Petition for Writ of Certiorari — Consumers Union of United States, Inc. v. Henry A. Kissinger, Secetary of State and Julius L. Katz, Deputy Assistant Secretary of State 421 U.S. 1004 (1975) (No. 74-1097)

IN THE

Supreme Court of the United States. RODAK, J

JANUARY TERM, 1975

n. 74-1097

CONSUMERS UNION OF UNITED STATES, INC.,

Petitioner,

Vv.

Henry A. KISSINGER, Secretary of State

and

Juuius L. Katz, Deputy Assistant Secretary of State,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

RICHARD A. FRANK

ELDON V. C. GREENBERG

JOSEPH N. ONEK

CENTER FOR LAW AND SOCIAL

POLICY

1751 N Street, N.W.

Washington, D. C. 20036

(202) 872-0670

Attorneys for Petitioner

WILSON - EPES PRINTING Co.. INC. - RE 7-6002 - WASHINGTON. D. C. 20001

TABLE OF CONTENTS

Page

RIPPIN OPINED SUMINITN sccsssorascncsesoevisisnosssasnvebsassaseseonssccmeasonnnenss 1

[RETEST OORT R ERNST AINE ER el eD 2

QUESTIONS PRESENTED 0000000. cocccocccccececeeeceee 2

CONSTITUTIONAL AND STATUTORY PROVI-

UD Ee WN ROD ong cccasasnncnenccececcesdsnsscnenecmsescens: 2

STATEMENT OF THE CASE... eee 4

REASONS FOR GRANTING THE WRIT ........... 7

I. THE EFFECT OF THE MAJORITY DECI-

SION IS TO PERMIT THE EXECUTIVE

BRANCH TO REGULATE COMMERCE IN

VIOLATION OF THE SUBSTANTIVE POLI-

CIES AND PROCEDURAL SAFEGUARDS

ESTABLISHED BY CONGRESS ................ 9

II. THE DECISION OF THE COURT OF AP-

PEALS CONFLICTS WITH THE DECISION

OF ANOTHER COURT OF APPEALS ON

THE SAME MATTER OF EXECUTIVE AU-

THORITY TO CONCLUDE QUOTA AGREE-

DINE dstitiastasecadaten tok 18

ER I Re Este FCN A OO Oe 22

SE ar OR Pe re

| oe Srey aan BERN

II

TABLE OF CONTENTS—Continued

Table of Cases

Page

Best Foods, Inc. v. United States, 218 F. Supp.

es NEM PUNE | haiceincicocsestnsasnnnohidisnieuennniebannes 12

The Brig Aurora, 11 U.S. (7 Cranch) 382 (1813).. 11

Chicago & Southern Air Lines, Inc. v. Waterman

S.S. Corp., 333 U.S. 103 (1948) -.......00000000 0. 12

Dickerson Vv. Colgrove, 100 U.S. 578 (1880) ......... 18

Eastern Greenland Vase, Denmark v. Norway,

CRUD EAs Hs BST, THO. BS mecccceesees 20s 18

Field Vv. Clark, 143 U.S. 649 (1892) —..00000 2. 11

Goodman V. Dicker, 169 F.2d 684 (D.C. Cir. 1948) .. 18

J. W. Hampton, Jr. & Co. v. United States, 276

lathe aE REE hee dccnciacss Nestabnakacaeaccm maou nesbeagaeceaes 11

Little v. Barreme (The Flying Fish), 6 U.S. (2

oo Be, + car risen cn cee eve ON 10, 12

Moore V. Ogilvie, 394 U.S. 814 (1969) 000000000... 9

Rich v. Naviera Vacuba, S.A., 197 F. Supp. 710

(E.D. Va.) aff’d 295 F.2d 24 (4th Cir. 1961).. 12

Roe v. Wade, 410 U.S. 113 (1978) .......2.....00200002.... 9

Schmidt Pritchard & Co. v. United States, 167 F.

fess. Bre ae. Gt: fe. 12

South Puerto Rico Sugar Co. Trading Corp. V.

