PrimeSource Tells SCOTUS to Take Case on 'Derivative' Duties to Reconsider Nondelegation Approach

Importer PrimeSource Building Products on July 26 asked the Supreme Court to take up its case contesting President Donald Trump's expansion of Section 232 steel and aluminum duties onto "derivative" products, urging the High Court to settle ambiguity in statutes delegating "vast legislative power to the Executive in favor of restraining the delegation" (PrimeSource Building Products v. U.S., Sup. Ct. # 23-69).

In a July 26 petition for a writ of certiorari, PrimeSource said the case "presents an ideal vehicle" for settling questions of "great doctrinal and practical significance." At a legal level, the "major question doctrine" can only go so far, the importer said, referring to a theory recently championed by the Supreme Court that guards against executive agencies exerting power over large swaths of the economy without direct congressional authority. The theory does not "directly address what should happen when Congress clearly intends to give away broad swaths of its constitutional responsibility to the Executive branch, often with limited substantive or procedural conditions attached," as was the case here, the brief said.

Section 232 duties exhibited a major effect on the economy, with steel prices jumping $3 billion a year and downstream industries seeing an average annual decrease in production values of $3.4 billion from 2018 to 2021, PrimeSource said. Thousands of jobs have been lost and inflation has worsened due to the duties as well, the importer noted. While the affected parties could usually contact their congressional representatives, that outlet for potential relief was precluded by the delegation of the power to impose taxes and regulate international commerce to the executive, the brief argued.

In the suit, the U.S. Court of Appeals for the Federal Circuit ruled that Trump legally expanded the duties onto derivative products beyond procedural time limits (see 2302070030). The appellate court relied on its finding in Transpacific Steel v. U.S., in which it said that further Section 232 action can be taken beyond the 105-day time limit to take action after the commerce secretary issues a report as long as the move follows the report's original plan of action.

The importer said the appellate court "could not have reached its expansive interpretation of the President's powers if it had applied the proper interpretative standard." The text is clear in that the president can take trade action only within 90 days of receiving the commerce secretary's report and if he sets the nature and duration of the action. The Federal Circuit upended these restrictions by giving the word "action" an "extraordinarily expansive reading," since the court gave this word the same meaning as a general "plan," the brief said.

The president's initial Section 232 action did not mention derivatives. As a result, the only way to say that the duty expansion was part of the original "plan of action" would be if the plan were just to "fix the problem somehow" or "impose these initial measures and see how it goes," PrimeSource argued. This definition can't be reconciled with the rest of the statute.

PrimeSource said the Federal Circuit settled "every potential ambiguity in the statute in favor of broadening the delegation and minimizing the statutory limits on the Executive's exercise of legislative powers." While there is no question Congress gave the executive the power to regulate international trade, the key question concerns the scope of that power, the brief said.

The importer relied on the Supreme Court's ruling in Federal Energy Administration v. Algonquin, in which the high court said a prior version of the Trade Act of 1930 gave an adequate "intelligible principle to which the President is directed to conform," including the statutory preconditions to presidential action. The Algonquin ruling has been undermined by the Federal Circuit's "repeated untethering of the President's action from those procedural prerequisites," which includes a commerce secretary report.

PrimeSource argued that the Supreme Court can use this case to start reconsidering its approach to nondelegation. While it doesn't need to overrule Algonquin, the court can show that the Trade Act raises "separation of powers concerns sufficient to require that courts find clear congressional authorization before construing the statute in ways that expand the scope of the President’s delegated authority," the brief said.