Borusan Mannesmann Pipe U.S. Inc. v. United States , 2020 CIT 90 ( 2020 )

Slip Op. 20-
UNITED STATES
COURT OF INTERNATIONAL TRADE
Court No. 20-00012
BORUSAN MANNESMANN PIPE U.S. INC.,
Plaintiff,
v.
UNITED STATES,
Defendant.
Before: M. Miller Baker, Judge
OPINION AND ORDER
[Defendant’s motion for remand to the Department of
Commerce is granted.]
Dated: June 25, 2020
Joseph H. Hunt, Assistant Attorney General; Jeanne
E. Davidson, Director; Tara K. Hogan, Assistant Di-
rector; and Stephen C. Tosini, Senior Trial Counsel,
Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, on the brief
for Defendant.
Julie C. Mendoza, Donald B. Cameron, R. Will Plan-
ert, Brady W. Mills, Mary S. Hodgins, Eugene Degnan,
Edward J. Thomas III, and Jordan L. Fleischer, Mor-
ris, Manning and Martin, LLP, of Washington, DC, on
the brief for Plaintiff.
Court No. 20-00012 Page 2
Baker, Judge: In this case, a domestic importer of
steel pipe products unsuccessfully asked the Depart-
ment of Commerce for exclusions (exemptions) from
the national security tariffs the President imposed on
such products. The importer then brought this Admin-
istrative Procedure Act suit challenging Commerce’s
denials of its exclusion requests. Demonstrating that
sometimes “the better part of valour is discretion,” W.
Shakespeare, Henry IV Part One 113 (M. Mack ed.,
Signet Classics 1998) (1598), the government now
moves to remand this matter back to Commerce so
that the agency can remedy deficiencies in the admin-
istrative record and otherwise rethink its denials of
the importer’s exclusion requests. For the reasons ex-
plained below, the Court grants the motion.
I. Statutory and Regulatory Background
As its heading indicates, Section 232 of the Trade
Expansion Act of 1962 authorizes the President to
take certain actions to reduce imports of goods to
“[s]afeguard[ ] national security.” 19 U.S.C. § 1862.
Pursuant to this authority, the President imposed a 25
percent ad valorem tariff on imports of certain steel
products. Proclamation 9705 of March 8, 2018, Adjust-
ing Imports of Steel into the United States, 83 Fed. Reg.
11,625 (Mar. 15, 2018).
In addition to imposing tariffs, Proclamation 9705
directs the Secretary of Commerce “to provide relief
from the additional duties set forth in clause 2 of this
proclamation for any steel article determined not to be
produced in the United States in a sufficient and rea-
sonably available amount or of a satisfactory quality”
Court No. 20-00012 Page 3
and further authorizes the Secretary “to provide such
relief based upon specific national security considera-
tions.” Id. at 11,627 ¶ 3.1
Pursuant to Proclamation 9705, the Department of
Commerce issued an interim final rule allowing do-
mestic parties to request exclusions from the Section
232 steel tariffs2 and allowing other domestic parties
to object to exclusion requests. See 83 Fed. Reg. at
12,106. The interim final rule states that “an exclusion
will only be granted if an article is not produced in the
United States in a sufficient and reasonably available
amount, is not produced in the United States in a sat-
isfactory quality, or for a specific national security
1 In related proclamations, the President thereafter made
certain adjustments to this tariff, including a 50 percent
rate applied to imports from Turkey during the period from
August 13, 2018, to May 21, 2019. See Proclamation 9772
of August 10, 2018, Adjusting Imports of Steel into the
United States, 83 Fed. Reg. 40,429 (Aug. 15, 2018); Procla-
mation 9886 of May 16, 2019, Adjusting Imports of Steel
into the United States, 84 Fed. Reg. 23,421 (May 21, 2019).
2 See Requirements for Submissions Requesting Exclusions
from the Remedies Instituted in Presidential Proclamations
Adjusting Imports of Steel into the United States and Ad-
justing Imports of Aluminum into the United States; and
the Filing of Objections to Submitted Exclusion Requests for
Steel and Aluminum, 83 Fed. Reg. 12,106, 12,106 (Dep’t
Commerce Mar. 19, 2018) (“The new supplements set forth
the process for how parties in the United States may sub-
mit requests for exclusions from actions taken by the Pres-
ident . . . to protect national security from threats resulting
from imports of specified articles.”).
