Universal Steel Products' Challenge to 232 Duties Dismissed

[UPDATE: See this post clarifying that there is an open issue in this case regarding the increase in duties on products of Turkey from 25% to 50%.]

 A three-judge panel of the Court of International Trade has granted the government's motion to dismiss a challenge to Section 232 duties on steel on the grounds that Presidential Proclamation 9705 and subsequent proclamations did not violate the statute. The plaintiffs are several steel importers that claim an injury caused by the tariffs President Trump imposed on certain imported articles of steel after a Commerce Department report found that the imports threaten national security due to the correspondingly lower U.S. production capacity.

Plaintiffs challenge the imposition of the duties on procedural arguments related to the requirements of Section 232 itself and the Administrative Procedure Act. To leverage the Court's opinion, Plaintiffs allege:

(1) the Steel Report is a reviewable, final agency action, is procedurally deficient, and invalidates subsequent Presidential action; (2) both the Secretary and the President fundamentally misinterpreted the statute by failing to base their determinations on an “impending threat;” (3) the President violated Section 232 by failing to set the duration of the action he chose; and (4) tariffs imposed on Canada, Mexico, and EU member nations violated Section 232’s timing provisions.

The Plaintiffs ran into a wall on each claim.

First, the Commerce Department's Steel Report does not actually impose tariffs and does not have final consequences until the President acts on it. That means, according to the CIT, that it is not a final agency action under the APA. 

The second argument goes to the degree to which there must be a threat to national security for the President to act under the statute. The plaintiffs believe the threat must be imminent. The statute is not clear on this. All it says is that before imposing tariffs or other measures, the President must concur with a finding by the Secretary that “an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security." Citing dictionary definitions, the Plaintiffs argued that the threat must be impending. Given the lack of a modifier in the statute, the Court found that the President's discretion was not so limited. And, as a general rule, the Court will not second guess an exercise of Presidential discretion.

Section 232 requires that the president determine "the nature and duration of the action" that must be taken to meet the threat to national security. In this instance, Proclamation simply asserted that the duties would be collected until the "action" is reduced, modified, or terminated. Put another way, the duties continue until the President says otherwise. The question is whether "until I say so" is a "duration" consistent with the statute. According to the Court, that is a valid duration.

The last argument has to do with the treatment of the EU, Canada and Mexico. This is a more complicated argument. Partly, it relies on a section of the statute that gives the President 180 days to negotiate with foreign countries to resolve the threat to national security. Plaintiffs maintained that the 180 days is a required length for negotiations and that the President may not commence negotiations and then act prior to the end of the 180-day period. That, however, is not in the statute. The remaining arguments on timing were similarly unpersuasive to the Court. 

As a result, the Court granted the government's motion for judgment on the pleadings and denied the Plaintiffs' motion for summary judgment, effectively ending the case at this level.

But wait . . . there is more.

Because so many cases are currently before three-judge panels, we seem to have entered the glory days of separate opinions at the CIT. This case has two. A concurring opinion by Judge Katzmann in which Judge Gordon concurred, explores the broader connections between trade and national security. Turning to the issue presented, Judge Katzmann wonders about the potential abuse of 232 actions that are not bound by a specific duration but notes that question is not squarely before the Court. While the President has broad discretion, the Judge notes, there is a national security role to be played by Congress and a reviewing role to be played by the judiciary. With respect to Section 232, it is important to remember that the President is acting in a legislative capacity pursuant to a delegation of authority from Congress to regulate trade. This means the President is "far from unbounded" in his authority. I would characterize that as noting that the delegation cannot give the President more power than Congress had and (this is me again) the action would be subject to similar review.

Finally, Judge Baker also provides a separate opinion, concurring in part and dissenting in part. One point he raises we already discussed: his view the Court has no jurisdiction over the President and that the President should be dismissed from the case. Similarly, Judge Baker opines that the Court has no jurisdiction to review the duration of the Section 232 remedy imposed by the President. This is because Section 232 commits the duration to the President and an exercise of Presidential discretion is not subject to judicial review. 


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