JSW Steel (USA) Inc. v. United States ( 2020 )

Slip Op. 20-111
UNITED STATES COURT OF INTERNATIONAL TRADE
JSW STEEL (USA) INC.,
Plaintiff,
Before: Claire R. Kelly, Judge
v.
Court No. 19-00133
UNITED STATES,
Defendant.
OPINION AND ORDER
[Remanding the U.S. Department of Commerce’s denials of plaintiff’s requests for
exclusion of certain steel articles from Section 232 tariffs, ordering further
explanation of the steps taken to complete the record and supplementation of the
record as appropriate, and denying plaintiff’s request for discovery and for a privilege
log.]
Dated: August 5, 2020
Sanford Litvack, Andrew L. Poplinger, and R. Matthew Burke, Chaffetz Lindsey LLP,
of New York, NY, for plaintiff JSW Steel (USA) Inc.
Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him
on the brief were Jeanne E. Davidson, Director, Tara K. Hogan, Assistant Director,
and Stephen C. Tosini, Senior Trial Counsel.
Kelly, Judge: This action is before the court on motion for judgment on the
agency record. See Pl.’s Mot. J. Agency R., Dec. 13, 2019, ECF No. 29 (“Pl.’s Mot.”).
Plaintiff JSW Steel (USA) Inc. (“JSW”) challenges the U.S. Department of
Commerce’s (“Department” or “Commerce”) denials of twelve requests for exclusions
(“exclusion requests”) for certain steel slabs from an additional 25 percent ad valorem
Court No. 19-00133 Page 2
tariff imposed on steel articles pursuant to section 232 of the Trade Expansion Act of
1962 (“Section 232”), 19 U.S.C. § 1862 (2012). See Compl., July 30, 2019, ECF No. 2;
see also [Conf.] Pl.’s Memo. L. Supp. Mot. J. Agency R. at 1–5, Dec. 13, 2019, ECF No.
30 (“Pl.’s Br.”). JSW contends that Commerce’s denials of exclusion requests for alloy
and non-alloy steel slab imported from India and Mexico were arbitrary and
capricious, an abuse of discretion, and not otherwise in accordance with law. See
Compl. at ¶¶ 36–43; Pl.’s Br. at 4. In addition, JSW requests the court to order
discovery regarding the substance of Commerce’s ex parte meetings with objectors to
JSW’s exclusion requests as well as for Defendant to furnish a privilege log for
redactions in the administrative record. Pl.’s Br. Resp. Ct.’s July 7, 2020 Order at 3–
7, July 13, 2020, ECF No. 85 (“Pl.’s Br. Resp. Ct.’s Order”). For the reasons that
follow, the court: (i) orders Commerce as part of its certification of the record to set
forth the steps taken to ascertain that the record is complete, including identifying
how the Department identified missing information and the existence of ex parte
communications and, further, how it determined whether and to what extent any ex
parte communications were or were not relied upon or referred to by the Department
in making its determinations; (ii) to further supplement the record with any
information that it determines should be included in the record, inclusive of any
information directly or indirectly considered by the Department in its
determinations, as a result of explaining its record compilation process; and, (iii)
remands for further consideration and explanation Commerce’s denials of all twelve
Court No. 19-00133 Page 3
exclusion requests, in light of the completed record. However, the court denies JSW’s
requests for discovery and for a privilege log.
BACKGROUND
Following an investigation and determination by the Bureau of Industry and
Security (“BIS”), a sub-agency of Commerce, that imports of steel threaten national
security, the President issued an executive order, Proclamation 9705, imposing a 25
percent ad valorem tariff on all imports of certain steel articles, effective March 23,
2018. Adjusting Imports of Steel Into the United States, Proclamation 9705 of March
8, 2018, 83 Fed. Reg. 11,625 (Mar. 8, 2018) (“Proclamation 9705”); see also 19 U.S.C.
§ 1862. 1 In addition, Proclamation 9705 tasked the Secretary of Commerce with
developing a process to exclude from the tariff certain steel products that are not
produced in the United States of a satisfactory quality or in a sufficient and
reasonably available amount. Id., 83 Fed. Reg. at 11,627.
On March 19, 2018, Commerce published an interim final rule that set forth
the product exclusion process. See Requirements for Submissions Requesting
1 However, recognizing the United States’ security relationship with some countries,
the President temporarily exempted imports of steel articles from, inter alia, Mexico.
Proclamation 9705, 83 Fed. Reg. at 11,626. The exclusion of steel articles from Mexico
expired on June 1, 2018. See Adjusting Imports of Steel Into the United States,
Proclamation 9894 of May 19, 2019, 84 Fed. Reg. 23,987, 23,988 (May 23, 2019).
Relevant here, JSW sought exclusions for its imports of steel slab from Mexico
beginning in June 2018. See, e.g., BIS Decisions for JSW Exclusion Requests (BIS-
2018-0006-1218-2337) at JSW-GEN-0002–0004, Apr. 19, 2019; see also Pl.’s Br. at 9.
