CAFC Says Commerce Properly Modified AD/CVD Scope in Response to Evidence of Evasion
The Commerce Department properly modified the scope of its antidumping duty and countervailing duty investigations on quartz surface products from China in response to evidence of evasion, the U.S. Court of Appeals for the Federal Circuit said in an April 25 opinion. Building materials company Bruskin International argued against Commerce's decision to accept the petitioner's scope request, telling the court the agency should have treated it as a request to amend the petition. But Judges Todd Hughes, Haldane Mayer and Kara Stoll ruled that Commerce was not bound to the preliminary scope and that it properly found the scope to be defective due to evidence of evasion.
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"We are very disappointed with this opinion," David Craven, counsel for Bruskin, said in an email. "The CAFC’s opinion has emasculated the provisions for requesting hearings. A party would be required to retain the Oracle at Delphi in order to know of the existence of an issue not yet presented to the Department by the deadline for requesting a hearing. ... The CAFC’s opinion also overturns the longstanding practices of the Department where the scope is set prior to the preliminary determination. This opinion is simply another step on the road of depriving importers and foreign producers of their rights to obtain a fair and proper determination by the Department."
Bruskin first brought its scope issues to the Court of International Trade, where it was met with a strong rebuke by Judge Leo Gordon. The judge said the company showed "remarkable chutzpah in arguing that they were somehow treated unreasonably or unfairly by a scope modification that directly addresses open and blatant evasion." Bruskin appealed to the Federal Circuit, where it argued that Commerce made multiple procedural errors in modifying the scope (see 2105210052).
The company said the request to expand the AD/CVD investigation to cover crushed glass was a request to expand and not just to clarify. According to Bruskin's brief, the Federal Circuit has long held that Commerce cannot expand the scope "absent prior procedures." The company also argued that Commerce requires the filing of any scope amendments before the preliminary determination is published, and since the petitioner for the scope determination did not do so, the entire scope decision should be thrown out.
The Federal Circuit backed Commerce. The court said the agency isn't bound to the preliminary scope and it had properly changed the scope under its own authority and not pursuant to the petitioner's request. Bruskin also argued that the scope modification was unlawful, standing "contrary to the intent of the petitioner." The Federal Circuit disagreed, holding that proper deference was given to the petitioner's intent.
"Cambria’s Petition Scope was ambiguous about crushed glass," the opinion said. "While the focus of the Petition Scope was on crystalline forms of silica, such as quartz, it also defined the bounds of the scope by silica content and not crystal structure: the Preliminary Scope covered products made from 'a mixture of materials that includes predominately silica.'" As this is ambiguous about crushed glass, the scope decision doesn't conflict with the petitioner's intent, the judges said.
Bruskin also argued that because Commerce is barred from reconsidering whether the AD/CVD investigation has proper industry support after starting it, it can't change the scope that would then change what is considered the domestic industry. "A scope modification or clarification at any stage could change the makeup of the domestic industry and reduce the fraction of the domestic industry that supports the petition," the court responded. "But that possibility does not nullify Commerce’s authority to make scope determinations."
Commerce was also justified in rejecting Bruskin's hearing request over the scope, as it was submitted beyond the 30-day deadline for requesting such hearings, the appeals court said. While Bruskin argued there's no statutory basis for this deadline, the court held that Commerce's regulations stand where the law is silent.
The court also addressed Bruskin's arguments that the scope decision itself wasn't backed by substantial evidence. Commerce found it needed to have language that excluded certain crushed glass. Bruskin said a product made of crushed glass isn't predominantly made of silica and thus outside the orders' scope. "Commerce cited respondent Foshan Yixin’s own test results showing that a sample of 'crushed glass' purchased in China was 71.48% silica," the opinion said. "And Foshan Yixin’s other factual submissions include articles explaining that '[w]hat the term ‘glass’ means to most people ... is a product made from silica (SiO2),' and 'typical, modern soda-lime-silica glass (used to make bottles and windows)' is made from 73.6% silica."
(M S International, et al. v. U.S., Fed. Cir. #21-1679 -1680, dated 04/25/22, Judges Todd Hughes, Haldane Mayer and Kara Stoll. Attorneys: David Craven of Craven Trade Law for plaintiff-appellant Bruskin International; Joshua Kurland for defendant-appellee U.S. government; Luke Meisner of Schagrin Associates for defendant-appellee Cambria Company LLC)