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In a surprising turn of events, Seneca Foods Corp. has emerged victorious in a recent legal battle, as a U.S. Court of International Trade judge deemed the U.S. Department of Commerce's refusal to grant the company an exemption from metal import duties for tin cans inadequate. The ruling suggests that the agency unfairly accepted the stance of U.S. Steel Corp., a domestic supplier, while dismissing crucial evidence submitted by Seneca

Questionable Commerce Decision

Judge Gary S. Katzmann, presiding over the case, voiced his concerns on Wednesday, asserting that Commerce's actions in siding with U.S. Steel Corp. were unjust. The judge argued that the agency's failure to address Seneca Foods Corp.'s evidence, which indicated U.S. Steel could not meet their metal demands, rendered their denials of tariff exemptions arbitrary and capricious.

"Commerce's denials in October 2021 and February 2022 left crucial questions unanswered regarding whether [U.S. Steel] could fulfill 100 percent of Seneca's demands, with a lack of clarity in their reasoning for crediting [U.S. Steel]'s statements," noted Judge Katzmann.

The case primarily revolved around Commerce's responsibility to thoroughly consider all the evidence and provide a comprehensive explanation for its decisions, commonly referred to as the "true-as-steel obligation."

Seneca Foods' Allegations

Seneca Foods  had contended that the Commerce Department had turned a blind eye to "clear evidence" indicating the absence of domestic steel and an attempt to distort the facts. They argued that the agency inaccurately claimed that Seneca Foods Corp. had only addressed past contract sales, failing to consider the current availability or spot sales that could have been sourced from domestic producers like U.S. Steel Corp, which had intervened in Seneca Corp.'s challenge.

In its defense, Seneca Foods Corp. highlighted that it had been unsuccessful in procuring the required volume of tin mill products from U.S. Steel for 2021 and beyond. They emphasized that U.S. Steel had been offering additional spot volumes of metal for 2022, not contractual ones. The agency's belief that the metal was available through spot sales but not contract sales was, according to Judge Katzmann, fundamentally flawed.

 Seneca Foods Corp. : Commerce's Mistake

Judge Katzmann firmly established that Commerce's conclusion, which disregarded Seneca's representations and evidence, was an error in itself. He pointed out that Seneca Foods Corp. had provided evidence of phone and email communications showing their discontent with U.S. Steel's inability to provide any metal. Yet, Commerce inexplicably limited Seneca's representations to contractual sales, omitting any discussion of Seneca's evidence and representations. This led Commerce to incorrectly conclude that "nothing contradicts the information certified by U.S. Steel in its objection submission."

While the judge declined Seneca Foods' request to have Commerce exclude them from the tariffs, he ordered the agency to revisit its denials in light of his findings.

"Moreover, the exclusion requests at issue may greatly benefit from a reopening of the record, which Commerce may exercise its discretion to do," Judge Katzmann noted.

Seneca Foods Corp., based in Fairport, New York, stands as the largest vegetable canner and the sole U.S. food company still manufacturing its own cans.

Seneca Foods Corp. : No Immediate Responses

Attorneys for Seneca Foods  and U.S. Steel Corp. remained silent and did not respond to requests for comments on Thursday. Similarly, the Department of Commerce did not provide an immediate response to the request for comment.

Seneca Foods Corp. is represented by James M. Smith, Thomas Brugato, Kwan Woo Kim, and Brock M. Mason of Covington & Burling LLP. The government is represented by Kyle S. Beckrich of the U.S. Department of Justice's Commercial Litigation Division. U.S. Steel Corp. is represented by a team of attorneys from Schagrin Associates.

The case is titled "Seneca Foods Corp. v. U.S.," case number 1:22-cv-00243, in the U.S. Court of International Trade.