In Re Section 301 Cases , 2023 CIT 35 ( 2023 )

Slip Op. 23-
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Mark A. Barnett,
Claire R. Kelly, and
IN RE SECTION 301 CASES
Jennifer Choe-Groves, Judges
Court No. 21-00052-3JP
OPINION AND ORDER
[Sustaining Final List 3 and Final List 4 as amended on remand by the Office of the
United States Trade Representative; granting Defendants’ second motion to correct the
administrative record.]
Dated: March 17, 2023
Pratik Shah, Akin Gump Strauss Hauer & Feld LLP, of Washington, DC, argued for
Plaintiffs HMTX Industries LLC, et al. With him on the brief were Matthew R. Nicely,
James E. Tysse, Devin S. Sikes, Daniel M. Witkowski, and Sarah B. W. Kirwin.
Elizabeth A. Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, argued for Defendants United States,
et al. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney
General, Patricia M. McCarthy, Director, L. Misha Preheim, Assistant Director, Justin R.
Miller, Attorney-In-Charge, International Trade Field Office, Sosun Bae, Senior Trial
Counsel, and Jamie L. Shookman, Trial Attorney. Of Counsel on the brief were Megan
Grimball, Associate General Counsel, Philip Butler, Associate General Counsel, and
Edward Marcus, Assistant General Counsel, Office of General Counsel, Office of the
U.S. Trade Representative, of Washington, DC, and Paula Smith, Assistant Chief
Counsel, Edward Maurer, Deputy Assistant Chief Counsel, and Valerie Sorensen-Clark,
Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S.
Customs and Border Protection, of New York, NY.
Alexander W. Koff, Venable LLP, of Baltimore, MD, argued for Amici Curiae VeriFone,
Inc., et al. With him on the brief were Ashleigh J. F. Lynn and Nicholas M. DePalma,
Venable LLP, of Tysons Corner, VA.
Joseph R. Palmore and Adam L. Sorensen, Morrison & Foerster LLP, of Washington,
DC, for Amici Curiae Retail Litigation Center, et al.
Court No. 21-00052-3JP Page 2
Barnett, Chief Judge: Plaintiffs HMTX Industries LLC, Halstead New England
Corporation, Metroflor Corporation, and Jasco Products Company LLC commenced the
first of approximately 3,600 cases 1 (“the Section 301 Cases”) contesting the imposition
of a third and fourth round of tariffs by the Office of the United States Trade
Representative (“USTR” or “the Trade Representative”) pursuant to section 307 of the
Trade Act of 1974 (“the Trade Act”), 19 U.S.C. § 2417 (2018). 2 See generally Am.
Compl., HMTX Indus. LLC v. United States, No. 20-cv-177 (CIT Sept. 21, 2020), ECF
No. 12 (“20-177 Am. Compl.”). USTR imposed the contested duties, referred to herein
as “List 3” and “List 4A,” in September 2018 and August 2019, respectively. See Notice
1 This figure reflects the approximate number of cases assigned to this panel. Cases
raising similar claims filed on or after April 1, 2021, are stayed without an order of
assignment. See U.S. Ct. of Int’l Trade Admin. Order 21-02.
2 Citations to the United States Code are to the 2018 version, unless otherwise
specified. Section 307 provides, inter alia:
(a) In general
(1) The Trade Representative may modify or terminate any action,
subject to the specific direction, if any, of the President with respect
to such action, that is being taken under section 2411 of this title
if—
(A) any of the conditions described in section 2411(a)(2) of
this title exist,
(B) the burden or restriction on United States commerce of
the denial rights, or of the acts, policies, and practices, that
are the subject of such action has increased or decreased,
or
(C) such action is being taken under section 2411(b) of this
title and is no longer appropriate.
19 U.S.C. § 2417(a)(1). The Section 301 Cases are named in recognition of the fact
that claims raised therein contest modifications of tariffs initially imposed pursuant to
section 301 of the Trade Act, 19 U.S.C. § 2411.
Court No. 21-00052-3JP Page 3
of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept.
21, 2018) (“Final List 3”); Notice of Modification of Section 301 Action: China’s Acts,
Policies, and Practices Related to Technology Transfer, Intellectual Property, and
Innovation, 84 Fed. Reg. 43,304 (Aug. 20, 2019) (“Final List 4”). 3 Plaintiffs alleged that
USTR exceeded its statutory authority and violated the Administrative Procedure Act
(“APA”), 5 U.S.C. § 706(2), when it promulgated List 3 and List 4A. 20-177 Am. Compl.
¶¶ 63–75.
In In Re Section 301 Cases, 46 CIT __, 570 F. Supp. 3d 1306 (2022), the court
rejected Defendants’ (“the Government”) argument that Plaintiffs’ claims were non-
justiciable and addressed Plaintiffs’ substantive and procedural challenges. 4 Although
the court sustained USTR’s statutory authority to impose the tariffs pursuant to section
307(a)(1)(b) of the Trade Act, id. at 1323–35, the court remanded the matter for USTR
3 Within Final List 4, USTR segregated the tariff subheadings into List 4A and List 4B
with staggered effective dates (September 1, 2019, and December 15, 2019,
respectively). 84 Fed. Reg. at 43,305. USTR promulgated List 3 and List 4A as
modifications of two prior rounds of tariffs, referred to herein as “List 1” and “List 2.”
See Notice of Action and Request for Public Comment Concerning Proposed
Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices
Related to Tech. Transfer, Intell. Prop., and Innovation, 83 Fed. Reg. 28,710 (June 20,
2018) (promulgating List 1); Notice of Action Pursuant to Section 301: China’s Acts,
Policies, and Practices Related to Tech. Transfer, Intell. Prop., and Innovation, 83 Fed.
Reg. 40,823 (Aug. 16, 2018) (promulgating List 2).
4 The court presumes familiarity with In Re Section 301 Cases, which sets forth in detail
background on the imposition of List 3 and List 4A duties, and the case management
procedures the court employed to handle the Section 301 Cases.
