CIT Allows Redo of Section 232 Exclusion Decision as Cases Mount on Missing Evidence

The Commerce Department will reconsider its denial of Section 232 exclusions for an importer of steel pipe, after the Court of International Trade on June 25 granted the government’s request to be allowed to reopen and add to the administrative record Commerce had previously presented the court and revisit its decision.

Commerce had in July 2019 denied Borusan Mannesmann’s 19 requests for exclusions from Section 232 duties for its imports of unfinished oil country tubular goods. The exclusions had all faced domestic industry objections. Borusan filed suit in January to challenge the denials. But instead of responding with arguments as to why the denials should be upheld, the government requested a voluntary remand so it can “review and complete the administrative record” and issue new determinations on Borusan’s exclusion requests.

“Taken together, the government’s arguments indicate that Commerce has concerns over the adequacy of the record, and therefore has ‘doubts about the correctness of its decision’ on the current record,” CIT said.

The government’s request comes in the context of a series of cases on Section 232 exclusion denials in which Commerce has acknowledged its omission of evidence from the record underlying its decisions. In one of those cases, involving exclusions denied to JSW Steel, the government indicated that some of the evidence it had failed to file with the court consisted of undocumented outside “ex parte” communications with the domestic objectors to the exclusions, according to court documents. In both of those cases -- the other involving exclusions denied to NMLK -- court orders issued by CIT in June require the court to complete the records within the next few months.

Commerce’s inspector general issued a report last October that criticized the agency for holding ex parte conversations with objectors and not adding them to the official record of requests or objections (see 1910300058). The report said that, by then denying the exclusions, Commerce created the appearance that the exclusion process is not transparent and not based on the evidence found in the record. Commerce did not immediately comment.

Borusan, citing that inspector general report, objected to the government’s request for a voluntary remand. The importer said that the gaps in the record raise questions about how Commerce arrived at its decision, and raise the possibility that its exclusion requests “may have been prejudged or subject to improper influence during the underlying proceeding at Commerce.” The importer contended that “an open-ended voluntary remand to Commerce is likely to be futile given Commerce’s apparent prejudgment of exclusion requests that are subject to any objection by the domestic industry.”

But CIT said the government has broad leeway to request a remand. “Given that the remand request is hardly frivolous, the Court is required to grant it unless Borusan has demonstrated bad faith.” Commerce, however, is entitled to the presumption that its “public officers have properly discharged their official duties,” the court said.

“Borusan’s evidence falls far short of clearly and convincingly establishing that Commerce previously prejudged its exclusion requests, much less that Commerce will do so on remand after correcting the deficiencies in the record and fully considering the exclusion requests anew,” CIT said.

“First, the IG report simply indicates that in some unidentified cases, officials at Commerce engaged in communications that are not reflected in the record. Whether the incidents noted by the IG report involved Borusan’s exclusion requests is wholly speculative. Moreover, even if they did, they do not establish that Commerce either prejudged Borusan’s requests or will do so on remand,” CIT said.

Borusan had also said Commerce’s statement that it would cost $350,000 to respond to Freedom of Information Act requests on the exclusion applications meant that there must have been “extensive correspondence or other ex parte communications between Commerce and outside parties.” But CIT found that “Commerce’s estimated cost of responding to Borusan’s FOIA requests merely confirms, as the government’s motion admits, that the existing record is inadequate. It does not establish that Commerce prejudged Borusan’s exclusion requests or will do so on remand.”

(Borusan Mannesmann Pipe U.S. Inc. v. U.S., Slip Op. 20-90, CIT # 20-00012, Judge Baker)