CIT Says Commerce Must Further Explain Section 232 Exclusion Denials

The Commerce Department must reconsider its decision to deny an importer’s requests for exclusions from Section 232 steel tariffs, and flesh out the scant rationale the agency offered alongside the denials, the Court of International Trade said in an Aug. 5 decision.

JSW Steel had filed the lawsuit a year prior, challenging Commerce’s denial of 12 exclusion requests for alloy and non-alloy steel slab it imports from India and Mexico. Several domestic steelmakers had opposed the exclusions, saying JSW could source the steel domestically. Commerce denied the 12 requests, six on the basis that the request was incomplete because the product description didn’t match the tariff number, and six on the availability of domestic steel.

The case is one of several denied Section 232 exclusions wherein Commerce submitted incomplete records of its administrative proceedings for judicial review, and subsequently had to go back to supplement them (see 2006260047). In this case, JSW says Commerce failed to include several off-the-record communications with domestic steel concerns.

Commerce hasn't revealed what was said in those conversations, even as it updated the record to say they had occurred. JSW seeks a court order to compel Commerce to disclose the contents of the communications. JSW also argues the denials “run counter to the evidence before the agency and Commerce fails to articulate any reasoned explanation for its conclusions,” CIT said.

Agencies must add documents to the administrative record only if the agency directly or indirectly considered them in its final decision. Commerce says its ex parte communications don’t rise to that threshold in this case, and JSW did not allege that Commerce acted in bad faith such that the court must compel Commerce to disclose the contents of the communications regardless, CIT said. The trade court did, however, order Commerce to further explain how it determined what to put in the record, including its decision not to include what was said in the ex parte communications.

On the other hand, CIT agreed with JSW that the exclusion denials were not adequately explained, sending them back to Commerce for reconsideration and further explanation. “Remand of all twelve exclusion requests is warranted because Commerce’s denials are devoid of explanation and frustrate judicial review,” CIT said.

First, none of Commerce’s decision memorandums refers to any evidence to support conclusions that JSW’s steel imports could instead be sourced domestically. Recommendations on the requests from the International Trade Administration, a Commerce subagency, say that there is an “indication” of sufficient U.S. production, which is not a finding that should lead to denial of a request under Commerce’s regulations.

As for the requests denied as incomplete because of incorrect tariff numbers, Commerce did not say why the tariff schedule subheading provided by JSW was incorrect, despite a space on the exclusion denial form to provide that information. “Nor does BIS indicate why an incorrect HTSUS statistical reporting number interferes with its ability to consider the substance of the request or why it does not ask for clarification as to the correct statistical reporting number,” CIT said.

“Given the defects in the record and Commerce’s failure to engage with record evidence, the court orders completion of the record, inclusive of any information directly or indirectly considered by the Department in its determinations, and remands, for further consideration and explanation Commerce’s denials of all twelve exclusion requests, in light of the completed record,” CIT said. Commerce’s redeterminations are due 90 days from the court’s Aug. 5 order.

(JSW Steel (USA) Inc. v. U.S., Slip Op. 20-111, CIT # 19-00133, dated 08/05/20, Judge Kelly. Attorneys: Sanford Litvack for plaintiff JSW Steel (USA); Joseph Hunt for defendant U.S. government)