Section 232 Unconstitutional, Steel Importers Claim

The American Institute for International Steel and two companies filed a lawsuit June 27 at the U.S. Court of International Trade over the constitutionality of Section 232 of the 1962 Trade Expansion Act. The suit claims that Section 232 is unconstitutional because it delegates such broad authority to the president and there is no judicial review to those broad powers. "The lawsuit seeks a declaration that the law relied on by President Trump to impose that tariff is unconstitutional, as well as a court order preventing further enforcement of the 25% tariff increase," AIIS said in a news release. The trade group also asked that a three-judge panel hear its case, because that would allow an appeal to go straight to the Supreme Court.

The lawsuit seeks no damages, but if it were to be successful, lawyers say the tariffs would end, and those that paid them should receive refunds, with interest, since they would have been considered collected invalidly. It would also prevent President Donald Trump from implementing a 20 percent tariff on autos and auto parts, as he has threatened to do. Alan Morrison, lead counsel in the case, said at a June 27 press conference that "Congress has, in effect, abdicated its constitutional responsibility to make the laws."

Other laws that allow the administration to impose tariffs have more guardrails, trade lawyers working with AIIS noted. Don Cameron, a partner at Morris, Manning, said Section 201, used for safeguard tariffs, limits how high the tariffs can be, sets out guidelines on quotas, and sets a time limit on remedies. The process outlined in the law also requires the International Trade Commission to determine if there's injury to industrial sectors, and whether the imports caused that injury. Moreover, Section 201 does have "at least some judicial review," said Gary Horlick, a trade attorney and former head of Import Administration at the Commerce Department.

Sim-Tex, an oil country tubular goods wholesaler, and Kurt Orban Partners, a specialty steel importer, are also parties to the suit. The lawyers do not expect other parties to join, but expect a slew of amicus curiae briefs. As AIIS announced the lawsuit, it acknowledged an excess delegation of powers case has not been won at the Supreme Court since 1935. They note that the administration argued in the Severstal Steel case (see 1804060028) on Section 232 that there is no judicial review of the president's discretion as he decides how to protect the national security -- and they believe that interpretation also bolsters their argument that the law violates the separation of powers doctrine.

The lawsuit says the law recognizes "the close relation of the economic welfare of the Nation to our national security," and says the Commerce Secretary and president "shall take into consideration the impact of foreign competition on individual domestic industries." But, AIIS said in its lawsuit, the law does not require that the president consider adverse impact on other industries, exports or prices. The American Iron and Steel Institute responded to the suit, calling it without merit. "We are confident the court will reject this challenge to the constitutionality of the Section 232 statute," the AISI CEO said.

This suit involves different issues than a 1976 Supreme Court decision on Section 232, the plaintiffs argued in a memo requesting the three-judge panel. "Unlike the plaintiffs in Algonquin, who alleged that the President had exceeded the limits imposed by Congress by using licensing fees rather than quotas, Plaintiffs here allege that Congress violated the nondelegation doctrine by providing no meaningful limits on how the President should or must exercise his authority to 'adjust imports,'" the filing said. The fact that the Supreme Court recently agreed to hear another delegation of powers case -- even though lower courts all agreed the statute, which has to do with sex offender registries, is valid -- also gives them hope they could win. "Ideally, we would have this done and decided by Labor Day," AIIS's lead counsel Morrison said.