Seneca Foods Rails Against Commerce's 'Boilerplate' Denials of Its Section 232 Exclusion Bids

The Commerce Department erred in rejecting food and vegetable processing giant Seneca Foods Corporation's requests for exclusions from Section 232 steel and aluminum tariffs, Seneca argued in an Aug. 19 complaint at the Court of International Trade. The vegetable canning company said that Commerce violated the Administrative Procedure Act by failing to meaningfully consider and explain its rejection of the exclusion requests (Seneca Foods Corporation v. United States, CIT #22-00243).

In the complaint, Seneca explained that it requires tin mill products to make the cans for its vegetables, beginning to import the needed substrate in 2014, given a lack of U.S. capacity. Once the Section 232 tariffs hit, Seneca early on applied for exclusions, only to be met by an objection from U.S. Steel Corp. The domestic steel company told Seneca in 2018 that it did not have the short-term capacity to fill Seneca's orders but that it expected to have the capacity later in the year.

The 2018 exclusion requests were denied, leading Seneca to place a purchase order with U.S. Steel in August 2018. The deliveries were delayed with the final coil arriving in February 2019. Despite these delays and statements from U.S. Steel explaining its lack of a sufficient quantity of tin mill products, Commerce continued to "yield to" U.S. Steel's objections in rejecting the requests. Seneca characterized Commerce's denials as being "boilerplate" rejections, with the agency relying on U.S. Steel's hypothetical future availability of these goods to deny the requests.

In all, Seneca's complaint contests the denial of six exclusion requests filed in October 2021 and January 2022 and two requests made in March 2022. The latter two exclusion requests stand apart from the previous six since Commerce offered a "different and unprecedented basis" for rejecting the exclusions, the complaint said. The International Trade Administration said that it was unable to carry out a complete analysis due to an issue with the request -- namely that there was insufficient technical information to resolve whether the requested product was identified in the confidential business information. As a result, no "substantive analysis" was provided for Seneca's criteria of available quantity and timeliness of delivery, the complaint said.

Seneca argued that this rationale violated the APA given that Commerce had previously assessed the same confidential information on six separate occasions and found it sufficient to give a complete analysis. "The Department’s unexplained, inconsistent treatment of these determinations is arbitrary and capricious," the brief said. The plaintiff further said that Commerce failed to adequately explain the basis for its finding.

For the October 2021 and January 2022 denials, Seneca's complaint says that Commerce's analysis, or lack thereof, violates the APA for failing to consider and explain its rationale on: "the conceded refusal of USS, despite continued outreach by Seneca, to supply any tons to Seneca, whether on a contract or spot basis, for more than two years prior to the exclusion requests at issue being filed"; the admitted misstatements by U.S. Steel in its certified submissions to Commerce; and the fact that Seneca and U.S. Steel agreed that the supplies of the relevant goods (electrolytic tinplate and tin-free steel) were not available when the relevant import orders were placed by Seneca. This failure to follow "procedure required by law” resulted in the unlawful imposition of Section 232 tariffs on Seneca’s imports, it complained.