“Steel” Subject to Tariffs: Federal Circuit Upholds Constitutionality of Section 232

“Steel” Subject to Tariffs: Federal Circuit Upholds Constitutionality of Section 232

Legal Sidebari

“Steel” Subject to Tariffs: Federal Circuit
Upholds Constitutionality of Section 232
March 18, 2020
In a February 28, 2020, decision, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit)
affirmed a judgment of the U.S. Court of International Trade (CIT) upholding the constitutionality of
Congress’s delegation of tariff authority to the executive branch in Section 232(b) of the Trade Expansion
Act of 1962 (generally referred to as “Section 232”). The decision leaves in place tariffs on imports of
steel and aluminum that the Administration imposed for national security purposes in March 2018, and
subsequently expanded in February 2020. In affirming the CIT’s judgment in American Institute for
International Steel (AIIS) v. United States, the Federal Circuit determined that Section 232 did not violate
the Constitution’s separation of powers by delegating too much of Congress’s authority over commerce to
the executive branch. The court thus rejected the constitutional challenge by trade associations
representing U.S. steel importers, relying almost exclusively on the Supreme Court’s 1976 decision in
Federal Energy Administration v. Algonquin SNG, Inc. The Federal Circuit agreed with the CIT that the
case was controlled by Algonquin, which held that Section 232 did not violate the nondelegation doctrine.
This Legal Sidebar (1) provides background on Section 232; (2) discusses the CIT’s decision in AIIS;
(3) examines the Federal Circuit’s decision on appeal; and (4) identifies several implications for
Congress.
Background on Section 232
Section 232 authorizes the President to “adjust the imports” of products and their derivatives to address
threats to national security. The President’s authority is triggered if the U.S. Department of Commerce
(Commerce) conducts an investigation and concludes that the articles are “being imported into the United
States in such quantities or under such circumstances as to threaten to impair the national security.” If
Commerce makes such a finding, Section 232 gives the President significant discretion to take action, for
such time as he deems necessary, to “adjust the imports” of a product and its derivatives. The statute
provides that Commerce and the President shall consider a variety of factors when determining whether
certain imports threaten national security, and how to adjust them if necessary. It characterizes national
security concerns broadly, stating that:
In the administration of this section, the Secretary [of Commerce] and the President shall further
recognize the close relation of the economic welfare of the Nation to our national security, and shall
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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.
The Supreme Court addressed the scope of Section 232’s delegation of authority to the President in
Algonquin, which involved a challenge to President Ford’s imposition of quotas and license fees on
imports of petroleum and petroleum products under Section 232. In that case, the Supreme Court
addressed the nondelegation issue before ruling on whether the President’s imposition of license fees on
imports fell within the scope of authority provided to the President, rejecting the “suggestion that [the
Court] must construe § 232(b) narrowly in order to avoid ‘a serious question of unconstitutional
delegation of legislative power.’” The Court then determined that Section 232 set forth an “intelligible
principle” to guide the President’s decisionmaking by establishing clear preconditions for action and
limiting, to an extent, the President’s discretion to act in response to a Section 232 investigation. This, the
Court wrote, made the delegation constitutional. The Court concluded: “Even if § 232(b) is read to
authorize the imposition of a license fee system, the standards that it provides the President in its
implementation are clearly sufficient to meet any delegation doctrine attack.”
The CIT’s Decision in AIIS
On March 8, 2018, following a Commerce investigation, President Trump issued two proclamations
imposing 25% and 10% tariffs on U.S. imports of certain steel and aluminum products, respectively,
using authority delegated to him under Section 232. The President sought to justify the tariffs on the
ground that the imports threatened national security by harming the U.S. steel and aluminum industries.
These actions, as well as requests for exemptions from the tariffs for imports from some countries, have
led to legal challenges before domestic and international tribunals.
The AIIS case began in June 2018 when the plaintiffs sought an injunction to prevent these tariff
increases, challenging the constitutionality of Section 232 before the CIT. The plaintiffs argued that
Congress’s broad delegation of its power over commerce to the President in the Act violated the
Constitution’s separation of powers. They maintained that “Congress created an unconstitutional regime
in [S]ection 232, in which there are essentially no limits or guidelines on the trigger or the remedies
available to the President, and no alternative protections to assure that the President stays within the law,
instead of making the law himself.”
On March 25, 2019, the CIT issued an opinion rejecting the plaintiffs’ arguments that Congress delegated
too much of its legislative power to the President in Section 232, in violation of the separation of powers
established in the Constitution. In granting the United States’ motion for judgment on the pleadings, the
court held that it was bound by Algonquin’s holding that Section 232 did not amount to an
unconstitutional delegation because it established an “intelligible principle” to guide presidential action.
Nonetheless, one member of the three-judge CIT panel, Judge Katzmann, wrote separately to express his
significant concerns about the ruling without openly dissenting. Judge Katzmann wrote that he was bound
to follow Supreme Court precedent and uphold the delegation, but questioned whether the nondelegation
doctrine retained any significant meaning if a delegation as broad as that in Section 232 was permissible.
After the CIT issued its decision in AIIS, the plaintiffs filed a petition for a writ of certiorari with the
Supreme Court seeking review of the CIT’s decision and arguing, among other things, that only the
Supreme Court could decide whether to overrule its precedent in Algonquin. After the Supreme Court
denied certiorari, the plaintiffs appealed to the Federal Circuit.

