Transpacific Steel LLC v. United States

• Citation: 466 F.Supp.3d 1246
• Decision Date: 14 July 2020
• Docket Number: Slip Op. 20-98,Court No. 19-00009
• Parties: TRANSPACIFIC STEEL LLC, Plaintiff, Borusan Mannesmann Boru Sanayi ve Ticaret A.S., et al., Intervenor Plaintiffs, v. UNITED STATES et al., Defendants.
• Court: U.S. Court of International Trade

466 F.Supp.3d 1246

TRANSPACIFIC STEEL LLC, Plaintiff,

Borusan Mannesmann Boru Sanayi ve Ticaret A.S., et al., Intervenor Plaintiffs,

v.UNITED STATES et al., Defendants.

Slip Op. 20-98

Court No. 19-00009

United States Court of International Trade.

July 14, 2020

Matthew M. Nolan and Russell A. Semmel, Arent Fox LLP, of Washington, DC, argued for plaintiff Transpacific Steel LLC. With them on the brief were Aman Kakar, Andrew A. Jaxa-Debicki, Diana Dimitriuc-Quaia, and Jason R. U. Rotstein.

Julie C. Mendoza, Brady W. Mills, Donald B. Cameron, Eugene Degnan, Mary S. Hodgins, and Rudi W. Planert Morris, Manning, & Martin, LLP, of Washington, DC, for intervenor plaintiff Borusan Mannesmann Boru Sanayi ve Ticaret A.S., et al.

Lewis Evart Leibowitz, the Law Office of Lewis E. Leibowitz, of Washington, DC, for intervenor plaintiff the Jordan International Company.

Tara K. Hogan, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, Stephen C. Tosini, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, and Meen Geu Oh, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, argued for defendants. With them on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Joshua E. Kurland, Trial Attorney.

Before: Claire R. Kelly, Gary S. Katzmann, and Jane A. Restani, Judges.

OPINION

Restani, Judge:

The question before us is whether President Trump issued Proclamation No. 9772 of August 10, 2018, 158 Fed. Reg. 40,429 (Aug. 15, 2018) (" Proclamation 9772") in violation of the animating statute and constitutional guarantees. We hold that he did. Proclamation 9722 is unlawful and void.

Plaintiff Transpacific Steel LLC ("Transpacific"), a U.S. importer of steel, requests a refund¹ of the additional tariffs it paid pursuant to Proclamation 9772 on certain steel products from the Republic of Turkey ("Turkey").² See Proclamation No. 9705 of March 8, 2018, 83 Fed. Reg. 11,625 (Mar. 15, 2018) (" Proclamation 9705") (imposing a 25 percent tariff duty on steel products from several countries); Proclamation 9772 (imposing a 50 percent tariff duty on steel products from Turkey alone); Am. Compl., ECF No. 19, ¶¶ 2, 4 (Apr. 2, 2019) ("Am. Compl."). Plaintiffs argue that Proclamation 9772 is unlawful because it lacks a nexus to national security, was issued without following mandated statutory procedures, and singles out importers of Turkish steel products in violation of Fifth Amendment Equal Protection and Due Process guarantees.

BACKGROUND

During the Cold War, Congress enacted Section 232 of the Trade Expansion Act of 1962, which authorized the President to adjust imports that pose a threat to the national security of the United States. See Trade Expansion Act of 1962, Pub. L. No. 87-794, Title II, § 232, 76 Stat. 872, 877 (1962) (codified as amended 19 U.S.C. § 1862 ) ("Section 232"). Since its original passage, there have been several amendments of the statute of varying magnitude including: altering the agency responsible for advising the president, shortening the time limit for investigation, and adding a congressional override for presidential actions taken to adjust petroleum imports. See generally, Trade Act of 1974, Pub. L. No. 93-618, Title I, § 127, 88 Stat. 1978, 1993-94 (1974); Crude Oil Windfall Profit Tax Act of 1980, Pub. L. No. 96-223, Title IV, § 402, 94 Stat. 229, 301-02 (1980). The most recent substantive change to Section 232 occurred in 1988, when the statute was altered to add time limits on the President's ability to act pursuant to the Secretary of Commerce's affirmative finding that investigated imports are a threat to national security. See Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, Title I, § 1501, 102 Stat. 1107, 1257-60 (1988). As it currently stands, the process to adjust imports under Section 232 is as follows.

