Thyssenkrupp Materials NA Inc. v. United States

498 F.Supp.3d 1372

THYSSENKRUPP MATERIALS NA INC., Thyssenkrupp Materials NA Inc. – Copper & Brass Sales Division, Thyssenkrupp Materials NA Inc. – Materials Trading Division, Thyssenkrupp Materials NA Inc. – Ken-Mac Metals Division, Thyssenkrupp Presta Danville LLC, Plaintiffs,

v.UNITED STATES, Joseph R. Biden, in His Official Capacity as President of the United States, Wynn Coggins, in Her Official Capacity as Acting Secretary of Commerce, United States Department of Commerce, Troy Miller, in His Official Capacity as Senior Official Performing the Duties of the Commissioner, United States Customs and Border Protection, Defendants.

Slip Op. 21-29

Court No. 20-00093

United States Court of International Trade.

March 10, 2021

Lawrence M. Friedman, Barnes, Richardson & Colburn, LLP, of Chicago, IL, argued for Plaintiffs Thyssenkrupp Materials NA Inc., Thyssenkrupp Materials NA Inc. – Copper & Brass Sales Division, Thyssenkrupp Materials NA Inc. – Materials Trading Division, Thyssenkrupp Materials NA Inc. – Ken-Mac Metals Division and Thyssenkrupp Presta Danville LLC. With him on the brief were David G. Forgue, and Lois Elizabeth J. Wetzel.

Joshua E. Kurland, Trial Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, of Washington D.C., argued for Defendants United States, Joseph R. Biden, in his official capacity as President of the United States, Wynn Coggins, in her official capacity as Acting Secretary of Commerce, United States Department of Commerce, Troy Miller, in his official capacity as Senior Official Performing the Duties of the Commissioner, United States Customs and Border Protection. With him on the briefs were Jeffrey Bossert Clark, Acting Assistant Attorney General, Ethan P. Davis, Former Acting Assistant Attorney General, Jeanne E. Davidson, Director, Tara K. Hogan, Assistant Director and Ann C. Motto, Trial Attorney.

Before: Claire R. Kelly, Gary S. Katzmann, and Jane A. Restani, Judges

OPINION

Restani, Judge:

The question before us is whether the process created in Interim Final Rule: Requirements for Submissions Requesting Exclusions From the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel Into the United States and Adjusting Imports of Aluminum Into the United States; and the Filing of Objections to Submitted Exclusion Requests for Steel and Aluminum, 83 Fed. Reg. 12,106 (Dep't Commerce Mar. 19, 2018) ("Interim Final Rule")¹ for importers to request exclusions from tariffs imposed on aluminum, Proclamation No. 9704 of March 8, 2018: Adjusting Imports of Aluminum into the United States, 83 Fed. Reg. 11,619 (Mar. 15, 2018) (" Proclamation 9704"), and steel, Proclamation No. 9705 of March 8, 2018: Adjusting Imports of Steel Into the United States, 83 Fed. Reg. 11,625 (Mar. 15, 2018) (" Proclamation 9705"), under the Trade Expansion Act of 1962, Pub. L. No. 87-794, Title II, § 232, 76 Stat. 872 (1962) (codified as amended 19 U.S.C. § 1862 ) ("Section 232"), violates the Uniformity Clause of the Constitution or is arbitrary, capricious or otherwise not in accordance with law.

Plaintiffs Thyssenkrupp Materials NA Inc., Thyssenkrupp Materials NA Inc. – Copper & Brass Sales Division, Thyssenkrupp Materials NA Inc. – Materials Trading Division, Thyssenkrupp Materials NA Inc. – Ken-Mac Metals Division, and Thyssenkrupp Presta Danville LLC, (collectively, "Thyssenkrupp") are importers of steel and aluminum. Thyssenkrupp argues that the exclusion process, which grants exclusions on an application basis to specific requestors and not automatically to all importers of a particular article, creates a non-uniform tax across the United States in violation of the Uniformity Clause of the Constitution, and is an impermissible construction of Proclamation 9704, Proclamation 9705, and Section 232. Defendants, the United States, Joseph R. Biden, in his official capacity as President of the United States, Wynn Coggins, in her official capacity as Acting Secretary of Commerce, the United States Department of Commerce, Troy Miller, in his official capacity as Senior Official Performing the Duties of the Commissioner, and the United States Customs and Border Protection, (collectively, "the Government"), move the court to dismiss the Complaint for failure to state a claim, under U.S. Court of International Trade ("USCIT") Rule 12(b)(6).²

