[Federal Register Volume 83, Number 176 (Tuesday, September 11, 2018)]
[Rules and Regulations]
[Pages 46026-46065]
[FR Doc No: 2018-19662]

Vol. 83

Tuesday,

No. 176

September 11, 2018

Part II

Department of Commerce

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 Bureau of Industry and Security

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15 CFR Part 705

Submissions of Exclusion Requests and Objections to Submitted Requests
for Steel and Aluminum; Final Rule

Federal Register / Vol. 83 , No. 176 / Tuesday, September 11, 2018 /
Rules and Regulations

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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.

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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 [email protected]. 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<PHONE_NUMBER>,
[email protected] regarding provisions in this rule specific to
steel exclusion requests and<PHONE_NUMBER>, [email protected]
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 recommended that U.S. manufacturers
be provided the opportunity, regarding any exclusions granted, to prove
that they have developed new capacity to meet quantity and/or quality
specifications of entities granted petitions.
    BIS response: As described above, 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. The commenter's recommendation to allow objectors to
provide additional information to permit re-reviewing an approved
exclusion request would likely require adding provisions to revoke
existing approvals. The Department did not add such provisions in this
rule because the Department believes there are likely many other
members of the public who believe such changes would add
unpredictability and undermine their ability for long range planning.
The Department does, however, welcome comments in response to today's
rule on this commenter's idea of allowing longer validity periods, with
the understanding that potential objectors could come back at any time
during such periods to request a readjudication of the product
exclusion.
    Comment (f)(11)(iv): Exclusions should not be limited to an annual
basis. Commenters requested that exclusions be indefinite until
challenged and domestic production is demonstrated. These commenters
asserted that a year is not a long time in the manufacturing cycle, and
companies will need to plan out their supply chains further into the
future. They also asserted that requiring all companies granted
exclusion requests to go through this process yearly to ensure
continuous supply would be a massive waste of the Department's
resources and overly burdensome to domestic steel users. These
commenters believe that if the Department has found in the first
instance that an exclusion should be granted because of the lack of
domestic supply, it should be up to the domestic suppliers to
demonstrate that their capabilities have changed.
    BIS response: As described above, today's 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. The new paragraph (h)(2)(iv) includes examples for when a
longer period may be warranted.
    Comment (f)(11)(v): Product exclusions should be permanent, not
temporary (and on a universal basis). One commenter believes that
temporary exclusions inject significant uncertainty into the business
planning of companies and will only increase costs for companies as
they have to alter their supply chains.
    BIS response: The Department does not believe that permanent
exclusions would be consistent with the intent of the Proclamations and
is concerned that such exclusions might in fact undermine the
resurgence of certain steel and aluminum manufacturing critical to
protecting U.S. national security. 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.
    Comment (f)(12): Allow supporters of exclusion requests an
opportunity to submit comments. One commenter was concerned that while
the March 19 rule provides an opportunity for any individual or
organization in the United States to file objections to exclusion
requests, it does not provide a similar opportunity for such persons to
make submissions in support of other parties' exclusion requests. This
commenter recommends the Department permit such filings.
    BIS response: The Department disagrees. The Department understands
the desire of affected or similarly situated parties to provide
submissions of support. However, the original submitter of an exclusion
request is best situated to provide the specific information for the
exclusion request and, under the new process for rebuttals and
surrebuttals adopted in this rule, will be allowed to submit rebuttals
to any objection received. Allowing other parties to submit statements
of support is not needed in order for the Department to conduct its
review of the exclusion request and would likely slow the entire
process down. The number of exclusion requests being reviewed is
substantial, and one of the purposes of today's rule is to make
improvements in the efficiency of the process. Where warranted to
improve the transparency or fairness of the process, the Department has
implemented changes that may increase its workload, but otherwise the
focus is on trying to streamline the process to improve it for all
parties involved.

Add Rebuttal Process and Specify Criteria for Review of Objections

    Comment (f)(13)(i): Must add a rebuttal process (to allow exclusion
request submitters to respond to objectors). An area of significant