Commerce Lawfully Relied on Different Brick Importers' Scope Rulings in Investigation, US Says

The U.S. on Feb. 9 argued the Commerce Department correctly considered all relevant prior scope rulings in finding that an importer’s bricks are within the scope of antidumping and countervailing duty orders on magnesia carbon bricks from China (Fedmet Resources v. U.S., CIT # 23-00117).

Importer Fedmet Resources claims its bricks are magnesia alumina graphite bricks, which are not covered under the orders, rather than magnesia carbon bricks, as CBP determined in its evasion finding in an Enforce and Protect Act evasion investigation of the company (see 2312070026).

The only difference between magnesia carbon bricks and magnesia alumina graphite bricks is the presence of added alumina in the latter. However, the 2010 AD/CVD orders on magnesia carbon bricks didn’t specify how much alumina a brick needs to be considered out of scope. Upon request by CBP during its investigation, Commerce declared in a scope ruling that Fedmet’s bricks were covered by the AD/CVD orders.

Of 11 sample bricks CBP tested, Commerce found nine were inconclusive as to alumina content due to poor testing methods, the government said. The remaining two didn't meet the standards set by either scope ruling, making them subject to the orders, it said.

In its motion opposing Fedmet’s motion for judgment, the government said that Commerce is allowed to make its scope decisions based on scope language alone, but also has discretion to consider other factors. Its decisions are granted “significant deference” by the court, it said.

“Fedmet has failed to clear the high barrier for reversal of Commerce’s scope ruling,” the government said.

DOJ said Commerce legally relied on two prior scope rulings in its determination -- one sought by Fedmet itself, in which magnesia bricks with about 8% to 15% alumina were ruled out of scope, and one sought by another company, which found that bricks with 5% “added” alumina were out of scope.

Fedmet is wrong to expect Commerce to restrict its analysis to scope rulings the importer itself initiated, DOJ said. Commerce may consider all rulings regarding a particular order, regardless of importer, it said.

Commerce said it had to follow both scope rulings because to do otherwise would be to treat different importers differently. Fedmet was wrong to call this rationale “‘misplaced’ and ‘entirely speculative and unfounded’” because it ignored Commerce’s legal power to consider all prior scope rulings, DOJ said.

Fedmet’s claim that it should be allowed to rely on its own earlier scope ruling, meanwhile, “would require Commerce and CBP to ignore application of EAPA’s covered-merchandise statutory and regulatory framework,” it said.

Fedmet also challenged the testing methods for its bricks based on the other importer’s scope ruling, saying that reliance on that other scope ruling was unlawful. That, however, was a “misreading of the administrative record” and only really a disagreement with “Commerce’s interpretation of the record evidence concerning the reliability of the testing methods,” DOJ said. Some testing methods may unintentionally add alumina to subject bricks, it said. Commerce used the other scope ruling’s explanation of a particular method, called an XRD test, to determine that method would yield accurate results if applied to Fedmet’s bricks.

An XRD test was used on two of Fedmet’s sample bricks and found they were out of scope, DOJ said. The remaining bricks were subject to other testing methods that Commerce later found could have altered the tests’ results, it said.