CIT Hearing on the Constitutionality of Section 232

Last Wednesday, the U.S. Court of International Trade held a hearing on the constitutional challenge to Section 232 (background on the complaint is here). The full transcript is here. There were lots of interesting exchanges. Here are a few snippets:

HON. GARY S. KATZMANN: Can I -- Mr. Morrison,
6 understand that this is a facial challenge to the statute.
7 It is interesting, of course, to go and dip into the record
8 and read Exhibit 8, the letter from the Secretary of
9 Defense.
10 MR. MORRISON: Yes, Your Honor.
11 HON. GARY S. KATZMANN: And there, the Secretary
12 of Defense says, "As noted in both Section 232 reports, the
13 U.S. Military requirements for steel and aluminum each only
14 represent about three percent of U.S. production.
15 Therefore, the Department of Defense does not believe that
16 the findings in the reports impact the ability of Department
17 of Defense programs to require the steel or aluminum
18 necessary to meet national defense requirements."
19 What relevance is this document? Which is
20 intriguing because basically, the department of defense is
21 saying that the tariffs are not necessary for national
22 defense on national defense grounds?
23 MR. MORRISON: I think it shows... First is the
24 President is not bound by that determination. If there were
25 an APA challenge, he would have to explain that away. He

1 doesn't have to do that here.
2 But second, I think the fact that the President
3 can impose, consistent with this statute because of its
4 breadth, the sanctions, the tariffs that he's imposed here,
5 demonstrates that this is not about national security.
6 The Defense Department says it's not about
7 national security. The statute says it's not about national
8 security. When we look at what the President did with
9 respect to specific steel products, you know, steel is not
10 simply one product.
11 There are, according to the Commerce Department,
12 177 different categories of steel products, some of which
13 have no defense needs at all, many of which the United
14 States is capable of providing all the needs. Some of them
15 are products that come from outside. All of this shows that
16 this is an economic protection statute, that this is not
17 about national security in the sense that which we
18 understand it.

...

17 HON. CLAIRE R. KELLY: Mr. Morrison, as you
18 pointed -- as you correctly pointed out, the challenge
19 before us is not so much about what the President did in
20 this case, but rather whether Congress can, in this statute,
21 give to a president the power to basically regulate imports
22 because of national security.
23 MR. MORRISON: For anything he wants to do with
24 them. That is there's no --
25 HON. JENNIFER CHOE-GROVES: Doesn't the

1 legislative history talk about giving the President latitude
2 for national security interests --
3 MR. MORRISON: Yes, it does.
4 HON. JENNIFER CHOE-GROVES: -- and for foreign
5 affairs?
6 MR. MORRISON: There's no question that Congress
7 intended to give the President the latitude. I don't know
8 whether Congress ever intended to give the President this
9 kind of latitude. But that doesn't really matter.
10 The question is not legislative history. The
11 question is whether what Congress did can essentially turn
12 over to the President the power to regulate Commerce by
13 tariffs, quotas, in any amount and any way he wants.
14 HON. CLAIRE R. KELLY: So, that kind of gets to
15 what I think was Judge Katzmann's Whitman question, which
16 is, so, what's our intelligible principle here? It's
17 national security. And I guess this is why you're focusing
18 on the remedies, because the national security part would
19 seem like an intelligible principle, right? It has to be to
20 threaten to impair national security. That means something,
21 right?
22 MR. MORRISON: Well, it might mean something if we
23 didn't have 232(d), which is the economic growth --
24 HON. CLAIRE R. KELLY: Well, that's why I asked
25 you about 232(d)?

1 MR. MORRISON: Yes.
2 HON. CLAIRE R. KELLY: Which kind of gives you an
3 argument which says because they said more.
4 MR. MORRISON: Not more, much more.
5 HON. CLAIRE R. KELLY: There's -- much more.
6 Okay, so they said much more?
7 MR. MORRISON: And indeed, in this case, which we
8 say is illustrative of the power of the President. We are
9 clear that all of the examples that we give in our briefs
10 and in our complaint are to show the breadth of the power of
11 the President under this provision. We're not arguing that
12 he did anything improper --
13 HON. CLAIRE R. KELLY: But even that second
14 sentence of 232(d), where it says the President shall be
15 concerned about economics, basically. It does still tie it
16 to national security. It talks about looking at particular
17 industries -- might as well look at the actual language
18 here, right? Recognized the close relation of economic
19 welfare of the nation to our national security, take into
20 consideration the impact or foreign competition on economic
21 welfare of individual domestic industries.
22 MR. MORRISON: That's what it did here.
23 HON. CLAIRE R. KELLY: Right.
24 MR. MORRISON: An individual domestic industry.
25 HON. CLAIRE R. KELLY: But so, there's still,

1 though, a tie to national security. So, I suspect, and I
2 guess the Government will make some argument like this, that
3 well, you're talking about the steel industry, the steel
4 industry's important, we want to preserve that for our
5 national security. And there's a line of reasoning you can
6 follow there, no?
7 MR. MORRISON: Well, I suppose if that were the
8 only defect in the statute.
9 HON. CLAIRE R. KELLY: Mm hmm.
10 MR. MORRISON: If it said that the President can
11 do, for example, what the statute said in Hampton, that he
12 can raise it by no more than 50 percent, tariff by no more
13 than 50 percent, then maybe we would have a different
14 situation.
15 As we tried to point out, Your Honor, the breadth
16 is on the front end, the trigger. A trigger, by the way,
17 it's a word that's in Algonquin and also in the Amalgamated
18 Meat Cutters case, the case which I commend the Court's
19 attention because of the breadth of Judge Leventhal's
20 thoughtful -- very thoughtful opinion about the separation
21 of powers concerns there.
22 If we had a broad trigger and a narrow remedy, or
23 a narrow trigger and a somewhat broader remedy, we might
24 have a different. But in this situation, we have
25 essentially the President can do anything he wants with

