‘No Basis’ to Charges USTR Ran Sloppy Section 301 Rulemaking Process, DOJ Says

DOJ also denies allegations in an Aug. 9 amicus brief from the Consumer Technology Association, the National Retail Federation, the Retail Litigation Center and others that the Office of the U.S. Trade Representative ran afoul of Administrative Procedure Act (APA) protections against sloppy rulemakings. Akin Gump lawyers for sample-case plaintiffs HMTX Industries and Jasco Products will respond to DOJ by Nov. 15, the final filing deadline listed in the court’s April 13 scheduling order.

Plaintiffs “find fault” with the lists 3 and 4A tariffs on grounds that they were retaliations for China’s escalation of the trade war that were untethered to the original Section 301 investigation that found widespread Chinese trade wrongdoing, DOJ said. It countered that USTR imposed lists 3 and 4A at the direction of President Donald Trump “after China not only refused to cease its adverse practices, but also caused additional harm to U.S. commerce.” The agency was well within its Trade Act Section 307 authority to do so, DOJ said.

The statute grants the executive branch “broad discretion” to modify tariff actions “when the burden on U.S. commerce from a foreign nation’s unfair trade practices has increased or decreased, or the prior section 301 action is ‘no longer appropriate,’” DOJ said. Plaintiffs’ Aug. 2 cross-motion “only confirms that the challenged actions were unreviewable, highly-discretionary determinations by the Executive Branch,” the government said.

Plaintiffs “liken this case” to other trade actions reviewed by the court, DOJ said. But none of those actions “was taken at the direction of the President, pursuant to a statute explicitly granting him authority to direct agency action, as with the issuance of Lists 3 and 4A under section 307,” it said.

The government filing devotes many pages to refuting CTA-NRF amicus brief allegations that USTR breached the APA by running sloppy rulemakings that lacked transparency for failing to disclose how the agency rendered its tariff decisions. The APA “does not require the procedures they claim were required, including public hearings with trial-like proceedings, specific timetables to prepare rebuttal comments, and copious responses from the USTR to thousands of public comments,” DOJ said. It doesn't mention that the overwhelming majority of lists 3 and 4A comments were anti-tariff.

USTR “followed the necessary procedural guarantees of notice and a meaningful opportunity to be heard before issuing Lists 3 and 4A,” the government said. “Nothing further was required to implement additional, critical actions designed to protect U.S. trade interests.”

Complaints about how USTR ran the lists 3 and 4A public hearings, including limiting witnesses to five minutes of testimony each, “fare no better” than plaintiffs’ other APA arguments, DOJ said. There’s “no basis” for finding that the public hearings “were deficient when they involved multiple days, hundreds of witnesses, and the opportunity to later rebut or supplement witness testimony, particularly when the APA requires no public hearings in the first place,” it said. Though the APA is silent on public hearings, Section 304 of the 1974 Trade Act requires USTR to convene a public hearing in a Section 301 investigation with 30 days' notice “if requested by any interested person.”

On the articles cited in the CTA-NRF amicus brief purporting to show that the economic harm from tariffs that critics had warned against did materialize, “these articles are not part of the administrative record and should not be considered by the Court,” DOJ said. “In any event, the proffered evidence regarding the effects of Lists 3 and 4A does not demonstrate that the notice-and-comment procedures followed in the issuance of Lists 3 and 4A were deficient.”

The government filing also takes aim against a separate Aug. 9 amicus brief of “interested plaintiffs” that called for sweeping refund relief at the end of the trial if they prevail in the litigation. They asked the court to confirm that relief will be available “to those who bear or have borne the cost of the tariffs” and that have filed a complaint, not just importers of record. Notable names on the list of roughly 40 plaintiffs include Cisco, Hughes Network Systems and contract manufacturer Jabil.

Relief may “generally be provided to importers of record who paid the challenged duties,” not to others lacking constitutional or statutory standing, DOJ said. Their “broad request” should be rejected, it said. “Any potential relief in this case is limited to specifically-identified importers of record because importers of record -- not consignees, purchasers, or other “interested parties” -- paid the challenged tariffs.” The court’s Sept. 8 order stipulating refunds at the end of the litigation was “without prejudice” on the issue of whether relief will be limited to importers of record.