Court No. 19-00133 Page 4
Exclusions From the Remedies Instituted in Presidential Proclamations Adjusting
Imports of Steel Into the United States and Adjusting Imports of Steel Into the United
States and Adjusting 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 (Dep’t Commerce Mar. 19, 2018). Subsequently, based on comments and
Commerce’s experience administering the first interim final rule, Commerce issued
a second interim final rule on September 11, 2018 that modified the first interim final
rule. 2 See Submissions of Exclusion Requests and Objections to Submitted Requests
for Steel and Aluminum, 83 Fed. Reg. 46,026 (Dep’t Commerce Sept. 11, 2018)
(“September Rule”). Taken together, the rules, now codified at 15 C.F.R. Pt. 705,
Supp. 1 (2019), identify who may request an exclusion (“requestor”) and who may
object to a request for an exclusion (“objector”); set forth the formalities and required
information in requests and objections as well as for rebuttals and surrebuttals;
define the criteria by which Commerce—and its subagencies, the BIS and the
International Trade Administration (“ITA”)—evaluates a request for an exclusion; 3
and, establish timelines for the exclusion request process.
2 Commerce issued a third interim final rule to establish a web portal to house
requests, objections, rebuttals, and surrebuttals but did not otherwise amend the
exclusion process. Implementation of New Commerce Section 232 Exclusions Portal,
84 Fed. Reg. 26,751 (Dep’t Commerce June 10, 2019).
3The Department identifies BIS as “the lead agency” in deciding whether to grant
exclusion requests and the ITA as “analyzing requests and objections to evaluate
whether there is domestic production available to meet the requestor’s product
needs[.]” September Rule, 83 Fed. Reg. at 46,027, 46,032.
Court No. 19-00133 Page 5
Directly affected individuals or organizations using steel in business activities
located in the United States may submit exclusion requests. 15 C.F.R. Pt. 705, Supp.
1 at ¶ (c)(1). Requestors must complete and submit an electronic form, which requires
certain factual information. Id. at ¶¶ (b)(1), (c)(3). The submission must include the
requestor’s name, the date, and the 10-digit Harmonized Tariff Schedule of the
United States (“HTSUS”) statistical reporting number for the requested steel article
to be excluded. Id. at ¶ (c)(2). 4 In addition, the regulations require a requestor to
“clearly identify” and “provide support” for which of the three enumerated criteria the
requestor bases its request. Id. at ¶ (c)(5). Individuals or organizations that
manufacture steel in the United States may object to an exclusion request by,
likewise, submitting an electronic form that identifies the objector and the relevant
exclusion request. Id. at ¶ (d). The objector must also identify and provide support
as to why Commerce should reject the request based on the three criteria. Id. at ¶¶
(c)(5), (d)(4). A requestor may rebut any objections, and objectors may submit
surrebuttals. Commerce denies incomplete exclusion requests and declines to
consider any incomplete objections, rebuttals, and surrebuttals. Id. at ¶ (h)(1).
Commerce reviews complete exclusion requests to determine whether the
article described in the request meet any of three criteria, namely “the article is not
4 In addition, the submission must include chemistry by percentage breakdown by
weight, metallurgical properties, surface quality, and distinct critical dimensions;
also, the submission may specify the minimum and maximum range dimensions. 15
C.F.R. Pt. 705, Supp. 1 at ¶ (c)(2).
Court No. 19-00133 Page 6
produced in the United States in a sufficient and reasonably available amount, is not
produced in the United States in a satisfactory quality, or for specific national
security concerns.” Id. at ¶¶ (c)(6), (h)(2). The regulations define the criterion “not
produced in the United States in a sufficient and reasonably available amount” to
mean that the amount of steel needed by the requestor is not available “immediately”
to meet its business needs. Id. at ¶ (c)(6)(i). By “immediately,” the regulations
elaborate that the product is currently produced or could be produced within eight
weeks in the amount needed described in the exclusion request. Id. The criterion
“not produced in the United States in a satisfactory quality” requires the steel to be
equivalent as a “substitute product,” as in steel produced by an objector that can
“immediately” meet “the quality (e.g., industry specs or internal company quality
controls or standards), regulatory, or testing standards, in order for the U.S. produced
steel to be used in that business activity in the United States by that end user.” Id.
at ¶ (c)(6)(ii). Finally, the criterion “for specific national security considerations”
enables Commerce, in consultation with other parts of the government, as warranted,
to determine whether denying an exclusion request would have an impact on national
security. Id. at ¶ (c)(6)(iii).
Commerce “normally” will issue its response to an exclusion request as a
memorandum that is “responsive to any of the objection(s), rebuttal(s) and
surrebuttal(s)” within 106 days of the exclusion request submission. Id. at ¶¶
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(h)(2)(i)(B), (h)(3)(i). 5 Granted exclusion requests are generally approved for one year
on a product basis and are usually limited to the requestor, unless Commerce
authorizes the exclusion to apply to additional importers. Id. at ¶¶ (c)(2), (h)(2)(iv).
If an exclusion request is denied based on a representation made by an objector with
respect to the availability of the requested steel or of a substitute in the United States,
and it later comes to light that the representation is inaccurate, a requestor may
submit a new exclusion request that refers back to the original denied request. Id. at
¶ (c)(6)(i)–(ii).
