Federal Circuit Finds Section 232 is Constitutional, What Next?
On February 28, 2020, the U.S. Court of Appeals for the Federal Circuit denied a challenge to the constitutionality of Section 232 and the currently applicable duties on steel and aluminum products. The case, American Institute for International Steel v. United States, was brought by a coalition of steel importers and is available here.
You may recall that AIIS tried to skip the Court of Appeals and move directly from the Court of International Trade to the Supreme Court. The reasoning behind that effort was that the Federal Circuit would likely find itself bound by a prior Supreme Court decision on the same issue. That case was Federal Energy Administration v. Algonquin SNG, Inc.
In Algonquin, the Supreme Court addressed whether President Nixon had the authority under Section 232 to impose license fees on imported oil. Plaintiff's in the case argued that the statute was an improper delegation of authority from Congress, which has the constitutional power to regulate international trade, to the President.
Citing an even earlier decision, the Supreme Court held that a delegation to the President is permissible where Congress "lays down by legislative act an intelligible principle to which the [President] is directed to conform,” and concluded that Section 232(b) "easily fulfills that test.” The Court explained that Section 232 includes clear preconditions to Presidential action and that “the leeway that the statute gives the President in deciding what action to take in the event the preconditions are fulfilled is far from unbounded.” The Court made the important point that the statute “articulates a series of specific factors to be considered by the President.” As a result, the Supreme Court held that there was “no looming problem of improper delegation.”
Thus, the Supreme Court has already upheld Section 232 as an acceptable delegation to the President. AIIS made several arguments in an effort to distinguish Algonquin but to no avail. The Federal Circuit followed Algonquin. In other words, we are exactly where AIIS predicted.
Counsel for AIIS has said it will file a petition for Supreme Court review as soon as possible. There is reason to believe this case may catch the Court's attention. The AIIS decision even notes that five current Supreme Court justices have expressed a willingness to reconsider the law in this area. Last term, they had the opportunity in a case involving the regulation of sex offenders. The justices may feel this is a better case on which to act (what with a more sympathetic petitioner).
There is a lot going on in litigation around Section 232 and I have been unable to adequately cover it. Here are some quick notes and links.
First, on January 29, 20202, the President expanded the products covered by the Section 232 duties to include certain downstream or derivative products including nails and wire. In a case called PrimeSource Building Products, the Court of International Trade issued an order enjoining the collection of 232 duties on imports of PrimeSource's affected imports. The Court agreed with PrimeSource that the extension of 232 duties to additional products violates the statutory requirements regarding the timing of relief and the possible need for a new investigation prior to Presidential action. Initially, PrimeSource brought the case seeking a total national injunction, but the Court's order only impacts PrimeSource's imports.
Next, a plaintiff called Oman Fasteners Inc. went to Court and received similar relief.
Both cases are pursuing a theory based on the Court's reasoning in TransPacific Steel LLC, in which the Court of International Trade denied a government motion to dismiss a challenge to the President's order increasing 232 duties on Turkish steel from 25% to 50%. The Court said that the President's authority is "cabined" by procedural requirements that must be followed. The focus on process is at the heart of the current challenges other than AIIS, which is raising a head on assault on 232 as a whole.
The next thing to watch for is any movement by the Court to address these cases in a consolidated manner. They all present the same question of the scope of the delegation and whether the President acted consistent with the statutory requirements. So far, the Court has declined to take action broader than the individual case before it. That may change if (when) enough cases are filed. The Court might also set up a special process to allow parties to file cases and park them while a single case proceeds through the process. The Court's official "test case" process likely does not apply here, so parties can't make that happen, rather the Court will need to make special procedures in a manner similar to how it handled the Harbor Maintenance Tax litigation of the 1990s.
For now, everyone who wants the relief granted to PrimeSource will need to file an individual summons and complaint. I hope the coffee pot in the Clerk's office is in good working order.
You may recall that AIIS tried to skip the Court of Appeals and move directly from the Court of International Trade to the Supreme Court. The reasoning behind that effort was that the Federal Circuit would likely find itself bound by a prior Supreme Court decision on the same issue. That case was Federal Energy Administration v. Algonquin SNG, Inc.
In Algonquin, the Supreme Court addressed whether President Nixon had the authority under Section 232 to impose license fees on imported oil. Plaintiff's in the case argued that the statute was an improper delegation of authority from Congress, which has the constitutional power to regulate international trade, to the President.
Citing an even earlier decision, the Supreme Court held that a delegation to the President is permissible where Congress "lays down by legislative act an intelligible principle to which the [President] is directed to conform,” and concluded that Section 232(b) "easily fulfills that test.” The Court explained that Section 232 includes clear preconditions to Presidential action and that “the leeway that the statute gives the President in deciding what action to take in the event the preconditions are fulfilled is far from unbounded.” The Court made the important point that the statute “articulates a series of specific factors to be considered by the President.” As a result, the Supreme Court held that there was “no looming problem of improper delegation.”
Thus, the Supreme Court has already upheld Section 232 as an acceptable delegation to the President. AIIS made several arguments in an effort to distinguish Algonquin but to no avail. The Federal Circuit followed Algonquin. In other words, we are exactly where AIIS predicted.
Counsel for AIIS has said it will file a petition for Supreme Court review as soon as possible. There is reason to believe this case may catch the Court's attention. The AIIS decision even notes that five current Supreme Court justices have expressed a willingness to reconsider the law in this area. Last term, they had the opportunity in a case involving the regulation of sex offenders. The justices may feel this is a better case on which to act (what with a more sympathetic petitioner).
There is a lot going on in litigation around Section 232 and I have been unable to adequately cover it. Here are some quick notes and links.
First, on January 29, 20202, the President expanded the products covered by the Section 232 duties to include certain downstream or derivative products including nails and wire. In a case called PrimeSource Building Products, the Court of International Trade issued an order enjoining the collection of 232 duties on imports of PrimeSource's affected imports. The Court agreed with PrimeSource that the extension of 232 duties to additional products violates the statutory requirements regarding the timing of relief and the possible need for a new investigation prior to Presidential action. Initially, PrimeSource brought the case seeking a total national injunction, but the Court's order only impacts PrimeSource's imports.
Next, a plaintiff called Oman Fasteners Inc. went to Court and received similar relief.
Both cases are pursuing a theory based on the Court's reasoning in TransPacific Steel LLC, in which the Court of International Trade denied a government motion to dismiss a challenge to the President's order increasing 232 duties on Turkish steel from 25% to 50%. The Court said that the President's authority is "cabined" by procedural requirements that must be followed. The focus on process is at the heart of the current challenges other than AIIS, which is raising a head on assault on 232 as a whole.
The next thing to watch for is any movement by the Court to address these cases in a consolidated manner. They all present the same question of the scope of the delegation and whether the President acted consistent with the statutory requirements. So far, the Court has declined to take action broader than the individual case before it. That may change if (when) enough cases are filed. The Court might also set up a special process to allow parties to file cases and park them while a single case proceeds through the process. The Court's official "test case" process likely does not apply here, so parties can't make that happen, rather the Court will need to make special procedures in a manner similar to how it handled the Harbor Maintenance Tax litigation of the 1990s.
For now, everyone who wants the relief granted to PrimeSource will need to file an individual summons and complaint. I hope the coffee pot in the Clerk's office is in good working order.
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