US Steel Companies Make Case to CAFC for Intervention in Section 232 Exclusion Denial Cases

A group of U.S. steel companies, including U.S. Steel Corp., made their case to the U.S. Court of Appeals to the Federal Circuit in a Dec. 8 brief as to why they should be allowed to intervene in multiple cases challenging the Commerce Department's decision to deny an exclusion to Section 232 national security tariffs. The Court of International Trade had denied their right to intervene due to the companies' lack of a legally protectable interest in the cases. The American steel producers countered by arguing that they have a right to intervene based on their participation administratively in the exclusion cases, direct economic stake in the outcome and position as intended beneficiaries of the Section 232 measures (California Steel Industries, Inc. v. United States, Fed. Cir. #21-2172).

"Despite Defendants-Appellants’ administrative participation, direct economic stake, and position as intended beneficiaries, Plaintiffs-Appellees insist Defendants-Appellants have no interest at stake -- an absurd bid to bar their administrative foe at the courthouse door," the brief said. "The Government, a neutral administrative decision maker balancing considerations set forth in Proclamation 9705 but lacking firsthand knowledge of Defendants-Appellants’ production capabilities, may not adequately defend Defendants-Appellants’ interests in every exclusion request at issue. Thus, the USCIT erred in denying intervention."

In May, CIT explained why it denied the steel producers the right to intervene in the case. According to CIT Rule 24(a)(2), to qualify for intervention in a CIT case, the proposed intervenor must either (1) "claim an interest in the property or transaction at issue that is 'legally protectable,'" (2) have a direct relationship with the litigation whereby the intervenor "will either gain or lose by the direct legal operation and effect of the judgment" or (3) demonstrate that its interests are not "adequately addressed by the government's participation." In the trade court's opinion, the domestic steel producers failed on all three fronts (see 2105260037).

The Department of Justice, while relatively silent on the issue of intervention at CIT, took up the trade court's rationale to defend against the companies' intervention at the Federal Circuit. DOJ said that the steelmakers' interests are insufficient to warrant intervention in the cases since they are "indirect and contingent," seeing as the companies argue that their interest in the exclusion derives from the "sales opportunities" that accompany a denied exclusion (see 2111190051).

In their response brief, the steel companies made the case that their interest in a CIT judgment issuing a Section 232 exclusion or a tariff refund may directly impair their economic interests. Central to the Section 232 duties is the fact that tariff-free imports stop U.S. companies from upping production and capacity, and central to the exclusion denials was Commerce's conclusion that the U.S. companies make competitive products, the companies said. "Denying Defendants-Appellants’ economic interest amounts to prejudging the merits (i.e., whether Defendants-Appellants produce competitive products) and/or second-guessing the justification for the tariffs themselves (i.e., finding tariffs have no economic effect)," the brief said. "Neither is a lawful method of applying Rule 24(a)(2)."

The companies also noted that steel slab subject to the 25% tariffs will cost more than tariff-free slab. "Consequently, downstream derivatives made from tariff-free slab are cheaper to produce," the brief said. "These cheaper products will harm Defendants-Appellants, as producers of slab and its derivatives, through lower market prices and/or lost sales." This "interrelation" undermines the entire point of the Section 232 tariffs and will result in direct harm to the U.S. companies, so they should be allowed to intervene, the steelmakers argued.

The DOJ and plaintiffs-appellees defend the trade court's decision -- recently cemented by a second opinion denying U.S. Steel the right to intervene in an exclusion denial case (see 2112060021) -- based on "bright line rules" that are "incompatible with Supreme Court precedent and the practical, inclusive orientation of Rule 24(a)(2)," the brief said. "For example, both oppose an undifferentiated participatory interest based on any manner of administrative activity, without addressing previously recognized participatory interests relevant to these facts. Plaintiffs-Appellees further suggest beneficiary interests apply only where wholesale invalidation is threatened, ignoring contrary precedent and Rule 24(a)(2)’s plain terms, which require an interest’s 'impairment,' not its 'elimination.' This rigid approach is no better than the USCIT’s erroneous formulations."