In re Section 301 Cases, 21-00052-3JP

• Court: U.S. Court of International Trade
• Writing for the Court: Mark A. Barnett, Chief Judge
• Parties: IN RE SECTION 301 CASES
• Decision Date: 01 April 2022
• Docket Number: Slip Op. 22-32,21-00052-3JP

IN RE SECTION 301 CASES

No. 21-00052-3JP

Slip Op. 22-32

Court of Appeals of International Trade

April 1, 2022

[Remanding the Office of the United States Trade Representative's determinations with respect to List 3 and List 4A; granting in part and denying in part Defendants' Motion to Correct the Administrative Record.]

Pratik Shah, Akin Gump Strauss Hauer & Feld LLP, of Washington, D.C., argued for Plaintiffs HMTX Indus. LLC, Halstead New England Corp., Metroflor Corp., and Jasco Prods. Co. LLC. With him on the brief were Matthew R. Nicely, James E. Tysse, Devin S. Sikes, Daniel M. Witkowski, and Sarah B. W. Kirwin.

Justin R. Miller, Attorney-In-Charge, International Trade Field Office, Elizabeth A. Speck, Trial Attorney, and Jamie L. Shookman, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendants. With them on the brief were Brian M. Boynton, Acting Assistant Attorney General, Patricia M. McCarthy, Director, L. Misha Preheim, Assistant Director, Sosun Bae, Senior Trial Counsel, and Ann C. Motto, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C. Of Counsel on the brief were Megan Grimball, Associate General Counsel, Philip Butler, Associate General Counsel, and Edward Marcus, Assistant General Counsel, Office of General Counsel, Office of the U.S. Trade Representative, of Washington, D.C., and Paula Smith, Assistant Chief Counsel, Edward Maurer, Deputy Assistant Chief Counsel, and Valerie Sorensen-Clark, Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of New York, N.Y.

Joseph R. Palmore, Morrison & Foerster LLP, of Washington, D.C., argued for Amici Curiae Retail Litigation Center, et al. With him on the brief was Adam L. Sorensen.

Christine M. Streatfeild, Baker McKenzie LLP, of Washington, D.C., argued for Amici Curiae Am. Trailer World Corp., et al. With her on the brief was Kevin M. O'Brien, as well as Nancy A. Noonan and Angela M. Santos, Arent Fox LLP, of Washington, D.C.

George W. Thompson, Thompson & Associates, PLLC, of Washington, D.C., for Amici Curiae Ecolab Inc., et al.

Before: Mark A. Barnett, Claire R. Kelly, and Jennifer Choe-Groves, Judges

OPINION AND ORDER

Mark A. Barnett, Chief Judge

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Barnett, Chief Judge: Plaintiffs HMTX Industries LLC, Halstead New England Corporation, Metroflor Corporation, and Jasco Products Company LLC commenced the first of approximately 3, 600 cases (the "Section 301 Cases")^[1] contesting the imposition of a third and fourth round of tariffs by the Office of the United States Trade Representative ("the USTR" or "the Trade Representative") pursuant to section 301 of the Trade Act of 1974 ("the Trade Act"), 19 U.S.C. § 2411, et seq. See generally Am. Compl., HMTX Indus. LLC v. United States, Court No. 20-cv-00177 (CIT Sept. 21, 2020), ECF No. 12 ("20-177 Am. Compl.").

Defendants United States, et al. ("the Government") move to dismiss Plaintiffs' claims as non-justiciable pursuant to U.S. Court of International Trade ("USCIT") Rule 12(b)(6) or, alternatively, for judgment on the agency record pursuant to USCIT Rule 56.1. Defs.' Mot. to Dismiss or, Alternatively, Mot. for J. on the Agency R. ("Defs.' Mot."), ECF No. 314. Plaintiffs cross-move for judgment on the agency record. Pls.' Cross-Mot. for J. on the Agency R., and accompanying Mem. in Supp. of Pls.' Cross-Mot. for J. on the Agency R. and Resp. to Defs.' Mot. to Dismiss/Mot. for J. on the Agency R. ("Pls.' Cross-Mot. & Resp."), ECF No. 358.

The Government also moves to correct the administrative record. Defs.' Mot. to Correct the R. ("Defs.' Mot. Correct R."), ECF No. 441. Plaintiffs oppose that motion, in

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part. Pls.' Partial Opp'n to Defs.' Mot. to Correct the Agency R. ("Pls.' Opp'n Correct R."), ECF No. 442.

