# Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2018-19662

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** September 11, 2018
- **Citation:** 83 FR 46026

## Text

DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Part 705
[Docket No.: 180227217-8217-02]
RIN 0694-AH55
Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum

AGENCY:

Office of Technology Evaluation, Bureau of Industry and Security, U.S. Department of Commerce.

ACTION:

Interim final rule.

SUMMARY:

On March 8, 2018, President Trump issued Proclamations 9704 and 9705 (referred to henceforth as the “Proclamations”), imposing duties on imports of aluminum and steel. The Proclamations also authorized the Secretary of Commerce (referred to henceforth as the “Secretary”) to grant exclusions from the duties if the Secretary determines the steel or aluminum article for which the exclusion is requested is not “produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” or should be excluded “based upon specific national security considerations.”

On March 19, 2018, the Department issued an interim final rule (referred to henceforth as the “March 19 rule”), setting forth the requirements a directly affected party located in the United States must satisfy when submitting exclusion requests. The March 19 rule also set forth the requirements that U.S. parties must meet when submitting objections to exclusion requests. The March 19 rule amended the National Security Industrial Base Regulations to add two new supplements.

The rule published today by BIS, on behalf of the Secretary, revises the two supplements added by the March 19 rule. The revisions are informed by the comments received in response to the March 19 rule and the U.S. Department of Commerce's (referred to henceforth as “the Department”) experience with managing the exclusion and objection process. The Department understands the importance of having a transparent, fair and efficient exclusion and objection process. The publication of today's rule should make significant improvements in all three respects, but due to the scope of this new process, BIS is publishing today's rule as an interim final rule with request for comments.

DATES:

Effective date:
This interim final rule is effective September 11, 2018.

Comments:
Comments on this interim final rule must be received by BIS no later than November 13, 2018.

See
SUPPLEMENTARY INFORMATION
section for information on submitting exclusion requests, objections thereto, rebuttals, and surrebuttals.

ADDRESSES:

All comments on this interim final rule must be submitted by one of the following methods:

• By the Federal eRulemaking Portal:
http://www.regulations.gov.
Comments on this interim final rule may be submitted to
regulations.gov
docket number BIS-2018-0016.

• By email directly to
publiccomments@bis.doc.gov.
Include RIN 0694-AH55 in the subject line.

• By mail or delivery to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, DC 20230. Refer to RIN 0694-AH55.

FOR FURTHER INFORMATION CONTACT:

Brad Botwin, Director, Industrial Studies, Office of Technology Evaluation, Bureau of Industry and Security, U.S. Department of Commerce (202) 482-5642,
Steel232@bis.doc.gov
regarding provisions in this rule specific to steel exclusion requests and (202) 482-4757,
Aluminum232@bis.doc.gov
regarding provisions in this rule specific to aluminum exclusion requests.

SUPPLEMENTARY INFORMATION:

Background

On March 8, 2018, President Trump issued Proclamations 9704 and 9705, imposing duties on imports of aluminum and steel. The Proclamations also authorized the Secretary to grant exclusions from the duties if the Secretary determines the steel or aluminum article for which the exclusion is requested is not “produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” or should be excluded “based upon specific national security considerations.”

On March 19, 2018, the Department issued an interim final rule, setting forth the requirements U.S. businesses must satisfy when submitting exclusion requests. On behalf of the Secretary, BIS published the March 19 rule,
Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel into the United States and Adjusting Imports of Aluminum into the United States; and the filing of Objections to Submitted Exclusion Requests for Steel and Aluminum
(83 FR 12106). The March 19 rule also set forth the requirements that U.S. parties must meet when submitting objections to exclusion requests. The March 19 rule amended the National Security Industrial Base Regulations to add two new supplements, Supplements No. 1 (for steel exclusion requests) and No. 2 (for aluminum exclusion requests) to part 705. The Department started this process with the publication of the March 19 rule and is continuing that process to make various improvements with the publication of today's rule.

Updates & Improvements to Section 232 Steel and Aluminum Exclusion Request and Objection Processes

The rule published today by BIS, on behalf of the Secretary, makes changes to the two supplements added in the March 19 rule: Supplement No. 1 to Part 705—Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamation 9705 of March 8, 2018 Adjusting Imports of Steel Articles into the United States; and to Supplement No. 2 to Part 705—Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamation 9704 of March 8, 2018 to Adjusting Imports of Aluminum into the United States.

The rule published today also makes needed changes to the two supplements to address the directives included in the Presidential Proclamations 9777 and 9776 of August 29, 2018, whereby President Trump directed that as soon as practicable, the Secretary of Commerce shall issue procedures for requests for exclusions described in clause 1 and clause 2 of these two proclamations to allow for exclusion requests for countries subject to quantitative limitations. Today's rule makes changes to add clause 1. The Department has already created a separate exclusion process for clause 2 on the Commerce website at
www.bis.doc.gov/index.php/232-steel,
so no changes are made in today's rule to address the directive included in clause 2 of Proclamation 9777. The rule published today will fulfill the Presidential directives included in the two most recent Proclamations, as well as the earlier Proclamations that directed the Secretary to create an exclusion process to ensure users of steel and aluminum in the United States would continue to have access to the steel and aluminum that they may need.

The changes to the exclusion processes in this rule are informed by both the comments received in response to the March 19 rule and the

Department's experience with managing the exclusion process. The comments identified a number of areas where transparency, effectiveness and fairness of the exclusion and objection process could be improved, including adding a rebuttal and surrebuttal process. The Department has incorporated changes based on many of those comments and has also included other process improvements. The publication of today's rule should make significant improvements in all three respects, but because of the scope of this new process, BIS is publishing today's rule as a second interim final rule with request for comments.

Since March 19, the Department has worked to develop its exclusion process to ensure that the duties and quantitative limitations protect our national security while also minimizing undue impacts on downstream U.S. industries. Two specific Commerce components have worked closely in this effort: BIS and the International Trade Administration (ITA). BIS is the lead agency deciding whether to grant steel and aluminum tariff exclusion requests, and ITA is analyzing requests and objections to evaluate whether there is domestic production available to meet the requestor's product needs, as provided in the exclusion requests.

Since March 19, the Department has diligently worked to develop its exclusion process to ensure that the duties and quantitative limitations protect critical U.S. national security while minimizing undue impacts on downstream U.S. industries. The Department has already taken several steps to improve the exclusion process, including expediting the grant of properly filed exclusion requests that receive no objections and present no national security concerns, as well as increasing and organizing the Department's staff to efficiently process exclusion requests. The publication of today's rule provides an exclusion process for steel and aluminum articles subject to quantitative limitations and is an important step in further improving the exclusion request and objection process, including through the addition of a rebuttal and surrebuttal process.

As of August 20, the Department had received more than 38,000 exclusion requests and more than 17,000 objections. To streamline the exclusion review process, the Department has already taken steps to expedite the granting of properly filed exclusion requests which receive no objections and present no national security concerns. The Department has also worked to increase and organize its staff to efficiently process exclusion requests. The publication of today's rule is an important step in improving the exclusion and objection process.

Types of Comments the Department is Requesting on Today's Rule

The Department is not seeking comments on the duties and quantitative limitations or the exclusion and objection process overall, but rather on whether the specific changes included in this second interim final rule have addressed earlier concerns with the exclusion and objection process. Comments specific to the changes included in today's rule will be the most helpful for the Department to receive, including comments on how the changes (
e.g.,
the adding of a rebuttal and surrebuttal to the process) interact with the established exclusion and objection process and whether the commenters believe these changes improve the exclusion and objection process by making it more transparent, fair and efficient, as well as highlighting any unintended consequences of the changes made in today's rule.

Public Comments and BIS Responses

The public comment period on the March 19 rule closed on May 18, 2018. BIS received 67 public comments on the interim final rule. Most of the comments were well thought out and supported their positions with a great deal of specificity. Many commenters made comments on the imposition of duties and quantitative limitations and whether or not that was a good idea. Those comments are outside the scope of the March 19 rule that was focused on creating an exclusion and objection process, thus the Department is not summarizing or providing responses to those general comments on the duties and quantitative limitations. The Department is responding to comments regarding concerns on the downstream impacts of U.S. manufacturers that use steel and aluminum, which is directly relevant to whether the exclusion process created in the March 19 rule is efficient enough to mitigate those downstream end users' concerns.

Commenters were generally supportive and welcomed the idea of creating an exclusion process, but most of the commenters believed the exclusion process was not working well and needed to be significantly improved in order for it to achieve the intended purpose. The commenters covered a broad range of industries and included some of the largest companies in the world, along with small to mid-size (SME) enterprises expressing significant concern over the duties and quantitative limitations and the difficulties in managing the exclusion process. Several of the SMEs indicated that without an efficient exclusion process, it is likely they may not survive or will face significant cut backs in employment and business activities. Larger companies indicated that without an efficient exclusion process, it is likely that major projects that they may have otherwise undertaken will likely not be undertaken. Commenters from the oil and gas industries and petrochemical industries hit on these points.

Many downstream manufacturers that use steel and aluminum were particularly concerned with suffering from higher input costs, while at the same time having to compete directly with foreign competitors in other countries;
e.g.,
China, but also countries such as Canada and Mexico. Many commenters argued that the exclusion process was overly and unnecessarily restrictive and did not take into account how steel and aluminum are procured and used in the United States.

Commenters supporting and opposing the duties and quantitative limitations submitted comments on what they thought needed to be changed in the exclusion and the objection process to make it more fair, efficient and effective. Commenters included references to arbitrary and capricious government action and laid out from their perspective how the exclusion and objection process could be legally challenged if not improved.

Concerns With Unintended Downstream Impacts That Steel and Aluminum Duties and Quantitative Limitations Will Have on U.S. Manufacturers and Consumers

The Department received a significant number of detailed comments that raised concerns in this area. The comments came from a broad spectrum of U.S. industries, including many major sectoral employers. The creation of an effective product based exclusion/objection process (and with the publication of today's rule, a rebuttal/surrebuttal process) is intended to address as many of these types of concerns as possible. As detailed below, many commenters do not believe that the exclusion/objection process is effective and that because of how products are sourced and used in the manufacturing process, it is unlikely to succeed.