JSW submitted twelve requests for exclusion for alloy and non-alloy steel
slabs. 6 Six of the requests were for slab from India with thicknesses of 8, 10, and 12
inches; 7 the other six were for slab from Mexico with thicknesses of 7.8, 8.8, and 9.8
5When a properly filed, complete exclusion request receives no objections, Commerce
will grant the request if it meets the requisite criteria and presents no national
security concerns. See 15 C.F.R. Pt. 705, Supp. 1 at ¶ (h)(2)(ii).
6 BIS assigns each exclusion request an individual number that follows a
standardized docket number “BIS-2018-0006-.” Given this formulation, the court
identifies each exclusion request, including all underlying documentation that
appears in the record pertaining to the cited request by the last digits assigned by the
Department of Commerce that follow the number “BIS-2018-0006-”. For example,
the court refers to Exclusion Request BIS-2018-0006-1218 as Exclusion Request No.
1218, which appears on the confidential record at pages BIS-2018-0006-4–108. The
court identifies the requests, objections, rebuttals, surrebuttals, memoranda, and
other documents that comprise an exclusion request by the name and number
assigned by Commerce.
7 The constituent exclusion requests are Exclusion Request Nos. 1218 (8-inch non-
alloy steel slab), 1221 (10-inch non-alloy steel slab), 1227 (12-inch non-alloy steel
slab), 2335 (8-inch non-alloy steel slab), 2336 (10-inch alloy steel slab), and 2337 (12-
inch alloy steel slab).
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inches. 8 JSW explained that it required the steel slabs to manufacture steel plate
because the slabs were not available in the United States. See, e.g., Request for
Exclusion from Remedies: Section 232 National Security Investigation of Steel
Imports at BIS-2018-0006-1218-11–15; Request for Exclusion from Remedies: Section
232 National Security Investigation of Steel Imports at BIS-2018-0006-2337-11–19.
Three U.S. producers, U.S. Steel Corporation, AK Steel Corporation, and Nucor
Corporation (collectively, “domestic objectors”), objected to JSW’s requests and
disagreed with JSW’s characterization of the domestic non-availability of steel slab.
See, e.g., [AK Steel] Objection Filing to Posted Section 232 Exclusion Request: Steel
at BIS-2018-0006-1218-34–36; [Nucor] Objection Filing to Posted Section 232
Exclusion Request: Steel at BIS-2018-0006-1218-37-50; [U.S. Steel] Objection Filing
Posted to Section 232 Exclusion Request: Steel at BIS-2018-0006-1218-51–73. For
each of the exclusion requests, JSW submitted rebuttals to the domestic objector’s
objections, and the domestic objectors submitted surrebuttals. See, e.g., [JSW]
Rebuttal to [Nucor’s] Objection Filed Against Request for Exclusion from Remedies:
Section 232 National Security Investigation of Steel Imports at BIS-2018-0006-1218-
75–85; [JSW] Rebuttal to [U.S. Steel’s] Objection Filed Against Request for Exclusion
from Remedies: Section 232 National Security Investigation of Steel Imports at BIS-
8 The constituent exclusion requests are Exclusion Request Nos. 29462 (7.8-inch non-
alloy steel slab), 29465 (7.8-inch alloy steel slab), 29470 (8.8-inch non-alloy steel slab),
29474 (8.8-inch alloy steel slab), 29481 (9.8-inch non-alloy steel slab), and 29484 (9.8-
inch alloy steel slab).
Court No. 19-00133 Page 9
2018-0006-1218-86–92; [Nucor’s] Surrebuttal to Objection Filed Against Request for
Exclusion from Remedies: Section 232 National Security Investigations of Steel
Imports at BIS-2018-0006-1218-94–97; [U.S. Steel’s] Surrebuttal to Objection Filed
Against Request for Exclusion from Remedies: Section 232 National Security
Investigations of Steel Imports at BIS-2018-0006-1218-98–108.
Nearly one year following the submission of JSW’s exclusion requests, BIS
issued separate decision memoranda (“BIS decision memoranda”) that denied each
request. See, e.g., BIS Decisions for JSW Exclusion Requests (BIS-2018-0006-1218-
2337) at JSW-GEN-0002. Each BIS decision memorandum concludes that the
requested steel slab “is produced in a sufficient and reasonably available amount and
of a satisfactory quality” and “that no overriding national security concerns requires
that this exclusion request be granted notwithstanding the domestic availability.”
See, e.g., BIS Decision Document – Steel Section 232 Remedy Exclusion Request,
Exclusion Request Number: BIS-2018-0006-29484 at BIS-2018-0006-29484-5. In
addition, for half of the exclusion requests, BIS found that the exclusion request was
incomplete because “the product description is inconsistent with the claimed
classification under the [HTSUS].” 9 See, e.g., BIS Decision Document – Steel Section
232 Remedy Exclusion Request, Exclusion Request Number: BIS-2018-0006-29481 at
BIS-2018-0006-29481-4–5
9Specifically, BIS found that Exclusion Request Nos. 1218, 1221, 1227, 29462, 29470
and 29481 were incomplete due to JSW’s erroneous classification of requested steel
articles.
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On July 30, 2019, JSW initiated this action, challenging Commerce’s denials
of the exclusion requests. See Summons, July 30, 2019, ECF No. 1; Compl.