Court No. 20-00012 Page 4
consideration.” Id. at 12,110 (cleaned up);3 see also
Submissions of Exclusion Requests and Objections to
Submitted Requests for Steel and Aluminum, 83 Fed.
Reg. 46,026, 46,062–63 (Dep’t Commerce Sept. 11,
2018).
II. Factual and Procedural Background
According to its complaint, Plaintiff Borusan
Mannesmann Pipe U.S., Inc., is a domestic producer of
steel pipe and tube products. ECF 5, at 2–3 ¶ 5. Bo-
rusan produces a type of welded steel pipe and tube
known as “oil country tubular goods.” Id. Borusan also
imports these products in unfinished form to comple-
ment its domestic production. Id. These imports are
subject to Section 232 tariffs under Proclamations
9705, 9772, and 9886. Id. at 3 ¶ 6.
3 Some readers may not recognize the parenthetical
“cleaned up.” It is an innovative legal writing device em-
ployed to cut through strings of parenthetical folderol that
can plague legal citations:
Using (cleaned up) indicates that in quoting a [source]
the author has removed extraneous, non-substantive
material like brackets, quotation marks, ellipses, foot-
note reference numbers, and internal citations; may
have changed capitalization without using brackets to
indicate that change; and affirmatively represents that
the alterations were made solely to enhance readability
and that the quotation otherwise faithfully reproduces
the quoted text.
J. Metzler, Cleaning Up Quotations, 18 J. App. Prac. & Pro-
cess 143, 154 (2017) (cleaned up).
Court No. 20-00012 Page 5
Borusan submitted 19 requests to exclude imported
oil country tubular goods from the Section 232 tariffs,
contending that such products were not produced in
the United States in a sufficient and reasonably avail-
able amount or in a satisfactory quality. Id. at 3 ¶ 7.
In response, certain of Borusan’s domestic competitors
objected on various grounds not relevant for purposes
of the present motion. Id. at 3–4 ¶¶ 8–9. Commerce
denied Borusan’s exclusion requests on July 15, 2019.
Id. at 4 ¶ 10.
Borusan then brought this suit alleging that Com-
merce’s denial of its exclusion requests violated the
APA, 5 U.S.C. §§ 701–06. Id. at 5 ¶ 12. Instead of filing
a responsive pleading, the government now moves to
“remand . . . to the agency to reconsider its final deter-
minations not to exclude 19 products from the remedy
imposed by the President under Section 232 of the
Trade Expansion Act of 1962, 19 U.S.C. § 1862.” ECF
12, at 2.4 Borusan opposes the motion. ECF 26.
III. Jurisdiction
Borusan’s suit seeking relief under the APA falls
within the Court’s residual jurisdiction, which consists
of exclusive jurisdiction of any civil action commenced
against the United States for, inter alia, “tariffs, du-
ties, fees, or other taxes on the importation of mer-
chandise for reasons other than the raising of reve-
nue.” 28 U.S.C. § 1581(i)(2).
4 Citations to the parties’ filings refer to the pagination
found in the ECF header at the top of each page.
Court No. 20-00012 Page 6
IV. The Parties’ Contentions
The government asks the Court to remand this case
to Commerce “for further consideration, without con-
fessing error.” ECF 12, at 4. The government argues
that where, “as is the case here, ‘if the record before the
agency does not support the agency action, if the
agency has not considered all relevant factors, or if the
reviewing court simply cannot evaluate the challenged
agency action on the basis of the record before it, the
proper course, except in rare circumstances, is to re-
mand to the agency for additional investigation or ex-
planation.” Id. (cleaned up and emphasis added) (quot-
ing Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744
(1985)).
The government further states that “Commerce in-
tends to review and complete the administrative rec-
ord, as necessary, including memorializing recommen-
dations by the International Trade Administration,”
and “then issue new determinations to either: (1) ex-
clude some or all of these products from the scope of
the Section 232 measure on steel; or (2) deny the ex-
clusion requests.” Id. Taken together, the govern-
ment’s arguments indicate that Commerce has con-
cerns over the adequacy of the record, and therefore
has “doubts about the correctness of its decision” on
the current record. SKF USA Inc. v. United States, 254
F.3d 1022, 1029 (Fed. Cir. 2001).