Comment (a)(1): Concerns for unintended downstream impacts for U.S. manufacturers.
A small manufacturer noted that a 25 percent ad valorem duty increases their Cost of Goods Sold (COGS) by 7 percent, which can be the difference between

profitability and loss for their employee-owned company. This commenter noted that it has been portrayed in the media that this duty will have an impact of one half of one percent on the total cost of U.S. produced product. This commenter noted that its potential impact is fourteen times that. Many additional commenters provided additional examples from their experience. One manufacturer of dump bodies for dump trucks asserted that a 25 percent increase in steel prices would result in an “11 percent increase in wholesale product price” for the company. A commercial construction company asserted that “steel building suppliers increased [their prices by] 25-29 percent overnight and will only hold pricing for 15 days.” The company anticipates price increases “across the board on more subcontractors and suppliers” as they anticipate a shortage. Another downstream manufacturer asked “how the Department will monitor and report on the effect of this tariff on the primary manufacturers of aluminum in the U.S., let alone downstream industries, which were ignored in the 232 report?” Other commenters noted that it is not only the 232 duties and quantitative limitations that are putting pressure on these U.S. manufacturers, but also the other various trade remedies that the U.S. has implemented.

BIS response:
The Department understands that the consistent message from these commenters is that they are feeling pressure from the duties and quantitative limitations, and in many cases the commenters believe the costs may not be absorbable by these companies and the market. This puts pressure on the U.S. steel and aluminum industries to ramp up production and in the interim for an effective exclusion process to fill the void. The Department understands that and is taking steps to ensure the exclusion process is efficient enough to fill the void to avoid any unintended economic impact to downstream U.S. industries. The changes made in today's rule will improve the efficiency of the process and address these comments. The Department will be monitoring the domestic aluminum and steel industries, as well as industries consuming steel and aluminum, to regularly evaluate the competitiveness of U.S. industry. The exclusion process is available to individuals and companies to ensure that they can obtain adequate supply of steel and aluminum products of size, shape, and function that are not available in the United States in adequate quantity or quality.

Comment (a)(1)(ii): Recommends additional analysis is done of the downstream impact of duties and quantitative limitations.
Some commenters recommended the Department review, on a regular basis, the impact of duties and quantitative limitations on the economy and downstream users and develop and implement a plan to sunset them if they prove to have a significant unintended impact. These commenters urged the Department to consider the unintended consequences of these duties and quantitative limitations in any review. One such consequence would be companies further down the supply chain importing finished goods at lower prices instead of purchasing higher-priced U.S. manufactured goods from companies that imported raw and semi-finished materials subject to duties and quantitative limitations.

BIS response:
The Secretary has directed the Department economists to regularly review the impacts of the steel and aluminum duties and quantitative limitations, including on downstream sectors. The Secretary will present this information to the President for his consideration as appropriate.

Comment (a)(1)(iii): Higher input costs for steel and aluminum will have a chilling effect on capital intensive investments that require a large amount of steel and aluminum, e.g., for energy exploration and production or petrochemical production.
Commenters from major trade associations for oil and gas exploration noted that a process that generally involves granting only one-year product exclusions would impede the ability to plan for the long term by introducing significant uncertainties as to when, whether, where, and at what price the member companies can purchase the steel inputs needed to bring U.S. oil and natural gas projects to fruition. Planning and locking in cost projections for equipment and materials is often key to determining whether a project's economics merit approval. Other major industry associations, such as a trade association for the auto industry, identified an impact on investments in the U.S. that they attribute to the duties and quantitative limitations. These commenters believe the duties and quantitative limitations will have an impact on these manufacturers, the jobs they create, and ultimately the American consumer.

BIS response:
The Department believes an effectively managed and configured exclusion/objection process, with a rebuttal/surrebuttal process being added with today's rule, will significantly mitigate these concerns. U.S. steel and aluminum manufacturers are already starting to increase production, and the exclusion process will be there to fill any temporary gaps in the U.S. supply to ensure that companies, such as those involved in oil and gas exploration and production and the automotive industry, will have the steel and aluminum they need to continue to invest in the United States.

Comment (a)(1)(iv): Consumers will face increased prices.
Commenters noted that the cost of their finished goods will increase because of the duties and quantitative limitations and those increases will be passed to consumers. A commenter noted that in order to compensate for their increased steel cost they will be forced to raise their finished product cost by at least 8 percent. “That may seem like a small margin, but in today's global market that is enough to cause a company to be forced to relocate manufacturing outside of the U.S., import finished foreign product, or ultimately to close their doors completely.” Another commenter noted that for 84 years in Harlan, Iowa this company has been a manufacturer of spare parts for mills used to make animal feed in the agriculture industry. The duties and quantitative limitations will drastically increase their costs and U.S. feed suppliers will see an increase in production costs to produce feed, leading to an increase in the cost of our food.

BIS response:
The Department agrees there may be some short term price adjustments that may reach consumers, but we believe that the price increases at the consumer level will be minimal. The Secretary has, as noted above, also directed the Department economists to regularly review the impacts of the steel and aluminum duties and quantitative limitations, including on downstream sectors.

Concerns Over the U.S. Supply Chain and Comments Asserting That the Exclusion Objection Process Are Inefficient and Not Consistent With Business Practices, Regulatory Requirements, and Contractual Agreements for Sourcing Materials

Comment (b)(1): Concern that exclusion process is not consistent with business procurement practices.
Commenters asserted that the exclusion process does not take into account several key aspects of how the U.S. supply chain functions. A commenter asserted that companies generally classify their suppliers into a multi-tiered list, such as acceptable, approved, and preferred. Each of these tiers indicates the compliance with quality

standards based on years of experience with a supplier's product. Even after a supplier adds new capacity, additional time is needed for purchasers of steel to technically qualify these new mills/lines. Adding a new supplier to an approved manufacturers list is a lengthy process, taking as long as three years as a company wants to be assured of a supplier's ability to manufacture a product to a given standard consistently.

BIS response:
The exclusion process created in the supplements added in the March 19 rule and the Proclamations include criteria requiring suitable quality of U.S. steel and aluminum to deny an exclusion request. The detailed form for requesting exclusions and the form for submitting objections are intended to provide enough information for individuals and companies to determine whether in fact a U.S. supplier can supply the steel or aluminum in the quantities and quality needed. If a U.S. supplier objects to an exclusion request, the burden is on that supplier to demonstrate that the exclusion should be denied because of failure to meet the specified criteria. As described below in the regulatory changes, today's rule is adding additional text to paragraph (d)(4) in the two supplements to provide greater specificity for objections, which will be responsive to these types of comments. Today's rule adding a rebuttal process to paragraph (f) to allow requesters of exclusions to rebut information included in an objection to their exclusion request will also improve the process and address these types of concerns raised by these commenters.

Comment (b)(2): Factors beyond an importer's control may limit their ability to change suppliers.
Commenters asserted that regulatory requirements often limit the ability for U.S. manufacturers to make changes in the inputs,
e.g.,
in the medical area or food products area. Offshore drilling and aircraft are other examples. Therefore, making changes in suppliers may not be permissible, or if it is, it may be expensive and/or time consuming. One commenter asserted that under Federal Food and Drug Administration regulations, substitution of the foil substrate could take two to ten years for approval, depending on use in packaging for food or medical devices. Another commenter asserted that given the low volume and high investment necessary to manufacture and smelt some specialty products for vehicles, many U.S. steel producers simply have decided not to enter into these markets. It can take many years for a company to test and validate that a material producer's product will meet the specifications necessary to perform as required for many of these safety-critical parts.

BIS response:
The Department, when evaluating whether suitable quality of steel or aluminum supply exists in the United States, can take into account the types of factors asserted here by the commenters in two respects. First, these considerations may be taken into account when deciding whether to grant an exclusion request and second, these considerations may be taken into account when determining the appropriate validity period for an exclusion request. As described below, regulatory changes that add paragraphs (c)(6)(i) and (ii) to better define the exclusion review criteria and paragraph (h)(2)(iv) to provide additional context for how the Department determines the appropriate validity for exclusions will be responsive to these comments.

Comment (b)(3): A one year window is not consistent with the way many raw materials are sourced.
One commenter asserted that the restriction of exclusions to specific supplier and country of origin combinations may make it difficult for the commenter to actually use an exclusion if one were granted because the company does not have visibility as to the country of origin or producer when sourcing aluminum through traders. At the time the commenter makes minimum purchase commitments, it does not know which traders will have inventory from which specific countries or which markets will have the most favorable pricing. In order to obtain an exclusion for its purchases from traders, the commenter would have to apply for an exclusion for each product from every market from which the commenter's traders could reasonably be expected to source product. Another commenter asserted that a problem could arise when the product delivered is not identical to what is ordered. In some instances, even though this commenter may place an order for one grade of aluminum, it might receive a better grade when there is a larger inventory of the higher graded product and the price differential is small. If an exclusion is limited to a specific grade and chemical composition of aluminum, the commenter would be forced to pay the tariff to use the product that was delivered. If the aluminum user must reject a shipment and wait for the specific grade covered by an exclusion, that could cause delays in its production process which could result in damages being assessed by its customers.

BIS response:
The Department understands that in the types of scenarios described by these commenters the usefulness of an exclusion may be limited or obtaining additional exclusions to cover additional sourcing activity may be needed. The Department believes that some of the concerns may be overstated and that, based on past procurement activities, patterns of steel and aluminum procurement can be identified to significantly limit the total number of exclusions that may need to be requested. These organizations may also attempt to begin sourcing more of their steel and aluminum procurement needs from U.S. manufacturers. Today's rule nevertheless clarifies in (c)(2) in both supplements that the exclusion request forms do allow for minimum and maximum dimensions, as well as clarifying that ranges are acceptable when the manufacturing process permits small tolerances. A permissible range must be within the minimum and maximum range that is specified in the tariff provision and applicable legal notes for the provision. These changes to paragraph (c)(2) will also help address some of the concerns raised by these commenters.

Comment (b)(3)(i): Exclusion process and timeline are difficult to align with real-world purchasing and contract decisions.
One commenter asserted that like many companies, it makes purchase decisions on a calendar year basis. For calendar year 2018, this company has already obligated itself to purchase guaranteed minimum amounts from certain suppliers. The company has already obligated itself to purchase certain volumes for 2019 and expects to sign purchase contracts for the remaining volume for 2019 in mid to late 2018. Even if the exclusion requests are renewable at the end of their one-year term, this company is concerned it will be forced to make 2020 purchasing commitments without knowing whether the full year's purchases will be subject to duties or not.

BIS response:
The Department understands the concerns being raised. Organizations, such as those that need to make purchasing decisions multiple years out in the future, should include in the exclusion request information to that effect. This type of information may be used to support a validity period for longer than one year. As noted above, this rule adds paragraph (h)(2)(iv) to provide greater transparency in how the Department determines the appropriate validity date for exclusions and this will be responsive to these types of comments. The March 19 rule did not include any type of grandfathering

provisions for existing purchase contracts, and today's rule does not add any grandfathering provisions. However, there is nothing that would preclude an individual or organization in the U.S. that has an existing purchase contract from applying for an exclusion request to cover the scope of that purchase agreement. To the extent that such exclusion request can meet the existing criteria in the supplements and Proclamations, the Department could approve that request and take into account the existence of a purchase contract in determining the appropriate validity period. The existence of a purchase contract would not be determinative, however, as the Department must also take into account any objections that are filed and the timeframe in which U.S. supply may be available.

