                                   Slip Op. 20-111

           UNITED STATES COURT OF INTERNATIONAL TRADE


 JSW STEEL (USA) INC.,

        Plaintiff,
                                             Before: Claire R. Kelly, Judge
 v.
                                             Court No. 19-00133
 UNITED STATES,

        Defendant.


                              OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s denials of plaintiff’s requests for
exclusion of certain steel articles from Section 232 tariffs, ordering further
explanation of the steps taken to complete the record and supplementation of the
record as appropriate, and denying plaintiff’s request for discovery and for a privilege
log.]

                                                                Dated: August 5, 2020

Sanford Litvack, Andrew L. Poplinger, and R. Matthew Burke, Chaffetz Lindsey LLP,
of New York, NY, for plaintiff JSW Steel (USA) Inc.

Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him
on the brief were Jeanne E. Davidson, Director, Tara K. Hogan, Assistant Director,
and Stephen C. Tosini, Senior Trial Counsel.

      Kelly, Judge: This action is before the court on motion for judgment on the

agency record. See Pl.’s Mot. J. Agency R., Dec. 13, 2019, ECF No. 29 (“Pl.’s Mot.”).

Plaintiff JSW Steel (USA) Inc. (“JSW”) challenges the U.S. Department of

Commerce’s (“Department” or “Commerce”) denials of twelve requests for exclusions

(“exclusion requests”) for certain steel slabs from an additional 25 percent ad valorem
Court No. 19-00133                                                              Page 2

tariff imposed on steel articles pursuant to section 232 of the Trade Expansion Act of

1962 (“Section 232”), 19 U.S.C. § 1862 (2012). See Compl., July 30, 2019, ECF No. 2;

see also [Conf.] Pl.’s Memo. L. Supp. Mot. J. Agency R. at 1–5, Dec. 13, 2019, ECF No.

30 (“Pl.’s Br.”). JSW contends that Commerce’s denials of exclusion requests for alloy

and non-alloy steel slab imported from India and Mexico were arbitrary and

capricious, an abuse of discretion, and not otherwise in accordance with law. See

Compl. at ¶¶ 36–43; Pl.’s Br. at 4. In addition, JSW requests the court to order

discovery regarding the substance of Commerce’s ex parte meetings with objectors to

JSW’s exclusion requests as well as for Defendant to furnish a privilege log for

redactions in the administrative record. Pl.’s Br. Resp. Ct.’s July 7, 2020 Order at 3–

7, July 13, 2020, ECF No. 85 (“Pl.’s Br. Resp. Ct.’s Order”). For the reasons that

follow, the court: (i) orders Commerce as part of its certification of the record to set

forth the steps taken to ascertain that the record is complete, including identifying

how the Department identified missing information and the existence of ex parte

communications and, further, how it determined whether and to what extent any ex

parte communications were or were not relied upon or referred to by the Department

in making its determinations; (ii) to further supplement the record with any

information that it determines should be included in the record, inclusive of any

information   directly   or   indirectly   considered   by   the   Department   in   its

determinations, as a result of explaining its record compilation process; and, (iii)

remands for further consideration and explanation Commerce’s denials of all twelve
Court No. 19-00133                                                             Page 3

exclusion requests, in light of the completed record. However, the court denies JSW’s

requests for discovery and for a privilege log.

                                   BACKGROUND

      Following an investigation and determination by the Bureau of Industry and

Security (“BIS”), a sub-agency of Commerce, that imports of steel threaten national

security, the President issued an executive order, Proclamation 9705, imposing a 25

percent ad valorem tariff on all imports of certain steel articles, effective March 23,

2018. Adjusting Imports of Steel Into the United States, Proclamation 9705 of March

8, 2018, 83 Fed. Reg. 11,625 (Mar. 8, 2018) (“Proclamation 9705”); see also 19 U.S.C.

§ 1862. 1 In addition, Proclamation 9705 tasked the Secretary of Commerce with

developing a process to exclude from the tariff certain steel products that are not

produced in the United States of a satisfactory quality or in a sufficient and

reasonably available amount. Id., 83 Fed. Reg. at 11,627.

      On March 19, 2018, Commerce published an interim final rule that set forth

the product exclusion process.      See Requirements for Submissions Requesting



1 However, recognizing the United States’ security relationship with some countries,
the President temporarily exempted imports of steel articles from, inter alia, Mexico.
Proclamation 9705, 83 Fed. Reg. at 11,626. The exclusion of steel articles from Mexico
expired on June 1, 2018. See Adjusting Imports of Steel Into the United States,
Proclamation 9894 of May 19, 2019, 84 Fed. Reg. 23,987, 23,988 (May 23, 2019).
Relevant here, JSW sought exclusions for its imports of steel slab from Mexico
beginning in June 2018. See, e.g., BIS Decisions for JSW Exclusion Requests (BIS-
2018-0006-1218-2337) at JSW-GEN-0002–0004, Apr. 19, 2019; see also Pl.’s Br. at 9.
Court No. 19-00133                                                               Page 4

Exclusions From the Remedies Instituted in Presidential Proclamations Adjusting

Imports of Steel Into the United States and 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). Subsequently, based on comments and

Commerce’s experience administering the first interim final rule, Commerce issued

a second interim final rule on September 11, 2018 that modified the first interim final

rule. 2 See Submissions of Exclusion Requests and Objections to Submitted Requests

for Steel and Aluminum, 83 Fed. Reg. 46,026 (Dep’t Commerce Sept. 11, 2018)

(“September Rule”). Taken together, the rules, now codified at 15 C.F.R. Pt. 705,

Supp. 1 (2019), identify who may request an exclusion (“requestor”) and who may

object to a request for an exclusion (“objector”); set forth the formalities and required

information in requests and objections as well as for rebuttals and surrebuttals;

define the criteria by which Commerce—and its subagencies, the BIS and the

International Trade Administration (“ITA”)—evaluates a request for an exclusion; 3

and, establish timelines for the exclusion request process.



