SMA Surfaces, Inc. v. United States

• Docket Number: Slip Op 23-4,Court No. 21-00399
• Decision Date: 12 January 2023
• Citation: 617 F.Supp.3d 1263
• Parties: SMA SURFACES, INC. (f/k/a Polarstone US), Plaintiff, v. UNITED STATES, Defendant, and Cambria Company, LLC, Defendant-Intervenor.
• Court: U.S. Court of International Trade

617 F.Supp.3d 1263

SMA SURFACES, INC. (f/k/a Polarstone US), Plaintiff,
v.
UNITED STATES, Defendant,
and
Cambria Company, LLC, Defendant-Intervenor.

Slip Op 23-4
Court No. 21-00399

United States Court of International Trade.

January 12, 2023

617 F.Supp.3d 1266

Michael S. Holton, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington, D.C., argued for Plaintiff SMA Surfaces, Inc. (f/k/a Polarstone US). With him on the briefs were Jordan C. Kahn, Kavita Mohan, and Erik D. Smithweiss of Los Angeles, CA.

Joshua E. Kurland, Senior Trial Counsel, U.S. Department of Justice, Washington, D.C., argued for Defendant United States. With him on the briefs were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of Counsel Jared Cynamon, Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement & Compliance.

Luke A. Meisner, Schagrin Associates, of Washington, D.C., argued for Defendant-Intervenor Cambria Company LLC. With him on the brief was Roger B. Schagrin.

OPINION AND ORDER

Katzmann, Judge:

617 F.Supp.3d 1267

This case calls on the court to go beyond scratching the glass surface when reviewing an agency's interpretation of scope text and photographic record evidence. Plaintiff SMA Surfaces, Inc. ("SMA Surfaces" or "Plaintiff"), an importer of crushed glass surface products from the People's Republic of China ("China"), brings the instant action to contest a scope ruling by the U.S. Department of Commerce ("Commerce" or "the Government"). SMA Surfaces had requested a scope inquiry clarifying that three of its glass surface products were not subject to the antidumping and countervailing duty orders on certain quartz surface products from China, which Commerce had instituted pursuant to the statutes designed for fair trade and prevention of injury to domestic industry. See Certain Quartz Surface Products from the People's Republic of China: Antidumping and Countervailing Duty Orders, 84 Fed. Reg. 33,053 (Dep't Com. July 11, 2019) ("QSP Orders"). After reviewing SMA Surfaces's request, Commerce determined that the scope language of the QSP Orders covered the three glass surface products. See Mem. from J. Pollack to J. Maeder, re: Final Scope Ruling on the Antidumping and Countervailing Duty Orders on Quartz Surface Products from the People's Republic of China: SMA Surfaces at 5–6 (Dep't Com. July 15, 2021), P.R. 15 ("Final Scope Ruling"). SMA Surfaces petitions the court for review, contending that the Final Scope Ruling was "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

The court concludes that Commerce's determination to include the glass surface products was in accordance with law but only partly justified by substantial evidence. While Commerce's interpretation of the QSP Orders was consistent with plain text, substantial evidence justified the inclusion of only two of the three glass surface products, branded "Grey Concrete Leather" and "Andes," but not the third "Twilight" product. Finally, Commerce's consideration of evidence under 19 C.F.R. § 351.225(k)(1) was also in accordance with law, thereby preserving Commerce's determinations as to the Grey Concrete Leather and Andes products. Plaintiff's Motion for Judgment on the Agency Record is granted in part and denied in part, and the court remands to Commerce for further explanation or reconsideration consistent with this opinion.

BACKGROUND

"When participants in a domestic industry believe that competing foreign goods are being sold in the United States at less than their fair value," Mid Continent Nail Corp. v. United States, 725 F.3d 1295, 1297–98 (Fed. Cir. 2013), or that competing foreign goods are subject to a foreign country's countervailable subsidy with respect to their manufacture, production, or export, see 19 U.S.C. § 1671(a)(1), then they may petition Commerce to impose antidumping or countervailing duties on importers. See 19 U.S.C. §§ 1671a(b),

617 F.Supp.3d 1268

1673a(b). If Commerce determines that "the subject merchandise is being, or is likely to be, sold in the United States at less than its fair value," 19 U.S.C. § 1673d(a), or that "a countervailable subsidy is being provided with respect to the subject merchandise," 19 U.S.C. § 1671d(a), and the United States International Trade Commission ("ITC") determines that a domestic industry is materially injured or threatened with material injury as a result, Commerce issues an antidumping and/or countervailing duty order. 19 U.S.C. §§ 1671d(b), 1673d(b). But "[q]uestions sometimes arise as to whether a particular product is covered by the scope of an antidumping or countervailing duty order." 19 C.F.R. § 351.225(a) (2022). Importers may ask for scope rulings, which are determinations made by Commerce that clarify the scope of the order, once issued, as it relates to their particular product. See id. § 351.225.

