On March 17, 2023, in the China Section 301 tariff relief litigation, the U.S. Court of International Trade (CIT) upheld in a major opinion the legality of the implementation of List 3 and List 4A tariffs by the Office of the U.S. Trade Representative (USTR) on imports of Chinese products into the United States. In April 2022, the CIT issued a remand directing the USTR to prepare an explanation clarifying its actions. In August 2022, the government defendants further explained its review and decision-making process. In September 2022, the plaintiff group filed comments in response to the remand explanation, challenging the USTR’s remand explanation on two grounds: (1) The USTR’s remand explanation constituted impermissible post hoc reasoning; and (2) the remand explanation failed to substantively provide sufficient responses and explanation in compliance with the Administrative Procedure Act (APA). The March 17 decision sustained the USTR’s implementation of the tariffs.
In response to the plaintiff group’s argument that the USTR relied upon post hoc reasoning and undertook a new review and analysis, the CIT stated that the argument seeks “to distinguish an agency’s failure to address comments, which they assert can be remedied by further explanation on remand …, from an agency’s failure to analyze or consider comments, which they assert cannot be remedied without a new rulemaking.” The opinion notes that courts have ordered remands requiring agencies to respond to significant comments, but such cases “do not distinguish between failures of explanation and failures of consideration.” The CIT found that the USTR’s remand explanation provided an —
’amplified articulation’ of the grounds for its actions. USTR further explained the removal or retention of certain tariff subheadings, its decision to set the level of duties on the specified aggregate level of trade notwithstanding the stated concerns, and its decision to proceed despite the proffered alternatives. In so doing, USTR responded to significant concerns within the context of China’s actionable conduct and the specific direction of the President.
The CIT stated that the USTR provided “a fuller explanation of [its] reasoning at the time of the agency action”, as supported by case law, and that it was not “convinced by plaintiffs’ argument to require USTR to conduct new notice-and-comment rulemakings.”
Concerning the plaintiff group’s argument that the USTR’s remand explanation failed to substantively provide sufficient responses and explanations in compliance with the APA, the CIT stated that the standard an agency’s response to comments must meet “is not particularly demanding” under existing case law. In issuing the remand order, the CIT found fault with the USTR “for relying on Presidential direction without explaining ‘the relationship between significant issues raised in the comments and the President’s direction’” and faulted the USTR “for its failure to respond to comments ‘within the context of the specific direction provided by the President.’” The CIT found that the USTR’s remand explanation “reflect[s] USTR’s conclusion that statutory language linking any modification to the specific direction of the President constrained USTR’s ability to depart from that direction and explained USTR’s position vis-à-vis the President’s direction. Nothing more was required.”
The CIT decision also found that the USTR: (i) accounted for concerns regarding the potential for economic harm and adequately explained how it did so; (ii) provided statements responsive to comments regarding the efficacy of tariffs and “was not bound to agree with commenters characterizing tariffs as an ineffective”; and (iii) explained in the remand explanation that it was pursuing other courses of action as an alternative to the tariffs.
As a result, the CIT found “that USTR has complied with the court’s remand order and has supplied the necessary explanation supporting the imposition of duties pursuant to Final List 3 and Final List 4.” The plaintiff group has indicated that it will appeal the CIT’s decision to the U.S. Court of Appeals for the Federal Circuit.
For additional details on the CIT’s remand order, see Update of April 6, 2022. For additional information on the content of the USTR’s remand explanation, see Update of August 2, 2022. See Update of September 15, 2022 for details on the plaintiff group’s comments in response to the USTR’s remand explanation. For additional information on the oral argument in the matter, see Update of February 9, 2023.