2 Commerce issued a third interim final rule to establish a web portal to house
requests, objections, rebuttals, and surrebuttals but did not otherwise amend the
exclusion process. Implementation of New Commerce Section 232 Exclusions Portal,
84 Fed. Reg. 26,751 (Dep’t Commerce June 10, 2019).
3The Department identifies BIS as “the lead agency” in deciding whether to grant
exclusion requests and the ITA as “analyzing requests and objections to evaluate
whether there is domestic production available to meet the requestor’s product
needs[.]” September Rule, 83 Fed. Reg. at 46,027, 46,032.
Court No. 19-00133                                                              Page 5

       Directly affected individuals or organizations using steel in business activities

located in the United States may submit exclusion requests. 15 C.F.R. Pt. 705, Supp.

1 at ¶ (c)(1). Requestors must complete and submit an electronic form, which requires

certain factual information. Id. at ¶¶ (b)(1), (c)(3). The submission must include the

requestor’s name, the date, and the 10-digit Harmonized Tariff Schedule of the

United States (“HTSUS”) statistical reporting number for the requested steel article

to be excluded. Id. at ¶ (c)(2). 4 In addition, the regulations require a requestor to

“clearly identify” and “provide support” for which of the three enumerated criteria the

requestor bases its request.     Id. at ¶ (c)(5).   Individuals or organizations that

manufacture steel in the United States may object to an exclusion request by,

likewise, submitting an electronic form that identifies the objector and the relevant

exclusion request. Id. at ¶ (d). The objector must also identify and provide support

as to why Commerce should reject the request based on the three criteria. Id. at ¶¶

(c)(5), (d)(4).   A requestor may rebut any objections, and objectors may submit

surrebuttals.     Commerce denies incomplete exclusion requests and declines to

consider any incomplete objections, rebuttals, and surrebuttals. Id. at ¶ (h)(1).

       Commerce reviews complete exclusion requests to determine whether the

article described in the request meet any of three criteria, namely “the article is not




4 In addition, the submission must include chemistry by percentage breakdown by
weight, metallurgical properties, surface quality, and distinct critical dimensions;
also, the submission may specify the minimum and maximum range dimensions. 15
C.F.R. Pt. 705, Supp. 1 at ¶ (c)(2).
Court No. 19-00133                                                              Page 6

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 specific national

security concerns.” Id. at ¶¶ (c)(6), (h)(2). The regulations define the criterion “not

produced in the United States in a sufficient and reasonably available amount” to

mean that the amount of steel needed by the requestor is not available “immediately”

to meet its business needs. Id. at ¶ (c)(6)(i). By “immediately,” the regulations

elaborate that the product is currently produced or could be produced within eight

weeks in the amount needed described in the exclusion request. Id. The criterion

“not produced in the United States in a satisfactory quality” requires the steel to be

equivalent as a “substitute product,” as in steel produced by an objector that can

“immediately” meet “the quality (e.g., industry specs or internal company quality

controls or standards), regulatory, or testing standards, in order for the U.S. produced

steel to be used in that business activity in the United States by that end user.” Id.

at ¶ (c)(6)(ii). Finally, the criterion “for specific national security considerations”

enables Commerce, in consultation with other parts of the government, as warranted,

to determine whether denying an exclusion request would have an impact on national

security. Id. at ¶ (c)(6)(iii).

       Commerce “normally” will issue its response to an exclusion request as a

memorandum that is “responsive to any of the objection(s), rebuttal(s) and

surrebuttal(s)” within 106 days of the exclusion request submission.         Id. at ¶¶
Court No. 19-00133                                                                Page 7

(h)(2)(i)(B), (h)(3)(i). 5 Granted exclusion requests are generally approved for one year

on a product basis and are usually limited to the requestor, unless Commerce

authorizes the exclusion to apply to additional importers. Id. at ¶¶ (c)(2), (h)(2)(iv).

If an exclusion request is denied based on a representation made by an objector with

respect to the availability of the requested steel or of a substitute in the United States,

and it later comes to light that the representation is inaccurate, a requestor may

submit a new exclusion request that refers back to the original denied request. Id. at

¶ (c)(6)(i)–(ii).

