CAFC Judges Cast Doubt on Steel Companies' Right to Intervene in Section 232 Exclusion Cases

Three judges at the U.S. Court of Appeals for the Federal Circuit probed the question of whether a group of U.S. steel companies, led by U.S. Steel Corp., could intervene in a spate of cases challenging the Commerce Department's decision to deny certain importers exclusions to Section 232 steel and aluminum duties. During an April 7 oral argument, Chief Judge Kimberly Moore and Judges Pauline Newman and Todd Hughes expressed serious doubt as to whether the steel companies could join the exclusion challenges (California Steel Industries v. United States, Fed. Cir. #21-2172).

The most intense line of questioning came from Hughes, who said multiple times to James Ransdell, counsel for the steel companies, that the proposed defendant-intervenors are seeking certain rights that were not even afforded to them during the administrative proceeding. In the cases, the steel companies only had the ability to submit objections to the exclusion requests and submit evidence in doing so. The companies were not permitted to see Commerce's record in its exclusion decisions -- a privilege that is afforded to intervening parties in court cases.

Hughes was persistent in his questioning of Ransdell, repeatedly pushing him on this point and others, prodding the evident limits of the steel companies' arguments. In all, Hughes pushed back on Ransdell's arguments toward the statutory basis for the companies' intervention, the reason for intervention and the ability of the companies to contest a granted exclusion in its own challenge.

In May 2021, the Court of International Trade denied the steel companies' bid to join the exclusion denial cases (see 2105260037). The trade court said that to qualify for intervention, the proposed intervenor must either have a legally protectable interest in the transaction at issue, have a direct relationship with the litigation where the intervenor will either gain or lose by the direct judgment or show that its interests are not adequately expressed by the government. The trade court said the steel companies failed on all three fronts. At the Federal Circuit, the steel companies now argue that they have a protectable economic interest in making sure the exclusions are denied (see 2112090041).

Of particular interest to Hughes during the case's oral argument was the precise statutory authority that would give the steel companies the right to intervene. Ransdell explained that the companies had jurisdiction to challenge Commerce's exclusion decisions under a subsection of Section 1581(i) -- the trade court's "residual" jurisdiction. In particular, Ransdell said that if the exclusions were granted, the companies could bring an Administrative Procedure Act claim to challenge them since the companies are the intended beneficiaries of the tariffs even though they don't pay the tariffs themselves and that something is lost if the tariffs are not properly administered.

This contention was countered by Sandy Litvack, counsel for plaintiff California Steel Industries, and Ann Motto of DOJ. "I think he misspoke or is in error; here's why," Litvack said. "What they would have to do is claim they're an aggrieved party under the APA, but to do that, you have the same problem we have here, you have to have a direct, immediate impact, and that's what they don't have. They're a bystander. They have a rooting interest."

Ransdell sought to bolster his case by arguing that the steel companies want to intervene to make sure that the administrative record contains the information the companies sent to Commerce to help them make a decision on whether to grant exclusions to the Section 232 duties. However, Hughes was not buying this argument, pointing out that the companies could send whatever materials they wanted as an amicus. Litvack also added that the record is already set and that no new facts could be added to the record.

Litvack also told the court that he believes the steel companies want to intervene because they don't like it that he settled a related case. Recently, importer North American Interpipe announced that it settled its Section 232 exclusion denial challenge following court-annexed mediation, receiving refunds for its duties paid. "I don't want to attribute bad motives, but the thing is clear: they don't like the fact that we settled," Litvack said. "They don't like the fact that we've gotten back some tariff money. Put aside the fact that it doesn't impact them. They don't want it, but the fact that they don't want it is insufficient to grant intervention. Settlements are a good thing, not a bad thing."