California Tells CIT IEEPA's Context, History Mean 'Regulate' Doesn't Create Tariff Power
The State of California and its governor, Gavin Newsom, filed an amici curiae brief on May 15 in a lawsuit brought by 12 U.S. states against all tariff action taken by President Donald Trump under the International Emergency Economic Powers Act. In it, the state made a bevy of statutory arguments against the government's interpretation of IEEPA, all of which are included in the state's own lawsuit against the IEEPA tariffs (The State of Oregon v. Donald J. Trump, CIT # 25-00077).
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The U.S. defense of the tariffs hinges on the statute's grant of power to the president to "regulate ... importation" in response to an unusual and extraordinary threat. California argued that when the terms "regulate" and "importation" are "read in the full context of their respective statutory lists," of the statute as a whole and of "IEEPA's overall statutory scheme," it's "clear that they do not authorize tariffs."
The statute lays out a list of 12 activities that the word "regulate" can apply to in addition to "importation." California argued that "regulate" must have a "consistent meaning" when applied to all 12 activities, adding that this meaning doesn't include the power to impose tariffs or taxes.
For instance, one of the activities is "use" and the power to regulate the use of something doesn't mean the power to tax, as "a matter of plain English," the brief said. "No one would say, for example, that to 'regulate ... use' of pesticides in organic food or chemicals in drinking water" means to "tariff or tax such use." Thus, the power to regulate imports "means to control importation or fix its time, amount, degree, or rate" and not to tax, the brief said.
Yet, the government's construction of the word "regulate" would provide for an "immense and unheralded power to tariff or tax" all 12 activities in the statute. "The vast economic and political significance of such a taxing power would be unprecedented," and nothing in the statute allows for "so tremendous and unheralded a power," let alone through so "wafer-thin [a] reed" as the "cherry-picked word 'regulate,'" the brief said.
One of the activities in the statute is exportation. The government's read of the law would thus give the president the power to tax exports, which is explicitly unconstitutional, the brief said.
California also argued that the power to "regulate" must be consistent with the seven other emergency powers found in IEEPA. These other powers "reflect an overall statutory scheme to control or restrict activities, not to tariff or tax them, which is an activity that is “simply not of that kind," the brief said.
For this argument, California leaned heavily on the statutory history of IEEPA and its roots in the Trading With the Enemy Act. The state noted that the word regulate didn't apply to importation for the first 24 years of TWEA's history. Regulate was applied to importation for the first time in the "first few weeks after the attack on Pearl Harbor" with the passage of the First War Powers Act, which amended TWEA "to give the government the power to seize (take, control, use, etc.) foreign property, in addition to simply freezing it," the brief said.
The statutory scheme at that time was constructed to "restrict transactions and seize enemy property for the benefit of the United States’s war effort -- not a design to allow transactions to continue as long as monies were paid, as would be the case under a tariff," the brief said.
The amended TWEA contains no mention of tariffs or taxes, nor does the First War Powers Act or any of the accompanying congressional reports on the Act, California said. It thus "strains credulity to think that" this amendment "meant that delegated to the Executive Branch one of its core constitutional functions -- the power to impose tariffs -- without a single mention it was doing so," the brief said.
While the U.S. argues that "regulate" is a transitive verb and requires an object, California said this is "entirely irrelevant." That a verb requires an object doesn't mean the word "can change its meaning depending on what that object is," the brief said. And while the government attempts to analogize the phrase "regulate ... importation" to other grants of authority permitting the president to impose tariffs, such as Section 232's phrase that the president can "adjust" imports, California argued that the court and the U.S. should first read "regulate ... importation" in the "full context of its own statute" before turning to others.
California has its own case against the IEEPA tariffs in the U.S. District Court for the Northern District of California. The state is currently fending off a bid from the U.S. to transfer the case to the trade court, though the state recently filed a motion for a preliminary injunction in its action (see 2505150031).