UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 24-117

Before the Court in Seneca Foods Corp. v. United States, Court No. 22-00243, Slip Op. 24-117, was a decision by the United States Court of International Trade (“CIT”) to sustain the Department of Commerce’s denials of certain exclusion requests filed by Seneca Foods Corp., the nation’s largest vegetable canner and the last food company in the U.S. that still makes its own cans.

The dispute concerned eight requests to the U.S. Department of Commerce for exclusion from the 25 percent tariff imposed pursuant to the President’s authority under Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862. The company’s exclusion requests were based on its argument that tin mill products were not produced in the United States in a sufficient and reasonably available amount. When the requests were denied, the company initiated a CIT action challenging Commerce’s decision as arbitrary and capricious under the Administrative Procedure Act (“APA”). Prior to this decision, on October 18, 2023, the CIT issued a decision remanding all eight denials to Commerce for further explanation and reconsideration. In its initial challenge, Seneca complained that Commerce’s denials of the October 2021 and January 2022 Requests were arbitrary and capricious under the APA, arguing that Commerce failed to (1) meaningfully consider relevant factors when making its determinations, (2) follow its own published interpretation of its regulations that evidence  of past unavailability is relevant to the resolution of new exclusion requests, (3) adequately explain the basis for its determinations, and (4) meaningfully consider the evidence before it. Seneca also claimed that Commerce’s denials of the March 2022 Requests were arbitrary and capricious on account of Commerce’s inadequate explanation of the bases for its decisions, which amounted to inconsistent treatment of these requests as compared to Seneca’s prior requests. The Court issued an opinion concluding that Commerce’s denials of Seneca’s October 2021 and January 2022 Requests were, indeed, arbitrary and capricious under the APA. The court accordingly remanded all eight denials for Commerce’s reconsideration or further explanation. Commerce sustained its determination as to all exclusion requests and Seneca sought review of the Remand Results through the instant action.

In its determination, Commerce concluded that the domestic producer, U.S. Steel (“USS”), had satisfied the availability criteria based on its representations of capacity to meet Seneca’s demand quicker than the import delivery timeframe required by Seneca’s foreign suppler. Additionally, Commerce addressed two issues intertwined with all of the requests.  First, the agency stated that it does not consider spot sales versus contract sales in its analysis for whether the domestic objector can meet the timeliness or quantity criteria aside from addressing the specifics of this case. Second, Commerce explained that it does not generally give  considerable weight to the evidence of history or interactions of requestors and objectors in its analysis unless it is clearly related to a denial of a prior request for the same product, or clearly indicative of the parties’ future dealings. Moreover, because there may be other, non-capacity reasons why companies would turn down an opportunity to supply steel, certain prior circumstances do not necessarily impact a company’s ability to produce and supply a product domestically for any company or the same company in the future. Commerce therefore found it irrelevant that USS had not sold to Seneca for more than two years.

The Court ultimately found for the government and sustained Commerce’s denials of the eight Section 232 exclusion requests. Pursuant to the USCIT residual jurisdiction provision,  28 U.S.C. § 1581(i), the Court held that (1) Commerce’s denials were supported by record evidence, (2) Commerce’s denials did not contravene regulations and prior practice, and (3) Commerce’s denials reasonably focused on prospective evidence of steel production. The Court found that Seneca’s arguments that Commerce’s record was unsupported by sufficient evidence to be unpersuasive. Although the record evidence contained only three emails, the Court said that Commerce was permitted to rely on parties’ factual statements to determine their ability to meet their obligations as long as that reliance is reasonable and that it was Seneca’s burden to create an adequate record, not Commerce’s. The Court stated that Seneca bore the burden to establish that the steel article in question was not being produced in the United States. Although the emails provided by Seneca were short email chains and suffered various deficiencies as to relevance, the Court reasoned that Commerce’s job is simply to weigh that evidence. Without additional evidence, the Court affirmed the factual sufficiency of Commerce’s denials of all eight exclusions.

Moreover, the Court found unpersuasive Seneca’s presentation of Commerce’s reasoning on three unrelated denials of steel exclusion requests under Section 232 as evidence of a past agency practice that Commerce had contravened in its determination as to Seneca’s requests. The Court found that Commerce’s reasoning as to the objectors in those unrelated denials  did not control the outcome in this case. The Court deemed Commerce’s denials of Seneca’s requests consistent with the agency’s own regulations. The Court noted, however, that one seeming error although harmless, should be corrected: this is to clarify the meaning of fields 2.d and 2.f in its form so that the calculation of timeliness does not include double counting the shipping time in its equation. Finally, the Court disagreed with Seneca’s argument that Commerce’s approach, even if in line with Commerce’s own regulations and practice, gives short shrift to course-of-dealing evidence suggesting that the objector will not supply steel. Commerce had stated that it will consider sales correspondence, submitted as evidence, absent additional accompanying information, only if such correspondence occurred within 90 days of the submission of the exclusion request, and the Court found that cutoff to be reasonable. Although Seneca asked for Commerce’s consideration of older course-of-dealing evidence, the Court concluded that nothing compels Commerce to do so. The Court noted that requesters like Seneca are not without administrative recourse when faced with potentially unreliable domestic producers because a requester can submit an initial request after executing foreign purchase orders, undergo the multistep process outlined above if a domestic objector promises but later fails to supply steel, and receive relief from Commerce that is retroactive to the entries associated with the initial request.