FEDMET RESOURCES CORPORATION v. US

Authored by: Jeremy J. Gustrowky

The Federal Circuit has affirmed a decision from the U.S. Court of International Trade holding that the Department of Commerce cannot impose a five-percent alumina threshold to determine whether imported refractory bricks fall within the scope of antidumping and countervailing duty orders on magnesia carbon bricks (MCBs) from Mexico and China. The ruling reinforces the court’s prior decision from 2014 and closes off Commerce’s attempt to distinguish between “real” magnesia alumina carbon (MAC) bricks and MCBs with only trace alumina content. 

The case revolves around whether Fedmet Resources Corporation evaded duty orders by importing Pinnacle® brand bricks from China labeled as MAC bricks rather than MCBs. After the Magnesia Carbon Bricks Fair Trade Committee filed an evasion allegation with U.S. Customs and Border Protection, Customs referred the scope question to Commerce. Commerce, drawing on its earlier scope rulings for Fedmet’s Bastion® bricks and for S&S Refractories, concluded that a brick must contain at least five percent added alumina (measured by x-ray diffraction) to qualify as an out-of-scope MAC brick. Under that standard, several of Fedmet’s samples were found to be in-scope MCBs, supporting an evasion finding. 

The Court of International Trade rejected Commerce’s five-percent threshold, ruling that the Federal Circuit’s earlier decision in Fedmet I established that adding any amount of alumina to an MCB removes it from the scope of the orders. On remand, Commerce reluctantly issued a redetermination under protest, finding that seven sample bricks with above-zero alumina content were not covered merchandise. 

The Federal Circuit agreed with the trade court’s reading of its prior precedent. When the original petitioner, Resco Products, sought the duty orders back in 2009, it repeatedly disclaimed coverage of MAC bricks and chose to rely on industry terminology rather than provide chemical composition specifications or a technical cut-off point. Because Resco declined to be more precise when Commerce asked how the scope excluded other refractory bricks, any overlap between MCBs and MAC bricks was surrendered during the underlying investigation. The court emphasized that “a petitioner has an obligation to be explicit and precise in its definition of the scope of the petition.” 

The court acknowledged the Committee’s concern (raised previously by the dissent in Fedmet I) that this interpretation leaves the orders open to manipulation, since importers can add small amounts of alumina and relabel their products as MAC bricks. However, the panel noted that the majority in Fedmet I already considered and rejected this concern, and subsequent panels are bound by that precedent absent en banc review. Commerce’s later scope rulings could not lawfully change the original scope of the orders through the interpretive process. 

Notably, the court offered a roadmap for the Committee going forward. Rather than trying to reinterpret the scope of the existing orders, the Committee may petition Commerce to initiate a circumvention inquiry under 19 U.S.C. § 1677j and 19 C.F.R. § 351.226. That framework specifically permits Commerce to bring within the scope of an order products that have been “altered in form or appearance in minor respects,” and would allow consideration of physical characteristics, ultimate uses, marketing channels, and modification costs. The Committee could argue there that bricks containing only trace alumina, insufficient to form the spinel structure that gives true MAC bricks their distinctive properties, are merely MCBs altered in minor respects to evade the orders.