Court No. 21-00052-3JP Page 4
to comply with the APA requirement for a reasoned response to comments submitted
during the List 3 and List 4A rulemaking proceedings. Id. at 1335–45. 5
This matter is now before the court following USTR’s filing of its remand
redetermination. See Further Explanation of the Final List 3 and Final List 4
Modifications in the Section 301 Action: China’s Acts, Policies, and Practices Related to
Tech. Transfer, Intell. Prop., and Innovation, Pursuant to Ct. Remand Order (“Remand
Results”), ECF No. 467. In the Remand Results, USTR (1) identified the documents
underlying its response to comments; (2) provided additional explanation supporting the
removal or retention of certain tariff subheadings from List 3 and List 4A; (3) addressed
comments concerning the level of duties to be imposed and the aggregate level of trade
subject to the duties; and (4) addressed comments concerning potential harm to the
domestic economy, the legality and efficacy of the tariffs, and suggested alternative
measures. See id. at 23–89.
Plaintiffs and Amici 6 filed comments opposing the Remand Results and seeking
vacatur of List 3 and List 4A. See Pls.’ Cmts. on the [USTR’s Remand Results] (“Pls.’
Cmts.”), ECF No. 474; Pls.’ Reply Regarding the Remand Determination (“Pls.’ Reply
Cmts.”), ECF No. 482; Br. of Amici Curiae Retail Litig. Ctr., Inc., Nat’l Retail Fed’n, Am.
Apparel and Footwear Assoc., Consumer Tech. Assoc., Footwear Distributors and
5 Finding authority pursuant to section 307(a)(1)(B), the court declined to address
USTR’s authority pursuant to section 307(a)(1)(C). In Re Section 301 Cases, 570 F.
Supp. 3d at 1334–35. The court rejected Plaintiffs’ remaining APA claims and granted
in part the Government’s motion to correct the record. Id. at 1345–49.
6 The court authorized additional plaintiffs in the Section 301 Cases to participate in this
litigation as amici curiae. Std. Procedural Order 21-02 at 4, ECF No. 82.
Court No. 21-00052-3JP Page 5
Retailers of Am., Juvenile Prods. Mfrs. Assoc., and Toy Assoc. (“RLC’s Br.”), ECF No.
472; Br. of Amici Curiae Verifone, Drone Nerds, and Specialized in Supp. of Pls.’ Cmts.
on the [Remand Results] (“Verifone’s Br.”), ECF No. 471-2. The Government filed
responsive comments in support of the Remand Results. See Defs.’ Resp. to Cmts. on
the [Remand Results] (“Defs.’ Resp. Cmts.”), ECF No. 479. The Government also filed
its second motion to correct the record. Defs.’ Second Mot. to Correct the R. (“2nd Mot.
Correct R.”), ECF Nos. 466, 466-1. The court heard oral argument on February 7,
2023. Docket Entry, ECF No. 488.
For the following reasons, the court sustains Final List 3 and Final List 4 as
amended by the Remand Results and grants the Government’s second motion to
correct the record.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(i)(1)(B) (2018 & Supp. II
2020), which grants the court “exclusive jurisdiction of any civil action commenced
against the United States . . . that arises out of any law of the United States providing
for . . . tariffs, duties, fees, or other taxes on the importation of merchandise for reasons
other than the raising of revenue.”
The APA directs the court to “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; [or] . . . (C) in excess of statutory . . . authority;
[or] . . . (E) unsupported by substantial evidence.” 5 U.S.C. § 706(2).
Court No. 21-00052-3JP Page 6
DISCUSSION
Plaintiffs and Amici challenge the Remand Results on two grounds. They first
assert that USTR’s Remand Results constitute impermissible post hoc reasoning
pursuant to Department of Homeland Security v. Regents of the University of California,
140 S. Ct. 1891 (2020). Next, to the extent that USTR’s Remand Results survive
Regents, Plaintiffs challenge the substantive adequacy of USTR’s response to certain
comments. Following disposition of these issues, the court addresses the
Government’s second motion to correct the record.
I. The Rule Against Post Hoc Rationalization
A. Parties’ Contentions
Plaintiffs contend that USTR contravened the court’s remand order by
undertaking a new review and analysis of the comments. Pls.’ Cmts. at 9–10. Plaintiffs
argue that, instead, judicial precedent limits USTR to elaborating on a “prior response to
comments” located somewhere in the administrative record. Id. at 10; see also id. at
13–14 (arguing that USTR failed to demonstrate consideration of comments
contemporaneous with the issuance of Final List 3 and Final List 4 upon which it now
seeks to elaborate). Having failed to do so, Plaintiffs assert that vacatur is merited.
Pls.’ Reply Cmts. at 2–4.
The Government contends that Plaintiffs’ view of the permissible limits of the
remand finds no support in Regents or subsequent cases remanding actions for an
agency to respond to comments. Defs.’ Resp. Cmts. at 10; see also id. at 11–12 (citing
Bloomberg L.P. v. SEC, 45 F.4th 462, 477 (D.C. Cir. 2022); Env’t Health Trust v. FCC, 9
Court No. 21-00052-3JP Page 7
F.4th 893, 909, 914 (D.C. Cir. 2021)). The Government further contends that taking
Plaintiffs’ argument to its logical conclusion would require any agency that fails to
address significant comments to undertake a new agency action on remand. Id. at 11.
Instead, the Government maintains that USTR’s Remand Results constitute permissible
elaboration on the underlying justifications for the actions taken, namely, “the
President’s direction and [the Trade Representative’s] predictive judgment that the
tariffs were ‘appropriate’ within the meaning of the statute.” Id. at 12; see also id. at 20.
B. USTR’s Response to Comments is Not Impermissibly Post Hoc
The APA requires agencies conducting notice and comment rulemaking to
“incorporate in the rules adopted a concise general statement of their basis and
purpose.” 5 U.S.C. § 553(c). “The basis and purpose statement is inextricably
intertwined with the receipt of comments.” Action on Smoking & Health v. Civ.
