Motion for Preliminary Injunction and Summary Judgment Filed in Section 338 Lawsuit
Following up on the complaint filed earlier this week, yesterday the plaintiffs in the Section 338 lawsuit at the CIT filed a Motion for Preliminary Injunction and/or Summary Judgment for Permanent Injunction. As stated in the motion:
To obtain injunctive relief a party must demonstrate: “(1) likelihood of success on the merits, (2) irreparable harm absent immediate relief, (3) the balance of interests weighing in favor of relief, and (4) that the injunction serves the public interest.”
Focusing here on the "success on the merits" prong, the motion elaborates a bit on the substantive arguments set out in the complaint, as follows.
Implicit repeal due to enactment of other statutes culminating in Section 301 (pp. 21-32)
The Supreme Court has long recognized “two well-settled categories of repeals by implication—(1) where provisions in the two acts are in irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one; and (2) if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate similarly as a repeal of the earlier act.” Posadas v. Nat’l City Bank, 296 U.S. 497, 503 (1936); accord Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 662–63 (2007). Although repeals by implication are disfavored, they are not unknown, and both categories apply here.
Congress need not use express words to displace an earlier law; its intention can be shown by the structure and history of a statutory scheme. ...
...
Since 1930, Congress has replaced Section 338’s model with a comprehensive scheme that culminates in Section 301.
...
The history set out above shows that Congress has occupied the entire field Section 338 once covered, and has done so repeatedly, each time with a new and more comprehensive statute.
...
Congress did not spend 50 years building and rebuilding Section 301 only to leave in place a 1930 statute that allows the President to bypass all of it. ...
My thoughts on this argument are: (1) it's stronger than I thought it would be when I first heard it discussed; (2) I'm still not fully persuaded; and (3) I'd like to hear from people more familiar with this area of law.
Discrimination (pp. 32-38)
1. Canada has not discriminated against the commerce of the United States.
...
a. Discrimination means singling out the United States. ... The statute’s object is discrimination against the United States: measures that target American commerce for worse treatment than the commerce of the world at large.
...
b. Responses to American tariffs are not discrimination under Section 338. The alcohol and motor vehicle proclamations target Canadian responses to American tariffs. ... Section 338 does not authorize an escalating cycle in which the President imposes (unlawful) tariffs, treats the foreign response as “discrimination,” imposes Section 338 duties, treats the next response as “maintain[ing] or increas[ing]” the discrimination, and imposes import bans under Section 338(b). Yet that is what happened. ...
...
c. The Congress that enacted Section 338 did not treat every reciprocal preference as “discrimination.” Section 317 was enacted in 1922, when the United States still adhered to the conditional form of most-favored-nation treatment, under which a nation that granted a concession to one country in exchange for a reciprocal concession was not obliged to extend it gratuitously to others. ...
...
d. Canada treats American cheese better than it treats the cheese of most of the world. The government’s theory is that Canada discriminates because it gives the European Union one feature of TRQ access, retailer eligibility, that the USMCA cheese TRQ does not include. Proclamation No. 11047 ¶¶ 4–6. But the USMCA TRQ is itself a preference for the United States: it gives American cheese duty-free access, within the quota, that Canada does not give to countries outside its trade agreements.
...
e. The government’s reading would make nearly every country a discriminator, including the United States. Every country that is party to a free-trade agreement gives its partners something it does not give the United States. ...
f. Canada’s preference is not “unreasonable.” Paragraph (a)(1) applies only to a charge, exaction, regulation, or limitation that is “unreasonable.” 19 U.S.C. § 1338(a)(1). Proclamation 11047 declares Canada’s rule unreasonable, Proclamation No. 11047 ¶ 6, but gives no reason. There is nothing unreasonable about a country entering into a trade agreement and agreeing to give its partner lower duties or more favorable quota terms on certain goods; the United States does so routinely. ...
I think this issue is going to require some fleshing out of what exactly "discrimination" means, both in general terms and in the context of this statute.