Comment (b)(4): Other concerns with quality or domestic supply.
Some commenters asserted that lead times are long to make changes to the supply chain, including sometimes requiring OEM approvals before changing. Because one trade association's members supply to the automotive and aerospace industry, the process to change raw material suppliers is closely followed by and often approved by their OEM customers. The association's members have long-term customer contracts based on these approvals, and changes to the terms of those contracts are lengthy and time consuming. Other commenters raised concern about obtaining products where there is not sufficient U.S. supply. For example, some commenters asserted that many specialty steel and aluminum materials used in vehicle components are not available domestically. There may be only a few producers in the world—in some cases only one or two—that can source the grade of specialty materials needed to meet component specifications. Examples cited include wire used in steel-belted radial tires and specialty metals used in fuel injectors. For domestic manufacturers, it is not a question of whether they can produce these materials, but instead whether production of these niche materials will be cost-effective and provide a return on investment.

BIS response:
The Department is reviewing exclusion applications from domestic industry, and related objections (and will do the same for rebuttals/surrebuttals), on a case-by-case basis in a fair and transparent process. The Department will assess whether manufacturing capability can meet the technical parameters for the specific article in question, including if idle capacity is being brought back online as well as new capacity. Today's rule adds greater specificity on the review criteria for exclusions under new paragraph (c)(6) and objections under revised paragraph (d)(4). These changes will be responsive to these types of comments.

Increases in Costs for Steel and Aluminum in the U.S. That Exceed the Duties

Some commenters provided detailed comments on what they perceived to be profiteering that may be occurring in the U.S. As described above, some of this may be short term adjustments that are not warranted by market fundamentals that should level out.

Comment (c)(1): Concerns over profiteering by certain U.S. manufacturers of steel and aluminum or other parties that supply downstream manufacturers with steel and aluminum.
One commenter asserted that it is not just importers being impacted by the duties and quantitative limitations. This commenter currently purchases all of its steel and aluminum from domestic sources, but is concerned that duties and quantitative limitations will allow the steel companies to raise their material prices significantly, even beyond the 25 percent competitive advantage provided by the tariff. Another commenter, a manufacturer of garage doors that buys 90 percent of its raw materials in the U.S., commented that “the tariffs have given the domestic manufacturers the ability to raise prices in excess of 28% this quarter.” The company fears that this increase will be impossible to pass on to its customers (national home builders). A trade association commenter expressed concern that market manipulation would cause the Midwest Premium to spike and the U.S. market to become more attractive to global aluminum suppliers, thereby drawing additional supply into the market and undermining the Department's Section 232 remedy. The commenter recommended that the Department follow the suggestion of Chairman Hatch and Ranking Member Wyden to “[c]oordinate with the Department of Justice and Federal Trade Commission to ensure that effective mechanisms are in place to deter and to redress any anticompetitive conduct in the market for products that are subject to the Section 232 tariffs [duties and quantitative limitations] and product exclusion process,” including “[m]echanisms . . . for the public to report perceived anticompetitive behavior in respect of such products and prompt review of those reports by the appropriate authorities.”

BIS response:
The Department and other parts of the U.S. Government as appropriate will review this issue and address as needed.

Comment (c)(2): Concern that openness of exclusion process will allow for foreign profiteering because importers granted exclusions will be locked in to specific foreign suppliers.
Because of the amount of confidential business information required on the exclusion forms, it will allow for foreign suppliers and competitors to increase their prices. A commenter asserted that they are concerned that limiting exclusions only to the suppliers, countries of origin, and quantities indicated in the exclusion request, while at the same time making all of this information public will create pricing, anti-trust, or customer-relation concerns. For example, once suppliers know that their company is limited only to sourcing through them if their company wants the product to be covered by an exclusion, they will have pricing power over the commenter and may raise prices because they know the commenter has no other choice but to buy from them. Another possible unintended consequence was highlighted by one commenter that asserted their competitors will know which suppliers and countries of origin they will need to purchase from and could attempt to fully book the supply so as to force the commenter to use more expensive materials that make the commenter's finished products uncompetitive.

BIS response:
The Department does not agree that importers granted exclusions will be locked in to specific foreign suppliers. The approved exclusions will be specific to specified countries and suppliers, but domestic users are not precluded from submitting a new exclusion request if that type of profiteering or anticompetitive activity occurred by a foreign party.

Is the exclusion objection process making supply issues worse for downstream manufacturers in U.S.?

Comment (d)(1): Commenters arguing that the inefficient exclusion process is part of the problem and making issues worse.
Many commenters expressed concern that the product exclusion process, as set forth in the March 19 rule, is not working well. One commenter asserted that the mechanism set up to assess these requests fails to address the economic impact done to domestic manufacturing and opens up the U.S. to additional national security risks. Other commenters asserted that the volume of requests slows the entire process and that unnecessary

limitations on the scope of the exclusion requests create an untenable burden on the parties as well as the Department. Commenters asserted that the current exclusion process prevents requesters from being able to receive an exclusion quickly enough in the short-term to avoid disruption to their supply chain, and prevents them from being able to prepare in the long-term due to the short scope of any approved exclusion request. Requiring a business to accurately predict its usage for the year, they contend, prevents the business from being able to adjust or adapt to any changes in the market. And they assert that the lack of clarity around the process means that no company submitting a request has any idea if it will receive an exclusion, despite having disclosed some of its most sensitive proprietary information. They worry that requesters in similar situations will find themselves treated in a disparate manner as the Department determines how it will approach the relevant criteria. Finally, they assert that the complexity of the process, in particular the amount of information required, discourages participation in the exclusion process.

BIS response:
The Department understands the importance of a transparent, effective, and fair exclusion/objection process, as well as having the rebuttal/surrebuttal process added in today's rule. The publication of today's rule makes improvements that will be responsive to these concerns and that will make the process work better for the Department. The process is designed to help U.S. downstream manufacturers obtain steel and aluminum without the additional duties when U.S. supply is not available in the quantity and quality that they need.

Comment (d)(1)(i): The Department misjudged the number of exclusions that would be submitted, as well as the anticipated burden.
One commenter questioned the burden estimates included for complying with the rule and filing exclusion requests. This commenter asserted that each exclusion request requires the compilation of extensive supporting information that manufacturers must submit in addition to the lengthy exclusion request form. The Department estimated an average reporting burden for the collection of information in the exclusion request of four hours per request. This commenter thought four hours is a misleading estimate and does not account for the time taken to identify in a company's business records the pertinent data needing to be entered or attached. This same commenter asserted that the Department was not even close on its estimate for how many exclusion requests would be received.

BIS response:
The commenter is the only commenter that mentioned a concern about four hours not being a sufficient amount of time to gather the information. Therefore, the Department believes the original estimate of four hours to gather the information and fill out the exclusion and objection forms is still an accurate estimate and makes no adjustments in that estimate. It is now clear, however, that the Department underestimated the number of exclusion requests and objections that would be filed. Although the estimates included in the March 19 rule were based on the Department's good faith estimate at the time, the Department now has more information and experience that it can rely upon to project an annual number of exclusion requests. As described later in the Rulemaking Section, the Department revises the exclusion form paperwork collection, as well as the objection form paperwork collection to reflect the new estimates of the burden, as well as expanding both collections to account for the rebuttal/surrebuttal process today's rule is adding. The Department believes the new numbers should be much more accurate. The Department took the changes being made in today's rule into account when developing the updated estimates for the number of exclusions and objections that are anticipated to be received, as well as the anticipated numbers of rebuttals/surrebuttals that will be received. Because the rebuttals/surrebuttals will not require filling out as extensive of a form as an exclusion request or objection, and in most respects will be responding to an objection or a rebuttal of an objection, the amount of time estimated to submit a rebuttal/surrebuttal is estimated to be much less, at one hour per rebuttal/surrebuttal. The Department will reevaluate the estimates provided in today's rule and the two related paperwork collection notices published in support of this rule and make any needed adjustments.

Comment (d)(2): Supportive of having exclusion process.
Commenters were supportive and appreciative of having an exclusion process. Commenters did not want to eliminate the exclusion/objection process, but almost all had suggestions for changes to the process. Many commenters asserted that while they think the duties and quantitative limitations should be lifted as soon as possible because of unintended effects on downstream users, they also recognize that there must be a workable product exclusion process. Several commenters asserted that they appreciated the opportunity to comment on the Department's March 19 rule and look forward to working with the Department to ensure that the exclusion request process is fair, inclusive, and effective. Commenters asserted that they understand the need for BIS to manage the product exclusion request process in a fair and transparent manner while taking appropriate account of the Proclamations' goals of ensuring sufficient U.S. production of steel and aluminum to meet fundamental national security requirements. These commenters believe several aspects of the supplements and forms added in the March 19 rule should be modified or clarified consistent with those goals.

BIS response:
The Department appreciates the support for the exclusion/objection process, as well as the comments provided to improve the process. The Department believes with the publication of today's rule, the exclusion/objection process (along with the rebuttal/surrebuttal process being added) will be significantly improved.

Arbitrary and Capricious, Lacks Basic Due Process, Not Transparent, and Not Fair

The comments described here are also referenced and addressed in other parts of this preamble and the regulatory changes made below. The intent of the discussion here is to highlight the general concerns raised in this area, along with the general BIS response. The specific types of issues,
e.g.,
the need to add a rebuttal process, are addressed in other parts of the preamble and the regulatory text of this rule, and the Department believes the process will resolve these types of fairness and consistency concerns that were the focus of these commenters' concerns.

Comment (e)(1): Commenters raised concerns over lack of due process, fairness, or transparency.
One commenter asserted that tying refunds to the date when the Department finally posts the petitions on its website is arbitrary. The commenter asked if an exclusion is granted, why that exclusion would not be granted retroactively to the date the tariff was imposed. Another commenter asserted that granting the exclusion for one year is arbitrary and that the decision process for whether to approve or deny exclusion requests is not specified and appears arbitrary. Other commenters asserted that it was critical for due process to include a formal rebuttal process in the exclusion and objection process. These commenters believe that without a rebuttal process, the Department risks finalizing actions without a complete record and taking action that is unfairly

biased against U.S. businesses that rely on imported articles or that may exacerbate risks to national security. Other commenters asserted that the current process increases the possibility of inconsistent treatment for individual requests that are only different based on an insignificant dimension. For example, one comment opined, “One can easily imagine a situation where a company ends up only able to import certain dimensions without payments of tariffs, and being barred from similarly being able to import others, despite their otherwise identical nature.” The comment continued, “This would be the definition of an arbitrary act on the part of the agency, when it “treats similar situations in dissimilar ways.” Along similar lines, another commenter asserted that the Department may grant an exclusion for a specific product for some companies/end-users but unreasonably deny it for others for the identical product, a result that it contended would be arbitrary, particularly if the exemption was based upon “short supply” considerations or a general lack of U.S. availability.