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The Federal Circuit’s Decision on Appeal
On February 28, 2020, the Federal Circuit ruled upon the plaintiffs’ appeal of the CIT’s decision. Like the
CIT, the Federal Circuit rested its decision upholding the constitutionality of Section 232 on Supreme
Court precedent, determining that the Court’s decision in Algonquin applied to the case and,
consequently, that the Act did not violate the nondelegation doctrine. The Federal Circuit did not embark
on its own analysis of whether, if the Supreme Court had not decided Algonquin, Section 232 would be
constitutional.
As to the plaintiffs’ argument that Algonquin did not control their case, the Federal Circuit disagreed,
noting that the “[Algonquin] Court’s rejection of the nondelegation-doctrine challenge to section 232 was
a necessary step in the Court’s rationale for ultimately construing the statute as it did, and the
constitutional ruling is therefore binding precedent.” The Federal Circuit also rejected the plaintiffs’
attempts to distinguish Algonquin from their own case. For example, the court rejected the argument that
Algonquin was distinguishable because the case involved licensing fees instead of tariffs. Both, the court
stated, were “monetary exactions,” and the Algonquin decision was not tied to the form of presidential
action authorized. Moreover, the plaintiffs also lodged a facial challenge to Section 232, and thus had to
show there was no application of the law that would be constitutional—a position that the Supreme Court
had rejected in Algonquin when it upheld President Ford’s imposition of license fees. The Federal Circuit
thus affirmed the CIT’s judgment, determining that it was bound by Supreme Court precedent.
Implications for Congress
Nondelegation-doctrine challenges, which generally argue that Congress has delegated authority to the
executive branch without providing an “intelligible principle” to govern the Executive’s exercise of that
discretion, have not been successful since 1935. If the plaintiffs seek and the Supreme Court grants
certiorari in AIIS to review the Federal Circuit’s decision, the Court might be asked to reconsider
Algonquin as well as its earlier precedents on the nondelegation doctrine, such as J.W. Hampton, Jr. & Co.
v. United States. Last term, five Supreme Court Justices indicated they may be willing to revisit the long-
dormant nondelegation doctrine. However, predicting whether the Court will overrule a prior decision is
difficult. Moreover, it may be difficult for the Court to establish an alternative workable standard for
determining when a congressional delegation of authority violates the Constitution, although at least one
Justice has proposed an approach.
Additionally, although the Federal Circuit, relying on Supreme Court precedent, affirmed that Section 232
on its face did not offend the Constitution’s nondelegation doctrine, a recent CIT decision in a separate
ongoing case suggests some limits to the scope of the President’s authority under Section 232. In
Transpacific Steel LLC v. United States, a U.S. company that imports steel products from various
countries, including Turkey, is seeking the refund of the allegedly excess Section 232 duties it paid on
imports of Turkish steel. In a decision denying the United States’ motion to dismiss the company’s
complaint, the CIT indicated that the President’s power to impose tariffs under Section 232, while broad,
is not unlimited. Specifically, the court suggested that the President must closely adhere to the procedural
requirements of the statute when exercising such authority. The court also determined that the company
established a plausible argument that the Executive violated constitutional guarantees of equal protection
under the Fifth Amendment’s Due Process Clause when imposing, without a rational basis, the additional
steel tariffs only on imports from Turkey, and no other countries, in August 2018. Thus, while the Federal
Circuit rejected a facial challenge to Section 232’s constitutionality in AIIS, the CIT’s decision in
Transpacific Steel indicates that courts might scrutinize whether the executive branch has followed the
proper procedures, including meeting statutory deadlines, when exercising Section 232 authority.
In addition, Congress has constitutional authority over tariffs and “Commerce with foreign Nations.”
Congress could pass legislation that imposes a different trade remedy or it could amend or repeal Section

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232. Several bills introduced in recent Congresses would provide for additional congressional oversight
over the Executive’s use of Section 232, including by allowing for a congressional joint disapproval
resolution to overrule presidential actions pursuant to the statute, or to require congressional approval of
presidential actions taken under Section 232.

Author Information

Brandon J. Murrill

Legislative Attorney

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