Steel Importers Vie for Rehearing of CAFC Opinion Permitting Expansion of Section 232 Duties to Derivatives

Steel importers led by PrimeSource Building Products petitioned for an en banc rehearing of the U.S. Court of Appeals for the Federal Circuit's decision to uphold President Donald Trump's expansion of the Section 232 national security tariffs on steel and aluminum "derivative" products. The companies said that if the decision stands, the president "will enjoy unbounded legislative power to regulate foreign trade -- to take any action, at any time, targeting any imported product," as long as the commerce secretary makes a threat determination on the targeted product or any material used to make that product (PrimeSource Building Products v. U.S., Fed. Cir. #21-2066).

The panel's ruling ignored the plain language of Section 232, the rehearing brief said. The statute says the president determines whether he agrees with the secretary's threat determination and set the nature and duration of any necessary action within 90 days, then implement that action within 15 days of finding the action is needed. This "action" does not mean a "series of actions" or "plan of action," since Congress was "perfectly capable of using the plural," the brief said.

By ruling "the action" encompasses an unlimited number of actions belonging to a central course of action, the panel rendered meaningless the requirements that the president set the nature and duration of the measures and provide Congress a statement of the reasons for such action. The appellate court also narrowed Congress' delegation of power for the president to take later actions, the importers argued.

The Federal Circuit relied heavily on its 2021 decision in Transpacific Steel v. U.S. in the PrimeSource matter. In Transpacific, the court said the president need not be constrained by procedural time limits when taking action under Section 232 so long as the additional actions belong to an original plan of action (see 2107130059). However, Transpacific applied to the president's move to raise the tariff rate on already-covered goods, while PrimeSource concerned the expansion of the tariffs onto new goods.

In its petition, PrimeSource said the panel mooted the limits implicit in the Transpacific ruling by stretching the "continuing course of action" finding past its breaking point. The move to extend the tariffs onto derivative products did not continue the original duties' plan of action but imposed a new tariff on a different group of imports. "Derivative articles were not discussed in either the Steel Report or (the original tariffs)," the brief said.

The panel also nullified Transpacific's concerns about the "staleness" of the secretary's report, PrimeSource said, noting the derivative tariffs were imposed more than two years after the initial duties. The panel said the gap between the report and the duties was irrelevant since there "is no textual basis for a specific time limit on adjustments under a timely adopted plan." PrimeSource disagreed, claiming that the statute has "very clear time limits on presidential action," and while Transpacific "may have pared those limits back," the panel here "discarded them altogether."

The importers concluded by claiming the decision "creates an unconstitutional delegation of legislative power." The companies said that "[d]eadlines demand attention, and Congress rationally concluded that adding deadlines to Section 232 would ensure the President's prompt comprehensive action to address an extant threat to national security identified by the Secretary, while limiting mission creep from the President's unrelated policy objectives."