Fedmet Res. Corp. v. United States

755 F.3d 912

FEDMET RESOURCES CORPORATION, Plaintiff–Appellant,

v. UNITED STATES, Defendant–Appellee,andANH Refractories Company, Defendant–Appellee,andResco Products, Inc. and Magnesita Refractories Company, Defendants–Appellees.

No. 2013–1539.

United States Court of Appeals, Federal Circuit.

June 20, 2014.

R. Will Planert, Morris Manning & Martin LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Donald B. Cameron, Julie C. Mendoza, Brady W. Mills, and Mary S. Hodgins. Of counsel was Sarah Suzanne Sprinkle.

Antonia Ramos Soares, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Devin S. Sikes, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, United States Department of Commerce, of Washington, DC.

Joseph W. Dorn, King & Spalding LLP, of Washington, DC, argued for defendant-appellee ANH Refractories Company. With him on the brief was Brian E. McGill.

Camelia C. Mazard, Doyle, Barlow & Mazard PLLC, of Washington, DC, for defendants-appellees Resco Products, Inc., et al.

Before RADER,^*REYNA, and WALLACH, Circuit Judges.

Opinion for the court filed by Circuit Judge REYNA. Dissenting opinion filed by Circuit Judge WALLACH.

REYNA, Circuit Judge.

Fedmet Resources Corporation (“Fedmet”) appeals a final decision of the U.S. Court of International Trade (“Trade Court”) denying Fedmet's motion for judgment upon the agency record and affirming the Department of Commerce's final scope determination regarding antidumping and countervailing 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 this opinion.

Background

I. The Underlying Investigations

On July 29, 2009, Resco Products, Inc. (“Resco”) filed a petition with the Department of Commerce (“Commerce”) requesting initiation of antidumping and countervailing duty investigations on imports of certain MCBs from China and Mexico. MCBs are a type of refractory brick used to line ladles and furnaces employed in steelmaking and steel handling processes. Resco's petition proposed that the scope of the investigations be limited to the following:

[C]ertain chemically bonded (resin or pitch), magnesia carbon bricks (“MCB”) whose magnesia component contains at least 70 percent magnesia (“MgO”), regardless of the source of raw materials for the MgO, with carbon levels ranging from trace amounts to 30 percent, regardless of enhancements, regardless of whether or not antioxidants are present. The scope of this investigation excludes alumina-carbon bricks, alumina-silicon-carbide-carbon bricks and all dolomite class bricks.¹

Joint Appendix (“J.A.”) at 492–93 (footnotes omitted). In proposing that the domestic like product be defined to cover only MCBs, the petition further limited the proposed scope of the investigation by describing MCBs as the product covered by the petition and distinguishing MCBs from other types of refractory bricks:

There are several types of standard refractory bricks in addition to magnesia carbon, the subject of this petition. Among the most important are fired magnesite, fired bauxite, magnesia dolomite and magnesia alumin[a] carbon brick. Each of these bricks possess certain unique properties, which make their use highly preferred, and even required, for certain uses in the lining of steel, ceramic, and other furnaces and holding vessels. The different types of bricks are not generally substitutable in a technical sense, due to varying chemical and physical properties and wear characteristics.

Id. at 498 (emphases added). This language prompted Commerce to inquire regarding the proposed scope of the investigation vis-à-vis other types of refractory bricks. In particular, as part of its pre-initiation investigation, Commerce issued a questionnaire, referring to the subject of the petition as “MCB.” Resco responded to the questionnaire on August 10, 2009. Regarding Questions 6 and 7, Resco stated:

[Question] 6. On page 10 of the petitions you state “{t}here are several types of standard refractory bricks in addition to MCB, the subject of this petition. Among the most important are fired magnesite, fired bauxite, magnesia dolomite, and magnesia aluminum carbon brick.” How does your proposed scope exclude these types of refractory bricks?

[Answer] The scope of our petition focuses only on MCB. These other products do not provide the same performance where MCB are used in steelmaking and steel handling applications. Their use or substitution results in significantly lower performance, higher costs and can be disruptive to the steel maker's operation. No other system over the last 35 years helped steel makers achieve performance levels in furnace and ladles like MCB, which are used in the most critical and high wear areas of the furnaces and ladles.