        JSW submitted twelve requests for exclusion for alloy and non-alloy steel

slabs. 6 Six of the requests were for slab from India with thicknesses of 8, 10, and 12

inches; 7 the other six were for slab from Mexico with thicknesses of 7.8, 8.8, and 9.8




5When a properly filed, complete exclusion request receives no objections, Commerce
will grant the request if it meets the requisite criteria and presents no national
security concerns. See 15 C.F.R. Pt. 705, Supp. 1 at ¶ (h)(2)(ii).
6  BIS assigns each exclusion request an individual number that follows a
standardized docket number “BIS-2018-0006-.” Given this formulation, the court
identifies each exclusion request, including all underlying documentation that
appears in the record pertaining to the cited request by the last digits assigned by the
Department of Commerce that follow the number “BIS-2018-0006-”. For example,
the court refers to Exclusion Request BIS-2018-0006-1218 as Exclusion Request No.
1218, which appears on the confidential record at pages BIS-2018-0006-4–108. The
court identifies the requests, objections, rebuttals, surrebuttals, memoranda, and
other documents that comprise an exclusion request by the name and number
assigned by Commerce.
7 The constituent exclusion requests are Exclusion Request Nos. 1218 (8-inch non-
alloy steel slab), 1221 (10-inch non-alloy steel slab), 1227 (12-inch non-alloy steel
slab), 2335 (8-inch non-alloy steel slab), 2336 (10-inch alloy steel slab), and 2337 (12-
inch alloy steel slab).
Court No. 19-00133                                                                 Page 8

inches. 8 JSW explained that it required the steel slabs to manufacture steel plate

because the slabs were not available in the United States. See, e.g., Request for

Exclusion from Remedies: Section 232 National Security Investigation of Steel

Imports at BIS-2018-0006-1218-11–15; Request for Exclusion from Remedies: Section

232 National Security Investigation of Steel Imports at BIS-2018-0006-2337-11–19.

Three U.S. producers, U.S. Steel Corporation, AK Steel Corporation, and Nucor

Corporation (collectively, “domestic objectors”), objected to JSW’s requests and

disagreed with JSW’s characterization of the domestic non-availability of steel slab.

See, e.g., [AK Steel] Objection Filing to Posted Section 232 Exclusion Request: Steel

at BIS-2018-0006-1218-34–36; [Nucor] Objection Filing to Posted Section 232

Exclusion Request: Steel at BIS-2018-0006-1218-37-50; [U.S. Steel] Objection Filing

Posted to Section 232 Exclusion Request: Steel at BIS-2018-0006-1218-51–73. For

each of the exclusion requests, JSW submitted rebuttals to the domestic objector’s

objections, and the domestic objectors submitted surrebuttals.           See, e.g., [JSW]

Rebuttal to [Nucor’s] Objection Filed Against Request for Exclusion from Remedies:

Section 232 National Security Investigation of Steel Imports at BIS-2018-0006-1218-

75–85; [JSW] Rebuttal to [U.S. Steel’s] Objection Filed Against Request for Exclusion

from Remedies: Section 232 National Security Investigation of Steel Imports at BIS-




8 The constituent exclusion requests are Exclusion Request Nos. 29462 (7.8-inch non-
alloy steel slab), 29465 (7.8-inch alloy steel slab), 29470 (8.8-inch non-alloy steel slab),
29474 (8.8-inch alloy steel slab), 29481 (9.8-inch non-alloy steel slab), and 29484 (9.8-
inch alloy steel slab).
Court No. 19-00133                                                            Page 9

2018-0006-1218-86–92; [Nucor’s] Surrebuttal to Objection Filed Against Request for

Exclusion from Remedies: Section 232 National Security Investigations of Steel

Imports at BIS-2018-0006-1218-94–97; [U.S. Steel’s] Surrebuttal to Objection Filed

Against Request for Exclusion from Remedies: Section 232 National Security

Investigations of Steel Imports at BIS-2018-0006-1218-98–108.

      Nearly one year following the submission of JSW’s exclusion requests, BIS

issued separate decision memoranda (“BIS decision memoranda”) that denied each

request. See, e.g., BIS Decisions for JSW Exclusion Requests (BIS-2018-0006-1218-

2337) at JSW-GEN-0002.       Each BIS decision memorandum concludes that the

requested steel slab “is produced in a sufficient and reasonably available amount and

of a satisfactory quality” and “that no overriding national security concerns requires

that this exclusion request be granted notwithstanding the domestic availability.”

See, e.g., BIS Decision Document – Steel Section 232 Remedy Exclusion Request,

Exclusion Request Number: BIS-2018-0006-29484 at BIS-2018-0006-29484-5.            In

addition, for half of the exclusion requests, BIS found that the exclusion request was

incomplete because “the product description is inconsistent with the claimed

classification under the [HTSUS].” 9 See, e.g., BIS Decision Document – Steel Section

232 Remedy Exclusion Request, Exclusion Request Number: BIS-2018-0006-29481 at

BIS-2018-0006-29481-4–5


9Specifically, BIS found that Exclusion Request Nos. 1218, 1221, 1227, 29462, 29470
and 29481 were incomplete due to JSW’s erroneous classification of requested steel
articles.
Court No. 19-00133                                                           Page 10

      On July 30, 2019, JSW initiated this action, challenging Commerce’s denials

of the exclusion requests.    See Summons, July 30, 2019, ECF No. 1; Compl.

Subsequently, the government filed on the docket the confidential and public

administrative records underlying those denials and certified the records as complete.

