United States: Section 232 Survives The Federal Circuit

Last week, in a highly anticipated decision, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) concluded that Section 232 of the Trade Expansion Act of 1962 does not offend the non-delegation doctrine. To most observers, the ruling does not come as a surprise, but the story on Section 232 and the non-delegation doctrine is not yet over.

Background

Section 232 authorizes the President to take measures against imports found to threaten to impair the national security of the United States. Since assuming office, President Trump has used Section 232 to impose tariffs on aluminum and steel imports, though he has not announced whether he will take any action on imports of automobiles and automotive parts, and he has affirmatively declined to impose any additional measures on imports of uranium and titanium sponge.

President Trump's unprecedented use of Section 232 to address steel imports caused the American Institute for International Steel, Inc. (AIIS) to challenge his action at the U.S. Court of International Trade (CIT). AIIS alleged that Section 232 violates the "non-delegation" doctrine, a principle developed by the Supreme Court over a series of opinions, the first of which it issued shortly after the nation's inception. In simple terms, to preserve the separation of powers that the Constitution establishes, the doctrine prohibits Congress from delegating any of its constitutionally prescribed authorities to another branch of government without an "intelligible principle." If the law in question contains an "intelligible principle" to which the delegate must conform, it passes constitutional muster and does not offend the non-delegation doctrine. The Supreme Court has not invalidated a law based on the non-delegation doctrine since the 1930s.

In March 2019, a three-judge CIT panel consisting of Judges Kelly, Choe-Groves and Katzmann rejected AIIS's non-delegation challenge, holding that the Supreme Court's 1976 decision in Federal Energy Administration v. Algonquin SNG Inc. foreclosed AIIS's claim. In Algonquin, the Supreme Court rejected a non-delegation challenge to Section 232. See 426 U.S. 548 (1976). Judge Katzmann concurred, concluding that Algonquin dictated the result, but he expressed doubts over whether Algonquin remains sound in view of subsequent Supreme Court decisions and recent events.

AIIS immediately appealed to the Federal Circuit. In January 2020, a panel consisting of Judges Taranto, Schall and Stoll heard oral argument from the parties.

The Decision

Writing on behalf of an unanimous panel, Judge Taranto agreed with the CIT and held that, for two reasons, the Supreme Court's decision in Algonquin directly "answers the question of the constitutionality of {S}ection 232 presented here." Slip Op. at 13. First, Judge Taranto reasoned that the Supreme Court's "rejection of the nondelegation-doctrine challenge to {S}ection 232" in Algonquin "was a necessary step in the {Supreme} Court's rationale for ultimately construing the statute as it did" in that case, such that the constitutional ruling in Algonquin "is . . . binding precedent." Id. (emphasis added). Second, Judge Taranto noted that "the rationale of the {Supreme} Court's rejection of the nondelegation-doctrine challenge" in Algonquin "rests on the determination that the standards governing the President's and {Commerce} Secretary's determinations under {S}ection 232 are constitutionally adequate. The same standards are at issue here." Id. at 14. In other words, Judge Taranto concluded that the Federal Circuit had no room to reach a result different from the directly applicable Algonquin.

Three other aspects of the Federal Circuit's decision warrant discussion. As an initial matter, Judge Taranto rejected AIIS's claim that Algonquin does not control the outcome because "later decisions of the Supreme Court have undermined at least one crucial premise of Algonquin." Id. at 15. Instead, he reasoned that only the Supreme Court (and not the Federal Circuit) may overrule directly applicable precedent issued by the Supreme Court (i.e., Algonquin) and that the Federal Circuit simply may not chart a different course, regardless of how the Supreme Court ruled in other cases involving similar grants of authority to the President. Id.; see also id. at 4 n.1 (citing other decisions in which the Supreme Court reviewed "other grants of authority to the President . . . involving import{s} or other measures involving foreign commerce or exactions").

Judge Taranto also acknowledged that five members of the Supreme Court have recently expressed an interest in revisiting the non-delegation doctrine. Nevertheless, he concluded that those statements "give us neither a license to disregard the currently governing precedent nor a substitute standard to apply." Id. Indeed, he noted the difficulty in "guess{ing} at precisely what analysis might be needed in the absence or Algonquin," particularly in view of the Supreme Court's recognition "that the President has some independent constitutional authority over national security and dealings with foreign nations, including in the form of executive agreements." Id. at 16.

Finally, Judge Taranto provides some clarity on a fundamental question: what exactly does the phrase "national security" in Section 232 cover? He raised several questions on this issue during oral argument. After walking through the statutory framework, he acknowledges that Section 232 requires an analysis of broad economic factors outside of the national defense context and explains that "Congress has elsewhere recognized connections between economic interests and national security." Id. at 3–6 & n.2.

What's Next?

Shortly after the Federal Circuit issued its decision last week, AIIS announced that it would immediately seek review by the Supreme Court. AIIS intends to quickly file its petition for writ of certiorari, with the hope that the Supreme Court will agree to hear and resolve the appeal before the end of its term in June 2020.

This development marks AIIS's second attempt to have the Supreme Court intervene in its Section 232 non-delegation challenge. In 2019, AIIS leapfrogged the Federal Circuit and unsuccessfully sought review by the Supreme Court after the CIT issued its decision.

Will AIIS fare better this round? Although several members of the Supreme Court have expressed an interest in revisiting the non-delegation doctrine, the Supreme Court generally has avoided resolving issues that involve the Executive Branch's national security interests. It therefore seems that AIIS's challenge may not provide the Supreme Court with the most desirable vehicle for revisiting the non-delegation doctrine.

Stay tuned.

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