US Says DC Court Took 'Nonsensical' View of CIT's Jurisdiction in IEEPA Tariff Suit
The U.S. filed its opening brief on June 27 in the appeal on the legality of the tariffs imposed under the International Emergency Economic Powers Act before the U.S. Court of Appeals for the D.C. Circuit, arguing that the district court got the jurisdiction and merits questions wrong. The government said the U.S. District Court for the District of Columbia took a "nonsensical" view of the Court of International Trade's jurisdiction and that, contrary to the court's ruling, IEEPA does confer tariff-setting authority (Learning Resources v. Donald J. Trump, D.C. Cir. # 25-5202).
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Last month, D.C. district court Judge Rudolph Contreras held that IEEPA doesn't allow for tariffs, granting a preliminary injunction against the collection of the duties from the two importers that brought the case, Learning Resources and Hand2Mind (see 2505290037). In his ruling, Contreras said the D.C. court, and not CIT, had jurisdiction to hear the case because CIT only has exclusive jurisdiction to hear cases arising out of U.S. laws providing for tariffs, and IEEPA doesn't provide for tariffs.
Appealing the ruling to the D.C. Circuit, the U.S. argued that Contreras got the jurisdiction question wrong. The government argued that the case "arises out of" the Harmonized Tariff Schedule and President Donald Trump's executive orders modifying the HTS. The brief said the HTS statute says presidential actions modifying the HTS qualify as U.S. laws, thus making jurisdiction proper at CIT.
The government argued that the "crux" of the importers' claim is a challenge to the EOs and their corresponding HTS modifications. "That sort of challenge to the legality of particular tariffs is in the heartland of the CIT’s exclusive jurisdiction," the U.S. said. Contreras' view that CIT only has jurisdiction if IEEPA actually provides for tariffs counters the Supreme Court's warning against "reading jurisdictional statutes in a way that 'would make a court’s jurisdiction … dependent upon the merits of the claim,'" the brief said.
The U.S. said it would be "nonsensical" to say the jurisdiction of a court where "Congress has provided for review of a class of cases" in that court is limited to "instances in which the underlying decision construes and applies the statute correctly.” The trade court's exclusive jurisdiction can't be evaded "simply by asserting that a particular statute does not authorize tariffs," the brief said.
Were CIT's jurisdiction to only hinge on whether IEEPA authorizes tariffs, the trade court would only have jurisdiction to hear "unsuccessful claims of ultra vires presidential tariff orders," which would compound the "confusion over the division of jurisdiction between" the trade court and the district courts and ensuring uniformity in trade cases, the government argued. If there's doubt about which court has jurisdiction, the "prudent thing to do" would have been to send the case to CIT, the brief said.
The government then shifted to the merits of the case, arguing that IEEPA provides for tariffs. The U.S. is basing its theory on the statute's text, which lets the president "regulate ... importation." The government heavily rested its case on the decision in Yoshida international v. U.S., in which the U.S. Court of Appeals for the Federal Circuit's predecessor court upheld a tariff imposed under the Trading With the Enemy Act, IEEPA's predecessor that uses nearly identical language.
While the D.C. court distinguished the power to regulate and the power to tax, including by invoking this very distinction in the U.S. Constitution, the government argued that this is a "false dichotomy." The U.S. rested on CIT's jurisdictional statute, which distinguishes between laws providing for "revenue from imports" and those providing for "tariffs ... for reasons other than the raising of revenue," and the more general fact that tariffs and taxes are "routinely used not just to raise revenue but to influence conduct."
In his ruling, Contreras also held that "regulate" doesn't extend to imports, since the law only covers property in which a foreign country or national has an interest and U.S. parties have legal title over imports. But the fact that tariffs are typically imposed after U.S. importers have taken legal possession doesn't mean a foreign country or national doesn't have an interest in the product, since "'interest' broadly extends beyond possessory legal interests," the U.S. said, citing D.C. Circuit precedent.
Contreras also said that IEEPA should be read in a way to avoid unconstitutional results. If "regulate" means to tax and regulate means the same thing as applied to all the activities listed in the statute, this would mean the president can impose taxes on "exportation," which is explicitly unconstitutional, the court noted. On appeal, the U.S. said the constitutional bar on imposing duties on exports "simply means that, for constitutional reasons, only some of the President’s statutory powers to 'regulate' are available as to exports."
The government also echoed its arguments against the claim that the major questions doctrine compels a finding that the IEEPA tariffs are unlawful. The U.S. made identical arguments against the doctrine before the U.S. Court of Appeals for the Federal Circuit last week in a parallel appeal on the IEEPA tariffs (see 2506250037).