Reconsidering Section 232 Exclusion Requests?

Recent developments in a lawsuit challenging a decision by the U.S. Department of Commerce suggest that opportunities may exist for reconsideration of Section 232 exclusion requests and denials.

To recall what we all already know: Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862, authorizes the President to undertake various actions, such as imposing tariffs and quotas on imports, in order to alleviate risks to the national security. In 2018, after a process conducted by the U.S. Department of Commerce, the President adopted tariffs and quotas on imports of a broad range of steel and aluminum products from a broad range of countries. Further, Commerce set up a process whereby importers can apply for exclusions from the tariffs for individual steel and aluminum products, and domestic producers can oppose such applications. Thousands of exclusion applications have been submitted, some have been granted, and many have been denied due to domestic opposition. Finally, many lawsuits have been commenced in the U.S. Court of International Trade, challenging both the imposition of the Section 232 tariffs and the Department’s refusal to grant exclusions. Most of the lawsuits have failed, but a few have not.

In one pending case, Maple Leaf Marketing challenged Commerce’s denial of two exclusion requests on a number of grounds, procedural, factual, and constitutional. On June 22, a three-judge panel granted the Government’s motion to dismiss all of Maple Leaf’s allegations except one, which focused on the facts underlying Commerce’s evaluation of the exclusion request and the opposition filed by a domestic producer. Maple Leaf Marketing, Inc. v. United States, Slip Op. 21-77.

Facing litigation on the remaining claim, the Government, on July 20, filed a consent motion for voluntary remand to permit Commerce to reconsider its denial of Maple Leaf’s exclusion request. Its motion recognized that in another recent case, JSW Steel, Inc. v. United States, 466 F. Supp. 3d 1320, 1330 (Ct. Int’l Trade 2020), the Court had found that Commerce’s denials of the exclusion requests at issue were “devoid of explanation and frustrate judicial review.” The Government also noted that the Bureau of Industry and Security (the office within Commerce that administers the Section 232 programs) had engaged in communications with individual parties in Section 232 proceedings, without preparing contemporaneous documentation of such contacts. “A remand for Commerce to reconsider the original exclusion requests and submissions will eliminate any potential disputes about the completeness of the current record.” Defendants’ Consent Motion for Voluntary Remand, Court No. 20-00125, at 4 (July 20, 2021).

Thus, on both substantive and procedural grounds, the Government justified the need for reconsideration of the denial of Maple Leaf’s exclusion application. The Court granted the motion on the same day. It set a deadline of October 18 for Commerce to file the results of its remand.

In its motion for remand, the Government noted that there are over 19,000 pending exclusion requests, and over the past three years thousands of such requests have been denied. For importers whose requests have been denied, it may be worthwhile evaluating the factual record and circumstances surrounding the denial to determine if grounds exist to challenge or seek reconsideration of Commerce’s decision. Likewise, for importers with pending exclusion requests, opportunities may exist to ensure that an adequate record is developed for Commerce’s decision and that appropriate processes are followed.

For questions regarding the Section 232 process and litigation options, please contact us at neil@neilellislaw.com.