CIT Says Commerce Didn't Unlawfully 'Relitigate' Negative Injury Finding on Rail Couplers

However, Katzmann did remand the AD/CVD investigations for Commerce to consider whether the proposed scope language of the orders includes merchandise that can't cause injury "by reason of import," namely freight rail couplers that enter the U.S. attached to a rail car. The judge said the agency can't disclaim the authority to modify the scope language despite overlap in identifying an order's scope with the International Trade Commission.

The claims against Commerce's AD/CVD investigations came from importers Wabtec and Strato, which centered many of their claims on the fact that the ITC, two years prior, issued a negative injury finding on freight rail couplers. In its second injury investigation two years later, the commission issued an affirmative injury finding on Chinese and Mexican freight rail couplers.

The importers argued that Commerce unlawfully tried to relitigate the initial negative AD/CVD result from the first investigation. However, Wabtec and Strato made nearly identical claims in a separate lawsuit contesting the ITC's new injury determination, though the trade court rejected that claim (see 2510200045).

In their lawsuit against Commerce's investigations, the result was no different. Katzmann said the agency didn't impermissibly relitigate the initial AD/CVD investigations, since the first and second proceedings are distinct. For instance, the first investigations covered "knuckles, coupler bodies, coupler yokes, and follower blocks imported from China," while the second investigations "covered knuckles and coupler bodies -- but not coupler yokes or follower blocks -- imported from China and Mexico," Katzmann noted. The proceedings also covered different review periods, the judge said.

Katzmann rejected two additional claims from the importers on this front, holding that Commerce has no "inherent authority" to refuse to initiate an investigation, as the companies claimed, and that Section 1675(b)(4), which says the ITC may not review a final jury determination less than two years after the date of publication, only applies to changed circumstances reviews.

Wabtec argued that "Commerce failed to acknowledge that it had inherent authority to terminate the investigation to preserve the integrity of the prior proceedings." However, Katzmann said the AD/CVD laws dictate that once the conditions for an AD or CVD proceeding are met, Commerce is required to start the investigation and can't terminate it according to its own inherent authority.

Even if the agency did have this power, the second AD/CVD proceedings "in no way compromised the integrity or finality" of the initial AD/CVD determinations, the judge said. The first time around, despite the negative injury finding from the ITC, Commerce found that countervailable subsidies were being provided to Chinese rail coupler producers and that rail couplers from China "were being, or were likely to be, sold" in the U.S. at "less-than-fair value."

However, Katzmann did remand the AD/CVD investigations for issues pertaining to the orders' scope. Wabtec argued that Commerce erred in including freight rail couplers attached to railcars abroad and imported into the U.S. within the scope of the orders. The importer made three specific claims: the petitioner's "underlying theory of injury" regarding the attached rail couplers isn't cognizable, a freight rail coupler "is a separate class or kind of merchandise from a freight railcar" and freight rail couplers are "substantially transformed when they are attached to railcars."

Katzmann remanded the case on Wabtec's first point but rejected the remaining claims.

The importer repeatedly argued throughout the investigations that attached freight rail couplers shouldn't be included in the scope, since the couplers "are not capable of causing a cognizable injury to the domestic FRC industry when they are imported directly from China into a third country and mounted on and incorporated into new rail cars there." Commerce said it had no authority to review Wabtec's claims, since the question of injury to the parties is left to the ITC.

The judge rejected this defense, finding that "Commerce has the authority to initially determine the scope of the investigation, as well as the authority to modify the scope language until the final order is issued, based on the agency’s findings." While the commission is responsible for making a final injury determination, this doesn't "absolve Commerce of its responsibility to define the scope of the investigations and the final order -- a responsibility that lies solely with Commerce," the brief said.

While the agency has "broad discretion to define the scope of its investigation," it can't "disclaim all authority to modify the scope language simply because an argument proposing such a modification relates to injury," Katzmann held. "Such a conclusion would mean that petitioners could sneak products that cannot cause injury by reason of import into duty orders simply by including them in proposed scope language that also includes products that cause significant injury."

So long as some in-scope merchandise causes a "large enough injury to result in" an affirmative injury finding "regarding the merchandise as a whole," the in-scope goods causing the injury "could mask the presence of in-scope merchandise that causes no injury whatsoever." It's Commerce's job to "tailor the scope to avoid such an 'overly broad' result," the judge said.

However, Katzmann then rejected Wabtec's claim that attached freight rail couplers are a separate class or kind of merchandise from unattached couplers. The judge said the importer's claim fails "because it relies on the incorrect premise that Commerce included full railcars within scope." The scope language specifically says that when a subject coupler is mounted onto nonsubject merchandise, "such as a railcar, only the coupler or subject parts are covered by the scope."

This scope language "leaves no doubt that Commerce did not include full railcars in scope," the judge said.

Lastly, Katzmann rejected Wabtec's claim that Commerce should have found that attached freight rail couplers undergo a "substantial transformation" when they are attached to a railcar, taking them out of the orders' scope.

The judge first held that Commerce didn't need to conduct a substantial transformation analysis at all, since the agency "can clarify ambiguous language without" using the test. "When Commerce explicitly includes merchandise in the scope language -- as it did here with attached FRCs -- substantial transformation analysis is unnecessary to determine whether that merchandise is in scope."

Despite this, the agency did conduct a substantial transformation analysis, finding that freight rail couplers don't undergo "further processing or physical charges when attached to or removed from railcars." The judge said this analysis was backed by sufficient evidence, including a variety of evidence showing that the couplers aren't "permanently affixed to railcars."

(Wabtec v. United States, Slip Op. 25-160, CIT #s 23-00160, -00161, dated 12/23/25; Judge: Gary Katzmann; Attorneys: David Morrell of Jones Day for plaintiff Wabtec; Andrew Schutz of Grunfeld Desiderio for plaintiff-intervenor Strato; Emma Bond for defendant U.S. government; Daniel Pickard of Buchanan Ingersoll for defendant-intervenor Coalition of Freight Rail Coupler Producers)