First, the Secretary of Commerce ("Secretary"), in consultation with the Secretary of Defense, initiates an investigation "to determine the effects on the national security of imports of the article[s]." 19 U.S.C. § 1862(b)(1)(A). No later than "270 days after the date on which an investigation is initiated, the Secretary shall submit to the President a report on the findings" that will advise the President if articles being imported into the United States threaten to impair national security and recommend appropriate action. Id. § 1862(b)(3)(A). Second, after receiving the Secretary's report, the President "[w]ithin 90 days," must determine whether he or she concurs with the Secretary and, if so, "determine the nature and duration of the action" to "adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security."³ Id. § 1862(c)(1)(A). In making this assessment, the President "shall" consider various non-exhaustive factors listed in § 1862(d). Id. § 1862(d). The President "shall implement that action" no later than 15 days from his or her decision to take such action.⁴ Id. § 1862(c)(1)(B). Finally, within 30 days after making any determination, the President must submit to Congress a written statement of reasons for taking that action. Id. § 1862(c)(2). Notably, the time limits described were added as part of the 1988 amendments. See Omnibus Trade and Competitiveness Act of 1988 § 1501. President Trump's recent proclamations are the first issued pursuant to Section 232 since the passage of these amendments. See CONG. RESEARCH SERV. , R45249, SECTION 232 INVESTIGATIONS : OVERVIEW AND ISSUES FOR CONGRESS , App'x B (Apr. 7, 2020) ("CRS 232 Overview").

On April 19, 2017, the Secretary initiated an investigation into the effect of imported steel on national security. See Notice Request for Public Comments and Public Hearing on Section 232 National Security Investigation of Imports of Steel, 82 Fed. Reg. 19,205 (Dep't Commerce Apr. 26, 2017). On January 11, 2018, the Secretary issued his report and recommendation to the President. See The Effect of Imports of Steel on the National Security, (Dep't Commerce Jan. 11, 2018) ("Steel Report").⁵ In response, on March 8, 2018, President Trump issued Proclamation 9705, which imposed a 25 percent ad valorem tariff on imports of steel products⁶ effective March 23, 2018. See Proclamation 9705. On August 10, 2018, the President issued Proclamation 9772, which imposed a 50 percent ad valorem tariff on steel products imported from Turkey, effective August 13, 2018. See Proclamation 9772. The additional tariffs on Turkish steel products remained in place until the President issued Proclamation 9886, which removed the additional tariffs on Turkish steel products, effective May 21, 2019. See Proclamation No. 9886 of May 16, 2018, 84 Fed. Reg. 23,421 (May 21, 2019) (" Proclamation 9886").

JURISDICTION AND STANDARDS OF REVIEW

The court has jurisdiction under 28 U.S.C. §§ 1581(i)(2) and (4). A President's action under Section 232 may be reviewed for a "clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority." See Maple Leaf Fish Co. v. United States, 762 F.2d 86, 89 (Fed. Cir. 1985). In evaluating an equal protection claim involving neither fundamental rights nor a suspect classification, the court will apply the rational basis test, which asks "if there is a rational relationship between the disparity of treatment and some legitimate governmental purpose." Armour v. City of Indianapolis, 566 U.S. 673, 680, 132 S.Ct. 2073, 182 L.Ed.2d 998 (2012) (quotations and citations omitted). In evaluating a Due Process challenge, the court considers whether there was a deprivation of a constitutionally protected life, liberty, or property interest and, if so, whether the necessary procedures were followed. See Board of Regents of State Colleges v. Roth, 408 U.S. 564, 570-74, 76-77, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).

DISCUSSION

I. Whether the President Violated Section 232's Procedural Requirements

Plaintiffs argue that the President violated statutorily mandated temporal conditions, and investigation and report procedures in issuing Proclamation 9772. Pl. Br. at 22-28. In their view, to avoid delegation of powers concerns, the President is bound by these statutory restrictions. Id. at 22-24. Plaintiffs note that the statute requires the President to make a decision based on the Secretary's report and recommendation within 90 days and then implement any chosen action another 15 days after that decision. Id. at 25 (citing 19 U.S.C. § 1862(c)(1)(A)-(B) ). Insofar as the government argues that Proclamation 9772 is a modification of the earlier, timely Proclamation 9705, Plaintiffs assert that there is no statutory basis for a purported modification of a previous proclamation and that allowing this interpretation would render the timelines meaningless. Id. at 26. Further, Plaintiffs argue that Proclamation 9772 was issued not following a formal report as required by the statute, but following informal information the President had later received from the Secretary. Id. at 26-28.

The government responds that Congress "inten[ded] to confer continuing authority and flexibility on the President to counter the threat identified" as confirmed by the "language, long-standing congressional understanding, and the purpose of the statute ..." Defs.’ Resp. in Opp'n to Pls.’ Mot. for J., ECF No. 55 at 16 (Mar. 9, 2020) ("Gov. Br."). In its view, to require the President to strictly abide by the time restraints in the statute would frustrate its statutory purpose. Id. at 17. The government takes an expansive reading of the statutory terms "nature," "duration," and "implement" and finds that these terms indicate that the President has authority to revisit and modify previous actions taken under Section 232. Id. at 17-19 (citing congressional statements from 1955). Although the...