part, 82 Fed. Reg. 28,629, 28,638–39 (Dep’t Commerce June 23, 2017) (“AD Preliminary

Determination”). After publication of the CVD Preliminary Determination, however, Commerce

clarified that plywood with both a face and back veneer of coniferous wood (softwood) was not

included within the scope of the investigations. See Certain Hardwood Plywood Products from



1
 The scope language includes several additional explicit exclusions, for certain furniture goods,
kitchen cabinets, table tops, countertops, and laminated veneer lumber door and window
components, that are not applicable to the subject merchandise at issue here. See, e.g., AD
Preliminary Determination, 82 Fed. Reg. at 28,638–39.
Court No. 18-00098                                                                         Page 6


the PRC: Additional Scope Comments Preliminary Decision Memorandum and Extension of

Deadlines for Scope Case Briefs and Scope Rebuttal Briefs at 7 (Dep’t Commerce June 16,

2017). Accordingly, Commerce modified the scope language to remove reference to HTSUS

subheadings 4412.39.1000 and 4412.39.3000, which cover exclusively plywood with both

veneers of softwood. See id.; see also AD Preliminary Determination, 82 Fed. Reg. at 28,639.

       On June 20, 2017, shortly before Commerce published its AD Preliminary

Determination, Petitioners requested that Commerce clarify the scope of the investigations to

cover decorative plywood with both face and back veneers of softwood. Certain Hardwood

Plywood Products from the PRC: Request for Scope Clarification (June 21, 2017) (“Scope

Clarification Request”). Petitioners argued that the language did not expressly exclude

hardwood plywood with both veneers of softwood and that it was their intent to include such

merchandise within the scope of the investigations based on their references to the decorative

and hardwood plywood standards. Scope Clarification Request at 5, 8–9. In its response,

Commerce again determined, based on the language of the scope, that plywood with both face

and back veneers of softwood unambiguously fell outside the scope of the investigations. See

Certain Hardwood Plywood Products from the PRC: Scope Comments Post-Preliminary

Decision Memorandum at 10–12 (Dep’t Commerce Oct. 16, 2017) (“Post-Preliminary Scope

Determination”) (stating that the plain language “expressly excludes the product”); Certain

Hardwood Plywood Products from the PRC: Final Scope Comments Decision Memorandum at

14–19 (Dep’t Commerce Nov. 6, 2017) (“Final Scope Determination”).2 Commerce also



2
 Commerce removed the following HTSUS subheadings from the scope, which cover
exclusively plywood with face and back veneers of softwood: 4412.39.4011; 4412.39.4012;
4412.39.4019; 4412.39.4031; 4412.39.4032; 4412.39.4039; 4412.39.4051; 4412.39.4052;
4412.39.4059; 4412.39.4061; 4412.39.4062; 4412.39.4069; 4412.39.5010; 4412.39.5030;
4412.39.5050. Final Scope Determination at 19.
Court No. 18-00098                                                                           Page 7


concluded that the Petitioners’ “references to decorative plywood and the Hardwood Plywood

Standard, simply state that softwood may be included as a component in hardwood plywood, but

do not support the [P]etitioners’ contention that it was their intent to include hardwood plywood

with both a face and back veneer of softwood within the scope.” Final Scope Determination at

18; Post-Preliminary Scope Determination at 11. Moreover, Commerce rejected the Petitioners’

argument that “hardwood plywood with both face and back veneers of softwood cannot be

expressly excluded from the scope because the scope does not provide an express exclusion for

such products.” Final Scope Determination at 18. Finally, Commerce expressed concern, inter

alia, that expanding the scope “could also potentially be at odds with [Commerce’s] industry

support determination,3 which was based on [its] and [the International Trade Commission’s

(“ITC”)] understanding that hardwood plywood must have at least either a face or back veneer

composed of hardwood or bamboo.” Post-Preliminary Scope Determination at 12.4

       On January 4, 2018, after receiving notification from the ITC that a domestic industry is

materially injured because imports of certain hardwood plywood products were subsidized by

foreign governments and sold in the United States at less than fair value, Commerce issued its

final AD and CVD orders. See Certain Hardwood Plywood Products from the PRC: Amended