Aeronautics Bd., 699 F.2d 1209, 1216 (D.C. Cir. 1983) (footnote citation omitted). An
agency “must respond in a reasoned manner to those [comments] that raise significant
problems.” City of Waukesha v. EPA, 320 F.3d 228, 257 (D.C. Cir. 2003) (quotations
and citation omitted). “Significant comments are those ‘which, if true, raise points
relevant to the agency’s decision and which, if adopted, would require a change in an
agency’s proposed rule.’” City of Portland v. EPA, 507 F.3d 706, 715 (D.C. Cir. 2007)
(quoting Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 n.58 (D.C. Cir. 1977)).
The court previously found that “USTR’s statements of basis and purpose . . .
indicate why the USTR deemed China’s ongoing and retaliatory conduct actionable,”
namely, “China’s unfair practices” and “the specific direction of the President.” In Re
Court No. 21-00052-3JP Page 8
Section 301 Cases, 570 F. Supp. 3d at 1340 (citing Final List 3, 83 Fed. Reg. at
47,974–75; Final List 4, 84 Fed. Reg. at 43,304–05). The court further found, however,
that although USTR’s notices of proposed rulemaking (“NPRMs”) 7 indicated the Trade
Representative’s “willingness to consider factors other than the President’s direction,”
the contested final actions “do not explain whether or why the President’s direction
constituted the only relevant consideration nor do those determinations address the
relationship between significant issues raised in the comments and the President’s
direction.” Id. at 1341. 8 In explaining its decision to remand without vacatur, the court
observed that “Regents . . . constitutes a warning to agencies regarding the
impermissibility of post hoc reasoning as much as it constrains the court’s review of
such reasoning provided pursuant to a remand.” Id. at 1344 (citing Regents, 140 S. Ct.
at 1908).
When “reviewing agency action, a court is ordinarily limited to evaluating the
agency’s contemporaneous explanation in light of the existing administrative record.”
7 For the NPRMs, see Request for Comments Concerning Proposed Modification of
Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Tech.
Transfer, Intell. Prop., and Innovation, 83 Fed. Reg. 33,608 (July 17, 2018) (“List 3
NPRM”), and Request for Comments Concerning Proposed Modification of Action
Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Tech.
Transfer, Intell. Prop., and Innovation, 84 Fed. Reg. 22,564 (May 17, 2019) (“List 4
NPRM”).
8 Final List 3 referenced the removal of tariff subheadings in response to comments. 83
Fed. Reg. at 47,975 (noting that USTR, “at the direction of the President, has
determined not to include certain tariff subheadings listed in the Annex to the [List 3
NPRM]”). Final List 4 asserted that “The Trade Representative’s determination takes
account of the public comments and the testimony from the seven-day public hearing,
as well as the advice of the interagency Section 301 committee and appropriate
advisory committees.” 84 Fed. Reg. at 43,305.
Court No. 21-00052-3JP Page 9
Dep’t of Com. v. New York, 139 S. Ct. 2551, 2573 (2019). When the grounds invoked
by an agency “are inadequate, a court may remand for the agency” to pursue one of two
options. Regents, 140 S. Ct. at 1907. 9 Option one permits the agency to provide “a
fuller explanation of the agency’s reasoning at the time of the agency action.” Id.
(quoting Pension Guar. Corp. v. LTV Corp., 496 U.S. 633, 654 (1990)). Option one “has
important limitations,” such that “[w]hen an agency’s initial explanation ‘indicate[s] the
determinative reason for the final action taken,’ the agency may elaborate later on that
reason (or reasons) but may not provide new ones.” Id. at 1908 (quoting Camp v. Pitts,
411 U.S. 138, 143 (1973) (per curiam)) (second alteration in original). Option two
permits an agency to “‘deal with the problem afresh’ by taking new agency action.” Id.(quoting SEC v. Chenery Corp., 332 U.S. 194, 201 (1947)). An agency acting in
accordance with option two “is not limited to its prior reasons but must comply with the
procedural requirements for new agency action.” Id.Plaintiffs argue that USTR’s response to comments is impermissibly post hoc
pursuant to Regents insofar as USTR undertook a new review and analysis of the
9 Regents concerns the U.S. Department of Homeland Security’s (“DHS”) rationale for
rescinding the program referred to as “Deferred Action for Childhood Arrivals,” or
“DACA.” 140 S. Ct. at 1901. DHS did not engage in “notice and comment” rulemaking
pursuant to 5 U.S.C. § 553(b)–(c). Instead, DHS attempted to rescind DACA through
the issuance of two consecutive executive memoranda. Id. at 1901, 1903–04. After the
D.C. District Court held that the first memorandum, issued by DHS Acting Secretary
Elaine C. Duke, was too “conclusory . . . to explain the change in [DHS’s] view of
DACA’s lawfulness,” the Acting Secretary’s “successor, Secretary Kirstjen M. Nielsen,”
issued a new memorandum purporting to elaborate on the reasoning provided in Acting
Secretary Duke’s Memorandum. Id. at 1904. Despite this characterization, the Court
held that “Secretary Nielsen’s reasoning bears little relationship to that of her
predecessor” and was instead “impermissible post hoc rationalization[].” Id. at 1908–09.
Court No. 21-00052-3JP Page 10
comments on remand and failed to identify analysis of the comments contemporaneous
with the issuance of Final List 3 and Final List 4. See, e.g., Pls.’ Cmts. at 9–11.
USTR’s analysis of the comments, Plaintiffs contend, required a new rulemaking. See
Pls.’ Reply Cmts. at 1 (“If USTR wishes to assess and address the significant
comments, evaluate the costs of further tariff actions, and then impose the List 3 and
List 4A tariffs going forward, it may take new action.”). Plaintiffs seek to distinguish an
agency’s failure to address comments, which they assert can be remedied by further
explanation on remand (i.e., Regents’ option one), from an agency’s failure to analyze
or consider comments, which they assert cannot be remedied without a new rulemaking
(i.e., Regents’ option two). Oral Arg. (Feb. 7, 2023) at 59:30–1:00:50 (time stamp from
the recording), available at https://www.cit.uscourts.gov/sites/cit/files/020723-21-00052-
3JP.mp3.
