CAFC Upholds Constitutionality of Section 232; AIIS to Seek Supreme Court Review

The U.S. Court of Appeals for the Federal Circuit on Feb. 28 upheld the constitutionality of Section 232 tariffs on iron and steel products, affirming a 2019 Court of International Trade decision in a closely followed case brought by the American Institute for International Steel.

Like CIT, the Federal Circuit said it was bound by Supreme Court precedent to find that Section 232 is a constitutional delegation of authority of congressional tariff powers to the president. In a case called Algonquin, decided in 1976, the Supreme Court found Section 232 “establishes clear preconditions to Presidential action,” passing the “intelligible principle” test by which congressional delegations of authority are judged.

Unlike the trade court, which expressed misgivings about the constitutionality of Section 232 even as it found itself bound to uphold it (see 1903250032), CAFC pointedly declined to weigh in on whether the law would be constitutional sans the binding precedent. “We affirm without deciding what ruling on the constitutional challenge would be proper in the absence of Algonquin,” CAFC said.

AIIS will appeal. “We intend to seek Supreme Court review promptly and we are hopeful that the Court will act before it adjourns in June,” said Alan Morrison, the George Washington University law professor that represents AIIS, as well as Sim-Tex and Kurt Orban Partners, also plaintiffs in the case. The Supreme Court already declined to hear the case on a direct appeal of CIT’s decision, though it could take up the case this second time around (see 1906240035).

The trade group had argued to the Federal Circuit its challenge was different from Algonquin, which held that import licensing fees imposed under Section 232 on oil imports were constitutional. But the Supreme Court “did not limit its reasoning in the delegation doctrine portion of its opinion to the license-fee authority in dispute in Algonquin,” CAFC said. And in any case, both the Section 232 tariffs on iron and steel imposed in 2018, and the license fees at issue in Algonquin, are “monetary extractions,” the Federal Circuit said.

CAFC also declined to find itself free to strike down Section 232 on the basis that more recent cases have undermined Algonquin, making it no longer binding. And although five Supreme Court justices have recently expressed interest in reconsidering constitutional limits on delegations of authority, “such expressions give us neither a license to disregard the currently governing precedent nor a substitute standard to apply,” CAFC said.

(AIIS v. U.S., Fed. Cir. # 19-1727, dated 02/28/20, Judges Taranto, Schall and Stoll)

(Attorneys: Alan Morrison for plaintiff AIIS; Tara Hogan for defendant U.S. government)