US Reply Makes It 'Crystal Clear' That Commerce Illegally Denied Section 232 Exclusions, NLMK Argues

The U.S. made it "crystal clear" that "no decision-maker could have reasonably" found that the U.S. industry made certain steel slabs in enough quantity to warrant rejecting steel company NLMK Pennsylvania's requests for Section 232 tariff exclusions, NLMK argued in a reply brief at the Court of International Trade. DOJ argued that the Commerce Department's regulations on quality criterion exclude the consideration of slab size when determining if there's enough capacity to make the merchandise in question in the U.S. NLMK said that argument contradicts the language of the regulation itself and is "nonsense on its face" (NLMK Pennsylvania v. United States, CIT #21-00507).

Administratively, NLMK sought exclusions for two different types -- 10-inch thick and 8-inch thick -- of semi-finished stainless steel slab from Russia via its 58 exclusion requests. Commerce's Bureau of Industry and Security rejected the requests, finding that the domestic industry was capable of timely making the slabs in quantities sufficient to fill NLMK's orders. At CIT, NLMK argued that Commerce did not provide sufficient analysis to deny the exclusion requests.

In its motion for judgment, NLMK had asked CIT to take over the remand process and order Commerce to grant the exclusions. The plaintiff said the agency has repeatedly ignored the evidence that showed that the U.S. industry did not have the capacity to fill the importer's requests (see 2207250032). In its reply, the U.S. said the audacity of this request "cannot be overstated" and that it represents blatant overreach for which no legal support can be found (see 2209260064).

In another reply brief, NLMK further made its case against Commerce's exclusion rejections by attacking the reply brief. The "linchpin" of the U.S.'s "freshly minted" argument, in NLMK's words, is that Commerce's regulations' quality criterion excludes any consideration of slab size, meaning 10-inch and 2-inch slab are substitutes so long as they have the same chemical qualities. NLMK dubbed this "nonsense" that cuts against the letter of the regulation. Even if it were in line with the regulation, which NLMK says it is not, it cannot now be used to justify Commerce's decision since it was not an interpretation put forth by Commerce, the brief said. The steel company dubbed the U.S.'s arguments a "desperate effort to move the goal posts."

"Second and more fundamentally, even if the Government could somehow substitute its own de novo argument to compensate for Commerce’s lack of reasoning, the Government is incorrect in claiming that the regulation excludes dimensional specifications from the 'quality' criterion," NLMK argued. "This belated interpretation is not only inconsistent with the plain language of the regulation, but it contradicts Commerce’s own interpretation. ... With the Government’s post hoc interpretation of the regulation debunked, there is simply no basis upon which to sustain Commerce’s decisions under the regulation."

Further, NLMK argued that Commerce failed to conduct any analysis in denying the 8-inch slab requests. The agency said it used one of the domestic objector's claims saying it could make 100% of the requested volume to deny the exclusion requests. "That is simply not true," the steel company argued, since there is no record in the Bureau of Industry Security or International Trade Administration recommendations showing that any analysis of the objector's data took place. "In other words, Commerce has effectively acknowledged that it never considered the confidential information that the Government now says it did," the brief said.