See Confidential Admin. Record, Oct. 7, 2019, ECF No. 15; Public Admin. Record,

Oct. 7, 2019, ECF No. 16. JSW, in its moving brief, alluded to a missing email from

the Department in connection with three exclusion requests, see Pl.’s Br. at 31 n.83,

and indicated that the Inspector General had issued a warning to Commerce

Secretary Wilbur Ross, advising that undocumented ex parte communications “giv[e]

the appearance that the Section 232 exclusion request review process is not

transparent and that decisions are not rendered based on evidence contained in the

record.” Id. at 3; Pl.’s Mot. at Ex. C. Defendant did not respond to these assertions

in its response brief. See generally Def.’s Br. However, after the matter had been

fully briefed and following the court’s issuance of oral argument questions, Defendant

informed the court that certain documents were missing from the administrative

record.   See Def.’s Status Report, May 28, 2020, ECF No. 59.            Following a

teleconference with the parties, see Telephone Conference, June 4, 2020, ECF No. 69,

the court issued an order directing Defendant to complete the administrative record

and to file on the docket, on a rolling basis, documents it identified through search

that were previously missing from the record. See Order, June 4, 2020, ECF No. 71.
Court No. 19-00133                                                            Page 11

The court also noted that it considered the matter submitted for decision and that it

would render its decision in due course. Id.

      Subsequently, and following Defendant’s filing of a status report on its

completion of the record, see Def.’s Status Report, July 6, 2020, ECF No. 81, the court

held a second teleconference with the parties on July 7, 2020. See Order, June 30,

2020, ECF No. 79 (ordering that the parties be prepared to advise the court of any

concerns with the compilation or contents of documents filed to complete the

administrative record during the second teleconference); see also Telephone

Conference, July 7, 2020, ECF No. 82. In light of JSW’s expressed concerns with the

documents added to complete the record, see generally Telephone Conference, July 7,

2020, ECF No. 82, the court directed JSW to file a brief that specifies its concerns

with the government’s efforts to complete the record and to request a remedy (or

remedies). See Order, July, 7, 2020, ECF No. 83. On July 13, 2020, JSW filed its

brief, which identifies several ex parte meetings between Department officials and

objectors, and requests that the court permit JSW to conduct discovery to uncover

information about the meetings as well as direct Defendant to furnish a privilege log.

See Pl.’s Br. Resp. Ct.’s Order at 1–6, App’x. On July 20, 2020, Defendant filed its

response brief, opposing JSW’s requests. See Def.’s Resp. JSW’s Resp. Ct.’s Order at

1–9, July 20, 2020, ECF No. 88 (“Def.’s Resp. Pl.’s Resp. Ct.’s Order”). On August 3,

2020, Defendant certified that the record was complete, see ECF No. 92, and, on the

same day, JSW filed a status report, reiterating its concern that information
Court No. 19-00133                                                             Page 12

regarding certain ex parte meetings remains missing from the record. See Pl.’s

Status Report, August 3, 2020, ECF No. 93 (“Pl.’s Status Report”).

                JURISDICTION AND STANDARD OF REVIEW

      The Court has jurisdiction under 28 U.S.C. § 1581(i)(2), (4) (2012). The court

reviews an action brought under 28 U.S.C. § 1581(i) under the same standards as

provided under section 706 of the Administrative Procedure Act (“APA”), as amended.

See 28 U.S.C. § 2640(e) (2012). Under the statute,

      [t]he reviewing court shall--
      (1) compel agency action unlawfully withheld or unreasonably delayed;
           and
      (2) hold unlawful and set aside agency action, findings and conclusions
          found to be—
             (A)    arbitrary, capricious, an abuse of discretion, or otherwise
                    not in accordance with law[.]

5 U.S.C. § 706(1), (2)(A).    Under the arbitrary and capricious standard, courts

consider whether the agency “‘entirely failed to consider an important aspect of the

problem, offered an explanation for its decision that runs counter to the evidence

before the agency, or [the decision] is so implausible that it could not be ascribed to a

difference in view or the product of agency expertise.’” Alabama Aircraft Indus., Inc.

v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009) (quoting Motor Vehicle Mfrs.

Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).

                                    DISCUSSION

      JSW contends that Commerce’s denials of its twelve exclusion requests are

arbitrary and capricious, because Commerce’s determinations run counter to the
Court No. 19-00133                                                           Page 13

evidence before the agency and Commerce fails to articulate any reasoned

explanation for its conclusions. See Pl.’s Br. at 15–37. In addition, JSW argues that

the administrative record is missing information about certain ex parte meetings

with objectors to JSW’s exclusion requests. See Pl.’s Br. Resp. Ct’s Order at 1–6,

App’x; see also Pl.’s Status Report. JSW requests discovery to unearth the contents

of those meetings as well as for Defendant to furnish a privilege log for any redacted

materials from the administrative record. See Pl.’s Br. Resp. Ct’s Order at 6; Pl.’s

Status Report. Defendant counters that Commerce reasonably explains the basis for

the denials for all twelve exclusion requests and addresses record evidence in the BIS

decision and ITA recommendation memoranda. See Def.’s Br. at 25–36. Although

Defendant acknowledged, after the matter had been fully briefed, the administrative

record’s incompleteness, see Def.’s Status Report, May 28, 2020, ECF No. 59; see also

Order, June 4, 2020, ECF No. 71 (directing Defendant, on a rolling basis, to complete

the record with previously missing documents), it submits that neither discovery nor

a privilege log would be warranted. See Def.’s Resp. Pl.’s Br. Resp. Ct.’s Order at 1–

9. For the following reasons, the court remands all twelve exclusion requests, orders

Commerce to provide further explanation as to the steps taken to complete the record

consistent with this opinion and to supplement the record as appropriate, and denies

JSW’s requests for discovery and for a privilege log.

