Fedmet Resources Corp. v. United States
2014 U.S. App. LEXIS 11607
Fed. Cir.2014Background
- Resco petitioned Commerce in 2009 to investigate certain magnesia carbon bricks (MCBs) defined by magnesia ≥70% and carbon up to 30%; Resco emphasized MCBs were distinct from other refractory bricks (including magnesia-alumina-carbon or "MAC" bricks).
- Commerce and the USITC initiated investigations adopting Resco’s scope language; Commerce and the Commission treated the domestic like product as MCBs.
- Commerce later issued antidumping and countervailing duty orders on MCBs from China and Mexico using the adopted scope language.
- Fedmet (not a party to the investigations) imported Bastion® MAC bricks (≈75–90% MgO, 8–15% Al2O3, 3–15% C) and requested a scope ruling that its MAC bricks were outside the MCB orders.
- Commerce found the order language ambiguous about MAC bricks and, after (k)(2) analysis, concluded Fedmet’s MAC bricks fell within the orders; the Trade Court upheld Commerce.
- The Federal Circuit reversed, holding (k)(1) sources (petition, investigation, Commission determinations) were dispositive and established that MAC bricks were excluded, so Commerce erred in proceeding to (k)(2).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the (k)(1) sources (petition, investigation, Commission determinations) dispositively exclude Fedmet’s MAC bricks from the MCB orders | Fedmet: (k)(1) sources explicitly distinguish MAC bricks from MCBs and Resco confirmed the petition focused only on MCBs, so MAC bricks are outside scope | Commerce/Intervenors: (k)(1) sources are ambiguous—no technical/spec limits for MAC bricks—so Commerce properly moved to (k)(2) factors | Court held (k)(1) sources dispositive: Resco’s statements excluded MAC bricks; Commerce lacked substantial evidence to find ambiguity and erred in relying on (k)(2) |
| Whether Commerce reasonably found ambiguity in the order language and permissibly relied on (k)(2) criteria | Fedmet: ambiguity not shown; Commerce adopted industry terminology and inquiry responses that excluded MAC bricks | Commerce: ambiguity existed because industry terminology lacks a firm technical cutoff; record supports (k)(2) inquiry | Court reversed: Commerce’s finding of ambiguity in (k)(1) sources not supported; agency may not change original scope via interpretive process |
| Whether Commerce’s factual (k)(2) findings (physical characteristics, channels, use, marketing) support inclusion of Fedmet’s bricks | Fedmet: unnecessary because (k)(1) dispositive; (k)(2) findings unreliable | Commerce: (k)(2) evidence shows Fedmet’s bricks share characteristics/uses/channels with MCBs | Court declined to reach (k)(2) because (k)(1) dispositive; remanded with judgment for Fedmet |
| Standard of review and deference to Commerce’s scope interpretation | Fedmet: De novo review shows (k)(1) record dispositive; agency cannot contradict its earlier understanding | Commerce: scope rulings are fact-intensive and deserve deference where supported by substantial evidence | Court: applied de novo review to Trade Court and substantial-evidence standard to Commerce; concluded Commerce’s ambiguity finding lacked substantial evidence |
Key Cases Cited
- King Supply Co. v. United States, 674 F.3d 1343 (Fed. Cir.) (plain language of order is paramount in scope analysis)
- Duferco Steel, Inc. v. United States, 296 F.3d 1087 (Fed. Cir.) (scope analysis focuses on final order language, not only petition)
- Tak Fat Trading Co. v. United States, 396 F.3d 1378 (Fed. Cir.) (Commerce may not change original scope through interpretation)
- Eckstrom Indus., Inc. v. United States, 254 F.3d 1068 (Fed. Cir.) (when (k)(1) sources dispositive, (k)(2) inquiry is unnecessary)
- ArcelorMittal Stainless Belg. N.V. v. United States, 694 F.3d 82 (Fed. Cir.) (order language must be read with reference to industry usage)
- Corus Staal BV v. Dep’t of Commerce, 395 F.3d 1343 (Fed. Cir.) (standard of review for Trade Court scope rulings)