US Says Plaintiffs 'Introducing Complexity' in 'Easy' IEEPA Tariff Suit

In its appeal to the D.C. Circuit, after the D.C. federal district court held that IEEPA categorically doesn't provide for tariffs, the U.S. argued that the case actually "arises out of" the Harmonized Tariff Schedule and President Donald Trump's executive orders modifying the HTS (see 2506300061). The plaintiffs, Learning Resources and Hand2Mind, argued in response that this case doesn't arise out of the HTS or the EOs modifying the HTS, but rather the "substantive law" giving rise to the plaintiff's claims: IEEPA.

In its response, the U.S. argued that the Court of International Trade has "made clear" that it has "exclusive jurisdiction over challenges indistinguishable" from those of the plaintiffs and that their arguments to the contrary "ignore the role of the HTSUS," misread the authorities they cite, and "ultimately collapse the jurisdictional and merits inquiries in this case in ways the Supreme Court has warned against."

The government referred to its cases as "USA-saving" and said that a negative ruling would have "destructive consequences for America; and that no court would want, or should have, that responsibility."

This case lies within CIT’s exclusive jurisdiction, the U.S. said, because the HTSUS is the substantive law that the plaintiffs are challenging. The government said the "gravamen" of the plaintiffs’ claim is that, because of revisions to the HTSUS by President Donald Trump's executive orders, the plaintiffs “must pay additional tariffs” that they "believe are unlawful."

The plaintiffs "misunderstand the meaning" of the phrase "substantive law,” as used in International Labor Rights Fund v. Bush, the government argued, when they say that only IEEPA and not the HTSUS provide the "substantive law" of the case. The U.S. said that by substantive law, the court in that case "simply meant" the law which is causing the plaintiffs’ substantive injury, which the government argued is the actual tariff schedule, and not the law justifying the change, IEEPA.

With this understanding, the U.S. said, the phrase substantive law "plainly encompasses the HTSUS and the challenged modifications to it." The government granted that IEEPA "may also be" substantive law from which the case arises, but said that a case "need not arise from only one law," and that CIT’s exclusive jurisdiction "encompasses cases that 'arise[] out of any law' of the relevant type."

The government argued that the plaintiffs’ "next suggestion" -- that the case doesn't arise from the HTSUS because the HTSUS “does not create Plaintiffs’ causes of action” -- "underscores the incoherence of their argument," because such a suggestion "directly contradicts" the argument that cases arise out of the substantive law that gives rise to the claims. The plaintiffs' "final theory" is that the case doesn't arise out of HTSUS because the HTSUS “does not require any interpretation,” which the government said "only compounds their confusion."

Ultimately, the government said that the "scattershot nature" of the plaintiffs’ arguments that CIT doesn't have exclusive jurisdiction over the case "reflects the flaws in introducing complexity into what should be an easy case." As the case is a challenge to tariffs imposed under the HTSUS, the government said, "it follows that this case 'arises out of' the HTSUS. Any contrary conclusion strains the statutory text past the breaking point."

The government then countered the plaintiffs' argument that “if IEEPA is a law providing for tariffs, then all civil actions against the government arising out of IEEPA" would have to be adjudicated in CIT, regardless of whether they concerned tariffs. This argument "hinges on" an incorrect premise, the U.S. said, that because Section 1581(i) refers to a “law of the United States,” it must therefore refer to IEEPA as a whole. The government cited Eli Lilly & Co. v. Medtronic, in which it claimed that the Supreme Court interprets the phrase "a Federal law" to mean not only an entire Act but also "an isolated statutory section.” The same goes for “a law of the United States,” the U.S. said. “'Law providing for tariffs' is not IEEPA as a whole but its provision for the President to 'regulate … importation.'”

The plaintiffs’ argument that it is “common” for the jurisdiction and merits questions to overlap is "beside the point," the government said. "Unlike the other statutes plaintiffs invoke [section] 1581(i)(1) need not -- and thus should not -- be read to make the CIT’s jurisdiction over a challenge to tariffs turn on the merits of that challenge."

In its final arguments for CIT's exclusive jurisdiction, the government said that even if the jurisdiction over the case was "less apparent," the district court should have "at a minimum," transferred the case to CIT for a determination of jurisdiction. "It is at least plausible" that CIT has jurisdiction over this case, the U.S. said. "And in that circumstance, precedent prescribes that the prudent course is to allow the CIT to determine its jurisdiction."

In its arguments on the merits of the case, the government said that the plaintiffs "cannot avoid the clear implication of Congress’s choice to incorporate in IEEPA exactly the language the U.S. v. Yoshida court had construed broadly in TWEA." Yoshida’s reasoning is "beside the point," the U.S. said, because "what matters" is that Congress was "aware of Yoshida" when it used in IEEPA identical language authorizing the use of tariffs.

The government said that the plaintiffs offered "no principled reason" why the president’s authority in IEEPA to “regulate … importation” would include the power to "control the flow of goods coming into and leaving the country," but not the power to "affect the flow of goods by increasing the cost of importing them." The plaintiffs’ "failure" to focus on the statutory phrase “regulate … importation,” instead of the word “regulate” in isolation, "similarly undercuts their related arguments," the U.S. said.

Next, the government attacked the claim that if "regulate" conveys the power to tax, it would lead to an unconstitutional result, since "regulate" also applies to "exportation" in the statute, which is explicitly unconstitutional. It is "natural," the U.S. said, to read the power to "regulate" importation as "encompassing" the power to impose tariffs, while understanding the power to “regulate … exportation” as "excluding that power." The argument that the word regulate must have a single meaning "as applied to each of its objects" is "formalistic," and "flunks the basic requirement of making 'sense rather than nonsense out of the corpus juris,'” the government said.

The government said that the plaintiffs are imposing a "magic-words requirement" when they say that Congress has used unmistakable language when granting the president tariff authority. This line of reasoning defies the principle that "courts broadly construe powers that Congress has delegated to the President in the arena of foreign affairs and national security," the U.S. said.

Congress "routinely delegates power broadly" within the domains of foreign affairs and national security, the government said, and noted the Supreme Court's reluctance to interfere with this realm. The U.S. cited Justice Brett Kavanaugh as saying that, with respect to national security and foreign policy, the nondelegation doctrine "appropriately has played an even more limited role in light of the President’s constitutional responsibilities and independent Article II authority.”