      Under section 706 of the APA, a court “review[s] the whole record or those parts

of it cited by a party.”   5 U.S.C. § 706.   Privileged and deliberative documents
Court No. 19-00133                                                             Page 14

reflecting an agency’s internal deliberations do not form part of the administrative

record, and, generally, are not discoverable so as to merit a privilege log, unless there

is a showing of bad faith or improper behavior. See, e.g., Stand Up for California! v.

U.S. Dep’t of Interior, 71 F. Supp. 3d 109, 122–23 (D.D.C. 2014); Oceana, Inc. v. Ross,

920 F.3d 855, 865 (D.C. Cir. 2019). Rather, judicial review is generally limited to the

full administrative record before the agency at the time it rendered its decision.

Accord Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971)

(“Overton Park”); Camp v. Pitts, 411 U.S. 138, 142 (1973) (“Camp”); Guy v. Glickman,

945 F. Supp. 324, 329 (D.D.C. 1996) (“Glickman”); Pacific Shores Subd. v. U.S. Army

Corps of Eng., 448 F. Supp. 2d 1, 4 (D.D.C. 2006) (“Pacific Shores”). “The purpose of

limiting review to the record actually before the agency is to guard against courts

using new evidence to ‘convert the “arbitrary and capricious” standard into effectively

de novo review.’” Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1380 (Fed.

Cir. 2009) (“Axiom”) (quoting Murakami v. United States, 46 Fed. Cl. 731, 735 (2000),

aff’d, 398 F.3d 1342 (Fed. Cir. 2005)).

      When a party challenges an administrative determination, the agency must

produce the complete administrative record. See Nat. Res. Def. Council, Inc. v. Train,

519 F.2d 287, 291 (D.C. Cir. 1975). The administrative record includes only those

documents directly or indirectly considered by the agency. See Ammex, Inc. v. United

States, 23 CIT 549, 554–55, 62 F. Supp. 2d 1148, 1156 (1999) (“Ammex”). An agency

enjoys a presumption of regularity as to the record it prepares, because the agency,
Court No. 19-00133                                                           Page 15

as the decision-maker, is generally in the best position to identify and compile those

materials it considered. See Fund for Animals v. Williams, 245 F. Supp. 2d 49, 55–7

(D.C. Cir. 2003); Pacific Shores, 448 F. Supp. 2d at 5.

      However, in certain circumstances, a court may direct an agency to complete

or supplement the record or order discovery.         Specifically, a court may order

completion or supplementation of the record in light of clear evidence that the record

was not properly designated or the identification of reasonable grounds that

documents considered by the agency were not included in the record. See Overton

Park, 401 U.S. at 419 (A court will order an agency to complete the record when the

produced record “clearly do[es] not constitute the ‘whole record’ compiled by the

agency[.]”); see, e.g., Pacific Shores, 448 F. Supp. 2d at 5–7. Where a party has made

a “strong showing of bad faith or improper behavior” by agency decision-makers by

providing a reasonable factual basis, a court may order discovery to supplement the

record. See Ammex, 23 CIT at 556, 62 F. Supp. 2d at 1157 (citing Apez Construction

Co. v. United States, 719 F. Supp. 1144, 1147 (D. Mass. 1989)) (internal quotations

removed); Tenneco Oil Co. v. Dep’t of Energy, 475 F. Supp. 299, 317 (D. Del. 1979)

(ordering interrogatories and discovery requests to be served on the agency, when the

record lacked internal memoranda and guidelines that the agency would have

considered). However, if the agency fails to explain administrative action, the court

should “not compensate for the agency’s dereliction by undertaking its own inquiry

into the merits.” Glickman, 945 F. Supp. at 329 (citing Camp, 411 U.S. at 143; Asarco,
Court No. 19-00133                                                          Page 16

Inc. v. U.S. Envtl. Prot. Agency, 616 F.2d 1153, 1159 (9th Cir. 1980)). The court,

instead, should remand a determination. See, e.g., id. at 332–33.

      Here, although JSW indicates that the record remains incomplete, see Pl.’s

Status Report, it has not made the requisite showing that discovery is necessary to

complete or supplement the record and that a privilege log is merited. JSW identifies

several likely ex parte meetings held with objectors for which Commerce made no

record of information discussed in the meetings. See Pl.’s Br. Resp. Ct’s Order at 5,

App’x; see also Pl.’s Status Report.   As JSW indicates in its status report, the

government has now identified these meetings but has not disclosed their substance.

See Pl.’s Status Report. Section 232 does not compel agency officials to maintain a

record of ex parte communications, unlike the statutory framework governing anti-

dumping proceedings.     See 19 U.S.C. § 1677f(a)(3).    Only if relied upon must

Commerce provide information pertaining to the meetings JSW identifies as missing

from the record, given that the record encompasses materials directly or indirectly

considered by the relevant agency decisionmakers. Cf. Ammex, 23 CIT at 554–55, 62

F. Supp. 2d at 1156. JSW contends that the discussions at these meeting “were

concededly part of what the Department considered[.]” Pl.’s Status Report. However,

implicit in the Department’s certification of the record on August 3, 2020, see ECF

No. 92, is a statement that these discussions were not considered by Commerce. The

court will not order disclosure of ex parte communications that were not relied upon

by the Department. However, Commerce must certify steps taken to identify and
Court No. 19-00133                                                            Page 17

correct deficiencies in the administrative record, including steps taken to ascertain if

any of the ex parte meetings were directly or indirectly considered by Commerce in

its determinations and, if not, how it determined that the discussions at these

meetings with the objectors were not directly or indirectly considered in its

decisions. 10 Should Commerce determine, as a result of this process, that there are

further materials, such as any notes, memoranda, or other documents pertaining to

the ex parte meetings, required to supplement the record, it shall so supplement the

record. If it determines that no further supplementation is required, it shall so state

along with its explanation.

