Leibowitz: Too Many Chefs in the S232 Exclusion Process

In the last couple of years, the Court of International Trade has decided several cases, It has held that domestic producers do not have that right. Allowing domestic producers to participate would largely duplicate the federal government’s role in defending its decisions in court. The time and money required to reach decisions would multiply if more parties were allowed to participate.

And if domestic opponents of steel exclusions could participate in these court cases, why could they not participate in litigation challenging the steel and aluminum tariffs in the first place—or in any tax or customs decisions that affected tax liability for any taxpayer? The accompanying complexities would delay proceedings. The public interest in achieving quick and clear results would suffer.

The importance of these issues should not be underestimated. We live in an age of litigation. More people sue each other than ever before. While courts pay lip service to rapid and efficient resolution of disputes, the complexity of the disputes makes rapid resolution impossible. And the more parties participate, the longer it takes to resolve the issues. Courts, Congress and state legislatures must choose between speed and efficiency on the one hand and more complete consideration of issues on the other.

The issue of intervention in litigation involving government decisions is one part of this endless balancing. Courts allow intervention when the party seeking to intervene shows that it has an interest in the dispute that is not adequately represented by the existing parties. If a statute permits intervention as a matter of right, there is no need to examine the issue further. But the issue is more complex if a statute does not guarantee the right to intervene (e.g., Section 232).

Why is intervention an important issue? The government has gained important new powers from the steel tariffs and the accompanying exclusion procedures. Nearly 500,000 exclusion requests have been submitted. Many are granted. The companies that obtain exclusions save 25% on their imports, so they clearly benefit. However, companies opposing exclusions have a difficult time establishing that they are actually injured by the exclusion. After all, exclusions are only granted if comparable domestic material is not “reasonably available.”

If the exclusion is denied, the plaintiff in ensuing litigation will be the company that requested the exclusion. Other companies participating in the case will want to defend the denial by the Commerce Department. Those companies are not likely to add anything to the case.

The government will defend its decision based on information in the administrative record. Private domestic companies will not be able to introduce new evidence that domestic supplies are “reasonably available” because court review will be on the administrative record, which is closed.

Sometimes, a court decision in an exclusion case will be sent back to the agency for further explanation because the original decision was not clear. During remand, the agency and the plaintiff may negotiate a settlement, resolving the case by granting refunds on some entries but not others. It is likely that intervenors would want to participate in these discussions and/or in the court’s consideration of the settlement once it is reached. Intervenors would probably frustrate efforts at settlement (or seek to do so).

Courts are generally in favor of efforts to settle cases by mutual agreement. Several cases involving exclusions have been resolved by mutual agreement. And, if they are settled, cases can be resolved without setting a precedent.

So these proposed intervenors, if their intention is to frustrate potential settlements, are “swimming upstream.” Public litigation about the reasonableness of settlements will frustrate settlement efforts.

An additional argument against intervention in exclusion denial cases is that the interest of the proposed intervenors is difficult to define precisely. If an exclusion is granted, a proposed intervenor may claim to have lost a sale. However, if the exclusion is denied, and the intervenor still did not obtain a sale, what exactly is the interest of the intervenor?

The courts have long held in many tax and tariff cases that the general interest in fewer imports in the market is insufficient. And the courts could be tied up for years if such claims were subject to litigation.

Lewis Leibowitz

The Law Office of Lewis E. Leibowitz
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