Offset (pp. 38-40)
Section 338 does not authorize the President to impose whatever duty he likes, up to 50 percent. It authorizes only “such new or additional rate or rates of duty as he shall determine will offset such burden or disadvantage.” 19 U.S.C. § 1338(d). The 50 percent figure is a ceiling, not a default. To “offset” is “[t]o set off; to place over against; to balance.” Offset, Webster’s Revised Unabridged Dictionary (1913). 9 The President may choose which products to tax, but the duty must balance the burden the discrimination places on American commerce. Congress’s later enactments confirm that it understood retaliation for foreign discrimination to require calibration: Section 301 requires mandatory action to be “equivalent in value to the burden or restriction being imposed by that country on United States commerce.” 19 U.S.C. § 2411(a)(3).
None of the original three proclamations ties the duty to the burden. ...
This argument seems like a strong one.
Major questions (pp. 40-43)
Courts should not lightly presume that Congress implicitly delegated decisions of major economic or political significance to the executive. Brown & Williamson, 529 U.S. at 160; Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014) (“When an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy, we typically greet its announcement with a measure of skepticism.”) ...
This case fits squarely within that framework, for three reasons.
First, the power claimed is unheralded and long-extant. Section 338 has been on the books for 96 years, and in all that time no President has used it to impose a tariff. ...
Second, the power claimed is vast, measured by the authority asserted and not merely the tariffs imposed so far. ...
Third, the power claimed lies at the core of Congress’s constitutional authority and conflicts with the scheme Congress enacted. ...
Section 338 contains no clear authorization for the power the government claims. Nothing in the statute says that a preference given to a third country under a reciprocal agreement is “discrimination,” or that the President may impose the statutory maximum without tying the duty to any measured burden, or that he may bypass Section 301. The government’s reading “strains credulity.” Ala. Ass’n of Realtors, 594 U.S. at 765. The Court should decline to adopt it.
...
For this argument and the non-delegation one below, the CIT may be reluctant to put too much emphasis on them, but perhaps they will play a bigger role if this gets appealed to the CAFC.
Non-Delegation (pp. 43-46)
If Section 338 conferred the sweeping and unreviewable authority the government claims, it would be an unconstitutional delegation of legislative power. The Constitution vests “[a]ll legislative Powers herein granted” in Congress, U.S. Const. art. I, § 1, and “[t]he executive Power” in the President, id. art. II, § 1, cl. 1. In a case involving Section 338’s own ancestor, the Supreme Court declared “[t]hat Congress cannot delegate legislative power to the President is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution.” Field v. Clark, 143 U.S. 649, 692 (1892); see also J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394, 406 (1928).
Congress must therefore supply an “intelligible principle” to guide the exercise of delegated discretion. J.W. Hampton, 276 U.S. at 409. A delegation fails where there is “an absence of standards for the guidance of the Administrator’s action, so that it would be impossible in a proper proceeding to ascertain whether the will of Congress has been obeyed.” Yakus v. United States, 321 U.S. 414, 426 (1944). ...
...
The government’s reading of Section 338 contains no such standard. Section 338 has two potential limits: the President may act only against “discrimination,” and he may impose only duties that “offset” the resulting burden. On the government’s reading, neither limits anything. “Discrimination” is present whenever a foreign country gives any preference to any third country, which describes virtually every country. And the “offset” requirement is satisfied whenever the President says it is. ...
...
Duty collection on plaintiff’s cheese before October 8, 2026
Even if Section 338 authorized the duties, Defendants began collecting them on Plaintiff’s cheese before the statute allowed. Section 338(d) provides that “thirty days after the date of such proclamation there shall be levied, collected, and paid upon the articles enumerated in such proclamation” the new or additional duties. 19 U.S.C. § 1338(d). The President followed that rule in the original proclamations: he issued them on July 20, 2026, and made them effective on August 19, 2026, 30 days later. 91 Fed. Reg. 46,639, 46,653, 46,663. But Plaintiff’s cheese was not “enumerated” in any of those proclamations. See Proclamation No. 11046, Annex; Proclamation No. 11047, Annex II; Proclamation No. 11048, Annex. It first became subject to Section 338 duties through Proclamations 11064 and 11065, which the President issued on September 8, 2026, and made effective on September 15, 2026, only seven days later. ...
This argument seems strong, but it might be easy for the Trump administration to remedy things.
As to the other preliminary injunction elements, the motion argues:
- "Plaintiff will suffer irreparable harm if the Section 338 tariffs are not enjoined." (pp. 48-50)
- "The balance of interests weighs in favor of enjoining the Section 338 tariffs, and an injunction serves the public interest." (pp. 50-52)