      Further, although JSW casts Commerce’s behavior as “perplexing,” “aberrant,”

“certainly suspicious,” and “creat[ing] a strong inference of undue influence

suggesting the Department’s decisions were not based on the merits of the

requests[,]” JSW does not allege impropriety that would warrant discovery. See Pl.’s

Br. Resp. Ct.’s Order at 6 n.4.      As a consequence, a privilege log cataloguing

“redactions it has made to documents it has recently added to the Record” is neither

necessary nor appropriate. Pl.’s Br. Resp. Ct.’s Order at 6. At this juncture, the court

declines to order discovery.




10 The court will entertain a request for discovery, should it come to light that
Commerce’s behavior regarding the record crosses the boundary from merely
“suspicious” to evincing bad faith or impropriety. Cf. Pl.’s Br. Resp. Ct.’s Order at 6
n.4.
Court No. 19-00133                                                           Page 18

      Remand of all twelve exclusion requests is warranted because Commerce’s

denials are devoid of explanation and frustrate judicial review. Cf. Glickman, 945 F.

Supp. at 331–32. The court cannot be certain what record evidence, if any, Commerce

relied upon when both the BIS decision memoranda and ITA recommendation

memoranda do not explain what information the sub-agencies considered, how it was

weighed, or why the evidence compelled denial. 11 See, e.g., BIS Decision Document

– Steel Section 232 Remedy Exclusion Request, Exclusion Request Number BIS-

2018-0006-1221 at BIS-2018-0006-1221-5; Recommendation for Denying of Steel

Exclusion Under Section 232 Exclusion Requests: 2018-0006-1221, 2018-0006-1227

at BIS-2018-0006-1221-9.

      Each BIS decision memorandum, which is the document communicating the

agency’s final decision, begins with the same statement that “BIS has considered the

evidence provided . . . and taken into account analysis provided by the [ITA]”; and,

each memorandum ends with the same conclusion that “BIS accepts ITA’s

recommended findings as to the domestic availability of the product, and finds that

no overriding national security concerns require that this exclusion request be

granted notwithstanding the domestic availability.”         See, e.g., BIS Decision


11 In its brief, JSW requests that the court instruct Commerce to grant JSW’s
Exclusion Request Nos. 1221, 1227, 2336, 2337, and 29484 “because the correct
conclusion based upon the record is so obvious[.]” Pl.’s Br. at 23 (citing Sierra Club
v. EPA, 346 F.3d 955, 963 (9th Cir. 2003)). Given the relevant BIS decision and ITA
recommendation memoranda do not articulate the reasons for the denials and that
Commerce may supplement the record consistent with this opinion, the court
remands these determinations. Cf. Glickman, 945 F. Supp. at 331–32.
Court No. 19-00133                                                           Page 19

Document – Steel Section 232 Remedy Exclusion Request, Exclusion Request

Number BIS-2018-0006-1221 at BIS-2018-0006-1221-5. Nowhere does BIS refer to

any record evidence in its decision memoranda, be it the exclusion requests

themselves or the applicable objections. See, e.g., id. at BIS-2018-0006-1221-4–6. For

example, for six of JSW’s exclusion requests, the BIS decision memoranda conclude

that JSW supplied the incorrect 10-digit HTSUS statistical reporting number to

identify a submission, stating that Customs and Border Protection (“CBP”) advised

BIS that the claimed classification is inconsistent with the product description and

“provid[ed] the following guidance:”—yet no guidance follows the colon. 12 See, e.g.,

id. at BIS-2018-0006-1221-4–5. BIS’s unsupported conclusion does not apprise the

court of the reason why the HTSUS statistical reporting number was incorrect or how

CBP reached that finding. Cf. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Nor does BIS indicate why an incorrect

HTSUS statistical reporting number interferes with its ability to consider the

substance of the request or why it does not ask for clarification as to the correct

statistical reporting number. See September Rule, 83 Fed. Reg. at 46,047 (“In cases




12 On remand, Commerce should explain why, in light of the regulations, incorrect
classification renders an exclusion request as incomplete and is a basis to reject the
request. See Pl.’s Br. at 12 n.43; see also Def.’s Br. at 23.
Court No. 19-00133                                                            Page 20

where a request is denied for HTSUS issues, companies are encouraged to work with

