No Stay in Section 232 'Derivatives' Case Due to Odds of Success at CAFC Rehearing, Plaintiffs Say

The Court of International Trade should not stay judgment of its decision rejecting Section 232 duties on steel and aluminum "derivatives" since plaintiffs in a separate but relevant case at the U.S. Court of Appeals for the Federal Circuit have a "significant probability" to succeed, a motion opposing the stay said. Plaintiffs Oman Fasteners and Huttig Building Products filed their opposition on Aug. 30 after the Justice Department sought the stay once the Federal Circuit issued its opinion in the Transpacific Steel LLC, et al. v. U.S. case, permitting the president to take Section 232 tariff actions beyond procedural deadlines (Oman Fasteners, LLC, et al. v. U.S., CIT Consol. #20-00037).

In Oman Fasteners' and Huttigs' case, the majority of a CIT panel found that President Donald Trump's 2018 decision to expand the Section 232 duties onto steel derivatives was made beyond the 105-day deadline laid out in the Section 232 statute. The decision came after the court had previously made an identical ruling in the PrimeSource Building Products, Inc. v. U.S. case.

A wrinkle for the plaintiffs came in July when the Federal Circuit said that the president was able to hike Section 232 tariffs on Turkish steel imports beyond the 105-day deadline (see 2107130059). In its decision, a majority at the appellate court said that the president can take action beyond the procedural time limits so long as the measures are part of a broader "plan of action" carried out over a period of time beyond the time restrictions. The U.S. then filed its appeal of the Oman Fasteners decision (see 2108090029) and filed for a stay at CIT arguing that the Transpacific decision gives them a likelihood of success on appeal.

The plaintiffs in the Transpacific case recently filed a petition for a full court rehearing and rehearing en banc, arguing that the majority failed to impose the congressionally mandated limitations to the president's power in Section 232 (see 2108250022). Oman Fasteners and Huttig are now relying on this petition in their opposition to the stay of judgment motion in their case, pushing the idea that a stay is premature since the Transpacific plaintiffs have a real shot at success on rehearing. Oman Fasteners and Huttig also declared that they will file an amicus brief in the Transpacific case on Sept. 6, backing the push for a full court rehearing.

"Defendants cannot make that showing because the Federal Circuit’s majority opinion -- issued over the strong dissenting opinion of Judge [Jimmie] Reyna -- in Transpacific is distinguishable and because there is a significant probability that this Court’s unanimous judgment in favor of the plaintiffs in Transpacific Steel v. United States ... will be affirmed by the Federal Circuit on rehearing," the motion said. Further muddying the waters, the plaintiffs argued that the underlying facts in the Transpacific and PrimeSource cases are different, so any stay in a case related to PrimeSource should not be upheld based on a ruling in Transpacific.

"The petition [for rehearing en banc] has a high likelihood of success given Judge Reyna’s strong dissenting opinion in Transpacific II, and the fact that two panels of this Court, in this case and in Transpacific I, previously held presidential action outside the statutory deadlines unlawful," Oman Fasteners and Huttig said. "As Judge Reyna stated, '[t]he plain language and legislative history of § 232 demonstrate that the President must act within the specified time limits or else forfeits the right to do so until the Secretary of Commerce provides a new report,' and 'majority’s malleable interpretation of § 232 opens the door to modifications of prior presidential actions absent the Secretary of Commerce's provision of current information.'"