CIT Dismisses Challenge to Constitutionality of Section 232 Exclusion Process

The U.S. Court of International Trade dismissed a challenge to the Section 232 steel and aluminum tariffs' exclusion process, finding that the importer-specific exclusion process is constitutional. In the case, steel importer Thyssenkrupp Materials and its subsidiaries said that by excluding individual importers from the tariffs, the process violated the Constitution's uniformity clause by discriminating against steel and aluminum importers based on geography (see 2004230053). Thyssenkrupp also held that the exclusion process was inconsistent with presidential proclamations dictating how the exclusions should be conducted. Judges Claire Kelly, Gary Katzmann and Jane Restani in their March 10 opinion were unconvinced of both arguments and granted the government defense's motion to dismiss the case.

Thyssenkrupp argued that if one importer is granted a Section 232 exclusion in a given state and another importer is denied the exclusion request in a different state, then the tariffs have the effect of discriminating against companies on geographic grounds -- a clear violation of the uniformity clause. Thyssenkrupp said a failure to extend an exclusion to all importers of the excluded import is discriminatory. The three-judge panel rejected this claim, saying the tariffs “are defined in non-geographic terms, allowing any 'directly affected party located in the United States' to apply for an exclusion from the Section 232 duty.”

The court also found that Thyssenkrupp was not actually claiming “actual geographic discrimination” because it failed to allege that the Commerce Department was issuing exclusions based on geography. Along the same lines, Thyssenkrupp's claim of unequal effects of the individual importer exclusions is not discriminatory because Thyssenkrupp is eligible to apply for the exclusions, and it doesn't allege that it was denied an exclusion based on its geographic location.

Thyssenkrupp also argued language in the proclamation indicated that the exclusions were originally intended to cover all importers, not just the one that requested it. Once again, the importer's claim was rejected, with the court finding that the decision to defer how to process exclusions to Commerce was in line with the presidential orders and that Commerce is within its authority to issue exclusions on an individual importer basis.