3
  A petition for the imposition of unfair trade duties must be filed “on behalf of an industry.” 19
U.S.C. §§ 1671a(b)(1). Commerce determines that a petition is filed on behalf of the industry if
there is support for the petition from domestic producers or workers who account for at least 25
percent of the total production of the domestic like product and more than 50 percent of the
production of that portion of the industry expressing support or opposition to the petition. 19
U.S.C. §§ 1671a(c)(4)(A) & 1673a(c)(4)(A).
4
 The Final Scope Determination has not been challenged by any interested party. See Certain
Hardwood Plywood Products from the PRC: Minor Alterations Anticircumvention Inquiry
Request at 13, P.D. 39 (Dep’t Commerce Apr. 2, 2018); Pls. Columbia Forest Products,
Commonwealth Plywood Inc., States Indus., Inc., & Timber Products Co.’s Reply Br. at 2 n.4,
ECF No. 71 (Apr. 18, 2019) (“Reply Br.”).
Court No. 18-00098                                                                         Page 8


Final Determination of Sales at Less Than Fair Value, and AD Order, 83 Fed. Reg. 504 (Dep’t

Commerce Jan. 4, 2018) (“AD Order”); Certain Hardwood Plywood Products from the PRC:

CVD Order, 83 Fed. Reg. 513 (Dep’t Commerce Jan. 4, 2018) (“CVD Order”) (collectively,

“Orders”). Based on its Final Scope Determination, Commerce continued to define the subject

merchandise “as a generally flat, multilayered plywood or other veneered panel, consisting of

two or more layers or plies of wood veneers and a core, with the face and/or back veneer made of

non-coniferous wood (hardwood) or bamboo.” AD Order, 83 Fed. Reg. at 512; CVD Order, 83

Fed. Reg. at 515. Commerce did not further modify the scope language.

       Shortly thereafter, on February 15, 2018, Columbia Forest requested that Commerce

initiate an anticircumvention inquiry, pursuant to 19 U.S.C. § 1677j(c) and 19 C.F.R. §

351.225(i), to determine whether imports of plywood with both face and back veneers of

softwood involve a minor alteration to the subject merchandise such that it would be subject to

the Orders. See Certain Hardwood Plywood Products from the PRC: Request for Anti-

Circumvention Inquiry at 1–2, P.D. 1-4, C.R. 2-9 (Feb. 15, 2018) (“Anticircumvention

Petition”). Columbia Forest provided evidence of alleged circumvention and argued that a

circumvention determination would be appropriate under the factors traditionally used in minor

alterations inquiries. Id. at 11–16, 20.5

       On April 2, 2018, Commerce decided not to initiate a minor alterations anticircumvention

inquiry. See Certain Hardwood Plywood Products from the PRC: Minor Alterations



5
 In its request, Columbia Forest explained that “[t]o improve the administrability of potential
orders, U.S. Producers chose not to specify in the scope language that hardwood and decorative
plywood may also have both a face and back veneer made of softwood. Nonetheless, in the
Petition, U.S. Producers clarified that [t]he term ‘hardwood plywood,’ as used in this scope
definition, incorporates products referred to as decorative plywood and emphasized that,
notwithstanding the term ‘hardwood,’ subject merchandise can be produced with softwood.”
Anticircumvention Petition at 6 (internal quotations omitted).
Court No. 18-00098                                                                            Page 9


Anticircumvention Inquiry Request, P.D. 39 (Dep’t Commerce Apr. 2, 2018) (“Non-Initiation

Memo”). Pursuant to 19 U.S.C. § 1677j(c)(2), Commerce concluded that “it is unnecessary to

consider whether plywood products with both face and back veneers of softwood are within the

scope of the Orders . . . because [Commerce] already determined during the investigation that

such products are not included in the scope.” Id. at 12; see also id. at 13–15 (citing its Post-

Preliminary Scope Determination, relying on Wheatland Tube Co. v. United States, 161 F.3d

1365 (Fed. Cir. 1998), and distinguishing Nippon Steel Corp. v. United States, 219 F.3d 1348

(Fed. Cir. 2000) and Deacero S.A. De C.V. v. United States, 817 F.3d 1332 (Fed. Cir. 2016)).