Plaintiffs’ distinction is unsupported. Since Regents, as in this case, courts have
ordered remands for agencies to respond to significant comments. See, e.g.,
Bloomberg, 45 F.4th at 477–78; Env’t Health, 9 F.4th at 909, 914; AT&T Servs., Inc. v.
FCC, 21 F.4th 841, 843, 853 (D.C. Cir. 2021). Such cases do not distinguish between
failures of explanation and failures of consideration. See, e.g., AT&T Servs., 21 F.4th at
853 (“The failure to respond to comments is significant only insofar as it demonstrates
that the agency’s decision was not based on a consideration of the relevant factors.”)
(citation omitted) (emphasis added); see also W. Coal Traffic League v. Surface Transp.
Bd., 998 F.3d 945, 954 (D.C. Cir. 2021) (likening the failure to respond to comments to
the “fail[ure] to consider an important aspect of the problem”) (quoting Motor Vehicle
Court No. 21-00052-3JP Page 11
Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
Accordingly, USTR’s Remand Results are not impermissibly post hoc simply because
USTR analyzed and addressed the comments on remand. Cf. FBME Bank Ltd. v.
Mnuchin, 249 F. Supp. 3d 215, 223 (D.D.C. 2017) (reviewing an agency’s response to
comments on remand). Nevertheless, the court must reconcile USTR’s response to
comments with Regents and the rule against post hoc rationalization.
To begin with, the court remanded the matter for USTR to respond to the
comments it had already received. See In Re Section 301 Cases, 570 F. Supp. 3d at
1338–43. 10 In discussing the limits of option one, Regents cites to an opinion from the
U.S. Court of Appeals for the D.C. Circuit for the proposition that an agency may
provide an “amplified articulation” of a prior “conclusory” rationale. Regents, 140 S. Ct.
at 1908 (quoting Alpharma, Inc. v. Leavitt, 460 F.3d 1, 5–6 (D.C. Cir. 2006)). Consistent
with this notion, although USTR’s reasons for agreeing or disagreeing with certain
10 In this respect, the underlying case is different from Regents. In the context of this
case, taking new agency action would require USTR to issue new NPRMs, which would
appear to be an inefficient mechanism for responding to comments USTR already
received. Other courts have likewise grappled with Regents’ formulation of the rule
against post hoc rationalization and its application in circumstances dissimilar from
those before the Regents court. In Doe v. Lieberman, 2022 WL 3576211 (D.D.C. Aug.
11, 2022), the D.C. District Court addressed whether an agency’s explanation on
remand for an earlier evidentiary determination survived Regents’ rule against post hoc
rationalization. Id. at *1, 5. The court found that Regents did not apply because
although Regents cabins an agency’s reasoning on remand to its initial determinative
reason(s), there, the agency did not provide a determinative reason for its evidentiary
decision in its initial determination. Id. at *5. Further, in addressing the plaintiff’s
arguments, the court explained that requiring the agency to reconsider the termination
afresh based on a conclusory evidentiary ruling did not make sense “in the context of
evidentiary rulings in agency adjudications.” Id. at *6.
Court No. 21-00052-3JP Page 12
comments are more expansive than what it previously offered, USTR does not offer
new determinative reasons for its actions. 11
Since Regents, some courts have questioned Alpharma’s formulation of the rule;
in particular, its apparent focus on the author rather than the timing of the supplemental
explanation. See Doe, 2022 WL 3576211, at *5; United Food and Com. Workers Union,
Local No. 663 v. U.S. Dep’t of Ag., 532 F. Supp. 3d 741, 779 (D. Minn. 2021); cf. IAP
Worldwide Servs., Inc. v. United States, 160 Fed. Cl. 57, 76–77 (2022) (rejecting similar
language from a pre-Alpharma case). However, as indicated by the Regents court’s
citation, Alpharma remains good law to the extent that it requires any supplemental
decision to be prepared by the appropriate decisionmaker and tethered to the original
justification for the action.
Moreover, while Alpharma does not involve an agency’s response to
comments, 12 it is analogous to the extent that it discusses judicial review of an agency’s
11 In explaining USTR’s decision to remove certain critical inputs for manufactured
goods from List 3, USTR stated that, “[t]hrough the interagency process the Department
of Commerce recommended USTR remove eight tariff subheadings.” Remand Results
at 51. Plaintiffs argue that “[t]his is the first time that detail has been revealed publicly”
and that “Commerce’s recommendation and underlying reasoning are nowhere in the
record.” Pls.’ Cmts. at 13. The confidential administrative record (“CR”) index provided
to the court indicates that CR-1 constitutes a “Confidential Summary of Confidential
Advisory Committee Advice,” the production of which is “subject to 19 U.S.C.
§ 2155(g).” ECF No. 298 at 4. Following oral argument on the remand determination,
the Government provided a redacted version of CR-1, which was previously included in
the public administrative record (“PR”) as PR-9057. See Defs.’ Notice of Filing Doc.
Referenced During Oral Arg., ECF Nos. 489, 489-1. Even accepting Plaintiffs’ premise
that this input is newly shared, it does not suggest a new determinative reason for
USTR’s decision.
12 Alpharma addresses the U.S. Food and Drug Administration’s adjudication of a
petition to revoke the agency’s approval of a generic animal drug. 460 F.3d at 4.
Court No. 21-00052-3JP Page 13
response, on remand, to concerns raised on the record during the adjudication and prior
to the final agency action at issue. See 460 F.3d at 5–7. 13 Here, as in Alpharma,
USTR’s Remand Results provide an “amplified articulation” of the grounds for its
actions. USTR further explained the removal or retention of certain tariff subheadings,
its decision to set the level of duties on the specified aggregate level of trade
notwithstanding the stated concerns, and its decision to proceed despite the proffered
alternatives. In so doing, USTR responded to significant concerns within the context of
China’s actionable conduct and the specific direction of the President. Thus, while
USTR provided a fuller explanation of its reasoning, it was “a fuller explanation of [its]
reasoning at the time of the agency action.” Regents, 140 S. Ct. at 1907–08 (quoting
Pension Benefit Guar. Corp., 496 U.S. at 654 ). 14 Without anything new to propose in
new NPRMs, the court is not convinced by Plaintiffs’ arguments to require USTR to
conduct new notice-and-comment rulemakings.
