Severstal Export GMBH, & Severstal Export Miami Corp. v. United States

SEVERSTAL EXPORT GMBH,and SEVERSTAL EXPORT MIAMI CORPORATION, Plaintiffs, v. UNITED STATES OF AMERICA,UNITED STATES CUSTOMS AND BORDER PROTECTION,ACTING COMMISSIONER KEVIN K. MCALEENAN,DEPARTMENT OF COMMERCE, SECRETARY WILBUR ROSS,and PRESIDENT DONALD J. TRUMP, Defendants.

Slip Op. 18-37 Court No. 18-00057

UNITED STATES COURT OF INTERNATIONAL TRADE

April 5, 2018

Before: Jane A. Restani, Judge

PUBLIC VERSION

OPINION

[Motion for preliminary injunction denied]

Mark Lunn, Thompson Hine LLP, of Washington, DC, argued for Plaintiffs Severstal Export GmbH and Severstal Export Miami Corp. With him on the brief were David Wilson and Sarah Hall, Thompson Hine LLP, of Washington, DC.

Tara Hogan, Commerical Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendants. With her on the brief were Joshua Kurland and Stephen Tosini, Commerical Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC.

Restani, Judge:

Severstal Export GMBH ("Severstal Export") and Severstal Export Miami Corporation ("Severstal Miami") (collectively, "plaintiffs") seek to enjoin the enforcement of Presidential Proclamation No. 9705, as subsequently amended. Proclamation No. 9705, 83 Fed. Reg. 11,625 (Mar. 8, 2018); Proclamation No. 9711, 83 Fed. Reg. 13,361 (Mar. 22, 2018) (collectively, the "Steel Tariff").

BACKGROUND

On April 19, 2017, the Secretary of Commerce opened an investigation into the impact of steel imports on U.S. national security. OFFICE OF TECH. EVALUATION, U.S. DEP'T OF COMMERCE, THE EFFECT OF IMPORTS OF STEEL ON THE NATIONAL SECURITY: AN INVESTIGATION CONDUCTED UNDER SECTION OF THE TRADE EXPANSION ACT OF 1962, AS AMENDED, at 18 (Jan. 11, 2018) ("Steel Report"). After notifying the Secretary of Defense, id. at App'x A, the investigation was conducted and the U.S. Department of Commerce ("Commerce") issued its report on January 11, 2018, see generally id.

The Steel Report stated that: (A) "Steel is Important to U.S. National Security," (B) "Imports in Such Quantities as are Presently Found Adversely Impact the Economic Welfare of the U.S. Steel Industry," (C) "Displacement of Domestic Steel by Excessive Quantities of Imports has the Serious Effect of Weakening our Internal Economy," and (D) "Global Excess Steel Capacity is a Circumstance that Contributes to the Weakening of the Domestic Economy." Steel Report at 2-5. The report recommended a range of alternative actions, including global tariffs, each of which had the objective of maintaining 80 percent capacity utilization for the U.S. steel industry. Steel Report at 58-61. In response to the Secretary of Commerce's report, however, the Secretary of Defense indicated an absence of any steel-related threat to national military supply chains: "[T]he U.S. military requirements for steel and aluminum each only represent about three percent of U.S. production. Therefore, [the U.S. Department of Defense ("DoD")] does not believe that the findings in the reports impact the ability of DoD programs to acquire the steel or aluminum necessary to meet national defense requirements." Memorandum in Support of Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction, ECF No. 16, at Ex. D. The Secretary of Defense further indicated his "concern[] about the negative impact on our key allies regarding the recommended options within the reports . . . among these reports' alternatives, targeted tariffs are more preferable than a global quota or global tariff." Id.

Proclamation No. 9705 was issued on March 8, 2018. Invoking Commerce's Steel Report and the authority granted by 19 U.S.C. § 1862 to enact trade measures to counter import-related threats to national security, the proclamation imposed a 25 percent ad valorem tariff on steel imports from every country except Canada and Mexico, effective March 23, 2018. Proclamation No. 9705, 83 Fed. Reg. at 11,625 and 11,627. The original proclamation also provided that:

Any country with which we have a security relationship is welcome to discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports from that country. Should the United States and any such country arrive at a satisfactory alternative means to address the threat to the national security such that I determine that imports from that country no longer threaten to impair the national security, I may remove or modify the restriction on steel articles imports from that country and, if necessary, make any corresponding adjustments to the tariff as it applies to other countries as our national security interests require.