Commerce also stated that the inclusion of “plywood with both face and back veneers of

softwood, which was not considered in the ITC’s injury analysis, could potentially create a

conflict with the ITC injury determination, and impermissibly expand the scope of the Orders.”

Id. at 13–14. Columbia Forest then timely initiated this action. See Complaint, ECF No. 9 (May

2, 2018).6

                          JURISDICTION AND STANDARD OF REVIEW

       The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012) and 19 U.S.C.

§ 1516a(a)(2)(B)(vi). This court “hold[s] unlawful any determination, finding, or conclusion

found . . . to be unsupported by substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B).



6
  Commerce subsequently initiated a separate anticircumvention inquiry pursuant to 19 U.S.C.
§ 1677j(d) concerning the same order at issue here but a regarding more limited product. See
Certain Hardwood Plywood Products from the PRC: Initiation of Anti-Circumvention Inquiry on
the Antidumping Duty and Countervailing Duty Orders, 83 Fed. Reg. 47,883 (Dep’t Commerce
Sept. 21, 2018). Columbia Forest moved to stay this action pending Commerce’s final
determination in that anticircumvention inquiry. See Pls.’ Mot. to Stay Proceedings 1–5, ECF
No. 53 (Oct. 18, 2018). The court denied the motion. See Order Denying Stay, ECF No. 59
Nov. 13, 2018).
Court No. 18-00098                                                                            Page 10


                                          DISCUSSION

       To prevent the circumvention of an antidumping or countervailable duty order, the Tariff

Act of 1930 provides that the “class or kind of merchandise subject to [such orders] shall include

articles altered in form or appearance in minor respects . . . whether or not included in the same

tariff classification.” 19 U.S.C. § 1677j(c)(1); see also 19 C.F.R. § 351.225(i) (“[Commerce]

may include within the scope of an antidumping . . . duty order articles altered in form or

appearance in minor respects”). In determining what alterations are properly considered minor,

Commerce examines “such criteria as the overall characteristics of the merchandise, the

expectation of ultimate users, the use of the merchandise, the channels of marketing[,] and the

cost of any modification relative to the total value of the imported product.” S. REP. NO. 100-71,

at 100 (1987); see also Nippon Steel, 219 F.3d at 1354. The minor alterations provision states

somewhat ambiguously that it does not apply if Commerce, determines that “it would be

unnecessary to consider the altered merchandise within the scope of the investigation, order, or

finding.” 19 U.S.C. § 1677j(c)(2).

       Section 1677j(c) essentially permits the inclusion “within the scope of an antidumping

duty order products that are so insignificantly changed from a covered product that they should

be considered within the scope of the order even though the alterations remove them from the

order’s literal scope.” Wheatland Tube, 161 F.3d at 1371; see also Deacero, 817 F.3d at 1338

(stating that minor alterations inquiries “determine whether articles not expressly within the

literal scope of a duty order may nonetheless be found within its scope as a result of a minor

alteration to the merchandise covered in the investigation”). The purpose of the provision is to

prevent circumvention through imports of “products with minor alterations that contain features
Court No. 18-00098                                                                              Page 11


or technologies not in use in the class or kind of merchandise imported into the United States at

the time of the original investigation.” S. REP. NO 100–71, at 101 (1987).

