Section 301 Plaintiffs' Claims on Post Hoc Rationalizations Ignores SCOTUS Precedent, US Tells CIT

Arguments from plaintiffs in the massive Section 301 litigation against the Office of the U.S. Trade Representative's remand submission at the Court of International Trade lack merit and reveal a "misunderstanding of judicial remands," the U.S. argued in a Nov. 4 brief defending the remand results. The plaintiffs said that USTR cannot take another look at the record to defend its tariff action under Section 301 from public comments and can only "parrot existing statements" on the record. The government said that this view is not compatible with a key Supreme Court precedent, and that under this interpretation, no agency would be able to stand by its decision in fixing a failure to respond to public comments (In Re Section 301 Cases, CIT #21-00052).

"Plaintiffs’ crabbed view of judicial remands for further agency explanation finds no support in or after the Supreme Court’s decision in Department of Homeland Security v. Regents of the University of California … which -- as this Court recognized -- expressly acknowledged that an agency may on remand further explain a prior justification," the brief said. "USTR faithfully followed this Court’s instructions, providing the additional explanation requested by the Court of the agency’s contemporaneous reasons for determining that Lists 3 and 4 were 'appropriate' measures in light of the significant comments its received and the President’s direction to take action."

On April 1, the trade court sent back the action to USTR after ruling that the agency failed to adequately respond to comments submitted in advance of the tariffs, as was required under the Administrative Procedure Act (see 2204010061). The agency received thousands of comments prior to the tariff action, to which very few were given a response. USTR then came back to CIT with a 90-page remand determination, attempting to further justify its trade actions by claiming, among other things, that it often weighed the possible harm to U.S. consumers by imposing the lists 3 and 4A tariff list against the need to give the duties enough bite to curb China's allegedly unfair trade practices (see 2208020029).

The plaintiffs rejected the remand results, arguing to the trade court that USTR is not allowed to make post hoc rationalizations for the agency's decisions (see 2209150041). In its reply, the U.S. said that this view disregards the Supreme Court's findings in Regents and adopts "a very different administrative law regime" in which any bid to address a previously unaddressed comment would stand as an "impermissible post hoc" explanation. "But that is not the law -- an agency’s explanation as to how comments intersected with its original justification for its action is not an impermissible, post hoc rationale," the government said.

The plaintiffs further argued that USTR did not devote enough discussion to the comments raising major policy concerns over the imposition of the tariffs, seeing as the purpose of the case is to challenge the legality of the process and not just to dig further into why certain goods were spared from the duties. The government countered that nothing in CIT's order required it to address this topic and that the exact issues USTR addressed were the ones the court told the agency to provide more context for, the U.S. said.

USTR also properly explained the role of the president's discretion in the policymaking process under Section 301, the government argued. The plaintiffs and amici came after USTR's explanation of how the lists were modified at the president's discretion. The U.S. said that the Trade Act of 1974's plain language gives both the president and USTR a role in modifying action under Section 301, making the question how this discretion is factored into the review process and not whether USTR acted at the president's discretion.

"In sum, USTR does not invoke the Presidential directives to 'obviate' its obligation to respond to significant comments," the brief said. "The Remand is USTR’s written response to public comment, and it describes how the Presidential directive guided the trade actions, along with USTR’s own judgment, inter-agency recommendations, and public comment."

The plaintiffs also argued that USTR failed to consider alternatives to the lists 3 and 4A tariff action. The government said that nothing in the remand order required this and that in making this argument the plaintiffs disregarded the fact that the tariff moves were modifications to an existing tariff action. "The initial 301 action has not been challenged by plaintiffs or by parties in any other lawsuit," the brief said. "Thus, USTR necessarily focused upon the actions set forth in section 301(c), which enumerate actions that USTR may take to obtain the elimination of a particular trade action. Indeed, the actions that USTR ultimately elected to take -- the imposition of tariffs and entering into binding agreements -- are two of the major actions available under the statute."