Subsequently, the government filed on the docket the confidential and public
administrative records underlying those denials and certified the records as complete.
See Confidential Admin. Record, Oct. 7, 2019, ECF No. 15; Public Admin. Record,
Oct. 7, 2019, ECF No. 16. JSW, in its moving brief, alluded to a missing email from
the Department in connection with three exclusion requests, see Pl.’s Br. at 31 n.83,
and indicated that the Inspector General had issued a warning to Commerce
Secretary Wilbur Ross, advising that undocumented ex parte communications “giv[e]
the appearance that the Section 232 exclusion request review process is not
transparent and that decisions are not rendered based on evidence contained in the
record.” Id. at 3; Pl.’s Mot. at Ex. C. Defendant did not respond to these assertions
in its response brief. See generally Def.’s Br. However, after the matter had been
fully briefed and following the court’s issuance of oral argument questions, Defendant
informed the court that certain documents were missing from the administrative
record. See Def.’s Status Report, May 28, 2020, ECF No. 59. Following a
teleconference with the parties, see Telephone Conference, June 4, 2020, ECF No. 69,
the court issued an order directing Defendant to complete the administrative record
and to file on the docket, on a rolling basis, documents it identified through search
that were previously missing from the record. See Order, June 4, 2020, ECF No. 71.
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The court also noted that it considered the matter submitted for decision and that it
would render its decision in due course. Id.
Subsequently, and following Defendant’s filing of a status report on its
completion of the record, see Def.’s Status Report, July 6, 2020, ECF No. 81, the court
held a second teleconference with the parties on July 7, 2020. See Order, June 30,
2020, ECF No. 79 (ordering that the parties be prepared to advise the court of any
concerns with the compilation or contents of documents filed to complete the
administrative record during the second teleconference); see also Telephone
Conference, July 7, 2020, ECF No. 82. In light of JSW’s expressed concerns with the
documents added to complete the record, see generally Telephone Conference, July 7,
2020, ECF No. 82, the court directed JSW to file a brief that specifies its concerns
with the government’s efforts to complete the record and to request a remedy (or
remedies). See Order, July, 7, 2020, ECF No. 83. On July 13, 2020, JSW filed its
brief, which identifies several ex parte meetings between Department officials and
objectors, and requests that the court permit JSW to conduct discovery to uncover
information about the meetings as well as direct Defendant to furnish a privilege log.
See Pl.’s Br. Resp. Ct.’s Order at 1–6, App’x. On July 20, 2020, Defendant filed its
response brief, opposing JSW’s requests. See Def.’s Resp. JSW’s Resp. Ct.’s Order at
1–9, July 20, 2020, ECF No. 88 (“Def.’s Resp. Pl.’s Resp. Ct.’s Order”). On August 3,
2020, Defendant certified that the record was complete, see ECF No. 92, and, on the
same day, JSW filed a status report, reiterating its concern that information
Court No. 19-00133 Page 12
regarding certain ex parte meetings remains missing from the record. See Pl.’s
Status Report, August 3, 2020, ECF No. 93 (“Pl.’s Status Report”).
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction under 28 U.S.C. § 1581(i)(2), (4) (2012). The court
reviews an action brought under 28 U.S.C. § 1581(i) under the same standards as
provided under section 706 of the Administrative Procedure Act (“APA”), as amended.
See 28 U.S.C. § 2640(e) (2012). Under the statute,
[t]he reviewing court shall--
(1) compel agency action unlawfully withheld or unreasonably delayed;
and
(2) hold unlawful and set aside agency action, findings and conclusions
found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law[.]
5 U.S.C. § 706(1), (2)(A). Under the arbitrary and capricious standard, courts
consider whether the agency “‘entirely failed to consider an important aspect of the
problem, offered an explanation for its decision that runs counter to the evidence
before the agency, or [the decision] is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.’” Alabama Aircraft Indus., Inc.
v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009) (quoting Motor Vehicle Mfrs.
Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
DISCUSSION
JSW contends that Commerce’s denials of its twelve exclusion requests are
arbitrary and capricious, because Commerce’s determinations run counter to the
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evidence before the agency and Commerce fails to articulate any reasoned
explanation for its conclusions. See Pl.’s Br. at 15–37. In addition, JSW argues that
the administrative record is missing information about certain ex parte meetings
with objectors to JSW’s exclusion requests. See Pl.’s Br. Resp. Ct’s Order at 1–6,
App’x; see also Pl.’s Status Report. JSW requests discovery to unearth the contents
of those meetings as well as for Defendant to furnish a privilege log for any redacted
materials from the administrative record. See Pl.’s Br. Resp. Ct’s Order at 6; Pl.’s
Status Report. Defendant counters that Commerce reasonably explains the basis for
the denials for all twelve exclusion requests and addresses record evidence in the BIS
decision and ITA recommendation memoranda. See Def.’s Br. at 25–36. Although
Defendant acknowledged, after the matter had been fully briefed, the administrative
record’s incompleteness, see Def.’s Status Report, May 28, 2020, ECF No. 59; see also
Order, June 4, 2020, ECF No. 71 (directing Defendant, on a rolling basis, to complete
the record with previously missing documents), it submits that neither discovery nor
a privilege log would be warranted. See Def.’s Resp. Pl.’s Br. Resp. Ct.’s Order at 1–
9. For the following reasons, the court remands all twelve exclusion requests, orders
Commerce to provide further explanation as to the steps taken to complete the record
consistent with this opinion and to supplement the record as appropriate, and denies
JSW’s requests for discovery and for a privilege log.