Although it acknowledges that “the case law gener-
ally favors granting Defendant’s motion for a volun-
tary remand,” Borusan contends that remand is inap-
propriate because this is an “exceptional case.” ECF
Court No. 20-00012 Page 7
26, at 3. Specifically, Borusan asserts that the appar-
ent gaps in the record raise questions about how Com-
merce arrived at its decisions denying Borusan’s ex-
clusion requests, id. at 3–4, and that these questions
are magnified by “other information that raises the
possibility that Plaintiff’s exclusion requests may have
been prejudged or subject to improper influence during
the underlying proceeding at Commerce,” id. at 5.
First, Borusan cites a report from Commerce’s in-
spector general stating that in certain unspecified
cases, agency
officials took subsequent action consistent with
[off-record] communications, giving the appear-
ance that the Section 232 exclusion review pro-
cess is not transparent and that decisions are
not rendered based on evidence contained in the
record. Additionally, the Bureau of Industry and
Security . . . changed an internal criterion used
to review exclusion requests before posting them
online at the request of an objector, creating the
perception of undue influence.
ECF 26-1, at 3.
Second, Borusan cites Commerce’s statement that
it would cost the agency $350,000 to respond to Free-
dom of Information Act requests concerning Section
232 exclusion applications. Borusan asserts that if
Commerce must actually incur such expense to re-
spond to FOIA requests, it “suggests that Commerce
believes there may have been extensive correspond-
ence or other ex parte communications between
Court No. 20-00012 Page 8
Commerce and outside parties” not included in the
current record. ECF 26, at 6.
Third, Borusan cites two studies of Commerce’s re-
view of Section 232 exclusion requests by the Mercatus
Center at George Mason University, ECF 26-1, at 29–
41, one from 2019, covering the first year of exclusion
requests, and the other from 2020, covering the second
year of such requests.
The 2019 study notes that “just 2.7 percent of alu-
minum tariff exclusion requests with an objection
have been approved.” Id. at 30. The 2019 study further
notes, however, that 47 percent of steel tariff exclusion
requests were approved and 15 percent were denied,
with the remainder pending at the time the article was
written. Id. at 31. While the study states that “less
than one percent of the steel exclusion requests with
an objection [had] been approved,” it also notes that
“89 percent of the exclusion requests that have had an
objection [were] still pending . . . .” Id. at 33 (cleaned
up).
The 2020 study shows that 50 percent of steel tariff
exclusion requests were approved, 14 percent were de-
nied, and 36 percent remained pending, and notes that
“the government has yet to approve a single steel or
aluminum exclusion request for which an objection
was filed . . . . At the same time, most of these requests
haven’t been rejected either but remain pending.” Id.
at 38 (cleaned up).
Borusan contends that the “apparent irregularities
in the administrative record,” when combined with the
Court No. 20-00012 Page 9
IG report raising questions about ex parte communica-
tions and the Mercatus Center studies, mean that “an
open-ended voluntary remand to Commerce is likely to
be futile given Commerce’s apparent prejudgment of
exclusion requests that are subject to any objection by
the domestic industry.” ECF 26, at 7.
V. Discussion
The applicable legal standard dictates that where,
as here, the government “request[s] a remand (without
confessing error) in order to reconsider its previous po-
sition,” this Court “has discretion over whether to re-
mand.” SKF, 254 F.3d at 1029. “A remand may be re-
fused if the agency’s request is frivolous or in bad faith.
. . . Nevertheless, if the agency’s concern is substantial
and legitimate, a remand is usually appropriate.” Id.The government’s request is prima facie “substan-
tial and legitimate,” as it identifies an inadequate rec-
ord as the basis for the remand request. Indeed, Bo-
rusan’s argument that the existing record does not
support Commerce’s exclusion denials merely con-
firms that the government’s concerns about the “cor-
rectness of its decision[s]” on the current record are
well-founded. Id.Given that the remand request is hardly frivolous,
the Court is required to grant it unless Borusan has
demonstrated bad faith. Commerce, however, is enti-
tled to the presumption of regularity, which “supports
official acts of public officers. In the absence of clear
evidence to the contrary, the doctrine presumes that
public officers have properly discharged their official
Court No. 20-00012 Page 10
duties.” Jazz Photo Corp. v. United States, 439 F.3d
1344, 1351 (Fed. Cir. 2006) (cleaned up) (quoting Bern-
klau v. Principi, 291 F.3d 795, 801 (Fed. Cir. 2002)); cf.