BIS response:
The review of all product exclusion applications from U.S. industry is being conducted on a case-by-case basis in a fair and transparent process. As described above, two specific Commerce components have worked closely in this effort—BIS and ITA. BIS is the lead agency deciding whether to grant steel and aluminum tariff exclusion requests, and ITA is analyzing requests and objections to evaluate whether there is domestic production available to meet the requestor's product needs, as provided in the exclusion requests. The Department appreciates all of the commenters' suggestions to improve the exclusion request process. Several of the commenters argued that they believe the March 19 rule and the exclusion process it established could be legally challenged because it appears arbitrary and capricious to them in certain respects. The Department does not agree with that assessment. However, the Department does believe the changes being made in today's rule should significantly address these concerns. For example, today's rule is adding a rebuttal/surrebuttal process under paragraphs (f) and (g) of the two supplements and making a number of other changes to make the criteria more well defined and their application more transparent for the public. The Department has been treating each exclusion request and objection received in a fair and equitable way based on the stated criteria included in the March 19 rule and standard operating procedures that have been developed for the exclusion and objection review process.

Comments for How the Exclusion and Objection Process Can Be Improved

Commenters in almost all cases noted that their comments applied equally to the steel and aluminum supplements. The rule published today makes the same improvements to each supplement to continue with parallel supplements (same parallel structure included in the March 19 rule), with only slight differences for information that is specific to steel or aluminum,
e.g.,
in some of the examples being added to the supplements to make the application of the criteria more transparent. These changes are described below under Changes made in this interim final rule to the exclusion/objection process.

Several commenters asked for clarification and guidance on how to apply for broader product exclusions that would apply to all importers in the United States. As described below in more detail, the Department has the discretion to make exclusions available to all importers if we find the circumstances so warrant, and we will exercise this discretion as appropriate. Individuals and organizations do not apply for such broad product exclusions, but rather the Department as it gains experience with the types of exclusion requests that are being repeatedly approved because the criteria are being met on a consistent basis over time, can exercise this type of discretion that will likely result in making the process more efficient. Several commenters wanted to quickly move toward these types of broad product exclusions, but the Department believes it better to begin with a deliberative assessment of individual requests in order to not undermine the purpose of the duties and quantitative limitations in place for steel and aluminum.

Comment (f)(1): Date of submission, not the date of posting on regulations.gov, should be the relevant date for all decisions.
Commenters requested that the date used for all future decisions such as applicability of duties or retroactive relief of duties be the date of submission of a complete request. They asserted that providing such retroactivity is a matter of fairness, as the date that the Department posts the submission on
regulations.gov
is currently an unknown and lengthy amount of time which is costing U.S. manufacturers hundreds of thousands of dollars per week. Another commenter asserted that the Department could have flexibility in this area and still be consistent with the second Presidential Proclamation, which set forth that the exclusion would apply retroactively to the date the request was posted for public comment. The commenter asserted that such language was not language of limitation, and the Department, through its action in response to these comments, might further extend the period of application.

BIS response:
The retroactive date for duty relief through the exclusion process is set by the Proclamations, not the Department. Today's rule, as described below in the description of the regulatory changes, in order to improve the transparency of the process is adding a new paragraph (h)(2)(iii) to specify the effective date for approved exclusions.

Improve Transparency, Including Making Information and Forms More Easily Accessible for the Public

Comment (f)(2)(i): Make information and process more transparent.
Commenters requested that the Department provide detailed timing and criteria, based on the Proclamations, that set forth how decisions will be made. U.S. manufacturers should be able to quickly determine that an exclusion request or denial is based on a known set of facts and is consistent with other actions on requests received. Several commenters requested that the Department impose stricter and more certain deadlines for its own actions, providing some finite time period between when an exclusion request is filed with the Department and when it is posted for comment. Commenters provided a range of suggested times from immediately (which is not feasible under the current
regulations.gov
system being used for the exclusion/objection process, as well as for the rebuttal/surrebuttal process being added in today's rule) to 5 to 14 days. Commenters were less concerned with the actual number of days than with having a specified number of days, so they better know what to expect. Without some set period for this step in the process, filing companies have no certainty as to when they can likely get a response to their request and this uncertainty is extremely disruptive to U.S. businesses trying to cope with the duties and quantitative limitations. Commenters said that the
regulations.gov
website where documentation is posted is not easy to navigate nor fully transparent. Commenters requested that the Department develop a system to notify applicants of their application status and anticipated wait time to facilitate planning and communications with

customers. Commenters requested that the Department publish official guidance or an “FAQ” page to describe the steps of the exclusion/objection process in easy to understand language. Commenters believe that information provided to the public should include a clear description of an entity eligible to file and an inventory or checklist of the information/evidence that should be provided as supplemental materials.

BIS response:
The Department published procedures for the product exclusion requests, as well as for objections, in the March 19 rule and subsequently made them available on the Department's website. Today's rule as described below adds Annex 1 to Supplements No. 1 and 2 to Part 705 that will assist the public in using
www.regulations.gov
for application issues that are specific to submitting rebuttals under the exclusion, objection, rebuttal, surrebuttal process. The Department has also posted a step-by-step visual guide to assist industry through the process and tips on how to properly complete the exclusion request forms based on issues identified during BIS's initial review of submissions, as well as based on ITA's experience in reviewing the submissions. The Department will update these guides as appropriate. BIS has established dedicated phone numbers and email addresses for U.S. industry to seek assistance or ask questions about the process. These phone numbers and email addresses were included in the press release announcing the exclusion process and in the supplements added in the March 19 rule. The procedures published in the March 19 rule set forth the requirements for submitting requests for exclusions and for submitting objections to such exclusion requests during a 30-day comment period. Today's rule is making a number of changes to better define the criteria used to review exclusion requests and objections that will be responsive to comments raising concerns about transparency and being able to predict the outcome for a particular exclusion request and any objections thereto.

Today's rule is adding a rebuttal/surrebuttal process that will specify that after the 30-day objection period, an exclusion requester may submit a rebuttal to any objection(s) within 7 days, and an objector(s) may respond to that rebuttal within an additional 7 days after the rebuttal period has ended and the 7-day surrebuttal comment period is opened. The Department will not open the 7-day rebuttal period until the 30-day objection period has concluded, all complete objections have been posted in
regulations.gov
, and the Department indicates on the tracking sheet that will be posted on the Department website that the 7-day rebuttal period has opened. The same type of process will be followed by the Department opening the 7-day surrebuttal comment period. The Department in order to not divert staff resources from reviewing 232 submissions will not be able to contact each submitter to notify that the rebuttal or surrebuttal review period have opened, so submitters will need to check the tracking sheet that will be posted on the Commerce website for updates on their 232 submissions. Only the individual or organization that submitted the exclusion request may submit a rebuttal during the rebuttal comment period. Only the individual or organization that submitted an objection to exclusion request that received a rebuttal may submit a surrebuttal during the rebuttal comment period. The Department is confident that these added procedures will allow it to more efficiently make determinations on exclusion requests. The Department also has the discretion to make exclusions available to all importers if we find the circumstances so warrant, and we will exercise this discretion as appropriate. The Department will expeditiously grant properly filed exclusion requests which receive no objections and present no national security concerns. The Department will work with U.S. Customs and Border Protection to ensure that the requester provided an accurate Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting number. If so, BIS will immediately assess the request for any national security concerns. If BIS identifies no national security concerns, it will expeditiously post a decision on
regulations.gov
granting the exclusion request. The Department has already made these process improvements and in today's rule is adding a new paragraph (h)(2)(ii) in both supplements to specify this streamlined review policy for exclusion requests that receive no objections. These changes taken together should be responsive to the various comments described above on the exclusion/objection process.

Comment (f)(2)(ii): Establish consistent guidelines for filling out the forms.
Commenters requested that the Department adopt objective and transparent standards and guidelines for completing and submitting the forms and curing deficiencies when refiling the forms. A commenter asserted that the Department has been inconsistent and non-transparent in processing and posting the forms and in determining which forms “satisfy” reporting requirements and which forms do not. The commenter asserts that some forms are accepted and posted even though they are inconsistent with the Department's detailed reporting specifications.

BIS response:
The Department has already taken action to improve transparency in this area. The Department has posted guidance with step-by-step visual guides to assist industry through the process and with tips on how to properly complete the exclusion request forms based on issues identified during the Department's initial review of submissions. The most common issues have been incomplete forms or bundling numerous requests in a single submission, but as requesters have become more familiar with the process and
regulations.gov
, these issues have been reduced significantly. Today's rule is also making changes to paragraph (b), including adding text to paragraph (b)(5) to clarify the provisions for public disclosure and information protected from public disclosure, and changes to paragraphs (c) and (d) to better define and include application examples for the criteria used for reviewing exclusions and objections. As described below, today's rule also adds Annex 1 to Supplements No. 1 and 2 to Part 705, which will assist the public in using
www.regulations.gov
for application issues that are specific to submitting rebuttals and surrebuttals under the exclusion, objection, rebuttal, surrebuttal process.

Comment (f)(2)(iii): Backlog of requests and timely release of information.
Commenters requested the Department streamline its process, asserting that the Department is simply not equipped to handle the crushing volume of exclusion requests, particularly with the details reported in the forms. They request that forms be simplified and that the information requested be streamlined and grouped. Commenters also identified much of the backlog as attributable to the duplicative filings required by the product specific and customer-specific filing requirements. Commenters believe the Department can alleviate much of this backlog by adopting product exclusions based on broader product groupings, regardless of source and supply chain, as discussed further in the comments below.

BIS response:
The Department has worked to increase and organize its staff to efficiently process exclusion requests. Since July 2, the Department has been reviewing and posting about 1,800 requests and 700 objections weekly. As of August 1, the Department has posted more than 2,200 steel and aluminum

decisions and will be posting substantially more in the coming weeks. BIS's dedicated phone lines and email accounts are available to assist industry with any inquiries about their exclusion or objection filing. Due to the rolling nature of the exclusion/objection process, the wait time can vary. The Department has also modified its review procedures to expedite decisions on requests that have no corresponding objections, as described further in other parts of this rule, such as by adding a new paragraph (h)(2)(ii). This will not only speed processing of those requests but also facilitate review of requests with objections, and with the publication of today's rule, requests that have rebuttal/surrebuttal(s). More Departmental staff time will be available for reviews of the more difficult requests that involve an objection(s) and rebuttal/surrebuttals(s).