        In Wheatland Tube, the Court of Appeals for the Federal Circuit (“CAFC”) held that a

minor alterations inquiry is inappropriate with respect to “products unequivocally excluded from

the order in the first place.” 161 F.3d at 1371. In that case, domestic producers argued that the

scope of several antidumping orders for certain steel pipes included line pipe and dual certified

pipe. See id. at 1369. In reviewing that claim, Commerce decided to perform a scope inquiry

rather than a minor alterations inquiry. Id. at 1368. The scope of the order stated that “[a]ll

carbon steel pipes and tubes within the physical description outlined above are included within

the scope of this investigation, except line pipe . . . [and] [s]tandard pipe that is dual or triple

certified[.]” Id. at 1367. Commerce concluded that line and dual-certified pipe were clearly

excluded from the scope of the orders, and, consequently, section 1677j(c)(1) did not apply

because it was “unnecessary for Commerce to include the ‘altered’ merchandise to protect the

antidumping duty order.” See Wheatland Tube Co. v. United States, 973 F. Supp. 149, 163 (CIT

1997). The CAFC agreed, commenting that interpreting the scope to both include and exclude

line and dual-certified pipe would render the orders internally inconsistent. Wheatland Tube,

161 F.3d at 1371 (A minor alterations inquiry was “unnecessary because it can lead only to an

absurd result” and would “frustrate the purpose of the antidumping laws because it would allow

Commerce to assess antidumping duties on products intentionally omitted from the ITC's injury

investigation.”).

        In Nippon Steel, by contrast, the CAFC concluded that a minor alterations inquiry was

appropriate with respect to certain steel products with a chemical composition of boron

exceeding that of the subject merchandise. See 219 F.3d at 1350–56. The applicable order
Court No. 18-00098                                                                         Page 12


covered alloy steel containing, by weight, not more than 0.0008 percent boron. See id. at 1350.

Commerce initiated an anticircumvention inquiry after a domestic company alleged that foreign

companies were increasing the amount of boron to circumvent the order. Id. at 1354. This Court

preliminarily enjoined Commerce, reasoning, pursuant to Wheatland Tube, that an “absurd

result” would occur if a minor alterations inquiry caused the antidumping order to “both exclude

alloy steel containing more than 0.0008% boron and include alloy steel containing more than

0.0008% boron.” Id. at 1356. But the CAFC reversed, distinguishing Wheatland Tube on the

basis that it involved judicial review of a final agency action, a scope determination, and two

different products both of which “were well known when the order was issued.” Id. at 1356.

Nippon Steel, however, involved an injunction barring the agency from conducting a proceeding,

solely a minor alterations inquiry, and a product “produced by making allegedly insignificant

alterations to an existing product.” Id.

       Finally, in Deacero, Commerce determined that steel wire rod with a 4.75-millimeter

diameter fell under an antidumping duty order covering steel wire rods with a cross-sectional

range of 5.00 millimeters to 19.00 millimeters as a minor alteration of the subject merchandise.

817 F.3d at 1336–39. The court held that substantial evidence supported the determination that

the importer circumvented the order by reducing the diameter of the rods, which resulted in the

exclusion of the product from the literal scope of the order. Id. at 1337–39. The court

distinguished Wheatland Tube on the basis that the order did not contain an “explicit exclusion”

of small-diameter rods. Id. at 1338 (identifying “certain metallic compositions of steel wire rod”

that were explicitly excluded). It rejected the notion that the cross-sectional range could “be read

to expressly exclude for purposes of anti-circumvention inquiries all products outside that range”

as that would “render meaningless Congress’s intent to address circumvention concerns.” Id.
Court No. 18-00098                                                                         Page 13


The court also emphasized that, at the time the petition was filed, the smallest diameter steel wire

rod produced in the investigated countries was 5.5 millimeters. Id. at 1339.

       The issue in dispute here is whether the Orders, defining the subject merchandise as

having “the face and/or back veneer made of non-coniferous wood (hardwood) or bamboo,”

unequivocally exclude plywood with both veneers made of softwood such that it would be

unnecessary to conduct a minor alterations inquiry. Columbia Forest argues that Commerce

refused to initiate a minor alterations inquiry on the faulty premise that Commerce had already

determined that the merchandise fell outside the plain language of the Orders. Columbia Forest

Br. at 8–12; Reply Br. at 3–5. Columbia Forest contends that Commerce failed to distinguish

Nippon Steel and Deacero and unreasonably relied on Wheatland Tube. Columbia Forest Br. at

12–18; Reply Br. 5–10. The government and Defendant-Intervenors, for their part, argue that

Commerce’s prior scope determination precludes a minor alterations inquiry, and that Commerce

appropriately relied on Wheatland Tube and distinguished Nippon Steel and Deacero. Gov Br. at

7–19; Ikea Br. at 11–20; Chengen Br. at 6–12; Shelter Br. at 12–24; Concannon Br. at 9–28.

