American Institute for Int'l Steel, Inc. v. United States
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Opinion
Kelly, Judge:
Before the court are American Institute for International Steel, Inc., Sim-Tex LP, and Kurt Orban Partners, LLC's ("Plaintiffs") motion for summary judgment and Defendants' motion for judgment on the pleadings, and their respective supporting memoranda.
See
[Plaintiffs'] Mot. Summary J. & Mem. Supp., July 19, 2018, ECF No. 20 ("Pls.' Br.") ; Defs.' Mot. J. Pleadings & Opp'n Pls.' Mot. Summary J., Sept. 14, 2018, ECF No. 26 ("Defs.' Opp'n Br."). Plaintiffs seek declaratory and injunctive relief against enforcement of section 232 of the Trade Expansion Act of 1962, as amended
BACKGROUND
Section 232 authorizes the Secretary of Commerce to commence an investigation "to determine the effects on the national security of imports" of any article.
Upon the investigation's completion or within the timeline provided, the Secretary of Commerce must provide the President with a report of the investigation's findings, advise on a course of action, and if the Secretary determines that the article under investigation "is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," advise the President of the threat.
After receiving the Secretary of Commerce's report, if the President concurs with the finding that a threat exists, he shall "determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security."
Additionally,
By no later than the date that is 30 days after the date on which the President makes any determinations under paragraph (1), the President shall submit to the Congress a written statement of the reasons why the President has decided to take action, or refused to take action, under paragraph (1).
Finally, section (d) lists the following factors that the Secretary and the President should consider when acting pursuant to the statute:
(d) Domestic production for national defense; impact of foreign competition *1339 on economic welfare of domestic industries
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Kelly, Judge:
Before the court are American Institute for International Steel, Inc., Sim-Tex LP, and Kurt Orban Partners, LLC's ("Plaintiffs") motion for summary judgment and Defendants' motion for judgment on the pleadings, and their respective supporting memoranda.
See
[Plaintiffs'] Mot. Summary J. & Mem. Supp., July 19, 2018, ECF No. 20 ("Pls.' Br.") ; Defs.' Mot. J. Pleadings & Opp'n Pls.' Mot. Summary J., Sept. 14, 2018, ECF No. 26 ("Defs.' Opp'n Br."). Plaintiffs seek declaratory and injunctive relief against enforcement of section 232 of the Trade Expansion Act of 1962, as amended
BACKGROUND
Section 232 authorizes the Secretary of Commerce to commence an investigation "to determine the effects on the national security of imports" of any article.
Upon the investigation's completion or within the timeline provided, the Secretary of Commerce must provide the President with a report of the investigation's findings, advise on a course of action, and if the Secretary determines that the article under investigation "is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," advise the President of the threat.
After receiving the Secretary of Commerce's report, if the President concurs with the finding that a threat exists, he shall "determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security."
Additionally,
By no later than the date that is 30 days after the date on which the President makes any determinations under paragraph (1), the President shall submit to the Congress a written statement of the reasons why the President has decided to take action, or refused to take action, under paragraph (1).
Finally, section (d) lists the following factors that the Secretary and the President should consider when acting pursuant to the statute:
(d) Domestic production for national defense; impact of foreign competition *1339 on economic welfare of domestic industries
For the purposes of this section, the Secretary and the President shall, in the light of the requirements of national security and without excluding other relevant factors, give consideration to domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth, and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. In the administration of this section, the Secretary and the President shall further recognize the close relation of the economic welfare of the Nation to our national security, and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security.
JURISDICTION AND STANDARD OF REVIEW
This Court has jurisdiction under
DISCUSSION
Article I, Section I of the U.S. Constitution provides that "all legislative Powers herein granted shall be vested in a Congress of the United States." U.S. Const. art. I, § 1. The Supreme Court established the standard by which delegations are to be judged in
J.W. Hampton, Jr., & Co. v. United States
,
Since 1935 no act has been struck down as lacking an intelligible principle.
