Fedmet Res. Corp. v. United States
| Decision Date | 30 May 2013 |
| Docket Number | Court No. 12–00215.,Slip Op. 13–68. |
| Citation | 911 F.Supp.2d 1348 |
| Parties | FEDMET RESOURCES CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and ANH Refractories Company, Resco Products, Inc., and Magnesita Refractories Company, Defendants. |
| Court | U.S. Court of International Trade |
OPINION TEXT STARTS HERE
Morris, Manning & Martin LLP, Washington, DC ) for Fedmet Resources Corporation, Plaintiff.
Stuart F. Delery, Principal Deputy Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC (Antonia R. Soares); Office of Chief Counsel for Import Administration, United States Department of Commerce, Devin S. Sikes, Of Counsel, for the United States, Defendant.
Jochum, Shore & Trossevin, PC, (Marguerite Ellen Trossevin, Andrew M. Shore, James J. Jochum, Washington, DC, and Reza Karamloo) for ANH Refractories Company, Defendant–Intervenor.
Doyle, Barlow & Mazard PLLC, Washington, DC (Camelia C. Mazard) for Resco Products, Inc., and Magnesita Refractories Company, Defendant–Intervenors.
Before the court is Fedmet Resources Corporation's (“Fedmet”) USCIT Rule 56.2 motion for judgment on the agency record appealing the United States Department of Commerce's (“Commerce”) finalscope ruling regarding antidumping and countervailing duty orders on magnesia carbon bricks (“MCBs”). Pl.'s Mot. J. Agency R. at 1–2 (“Pl.'s Br.”); see Certain Magnesia Carbon Bricks from the People's Republic of China and Mexico: Final Scope Ruling—Fedmet Resources Corporation, Case Nos. A–201–837, A–570–954 and C–570–955 (July 3, 2012), Pub. R.2d 74 at 1–2 (“ Final Scope Ruling ”).1 Fedmet imports “Bastion”-trademarked magnesia alumina carbon bricks (“MACBs”), which contain alumina in addition to magnesia and carbon. Pl.'s Br. at 6. In its Final Scope Ruling, Commerce determined that Fedmet's Bastion bricks are within the scope of the antidumping and countervailing duty orders. Final Scope Ruling at 1–2. Fedmet argues that Commerce's ruling is not based on substantial evidence or otherwise in accordance with the law because MACBs have distinct physical and commercial characteristics from in-scope MCBs, and because the International Trade Commission (“ITC”) did not consider MACBs in its injury determination. Pl.'s Br. at 9–11; see Certain Magnesia Carbon Bricks from China and Mexico (Final), USITC Pub. 4182, Inv. Nos. 701–TA–468 and 731–TA–1166–1167 at 3–6 (Sept. 2010) (“ ITC Final Determination ”). Commerce and defendant-intervenors Resco Products, Inc. (“Resco”), ANH Refractories Company, and Magnesita Refractories Company (collectively, “defendant-intervenors”) oppose the motion. See Commerce's Resp. Pl.'s Br. at 7–8 (“Commerce Resp.”); ANH's Resp. Pl.'s Br. at 2–5 (“ANH Resp.”); Magnesita's & Resco's Resp. Pl.'s Br. at 4–5 (“M & R Resp.”).
In September 2010, Commerce published antidumping duty orders on MCBs from Mexico and the People's Republic of China (“PRC”), and a separate countervailing duty order on MCBs from the PRC. Certain MCBs From Mexico and the PRC: Antidumping Duty Orders, 75 Fed.Reg. 57,257, at 57,257 (Sept. 20, 2010) (“ AD Orders ”); Certain MCBs from the PRC: Countervailing Duty Order, 75 Fed.Reg. 57,442, at 57,442 (Sept. 21, 2010) (“ CVD Order,” and collectively, “the Orders”). MCBs are a type of “refractory brick” necessary for certain applications in the steelmaking industry. R.3d 3 Ex. 1 at 6–7. Steelmakers use refractory bricks as lining for the inside of ladles that transport and pour molten steel and as lining for the inside of metallurgy furnaces. Id. & Ex. 2 at 5–7. Refractory bricks undergo repeated exposure to extreme temperatures and caustic substances in these roles, meaning each brick has a limited useful life. Id. Ex. 2 at 5–6. Bricks used in certain locations—particularly at the “slag line and at the top of the steel melt [,] where active chemical processes are taking place and impurities and waste tend to aggregate”—experience more wear than bricks in other locations. Id. at 5. Consequently, producers offer a wide range of refractory bricks with finely tuned chemistries for use in different parts of the ladle or furnace. Id. at 5–6. Steelmakers arrange these specialized bricks to achieve uniform deterioration and to lower costs, although the exact arrangement “may be quite different from shop to shop.” Id. at 5–7.
