Company Seeks Reconsideration of Broad Section 232 Challenge, Cites SCOTUS' EPA Opinion

The U,S, Court of Appeals for the Federal Circuit needs to reconsider its dismissal of a broad challenge to President Donald Trump's Section 232 steel and aluminum tariffs, plaintiff-appellants in the case, led by USP Holdings, argued in a July 22 motion for reconsideration. The plaintiff-appellants said that the court "failed to consider" the effect of the Administrative Procedure Act on the standard of review issue when finding that the scope of judicial review given to the Commerce Secretary's determination of threat to impair national security was identical to that given to the president, whose findings are not subject to the APA (USP Holdings v. United States, Fed. Cir. #21-1726).

Citing the Supreme Court's recent decision in West Virginia v. EPA, which clipped federal agencies' ability to regulate major sectors of the economy lest it be explicitly delegated by Congress, the plaintiff-appellants argued that "If Congress intended to delegate full authority to the Executive to regulate international trade, it would have done so." The delegation of this power is a "major question" that requires Congress' guidance, the appellants said.

The invocation of the West Virginia opinion is the first of its kind in a trade case, following speculation from the trade bar over whether the case could impact trade matters (see 2207060068). "The 'major questions' issue is a matter of statutory interpretation: under Section 232, Congress imposed requirements for the Secretary to consider in determining whether imports threaten to impair the national security," the brief said. "In addition, Congress has chosen the standards of judicial review that apply to such a determination under the APA. Under these circumstances, 'clear congressional authorization' is required to sustain the delegation of authority."

In USP's case, the appellants argued that the Commerce report preceding the president's Section 232 action violated the law since it failed to outline an imminent threat to the domestic industry as required by the statute and was unsupported by substantial evidence. A three-judge panel at the court ruled against these arguments, holding that there is no "imminence requirement" in the statute and that the threat determination is not reviewable under the "arbitrary and capricious" standard since the secretary's action "is only reviewable for compliance with the statute" (see 2206090047).

In their reconsideration motion, the appellants took serious issue with the implication of the ruling on the standard of review of Section 232 action. The brief said that the court "erroneously equated" Commerce's finding and the president's actions themselves -- a finding that is "inconsistent" with the position that the Commerce report is a final agency action. Thus, the court must either examine the Commerce report and findings separately under the APA or send the case back to the Court of International Trade to carry out an "appropriate judicial review," the brief said.

Peering into the facts of the Commerce report, the appellants argued that the agency's determination was rooted in "two major logical fallacies: first, the hypothetical that should a major increase in demand for steel arise as the result of a global conflict, the capacity of the domestic steel industry 'may be ... insufficient to meet national security needs,'" and "the Commerce report’s uncritical acceptance of an 80 percent capacity utilization requirement for a sustainably profitable domestic steel industry." The 80% utilization rate is completely arbitrary and not linked to national security, the brief said. As for this first fallacy, the appellants said that Commerce's failure to address whether the prospect of various hypotheticals is realistic at all "breaks the logical connection between the conjecture and the threat."

The motion strongly urged the court to reconsider its position, making the stakes perfectly clear. "Applying the appropriate standard of review is critically important; otherwise, the way would be open for the Executive Branch to assert full control over the regulation of international trade, usurping the role of Congress," the brief said. "This would be an unprecedented expansion of the notion of congressional deference to Executive authority." The court must take another look at the "logical basis linking the findings" and the Commerce report to hand over legislative power to the president.