Confidentiality Issues

Comment (f)(3)(i): Create formal process to allow for and protect submissions of confidential business information (CBI).
Most commenters requested the Department revise the supplements added in the March 19 rule to provide for a formal process for the submission of CBI. Commenters asserted that neither the March 19 rule nor the exclusion request and objection forms indicate the procedures for submitting confidential business information. Commenters asserted that the Department has much experience (in trade remedy proceedings) in protecting CBI through the use of “protective orders.” Commenters requested the Department establish a similar process where parties may submit a “confidential” version of an exclusion request and a separate redacted “public” version which is released to the public at large. Commenters asserted that they believe that concerns over CBI may depress the number of companies willing to submit objections to exclusions. Commenters requested that the Department clarify the following issues related to CBI and the exclusion and objection process: Is an application complete if CBI is not provided, such as when a company determines that certain fields on an exclusion or objection form require disclosing proprietary information? If the box for CBI is checked, how long does the submitter have to submit the CBI and how long will it take for the completed application to be posted in
regulations.gov
? Does the 25 page limit of the petition include CBI? If the Department accepts group submissions, how can individual members protect their CBI? Other commenters urged the Department to allow filing of CBI in a way that protects that information from public disclosure but allows the Department to use it in a balanced manner across all requesters.

Commenters raised concerns over fairness for the current process of dealing with CBI. The lack of a process for dealing with proprietary information means that when the Department posts an exclusion request or an objection with CBI in the supplementary material, there is no way for other parties to respond. For example, a commenter notes that objections from U.S. Steel have been posted, but certain information has not been provided, such as capacity and capacity utilization. Although the Department may reach out relating to such information, the requester will never know what the objector said about its capacity to supply the requested demand and, therefore, will never be able to rebut the issue. The commenter argues that the current system penalizes requesters whose requests may not be posted (or at a minimum may be delayed in being posted, thereby forestalling retroactive relief) if the exclusion request form is not fully filled out, yet an objector is able to unilaterally withhold data and delay consideration of the exclusion request. The commenter requests that such an objection be rejected as incomplete.

BIS response:
The Department published the regulations establishing the exclusion request/objection process in the March 19 rule. The Department has made clear in the regulations that parties applying for an exclusion and those objecting to the exclusion requests should include only public information in their full submissions. The exclusion and objection forms include an area where parties can indicate if they have additional CBI that they believe is relevant to their submission, although the Department believes that the information requested in the forms, in most cases, should suffice to allow a determination to grant or deny. However, based on the number of comments received on this issue regarding concerns over protecting CBI, the Department understands that additional changes and clarifications need to be made. Today's rule is revising paragraph (b)(5) to clarify the procedures for public disclosure and the information protected from public disclosure, including specifying a process to be followed when making submissions that are not intended for public release.

Comment (f)(3)(ii): Exclusion/objection forms need to be scrubbed to eliminate questions that require disclosing CBI.
Commenters asserted that much of the information the Department has requested in conjunction with objections to exclusion requests includes CBI, information that, if shared publicly, could raise intellectual property/trade secret, anti-trust, or customer-relation concerns. For example, a requester must provide chemical composition, dimensions, strength, toughness, ductility, magnetic permeability, surface finish, coatings, along with other technical data and must also provide the names of the suppliers used, as well as the quantity predicted to be needed from each supplier. An objector must provide capacity and capacity utilization data; production information, including production capacity and utilization data; technical specifications, including the detailed chemical composition; production/shipping timelines; and internal technical data to refute assertions made in the request. Commenters believed that this level of detail is unnecessary and burdensome for the purpose of this exercise and may require disclosure of proprietary information belonging not only to a requester or objector, but to a requester's supplier. Commenters were also concerned that the exclusion request form requires companies to provide support regarding their inability to source domestic suppliers which will often involve revealing non-public terms of sale discussions and available sources of supply. One commenter asserted that sharing such extensive information plays into the hands of foreign powers or other competitors, allowing them to easily amass a large amount of industrial information on the U.S.

BIS response:
The Department designed both the steel and aluminum exclusion request and objection forms with input from a variety of U.S. Government and industry experts. The goal was to create a balance of information requested from the exclusion requester to allow a U.S. manufacturer of steel or aluminum to file a credible objection to that specific exclusion request. The Department is requesting that parties applying for an exclusion and those objecting to an exclusion request include only public information in their full submissions. The exclusions, objections, rebuttal, and surrebuttal forms include a section where parties can indicate if they have additional CBI that is relevant to their exclusion request or their objection. Metallurgical composition is not proprietary information. The Department does not ask for steel or

aluminum process information, which can be CBI. In almost every case, only public information is needed for a valid exclusion request and a valid objection. In the event that the Department determines that additional information of a proprietary nature is necessary to make a determination on an exclusion request, the Department will provide instructions to the affected parties and will protect this information from public disclosure. However, to address concerns in this area, today's rule is revising paragraph (b)(5) to add more provisions to clarify the procedures for public disclosure and the information protected from public disclosure, including specifying a process to be followed when making submissions not intended for public release as part of a request, objection, rebuttal, or surrebuttal.

Expand and Clarify What Parties Can Apply for Exclusions

Comment (f)(4)(i): Trade associations should be able to petition on behalf of industries.
Commenters felt strongly that the exclusion process should be revised to allow for trade associations to file for a broader exclusion on behalf of similarly situated member importers. They asserted that this would cut down on the number of requests that the Department is receiving, making the process more efficient and less costly, and would benefit small business importers in particular. In cases where several companies would like to make the same exclusion request, such as when the imported product at issue is not produced in the U.S. and is used by multiple domestic manufacturers, they argued that it is very inefficient to ask each of the companies to file the same request. Commenters asserted that the supplements contemplate broader exclusions, which they thought would be a natural place for trade associations to play a beneficial role in the exclusion process, but the supplements provide no guidance on how to apply for such broader exclusions.

BIS response:
Allowing trade associations to file requests will not make the process more efficient, because the information required for an exclusion request is unique to each individual or company applying for an exclusion. The individuals or organizations applying for an exclusion request must specify the precise steel or aluminum product, including whether a product is customized. Because the primary consideration in whether to grant or deny an exclusion request is evidence that the requested product is or readily can be made in sufficient quantity and quality by domestic manufacturers, it is essential that the precise product being sought be clearly identified, along with the quantity needed and the timeframe for delivery. This will necessarily be different for each individual or organization. A credible objection must state that the objector can produce the product being sought. Absent this specificity, it would be impossible for domestic manufacturers to determine whether or not they can produce the product. The need for specificity is why each individual or company needs to respond, as opposed to trade associations. The Secretary does have the discretion to make broader exclusions available to all importers if the Department finds the circumstances warrant, and the Secretary will exercise this discretion as appropriate.

Comment (f)(4)(ii): Confirm that contractors and distributors that supply others with steel may apply for exclusion requests.
A commenter requested the Department confirm that the supplements added with the March 19 rule allow the Department to accept petitions from contractors and distributors that supply others with steel, as eligible individuals or organizations using steel in business activities. The commenter argued that it is important to accept such petitions, as these entities work with numerous clients and customers that need to procure steel needs for various oil and natural gas projects.

BIS response:
The Department confirms that contractors and distributors in the U.S. that supply others with steel or aluminum in the U.S. may apply for exclusion requests to supply those U.S. customers.

Comment (f)(4)(iii): The Department should accept petitions from entities that are not the importer of record for products.
Commenters requested the Department accept petitions from entities that are not importers of record, so that companies can submit petitions on behalf of their ultimate procurement needs that may be imported by other entities within their supply chains.

BIS response:
The Department does not agree. The individual or organization that will be identified as the beneficiary of the exclusion request must also be the importer of record.

Comment (f)(4)(iv): U.S. importers of record—even though they may be foreign entities, should be able to submit exclusion requests.
One commenter asserted that all of its European production exported to the United States is sold before that export. In such cases, this commenter believes the importers of record are more likely to have the information that would be useful to fill in the exclusion request forms as they are the ones involved with the actual act of importing and the ones responsible for tariffs. The commenter requests the Department allow such parties to apply for exclusions.

BIS response:
The Department confirms that a U.S. importer of record, including foreign entities located in the United States, may submit an exclusion request, provided they meet the other applicable criteria. The Department is aware that in certain cases a U.S. importer of record may be a foreign entity not located in the United States and those U.S. importers of record would not be able to meet the other applicable criteria—meaning an exclusion request would not be granted to such a foreign entity. The supplements added in the March 19 rule already permitted these types of parties to apply for exclusions, so no regulatory changes are needed.

Comment (f)(4)(v): Allow affected foreign producers and exporters of steel and aluminum to apply for exclusions.
One commenter asserted that foreign producers and/or exporters of steel and aluminum often have the most detailed information about the merchandise for which an exclusion is requested, including chemistry, standards, dimensions, availability, and quantities. This commenter asserted that foreign producers and exporters of steel and aluminum must often be consulted for this information by U.S. importers and end-users. The commenter requested the Department allow such foreign producers and exporters to submit exclusion requests on their own behalf to streamline the process. They asserted that doing so would be consistent with the Section 201 exclusion process, which allowed foreign producers to seek exclusions.

BIS response:
Making this change would not be consistent with the Proclamations or the intent of the two supplements added in the March 19 rule.

Comment (f)(4)(vi): Permit and clarify flexibility in certain situations particular to the motor vehicle industry in the designation of the proper party to make the exclusion request.
A major trade association representing the auto industry asserted that there are certain situations that may be unique to the motor vehicle industry. The first example provided by the commenter is a “resale” program, in which the purchaser and user of the materials are not the same company. The vehicle manufacturer will purchase steel directly from the foreign steel company but will then resell the steel to a parts supplier. That supplier will then use the

steel in the production of a part to be sold to the vehicle manufacturer who originally purchased the materials. In the second example provided by the commenter, the vehicle manufacturer will instruct the parts supplier to purchase specific materials from a foreign producer. The properties or chemical makeup of the materials being purchased and used may be unknown to the parts supplier. This commenter requested the Department clarify the application process and provide flexibility allowing either the parts supplier or the vehicle manufacturer to make the exclusion request.

