On September 11, 2018, the Department of Commerce published in the Federal Register an amendment to the rules on the submission and processing of exclusions requests on steel and aluminum articles subject to duties and quotas under Section 232 of the Trade Expansion Act. As noted below, rebuttal comments are now due as early as September 18. Duties of 25% ad valorem on steel and 10% ad valorem on aluminum have been in effect for certain countries since March 23, 2018.

The regulations are in 15 CFR Part 705 Supplements 1 and 2. Important changes under the amended regulations include:

• Under limited circumstances, parties can now request exclusions on products subject to quotas. (see Proclamation 9777 of August 29, 2018 for details).
• The party requesting the exclusion (the Requestor) can submit a rebuttal to any objections, and the objector can then submit a sur-rebuttal within 7 days.
• Rebuttals must be submitted within 7 days of BIS opening the rebuttal period, or the posting of an objection.
• Rebuttals must be submitted for each objection on a specified form and must address specific criteria.
• Criteria for reviewing exclusion requests have been clarified. For example, a product is determined to be “not reasonably available immediately in the United States” if it cannot be produced within 8 weeks. In addition, a determination of “satisfactory quality” can include internal company quality controls and standards.
• There appears to be more flexibility to include product ranges in a single exclusion request, provided the manufacturing process permits small tolerances, and the permissible range falls within a single 10-digit HTS subheading.
• There are new procedures for submitting confidential business information.
• The effective date for retroactive refunds of duties on granted exclusion requests is the date the request was submitted to BIS, and not the date BIS posted the request (this change was made by Proclamation 9777)

IMPORTANT ISSUES FOR IMPORTERS AND PARTIES REQUESTING EXCLUSIONS:

• As of September 11, BIS had opened the rebuttal period for hundreds of pending exclusion requests for which objections were previously posted. These rebuttals are due September 18. BIS will open additional rebuttal periods up through early next week, in each case triggering a 7-day deadline. Affected parties must check Regulations.gov on a daily basis to identify relevant exclusion requests. Failure to meet these deadlines will likely result in denial.

• For exclusion requests previously denied based on an objection containing inaccurate information – requesters can resubmit an exclusion request that references the original request and provides information demonstrating the inaccuracy. The regulation does not address if refunds will be retroactive to the date of original submission, or the new submission, and we are informed that BIS has not made any commitment to provide relief retroactive to the original submission.

• For exclusion requests denied as being “incomplete” – we are informed that these denials are based primarily on inaccurate HTS classifications, or situations in which a tolerance range spanned two HTS statistical subheadings. It would appear that requestors must resubmit the exclusion requests. BIS has not made any commitment to provide relief retroactive to the date the original request was filed.

GDLSK attorneys are directly involved in the Section 232 exclusion process. We are assisting the staff of key members of Congress that are working with BIS to ensure a fairer and more transparent process, and we have been meeting with BIS officials to raise concerns on improper denials of exclusion requests.

Please contact one of the attorneys in our offices if you desire guidance navigating the exclusion process, including preparing and submitting rebuttals, pursuing refunds of duties on granted requests, or determining best options for previously denied exclusion requests. We are working with companies on strategies to obtain retroactive relief in cases where exclusion requests were improperly denied, including the potential for judicial review.