For the following reasons, the court remands the contested USTR determinations and grants in part and denies in part the Government's motion to correct the record.

Background

I. Legal Framework

Article I, Section 8 of the U.S. Constitution vests Congress with the "Power To lay and collect Taxes, Duties, Imposts and Excises" and to "regulate Commerce with foreign Nations." U.S. Const. art. I, § 8, cl. 1, 3. Section 301 of the Trade Act, which governs actions taken in response to a foreign country's violation of a trade agreement or conduct that is otherwise harmful to U.S. commerce, constitutes a congressional delegation of some of that authority to the Executive Branch. See 19 U.S.C. § 2411 (2018).^[2] Specifically, section 301 sets out the circumstances under which action by the USTR is mandatory (subject to certain exceptions), see id. § 2411 (a)(1)-(2), ^[3] and when such action is discretionary, see id. § 2411(b).

This case concerns the latter scenario. Pursuant to section 301(b), the USTR has discretion to act when it determines that "(1) an act, policy, or practice of a foreign

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country is unreasonable or discriminatory and burdens or restricts United States commerce, and (2) action by the United States is appropriate." Id. When both conditions are met, the USTR

shall take all appropriate and feasible action authorized under subsection (c), subject to the specific direction, if any, of the President regarding any such action, and all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under this subsection, to obtain the elimination of that act, policy, or practice. Actions may be taken that are within the power of the President with respect to trade in any goods or services, or with respect to any other area of pertinent relations with the foreign country

Id. § 2411(b)(2).

Subsection (c) describes the actions the USTR may take in order to implement mandatory or discretionary actions under subsections (a) and (b). Id. § 2411(c). For investigations not involving a trade agreement, the USTR must make its determination as to whether conduct is actionable under section 301(a) or (b) and, if so, what action to take, no later than "12 months after the date on which the investigation [was] initiated." Id. § 2414(a)(2)(B). Generally, such actions must then be implemented within 30 days of the date of the determination. Id. § 2415(a)(1).

Central to this litigation, section 307 of the Trade Act governs the modification or termination of the USTR's actions taken pursuant to section 301. See generally id. § 2417. The statute provides, inter alia:

(a) In general

(1) The Trade Representative may modify or terminate any action, subject to the specific direction, if any, of the President with respect to such action, that is being taken under section 2411 of this title if-

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(A) any of the conditions described in section 2411(a)(2) of this title exist,

(B) the burden or restriction on United States commerce of the denial rights, or of the acts, policies, and practices, that are the subject of such action has increased or decreased, or

(C) such action is being taken under section 2411(b) of this title and is no longer appropriate. Id. § 2417(a)(1).

II. Factual Background

On August 14, 2017, the President of the United States issued a memorandum instructing the USTR to consider, consistent with section 302(b) of the Trade Act, initiating an investigation addressing the Government of the People's Republic of China's ("China") "laws, policies, practices, or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development." Addressing China's Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and Technology, 82 Fed.Reg. 39, 007, 39, 007 (Aug. 17, 2017). The USTR initiated such an investigation on August 18, 2017. Initiation of Section 301 Investigation; Hearing; and Request for Public Comment: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82 Fed.Reg. 40, 213 (Aug. 24, 2017) ("Initiation Notice").

On March 22, 2018, the USTR published a report announcing the results of the investigation. Office of the United States Trade Representative, Findings of the Investigation into China's Acts, Policies, And Practices Related to Technology

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Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974 (2018) ("USTR Report" or "the Report"), https://ustr.gov/sites/default/files/ Section 301 FINAL.PDF. The Report summarizes the ways in which China's conduct in the areas subject to the investigation was unreasonable and burdened U.S. commerce. See id. Also on March 22, 2018, the President issued a memorandum directing the USTR, inter alia, to "take all appropriate action" pursuant to section 301 "to address the acts, policies, and practices of China that are unreasonable or discriminatory and that burden or restrict U.S. commerce" and to "consider whether such action should include increased tariffs on goods from China." Actions by the United States Related to the Section 301 Investigation of China's Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed.Reg. 13, 099, 13, 100 (Mar. 27, 2018). In that memorandum, the President further instructed the USTR to "publish a proposed list of products and any intended tariff increases within 15 days of the date of this memorandum," subject to notice and comment pursuant to section 304(b), and, "after consultation with appropriate agencies and committees," to "publish a final list of products and tariff increases, if any, and implement any such tariffs." Id.

On April 6, 2018, the USTR published notice of its determination "that the acts, policies, and practices of the Government of China...