Under section 706 of the APA, a court “review[s] the whole record or those parts
of it cited by a party.” 5 U.S.C. § 706. Privileged and deliberative documents
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reflecting an agency’s internal deliberations do not form part of the administrative
record, and, generally, are not discoverable so as to merit a privilege log, unless there
is a showing of bad faith or improper behavior. See, e.g., Stand Up for California! v.
U.S. Dep’t of Interior, 71 F. Supp. 3d 109, 122–23 (D.D.C. 2014); Oceana, Inc. v. Ross,
920 F.3d 855, 865 (D.C. Cir. 2019). Rather, judicial review is generally limited to the
full administrative record before the agency at the time it rendered its decision.
Accord Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971)
(“Overton Park”); Camp v. Pitts, 411 U.S. 138, 142 (1973) (“Camp”); Guy v. Glickman,
945 F. Supp. 324, 329 (D.D.C. 1996) (“Glickman”); Pacific Shores Subd. v. U.S. Army
Corps of Eng., 448 F. Supp. 2d 1, 4 (D.D.C. 2006) (“Pacific Shores”). “The purpose of
limiting review to the record actually before the agency is to guard against courts
using new evidence to ‘convert the “arbitrary and capricious” standard into effectively
de novo review.’” Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1380 (Fed.
Cir. 2009) (“Axiom”) (quoting Murakami v. United States, 46 Fed. Cl. 731, 735 (2000),
aff’d, 398 F.3d 1342 (Fed. Cir. 2005)).
When a party challenges an administrative determination, the agency must
produce the complete administrative record. See Nat. Res. Def. Council, Inc. v. Train,
519 F.2d 287, 291 (D.C. Cir. 1975). The administrative record includes only those
documents directly or indirectly considered by the agency. See Ammex, Inc. v. United
States, 23 CIT 549, 554–55, 62 F. Supp. 2d 1148, 1156 (1999) (“Ammex”). An agency
enjoys a presumption of regularity as to the record it prepares, because the agency,
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as the decision-maker, is generally in the best position to identify and compile those
materials it considered. See Fund for Animals v. Williams, 245 F. Supp. 2d 49, 55–7
(D.C. Cir. 2003); Pacific Shores, 448 F. Supp. 2d at 5.
However, in certain circumstances, a court may direct an agency to complete
or supplement the record or order discovery. Specifically, a court may order
completion or supplementation of the record in light of clear evidence that the record
was not properly designated or the identification of reasonable grounds that
documents considered by the agency were not included in the record. See Overton
Park, 401 U.S. at 419 (A court will order an agency to complete the record when the
produced record “clearly do[es] not constitute the ‘whole record’ compiled by the
agency[.]”); see, e.g., Pacific Shores, 448 F. Supp. 2d at 5–7. Where a party has made
a “strong showing of bad faith or improper behavior” by agency decision-makers by
providing a reasonable factual basis, a court may order discovery to supplement the
record. See Ammex, 23 CIT at 556, 62 F. Supp. 2d at 1157 (citing Apez Construction
Co. v. United States, 719 F. Supp. 1144, 1147 (D. Mass. 1989)) (internal quotations
removed); Tenneco Oil Co. v. Dep’t of Energy, 475 F. Supp. 299, 317 (D. Del. 1979)
(ordering interrogatories and discovery requests to be served on the agency, when the
record lacked internal memoranda and guidelines that the agency would have
considered). However, if the agency fails to explain administrative action, the court
should “not compensate for the agency’s dereliction by undertaking its own inquiry
into the merits.” Glickman, 945 F. Supp. at 329 (citing Camp, 411 U.S. at 143; Asarco,
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Inc. v. U.S. Envtl. Prot. Agency, 616 F.2d 1153, 1159 (9th Cir. 1980)). The court,
instead, should remand a determination. See, e.g., id. at 332–33.
Here, although JSW indicates that the record remains incomplete, see Pl.’s
Status Report, it has not made the requisite showing that discovery is necessary to
complete or supplement the record and that a privilege log is merited. JSW identifies
several likely ex parte meetings held with objectors for which Commerce made no
record of information discussed in the meetings. See Pl.’s Br. Resp. Ct’s Order at 5,
App’x; see also Pl.’s Status Report. As JSW indicates in its status report, the
government has now identified these meetings but has not disclosed their substance.
