Steel Mills

NLMK USA Section 232 Lawsuit Against US Steel Dismissed

Written by David Schollaert

March 27, 2022

NLMK USA’s lawsuit claiming US Steel had misled the Commerce Department into denying the company Section 232 tariff exemptions was dismissed last week.

NLMKThe lawsuit was originally filed in January 2021 in the Court of Common Pleas of Allegheny County, Pa. NLMK alleged that US Steel undermined its requests for exemptions from Section 232 tariffs on foreign-made raw steel slabs. It also claimed that Pittsburgh-based US Steel had falsely told Commerce that it was capable of domestically producing the eight- and 10-inch-thick steel slabs that NLMK needed.

As a result, the US subsidiary of Russia’s largest steelmaker – NLMK Group – sought at least $100 million to recoup Section 232 tariffs it claimed were unjustly levied against it because of US Steel’s “deception”.

US Steel initially had the case removed to federal court over NLMK’s protests. But US District Judge William S. Stickman IV ruled in August 2021 that the case should stay there since it concerned second-guessing federal decisions.

Ultimately, Judge Stickman dismissed the complaint against US Steel, stating that NLMK couldn’t sue the company for unfair competition under Pennsylvania state law because Commerce’s oversight of tariffs on foreign steel was outside the reach of state law. Likewise, Judge Stickman was skeptical about whether Pennsylvania’s unfair competition law applied to US Steel’s conduct.

“The statutory and regulatory scheme at issue combines two areas which have traditionally been viewed as presenting uniquely federal interests — the imposition of tariffs on foreign commerce and national security,” Judge Stickman wrote Tuesday, March 22. “The federal preeminence in each of these fields originates in the Constitution itself and has long been recognized by Congress and the courts. There is no way for NLMK’s state law cause of action to avoid treading on ground that is held exclusively by the federal government.”

US Steel cheered the decision. “The US Department of Commerce rightfully required NLMK to pay the Section 232 national security tariffs on steel slab imports from Russia that NLMK finishes in the United States,” a US Steel spokeswoman said.

“The court’s decision … affirms that US Steel should not be subject to meritless state tort claims for exercising our right to object to importers like NLMK’s requests that it not pay Section 232 tariffs when we mine, melt, and pour the same products in the USA,” she added.

Representatives for NLMK Group did not respond to requests for comment.

By David Schollaert, David@SteelMarektUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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