Leibowitz on Trade: CIT Ruling on AIIS Suit Not the End of the Story

In a rare move, the CIT (a U.S. federal court sitting in New York) established a three-judge panel, rather than only designating one judge to hear the case, because serious constitutional issues were raised. This was an indication of the importance the Court placed on the case. This designation also created the possibility of a direct appeal of the case by the losing side to the United States Supreme Court, bypassing the intermediate appellate court.

The Court’s opinion was a bit of an anticlimax. All three judges ruled that the outcome was dictated by a Supreme Court case decided in 1976. In that case, the Court held that Section 232 “easily” met the “intelligible standards” test and was therefore not unconstitutional as an excessive delegation of legislative power. The government argued in the AIIS case that the 1976 case was binding and the CIT agreed.

That is not the end of the story, however, on at least two grounds. First, while the Court of International Trade, a lower federal court, is bound to follow decisions of the Supreme Court, the Supreme Court itself is not so bound. In quite a number of cases, the Court has “overruled” decisions that did not stand the test of time. The Court does not lightly overrule cases; but the AIIS plaintiffs have always maintained that the Supreme Court will likely have to rule on the constitutionality of Section 232. The CIT signaled with unusual clarity that the 1976 ruling should be reviewed by the Supreme Court.

Second, there have only been two court challenges to the Section 232 steel tariffs, neither of which broadly attacked the entire process in the steel (and aluminum) cases. The first, filed by a Severstal affiliate, sought a preliminary injunction banning the steel tariffs; when the CIT denied that motion, the suit was dismissed. The AIIS suit is the second challenge; AIIS did not argue that the administration failed to follow the law, only that the law is unconstitutional.

The Commerce Department’s report on the Section 232 investigations has never been challenged in court—there are those that argue the Commerce report is “predecisional” and therefore not subject to court review because judicial review is not permitted unless it is “final agency action.” A number of others disagree; practically speaking, we don’t know the answer. Even the president’s determination is subject to very narrow court review (under the law, the White House is not an “agency” whose “final action” can be reviewed by a court), but the clear misinterpretation of the statute is one example where a court can get involved, and there are issues about the president’s interpretation of the statute that could well be raised.

In summary, the tariffs remain, at least for now. The plaintiffs will seek a direct appeal to the Supreme Court, which the Court may grant, but it is not obligated to do so. The government will continue to argue that Section 232 allows no judicial review and is constitutional. Monday’s decision gave pretty clear indication that the three judges on the Court of International Trade who decided this case are troubled by the statute’s broad reach. As one of the judges asked rhetorically in a concurring opinion, “If the delegation permitted by Section 232, as now revealed, does not constitute excessive delegation in violation of the Constitution, what would?”

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