See Pl.’s Status Report. Section 232 does not compel agency officials to maintain a
record of ex parte communications, unlike the statutory framework governing anti-
dumping proceedings. See 19 U.S.C. § 1677f(a)(3). Only if relied upon must
Commerce provide information pertaining to the meetings JSW identifies as missing
from the record, given that the record encompasses materials directly or indirectly
considered by the relevant agency decisionmakers. Cf. Ammex, 23 CIT at 554–55, 62
F. Supp. 2d at 1156. JSW contends that the discussions at these meeting “were
concededly part of what the Department considered[.]” Pl.’s Status Report. However,
implicit in the Department’s certification of the record on August 3, 2020, see ECF
No. 92, is a statement that these discussions were not considered by Commerce. The
court will not order disclosure of ex parte communications that were not relied upon
by the Department. However, Commerce must certify steps taken to identify and
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correct deficiencies in the administrative record, including steps taken to ascertain if
any of the ex parte meetings were directly or indirectly considered by Commerce in
its determinations and, if not, how it determined that the discussions at these
meetings with the objectors were not directly or indirectly considered in its
decisions. 10 Should Commerce determine, as a result of this process, that there are
further materials, such as any notes, memoranda, or other documents pertaining to
the ex parte meetings, required to supplement the record, it shall so supplement the
record. If it determines that no further supplementation is required, it shall so state
along with its explanation.
Further, although JSW casts Commerce’s behavior as “perplexing,” “aberrant,”
“certainly suspicious,” and “creat[ing] a strong inference of undue influence
suggesting the Department’s decisions were not based on the merits of the
requests[,]” JSW does not allege impropriety that would warrant discovery. See Pl.’s
Br. Resp. Ct.’s Order at 6 n.4. As a consequence, a privilege log cataloguing
“redactions it has made to documents it has recently added to the Record” is neither
necessary nor appropriate. Pl.’s Br. Resp. Ct.’s Order at 6. At this juncture, the court
declines to order discovery.
10 The court will entertain a request for discovery, should it come to light that
Commerce’s behavior regarding the record crosses the boundary from merely
“suspicious” to evincing bad faith or impropriety. Cf. Pl.’s Br. Resp. Ct.’s Order at 6
n.4.
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Remand of all twelve exclusion requests is warranted because Commerce’s
denials are devoid of explanation and frustrate judicial review. Cf. Glickman, 945 F.
Supp. at 331–32. The court cannot be certain what record evidence, if any, Commerce
relied upon when both the BIS decision memoranda and ITA recommendation
memoranda do not explain what information the sub-agencies considered, how it was
weighed, or why the evidence compelled denial. 11 See, e.g., BIS Decision Document
– Steel Section 232 Remedy Exclusion Request, Exclusion Request Number BIS-
2018-0006-1221 at BIS-2018-0006-1221-5; Recommendation for Denying of Steel
Exclusion Under Section 232 Exclusion Requests: 2018-0006-1221, 2018-0006-1227
at BIS-2018-0006-1221-9.
Each BIS decision memorandum, which is the document communicating the
agency’s final decision, begins with the same statement that “BIS has considered the
evidence provided . . . and taken into account analysis provided by the [ITA]”; and,
each memorandum ends with the same conclusion that “BIS accepts ITA’s
recommended findings as to the domestic availability of the product, and finds that
no overriding national security concerns require that this exclusion request be
granted notwithstanding the domestic availability.” See, e.g., BIS Decision
11 In its brief, JSW requests that the court instruct Commerce to grant JSW’s
Exclusion Request Nos. 1221, 1227, 2336, 2337, and 29484 “because the correct
conclusion based upon the record is so obvious[.]” Pl.’s Br. at 23 (citing Sierra Club
v. EPA, 346 F.3d 955, 963 (9th Cir. 2003)). Given the relevant BIS decision and ITA
recommendation memoranda do not articulate the reasons for the denials and that
Commerce may supplement the record consistent with this opinion, the court
remands these determinations. Cf. Glickman, 945 F. Supp. at 331–32.
Court No. 19-00133 Page 19
Document – Steel Section 232 Remedy Exclusion Request, Exclusion Request
Number BIS-2018-0006-1221 at BIS-2018-0006-1221-5. Nowhere does BIS refer to
any record evidence in its decision memoranda, be it the exclusion requests
themselves or the applicable objections. See, e.g., id. at BIS-2018-0006-1221-4–6. For
example, for six of JSW’s exclusion requests, the BIS decision memoranda conclude
that JSW supplied the incorrect 10-digit HTSUS statistical reporting number to
identify a submission, stating that Customs and Border Protection (“CBP”) advised
BIS that the claimed classification is inconsistent with the product description and
“provid[ed] the following guidance:”—yet no guidance follows the colon. 12 See, e.g.,
id. at BIS-2018-0006-1221-4–5. BIS’s unsupported conclusion does not apprise the
court of the reason why the HTSUS statistical reporting number was incorrect or how
CBP reached that finding. Cf. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). 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. See September Rule, 83 Fed. Reg. at 46,047 (“In cases
12 On remand, Commerce should explain why, in light of the regulations, incorrect
classification renders an exclusion request as incomplete and is a basis to reject the
request. See Pl.’s Br. at 12 n.43; see also Def.’s Br. at 23.