On April 17, 2018, Defendant-Intervenor Cambria Company LLC ("Cambria"), a domestic producer of quartz surface products, submitted antidumping and countervailing duty petitions to Commerce concerning imports of certain quartz surface products from China. See Certain Quartz Surface Products from the People's Republic of China: Initiation of Less-Than-Fair-Value Investigation, 83 Fed. Reg. 22,613, 22,614 (Dep't Com. May 16, 2018) ; Certain Quartz Surface Products from the People's Republic of China: Initiation of Countervailing Duty Investigation, 83 Fed. Reg. 22,618, 22,622 (Dep't Com. May 16, 2018) (together, the "Investigations"). Quartz surface products "consist of slabs and other surfaces created from a mixture of materials that includes predominately silica (e.g., quartz, quartz powder, cristobalite) as well as a resin binder (e.g., an unsaturated polyester)," and include "surfaces such as countertops, backsplashes, vanity tops, bar tops, work tops, tabletops, flooring, wall facing, shower surrounds, fire place surrounds, mantels, and tiles." Investigations, 83 Fed. Reg. at 22,618, 22,622. The initial scope of the investigation "[s]pecifically excluded ... crushed glass surface products," defining crushed glass surface products to mean "surface products in which the crushed glass content is greater than any other single material, by actual weight." Id.

On March 1, 2019, Cambria asked Commerce to clarify this exclusion in the Investigations’ scope text. See Letter from Cambria Co. LLC to Dep't Com., re: Certain Quartz Surface Products from the People's Republic of China: Request for Scope Clarification (Mar. 1, 2019) ("Scope Clarification Req."). The Scope Clarification Request noted that, in the wake of Commerce's preliminary affirmative determinations in the antidumping and countervailing investigations of quartz surface products from China, Chinese producers and exporters had begun to ship "quartz surface products made from ground glass powder that [were] virtually indistinguishable in appearance from other quartz surface products." Id. at 7. By contrast, the exclusion of crushed glass surface products in the initial Investigations was "intended to capture" a particular kind of "crushed glass surface product[ ] made by" domestic producers such as "IceStone, Vetrazzo, Curava, and Florentine Marble." Id. at 5. Those surface products contain pieces of crushed glass from recycled materials such as bottles and jars as an "eco-friendly solution" and have a distinct appearance that "emphasize[s] ... [the] recycled content." Id. at 5–6. Because the scope language in the Investigations "was never intended" to cover crushed glass products that were effectively indistinguishable from other quartz surface products, Cambria proposed an amendment to the scope text that enumerated four requirements to meet the

617 F.Supp.3d 1269

crushed glass exclusion. Id. at 7, 11. On May 14, 2019, Commerce modified the scope of the Investigations, reasoning that:

[I]nformation [on the record] overtly suggests the possibility of future evasion of the orders if we do not modify the scope in these investigations....

Commerce should modify the scope of the Petitions to best reflect an effective scope of the potential orders which would provide the injured domestic parties with the remedy it is seeking -- a remedy which counters injurious dumping and subsidization. Indeed, were Commerce not to address it here, we would fail to best address the dumping and subsidies found to exist in these investigations.

Mem. from M. Skinner to G. Taverman, re: Certain Quartz Surface Products from the People's Republic of China: Scope Modification Determination at 4 (Dep't Com. May 14, 2019) ("Scope Modification Mem."). Importers subsequently challenged Commerce's scope modification as unlawful and unjustified by substantial evidence. See MS Int'l, Inc. v. United States, 32 F.4th 1145 (Fed. Cir. 2022). The Federal Circuit reasoned, in relevant part, that because "Commerce found the Preliminary Scope to be defective [where] Chinese producers and exporters could evade antidumping and countervailing duty orders by selling ‘quartz glass,’ " Commerce acted within its discretion when it "modified the...