NLMK Pa. LLC v. United States Steel Corp.
| Decision Date | 19 August 2021 |
| Docket Number | Civil Action 2:21-cv-273 |
| Parties | NLMK PENNSYLVANIA, LLC and NLMK INDIANA, LLC Plaintiffs, v. UNITED STATES STEEL CORPORATION, Defendant. |
| Court | U.S. District Court — Western District of Pennsylvania |
Upon the recommendation of the United States Secretary of Commerce (“Secretary of Commerce”), President Donald J Trump (“the President”), imposed tariffs on steel imports. The tariffs were not universal, however, in that the President authorized the United States Department of Commerce (“Department of Commerce”) to exclude certain steel articles if those articles were not produced in a sufficient and reasonably available amount or satisfactory quality, or if national security concerns weighed against imposing the tariffs. The Department of Commerce published an interim rule setting forth the procedures and methods governing the underlying exclusion process, which required inter alia, an application from the party seeking an exclusion. The Department of Commerce also created a process for third parties to object to a request for exclusion.
Plaintiffs NLMK Pennsylvania, LLC, and NLMK Indiana, LLC (collectively “NLMK”), filed a one-count Complaint in the Court of Common Pleas of Allegheny County, Pennsylvania asserting a state-law unfair competition claim. The Complaint alleges that NLMK submitted exclusion requests to the Department of Commerce and that Defendant, United States Steel Corporation (“U.S. Steel”), engaged in unfair competition by making various misrepresentations to the Department of Commerce during its evaluation. NLMK contends that these misrepresentations resulted in the wrongful imposition of the tariffs to its products, which caused it direct and indirect economic damages.
U.S. Steel removed the case to this Court on the ground that jurisdiction is proper because NLMK's unfair competition claim necessarily raises disputed and substantial federal questions under Grable & Sons Metal Prod.'s, Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005).[1] NLMK filed a Motion to Remand (ECF No. 18), asking the Court to remand the case for lack of subject matter jurisdiction.
The question now before the Court is whether a federal district court has federal question jurisdiction to adjudicate a state-law unfair competition claim arising out of alleged misrepresentations made to the Department of Commerce under the framework it created to govern whether a tariff exclusion is warranted. For the reasons that follow, the Court holds that NLMK's unfair competition claim necessarily raises disputed and substantial federal issues that are capable of resolution in federal court without disturbing the federal-state balance approved by Congress. The Court will therefore deny NLMK's Motion to Remand. (ECF No. 18).
To determine whether the Court has subject matter jurisdiction over NLMK's state-law action, the Court must examine the statutory and regulatory framework regarding the imposition of the tariffs and the procedure used by the Department of Commerce in making its determination of NLMK's request for exemption from the tariffs.
Under Section 232 of the Trade Expansion Act of 1962, Pub. L. No. 87-794, 76 Stat. 872, 877 (1962) () (hereinafter Section 232), Congress authorized and empowered the President, upon receipt and agreement with specific findings of an executive officer, to take actions necessary to address national security threats posed by imported goods. Under the statute, upon receiving a “request of the head of any department or agency, upon application of an interested party, or upon his own motion, ” the Secretary of Commerce must “initiate an appropriate investigation to determine the effects on the national security of imports of the article which is the subject of such request, application, or motion.” 19 U.S.C. § 1862(b)(1)(A). At the same time, “the Secretary [of Commerce] shall immediately provide notice to the Secretary of Defense of any investigation initiated . . . .” 19 U.S.C. § 1862(b)(1)(B). The Secretary's investigation is informed and advised by various officers of the United States-most notably the Secretary of Defense on “methodological and policy questions”-and “if it is appropriate and after reasonable notice, [the Secretary shall] hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to [the] investigation.” 19 U.S.C. § 1862(b)(2)(A)(i)-(iii).
Upon completion of the investigation, the Secretary must submit a report detailing the findings “with respect to the effect of the importation of such article in such quantities or under such circumstances upon national security” and provide recommendations for action or inaction of the President. 19 U.S.C. § 1862(b)(3)(A). Furthermore, if the Secretary determines that an “article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the Secretary shall so advise the President in such report.” Id. Thereafter, the President shall “determine whether [he] concurs with the finding of the Secretary, and if the President concurs, determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.” 19 U.S.C. § 1862(c)(1)(A)(i)-(ii).
Congress also provided various considerations that both the President and the Secretary must consider in making their determinations:
the Secretary and the President shall, in the light of the requirements of national security and without excluding other relevant factors, give consideration to domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth, and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. In the administration of this section, the Secretary and the President shall further recognize the close relation of the economic welfare of the Nation to our national security, and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security.
19 U.S.C. § 1862(d).
The specific tariffs underlying the dispute in this case arose after the Secretary of Commerce initiated an investigation to determine the effects of steel imports on national security on or about April 26, 2017.[2] The Secretary accordingly notified the United States Secretary of Defense, James N. Mattis, of his “investigation to determine the effects of imported steel on national security.”[3] The President then requested an expeditious investigation, with considerations and recommendations concerning the nation's security.[4]
Upon finishing his investigation, the Secretary sent his report to the President.[5] The Secretary of Commerce found that domestic steel production was essential to national security, and more specifically, that the importation of foreign flat, long, semi-finished, pipe and tube, and stainless steel were adversely impacting both national security and the steel industry.[6] The Secretary found that “the present quantities and circumstance of steel imports are ‘weakening our internal economy' and threaten to impair the national security as defined in Section 232.”[7] The Secretary highlighted that “[n]umerous U.S. steel mill closures, a substantial decline in employment, lost domestic sales and market share, and marginal annual net income for U.S.-based steel companies illustrate the decline of the U.S. steel industry.”[8] Excessive imports were further reducing U.S. steel production capacities to an economically unsustainable position.[9] The Secretary determined that U.S. steel producers would “face increasing competition from imported steel as other countries export more steel to the United States to bolster their own economic objectives and offset loss of markets to Chinese steel exports.”[10] The Secretary therefore concluded “that the only effective means of removing the threat of impairment is to reduce imports to a level that should, in combination with good management, enable U.S. steel mills to operate at 80 percent or more of their rated production capacity.”[11]
To accomplish that goal, the Secretary presented two options. The first being that the President impose either a global quota limiting steel imports to 63% of 2017 imports or a global tariff of 24% on all steel imports.[12] The second being that the President impose a 53% tariff on Brazil, South Korea, Russia, Turkey, India, Vietnam, China, Thailand, South Africa, Egypt, Malaysia and Costa Rica, as well as limit imports from other countries to their 2017 levels.[13] The Secretary recommended that the President consider an exemption process from the options above premised “on...
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