       Commerce properly determined that the limitations on the circumstances contemplated

by 19 U.S.C. § 1677j(c)(2) control the outcome of this case, correctly relying on the reasoning in

Wheatland Tube. Here, the allegedly altered merchandise at issue was specifically considered

during the investigation, was well-known at the outset of the investigation, and is different from

the subject merchandise. First, plywood with both veneers of softwood was explicitly

considered by Commerce during the investigation and found to be excluded from the scope

based on the plain language of the Orders as drafted by the Petitioners. In Wheatland Tube,

Commerce made a scope determination that line and dual-certified pipe were clearly excluded

from the order on certain steel pipes. 161 F.3d at 1371 (affirming Commerce’s determination
Court No. 18-00098                                                                             Page 14


that a minor alteration inquiry under section 1677j(c) was unnecessary); see also Wheatland

Tube, 973 F. Supp. at 163 (“As Commerce has made a final determination that the alleged

‘altered merchandise’ . . . is clearly excluded from the scope of the antidumping duty orders in

effect . . . it is unnecessary [per section 1677j(c)(2)] for Commerce to include the altered

merchandise to protect the antidumping duty order.”). By contrast, in Nippon Steel and Deacero,

Commerce at no point—either in an investigation or subsequent scope inquiry—considered the

products at issue or determined that they are excluded from the scope. Here, however,

Commerce understood, throughout the investigation, that both Petitioners’ intent and the plain

language of the scope preclude coverage of hardwood plywood with both a face and back veneer

of softwood. Post-Preliminary Scope Determination at 10–11; Final Scope Determination at 18.

These scope determinations at issue specifically sought to answer whether the merchandise is

excluded from the scope of the investigation.

       Columbia Forest’s responses to the contrary are unavailing. Columbia Forest claims that

Commerce’s prior scope findings only confirms a basic assumption in minor alterations

inquiries: that the inquiry applies to merchandise that fall outside the literal scope of an order.

Columbia Forest Br. at 11–12; Reply Br. at 3. But Columbia Forest misrepresents Commerce’s

reasoning that previous scope determinations rendered a minor alterations inquiry unnecessary.

The scope determinations were not limited to the finding that the plain language of the scope

excludes plywood with both veneers of softwood. Rather, Commerce also determined that the

Petitioners did not intend to include the product with the scope of the investigation and that a

finding otherwise would be at odds with the scope of the ITC injury determination, a basic

requirement for an unfair trade order. See Post-Preliminary Scope Determination at 10–12; Final

Scope Determination at 17–19. Because the scope clarifications occurred during the
Court No. 18-00098                                                                        Page 15


investigation, Commerce was not interpreting the scope of the Orders, but was establishing it.

Through its investigatory scope determinations, Commerce established that the limitation of

merchandise to plywood with at least one hardwood or bamboo veneer excludes the use of two

softwood veneers.

       Columbia Forest contends that the Orders contain no express exclusion for plywood with

both veneers of softwood and that only articles listed as “explicitly excluded” need not undergo a

minor alterations inquiry. Columbia Forest Br. at 10; Reply Br. at 4. An affirmative

circumvention decision here, Columbia Forest claims, would not require a simultaneous

inclusion and exclusion of subject merchandise, as in Wheatland Tube, but instead would cover

merchandise in addition to the ones expressly excluded, as in Deacero and Nippon Steel.

Columbia Br. at 17. This is not the case. The final AD and CVD Orders were published based

on the understanding that plywood with both veneers of softwood was excluded from the scope

of the Orders. Although the Orders do not contain language explicitly excluding the allegedly

circumventing product, Commerce’s previous clarification that the plain language of the scope

was clear and required hardwood plywood to have at least one hardwood or bamboo veneer

performs the same function—it unequivocally excludes from the scope of the order plywood

with both veneers of softwood.