BACKGROUND

A. Statutory Framework

Congress authorized the President under Section 232 to adjust imports that pose a threat to the national security of the United States. In furtherance of Section 232, President Trump imposed 10 percent ad valorem duties on imports into the United States of certain aluminum products, see Proclamation 9704, 83 Fed. Reg. at 11,620, and imposed 25 percent ad valorem duties on imports into the United States of certain steel products, see Proclamation 9705, 83 Fed. Reg. at 11,626, (collectively, "Proclamations"). In the Proclamations, the President authorized Commerce to exclude aluminum and steel articles from the imposition of these tariffs if the article is "determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality and [Commerce] is also authorized to provide such relief based upon specific national security considerations." Proclamation 9704, 83 Fed. Reg. at 11,621, cl. 3 (aluminum); Proclamation 9705, 83 Fed. Reg. at 11,627, cl. 3 (steel). The President explicitly instructed that such relief shall be provided for an aluminum or steel article "only after a request for exclusion is made by a directly affected party located in the United States." Id.

B. Section 232 Exclusion Process for Steel and Aluminum

In March 2018, Commerce established a process for "[o]nly individuals or organizations using [steel or aluminum] ... in business activities ... in the United States [to] submit exclusion requests[.]" Interim Final Rule, 83 Fed. Reg. at 12,107. The rule establishes that "[a]n exclusion will only be granted if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration." Interim Final Rule, 83 Fed. Reg. at 12,110 (steel), 12,112 (aluminum). Commerce determined that it would approve exclusions "on a product basis" and limit exclusions "to the individual[s] or organization[s] that submitted the specific exclusion request, unless [it] approves a broader application of the ... exclusion ... to additional importers." Id. at 12,107.³

C. Challenges to Commerce's Actions

Thyssenkrupp describes its Complaint as a facial challenge of Commerce's regulations implementing the Proclamations. See Pls.’ Letter of Clarification, ECF No. 23 (Jan. 6, 2021). Thyssenkrupp has made no allegation in its Complaint that it requested an exclusion and that Commerce improperly denied it. The Complaint does not challenge how the regulation was applied to a specific exclusion request from Thyssenkrupp, but rather that the regulations require Thyssenkrupp to apply for an exclusion in the first place. This court regularly hears cases regarding specific exclusion denials. See, e.g., JSW Steel (USA) Inc. v. United States, 44 CIT ––––, 466 F. Supp. 3d. 1320 (2020). Should Thyssenkrupp request such an exclusion and be denied, it may seek this remedy.

Thyssenkrupp raises two challenges to Commerce's actions.⁴ First, in Counts I and III, Thyssenkrupp asserts that Commerce's exclusion process for Section 232 duties on aluminum and steel articles results in a dis-uniform tax whereby individual importers pay different duty rates on the same merchandise, in violation of the Uniformity Clause of the Constitution. Compl. ¶¶ 38, 42; see also 5 U.S.C. § 706(2)(B). In support of this claim, Thyssenkrupp alleges that it paid Section 232 duties on merchandise that falls within the same Harmonized Tariff Schedule of the United States ("HTSUS") classification as merchandise imported by other importers that received an exclusion. Compl. ¶¶ 21–22. Thyssenkrupp further alleges that the exclusion process results in geographic discrimination because Commerce grants exclusions to importers that import goods through one state, thereby discriminating against importers that import the same goods through other states. See Pls.’ Resp. at 17–20. As a result, Thyssenkrupp avers that the exclusion process violates the Uniformity Clause and is "unlawful" under 5 U.S.C. § 706(2)(B). The Government counters that because both the Section 232 tariffs imposed by the President and Commerce's regulations implementing these tariffs are defined in non-geographical terms and operate with the same force and effect nationwide, the exclusion process set out in the Interim Final Rule does not violate the Uniformity Clause. Defs.’ Mot. to Dismiss at 16 –17, ECF No. 11 (Jul. 22, 2020) ("Gov. Mot. to Dismiss").

In Count II, Thyssenkrupp challenges Commerce's Interim Final Rule, which establishes a process for granting Section 232 duty exclusions to specific importers rather than to specific articles, as contrary to the Proclamations and as arbitrary, capricious, an abuse of discretion or not in accordance with law, under the Administrative Procedure Act ("APA"). Compl. ¶¶ 24, 40; see 5 U.S.C. § 706(2)(A). Thyssenkrupp argues that Commerce's "decision to grant exclusions to individual requestors rather than for products based on HT{SUS} classification is contrary to" the Proclamations. Id. Thyssenkrupp puts particular emphasis on the language in the Proclamations directing Commerce to provide such relief "for any aluminum article," Proclamation 9704, 83 Fed. Reg. 11,621, cl. 3 (emphasis added), or "for any steel article" Proclamation 9705, 83 Fed. Reg. 11,627, cl. 3 (emphasis added), rather than for individual importers. Pls.’ Resp. at 21–23. The Government counters that this claim should be dismissed because the Interim Final Rule is consistent with the Proclamati...