MCBs are a particularly strong variety of refractory brick composed of magnesia (MgO) and added carbon. Id. Ex. 1 at 10–12 & Ex. 2 at 5–7. MCBs exhibit high thermal conductivity, low porosity, and high corrosion resistance. R.2d 18 at 5 (citing R.3d 3 Ex. 1 at 10–11). Consequently, MCBs are used where corrosion is most severe—the slag line, the lower sidewall, the upper sidewall, the roofs of ladles, and the wall lining of high-temperature furnaces. R.3d 3 Ex. 1 at 6–7.
The scope of the Orders covers “certain chemically-bonded ... magnesia carbon bricks with a magnesia component of at least 70 percent magnesia ... by weight, ... with carbon levels ranging from trace amounts to 30 percent by weight, regardless of enhancements ... and regardless of whether or not antioxidants are present.” Pl.'s Br. at 6 (quoting AD Orders, 75 Fed.Reg. at 57,257;CVD Order, 75 Fed.Reg. at 57,443).
On May 3, 2011, Fedmet filed a scope ruling request to determine whether its Bastion MACB product is covered under the Orders. Certain Magnesia Carbon Bricks from the PRC and Mexico: Preliminary Scope Ruling—Fedmet Resources Corporation, Case Nos. A–201–837, A–570–954, and C–570–955 at 1 (Mar. 30, 2012) (“ Preliminary Scope Ruling ”). Fedmet's Bastion bricks contain 70–90% magnesia and 3–15% carbon, levels well within the scope's technical parameters. Pl.'s Br. at 6–7. However, Fedmet argues that the 8–15% alumina (Al2O3) content of its Bastion bricks distinguish them from in-scope MCBs. Id. at 3. Specifically, the alumina reacts with magnesia in the brick at steelmaking temperatures to form a mineral called spinel. Id. “The spinel improves the performance of the brick in certain applications by promoting permanent expansion of the brick when it is heated, which hinders the formation of cracks, and maintains that expansion when the ladle cools between uses.” Id.
All parties agree there is no standard chemical definition for bricks marketed as MACBs. Final Scope Ruling at 9; see Pl.'s Reply at 6. Evidence on the record demonstrates that the term “MACB” can refer to bricks with more than 70% magnesia (“low-alumina bricks”), as well as bricks with less than 70% magnesia (“high-alumina bricks”).2Preliminary Scope Ruling Ex. 2 at 3 (); R.2d 18 Ex. 1 at 3 (); R.4th 2 at 3–10 (). Fedmet stated at oral argument that the minimum level of alumina required to form spinel is about 5%, Hr'g Tr. at 17, Fedmet Res. Corp. v. United States, No. 12–00215 (Ct. Int'l Trade Mar. 26, 2013), but there is little evidence in the administrative record to support this claim. See Preliminary Scope Ruling Ex. 1 at 100–01 ().
In its preliminary determination, Commerce ruled that Fedmet's Bastion low-alumina MACB is within the scope of the Orders. Preliminary Scope Ruling at 1–2. Commerce first found that “[b]ased on the magnesia and carbon content alone, it appears that Fedmet's Bastion[ ] [MACBs] fall within the scope of the Orders” because they contain more than 70% magnesia and have some added carbon. Id. at 26. Nevertheless, Commerce found “it necessary to look beyond the language of the scope of the Orders because of the potential ambiguity regarding whether the plain language of the scope covers MCBs with alumina.” Id. Commerce then determined that conflicting language in the petition and in the investigations before it and the ITC “prevent[ed] a definitive conclusion on these sources alone.” Id. at 26–27. Upon consideration of the physical characteristics, purchaser expectations, end use, channels of trade, price, and manner of advertising, however, Commerce concluded that Fedmet's Bastion bricks did fall within the scope of the Orders. Id. at 27–32. Commerce later affirmed each of these determinations in its Final Scope Ruling. Final Scope Ruling at 1–12.
Fedmet alleges that the Final Scope Ruling is unsupported by substantial evidence and contrary to law because the steel industry considers MACBs to be distinct products from MCBs. Specifically, Fedmet argues: (1) language in the petition, questionnaire responses, and investigations indicates the scope should be interpreted to exclude MACBs; (2) MACBs are distinguishable from in-scope MCBs on the basis of their distinct physical properties; and (3) Commerce acted contrary to law by interpreting the scope as covering MACBs even though the ITC excluded them from its injury determination. Pl.'s Br. at 12–38.
The court has jurisdiction over this matter pursuant to section 516(a)(2)(B)(vi) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) (2006).3
The court must uphold Commerce's scope determination unless it is “unsupported by substantial evidence on the record, or not otherwise in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial evidence is ‘such relevant evidence as a reasonable mind...
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Fedmet Res. Corp. v. United States
...duty orders covering imports of certain magnesia carbon bricks (“MCBs”) from China and Mexico. Fedmet Res. Corp. v. United States, 911 F.Supp.2d 1348 (Ct. Int'l Trade 2013). For the reasons below, we reverse the Trade Court's decision and remand for further proceedings in accordance with th......