See
Panama Refining Co. v. Ryan
,
[i]t establishes clear preconditions to Presidential action[,] -[i]nter alia, a finding by the Secretary of the Treasury 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." Moreover, 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 President can act only to the extent "he deems necessary to adjust the imports of such article and its derivatives so that such imports will not threaten to impair the national security." And § 232(c), 4 [a]rticulates a series of specific factors to be considered by the President in exercising his authority under § 232(b). In light of these factors and our recognition that "(n)ecessity ... fixes a point beyond which it is unreasonable and impracticable to compel Congress to prescribe detailed rules ...," we see no looming problem of improper delegation.
Algonquin
,
Plaintiffs argue unpersuasively that
Algonquin
does not control because the plaintiffs in
Algonquin
"did not bring a facial challenge to the constitutionality of section 232," but rather challenged the President's statutory authority to impose a specific kind of remedy and argued for a narrow statutory construction to avoid a nondelegation problem.
See
Pls.' Br. at 31-33; Resp. Mem. Supp. Pls.' Opp'n Defs.' Mot. J. Pleadings & Reply Mem. Supp. Pls.' Mot. Summary J. at 4-7, Oct. 5, 2018, ECF No. 33 (Pls.' Reply Br."). This argument fails to carry the day, given that the parties in
Algonquin
argued the nondelegation issue, and the District Court for the District of Columbia and Supreme Court squarely addressed it. The district court ruled that section 232 is "a valid delegation of authority by Congress to the President and confers upon him the power to impose import license fees on oil imports once he determines the fact of threatened impairment of the national security."
Algonquin SNG, Inc. v. Fed. Energy Admin.
,
Plaintiffs also argue that
Algonquin
does not control because, since its issuance, "the legal landscape of judicial review of presidential decisions involving implementation of federal statutes has changed markedly[.]"
See
Pls.' Br. at 29-30. Specifically, Plaintiffs argue that the Supreme Court's decisions explaining that the President is not an agency and therefore not subject to review under the Administrative Procedure Act ("APA") undercut
Algonquin
's relevance.
See
Plaintiffs' premise cannot withstand scrutiny.
Dalton
and
Franklin
did not change "the legal landscape of judicial review" with respect to section 232.
See
Pls.' Br. at 29-30. Indeed, no court before or after
Algonquin
held that the President was subject to the APA.
See
1 Kenneth Culp Davis, Administrative Law Treatise § 1.2 at 8 (2d ed. 1978); 1 Kristin E. Hickman & Richard J. Pierce, Jr., Administrative Law Treatise § 1.2.4 at 15 (6th ed. 2019);
see also
Franklin
,
Nonetheless, Plaintiffs ask the court to consider the broad authority given to the President that triggers executive action, i.e., the "essentially unlimited definition of national security," as well as the "limitless grant of discretionary remedial powers," as indicative that the statute does not have an intelligible principle.
See
Pls.' Br. at 5-6, 19-20;
see also
imposing tariffs on goods that are currently duty-free and increasing tariffs above those currently existing under the law for the subject article-with no limit on the level of the tariff. Thus, section 232 permits the President to impose tariffs-taxes-in unlimited amounts and of unlimited duration on any imported articles-or, as in the case with the steel tariff, on an entire class of imported articles. The President may also impose quotas-whether or not there are existing quotas-and with no limit on how much a reduction from an existing quota (or present or historical level of imports) there can be for the subject article. In addition, the President could choose to impose licensing fees for the subject article, either in lieu of or in addition to any tariff or quota already in place. Conversely, the President may also reduce an existing tariff or increase a quota, whenever he concludes that such a reduction or increase is in the interest of national security, as elastically defined. And for all these changes in the law, the President may select the duration of each such change without any limits on his choice, and he may make any *1344 changes with no advance notice or delay in implementation.
Pls.' Br. at 6.
8
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.
See
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.
See, e.g.
,
Indep. Gasoline Marketers Council, Inc. v. Duncan
,
CONCLUSION
For the foregoing reasons, the Plaintiffs' motion for summary judgment is denied, and the Defendants' motion for judgment on the pleadings is granted. Judgment will enter accordingly.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Katzmann, Judge, dubitante. 1
Section 232 of the Trade Expansion Act of 1962,
as amended in
*1346
Section 232 was enacted pursuant to the power granted exclusively to Congress by Article I, Section 8 of the Constitution, which provides: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises," as well as "To regulate Commerce with foreign Nations." There is no provision in the Constitution that vests in the President the same "Power To Lay and collect ... Duties." In short, the power to impose duties is a core legislative function.