13 This court previously recognized the instructiveness of “judicial precedent from the
D.C. Circuit . . . in light of the court’s expertise in the area of administrative law.” In Re
Section 301 Cases, 570 F. Supp. 3d at 1324 n.7.
14 Plaintiffs cite two cases supporting their view that “courts regularly have held that an
agency failed to provide non-conclusory, non-post hoc reasoning sufficient to sustain
agency action—even after remanding to give the agency a second chance to cure its
APA violation.” Pls.’ Reply Cmts. at 3 (citing Comcast Corp. v. FCC, 579 F.3d 1, 9
(D.C. Cir. 2009); Tex Tin Corp. v. EPA, 992 F.2d 353, 355 (D.C. Cir. 1993)). Neither
case is analogous. In Comcast, the D.C. Circuit vacated a rule when the agency had
failed to consider important concerns the court raised in prior litigation involving an
earlier iteration of the same rule. 579 F.3d at 8–10. In Tex Tin, the court held that an
agency impermissibly based its decision on remand “on a new theory.” Id. at 355 (citing
Anne Arundel Cty., Md. v. EPA, 963 F.2d 412, 418 (D.C. Cir.1992)). As discussed
above, USTR did not do so here.
Court No. 21-00052-3JP Page 14
II. USTR’s Response to Comments
The court previously held that “[h]aving requested comments on a range of
issues, USTR had a duty to respond to the comments in a manner that enables the
court to understand ‘why the agency reacted to them as it did.’” In Re Section 301
Cases, 570 F. Supp. 3d at 1341 (quoting Auto. Parts & Accessories Ass’n v. Boyd, 407
F.2d 330, 338 (D.C. Cir. 1968)). The court now turns to the question whether, through
the Remand Results, USTR has fulfilled that requirement.
A. Parties’ Contentions
Plaintiffs contend that USTR’s reliance on Presidential direction to explain its lack
of discretion is legally insufficient given the breadth of USTR’s request for comments.
Pls.’ Cmts. at 12–13; Pls.’ Reply Cmts. at 5. Plaintiffs fault USTR for failing to explain
why it agreed with the President’s direction or how it arrived at the conclusion that the
actions were “appropriate” within the meaning of the statute. Pls.’ Reply Cmts. at 4–5.
Plaintiffs further contend that USTR responded to major policy concerns raised in
the comments in an inadequate and conclusory manner. Pls.’ Cmts. at 15–17.
Plaintiffs assert that USTR failed to explain why the benefits of the actions outweighed
their costs in terms of economic harm. Id. at 17; Pls.’ Reply Cmts. at 7–8. Plaintiffs
also argue that USTR failed to address concerns about the perceived ineffectiveness of
the tariffs or proposed alternatives to the increased tariffs. Pls.’ Cmts. at 18–20; Pls.’
Court No. 21-00052-3JP Page 15
Reply Cmts. at 8–9. Amici advance similar arguments. See RLC’s Br. at 5–10;
Verifone’s Br. at 2–5. 15
The Government contends that USTR adequately explained the role that
Presidential direction played in its decision-making. Defs.’ Resp. Cmts. at 17–19. The
Government also argues that the entirety of the Remand Results—not just the final few
pages—reflects USTR’s consideration of the potential for disproportionate economic
harm. Id. at 21–22. The Government further asserts that Plaintiffs’ additional
arguments “amount to mere disagreement” with USTR’s explanation, id. at 22–23, and
USTR was not required to consider each alternative because USTR tailored its NPRMs
specifically to modifying the original section 301 actions, id. at 23–24.
B. USTR’s Response to Comments Meets APA Requirements
The standard that an agency’s response to comments must meet “is not
particularly demanding.” Nat’l Mining Ass’n v. Mine Safety & Health Admin., 116 F.3d
520, 549 (D.C. Cir. 1997) (per curiam) (quoting Pub. Citizen, Inc. v. FAA, 988 F.2d 186,
197 (D.C. Cir. 1993)). For “judicial review . . . to be meaningful,” the agency’s
explanation must enable the court “to see what major issues of policy were ventilated by
the informal proceedings and why the agency reacted to them as it did.” Auto. Parts &
Accessories Ass’n, 407 F.2d at 338. The court will “uphold a decision of less than ideal
15 Verifone’s arguments appear to digress into complaints about USTR’s decisions
regarding specific exclusions. See Verifone’s Br. at 6–7 (discussing USTR’s decisions
to grant, but not thereafter to reinstate, certain exclusions). Specific exclusion decisions
are not, however, at issue in this case.
Court No. 21-00052-3JP Page 16
clarity if the agency’s path may reasonably be discerned.” Nat’l Mining Ass’n, 116 F.3d
at 549 (quoting State Farm, 463 U.S. at 43). With these principles in mind, the court
considers the matters it required USTR to address on remand.
1. Presidential Direction
The court previously held that the imposition of List 3 and List 4A duties
constituted agency—not Presidential—action. In Re Section 301 Cases, 570 F. Supp.
3d at 1323–26. The court also recognized, however, that “the President’s specific
direction, if any, is a statutory consideration for which the agency must account.” Id. at
1339. The court faulted USTR for relying on Presidential direction without explaining
“the relationship between significant issues raised in the comments and the President’s
direction.” Id. at 1341.
The Remand Results demonstrate USTR’s adherence to the specific direction of
the President in terms of the level of duty increase and the aggregate level of trade
affected by the actions. See Remand Results at 27–28, 74, 77. While it is clear from
the Remand Results that USTR did not interpret the statute to accord USTR much
discretion to deviate from the President’s direction, see id. at 77–78, USTR also
explained that the judgments reflected in the construction of Final List 3 and Final List
4A were its own, see id. at 80–81.
