Commerce Can Modify AD/CVD Scope Based on Evasion Evidence, DOJ Tells Federal Circuit

The Commerce Department has the authority to modify the scope of an antidumping duty investigation in response to evidence of evasion to ensure that the ultimate order "provides an effective remedy," the Department of Justice argued in a Nov. 12 brief at the U.S. Court of Appeals for the Federal Circuit. DOJ also backed the actual scope decision at issue in the case itself, asserting it was based on substantial evidence that showed Chinese companies were planning to use the original crushed glass exclusion to evade Commerce's AD/CVD orders on quartz-glass product (M S International, Inc., et al. v. United States, Fed. Cir. #21-1679).

The case was originally brought by building materials company Bruskin International, which challenged a purported expansion of the scope of antidumping and countervailing duty investigations of quartz surface products from China to include crushed glass, made in response to allegations of evasion. Bruskin was met with a strong rebuke by Judge Leo Gordon in the Court of International Trade's opinion, which came down against the company. "Plaintiffs demonstrate remarkable chutzpah in arguing that they were somehow treated unreasonably or unfairly by a scope modification that directly addresses open and blatant evasion of antidumping and countervailing duties on quartz surface products," Gordon said.

Bruskin then took its case to the Federal Circuit, where it argued that Commerce made multiple procedural errors in modifying the scope (see 2105210052). Bruskin 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.

DOJ replied by arguing that Commerce has the statutory authority to modify the scope at any time during an investigation. "The bulk of Bruskin’s arguments on appeal, as before the trial court, focus on alleged procedural deficiencies and timeliness issues regarding [petitioner] Cambria’s request that miss the point because they are rooted in a fundamental misunderstanding of Commerce’s treatment of the request," the brief said. "Contrary to the thrust of Bruskin’s arguments, Commerce’s scope modification was based on its own authority to modify the scope during an investigation, not on Cambria’s request."

Commerce's scope decision was also backed by substantial evidence, DOJ said. "Specifically, record evidence indicates that Chinese producers manipulated the formula of their merchandise to create a quartz-glass product to exploit the crushed glass surface products exclusion contained in the scope at the initiation of the investigation," the brief said. Commerce also pointed to the record, which shows that the producers actually advertised that they had adjusted their formulas so that the product is mainly made of glass while still being a quartz product.