Steel Round Bar Importer Challenges Commerce's Rejection of Section 232 Exclusion Requests

The Commerce Department illegally rejected importer LE Commodities' requests for exclusion from Section 232 steel and aluminum tariffs on its imports of stainless steel round bar, the importer argued in an Oct. 16 complaint at the Court of International Trade. LE Commodities argued that looking at the record, the "only reasonable conclusion" was that the company cannot obtain these goods in the U.S. market in a "sufficient quantity or quality, on a timely basis to replace the steel it currently imports" (LE Commodities v. United States, CIT # 23-00220).

The company tacked on a Fifth Amendment claim, arguing that its due process rights were violated "when it was denied the requested tariff exclusion to which it is entitled." The complaint pointed to a U.S. Court of Appeals for the Federal Circuit decision recognizing a property interest for Fifth Amendment claims for importers "facing a deprivation of their property by the federal government." Applying Commerce's standards for exclusion requests, it is clear LE Commodities remains entitled to its requested relief, the brief said.

LE Commodities noted that it makes stainless, tool and high-speed steel semi-finished products, which include imports of alloy type 416 stainless steel round bar that conform to ASTM standards A582 and A484. On import, the goods were hit with 25% Section 232 duties. LE Commodities requested an exclusion from Commerce, to which U.S. companies Electralloy and North American Stainless objected.

The agency sided with the objectors. LE Commodities argued that the rejection came despite evidence showing a lack of a sufficient and reasonably available amount or satisfactory quality of the subject steel in the domestic market. Electralloy's inability to make an identical or substitute steel product and the companies' failure to support their claimed delivery times warranted the grant of the exclusion, the brief argued.

The International Trade Administration memo relied upon by Commerce didn't "provide sufficient reasoning to support its recommendations and clearly misinterpreted and improperly disregarded the evidence provided by LE Commodities demonstrating that Electralloy could not meet the quality criterion," the complaint said. LE Commodities said that in addition to Commerce's "blatant mistake" regarding the record evidence on Electralloy's inability to make the steel products at the required quality level, "Commerce relied on a delivery time for LE Commodities’ foreign manufacturer that ITA calculated in error."