Court No. 19-00133 Page 20
where a request is denied for HTSUS issues, companies are encouraged to work with
CBP to confirm the proper classifications and resubmit.”) 13
Likewise, the ITA recommendation memoranda, which recommend to BIS
whether to grant or deny an exclusion request, suffer from the same paucity of
analysis as the BIS decision memoranda. 14 Although the regulations provide that
13 As an additional example, Defendant seems to argue that it is reasonably
discernable from the record that Commerce rejected requests for steel slab within
range of thicknesses, i.e., 235–270 mm (9.25–10.63 inches) and 222–257 mm (8.74–
10.12 inches), because steel slab was available within those ranges. See Def.’s Br. at
28–29. Without further explanation, this reason for rejection would be arbitrary and
capricious because Commerce would be treating similar parties differently, as JSW
notes, in requiring other requestors, after filing an initial request, to refile without
ranges of thickness. See Pl.’s Reply Memo. L. Further Supp. [Pl.’s Mot.] at 14–16.,
Mar. 12, 2019, ECF No. 47 (“Pl.’s Reply Br.”).
14 In addition, requestors like JSW do not receive a copy of the ITA decision
memoranda as a matter of course. As JSW notes, it saw, for the first time, a copy of
the relevant ITA recommendation memoranda with the filing of the administrative
record following the commencement of this action. See Pl.’s Br. at 12. Given that the
BIS decision memoranda restate, in part, the conclusions of the ITA recommendation
memoranda, it is unclear why the ITA recommendation memoranda should be
maintained as fully confidential. Compare Decision Document – Steel Section 232
Remedy Exclusion Request, Exclusion Request Number BIS-2018-0006-1221 at BIS
2018-0006-1221-5 with Recommendation for Denying of Steel Exclusion Under
Section 232 Exclusion Requests: 2018-0006-1221, 2018-0006-1227 at BIS-2018-0006-
1221-9–10.
Moreover, the Government’s assertion that “the record allows the Court, and,
indeed, the public, to easily discern how the agency reached its decision[,]” Def.’s Br.
at 34, is troubling, particularly when the ITA recommendation memoranda for JSW’s
requests, which, as noted above, refer to record evidence, were entirely confidential.
In addition, given that the regulations compel disclosure of information contained in
the exclusion requests, objections, rebuttals, and surrebuttals and require any
proprietary information submitted to be summarized “in sufficient detail to permit a
reasonable understanding of the substance of the information[,]” 15 C.F.R. Pt. 705,
(footnote continued)
Court No. 19-00133 Page 21
Commerce’s “[r]esponse to an exclusion request will . . . be responsive to any of the
objection(s), rebuttal(s), and surrebuttal(s) for that submitted exclusion request[,]” 15
C.F.R. Pt. 705, Supp. 1 at ¶ (h)(2)(i)(A), the ITA recommendation memoranda merely
catalogue a brief selection of evidence on the record. 15 See, e.g., Recommendation for
Denying of Steel Exclusion Under Section 232 Exclusion Requests: 2018-0006-1221,
2018-0006-1227 at BIS-2018-0006-1221-9. The ITA recommendation memoranda
neither address detracting evidence 16 nor provide any analysis of the evidence, even
Supp. 1 at ¶ (b)(5)(ii)–(iii), it is unclear why a public version of the recommendation
memoranda could not be prepared and disclosed. Defendant concedes this point,
given that it has filed, on the record, public versions of the ITA recommendation
memoranda for JSW’s exclusion requests. See Def.’s Resp. Ct.’s Request Regarding
Redaction, May 29, 2020, ECF No. 60.
15Several of the ITA recommendation memoranda cover multiple exclusion requests.
See Def.’s Br. at 17 (noting that ITA prepared four recommendation memoranda
covering JSW’s twelve exclusion requests).
16 For example, as JSW notes, the ITA judges “Nucor’s product as a suitable
substitute” but provides no explanation and does not address detracting evidence that
Nucor only produces a downstream product, not a substitute product. See Pl.’s Reply
Br. at 8 (citing Recommendation for Denying of Steel Exclusion Under Section 232
Exclusion Requests: 2018-0006-1221, 2018-0006-1227 at BIS-2018-0006-1221-9).
Indeed, in its objections to those exclusion requests, Nucor indicated that it neither
manufacturers nor can “immediately” (i.e., within eight weeks) manufacture JSW’s
requested steel slab or a substitute produce, and, instead, merely stated that it could
produce a downstream product within 84 days. [Nucor] Objection Filing Posted to
Section 232 Exclusion Request: Steel at BIS-2018-0006-1221-44; [Nucor] Objection
Filing Posted to Section 232 Exclusion Request: Steel at BIS-2018-0006-1227-44. ITA
does not explain why it considers Nucor’s domestically available downstream product
is equivalent as a substitute. Cf. 15 C.F.R. Pt. 705, Supp. 1 at ¶ (c)(6)(ii).