On March 18, 2018, after receiving the report of the Secretary of Commerce, the President, invoking section 232, issued two proclamations imposing tariffs of 25% on steel and 10% on aluminum imports effective March 23, 2018, 2 while providing for flexibility with regard to country and product applicability of the tariffs. The new tariffs were to be imposed in addition to duties already in place, including antidumping and countervailing duties under domestic laws designed to preserve fair trade for the American economy. 3 It appears that the March 18, 2018 proclamations were the first presidential actions based on section 232 in more than thirty years. 4
The question before us may be framed as follows: Does section 232, in violation of the separation of powers, transfer to the President, in his virtually unbridled discretion, the power to impose taxes and duties that is fundamentally reserved to Congress by the Constitution? My colleagues, relying largely on a 1976 Supreme Court decision, conclude that the statute passes constitutional muster. While acknowledging the binding force of that decision, *1347 with the benefit of the fullness of time and the clarifying understanding borne of recent actions, I have grave doubts. I write, respectfully, to set forth my concerns.
It was the genius of the Framers of the Constitution of this Nation, forged from the struggle against tyranny, that they declared the essential importance of the separation of the powers.
5
In
The Federalist No. 47
, James Madison wrote that "[n]o political truth is certainly of greater intrinsic value, or is stamped with the authority of more enlightened patrons of liberty than" the separation of powers.
The Federalist No. 47
, at 301 (James Madison) (Clinton Rossiter ed., 1961). "The accumulation of all powers, legislative, executive and judiciary in the same hands ... must justly be pronounced the very definition of tyranny."
A review of Supreme Court jurisprudence, from the early days of the Republic, evinces affirmation of the principle that the separation of powers must be respected and that the legislative power over trade cannot be abdicated or transferred to the Executive. Indeed, the first case raising the question of unconstitutional delegation of legislative power was a trade case,
Cargo of the Brig Aurora v. United States
, 11 U.S. (7 Cranch) 382, 382-85,
By the time the Supreme Court addressed its next nondelegation challenge in a trade case,
Field v. Clark
,
That with a view to secure reciprocal trade with countries producing [specified] articles ... whenever, and so often as the [P]resident shall be satisfied that the [G]overnment of any country producing ... such articles, imposes duties or other exactions upon the agricultural or other products of the United States, which in view of the free introduction of ...[such articles] into the United States he may deem to be reciprocally unequal and unreasonable, he shall have the power and it shall be his duty to suspend, by proclamation to that effect, the provisions of this act relating to the free introduction of [such articles] ... for such time as he shall deem just, and in such case and during such suspension duties shall be levied, collected, and paid upon [such articles] ....
Field
,
That Congress cannot delegate legislative power to the [P]resident is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution. The [A]ct of October 1, 1890, in the particular under consideration, is not inconsistent with that principle. It does not, in any real sense, invest the [P]resident with the power of legislation.... Congress itself prescribed, in advance, the duties to be levied, collected and paid ...while the suspension lasted. Nothing involving the expediency or the just operation of such legislation was left to the determination of the [P]resident.... But when he ascertained the fact that duties and exactions, reciprocally *1349 unequal and unreasonable, were imposed upon the agricultural or other products of the United States by a country producing and exporting sugar, molasses, coffee, tea or hides, it became his duty to issue a proclamation declaring the suspension, as to that country, which [C]ongress had determined should occur. He had no discretion in the premises except in respect to the duration of the suspension so ordered. But that related only to the enforcement of the policy established by [C]ongress. As the suspension was absolutely required when the [P]resident ascertained the existence of a particular fact, it cannot be said that in ascertaining that fact, and in issuing his proclamation, in obedience to the legislative will, he exercised the function of making laws.
