Section 232 Exclusion Request Denial Improperly Based on 'National Security,' Cable Importer Argues
Importer Prysmian Cables and Systems again said Aug. 15 that the plain language of the executive order establishing Section 232 exclusion requests doesn’t allow the Commerce Department to base denials on national security considerations (Prysmian Cables and Systems USA v. United States, CIT # 24-00101).
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A number of the importer’s claims challenging exclusion request denials were dismissed in January, when Court of International Trade Judge Stephen Vaden ruled they couldn’t be brought under 5 U.S.C. 706(1) to charge the U.S. with failing to take a “discrete agency action” (see 2501220064). Vaden found that the Commerce Department's decision to deny a Section 232 exclusion wasn’t a failure to act.
The importer followed the dismissals up with an amended complaint and a June motion for judgment (see 2506110057), which the U.S. opposed in a July 25 brief (see 2507300076).
Prysmian said Aug. 15 that four of its claims still survive because they either allege the department’s exclusion request denials were arbitrary or capricious under 706(2) or are based on new factual assertions under 706(1).
Regarding its first two claims, it said that, despite the government’s claim otherwise, Commerce can’t reject exclusion request claims on the basis of national security concerns -- only accept them.
The U.S. said that the phrasing of Proclamation 9705 -- the executive order establishing exclusion requests -- indicated that national security could serve as a basis for exclusion request denials, even if the order doesn’t state so explicitly. For example, it said, the order allows the Bureau of Industry and Security to streamline requests if it “identifies no national security concerns.” It also said Proclamation 9704 and 9705, together, were generally intended to address national security.
But Proclamation 9705 doesn’t actually say that, Prysmian said. The order lets Commerce “grant exclusions from the duties at the request of directly affected parties located in the United States … based upon specific national security considerations,” but it “unambiguously” doesn’t say the department may deny requests for that reason, the importer argued.
As an example, the final rule issued by Commerce as a result of 9705 described that “if the steel included in an exclusion request is needed by a U.S. defense contractor for making critical items for use in a military weapons platform for the U.S. Department of Defense, and the duty or quantitative limitation will prevent the military weapons platform from being produced, the exclusion will likely be granted,” Prysmian noted.
This interpretation fits the context of the order, as Proclamation 9704 establishes that all aluminum imports threaten national security, it said. Therefore, it argued, “Commerce would necessarily be required to deny all exclusion requests if national security concerns served as a basis for the denial of a tariff exclusion.”
It also said the U.S. was trying to rely on “general provisions” of Section 232 and Proclamation 9704 for Commerce’s national security argument. But “well settled canons of construction” mean that these general provisions don’t override the specific ones stating explicitly that the department can use national security considerations only to grant exclusion requests, it claimed.
Again, it also argued that the specific national security concerns Commerce cited in its exclusion request denials were “absurd.” Prysmian sought the exclusion for aluminum rod purchased from Russia prior to invasion of Ukraine, it said, “meaning that the denials imposed no economic costs on Russia.”
Regarding its other two claims, Prysmian said again that Commerce’s refusal to add its importing agent, Concord, to another partially authorized exclusion request represented an unlawful failure to take agency action.
The department couldn’t cite to any legal authority demonstrating that it couldn’t add new importers to an exclusion after the exclusion window had ended, it said.
“The sole evidence the Government musters in support of its contention that the Department had an ‘established practice’ of declining to add importers of record after the close of an exclusion window is a single entry in an internal BIS checklist related to importer of record changes, which states that ‘[c]hanges to expired exclusions can’t be processed,’” it said.
On the other hand, Commerce’s “own guidance” also states that importer of record changes were “non-substantive” and “should be permitted ‘even after the exclusion request has been granted,’” it claimed.