Section 301 Tariffs Cannot Stand on 'Conclusory and Post Hoc Rationales,' Plaintiffs Tell Trade Court

DOJ briefs in the massive Section 301 litigation don't demonstrate that the Office of the U.S. Trade Representative considered "major objections contemporaneously with its decisions" to impose the lists 3 and 4A tariffs, the plaintiffs argued in a Dec. 5 reply brief at the Court of International Trade. While USTR relies on presidential direction as the post hoc justification of its decisions, the court already ruled that out as a means of satisfying the Administrative Procedure Act, the brief said. To now satisfy the APA, the U.S. may take new action, but the lists 3 and 4A tariffs may not stay in place based on "conclusory and post hoc rationales," the plaintiffs said (In Re Section 301 Cases, CIT #21-00052).

In April, 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 APA (see 2204010061). The agency received thousands of comments prior to the tariff action, to which very few were given a response. USTR came back to CIT with a 90-page remand determination, claiming that it weighed the possible harm to U.S. consumers from the lists 3 and 4A tariffs against the need to give the duties enough bite to curb China's allegedly unfair trade practices (see 2208020029).

The court held that presidential direction does not eliminate USTR's obligation to respond to issues raised in comments and, in its remand, USTR said that it also used its own judgment -- beyond pure acquiescence to the president's demands -- in imposing the duties. But pressed by the plaintiffs in the case for examples of USTR's reasoning, "USTR does not say," the plaintiffs said.

"In the absence of any record-grounded explanation, the Government effectively asks the Court to take its word for the proposition that USTR exercised independent judgment in deciding whether to proceed with the tariffs, at what rates, and in what amounts, apart from presidential direction," the brief said. "That will not do, under either this Court’s remand order or APA precedent."

In their initial reply to the U.S.'s remand results, the plaintiffs said that USTR is not allowed to make post hoc rationalizations for USTR's decisions and that the remand merely presented the agency with the opportunity to present contemporaneous evidence of how the comments were considered (see 2209150041). In reply, the government said that that disregards the Supreme Court's holding in Department of Homeland Security v. Regents of the University of California, which said that an agency can further explain a prior justification on remand (see 2211070061).

In response, the plaintiffs said that "neither of the Government’s cases even cites Regents, let alone sheds light on the choice USTR faced between elaborating on previously given rationales or '''deal[ing] with the problem afresh" by taking new agency action.'" The plaintiffs claim that the USTR's reasoning is "manifestly inadequate" without the reliance on presidential direction, particularly given the major objections pertaining to the duty levels, amount of trade effected and harm to the U.S. consumers and economy.

The U.S.'s second crack at satisfying its APA obligations fell "woefuly short" of giving a "reasoned and permissible response" for overlooking the objections, the plaintiffs said. The importers argued that the consequence should be vacatur of the tariffs. "It is precisely in cases like this, where agency action is so consequential, that the APA’s procedural safeguards are most critical and must be respected," the brief said. "'[P]articularly when so much is at stake, ... the Government should turn square corners in dealing with the people.' ... The Court should now vacate the List 3 and List 4A tariff actions and order refunds of the duties paid thereunder."