USTR explained that “[t]he aggregate level of trade included in the President’s
directive and reflected in Final List 3 . . . reflected the need to cover a substantial
percentage of U.S. imports from China,” id. at 80, and that “[t]he Trade Representative
determined that covering a substantial percentage of U.S. goods exported from China
Court No. 21-00052-3JP Page 17
was appropriate to obtain the elimination of China’s harmful acts, policies, and
practices,” id. at 81. Likewise, USTR stated that “Final List 4 reflected the judgment that
covering essentially all products not covered by previous actions was needed to obtain
the elimination of China’s acts, policies and practices.” Id. USTR explained that the
levels of duties imposed reflected its judgment regarding “the appropriate balance” to
strike “between exerting an appropriate amount of pressure on China to eliminate its
harmful practices, while encouraging China to meaningfully engage in negotiations,
against comments suggesting additional duties would result in severe economic harm to
U.S. consumers and industries.” Id. at 77. USTR also explained its exercise of
discretion to determine the tariff subheadings that would be subject to List 3 and List 4A
duties and establish an exclusion process for products subject to List 4A duties. See id.
at 77–78. 16
Plaintiffs fail to persuade the court that USTR was required to provide additional
explanation regarding its reasons for agreeing with the President that the chosen
actions were “appropriate.” Pls.’ Reply Cmts. at 5. The court discusses USTR’s
response to comments raising policy concerns below and considers this explanation
responsive to the question of whether the actions were appropriate. Moreover, the
court recognizes that USTR’s consideration of significant comments must account for
16While USTR ultimately established an exclusion process for products subject to List 3
duties, see Procs. for Requests to Exclude Particular Prods. From the Sept. 2018 Action
Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Tech.
Transfer, Intell. Prop., and Innovation, 84 Fed. Reg. 29,576 (June 24, 2019), it did not
do so initially because USTR “had greater flexibility” to exempt products from the outset,
Remand Results at 78.
Court No. 21-00052-3JP Page 18
“section 301’s statutory purpose to eliminate the burden on U.S. commerce from
China’s unfair acts, policies, and practices” and any “specific direction [from] the
President.” In Re Section 301 Cases, 570 F. Supp. 3d at 1340. In remanding Final List
3 and Final List 4, the court admonished USTR for its failure to respond to comments
“within the context of the specific direction provided by the President.” Id. at 1340–41.
The court did not order USTR to analyze the President’s directives. 17 In contrast to the
conclusory treatment of comments in Final List 3 and Final List 4, the Remand Results
reflect USTR’s conclusion that statutory language linking any modification to the specific
direction of the President constrained USTR’s ability to depart from that direction and
explained USTR’s position vis-à-vis the President’s direction. Nothing more was
required.
2. Harm to the U.S. Economy
Plaintiffs assert that the Remand Results reflect no weighing of the costs of the
actions, identifying such concerns as “increased costs on U.S. businesses,” additional
“Chinese retaliation,” and impacts on U.S. businesses that export inputs or technology
17 Plaintiffs previously conceded that they do not contest “subjective determination[s] of
what is ‘appropriate’ (or any other discretionary determination[s]).” Pls.’ Mem. in Supp.
of Pls.’ Cross-Mot. for J. on the Agency R. and Resp. to Defs.’ Mot. to Dismiss/Mot. for
J. on the Agency R. at 51, ECF No. 358; see also Oral Arg. (Feb. 1, 2022) at 1:17:50–
1:18:12, available at https://www.cit.uscourts.gov/sites/cit/files/020122-21-00052-
3JP.mp3 (during the first hearing on the merits, Plaintiffs explained that they do not
seek to challenge “the dollar amount” of tariffs and that USTR retains “vast discretion”
regarding such determinations). The court is therefore circumspect in requiring further
explanation from USTR regarding such discretionary matters that are likely not judicially
reviewable. Cf. Japan Whaling Ass’n v. Am. Cetacean Soc’y, 478 U.S. 221, 230 (1986)
(explaining that the political question doctrine precludes judicial review of “policy
choices” committed to the Executive Branch).
Court No. 21-00052-3JP Page 19
to China. Pls.’ Cmts. at 17. 18 While USTR must explain how it “resolved any significant
problems raised by the comments,” it “need not respond to every comment.” Action on
Smoking, 699 F.2d at 1216. In the Remand Results, the court readily discerns USTR’s
attempts to balance commenters’ concerns about economic harm with the specific
direction it had received from the President and the ongoing need to respond to China’s
acts, policies and practices burdening U.S. commerce.
In responding to such comments, USTR explained that it “shared the view that
mitigating harm to U.S. consumers was an important consideration in developing and
finalizing lists of products that would be subject to additional duties.” Remand Results
at 82. USTR pointed to prior tariff actions (i.e., List 1 and List 2) in which USTR sought
to avoid consumer impact. Id. For List 3, USTR noted that “the selection process”
considered “likely impacts on U.S. consumers, and involved the removal of subheadings
identified by analysts as likely to cause disruptions to the U.S. economy.” Id. at 83
(citing List 3 NPRM, 83 Fed. Reg. at 33,609). USTR further noted that concerns about
economic harm prompted USTR “to initially set the duties at 10 percent for three
months.” Id. at 77 (citing Final List 3, 83 Fed. Reg. at 47,975).
USTR acknowledged that List 4A resulted in additional “duties on essentially all
remaining imports from China, thus necessitating the need for USTR to include
consumer products.” Id. at 83. USTR noted, however, that by segregating certain
18 Plaintiffs also fault USTR for relying on documents that predate the imposition of List
3 and List 4 duties. Pls.’ Cmts. at 16. USTR did not cite such documents as evidence
of its contemporaneous response to comments. Rather, USTR cited such documents
as evidence of USTR’s ongoing consideration of harm. See Remand Results at 82–84.
Court No. 21-00052-3JP Page 20
goods into List 4B, it “would delay additional duties for products where China’s share of
imports from the world is 75 percent or greater to ‘provide a longer adjustment period.’”