Am-Pro Prot. Agency, Inc. v. United States, 281 F.3d
1234, 1239–40 (Fed. Cir. 2002) (discussing presump-
tion that government officials act in good faith and re-
quiring clear and convincing evidence to show other-
wise).
Borusan’s evidence falls far short of clearly and con-
vincingly establishing that Commerce previously pre-
judged its exclusion requests, much less that Com-
merce will do so on remand after correcting the defi-
ciencies in the record and fully considering the exclu-
sion requests anew.
First, the IG report simply indicates that in some
unidentified cases, officials at Commerce engaged in
communications that are not reflected in the record.
Whether the incidents noted by the IG report involved
Borusan’s exclusion requests is wholly speculative.
Moreover, even if they did, they do not establish that
Commerce either prejudged Borusan’s requests or will
do so on remand.
Second, Commerce’s estimated cost of responding
to Borusan’s FOIA requests merely confirms, as the
government’s motion admits, that the existing record
is inadequate. It does not establish that Commerce
prejudged Borusan’s exclusion requests or will do so
on remand.
Third, the Mercatus studies show at most that
when a domestic steel producer objected to a steel
Court No. 20-00012 Page 11
tariff exclusion request, Commerce delayed disposition
of that request. The studies do not show how many op-
posed requests were ultimately granted or denied. Nor
do they address the average length of delays, much
less the reasons for the delays (aside from an objection
being filed). The Mercatus studies simply do not sup-
port the conclusion that Commerce prejudged Bo-
rusan’s exclusion requests before or will do so on re-
mand.
In sum, on this thin evidentiary record, the Court
must apply the presumption of regularity to which
Commerce is entitled.
Finally, a remand at this early stage of the litiga-
tion will promote judicial economy. If the Court were
to adjudicate the case on the existing deficient record,
the result could well be a remand for reconsideration,
which Borusan’s complaint requests as an alternative
form of relief. See ECF 5, at 17. Thus, remanding for
reconsideration now essentially expedites relief that
Borusan seeks and may obviate the necessity for re-
mand (or, perhaps, any proceedings) later. At a mini-
mum, a remand now for correcting the record and fully
reconsidering all aspects of the challenged 19 exclu-
sion denials may serve to better frame the issues for
the Court to decide.
***
For the foregoing reasons, therefore, it is hereby
ORDERED that Defendant’s motion for voluntary
remand (ECF 12) is GRANTED; and it is further
Court No. 20-00012 Page 12
ORDERED that the Department of Commerce’s fi-
nal determinations not to exclude 19 products from the
remedy imposed by the President under Section 232 of
the Trade Expansion Act of 1962, 19 U.S.C. § 1862, as
challenged in this action, are remanded to Commerce
to (1) identify and correct all deficiencies in the exist-
ing administrative record, including but not limited to
locating and adding all of Commerce’s communica-
tions with domestic industry objectors and the Inter-
national Trade Administration concerning Borusan’s
exclusion requests insofar as such communications are
not part of the existing record, and (2) fully reconsider
all of Borusan’s exclusion requests; and it is further
ORDERED that Defendant shall file the remand
results no later than 60 days from the date on which
this order is entered; and it is further
ORDERED that Defendant shall file the corrected
administrative record for the initial proceeding and
the administrative record for any remand proceedings
no later than 14 days after filing the remand results;
and it is further
ORDERED that Defendant’s obligation to respond
to Plaintiff’s complaint is moot in view of this order;
and it is further
ORDERED that within 30 days of Defendant’s fil-
ing of the remand results, the parties shall meet and
confer and, if possible, file a proposed stipulated judg-
ment disposing of this action, but if the parties are un-
able to agree regarding the disposition of this action,
Court No. 20-00012 Page 13
Plaintiff shall file an amended complaint within 30
days of Defendant’s filing of the remand results.
Dated: June 25, 2020 /s/ M. Miller Baker
New York, New York Judge