Quartz Surface Product Importer Continues CAFC Challenge Over Domestic Support for AD/CVD Cases

The Commerce Department has failed to rebut importer M S International's position that the agency failed to get adequate industry support to initiate its antidumping and countervailing duty investigations on quartz surface products from India, the importer told the U.S. Court of Appeals for the Federal Circuit in a May 11 reply brief. Commerce failed to take into account QSP fabricators in the domestic industry support conclusion, MSI said. In fact, the statute does not allow Commerce to label manufacturers as responsible for "production processes" that create covered merchandise and then allow the agency to exclude them from the domestic support question through a filter of "production-related activities" test, the brief said (Pokarna Engineered Stone Limited v. United States, Fed. Cir. #22-1077).

Commerce requires that producers representing over 25% of domestic production back petitions for AD/CVD cases prior to initiation, but the statute is silent on the definition of "producers." MSI claimed, in its original complaint, that Commerce abused its discretion by excluding fabricators from its definition of "producers," for the sake of determining proper industry support to initiate the AD/CVD investigations.

The trade court had said that the Federal Circuit and the Court of International Trade have previously ruled that Commerce is afforded Chevron deference in regard to how it determines which companies are "producers" of the merchandise in question. Commerce decided to use the "sufficient production-related activities" test, which employs a six-factor test to find if a company has enough production-related activities to quality as a domestic producer (see 2110080035). The court said that MSI failed to point to any basis on which the court could find that Commerce's interpretation of who is a producer is unreasonable.

At the Federal Circuit, MSI argued that Commerce was wrong to drop fabricators from the industry support determination since "fabricated QSP is part of both the domestic like product and the scope of the Investigations" (see 2112290047). MSI said that the statute lays out two clear exceptions to when domestic like product producers should be barred from the standing calculation but that Commerce did not invoke either in this case. Commerce and the petitioner, Cambria, replied that Commerce could ignore the views of fabricators since they should not be considered producers of the domestic like product.

MSI replied that this ignores the question Commerce actually addressed in the proceeding. which is whether the fabricators were "producers enough" to be included in the domestic injury support calculation. "We respectfully submit that Commerce’s addition of a 'production enough' standard was a fatal error inconsistent with the governing statute," the brief said. MSI said that Commerce and Cambria attempted to confront the "awkward inconsistencies" that arise when saying the fabricators should not be considered producers since the defendant-appellees failed to rebut the fact that fabricators use a "production process" acknowledged by the defendant-appellees themselves throughout the proceedings.

Commerce and Cambria further argued that MSI wants to engage in "line drawing" that Congress in fact delegated to Commerce. "This is wrong," MSI said. "Defendant seeks to enable Commerce to avoid the clear line drawn by Congress -- if you are a producer, you should be included in the agency’s industry support analysis. Defendant’s argument also ignores the record of this proceeding, which demonstrates that Commerce drew one line recognizing fabricators to be producers, and then determined them not to be 'producers enough.' That is, Commerce accepted Cambria’s view that fabricators account for the production of the domestic like product, and yet the agency subsequently excluded the fabricators’ views from its industry support determination."