Id. (quoting Final List 4, 84 Fed. Reg. at 43,305). USTR also pointed to the
announcement of an exclusion process as responsive to these concerns. Id. at 84
(citing Final List 4, 84 Fed. Reg. at 43,305).
In addition to these broader considerations, USTR’s decisions at the subheading
level reflect USTR’s weighing of economic harm. See, e.g., Remand Results at 27–28
(discussing USTR’s requirement for a “clear showing” of ineffectiveness or harm to
remove subheadings from List 3 in order to retain the $250 billion aggregate level of
trade directed by the President); id. at 31 (weighing costs and benefits of including rare
earths and critical minerals and deciding to remove those subheadings); id. at 33 (same
for U.S.-caught seafood); id. at 62–63 (same for child safety seats).
While framing the issue as a procedural failure to explain, Plaintiffs effectively
take issue with the conclusions USTR reached. See Pls.’ Reply Cmts. at 7 (arguing that
“the fundamental point commenters raised was that USTR’s proposed cure for China’s
unfair acts was worse than the disease” and that “[n]o regulation is ‘appropriate’ if it
does significantly more harm than good”) (quoting Michigan v. EPA, 576 U.S. 743, 752
(2015)). 19 Mere disagreement with USTR’s actions is not a basis for the court to
19Michigan addressed a provision in the Clean Air Act that “instructed EPA to add
power plants to [a] program if (but only if) the Agency finds regulation ‘appropriate and
necessary.’” Michigan, 576 U.S. at 752. Citing administrative practice when deciding
whether to regulate such matters, the Michigan Court considered cost “an important
aspect of the problem” that EPA had to address in the context of that case. Id. at 752–
Court No. 21-00052-3JP Page 21
overturn them. See Rodriguez-Jimenez v. Garland, 20 F.4th 434, 439 (9th Cir. 2021)
(“[W]e cannot overturn the agency’s decision based on mere disagreement.”). It is not
the court’s role to reweigh the evidence or opine on USTR’s (or the President’s) policy
choices, such as the appropriate “cure” for China’s conduct. See Downhole Pipe &
Equip., L.P. v. United States, 776 F.3d 1369, 1376–77 (Fed. Cir. 2015). As discussed
above, USTR accounted for concerns regarding the potential for economic harm within
the context of the statutory factors it was required to consider and adequately explained
how it did so. 20
3. Efficacy of the Tariffs
USTR explained that it was not persuaded by “comments which suggested that
negotiations alone could be successful in obtaining the elimination of the harmful
practices without accompanying economic pressure through additional tariffs.” Remand
Results at 86–87. USTR acknowledged “that previous actions were not sufficient to
encourage China to change its acts, policies, and practices” but nevertheless found
53. The Court acknowledged, however, that “the phrase ‘appropriate and necessary’
does not [always] encompass cost.” Id. at 752.
20 Although commenters objecting to the tariffs based on economic harm may have
been guided by their respective experiences with List 1 and List 2 duties, concerns
about the future impact of the List 3 and List 4A duties were, to some extent,
speculative. USTR therefore had a limited record with which to balance such harm
against the harm caused by China’s ongoing unfair trade practices. It is also worth
noting that the statute accounts for economic harm caused by section 301 tariffs in the
context of USTR’s four-year review of necessity. When deciding whether to continue a
section 301 action beyond the specified four-year timeframe, the statute requires USTR
to consider the effectiveness of the action, alternatives to such action, and “the effects
of such actions on the United States economy, including consumers.” 19 U.S.C.
§ 2417(c)(3).
Court No. 21-00052-3JP Page 22
“that more substantial trade actions were needed to encourage negotiations” with
China. Id. at 87. USTR also accounted for concerns of inefficacy in its decisions
regarding inclusion or omission of certain subheadings. See, e.g., id. at 29, 33, 34, 55;
cf. List 3 NPRM, 83 Fed. Reg. at 33,609 (seeking comments on “whether imposing
increased duties on a particular product would be practicable or effective to obtain the
elimination of China’s acts, policies, and practices”) (emphasis added).
Plaintiffs accuse USTR of “deflect[ing]” by contextualizing the choice as one
“between ‘negotiations alone’” and “placing tariffs on virtually all of Chinese trade.” Pls.’
Cmts. at 18. That is not an accurate summation of USTR’s response. USTR’s
statements were responsive to commenters seeking to dissuade USTR from imposing
any increased duties and instead to persuade USTR to adopt other courses of action,
including negotiations with China. See Remand Results at 86.
Plaintiffs further argue that USTR effectively admitted that prior section 301
actions were ineffective and still failed to respond to concerns that List 3 and List 4A
duties would likewise be ineffective. Pls.’ Cmts. at 19; Pls.’ Reply Cmts. at 8. It is
unclear, however, what more USTR could state on this point. Absent contrary record
evidence, USTR was not bound to agree with commenters characterizing tariffs as an
ineffective option simply because List 1 and List 2 duties were deemed insufficient.
Section 307(a) authorizes USTR to modify prior actions precisely when they have been
ineffective in reducing “the burden or restriction on United States commerce of the
denial rights, or of the acts, policies, and practices, that are the subject of such action.”
19 U.S.C. § 2417(a)(1)(B).
Court No. 21-00052-3JP Page 23
4. Alternatives to the Tariffs
On remand, USTR pointed, by way of example, to comments suggesting
alternative action under section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337.
Remand Results at 88. USTR responded to such comments by explaining that section
337 could not address the “broader set of issues” identified as the basis for the
underlying section 301 investigation. Id. USTR further explained that it “did not intend
to invite comments on alternative measures” because the President directed USTR to
act under sections 301 and 307 of the Trade Act. Id. at 89.