The next case adjudicating a challenge to a trade statute on the grounds of unconstitutional delegation of legislative power to the President was
J.W. Hampton, Jr. & Co. v. United States
,
to secure by law the imposition of customs duties on articles of imported merchandise which should equal the difference between the cost of producing in a foreign country the articles in question and laying them down for sale in the United States, and the cost of producing and selling like or similar articles in the United States, so that the duties not only secure revenue, but at the same time enable domestic producers to compete on terms of equality with foreign producers in the markets of the United States.
Noting that the Federal Constitution "divide[s] the governmental power into three branches," the
Hampton
Court stated that "it is a breach of the national fundamental law if Congress gives up its legislative powers and transfers it to the President ...."
not in any real sense invest[ed] ... with the power of legislation, because nothing involving the expediency or just operation of such legislation was left to the determination of the President; that the legislative power was exercised when Congress declared that the suspension should take effect upon a named contingency.
Id.
at 410,
The "intelligible principle" standard is the standard which has since been applied to determine whether there has been an impermissible delegation of legislative power. As my colleagues note, in the years since the "intelligible principle" was announced, and in cases involving numerous statutes, only twice has the Court invalidated a statute because it impermissibly delegated the power vested in the Congress to the Executive. "In the history of the Court we have found the requisite 'intelligible principle' lacking in only two statutes, one of which provided literally no guidance for the exercise of discretion, and the other of which conferred authority to regulate the entire economy on the basis of no more precise a standard than stimulating the economy by assuring 'fair competition.' "
Whitman v. Am. Trucking Ass'ns, Inc.
,
In the one trade case before the Court since
Hampton
where it was contended that the statute at issue constituted an unconstitutional delegation of legislative power to the Executive, the statute in question was the one before us now -- section 232.
See
Fed. Energy Admin. v. Algonquin SNG, Inc.
,
Of course, as a lower court, it behooves us to follow the decision of the highest court. It can also be observed that new developments and the record of history may supplement and inform our understanding of law. Indeed, the Algonquin court concluded with 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.
Analyzing the delegation question from the face of the statute, the
Algonquin
court took note of "clear conditions to Presidential action" that established an intelligible principle restricting presidential action: The Secretary is required to make a finding 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."
As the preceding review of the trilogy of Aurora , Field , and Hampton evinces, the trade statutes in those cases did not impermissibly transfer the legislative function to the Executive because they provided *1352 ascertainable standards to guide the President - standards such that the congressional will had been articulated and was thus capable of effectuation. What we have come to learn is that section 232, however, provides virtually unbridled discretion to the President with respect to the power over trade that is reserved by the Constitution to Congress. Nor does the statute require congressional approval of any presidential actions that fall within its scope. 7 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.
To note these concerns is not to diminish in any way the reality, sanctioned under established constitutional principles, that in the workings of an increasingly complex world, Congress may assign responsibilities to the Executive to carry out and implement its policy. Nor is it to ignore the flexibility that can be allowed the President in the conduct of foreign affairs.
See
United States v. Curtiss-Wright Export Corp.
,
In the end, I conclude that, as my colleagues hold, we are bound by Algonquin , and thus I am constrained to join the judgment entered today denying the Plaintiffs' motion and granting the Defendants' motion. I respectfully suggest, however, that the fullness of time can inform understanding that may not have been available more than forty years ago. We deal now with real recent actions, not hypothetical ones. Certainly, those actions might provide an empirical basis to revisit assumptions. If the delegation permitted by section 232, as now revealed, does not constitute excessive delegation in violation of the Constitution, what would?
Further citations to the Trade Expansion Act of 1962, as amended, are to the relevant provisions of the United States Code, 2012 edition.
Basrai Farms appears as amicus curiae in this action and filed a brief in support of Plaintiffs' position and in opposition to Defendants' position. See generally Br. Basrai Farms Opp'n Defs.' Mot. J. Pleadings & Supp. Pls.' Mot. Summary J., Oct. 5, 2018, ECF No. 39.
American Iron and Steel Institute ("AISI") and Steel Manufacturers Association ("SMA") appear as amici curiae in this action and filed a brief in opposition to Plaintiffs' position. See generally Br. Amici Curiae [AISI] & [SMA] Opp'n Pls.' Mot. Summary J., Sept. 14, 2018, ECF No. 30.