BIS response:
The Department clarifies that either the parts supplier or the vehicle manufacturer in these scenarios may submit an exclusion request. Individuals or organizations that apply for exclusion requests must use steel or aluminum articles in business activities in the United States, such as construction, manufacturing, or “supplying these articles to users.” In this scenario, where the “vehicle manufacturer will purchase steel directly from the foreign steel company but will then resell the steel to a parts supplier,” the Department would consider the vehicle manufacturer to be a party supplying these articles to users and therefore could apply for an exclusion request.

Tighten Exclusion Approval Criteria To Ensure That Intent and Scope of Exclusion Process Is Not Circumvented

Comment (f)(5)(i): Clarify approval criteria for exclusions to specify requester must show that neither product nor an equivalent or substitutable product is produced in the U.S.
A commenter requested that a product-specific exclusion be granted only upon a showing that neither the product nor an equivalent or substitutable product is produced in the United States.

BIS response:
The Department evaluates whether the steel or aluminum is “produced in the United States in a satisfactory quality” for consistency with the Proclamations. The exclusion review criteria “not produced in the United States in a satisfactory quality” does not mean the aluminum or steel needs to be identical, but it does need to be equivalent as a “substitutable product.” Today's rule adds a new paragraph (c)(6)(ii) to further define this criterion, including adding some application examples to assist the public's understanding and make the review process more transparent.

Comment (f)(5)(ii): Clarify approval criteria for exclusions to specify that simply avoiding duties is not sufficient basis for approval.
A commenter requested clarification that product-specific exclusions will not be granted simply to allow a submitter to avoid paying the additional duty on a product that is commonly produced in several markets, including markets that are exempt from the duties. This commenter believes allowing exclusions on such grounds would severely undermine the purpose of the duties.

BIS response:
The Department confirms that, based on the criteria of the Proclamations and the two supplements added in the March 19 rule, simply wanting to avoid the duties is not sufficient basis for approval.

Comment (f)(5)(iii): Definition of “immediately” is too rigid and should be lengthened.
Commenters requested lengthening the period for what should constitute “immediately.” A commenter asserted that in several instances, the exclusion request form asks whether a product could be produced “immediately,” which is defined as “within eight weeks.” Unless an article is currently being manufactured, an eight-week window to begin production is unreasonable. Beginning production “immediately” should vary based on the level of processing and finishing involved (
i.e.,
semi-finished products should have the shortest time period while downstream finished products should have longer time periods, including some much longer than 8 weeks) as well as the volume requested (with larger volumes requiring more time). The commenter requested that if a specific time period is used in the forms and the Department's analysis for “immediately,” then it should be “within twelve to sixteen weeks.”

BIS response:
The Department disagrees. The definition of “immediately” is appropriate and requires no lengthening or shortening in order to meet the purposes of the exclusion and objection process and for consistency with the Proclamations. The Department emphasizes that the supplements added in the March 19 rule used the word “generally” to qualify the one year validity periods for approved exclusions. Because of the large number of comments received on the issue of the appropriate validity date and the need to improve the transparency of the decision making process and alert submitters of exclusion requests/objections/rebuttals/surrebuttals to the types of information that may warrant a longer or shorter validity period, today's rule is adding a new paragraph (h)(2)(iv) to provide more details on validity periods, including application examples.

Comment (f)(5)(iv): Clarify approval criteria for exclusions to specify that evidence of substitutable products is sufficient to deny.
A commenter asserted the final rule should clarify that exclusion requests will be denied where a member of the domestic industry opposes the request and demonstrates that it produces a product with “similar form, fit, function, and performance” to the requested product.

BIS response:
The Department agrees, provided “similar form, fit, function, and performance” being referenced by the commenter meets the definition of “substitute product” that is being added to the two supplements in today's rule and can be provided in the requisite quantity and time frame to meet the needs of the requester. Today's rule adds a new paragraph (c)(6)(ii) to provide a definition for the criterion “not produced in the United States in a satisfactory quality.” The new paragraph specifies that the exclusion review criterion “not produced in the United States in a satisfactory quality” does not mean the steel or aluminum needs to be identical, but it does need to be equivalent as a substitute product. This new paragraph will also include application examples to assist the public's understanding of “substitute product.”

Comment (f)(5)(v): Specify that approved exclusions cannot be assigned for other companies to use.
A commenter requested the Department to clarify that not only is an exclusion limited to the party that requested it, there can be no assignment or transfer of the exclusion once granted. Allowing the assignment of exclusions would allow importers to circumvent the duties by accumulating the ability to import under product-specific exclusions.

BIS response:
The Department agrees and clarifies here that the use of an approved exclusion may not be assigned to another entity.

Comment (f)(5)(vi): Specify that all product needs to be imported within one year of the approved exclusion.
A commenter requested further narrowing and clarifying the scope of exclusions to specify that goods must be imported into the United States prior to the end of the one-year (or any other period) for which the exclusion is granted.

BIS response:
The Department agrees and confirms here that all products in an exclusion approved request must be imported within the validity period. A one-year validity period is standard. The Department communicates with CBP once an exclusion request is to be approved to provide the validity date. The Presidential Proclamations

establish the requirements for obtaining retroactive refunds from duties paid prior to the validity period of a granted exclusion.

Broaden Exclusion Criteria (To Make It Easier To Get Approved) To Better Achieve the Purpose of the Exclusion Process

Commenters that had concerns with the exclusion process made suggestions for broadening the exclusion criteria to make it easier to get approval as discussed in the next series of comments.

Comment (f)(6)(i): Department should not consider the availability of “substitute steel products” in assessing requests.
In contrast to the comments above that advocated being more permissive to steel and aluminum manufacturers in the U.S., the commenter here requested that the Department not allow supposed product “substitutes” to form the basis of rejecting an exclusion request, arguing that doing so would be contrary to the Proclamations. The same commenter asserted that neither the Proclamations nor the text of the March 19 rule mention either “substitute” or “near-equivalent” products, so inclusion of this as part of the criteria is not appropriate. The same commenter asserted that neither “substitute steel product” nor “near-equivalent steel product” is defined, creating uncertainty as to what these fields mean and that the Department is in no position to make that determination on a factual or technical basis. The commenter noted that if a customer requires certification of the product, just being similar is not good enough to immediately replace a current supplier. The commenter also noted that manufacturers have production lines and operations created for exact technical properties and cannot just do with any raw material that is “similar.” The commenter also argued that if a manufacturer has a preference for products it uses as raw materials, it is wholly inappropriate for the government to force it to use another kind of product. A company's operations and equipment may need to change in order to use a “substitute steel product” and its workforce may not have the experience in dealing with a different kind of steel. Finally, the commenter asserted that even if the Department believes that substitute steel products should be considered, it must clarify how it is using that factor in its analysis and specify what factors are being considered as the exclusion request form does not fully address these issues. The commenter asserted that a company should be afforded a full opportunity to explain why it cannot use such “substitute” or “near-equivalent” products, and any problems that could arise from the use of such products.

BIS response:
The Department disagrees with the concerns raised about considering substitute products. The Department understands the points raised about the importance of adding greater specificity for the criterion on what may constitute an equivalent product that is of satisfactory quality and how the criterion is used in the review of exclusion requests and objections. As noted above in response to comment (f)(5)(iv), today's rule is adding a new paragraph (c)(6)(ii) to provide a definition for the criterion “not produced in the United States in a satisfactory quality,” defining the term “substitute product,” and including application examples. The Department is also adding a rebuttal and surrebuttal process that will allow an exclusion requester to identify reasons why an alleged substitute product is not in fact a substitute. These changes are responsive to these types of comments.

Comment (f)(6)(ii): Definition of “immediately” should be kept the same or shortened.
One commenter asserted that as the exclusions currently only last one year, the Department should not recognize objections unless they can produce the item at that point. If a domestic steel manufacturer is able to produce the good in the future, it would be then more appropriate to object to the following year's request.

BIS response:
The Department agrees that the definition should remain the same, but disagrees that the definition needs to be shortened. The definition of “immediately” is appropriate and requires no lengthening or shortening in order to meet the purpose of the exclusion and objection process and for consistency with the Proclamations. As referenced above, today's rule is adding paragraph (h)(2)(iv) to provide more transparency and guidance to submitters on how the Department will determine the appropriate validity date for approved exclusions. Today's rule also is adding a rebuttal and surrebuttal process discussed in regulatory changes below that will be responsive to these types of comments and help to ensure the Department has all the relevant information needed to determine the appropriate validity period on a fair and consistent basis.

Comment (f)(6)(iii): Add metrics for determining U.S. domestic capacity to meet demand.
Commenters raised concerns that the March 19 rule does not identify the criteria the Department will apply in determining whether an article is produced in the United States in a sufficient and reasonably available amount, which raises the following questions:

Comment (f)(6)(iii)(A):
To what extent will the Department take into account quantities demanded by users of the article other than the applicant itself?

BIS response:
The Department, including product experts from ITA, will review requests based on the information provided and representations made by the objector. Today's rule is adding a rebuttal and surrebuttal process where an individual or organization that submitted an exclusion request that received an objection could include in their rebuttal any concerns they had about an objector overcommitting the steel or aluminum manufacturer's current or future capacity. This rebuttal process will be included in a new paragraph (f) in both supplements.

Comment (f)(6)(iii)(B):
To what extent will the Department verify the potential for U.S. manufacturers to increase capacity and/or capacity utilization?

BIS response:
If the objector is asserting that it is not currently producing the steel identified in an exclusion request but can produce the steel or aluminum within eight weeks, the objector must identify how it will be able to start production within eight weeks. This requirement includes specifying in writing to the Department as part of an objection the timeline the objector anticipates to start or restart production of the steel or aluminum included in the exclusion request to which the manufacturer is objecting. Today's rule revises paragraph (d)(4) to add more specificity on these requirements for the substance of objections to submitted exclusion requests.

Comment (f)(6)(iii)(C):
How does the Department intend to deal with multiple exclusion requests where each individual request might be fulfilled from U.S. domestic parties, but the total of such requests exceeds current U.S. capacity?

BIS response:
The Department, including product experts from ITA, will be evaluating these factors as part of the review process when objections are received. The new rebuttal process this rule is adding to a new paragraph (f), as well as the surrebuttal process being added to paragraph (g), in each supplement, provides an additional way for the Department to receive input to help identify these types of trends that the Department agrees should be taken into account for an efficient and effective exclusion process.

Comment (f)(6)(iii)(D):
What is the timeframe that the Department will use to determine if a U.S. domestic party is capable of producing the specific product? Is it within the period of the particular exclusion request (
i.e.,
one year)?

BIS response:
The steel or aluminum product must be available “immediately.” “Immediately” means whether a product is currently being produced or could be produced and delivered “within eight weeks” in the amount needed for the business activities described in the exclusion request. Today's rule is adding a definition of “immediately” to paragraph (c)(6)(i) and application examples to assist the public's understanding.

