Relying largely on a 1976 Supreme Court decision - Federal Energy Administration versus Algonquin SNG Inc - the CIT ruled that Section 232 of the Trade Expansion Act of 1962, under which Trump imposed import duties of 25% on steel and 10% on aluminum in late March, does not violate the US Constitution’s separation of powers.
The American Institute for International Steel (AIIS), a lobbying group representing steel traders, and two of its members - Sim-Tex LP and Kurt Orban Partners - disputed the constitutionality of Section 232 in a lawsuit filed in the CIT last June
. The CIT accepted the request for a three-judge panel and heard oral arguments in mid-December.
The AIIS case centered on two issues: Improper delegation of Congress’ constitutional power to the president to regulate international trade, and the absence of a provision for judicial review of presidential orders.
“Admittedly, the broad guideposts of subsections (c) and (d) of Section 232 bestow flexibility on the president and seem to invite the president to regulate commerce by way of means reserved for Congress, leaving very few tools beyond his reach,” Judges Claire R. Kelly and Jennifer Choe-Groves wrote in the decision.
To be sure, Section 232 regulation plainly unrelated to national security would be, in theory, reviewable as action in excess of the president’s Section 232 authority. But “identifying the line between regulation of trade in furtherance of national security and an impermissible encroachment into the role of Congress could be elusive in some cases because judicial review would allow neither an inquiry into the president’s motives nor a review of his fact-finding,” they wrote.
One might argue that the statute allows for a gray area where the president could invoke the statute to act in a manner constitutionally reserved for Congress but not objectively outside the president’s statutory authority, and the scope of review would preclude the uncovering of such a truth, the judges noted. “Nevertheless, such concerns are beyond this court’s power to address, given the Supreme Court’s decision in Algonquin.”
In the 1976 case, the Supreme Court found that Section 232 “easily” met the intelligible principle because it established clear preconditions to presidential action. Moreover, the leeway given to the president under the statute in deciding what action to take in the event the preconditions were fulfilled was "far from unbounded," with Section 232 subsection c articulating a series of specific factors to be considered by the president in exercising his authority under subsection b of the act. As a result, the Supreme Court found "no looming problem of improper delegation.”
“While acknowledging the binding force of that decision, with the benefit of the fullness of time and the clarifying understanding borne of recent actions, I have grave doubts,” Judge Gary S. Katzmann wrote in a dubitante opinion in the CIT ruling, suggesting that a revisit of the Algonquin determination might be appropriate.
In the Algonquin case, while the court took note of "clear conditions that established an intelligible principle restricting presidential action" there was no statutory requirement that the president’s actions match the secretary’s report or recommendations, he wrote, adding that the president also was not required to base his remedy on the report or information provided to the secretary through any pubic 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,” Katzmann wrote.
In fact, former Secretary of Defense James Mattis noted in a department memo responding to Trump's steel and aluminium policy recommendations that very little of the metals were needed for national defense purposes. "US military requirements for steel and aluminium each only represent about 3% of US production," Mattis stated at the time.
“In short, it is difficult to escape the conclusion that the statute has permitted the transfer of power to the president in violation of the separation of powers,” Katzmann wrote. “I respectfully suggest, however, that the fullness of time can inform understanding that may not have been available more than 40 years ago. We deal now with real recent actions not hypothetical ones... If the delegation permitted by Section 232, as now revealed, does not constitute excessive delegation in violation of the Constitution, what would?”
Trade group responses
“We are heartened that the [CIT] recognized that Section 232, in the court’s words, ‘seem[s] to invite the president to regulate commerce by way of means reserved for Congress,'" the AIIS said, adding that it shared the opinion expressed by Katzmann and would appeal the ruling.
AIIS has two options there, legal experts said, noting that it can appeal to the US Court of Appeals for the Federal Circuit or to the Supreme Court directly since the CIT determination was reached by a three-judge panel of a lower federal court. The former would need to be filed within 60 days of the determination and the latter within 30 days, they noted.
The American Iron and Steel Institute (AISI), which in conjunction with the Steel Manufacturers Association submitted an amicus brief in the lawsuit in September, hailed the CIT ruling to uphold Section 232 tariffs and quotas.
“Today the CIT rightly affirmed our strong belief that the constitutional challenge to the Section 232 statute was and is without merit... The president’s bold trade actions have now helped the industry gain some momentum, and today’s CIT decision builds on that momentum,” AISI president and chief executive officer Thomas J. Gibson said in a statement.