Transpacific, Turkish Steel Makers Want Full Court Rehearing of Section 232 Case at Federal Circuit

Steel importer Transpacific Steel, along with several Turkish steel makers, wants a full court rehearing at the U.S. Court of Appeals for the Federal Circuit of a panel decision to uphold President Donald Trump's Section 232 tariff hike on Turkish steel. In an Aug. 23 petition for panel rehearing and rehearing en banc, Transpacific argued that the panel's majority failed to impose the congressionally mandated limitations to the president's power in Section 232. Further, the majority improperly rejected the plaintiff appellees' equal protection claims, the petition said (Transpacific Steel LLC, et al. v. United States, Fed. Cir. #20-2157).

While rare, full court rehearing petitions are typically granted to enforce uniformity of the court's decisions or for matters of extreme importance, a lawyer familiar with the Federal Circuit said. A July opinion in the case found that the president may impose greater Section 232 national security tariffs beyond the 105-day time frame for action set out in the statute (see 2107130059). The Federal Circuit said that the underlying law's deadline for the president to take "action" can refer to a "plan of action" carried out over a period of time after the procedural time limits.

In particular, Transpacific and the other plaintiffs challenged Trump's doubling of the Turkish Section 232 tariffs, from 25% to 50%. The Court of International Trade originally ruled against this hike, finding that it came after the relevant deadline. However, the Federal Circuit said that as long as the tariffs continue their original purpose as laid out in the Commerce Department report preceding any Section 232 tariff action, then the president can hike the tariffs as he pleases. Seeing as the original purpose of the tariffs was to bolster domestic capacity utilization of steel and aluminum, any further tariffs beyond this deadline meant for this purpose are not in violation of the law, the majority held.

However, Judge Jimmy Reyna dissented from this decision, finding that his colleagues went beyond legislating from the bench and even amended the U.S. Constitution itself. The judge held that the majority gave no valid reason for deviating from the "plain words" of Section 232 and failed to account for the legislative history of the text that showed Congress' intention to eliminate the practice of perpetually modifying earlier actions without obtaining a new Commerce report.

Transpacific's petition tapped some of Reyna's arguments in pushing for a full-court rehearing. The plaintiffs discussed how the majority did not give effect to the statute's express limitations including how the majority's interpretation gives no limits to the president's power. "According to the Majority, these additional measures could be announced tomorrow, in two years or a decade from now, at the President’s sole discretion and without undertaking any of the required steps Congress required in Section 232," the petition said. "Nothing in the language of Section 232 or its legislative history supports such an expansive reading of the President’s delegated powers. To the contrary, the legislative record leaves no doubt that this delegation by Congress was conditional on adherence to stated requirements, including time limits and determining the nature and duration of the action required to end the threat to national security."

In fact, the statute does not provide continuing authority to take such tariff action, the plaintiffs said. The original proclamation establishing the Section 232 tariffs cannot be read to include a plan of action that includes the doubling of Turkish steel tariffs, plaintiffs argued. Rather, the Turkish tariff hike was for an issue "unrelated to the relief recommendations in the report." The report's recommendations did not include increased tariffs on Turkey alone.

The case should be reconsidered at a Federal Circuit-wide level also to uphold the plaintiffs' equal protection claims, the petition urged. Since U.S. importers from a particular country are a "class of persons" under equal protection jurisprudence, this "class legislation" is discriminatory, the plaintiffs argued. "In every case, the discrimination must be a rational way of achieving a legitimate government end. Though the Majority dismisses such rational basis review as 'undemanding,' the inquiry has meaning." Also, the petition pointed to news reports that suggested that the tariff hike was due to the "political unpopularity" of Turkey rather than national security as further evidence for its equal protection claims.