BIS Again Denies California Importer's Section 232 Exclusion Requests on Remand at CIT

The Commerce Department's Bureau of Industry and Security again rejected 193 requests for exclusions from Section 232 steel and aluminum duties sought by importer California Steel Industries on its steel slab imports. Filing its remand results to the Court of International Trade on Feb. 9, BIS said that "no overriding national security concerns require that" the exclusions be granted (California Steel Industries v. United States, CIT # 21-00015).

The denials were issued after an attempt at mediation between the importer and agency broke down (see 2402050019).

California Steel sought the exclusions for semifinished slab, garnering objections from various U.S. steel producers. BIS said that when it receives objections, it reviews each exclusion request to find whether the good is not made in the U.S. "in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for specific national security considerations."

The agency said for each one that U.S. Steel meets the "quality, quantity, and timeliness criteria" when assessing U.S. industry capacity. As a result, BIS did not consider the capacity of any other objector, including Nucor Corp. and AK Steel.

In one of the denials, which used nearly the same rationale as all the other denials, BIS opened its discussion of the "satisfactory quality" analysis, through which it assesses if U.S. steel makers can make the subject product of a similar quality, by discussing the products' width. California Steel gave the agency a variety of thickness measurements across its requests, though it gave "tolerances for these requested dimensions," which said that actual width may vary by 15 mm in either direction.

While the agency said this could "potentially create" a problem, it ultimately found it not to be an issue since U.S. Steel certified that it can make an identical product for the "full range of dimensions." Since California Steel also did not "make any rebuttal claims" on U.S. Steel's ability to make these dimensions, the agency accepted the U.S. Steel certification.

U.S. Steel objected that California Steel's requests are "defective" since the chemical composition of its requested product "could represent multiple products instead of a single product." Regardless, U.S. Steel said it could make products to the same specifications as those in each request, and California Steel didn't contest the claim.

BIS said that despite "prior quality issues with U.S. Steel's slab," California Steel currently acknowledges that it buys slab from U.S. Steel and identifies the company as a "qualified supplier of the requested product." As a result, the agency said U.S. Steel "meets the quality criterion."

The agency also presented the results of its "sufficient and reasonably available amount" analysis. California Steel argued on remand that U.S. Steel "is not capable of meeting all of its slab volume requirements," though it acknowledged that it has contracted with U.S. Steel for at least a part of its requested quantity. U.S. Steel said in response that it can make 100% of the requested volume within eight weeks. U.S. Steel said the decline in California Steel's volume of slab purchases from U.S. Steel, which the importer used as evidence against the objection, is due in part to the importer's decision not to buy the full amount offered by U.S. Steel in 2020.

California Steel "provided no information or supporting documentation that [the International Trade Administration] finds demonstrates that U.S. Steel cannot manufacture the requested quantity of the product at the three plants it has listed," the agency decision said. The importer also admitted it intentionally limited its slab purchases from domestic players due to "geographic distance and high transportation costs between" the importer and the U.S. Steel plants. California Steel's own statements showed that over 50% of past deliveries occurred within U.S. Steel's eight-week time frame, the agency noted, adding that there is "nothing" in the improter's documents to show that "current and future production and deliveries are impacted by any past delivery issues."