Trade Cases

USCIT Orders Commerce to Explain Denial of JSW Exclusion Requests

August 6, 2020

A challenge by JSW Steel USA to the U.S. Court of International Trade regarding the denial by Commerce of its slab exclusion requests has prompted CIT to order Commerce to provide further explanation of the steps taken in the denial process.

“Remand of all twelve exclusion requests is warranted because Commerce’s denials are devoid of explanation and frustrate judicial review,” said CIT in its decision. “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.”

CIT further ordered that Commerce 1) identify and correct all deficiencies in the existing administrative record, and 2) fully reconsider or provide further explanation of its denials of all of JSW’s exclusion requests.

In 2018, JSW Steel submitted 12 Section 232 exclusion requests for alloy and non-alloy steel slab imports—six from India and six from Mexico—explaining that the steel slabs it requires for manufacturing steel plate were not available in the U.S. Nucor, U.S. Steel and AK Steel objected to JSW’s request and contested the claim that sufficient slabs were not available domestically.

After a rebuttal by JSW and surrebuttals by the steel mills, Commerce’s Bureau of Industry and Security a year later denied the exclusion requests. BIS stated 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.”

JSW submitted a complaint on July 30, 2019, to the CIT regarding Commerce’s denials stating they were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” In updated filings, the company asserted that certain information regarding the decision was missing from the record and noted that the Inspector General had warned Commerce Secretary Wilbur Ross that the exclusion process was not transparent.

The CIT decision on Aug. 5 added that “although JSW casts Commerce’s behavior as ‘perplexing,’ ‘aberrant,’ ‘certainly suspicious,’ and ‘creating a strong inference of undue influence that suggests the Department’s decisions were not based on the merits of the requests,’ JSW does not allege impropriety that would warrant discovery.” CIT also denied JSW’s request for a privilege log.

Although the CIT order does not provide tariff relief to JSW Steel USA on its imports of foreign slab, it does indicate that the BIS will be under tighter scrutiny of its decisions.

JSW Steel USA and Commerce now have 30 days to file comments and rebuttals.