Comment (f)(6)(iii)(E):
Will the Department take into account product prices and the conflicting impacts of such prices on U.S. domestic steel producers and users in determining whether there could be sufficient domestic capacity?

BIS response:
The Department will not consider this criterion. The Department only considers criteria taken from the Proclamations which are included in the review criteria of the two supplements and on the exclusion request and objection forms.

Comment (f)(6)(iii)(F):
One commenter argued that the Department should apply reasonable standards to the review of exclusion requests and objections, which the commenter identified as not allowing unsupported assertions of production capacity and, after a
prima facie
case for an exclusion request is made (accepted as correct until proven otherwise), affording that request a presumption of approval.

BIS response:
The Department agrees that it must hold requesters and objectors to a high and consistent review standard and will continue to do so with the rebuttals and surrebuttals being added with today's rule. However, the Department wants to emphasize that BIS and ITA do not prejudge or give greater weight to any particular submission, whether an exclusion request, an objection, a rebuttal, or a surrebuttal. The process is created to allow each party involved in the process to provide relevant information, including that specified on the forms by the Department, and any other information that the party involved in the process believes is relevant, in order to allow the Department to make a fair, impartial and consistent determination whether an exclusion request should be approved or denied.

Comment (f)(6)(iv): Broaden criterion for determining whether a U.S. steel or aluminum user has tried to source from U.S. suppliers to be longer than two years.
One commenter requested that the Department broadly take into consideration requesters' attempts to source a product historically beyond the most recent two-year period. The commenter argued that if a requester has tried repeatedly over the years or is familiar enough with the market, it may not have regularly reached out to domestic suppliers in the most recent years. The commenter believed it would be unfair to expect a company to check annually whether or not a supplier has changed its production capabilities.

BIS response:
The Department disagrees. The U.S. Government anticipates and is already seeing a resurgence in steel and aluminum production in the United States with new facilities opening and new capacity being actively planned. If an individual or organization has not looked to buy steel or aluminum manufactured in the United States, it would be well worth their effort to do so before applying for an exclusion request. This will also save the requester time, as well that of potential objectors and the Department, because the potential requester may find in conducting a search that steel or aluminum not available in the U.S. market before may now or soon be available in the United States.

Comment (f)(6)(v): Add metrics to determine sufficient quality.
Commenters asserted that the Department should define and release metrics that will be used to determine whether U.S. steel manufacturers have the capacity to meet demand in order to provide greater clarity on how the Department will make its determination regarding production in the United States in a satisfactory quality. One commenter requested that objectors be required to show that they have the ability to produce steel goods that can actually be used by the supplier in the same way as the overseas product it had previously sourced. In the commenter's view, that would require a showing that the product is of the same quality and can be certified if necessary for the particular item and that it will be committed to this specific use if requested. Another commenter was concerned that it is easy for manufacturers to assert that they ought to be able to make a certain product but, in reality, it may turn out to be difficult and unfeasible. Still another commenter was concerned that for many steel items there is a certification process which can take years and require demonstrated consistency in the product, thereby pushing off by two to three years actual production by a replacement U.S. steel supplier, assuming the would-be supplier is able to pass the certification. The commenters argued that if the Department does not stringently assess U.S. steel producers' claims and consider extrinsic factors that affect available supply, it could create a situation where domestic steel users will have no usable steel supplies, driving them out of business.

BIS response:
The Department agrees with some of the concerns raised and, as noted above, is adding a new paragraph (c)(6)(ii) to clarify issues regarding quality and provide the public with a better understanding of the application of the criterion. In addition, the Department notes that today's rule also is adding a rebuttal and surrebuttal process under paragraphs (f) and (g) that will allow requesters to provide a rebuttal if they believe an objector cannot meet their quality standards or if some other aspect of the objection warrants a response, as well as an opportunity for the objector receiving a rebuttal to submit a surrebuttal if it believes that is warranted.

Comment (f)(6)(vi): Allow companies to seek product exclusions on basis of internal quality standards.
A commenter requested the Department specify how it will determine whether, in the case of highly specialized products, a domestic product's quality/standard is equivalent to the quality/standard of the foreign import. The same commenter requested the Department explain the weight that it will give to a user's stated needs regarding product quality in making its determination whether to grant an exclusion request. Commenters requested that the Department define the minimum quality thresholds that U.S. steel manufacturers must meet. In particular, commenters requested that the Department approve exclusions based on comparative performance standards. For products available from both domestic and international sources, commenters asserted that companies should be allowed to submit data identifying the companies' performance needs and comparing the performance of the domestic product vs. the international product; identifying specific products needed to meet a specific performance standard determined by the user, who is in the best position to identify the product quality requirements for any given project; and establishing the existence of a company's corporate approved Quality Assurance standards that exceed regulatory or industry approved standards.

BIS response:
The purpose of the exclusion process is to protect

downstream manufacturers that rely on products not produced by U.S. domestic industry at this time. The guiding principle is that, if U.S. domestic industry does not or will not produce a given steel or aluminum product of the quality needed by users in the United States, companies that rely on those products will not pay duties on them. Today's rule adds paragraph (c)(6), including paragraph (c)(6)(ii), to respond to these types of comments concerned with ensuring that the exclusion review process adequately takes into account the quality needs of requesters.

Comment (f)(6)(vii): The Department should only deny an exclusion request if there is a domestic metals producer that can provide the same product to customer specifications in the time line needed by the requester.
A commenter asserted that domestic capacity to make a product is not the same thing as the current ability to produce a needed product within a viable lead time to meet customer demands. The commenter was concerned that the Department not reject product exclusion requests based solely on a domestic producer's claim of capacity to make the product, noting that many of the objections posted on
regulations.gov
, have included phrases like “Although we don't make this product. . .” and “We have the capacity to make this product. . .” The commenter emphasized that a manufacturer that needs steel or aluminum to make its product needs it available in the U.S. marketplace within reasonable lead times and to specific specifications to meet customer demands.

BIS response:
The Department agrees on the point generally, but also believes that a reasonable standard needs to be applied to balance the needs of requesters to obtain steel and aluminum in a timely fashion with providing an opportunity for U.S. steel and aluminum manufacturers to expand capacity when that can be done “immediately”—meaning within eight weeks. This criterion is consistent with the intent of the Proclamations and the criteria of the two supplements added in the March 19 rule. The final rule published today is adding text to paragraph (d)(4), as well as adding new paragraphs (c)(6)(i) and (ii) to the supplements, to provide additional context for what constitutes sufficient quality and application examples for this criterion.

Comment (f)(6)(viii): Establish process to consider existing contracts and supplier agreements when reviewing exclusion requests.
A commenter requested that the Department establish a process to evaluate existing contracts and supplier agreements when assessing exclusion requests in order to avoid undue disruption to the operations of U.S. companies that are already relying on qualified suppliers of needed inputs.

BIS response:
The Department is not authorized by the Proclamations to grant product exclusions on the basis of existing contracts, except as described in the Presidential Proclamation 9777 of August 29, 2018 under clause 2 that requires the Secretary to grant exclusions from quantitative limitations. The August 29 Proclamation 9777 created the separate exclusion process to address concerns such as these for certain existing contracts that include steel articles. Other than clause 2, exclusions will only be granted if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for specific national security considerations.

Comment (f)(6)(ix): Add metrics to determine “national security considerations”—current criterion is too narrow for what should be considered national security.
Commenters requested that national security considerations be defined more precisely and more broadly to take into account other economic considerations that are important to U.S. national security. A commenter requested that the Department must make “national security considerations” explicitly clear to requesters. It asserted that, if the Department produces exclusion guidance without defining this term or with a vague definition, requesters will have great difficulty in providing the necessary information in their requests and such vagueness could lead the Department to deny exclusion requests in an arbitrary and capricious manner. Smaller companies, the commenter remarked, would be at a severe disadvantage in responding to this criterion. Another commenter was concerned that national security was being defined too narrowly because the exclusion request form identifies U.S. national security requirements as “critical infrastructure or national defense systems.” The commenter was concerned that this form implies that these two criteria alone are the only national security justifications that may be made for a product exclusion request. The commenter requested that the Department consider a broader definition of “national security” for determining exclusion requests that mirrors the language of 19 U.S.C. Sec. 1862(d), which states that “. . . [I]n 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 . . .” A trade association commenter for the oil and gas industry asserted that they expect the Department to recognize the importance the oil and natural gas industry and to consider petitions for relief from the U.S. oil and natural gas industry in the spirit of President Trump's March 28, 2017 Executive Order (E.O.) entitled “Promoting Energy Independence and Economic Growth.” That E.O. states that “[I]t is in the national interest to . . . avoid regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation” and that regulatory actions that “unduly burden the development of domestic energy resources” be suspended, revised, or rescinded.

BIS response:
Protecting U.S. national security is why the Section 232 process exists. The President has instructed the Department to grant exclusions from the tariff for specific national security considerations, and the Department, as well as the rest of the U.S. Government, must exercise some reasonable discretion in determining whether that standard is met when evaluating exclusion requests, objections, and the rebuttals and surrebuttals being added with the publication of today's rule. However, the Department also understands the importance of transparency in applying the national security review criterion in a fair and consistent way. The Department in today's rule is adding a new paragraph (c)(6)(iii) to each of the supplements to provide additional context for how the Department will apply the criterion
“for specific national security considerations.”
Similar to the other new paragraphs today's rule is adding to better define the criteria used to evaluate exclusion requests, objections, and the new rebuttals and surrebuttals process, examples are provided to assist the public in better understanding the application of the national security criterion.

Comment (f)(6)(x): Establish processes that evaluate the risks to approving an exclusion request, but also the risks of not approving.
A commenter requested that the Department, in evaluating exclusion requests, consider the risks and potential effects of granting as well as not granting a requested exclusion on U.S. businesses, including downstream users of products with little or no national security applications.

BIS response:
The Department considers the criteria of the Proclamations in deciding whether or

not to grant an exclusion request and is committed to applying those criteria in a fair and objective way.

Comment (f)(7): Separate requests for like products should be eliminated.
There was overwhelming support by a large number of the commenters for the rule to be revised to allow exclusion requests to cover ranges or dimensions within the same HTSUS code and thereby streamline the process for both importers and the Department. Commenters asserted that not only do current limitations unduly burden the requester by requiring duplicative requests, they also burden objectors who must respond individually to each request and the Department that must consider each request. The commenters believe that substantively the Department could still adequately track what was being approved in exclusions without retaining this unnecessary restriction. Another commenter raised concerns that the current process increases the possibility of inconsistent treatment for individual requests that are only different based on an insignificant dimension. Commenters recommended the Department clarify that a single exclusion form may be submitted for similar products and allow reasonable ranging of chemistry and dimensions (including width, height, length, diameter, and thickness) based upon standard industry practice.

