The latest on Russia sanctions from the International Trade and Supply Chain Team
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On March 25, 2019, the Court of International Trade issued its decision in the American Institute for International Steel’s appeal on the institution of Section 232 tariffs on steel products.  The CIT found that the Section 232 tariffs were constitutional and thus this decision results in the continuation of these tariffs for the foreseeable future.

The CIT seemed to be hamstrung in this decision and forced to rely on existing precedent in Algonquin that it was unable to overturn.  The CIT did, however, express concerns that the Section 232 tariffs blur the lines with respect to the separation of powers principle of the Constitution.

The AIIS immediately issued a press release and statement that it was “heartened” by parts of the opinion and that it planned to appeal to the U.S. Court of Appeals for the Federal Circuit and even potentially the Supreme Court especially since the CIT made the unusual procedural move to decide the case as a three-judge panel.

The CIT’s main misgivings and concerns about Section 232  can be summarized by the statement in the opinion that “{a}dmittedly, the broad guide­posts of subsubsections (c) and (d) of section 232 bestow flexibility on the President and seem to invite the President to regulate commerce by way of means reserved for Congress, leaving very few tools beyond his reach.”   The conundrum faced by the Court is that the basic construct of Section 232 grants a broad delegation of authority and this makes it difficult to review whether any decision to impose import restrictions exceeds Congress’ delegation of authority.  The CIT touched upon this when it said “because judicial review would allow neither an inquiry into the President’s motives nor a review of his fact-finding,” but unfortunately “such concerns are beyond this court’s power to address, given the Supreme Court’s decision in Algonquin.”

In an even more unusual move, CIT Judge Gary Katzmann issued a “dubitante” opinion (which does not arise to the level of a dissent).  In this companion opinion Judge Katzmann was clear that while he could not deviate from the Supreme Court precedent relied upon by the three-judge panel, he continued to have “grave doubts” about the real world effects of such a broad delegation of authority.

According to Judge Katzmann, while he believed that there were certain conditions and restrictions on the president’s authority under Section 232, “{t}he President is not bound in any way by any recommendations made by the Secretary, and he is not required to base his remedy on the report or the information provided to the Secretary through any pub­lic hearing or submission of public comments. There is no rationale provided for how a tariff of 25% was derived in some situations, and 10% in others.”  Furthermore, the opinion goes on to state that the “definition of ‘national security’ in the statute… {is} so broad that it not only includes national defense but also encompasses the entire national economy,” he said.  The concern articulated by Judge Katzmann is a fundamental basis for AIIS’s challenge which is that Section 232 “provides virtually unbridled discretion to the President with respect to the power over trade that is reserved by the Constitution to Congress.”  The Judge succinctly captured this concern in his concluding statement that “{i}n short, it is difficult to escape the conclusion that the statute has permitted the transfer of power to the President in violation of the separation of powers.”

As AIIS has now publicly announced that it intends to appeal this decision, we have to wait and see how this plays out. For more information on Section 232, please contact Nithya NagarajanJeffrey Neeley, Robert Stang, Cortney Morgan, or Beau Jackson.