Importer Tells CAFC Commerce Didn't Support Section 232 Exclusion Bids With Evidence
Importer Seneca Foods told the U.S. Court of Appeals for the Federal Circuit that the government is trying to support the Commerce Department's denial of Seneca's request for Section 232 tariff exclusions by "stretching" the deference shown under the arbitrary and capricious standard to "cover decisions devoid of any supporting evidence." Filing a reply brief on May 23, Seneca said it submitted enough evidence to show that the U.S. industry didn't have the capacity to fill its steel orders at the time the foreign purchase orders were made and at the time the exclusion requests were filed (Seneca Foods Corp. v. United States, Fed. Cir. # 25-1310).
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The Court of International Trade last year upheld Commerce's rejection of Seneca's eight exclusion requests, finding that the rejections were backed by substantial evidence and in line with agency practice (see 2410240029). The trade court also upheld the agency's focus on "prospective evidence of steel production," finding it to be in line with the tariffs' "stated purpose and expected fact" of allowing U.S. steelmakers to reach 80% domestic production capacity.
At the Federal Circuit, the government defended Commerce's decision to focus on evidence of the U.S. industry's capacity at the time the exclusion requests were submitted (see 2505050039). The U.S. said "Seneca offers no regulation, agency practice, or other authority to support its contention that Commerce must measure availability based on the time that Seneca placed its foreign orders."
In response, Seneca said its focus on evidence that the U.S. industry lacked capacity to fill its orders at the time the orders were made is in line with the president's policy objectives in imposing the Section 232 tariffs. It added that it sought to comport its practices with the president's objectives.
The importer said an agency action is "arbitrary and capricious" if it "entirely failed to consider an important aspect of the problem" or "offered an explanation for its decision that runs counter to the evidence before the agency." In its original and remand decisions, Commerce "never addressed facts in the record that should have compelled the agency to grant the requested exclusions," Seneca said. Specifically, the agency has "repeatedly ignored" evidence that U.S. Steel "affirmatively refused to supply Seneca" the same volumes of goods covered by the importer's exclusion requests.
Instead of disputing the importer's evidence of the "unavailability" of domestic steel, U.S. Steel said that it could supply the importer the requested quantity "at some point in the future," the brief said. "But any prospect of future availability was wholly irrelevant to the exclusion requests before Commerce, which were limited to volumes already purchased at a time of conceded unavailability from U.S. Steel."
Seneca added that the government made a "last-ditch attempt to defend the indefensible" in arguing an agency action must be upheld "as long as it is rational and adequately supported," even though two different conclusions can be drawn from the evidence. But for this standard to apply, "the evidence must rationally and adequately support two different conclusions," Seneca said, arguing that the evidence only backs its claim that the U.S. industry "declined to supply Seneca the volumes of tin mill steel in the specific purchase orders covered by its exclusion requests."
Seneca added that Commerce's decisions are also arbitrary and capricious even looking at "prospective availability." For instance, the importer noted that for some of its requests, "U.S. Steel never challenged or contradicted Seneca’s evidence of their recent dealings, which demonstrated that Seneca could not even obtain a quote from U.S. Steel for 2021 or 2022 volumes." When U.S. Steel said in its objections to Seneca's exclusion requests that it could supply Seneca "120 to 270 days in the future," the importer tried to buy steel from U.S. Steel for this period, but the company said "nothing was available into the foreseeable future," Seneca said.