US Rails Against Rehearing Bid in Suit Against Expansion of Section 232 Duties to 'Derivatives'

A rehearing of the U.S. Court of Appeals for the Federal Circuit's decision in PrimeSource Building Products v. U.S., upholding President Donald Trump's decision to expand Section 232 duties on "derivatives" of steel and aluminum products, is "unwarranted," the U.S. argued in a reply brief. While the petitioners, led by PrimeSource, continue to "demur," the U.S. said that the Federal Circuit's decision is "consistent with" Supreme Court and past Federal Circuit decisions, namely Transpacific Steel v. U.S., in which the court said that the president can take action beyond the procedural time limits set in the statute as long as it comports with the original duties' plan of action (PrimeSource Building Products v. United States, Fed. Cir. # 21-2066).

In vying for a rehearing, PrimeSource said the Transpacific ruling cannot apply to its case since the expansion of Section 232 duties onto derivative products is different from the duty expansion in Transpacific, where Trump raised the duty rate on already covered products from Turkey (see 2304260033). The U.S. argued in its reply that the Federal Circuit correctly found this distinction to be "immaterial" and without a "textual basis."

"To contend, as petitioners do, that the President must return to the Secretary to refresh his authority simply to cover derivatives of an already-covered article makes no sense when Section 232 does not require that condition for the President to act on derivatives in the first place," the brief said.

The petitioners also claimed that Transpacific's reasoning can only apply to adjustments stemming from the same circumstances that prompted the rate hike in Turkish steel goods. In that case, it was failed trade negotiations that led to the presidential order. The government derided this claim as an "inaccurate reading of Transpacific," since the decision does not state "that a permissive 'further implementation' can only result from failed trade negotiations. Rather, Transpacific reached its outcome on the ground that the challenged Proclamation was 'a further implementation of [the original tariffs],' and thus did not constitute an independent 'action' pursuant to Section 232." Both the Turkish rate hike and expansion onto deriative goods addressed the same issue, signifying that the overall purpose of the tariffs "is what drives the relevant inquiry," the government said.

The U.S. also objected to the petitioners' claim that the court's application of Section 232 violates nondelegation constitutional principles. Decrying the argument as "unpersuasive," the government said the issue was settled by the Supreme Court in Federal Energy Administration v. Algonquin, in which the court ruled against a claim that a previous version of Section 232 was an unconstitutional delegation of legislative power. SCOTUS said that a single precondition limiting action under the statute, the commerce secretary's report, makes the statute a legal delegation of power.

"These 'clear preconditions' and 'specific factors' that the President must consider are the same ones that the Supreme Court found meaningful in concluding that Section 232 'easily fulfills' the intelligible principles test," the brief said. "Given the Supreme Court’s decision on the matter, the Panel correctly saw 'no basis for concluding otherwise.'"