BIS response:
BIS designed both the steel and aluminum exclusion and objection forms with input from a variety of U.S. Government and industry experts. The goal was to obtain sufficient information from the exclusion filer to allow a U.S. manufacturer of steel or aluminum to file a credible objection to that specific exclusion. To be credible, the objection must state that the objector can produce the specific product for which the exclusion is requested within the time frame covered by the exclusion request. The forms allow for a product that may be within a narrow range. Today's rule is adding two sentences to paragraph (c)(2) to clarify these types of issues.

Define Process for Obtaining “Broad Exclusions” and Use This Process To Make the Exclusion Process More Effective

Comment (f)(8)(i): Provide details on how to apply for broad exclusions.
Commenters asserted that the statement “unless Department approves a broader application of the product-based exclusion request to apply to additional importers” clearly contemplates that the Department is considering approving broader exclusion requests that can apply to multiple importers and that the Department should provide guidance on a process for such exclusions. Many commenters requested that the Department explain the circumstances under which BIS will approve a broader product exclusion and how U.S. companies may request such an exclusion. Commenters believe these broader exclusions would allow steel products to be reviewed in a broader fashion and provide the Department with an opportunity to more accurately assess domestic availability in relation to all the requests relating to that particular type of steel. Some commenters, to further support their position, asserted that the Department and the USTR relied on such a product-based exclusion process as part of the Section 201 steel safeguard proceedings more than a decade ago.

BIS response:
The March 19 rule was not clear enough on this issue. Identifying, evaluating, and approving broad product-based exclusions is done solely by the Department. Individuals and companies do play a role in this process, but that role is limited to submitting exclusion requests, objections, and the rebuttals and surrebuttals being added with the publication of today's rule. The Department is responsible for identifying market trends in specific exclusion requests that may warrant approving broad product-based exclusions. In identifying these market trends, the Department will place particular importance on the objections being provided or lack thereof. The Department understands that this is a more time intensive process for all parties involved, but it ensures that the granting of broad based product exclusions is done in a measured and deliberative way so as not to undermine the Proclamations and their objective of protecting critical U.S. national security interests.

Comment (f)(8)(ii): Product exclusions must not be company-specific and should apply broadly to all products from all sources meeting the exclusion requirements.
Some commenters believe product exclusions should be broadly considered and granted on a product-specific basis, regardless of source, manufacturer, country-of-origin, or supply chain. They argued that the Department should use an exclusion process similar to the one used during the Section 201 safeguard measures on imported steel in 2002 in which exclusion requests were not tied to specific supply chains, manufacturers, or countries. The commenters asserted that a company-specific exclusion scheme is unduly restrictive, arbitrary, and ignores commercial realities. They argued that, under the current system, the Department may grant an exclusion for a specific product for some companies/end-users but unreasonably deny it for others for the identical product, a result that they contend is arbitrary, particularly if the exemption is based upon “short supply” considerations or a general lack of U.S. availability. Commenters also note that the current system increases the burden on requesters and the Department and creates needless enforcement and compliance issues at the border, as suppliers, importers, and end-users must determine how to monitor, segregate, track, and report all such supply chain details to CBP at the time of entry. Therefore, these commenters believe a “product” exclusion should be granted for “the product” itself, regardless of supplier or country of origin.

BIS response:
The Department does not agree. Parties applying for exclusions are required to identify the source countries for the single product for which the exclusion is requested, the annual quantity to be supplied, and the name of the current manufacturer(s)/supplier(s), and the country of the manufacturer(s)/supplier(s). The exclusion request, if granted, will only pertain to the identified supplier(s) listed in the exclusion request form and the specific country of origin identified by the requester. The Secretary has the discretion to make broader exclusions available to all importers if the Department finds the circumstances warrant it, and the Secretary will exercise this discretion as appropriate, but only after exclusion request in the ordinary course.

Comment (f)(8)(iii): If the Department determines a product is not available in U.S., then broader product (categorical) exclusion available to all should be approved.
Commenters requested that if a product is not made in the United States or is not made in sufficient quantity or quality, the Department grant a broader product exclusion (not just on company by company, product by product basis). Commenters requested that any domestic industry objections to such a categorical exclusions be accompanied by specific evidence demonstrating when domestic capacity is projected to come on line. One commenter requested that the Department allocate resources to accelerate the identification of products where there is currently no (or very limited) U.S. production and none is likely to be available before a to-be-determined future date. Such action would ease the burden on users of these types of products. Moreover, once the

review is completed, the commenter argued that the Department would be able to focus its resources on analyzing exclusion requests where there is substantial U.S. production or where there is expected to be substantial U.S. production in the foreseeable future.

BIS response:
As asserted above, the individuals or organizations applying for an exclusion must specify the precise steel or aluminum product, including whether a product is customized. Parties applying for exclusions are required to identify the source countries for the single product for which the exclusion is requested, the annual quantity to be supplied, the name of the current manufacturer(s)/supplier(s), and the country of the manufacturer(s)/supplier(s). The exclusion request, if granted, will only pertain to the identified supplier(s) listed in the exclusion request form and the specific country of origin identified by the requester. The Secretary does have the discretion to make broader exclusions available to all importers if the Department finds the circumstances warrant it, and the Secretary will exercise this discretion as appropriate, but only after an exclusion request in the ordinary course.

Comment (f)(9): Provide streamlined process whereby a second company seeking to use an exclusion already granted to another U.S. company can quickly obtain the right to use the same type of product exclusion.
Commenters thought requiring that each exclusion granted be available only to the company that requested it is inefficient and time-consuming. Commenters recommended the Department provide a streamlined process whereby a second company seeking to use an exclusion already granted to a U.S. company can quickly obtain the right to use the same product exclusion.

BIS response:
The Department will allow exclusion requesters to reference a previously approved exclusion, but the new requester must still fill out the exclusion form and their new exclusion request will be evaluated based on the information included in their exclusion request. New requesters may include a copy of the original approved exclusion request, but simply referencing the approval identifier of the previous approved exclusion is sufficient and is what the Department recommends in such scenarios. The existence of a preexisting approved exclusion request for another individual or company would not be determinative for the review of a new exclusion request. Each request is reviewed on a case-by-case basis, and potential objectors will have an opportunity to review the new exclusion request, to object, and if they submitted an exclusion request or objection, to participate in the rebuttals/surrebuttals process created with the publication of today's rule. This is important because a domestic steel or aluminum manufacturer that may not have had the capacity to produce when reviewing the previously approved exclusion request may be able to produce “immediately” at the time a later exclusion request is filed.

Country of Origin (Various Recommendations for How It Should Be Used in the Exclusion Process)

Comment (f)(10)(i): Exclusions should not be country specific.
One commenter recommended the Department allow companies granted product exclusions to import the product tariff-free from any country, given that the basis of the exclusion request is that the U.S. company cannot source the product domestically.

BIS response:
As noted above, the Department, in consultation with other Federal agencies, has the authority to grant exclusions from the additional duties imposed in the Proclamations for products that are not produced in sufficient quantity or quality in the United States or for specific national security considerations. Parties applying for exclusions are required to identify the source countries for the single product for which the exclusion is requested, the annual quantity to be supplied, the name of the current manufacturer(s)/supplier(s), and the country of the manufacturer(s)/supplier(s). The exclusion request, if granted, will only pertain to the identified supplier(s) listed in the exclusion request form and the specific country of origin identified by the requester. The Secretary does have the discretion to make broader exclusions available to importers if the Department finds the circumstances warrant it, and the Secretary will exercise this discretion as appropriate, but only after an exclusion request in the ordinary course.

Comment (f)(10)(ii): Department should consider country of origin when assessing a request.
A commenter recommended that the Department consider the country of origin, and prioritize the requests of those countries that are national security allies, such as members of the European Union. In the commenter's view, such an approach would be in consonance with the national security aims of the tariffs.

BIS response:
The review criteria based on the Proclamations and the two supplements added in the March 19 rule do not take into account the country of origin, so it would be inappropriate for the Department to make the proposed change. However, as described below, today's rule does add a new Note to paragraph (c)(2) to both supplements to allow for product exclusions for countries subject to country-based quantitative limitations.

Validity Periods for Exclusions

Comment (f)(11)(i): Concerns that one year is insufficient and arbitrary.
Commenters thought that granting of the exclusion for one year is arbitrary. A commenter asked if the product is not available domestically now, why the Department believes it will be available next year, or the year after, or ever. Commenters requested that instead of forcing importing manufacturers to go through this arduous exclusion petition process every year, the Department require aluminum and steel manufacturers to prove that the domestic supply exists in the quantities and the quality specifications necessary before ending any exclusion.

BIS response:
Generally, an exclusion is granted for one year from the date of signature. Parties should review the decision document for this information. As described below, the Department does have discretion to approve varying validity dates depending on the facts surrounding an exclusion. Also as referenced above and described in more detail below, today's rule is adding a new paragraph (h)(2)(iii) to provide more information on the criteria the Department uses to determine the appropriate validity date for an exclusion.

Comment (f)(11)(ii): Clarify that approvals can be less than one year when warranted.
One commenter requested that the final rule clarify that although exclusions generally will be granted for one year, a shorter time period may be granted if the objector provides information showing that an exclusion is only warranted for a shorter period of time (
e.g.,
that the objector can begin or expand domestic production in less than one year).

BIS response:
The Department agrees and confirms approvals can be less than one year when warranted. Today's final rule is adding a new paragraph (h)(2)(iv) to provide additional context on the general one year validity date and when a shorter or longer validity date may be warranted. New paragraph (h)(2)(iv) includes application examples for when a longer period may be warranted for the validity period.

Comment (f)(11)(iii): Should be five years or longer.
One commenter requested that the Department explicitly provide for exclusion validity periods of

five years, subject to renewal thereafter, and for the length of specific projects discussed in submitted exclusion requests where U.S. domestic parties cannot demonstrate sufficient capacity to meet the long-term requirements set forth in an individual exclusion request or multiple exclusion requests for the same specific product. This commenter supported its position by noting that while one year is an easily definable time period, it does not reflect the reality of business planning, particularly where long-term, large-scale investments and purchasing contracts are involved, such as are typical in the oil and natural gas industry. In the commenter's view, a five-year product exclusion is required to accommodate project planning and to reflect the reality of the long lead time from purchase order to delivery of products. The commenter recomm

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2018-19662. Public record. Not legal advice.