CBP to confirm the proper classifications and resubmit.”) 13

      Likewise, the ITA recommendation memoranda, which recommend to BIS

whether to grant or deny an exclusion request, suffer from the same paucity of

analysis as the BIS decision memoranda. 14 Although the regulations provide that


13 As an additional example, Defendant seems to argue that it is reasonably
discernable from the record that Commerce rejected requests for steel slab within
range of thicknesses, i.e., 235–270 mm (9.25–10.63 inches) and 222–257 mm (8.74–
10.12 inches), because steel slab was available within those ranges. See Def.’s Br. at
28–29. Without further explanation, this reason for rejection would be arbitrary and
capricious because Commerce would be treating similar parties differently, as JSW
notes, in requiring other requestors, after filing an initial request, to refile without
ranges of thickness. See Pl.’s Reply Memo. L. Further Supp. [Pl.’s Mot.] at 14–16.,
Mar. 12, 2019, ECF No. 47 (“Pl.’s Reply Br.”).
14 In addition, requestors like JSW do not receive a copy of the ITA decision
memoranda as a matter of course. As JSW notes, it saw, for the first time, a copy of
the relevant ITA recommendation memoranda with the filing of the administrative
record following the commencement of this action. See Pl.’s Br. at 12. Given that the
BIS decision memoranda restate, in part, the conclusions of the ITA recommendation
memoranda, it is unclear why the ITA recommendation memoranda should be
maintained as fully confidential. Compare Decision Document – Steel Section 232
Remedy Exclusion Request, Exclusion Request Number BIS-2018-0006-1221 at BIS
2018-0006-1221-5 with Recommendation for Denying of Steel Exclusion Under
Section 232 Exclusion Requests: 2018-0006-1221, 2018-0006-1227 at BIS-2018-0006-
1221-9–10.
        Moreover, the Government’s assertion that “the record allows the Court, and,
indeed, the public, to easily discern how the agency reached its decision[,]” Def.’s Br.
at 34, is troubling, particularly when the ITA recommendation memoranda for JSW’s
requests, which, as noted above, refer to record evidence, were entirely confidential.
In addition, given that the regulations compel disclosure of information contained in
the exclusion requests, objections, rebuttals, and surrebuttals and require any
proprietary information submitted to be summarized “in sufficient detail to permit a
reasonable understanding of the substance of the information[,]” 15 C.F.R. Pt. 705,

                                                                   (footnote continued)
Court No. 19-00133                                                             Page 21

Commerce’s “[r]esponse to an exclusion request will . . . be responsive to any of the

objection(s), rebuttal(s), and surrebuttal(s) for that submitted exclusion request[,]” 15

C.F.R. Pt. 705, Supp. 1 at ¶ (h)(2)(i)(A), the ITA recommendation memoranda merely

catalogue a brief selection of evidence on the record. 15 See, e.g., Recommendation for

Denying of Steel Exclusion Under Section 232 Exclusion Requests: 2018-0006-1221,

2018-0006-1227 at BIS-2018-0006-1221-9. The ITA recommendation memoranda

neither address detracting evidence 16 nor provide any analysis of the evidence, even



Supp. 1 at ¶ (b)(5)(ii)–(iii), it is unclear why a public version of the recommendation
memoranda could not be prepared and disclosed. Defendant concedes this point,
given that it has filed, on the record, public versions of the ITA recommendation
memoranda for JSW’s exclusion requests. See Def.’s Resp. Ct.’s Request Regarding
Redaction, May 29, 2020, ECF No. 60.
15Several of the ITA recommendation memoranda cover multiple exclusion requests.
See Def.’s Br. at 17 (noting that ITA prepared four recommendation memoranda
covering JSW’s twelve exclusion requests).
16  For example, as JSW notes, the ITA judges “Nucor’s product as a suitable
substitute” but provides no explanation and does not address detracting evidence that
Nucor only produces a downstream product, not a substitute product. See Pl.’s Reply
Br. at 8 (citing Recommendation for Denying of Steel Exclusion Under Section 232
Exclusion Requests: 2018-0006-1221, 2018-0006-1227 at BIS-2018-0006-1221-9).
Indeed, in its objections to those exclusion requests, Nucor indicated that it neither
manufacturers nor can “immediately” (i.e., within eight weeks) manufacture JSW’s
requested steel slab or a substitute produce, and, instead, merely stated that it could
produce a downstream product within 84 days. [Nucor] Objection Filing Posted to
Section 232 Exclusion Request: Steel at BIS-2018-0006-1221-44; [Nucor] Objection
Filing Posted to Section 232 Exclusion Request: Steel at BIS-2018-0006-1227-44. ITA
does not explain why it considers Nucor’s domestically available downstream product
is equivalent as a substitute. Cf. 15 C.F.R. Pt. 705, Supp. 1 at ¶ (c)(6)(ii).
      In addition, JSW explained in its exclusion requests that it requires certain
thicknesses of steel to satisfy “reduction ratios” to manufacture steel plate. See Pl.’s

                                                                   (footnote continued)
Court No. 19-00133                                                             Page 22

in the section of the memoranda entitled “Analysis.” 17 See, e.g., id. at BIS-2018-0006-

9. In addition, the ITA recommendation memoranda for all twelve exclusion requests

at issue conclude that “[b]ecause there is indication of sufficient U.S. production

availability”   the   ITA   recommends     denying    JSW’s    requests.     See,   e.g.,

Recommendation for Denying of Steel Exclusion Under Section 232 Exclusion

Requests: 2018-0006-1221, 2018-0006-1227 at BIS-2018-0006-1221-10. However, the

regulations simply state 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 specific national

security considerations.” See 15 C.F.R. Pt. 705, Supp. 1 at ¶ (c)(5); see also id. at ¶

(c)(6). The regulations do not provide for the denial of an exclusion request upon the

showing of an “indication” of sufficient U.S. production. It is unclear what constitutes

an “indication” of sufficient U.S. production, or why an “indication” of U.S domestic