       Moreover, like the merchandise in Wheatland Tube but unlike that of Nippon Steel and

Deacero, plywood with both veneers of softwood was “well-known at the time of the

investigations.” See Non-Initiation Memo at 15; Nippon Steel, 219 F.3d at 1356 (distinguishing

Wheatland Tube on this basis); Deacero, 817 F.3d at 1339. Interested parties and Commerce

were aware that plywood was imported with both veneers of softwood under several HTSUS

headings. Indeed, Petitioners’ 2013 petition for AD and CVD orders explicitly included
Court No. 18-00098                                                                         Page 16


plywood with both veneers of softwood. See Hardwood and Decorative Plywood from the PRC:

Final Determination of Sales at Less Than Fair Value, 78 Fed. Reg. 58,273, 58,275 (Dep’t

Commerce Sept. 23, 2013) (“A hardwood and decorative plywood panel must have face and

back veneers which are composed of one or more species of hardwoods, softwoods, or

bamboo.”). In Nippon Steel and Deacero, the altered merchandise was not included in the

physical description of the subject merchandise precisely because, at the time of the

investigation, merchandise with the altered physical specifications was not known to be dumped

into the United States. See, e.g., Deacero, 817 F.3d at 1339 (finding substantial evidence in

Commerce’s conclusion that the smallest diameter steel wire rod produced in the investigated

countries at the time the petition was filed was 5.5 mm).

       Finally, Commerce reasonably concluded that plywood with veneers of softwood was not

an alteration of subject merchandise, but rather the production of a different product. See Non-

Initiation Memo at 15. The Senate Report specifies that section 1677j(c) sought to prevent

circumvention by “products with minor alterations that contain features or technologies not in

use in the class or kind of merchandise imported into the United States at the time of the original

investigation.” S. REP. NO. 100–71, at 101. Plywood is composed of layers of wood plies

adhered to a core. At some point in the production process, a choice is made as to which kind of

wood will form the outermost layers (the veneers). Softwood plywood contains two softwood

veneers and hardwood plywood, as defined by the Orders, contains at least one veneer of

hardwood. If two layers of softwood plies are added to hardwood plywood, then arguably,

hardwood plywood is turned into softwood plywood. This process, Columbia Forest argues,

constitutes a minor alteration of the subject merchandise. See Columbia Forest Br. at 13–14;
Court No. 18-00098                                                                          Page 17


Reply Br. at 7–10. But those veneers of softwood are not features of hardwood plywood.7

Rather, they are components of many kinds of plywood, including those with softwood,

hardwood, or bamboo cores. Although Commerce did not explicitly consider Columbia Forest’s

evidence of circumvention, its determination that the use of two softwood veneers results in the

production of a different product is supported by substantial evidence.

       Commerce was also justifiably concerned that including the merchandise within the

scope of the order would have been at odds with the ITC injury determination. “A fundamental

requirement of both U.S. and international law is that an antidumping duty order must be

supported by an ITC determination of material injury covering the merchandise in question.”

Wheatland Tube, 973 F. Supp. at 158 (citing 19 U.S.C. § 1673). The ITC here defined the

“domestic like product” based on an understanding that “hardwood plywood includes plywood

that may have a face veneer and/or other layers of veneer of any softwood species so long as

either the face or back veneer is of a hardwood species.” Hardwood Plywood from China, Inv.