Id. at 11,627. No formal procedure or standards were ever promulgated for making such changes,¹ but Proclamation No. 9705 was nevertheless amended on March 22, 2018, to extendadditional exemptions to Australia, Argentina, Brazil, the member countries of the European Union, and South Korea. Proclamation No. 9711, 83 Fed. Reg. at 13,363. All exemptions were furthermore made temporary, lasting until May 1, 2018. Id. at 13,363-64. With these modifications, the Steel Tariff was implemented as scheduled on March 23, 2018. Proclamation No. 9711 continued to allow for nation-to-nation negotiations on exemptions and adjustments. Id. South Korea's temporary exemption was ultimately made permanent, in exchange for an agreement which, inter alia, limited South Korean steel imports to 70 percent of South Korea's average steel exports to the U.S. over the period from 2015 to 2017. South Korean Ministry of Trade, Energy and Industry, Korea, US reach agreement on trade deal and steel tariff exemption (Mar. 26, 2018), available at english.motie.go.kr/en/ (last visited Mar. 27, 2018).

Severstal Export is a Swiss company that negotiates and arranges sales of steel products with foreign customers. Pl. Br. at Ex. A, ¶1, 4. Severstal Miami is a Florida corporation that assists in negotiating sales and acts as Severstal Export's importer of record for steel products entering the U.S. Id. at Ex. B, ¶4. Plaintiffs are both wholly-owned subsidiaries of a Russian steel producer, PAO Severstal. Id. at Ex. A, ¶1, 4. The steel being imported by plaintiffs is shipped from Russia and is thus subject to the 25 percent tariff levied by Proclamation No. 9705. Pursuant to contracts entered prior to announcement of the Steel Tariff, plaintiffs expect to enter steel goods affected by Proclamation No. 9705 after March 23, 2018. Id. at Ex. A, ¶17. Plaintiffs challenge the lawfulness of Proclamation No. 9705, as applied to plaintiffs' expected steel imports, and seek a preliminary injunction to prevent the government from collecting the additional 25 percent tariff pending a decision on the merits of its action.²

JURISDICTION

The court has jurisdiction of any justiciable claim raised by plaintiff under 28 U.S.C. § 1581(i)(2), which grants the Court of International Trade ("CIT") "exclusive jurisdiction of any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for . . . tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue[.]" This is a civil action commenced against the United States, challenging the government's imposition of tariffs under 19 U.S.C. § 1862 for reasons of national security.³ Cf. Motion Systems Corp. v. Bush, 437 F.3d 1356, 1357 and 1362(Fed. Cir. 2006) (on appeal of denial of claim against the President and U.S. Trade Representative under 19 U.S.C. § 2451, instead of reversing or remanding with a direction to dismiss for lack of subject matter jurisdiction, the Federal Circuit affirmed the CIT's judgment in favor of defendants). Elsewhere, however, the Federal Circuit has held that 28 U.S.C. § 1581(i) does not authorize proceedings directly against the President. Corus Group PLC v. Int'l Trade Comm'n, 352 F.3d 1351, 1359 (Fed. Cir. 2003) ("Corus Group v. ITC"). Nonetheless, the United States remains a defendant as do any other relevant officers or employees in their official capacities.

DISCUSSION

The court employs a four factor test to determine whether a preliminary injunction should be granted, considering: (1) whether plaintiffs will suffer irreparable harm absent the requested relief; (2) plaintiffs' likelihood of success on the merits; (3) whether the balance of hardships favors plaintiffs; and (4) whether the public interest would be served by granting the relief. Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375-76 (Fed. Cir. 2009). "[N]o one factor, taken individually, is necessarily dispositive, because the weakness of the showing regarding one factor may be overborne by the strength of the others." Ugine & ALZ Belg. v. United States, 452 F.3d 1289, 1292-93 (Fed. Cir. 2006) (internal quotation marks omitted). Nevertheless, "[c]entral to the movant's burden are the likelihood of success and irreparable harm factors." Qingdao Taifa Group Co., Ltd. v. United States, 581 F.3d 1375, 1378 (Fed. Cir. 2009). Having had the benefit of oral argument and submissions from plaintiffs and defendants, the court now will weigh these four factors.

I. Whether Plaintiffs will Suffer Irreparable Harm Absent a Preliminary Injunction

Irreparable harm constitutes potential harm that cannot be redressed by a legal or equitable remedy at the conclusion of the proceedings, so that a preliminary injunction is the only way of protecting the plaintiffs. See Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982). In evaluating irreparable harm, the court considers: "the magnitude of the injury, the immediacy of the injury, and the inadequacy of future corrective relief." CannaKorp, Inc. v. United States, 234 F. Supp. 3d 1345, 1350 (Ct. Int'l Trade 2017). "Of these three factors, 'immediacy [of the injury] and the inadequacy of future corrective relief' may be weighed more heavily than magnitude of harm." Id. (...