CIT Upholds Constitutionality of 232 Duties

Here is a quick take on the decision of the Court of International Trade in American Institute for International Steel v. United States. This is the case challenging the constitutionality of Section 232, under which President Trump imposed duties on steel and aluminum products in furtherance of national security. Plaintiff's theory of the case is that the statute is facially unconstitutional because it violates the constitutional requirement for separation of powers.

The starting point for this that Congress, not the President has the power to regulate trade. In Section 232, Congress delegated some of that power to the President so that he may make adjustments to trade to protect the national security. AIIS argued that the powers given to the President are unbounded by an "intelligible principle," meaning he can exercise legislative powers that are reserved to Congress. That would be unconstitutional. If, on the other hand, the President can only act within a defined set of parameters, then the delegation is constitutional.

This case was heard by a three-judge panel of the CIT. While not common, three-judge panels are often convened at the CIT when a constitutional question is raised. Importantly, three-judge district court decision are immediately appealable to the Supreme Court. 28 U.S.C. 1253. As far as I know, the ability to directly appeal from a three-judge district court should be applicable to the Court of International Trade, which has all the powers of a district court and is generally treated as a district court.

The decision in this case was unanimous, although there is an interesting separate opinion that deserves some attention.

The majority opinion details prior cases raising a similar challenge. Most relevant is Federal Energy Admin. v. Algonquin in which the Supreme Court held that Section 232 easily passes the intelligible principle test for constitutional delegation. Basically, that is all you need to know. Once the Supreme Court has declared the statute to be facially constitutional, there is not much a lower court can do. 

The main opinion does add some caveats. Most interesting is the recognition by the Court that imposing duties under the authority of Section 232 for some reason unrelated to national security would constitute an unconstitutional exercise of legislative authority. Nevertheless, the Court lacks a mechanism to review the President's subjective motives making that review a practical impossibility.

Despite that concern, the Court upheld the President's exercise of delegated authority and the 232 duties on steel (and aluminum) remain in place.

Writing separately, CIT Judge Katzmann issued an opinion dubitante. First, I have no doubt that the entire customs and trade bar spent considerable time on the interesting footnote explaining the nature of an opinion dubitante. Personally, I love this kind of legal arcana. An opinion dubitante is one that agrees in the result but expresses grave concerns with that result.

The gist of Judge Katzmann's opinion is that the facts of the President's exercise of Section 232 authority may be so unlike previous uses of the law that Algonquin and the earlier cases may not apply. He points, for example, to the opinion of the Secretary of Defense that U.S. steel and aluminum production is sufficient to meet the national security requirements. He also notes that Algonquin includes the following:

Our holding today is a limited one.  As respondents themselves acknowledge, a license fee as much as a quota has its initial and direct impact on imports, albeit on their price as opposed to their quantity.  As a consequence, our conclusion here, fully supported by the relevant legislative history, that the imposition of a license fee is authorized by  § 232(b) in no way compels the further conclusion that any action the President might take, as long as it has even a remote impact on imports, is also so authorized.

This is an important limitation, although it goes more to the nature of the adjustment imposed than the basis for the adjustment.

Judge Katzmann goes on to say:

[Under Section 232, the] President is not bound in any way by any recommendations made by the Secretary, and he is not required to base his remedy on the report or the information provided to the Secretary through any public hearing or submission of public comments.  There is no rationale provided for how a tariff of 25% was derived in some situations, and 10% in others.  There is no guidance provided on the remedies to be undertaken in relation to the expansive definition of “national security” in the statute – a definition so broad that it not only includes national defense but also encompasses the entire national economy.

My take on this it that Judge Katzmann seems troubled not so much by Section 232 per se but by the President's use of it in this particular case. Perhaps, it seems, the present circumstances show a previously unanticipated expansive reading of 232 through which the President is able to manage the economy beyond adjusting imports for national security purposes, which is a power the Constitution vests in Congress.