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US Tells SCOTUS Section 232 Secretary Report Not Reviewable Under APA, for Arbitrariness

The commerce secretary's report allowing President Donald Trump to take tariff action on steel and aluminum imports under Section 232 is not subject to the Administrative Procedure Act nor can it be reviewed for arbitrariness, the U.S. argued in a Feb. 20 reply brief at the U.S. Supreme Court. Even if it was up for review, the secretary did not misconstrue the statute since it does not require the report to make a finding on the imminent nature of any threat to national security, the government said (USP Holdings, et al. v. United States, U.S. Sup. Ct. # 22-565).

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The case, led by USP Holdings, is a broad challenge to Trump's Section 232 steel and aluminum tariffs. In February 2021, the Court of International Trade rejected USP's claims, and the U.S. Court of Appeals for the Federal Circuit affirmed CIT's decision (see 2206090047).

Central to the plaintiffs' claims was whether the secretary's report was subject to the APA. To prove that it is, the petitioners have to convince the Supreme Court that the report constitutes a final agency action. The Federal Circuit said that it was, citing a 2003 CAFC decision, Corus Group v. International Trade Commission. In that opinion, the court held that even when the president can reject a recommendation, the agency report still constitutes final agency action if the recommendation is a legal prerequisite to the president taking a given action.

Judge Raymond Chen at the Federal Circuit called the use of this opinion into question, finding that it cuts against Supreme Court precedent. Latching on to Chen's dissent, the U.S. cited Dalton v. Specter and Franklin v. Massachusetts, arguing that the secretary's report does not directly affect the parties nor does it change tariff rates or otherwise adjust imports itself, and so it is not a final agency action.

"As Judge Chen explained, the Federal Circuit’s holdings in Corus and in this case are 'inconsistent with Supreme Court precedents on the non-finality of a Secretary’s or Commission’s tentative report and recommendation to the President,'" the brief said. The issue in the Specter case required the president to approve or disapprove of base-closing recommendations floated by the Defense Base Closure and Realignment Commission. While the statute barred the president from closing bases except where he agreed with the Commission's recommendations, the court said that the Commission's report was not final agency action since the president had the discretion either to approve or disapprove the report.

As for whether the secretary's report could be reviewed for arbitrariness or abuse of discretion, the government cited the U.S. v. George S. Bush & Co. a Supreme case that said that courts cannot review an agency recommendation for arbitrariness. While the petitioners argued that this decision predated the APA by six years, the U.S. said that the APA was "understood when enacted to 'restate the present law as to the scope of judicial review.'"

The government added that "[j]udicial review for arbitrariness would be especially untoward in the present statutory setting" since, using petitioners' position, "federal courts could review the Secretary’s judgments about whether imports of particular articles threaten national security." The government argued that national security decisions are strictly confined by the Constitution to the political branches.

The U.S. wrapped up its brief by arguing against the plaintiffs' claim that the report misinterprets Section 232 by not adhering to limits in the statute. Though USP had argued that the secretary's report failed to establish an imminent threat to the domestic industry, USP failed to clearly point to any of this limiting language, the government said, adding that the statute imposes no imminence requirement. "And '[t]he factors that the President and Secretary are directed to consider in making their determinations do not mention imminence but focus instead on long term health of and adverse effects on the relevant domestic industry.'"