In addition, JSW explained in its exclusion requests that it requires certain
thicknesses of steel to satisfy “reduction ratios” to manufacture steel plate. See Pl.’s
(footnote continued)
Court No. 19-00133 Page 22
in the section of the memoranda entitled “Analysis.” 17 See, e.g., id. at BIS-2018-0006-
9. In addition, the ITA recommendation memoranda for all twelve exclusion requests
at issue conclude that “[b]ecause there is indication of sufficient U.S. production
availability” the ITA recommends denying JSW’s requests. See, e.g.,
Recommendation for Denying of Steel Exclusion Under Section 232 Exclusion
Requests: 2018-0006-1221, 2018-0006-1227 at BIS-2018-0006-1221-10. However, the
regulations simply state that “[a]n 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 satisfactory quality, or for specific national
security considerations.” See 15 C.F.R. Pt. 705, Supp. 1 at ¶ (c)(5); see also id. at ¶
(c)(6). The regulations do not provide for the denial of an exclusion request upon the
showing of an “indication” of sufficient U.S. production. It is unclear what constitutes
an “indication” of sufficient U.S. production, or why an “indication” of U.S domestic
Br. at 33–34. Even though the regulations state that steel may be considered
equivalent as a substitute product if it meets, inter alia, “internal company quality
controls or standards[,]” 15 C.F.R. Pt. 705, Supp. 1 at ¶ 1 (c)(6)(ii), and the September
2018 Federal Register Notice, notes that the exclusion review process accounts for
the “quality needs of requestors[,]” neither BIS nor ITA address JSW’s internal
quality considerations in their respective memoranda. See September Rule, 83 Fed.
Reg. at 46,039.
17 For example, in the “Analysis” section of the ITA recommendation memorandum
for Exclusion Request Nos. 29462, 29465, 29470, 29474, 29481, and 29484, the ITA
summarizes JSW’s, Nucor’s, and U.S. Steel’s submissions and does not, itself, analyze
those statements. See Recommendation for Denying Steel Exclusion Request Unser
Section 232 Exclusion Requests 2018-0006-29462, 2018-0006-29465, 2018-0006-
29470, 2018-0006-29474, 2018-0006-29481, 2018-0006-29484 at BIS-2018-0006-
29484-9.
Court No. 19-00133 Page 23
production of the steel articles in question accords with the regulation. Commerce
does not further explain how that term is used either in its regulations or in the BIS
decision or ITA recommendation memoranda. Given the defects in the record and
Commerce’s failure to engage with record evidence, 18 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. 19
CONCLUSION
In accordance with the foregoing, it is
ORDERED that on or before Monday, August 17, 2020 Defendant shall file,
as part of its U.S. Court of International Trade Rule 73.3 certification, a statement
that sets forth: the steps taken to ascertain that the record for the original proceeding
is complete, including identifying how the Department identified missing information
and the existence of ex parte communications; and, to what extent any ex parte
communications were or were not directly or indirectly relied upon or referred to by
Commerce in making its determinations; and it is further
18Defendant concedes that BIS lacked “an established process or dedicated systems
for collecting and compiling an administrative record in a Section 232 exclusion
case[.]” See [Def.’s] Resp. Ct.’s May 2020 Order at 2, June 3, 2020, ECF No. 64.
19Defendant requests a remand for Exclusion Request No. 1227. See Def.’s Br. at 36.
However, for the reasons discussed above, the court remands all twelve exclusion
requests at issue, including Exclusion Request No. 1227.
Court No. 19-00133 Page 24
ORDERED that Defendant shall file on the docket and further supplement
the record with any information, inclusive of any information directly or indirectly
considered by Commerce, in its determinations that it determines should be included
in the record as a result of explaining the steps taken to ensure completion of the
administrative record on or before Monday, August 17, 2020; and it is further
ORDERED that Commerce’s determinations not to exclude twelve steel
articles 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 (i.e., Exclusion
Request Nos. 1218 (8-inch non-alloy steel slab from India), 1221 (10-inch non-alloy
steel slab from India), 1227 (12-inch non-alloy steel slab from India), 2335 (8-inch
non-alloy steel slab from India), 2336 (10-inch alloy steel slab from India), 2337 (12-
inch alloy steel slab from India), 29462 (7.8-inch non-alloy steel slab from Mexico),
29465 (7.8-inch alloy steel slab from Mexico), 29470 (8.8-inch non-alloy steel slab from
Mexico), 29474 (8.8-inch alloy steel slab from Mexico), 29481 (9.8-inch non-alloy steel
slab from Mexico), and 29484 (9.8-inch alloy steel slab from Mexico)), are remanded
for further explanation and consideration, specifically to (1) identify and correct all
deficiencies in the existing administrative record, including but not limited to locating
and adding all of Commerce’s communications with domestic industry objectors
concerning JSW’s exclusion requests insofar as such communications are not part of
the existing record and were directly or indirectly considered by Commerce in its
determinations, and (2) fully reconsider or provide further explanation of its denials
Court No. 19-00133 Page 25
of all of JSW’s exclusion requests, consistent with this opinion and in light of the
complete administrative record; and it is further
ORDERED that Commerce shall file its remand redeterminations with the
court within 90 days of this date; and it is further
ORDERED that Defendant shall file the administrative record for any
remand proceedings no later than 14 days after filing the remand results; and it is
further
ORDERED that on the same day that Defendant files the administrative
record for any remand proceedings, Defendant shall also file as part of its U.S. Court
of International Trade Rule 73.3 certification, a statement identifying whether the
determinations on remand are based on the original administrative record, the new
record on remand, or both, and whether any of the ex parte meetings were or were
not directly or indirectly considered by Commerce in its determinations; and it is
further
ORDERED that the parties shall have 30 days after the filing of the remand
results to file comments on the remand redetermination; and it is further
ORDERED that the parties shall have 30 days to file their replies to
comments on the remand redetermination.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: August 5, 2020
New York, New York