In Re Section 301 Cases, 570 F.Supp.3d 1306

Background

In 2017–2019 the USTR, pursuant to a Section 301 investigation of China’s technology transfer and IP practices, promulgated successive tariff lists; List 3 (initially 10%, later 25%) covered ~$200B of imports and List 4A (initially 10%, later adjusted) covered additional subheadings.
Plaintiffs (manufacturers/importers) sued, challenging List 3 and List 4A as beyond USTR authority under 19 U.S.C. § 2417 and as arbitrary and capricious under the APA.
The Government moved to dismiss as non-justiciable (presidential action/political question) and sought partial corrections to the administrative record.
The USTR relied on § 2417(a)(1)(B) and (C) to modify the Section 301 action, citing China’s retaliatory measures (tariffs on U.S. goods and other steps) as increasing the burden on U.S. commerce.
The Court held the claims are reviewable under the APA, upheld USTR authority under § 2417(a)(1)(B) to base modifications on China’s retaliatory conduct, but found the agency’s Federal Register statements insufficiently explain how it considered and resolved significant public comments and product-selection decisions.
The Court remanded List 3 and List 4A for further explanation or reconsideration, granted the Government’s record-correction motion as to the June 2018 Presidential Statement but denied it as to a post hoc Supplemental 301 Report, and set a remand deadline (June 30, 2022).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Reviewability: Were List 3/4A presidential (non-APA) actions?	USTR actions were final agency acts subject to APA; Congress delegated authority to USTR.	Lists implemented at the President’s specific direction are presidential and non-reviewable under Franklin.	Denied dismissal: agency action implementing §301/§307 is reviewable; Franklin limited to cases where President’s role is the essential final step.
Political question/doctrine of non-justiciability	Claims seek statutory interpretation and APA compliance, which courts can decide.	Tariff-modification decisions are discretionary foreign-affairs matters lacking judicially manageable standards.	Denied: statutory interpretation and procedural-review claims are justiciable; political-question factors not met.
Statutory authority under §307(a)(1)(B) — scope of “subject of such action”	Phrase is limited to the discrete practices investigated; China’s later retaliation is a separate matter and cannot justify expansion.	Retaliatory measures were intended to defend the investigated practices and thus fall within the original action’s subject; USTR may respond to increased burden.	Held that USTR reasonably treated China’s retaliatory conduct as part of the acts/policies that were the subject of the original action, so §307(a)(1)(B) furnished authority for List 3 and 4A.
Alternative statutory basis §307(a)(1)(C) — "no longer appropriate"	Plaintiffs argued §307(c) should not be read to authorize augmenting tariffs rather than only reducing/terminating actions.	Gov argued (and court accepted) §307(c) is predictive judgment tied to appropriateness, but resolution unnecessary because (B) sufficed.	Court did not resolve §307(a)(1)(C) because (B) independently justified the modifications.
APA procedural claims — notice, response to comments, explanation of product selection	USTR failed to explain how it resolved overwhelming opposing comments and why certain subheadings were removed/retained.	USTR conducted notice-and-comment, hearings, and made some changes (delays, exclusions); relied on Presidential direction and prior findings.	Held USTR’s final Federal Register statements inadequately explained how it considered and resolved significant comments or why it kept/omitted particular subheadings; remand for explanation or reconsideration.
Foreign affairs exemption & correction of administrative record	Plaintiffs argued APA procedures applied; opposed adding post‑decision documents to record.	Gov argued foreign-affairs exemption could apply and asked to add Presidential Statement and Supplemental Report to record.	Held exemption did not apply here; Court allowed adding the June 2018 Presidential Statement to the record but denied inclusion of the Supplemental 301 Report because it post-dated the decisions and there was no evidence the USTR considered it.

Key Cases Cited

Franklin v. Massachusetts, 505 U.S. 788 (APA does not apply where President made the final decision affecting parties)
Baker v. Carr, 369 U.S. 186 (political question factors)
Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (agency deference on ambiguous statutes)
Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (arbitrary and capricious standard; agency must explain decisions)
Department of Homeland Security v. Regents of the Univ. of Cal., 140 S. Ct. 1891 (agencies cannot supply post hoc rationalizations; limits on later justifications)
Gilda Indus., Inc. v. United States, 622 F.3d 1358 (Fed. Cir.) (deference to USTR on foreign-relations matters but courts decide statutory interpretation)
Public Citizen v. USTR, 5 F.3d 549 (D.C. Cir.) (distinguishing Presidential-essential roles from agency action reviewability)
Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 260 F.3d 1365 (Fed. Cir.) (remand/vacatur balancing; when to leave action in effect on remand)
Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm'n, 988 F.2d 146 (D.C. Cir.) (framework for remand without vacatur)
Sherley v. Sebelius, 689 F.3d 776 (D.C. Cir.) (agency implementing Executive Order may limit responses to comments inconsistent with directive)