Plaintiffs argue that USTR engaged with just one of many proposed alternatives,
which is insufficient given the invitation for “comments on ‘any aspect’ of its proposed
actions.” Pls.’ Cmts. at 20. Considering alternatives, Plaintiffs argue, was also
necessary for USTR to determine whether additional action was “appropriate.” Id.As USTR explained, however, it was pursuing additional courses of action, such
as initiating a dispute at the World Trade Organization, requesting consultations with
China, and proceeding with negotiations. See, e.g., Remand Results at 6 n.2, 87.
Moreover, in the NPRMs, USTR did not seek comments generally on how to respond to
China’s acts, policies and practices, but instead requested comments on “any aspect of
the proposed supplemental action,” and provided comment topics relevant to such
action. List 3 NPRM, 83 Fed. Reg. at 33,609 (emphasis added); cf. List 4 NPRM, 84
Fed. Reg. at 22,565. Thus, while USTR’s request was broad to the extent that it
requested comments on “any aspect” of the proposal, it was also more limited in scope
than Plaintiffs suggest. Accordingly, USTR adequately explained its disinclination to
Court No. 21-00052-3JP Page 24
consider each alternative. Cf. Nat’l Mining Ass’n, 116 F.3d at 549 (finding adequate an
agency’s brief dismissal of certain proposed safety standards as “outside the scope of
this rulemaking” based on the court’s understanding “that the agency was choosing to
impose some standards without addressing ‘everything that could be thought to pose
any sort of problem’”) (citation omitted). 21
In view of the foregoing, the court finds that USTR has complied with the court’s
remand order and has supplied the necessary explanation supporting the imposition of
duties pursuant to Final List 3 and Final List 4.
III. Defendants’ Second Motion to Correct the Record
The Government moves to correct the record to include several Federal Register
notices, USTR press releases, and one Presidential memorandum, all marked as
Exhibits C through K, respectively. 2nd Mot. Correct R. at 1–2, Exs. C–K. 22 “Plaintiffs
[took] no position on the motion, on the understanding that the Government has
forfeited reliance on documents not cited in its previous merits briefing to this Court.” Id.
at 2. 23
21 Actions under section 337 rest with the U.S. International Trade Commission, not the
Trade Representative. See 19 U.S.C. § 1337(a)(1), (b)(1). Thus, Plaintiffs’ reliance on
cases concerning an agency’s failure to consider options within its purview is misplaced.
See Pls.’ Reply Cmts. at 8–9 (citing Spirit Airlines, Inc. v. U.S. Dep’t of Trans. and FAA,
997 F.3d 1247, 1255 (D.C. Cir. 2021); Chamber of Com. of U.S. v. SEC, 412 F.3d 133,
145 (D.C. Cir. 2005)).
22 There were no Exhibits A or B attached to the motion, presumably because two prior
documents USTR sought to include in the record were labeled as such. See Defs.’ Mot.
to Correct the R., Exs. A–B, ECF No. 441.
23 To the extent that Plaintiffs’ position is based on their arguments concerning post hoc
rationalization, the court disagrees with Plaintiffs’ position for the reasons stated above.
Supra, Discussion Section I.B.
Court No. 21-00052-3JP Page 25
For purposes of APA review, the administrative record consists of “all documents
and materials directly or indirectly considered by agency decisionmakers.” Ammex, Inc.
v. United States, 23 CIT 549, 556, 62 F. Supp. 2d 1148, 1156 (1999) (quoting
Thompson v. U. S. Dep't of Labor, 885 F.2d 551, 555 (9th Cir. 1989)). Additionally, CIT
Rule 73.3(a)(1) requires an agency to file, inter alia, “[a] copy of the contested
determination and the findings or report on which such determination was based.”
Exhibits C, E, G and H constitute Federal Register notices regarding the initial
investigation, determination, and actions taken with respect to List 1 and List 2. 2nd
Mot. Correct R. at 3, Exs. C, E, G, H. Exhibit D constitutes a Presidential memorandum
issued in conjunction with USTR’s section 301 investigation findings. Id. at 3, Ex. D.
Exhibit F is a USTR press release concerning List 1 and List 2. Id. at 3, Ex. F. These
documents all predate USTR’s issuance of Final List 3 and “were indirectly considered.”
Id. at 4. Exhibit J is a conforming amendment published in the Federal Register
regarding List 3 previously included in the record in an unpublished form as PR 5. Id. at
3, 5, Ex. J. Inclusion of these documents is appropriate.
Exhibits I and K constitute press releases published a few days prior to USTR’s
publication of Final List 3 and Final List 4, respectively. Id. at 3, Exs. I, K. The
Government argues that the press releases are properly before the court pursuant to
CIT Rule 73.3(a)(1) because they were “issued in conjunction with” Final List 3 and
Final List 4. Id. at 4–5. Consistent with the Government’s representations regarding the
relationship of these documents to the contested determinations, and their
contemporaneous preparation with those determinations, the court finds that the
Court No. 21-00052-3JP Page 26
documents are part of the record and will allow the Government to amend the record
accordingly.
Accordingly, the Government’s second motion to correct the record will be
granted.
CONCLUSION AND ORDER
In accordance with the foregoing, it is hereby
ORDERED that the tariff actions imposed by the Office of the United States
Trade Representative and styled as Notice of Modification of Section 301 Action:
China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018), and Notice of
Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (Aug.
20, 2019), as amended on remand by Further Explanation of the Final List 3 and Final
List 4 Modifications in the Section 301 Action: China’s Acts, Policies, and Practices
Related to Technology Transfer, Intellectual Property, and Innovation, Pursuant to Court
Remand Order, ECF No. 467, are SUSTAINED; and it is further
ORDERED that Defendants’ second motion to correct the record, ECF No. 466,
is GRANTED; and it is further
ORDERED that, on or before March 27, 2023, the Government shall file updated
administrative record indices reflecting corrections granted herein and in Slip Op. 22-32.
Court No. 21-00052-3JP Page 27
The court will enter judgment in HMTX Indus. LLC v. United States, No. 20-cv-
177, accordingly.
/s/ Mark A. Barnett
Mark A. Barnett, Chief Judge
/s/ Claire R. Kelly
Claire R. Kelly, Judge
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: March 17, 2023
New York, New York