Steel Importers Blast Section 232 Exclusion Process, Call Government Solution 'Unconscionable'

The U.S.' voluntary remand request in two Section 232 exclusion cases should be denied in its current form since the government's delayed, tranched solution is "unconscionable," steel importers Allegheny Technologies Inc. and California Steel Industries argued in an Aug. 16 reply brief. Given that Section 232 steel and aluminum tariff exclusion requests are supposed to be decided within 106 days, the Commerce Department's proposed nine to 12 month schedule to reconsider CSI's exclusion requests is "unreasonable" with a "nonsensical" rationale, CSI argued (Allegheny Technologies Incorporated et al. v. U.S., CIT #20-03923)(California Steel Industries, Inc. v. U.S., CIT #21-00015).

For both ATI and CSI, Commerce's Bureau of Industry and Security issued blanket denials of their Section 232 exclusion requests, well beyond the 106-day deadline that the government has to issue a decision. So they took their denials to the Court of International Trade in pursuit of a judicial remedy. Commerce then requested a voluntary remand, seeking a "do over," namely a new and independent review of the exclusion denials (see 2107220057). In CSI's case, Commerce offered a 250 to 325 day timeline in which it would return its remand results, citing the sheer amount of exclusions the agency needs to wade through (see 2107270025).

ATI and CSI did not mince words in their response. Offering a brief history of the exclusion process that brought the importers to court, counsel for the companies told the story of a "deeply flawed process." In its remand, the government obscured a main problem with the "carte blanche remand" for which it moved, the importers said. "In denying the requests, Commerce blindly accepted the objectors’ bald representations, including those made off-record, while ignoring the uncontroverted evidence," the brief said. "In fact, as the Government frankly concedes, the entire process has been tinged with a large number of unexplained ex parte communications, many of which specifically targeted Plaintiffs and their request." The importers pointed to Government Accountability Office reports detailing the flawed nature of the exclusion process as further evidencde.

Such delays and blanket denials came with a steep cost as well, the importers said. ATI had to stop operations at one of its Pennsylvania steel plants, resulting in the loss of hundreds of jobs and millions of dollars in revenue. CSI was forced to reduce its workforce and "has been constantly struggling to maintain its current operations at normal levels." The government's voluntary remand, as a result, "is obviously unsatisfactory," the importers said. Should a remand actually proceed, it should seek to fulfill two objectives: a full, fair and impartial review of the exclusion requests where the court receives a complete record with reasoned decisions on the record, the brief said. "Unfortunately, the remand motion doesn’t suggest solutions for either of these objectives," ATI and CSI argued.

Before the central question of how to proceed on fixing these errors is addressed, however, the court must address the lingering issue of relief, the importers said. The government claimed in its "July 9 communications" that the court may not be able to award refunds of wrongly paid Section 232 tariffs. "While we submit that there is no provision of law supporting the Government’s novel proposition that liquidation limits this Court’s broad remedial powers, it is not time for a game of cat and mouse," the importers said. "If the Government has a theory (and we know of none) it should set it forth now so Plaintiffs can address it and the Court can resolve it."

ATI and CSI also attacked the government's remand request for its broad and unspecific scope. The motion does not discuss how to ensure that the new reviewers were not associated with the first denial or will not be "tainted by the same flaws," nor does it propose how it will address CSI's alleged Harmonized Tariff Schedule designation errors that the agency cited in its denial.

"The Government acknowledges that the process Commerce followed and its resulting decisions were, to put it politely, 'problematic,'" the brief said. "The best the Department can offer is to do it all over again. ... We believe a remand with instructions to conduct the new review in a manner that ensures that the new decisions are truly “new and independent” would be appropriate."