1 regard to the economy.
2 Suppose we had a statute that said the President
3 can adjust any rates, deductions and interest income with
4 respect to the foreign tax provisions of the United States
5 Tax Code? That would be an intelligible principle, I
6 suppose. We know exactly what Congress meant. But what we
7 think that that's a proper authority to give to the
8 President? I suggest to you not. But this is about seeing
9 that the separation of powers is enforced.

...

15 HON. CLAIRE R. KELLY: So, let me ask you two
16 questions. I see the yellow light's on and I want to make
17 sure I get to these. One is, if you could speak to the
18 argument that the President has certain inherent powers in
19 this area.
20 And the other is regarding the point that you just
21 made -- and I'm sorry, it's going to be a little bit of a
22 long question. You know, I was looking at the statute and
23 thinking, okay, what can the President do here, right? You
24 know, what could be kind of shocking that you think that
25 that would go too far, right? Could the President say, you

1 know, make some argument that some industry -- and I'll just
2 pick peanut butter, right? Just -- I'm not picking on the
3 peanut butter industry, just some other industry, right?
4 So peanut butter, you know, decides the President
5 wants to, you know, worry about jobs in the peanut butter
6 industry and that somehow, he can make a national security
7 connection and have some sort of embargo on peanut butter,
8 right, and that he could do that. That would be able to be
9 challenged as a clear misconstruction of the statute,
10 wouldn't it?
11 MR. MORRISON: I do not believe so, and I think
12 you'll ask the Government, they will agree with my answer.

...

16 HON. GARY S. KATZMANN: Now, just returning to
17 first principles, so you -- you know, you whip out the
18 Constitution, you go to Article I, Section 1. All
19 legislative powers herein granted shall be vested in the
20 Congress of the United States.
21 Then you go to Section 8. The Congress shall have
22 the power to lay and collect taxes, duties, imposts and
23 excises, et cetera, also to regulate commerce with foreign
24 nations.
25 Then you go to the Hampton case. And it's

1 interesting, as you know, a lot of these nondelegation cases
2 have really arisen in the context of trade, you know,
3 historically, dating back to the 1800s.
4 So, Chief Justice Taft in Hampton says, well, this
5 is a delegation which is limited by intelligible principle.
6 Essentially, the equalization of domestic and import
7 pricing. And then also in the context of, you know, the 50
8 percent statute.
9 And then you have a series of statutes in the
10 trade area, accountability and duty, and if you're dumping -
11 - you know, go down the list -- which set forth principles
12 for adjudication which can be reviewed. And this is an area
13 of trade -- this is the area of the legislature.
14 Now, how do you respond to the argument that this
15 232 legislation -- it's so broad, it encompasses, really,
16 any kind of, you know, economic interest that it swallows
17 what has been understood to be the role of the Congress,
18 which is to impose and collect taxes, duties, excises, and
19 to govern the tariff area? It swallows the area. And so,
20 is it an unconstitutionally broad delegation of power?
21 MS. HOGAN: So, I have two responses. The first
22 would be that, of course, to go back to what the Supreme
23 Court said in Algonquin, which was that the Section (d)
24 factors do meaningfully constrain the President's
25 discretion. So, I think we have to start there. But even

1 apart from Algonquin, we disagree that it swallows the rule.
2 The statute does set forth factors and does illicitly
3 acknowledge the connection between the health of our
4 internal economy and our national security.
5 So, the suggestion that our national economy is
6 somehow untethered to our national security is not reading
7 what the statute says.

...

14 HON. CLAIRE R. KELLY: Well, I guess my concern is
15 that at some point, even though, you know, you start with
16 what -- it would be hard to argue it's not an intelligible
17 principle, national security, right, furtherance of national
18 security, given the precedent.
19 But then you seem to expand it and say consider
20 this and consider this and consider that. Is there any
21 limit on what kind of power you can give away? Some ways,
22 by making -- by saying more, you created more power problem.
23 And then without judicial review, it seems that you've give
24 away -- or Congress has given away an awful lot. And maybe
25 it should be able to do that.

1 MS. HOGAN: The power -- if we're talking about
2 what the power is, and the power is, one, to make a judgment
3 call, and two, to adjust imports if there is an affirmative
4 finding and if the President concurs.
5 So, there is a limitation to what the President
6 can do. The President can only adjust imports of the
7 article. The fact that there is this broad understanding of
8 national security is Congress's intent.
9 HON. CLAIRE R. KELLY: Right. But that's the
10 problem, right? So, I mean, Congress intended to give all
11 this away. The question is whether Congress can intend to
12 do that. Why can they do that? Have they done too much?
13 MS. HOGAN: Right. And we would say again, if you
14 look at Yoshida, that's a perfect example of what was found
15 to be permissible under the Delegation Doctrine, and at
16 least in my view, seems to be even broader in terms of what
17 the President can do.