[Question] 7. If necessary based on the response to the questions above, please provide a revised version of the scope of the investigations as it should appear in the Federal Register.

[Answer] Petitioner does not believe it is necessary to revise the scope based on the responses to the questions above. The complete version of the scope of the investigations as it should appear in the Federal Register is provided in the petition.

Id. at 505–06 (emphases added). On August 14, 2009, at Commerce's request, Resco revised its proposed scope language to remove the explicit exclusion of aluminacarbon bricks, alumina-silicon bricks and dolomite class bricks. Resco confirmed that the exclusion was unnecessary because those three types of bricks do not have the magnesia levels specified by Resco. See id. at 513.

Resco continued to reinforce the distinction between MCBs and other types of refractory bricks during the preliminary injury investigation conducted by the United States International Trade Commission (“Commission”). In particular, on August 19, 2009, Resco's counsel testified before the Commission that:

[O]ther refractory products, such as fired magnesite, fired bauxite, magnesia dolomite, and magnesia alumina graphite bricks, and the subject merchandise do not have the same physical characteristics and uses are not perceived by producers and purchasers as substitutable and are easily differentiated by price.

Id. at 396.

Commerce published notices of initiation of antidumping and countervailing duty investigations on August 25, 2009. In the notices, Commerce adopted almost all of the language proposed by Resco to define the scope of the investigations:

Imports covered by this petition consist of certain chemically bonded (resin or pitch), magnesia carbon bricks with a magnesia component of at least 70 percent magnesia (“MgO”) by weight, regardless of the source of raw materials for the MgO, with carbon levels ranging from trace amounts to 30 percent by weight, regardless of enhancements, (for example, magnesia carbon bricks can be enhanced with coating, grinding, tar impregnation or coking, high temperature heat treatments, anti-slip treatments or metal casing) and regardless of whether or not anti-oxidants are present (for example, antioxidants can be added to the mix from trace amounts to 15 percent by weight as various metals, metal alloys, and metal carbides).

Certain Magnesia Carbon Bricks from the People's Republic of China and Mexico: Initiation of Antidumping Duty Investigations, 74 Fed.Reg. 42,852, 42,857 (Aug. 25, 2009); Certain Magnesia Carbon Bricks from the People's Republic of China and Mexico: Initiation of Countervailing Duty Investigation, 74 Fed.Reg. 42,858, 42,861 (Aug. 25, 2009).

Both Commerce and the Commission issued questionnaires to known producers, exporters and importers of subject merchandise. The Commission issued its preliminary injury determination on September 14, 2009. See Certain Magnesia Carbon Bricks from China and Mexico, Inv. Nos. 701–TA–468 and 731–TA–1166, –1167, USITC Pub. No. 4100 (Sep.2009). The Commission identified the scope of the investigations as including “only chemically bonded MCBs in which the magnesia content is at least 70 percent and the carbon content ranges up to 30 percent.” Id. at 5. The Commission also found that MCBs are not used interchangeably with other refractory products because they have “distinct uses, differ in physical characteristics, are priced higher, and are made by different production processes.” Id. at 6. Accordingly, the Commission concluded that the domestic like product did not “include other refractory products such as fired magnesite, fired bauxite, magnesia dolomite, and magnesia alumina graphite bricks.” Id. The Commission defined the domestic like product as MCBs,² making it coterminous with Commerce's determination without objection from any party. Id.

On September 20 and 21, 2010, Commerce published its final affirmative antidumping and countervailing determinations and issued antidumping and countervailing duty orders on MCBs from Mexico and China. The orders continued to use the scope language proposed by Resco and adopted during initiation of the investigations. See Certain Magnesia Carbon Bricks from Mexico and the People's Republic of China: Antidumping Duty Orders, 75 Fed.Reg. 57,257 (Sep. 20, 2010); Certain Magnesia Carbon Bricks from Mexico and the People's Republic of China: Countervailing Duty Order, 75 Fed.Reg. 57,442 (Sep. 21, 2010) (collectively, “the orders”). Likewise, the Commission's final injury determination continued to define the domestic like product as coterminous with the scope of the investigations. See Certain Magnesia...