Br. at 33–34. Even though the regulations state that steel may be considered
equivalent as a substitute product if it meets, inter alia, “internal company quality
controls or standards[,]” 15 C.F.R. Pt. 705, Supp. 1 at ¶ 1 (c)(6)(ii), and the September
2018 Federal Register Notice, notes that the exclusion review process accounts for
the “quality needs of requestors[,]” neither BIS nor ITA address JSW’s internal
quality considerations in their respective memoranda. See September Rule, 83 Fed.
Reg. at 46,039.
17 For example, in the “Analysis” section of the ITA recommendation memorandum
for Exclusion Request Nos. 29462, 29465, 29470, 29474, 29481, and 29484, the ITA
summarizes JSW’s, Nucor’s, and U.S. Steel’s submissions and does not, itself, analyze
those statements. See Recommendation for Denying Steel Exclusion Request Unser
Section 232 Exclusion Requests 2018-0006-29462, 2018-0006-29465, 2018-0006-
29470, 2018-0006-29474, 2018-0006-29481, 2018-0006-29484 at BIS-2018-0006-
29484-9.
Court No. 19-00133                                                             Page 23

production of the steel articles in question accords with the regulation. Commerce

does not further explain how that term is used either in its regulations or in the BIS

decision or ITA recommendation memoranda. Given the defects in the record and

Commerce’s failure to engage with record evidence, 18 the court orders completion of

the record, inclusive of any information directly or indirectly considered by the

Department in its determinations, and remands, for further consideration and

explanation Commerce’s denials of all twelve exclusion requests, in light of the

completed record. 19

                                   CONCLUSION

      In accordance with the foregoing, it is

      ORDERED that on or before Monday, August 17, 2020 Defendant shall file,

as part of its U.S. Court of International Trade Rule 73.3 certification, a statement

that sets forth: the steps taken to ascertain that the record for the original proceeding

is complete, including identifying how the Department identified missing information

and the existence of ex parte communications; and, to what extent any ex parte

communications were or were not directly or indirectly relied upon or referred to by

Commerce in making its determinations; and it is further




18Defendant concedes that BIS lacked “an established process or dedicated systems
for collecting and compiling an administrative record in a Section 232 exclusion
case[.]” See [Def.’s] Resp. Ct.’s May 2020 Order at 2, June 3, 2020, ECF No. 64.
19Defendant requests a remand for Exclusion Request No. 1227. See Def.’s Br. at 36.
However, for the reasons discussed above, the court remands all twelve exclusion
requests at issue, including Exclusion Request No. 1227.
Court No. 19-00133                                                             Page 24

      ORDERED that Defendant shall file on the docket and further supplement

the record with any information, inclusive of any information directly or indirectly

considered by Commerce, in its determinations that it determines should be included

in the record as a result of explaining the steps taken to ensure completion of the

administrative record on or before Monday, August 17, 2020; and it is further

      ORDERED that Commerce’s determinations not to exclude twelve steel

articles from the remedy imposed by the President under Section 232 of the Trade

Expansion Act of 1962, 19 U.S.C. § 1862, as challenged in this action (i.e., Exclusion

Request Nos. 1218 (8-inch non-alloy steel slab from India), 1221 (10-inch non-alloy

steel slab from India), 1227 (12-inch non-alloy steel slab from India), 2335 (8-inch

non-alloy steel slab from India), 2336 (10-inch alloy steel slab from India), 2337 (12-

inch alloy steel slab from India), 29462 (7.8-inch non-alloy steel slab from Mexico),

29465 (7.8-inch alloy steel slab from Mexico), 29470 (8.8-inch non-alloy steel slab from

Mexico), 29474 (8.8-inch alloy steel slab from Mexico), 29481 (9.8-inch non-alloy steel

slab from Mexico), and 29484 (9.8-inch alloy steel slab from Mexico)), are remanded

for further explanation and consideration, specifically to (1) identify and correct all

deficiencies in the existing administrative record, including but not limited to locating

and adding all of Commerce’s communications with domestic industry objectors

concerning JSW’s exclusion requests insofar as such communications are not part of

the existing record and were directly or indirectly considered by Commerce in its

determinations, and (2) fully reconsider or provide further explanation of its denials
Court No. 19-00133                                                              Page 25

of all of JSW’s exclusion requests, consistent with this opinion and in light of the

complete administrative record; and it is further

      ORDERED that Commerce shall file its remand redeterminations with the

court within 90 days of this date; and it is further

      ORDERED that Defendant shall file the administrative record for any

remand proceedings no later than 14 days after filing the remand results; and it is

further

      ORDERED that on the same day that Defendant files the administrative

record for any remand proceedings, Defendant shall also file as part of its U.S. Court

of International Trade Rule 73.3 certification, a statement identifying whether the

determinations on remand are based on the original administrative record, the new

record on remand, or both, and whether any of the ex parte meetings were or were

not directly or indirectly considered by Commerce in its determinations; and it is

further

      ORDERED that the parties shall have 30 days after the filing of the remand

results to file comments on the remand redetermination; and it is further

      ORDERED that the parties shall have 30 days to file their replies to

comments on the remand redetermination.

                                                       /s/ Claire R. Kelly
                                                       Claire R. Kelly, Judge

Dated:       August 5, 2020
             New York, New York