Section 232 has been amended since the Supreme Court issued Algonquin . Under the current law, section 232(d) mirrors what was previously section 232(c) and section 232(c) enumerates the President's authority, as was previously codified in section 232(b). Section 232, substantively, remains the same in relevant part.
Courts had suggested, without deciding the question, that the APA applied to the President.
See
Amalgamated Meat Cutters & Butcher Workmen of North America, AFL-CIO v. Connally
,
Plaintiffs, perhaps unintentionally, touch upon this idea in their reply brief, stating that "even if there w[as] an express provision for judicial review, the courts would be assigned an impossible task." Pls.' Reply Br. at 20. Indeed, the task would be impossible not because
Dalton
and
Franklin
changed the legal landscape for judicial review of presidential action, but because section 232 commits requisite determinations to the President's discretion.
See
In addition to establishing judicial power to review the constitutionality of statutes,
Marbury v. Madison
, 5 U.S. (1 Cranch) 137,
Likewise,
U.S. Cane Sugar Refiners' Ass'n v. Block
,
Plaintiffs emphasize the range of actions available to the President under section 232 and reference specific acts that he has taken.
See
Pls.' Br. at 12, 19-20; Pls.' Reply Br. at 5-6, 12-13. For example, on March 8, 2018, the President issued Proclamation 9705 imposing a 25% tariff on all imported steel articles, other than those imported from Canada and Mexico.
See
Proclamation 9705 of March 8, 2018
,
"[E]xpressing the epitome of the common law spirit, there is the opinion entered dubitante - the judge is unhappy about some aspect of the decision rendered, but cannot quite bring himself to record an open dissent." Lon Fuller, Anatomy of the Law 147 (1968). See generally Jason Czarnezki, The Dubitante Opinion,
Proclamation 9704 of March 8, 2018
,
"Dumping occurs when a foreign company sells a product in the United States at a lower price than what it sells that same product for in its home market. Such a product can be described as being sold below 'fair value.' "
Sioux Honey Ass'n v. Hartford Fire Ins. Co.
,
The Congressional Research Service has reported in a study that "[p]rior to the [current] Administration, a President arguably last acted under Section 232 in 1986. In that case, Commerce determined that imports of metal-cutting and metal-forming machine tools threatened to impair national security.... [T]he President sought voluntary export restraint agreements with leading foreign exporters, and developed domestic programs to revitalize the U.S. industry." Cong. Research Serv., R45249, Section 232 Investigations: Overview and Issues for Congress 4 (2018).
See generally
M.J.C. Vile,
Constitutionalism and the Separation of Powers
, 156-175 (1967) (
reprinted in
1969); Keith E. Whittington & Jason Iuliano,
The Myth of the Nondelegation Doctrine
,
Letter from James N. Mattis, Secretary of Defense, to Wilbur L. Ross Jr., Secretary of Commerce (2018), Pl.'s Mot. for Summary J. (July 19, 2018) at Exh. 8, ECF No. 20-7.
Compare the Crude Oil Windfall Profit Tax Act of 1980, creating a joint disapproval resolution provision under which Congress can override presidential actions in the case of adjustments to petroleum or petroleum product imports). The Crude Oil Windfall Profit Tax Act of 1980, § 402, Pub. L. 96-223,
Regarding the interplay between the Constitution and statute, one commentator has observed:
The Constitution grants Congress the "Power To lay and collect Taxes, Duties, Imposts and Excises" and "To regulate Commerce with foreign Nations." The president has no similar grant of substantive authority over economic policy, international or domestic. Consequently, international trade policy differs substantially from other foreign affairs issues, such as war powers, where the president shares constitutional authority with Congress. Where international trade policy is concerned, the president's authority is almost entirely statutory.
Timothy Meyer, Trade, Redistribution, and the Imperial Presidency , 44 Yale J. Int'l L. Online 16 (2018) (footnotes omitted) available at http://www.yjil.yale.edu/features-symposium-international-trade-in-the-trump-era/.
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