Nos. 701-TA-565 & 731-TA-1341, USITC Pub. 4661 at 7 (Jan. 2017) (emphasis added); see also

19 U.S.C. § 1677(10) (defining a “domestic like product” as “a product which is like, or in the

absence of like, most similar in characteristics and uses with, the article subject to an

investigation”). Thus, there was no ITC injury determination of plywood that had neither a back

nor front veneer of hardwood. See Hardwood Plywood from China, Inv. No. 701- TA-565 &

731-TA-1341, USITC Pub. 4747 at 10 (Dec. 2017). Commerce’s concern about including the




7
  The Senate and House Reports provide examples of the kinds of features that would be
considered a minor alteration. See S. REP. NO. 100–71, at 101 (1987) (“a minor alteration
resulted in portable typewriters with calculator or memory features being excluded from the
scope of an existing antidumping order on portable typewriters.”); H.R. REP. NO. 100–40, at 135
(1987) (The minor alterations provision “might apply when steel sheet is temper rolled prior to
importation . . . or when a fire resistance coating is applied to cookware prior to importation.”).
Court No. 18-00098                                                                           Page 18


allegedly altered merchandise within the scope of the Orders is especially important in the minor

alterations context, where Commerce is not required to notify the ITC before making a

determination. As this court explained in Wheatland Tube, the statutory scheme indicates that

Congress sought to avoid a conflict with the requirement of an ITC injury determination by

permitting only scope clarifications that were not “wholesale changes to the scope of the orders.”

973 F. Supp. at 163. Given the scope of the ITC investigation, Commerce reasonably refrained

from making an affirmative minor alterations finding because of the risk of a conflict with the

requirement of an ITC injury determination.

       The court acknowledges that evidence demonstrates that, since the initiation of the

investigation, import volumes of plywood with both veneers of softwood increased drastically

compared with plywood with at least one veneer of hardwood. Although a substitution effect

may be indicative of circumvention, it is not a sufficient cause for Commerce to initiate a minor

alterations inquiry. This is especially true given that the scope of the subject merchandise is

driven by physical characteristics rather than actual end use. If Columbia Forest or other

domestic interested parties suffer material injury because imports of plywood with front and

back veneers of softwood are subsidized by foreign governments or sold in the United States at

less than fair value, then the appropriate remedy is the initiation of an AD or CVD investigation

that covers plywood with front and back veneers of softwood. Although Commerce may use the

anticircumvention provisions to interpret the scope beyond its literal terms, it cannot interpret it

“in a way contrary to its terms.” Smith Corona Corp. v. United States, 915 F.2d 683, 686 (Fed.

Cir. 1990). To do otherwise would risk broadening the scope of an order to include a class or

kind of merchandise that has not been the subject of a corresponding ITC injury determination.

See Wheatland Tube, 973 F. Supp. at 163 n.9 (“When a class of merchandise already exists and
Court No. 18-00098                                                                          Page 19


is well known to the parties, the minor alterations provision should not allow a petitioner to

broaden the scope of an order in a way which petitioner avoided at the outset.”).

       To summarize, the purpose of the minor alterations provision is to include merchandise

that would have been included within the scope of an order but for minor alterations removing

the merchandise from the order’s literal scope. This reasonably includes an intent that the

merchandise as altered would have been included in the scope of the investigation if Commerce

and the ITC had had reason to consider it at the outset of the investigation. See Wheatland Tube,

973 F. Supp. at 164 (holding that “declining to perform an anticircumvention investigation” was

appropriate where “the merchandise at issue was always known to the parties, was discussed in

respect to several rulings on scope and clearly was not included within the scope of the order”).

Given this purpose, in determining whether it is unnecessary to perform a minor alterations

inquiry under section 1677j(c)(2), it is reasonable for Commerce to consider whether the

allegedly circumventing product existed at the time of the investigation and whether, during the

investigation, Commerce already determined that the product is excluded from the scope.

Accordingly, Commerce’s decision that an anti-circumvention inquiry was unnecessary pursuant

to 19 U.S.C. § 1677j(c)(2) is supported by substantial evidence and in accordance with law.

                                         CONCLUSION

       For the foregoing reasons, Columbia Forest’s motion for judgment on the agency record

is DENIED. The court sustains Commerce’s determination not to initiate a minor alterations

anticircumvention inquiry regarding softwood veneered plywood.


                                                              V-DQH$5HVWDQL
                                                             __________________
                                                             Jane A. Restani, Judge

Dated: July 30, 2019
       New York, New York
