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Importer Says Commerce Violated APA in Denying 63 Section 232 Exclusion Requests

The Commerce Department's Bureau of Industry and Security (BIS) improperly rejected 63 Section 232 steel tariff exclusion requests filed by California-based importer Mirror Metals, the company argued in a Dec. 20 complaint at the Court of International Trade. Mirror Metals said that if BIS applied the standards laid out in its regulations, the "only reasonable conclusion" it could have drawn was that the company "cannot obtain the subject steel in the U.S. market in a sufficient quantity or quality, on a timely basis to replace the steel it currently imports" (Mirror Metals v. United States, CIT # 24-00260).

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The company filed a total of 63 exclusion requests -- 35 between October 2022 and January 2023, six between March and May 2023, 15 between July and August 2023 and seven between January and July 2024. The requests covered three categories of stainless steel product: "(1) #8 Non Directional, (2) 430 Bright Annealed, and (3) #4 Satin Finish," the company said.

After receiving objections from U.S. steelmakers Outokumpu Stainless USA, North American Stainless and Cleveland-Cliffs Steel, BIS denied all 63 exclusion requests. Mirror Metals railed against the denials at the trade court, arguing that Commerce "undertook no effort to verify the objectors’ respective claims," ignored evidence that the objectors couldn't produce the covered products in the "required quality or required time frame" and "failed to provide a sufficiently reasoned basis for each of its decisions."

In denying the exclusions, BIS said it was relying on the recommendations from another wing of Commerce -- the International Trade Administration. However, Mirror Metals alleged that ITA's recommendations "do not include a complete analysis of the record before it." The importer noted that Mirror Metals re-filed new exclusion bids for "products identical to those in nearly all of these denied requests," which BIS then approved.

The importer said "BIS’s approval of these exclusions based on the same facts is a strong indication that the denied exclusion requests at issue should have been granted and that the denials were arbitrary, capricious or contrary to law."

For instance, regarding the #4 satin finish steel exclusions, Mirror Metals responded to the objections, arguing that Outokumpu doesn't make steel with the required #4 satin finish and that North American Stainless has "extended lead times." But in the proceedings for the granted exclusions, Outokumpu admitted to using a domestic processor to achieve the desired #4 satin surface finish. ITA relied on this admission in recommending that the separate exclusion requests be granted. In addition, ITA said it couldn't evaluate North American Stainless' claimed delivery time since its statement that it could only "potentially supply" the steel depending on market conditions "created ambiguity," the brief said.

With regard to the rejected exclusions, "BIS simply accepted the objectors’ claims that they could produce and timely provide the subject steel in the quantities needed by Mirror Metals," and ITA just said nothing on the record contradicts the objectors' claims, Mirror Metals noted. Thus, ITA "repeatedly accepted at face value" comments from Outokumpu, despite later acting differently in light of identical arguments.

Mirror Metals added that all three objectors "failed to provide in their objections or surrebuttals any support or supplemental evidence, such as purchase orders, invoices, and/or shipping documents, that they were capable of producing and delivering the requested quantities of the subject steel in the time frames asserted." The importer said such evidence is required under subsections (c)(6)(i) and (d)(4) of BIS's regulations, adding that BIS erred in not disregarding objections that don't meet its regulations.

As a result, the denials violate the Administrative Procedure Act for not being based on any evidentiary basis and lacking any "expressed, reasoned basis," Mirror Metals said.