United States, 334 F.2d 622 (Ct. Cl. 1964),

cert. denied, 379 U.S. 964 (1965) 0000... 10, 12

Southern Pacific Terminal Co. v. ICC, 219 U.S. 498

5. | GARR CE A Sas EI Nelonre ERS 9

Star Industries, Inc. v. United States, 320 F. Supp.

1018 (Cust. Ct. 1970), rev’d on other grounds,

462 F.2d 557 (C.C.P.A.), cert. denied, 409 U.S.

TE EE icthait cine ei es 10

Star-Kist Foods, Inc. v. United States, 275 F.2d

Ee ge | Rae ER APU ee een 10, 11

United States v. Belmont, 301 U.S. 324 (1937) ..... 12

United States v. Curtiss-Wright Export Corp.,

ee Sh ee. CRE ett 10, 11-12

United States v. Guy W. Capps, Inc., 204 F.2d

655 (4th Cir. 1953), aff’d on other grounds, 348

U.S. 296 (1955) slaphubickecacieadiaaaaatenl 9, 11, 18-22

ill

TABLE OF CONTENTS—Continued

Page

United States v. W. T. Grant Co., 345 U.S. 629

re _ | pn Cena aN oe eras eam

United States V. Pink, 315 U.S. 203 (1942) -..-------- 12

Yoshida International, Inc. V. United States, 378

F. Supp. 1155 (Cust. Ct. 1974) ....--------eceeeeere 11

Youngstown Sheet & Tube Co. Vv. Sawyer, 343 U.S.

es 18) 12

Constitution

as he eee 2, 10-11

a1) 11

at 2s 11

el Tl, OG itr ere 11

Statutes

Agricultural Act of 1956, Section 204, 7 U.S.C.

ee ge rem rear rae 13

Agricultural Adjustment Act of 1933, Section 22,

us. (A 13, 19, 20

Sherman Antitrust Act, 15 U.S.C. §§ 1-7 -...-.--------- 6,7

Tariff Act of 1930, Ch. 497, 46 Stat. 590, 19 U.S.C.

$8 1001-1654 4... 13

Trade Act of 1974, Pub. L. No. 93-618 (Jan. 3,

1975), 19 U.S.C. §§ 9111-2487 ......------------22---0°° 2,13

Trade Agreements Act of 1934, §§ 1-4, 48 Stat.

Aaah IPN Te De cc rete eS 13

Trade Agreements Extension Act of 1943, Ch. 118,

57 Stat. 126 ......------------------eser Beta 2 ane 13

Trade Agreements Extension Act of 1948, Ch. 678,

62 Stat. 1053 ......-.--------------e ee take meh 13

Trade Agreements Extension Act of 1949, Ch. 585,

GS Stat. GOT —..---------------n--n-cnn-nn one 13

Trade Agreements Extension Act of 1951, Ch. 141,

eae een en eer rnyrareeaeengr nl 13

Trade Agreements Extension Act of 1955, Ch. 169,

ost 16 13

Trade Agreements Extension Act of 1958, Pub. L.

No. 85-686, 72 Stat. 673 -.....----------egrrnn 13

\

IV

TABLE OF CONTENTS—Continued

Page

Trade Expansion Act of 1962, Pub. L. No. 87-794,

76 Stat. 872, 19 U.S.C. §§ 1801-1991 _..... 13

Escape Clause Provisions, Sections 301, 302,

351, 352, 19 U.S.C. §§ 1901, 1902, 1981,

NE eg dis iene nicedneh cert edn aniael 2, 3, 14, 15, 17, 20

National Security Provision, Section 232, 19

SEARS a aa ia Nc mae 15-16

Rules

Congressional Material

108 Cong. Rec. 19859 (1962) 2.02.02. 15

Hearings on H.R. 9900 Before the House Comm.

on Ways and Means, 87th Cong., 2d Sess.

esa Ais SRE BS Ae 13, 14

H.R. Rep. No. 1000, 73d Cong., 2d Sess. (1934).... 10-11

S. Rep. No. 2059, 87th Cong., 2d Sess. (1962) ........

S. Rep. No. 1298, 98d Cong., 2d Sess. (1974) ......... 11

IN THE

Supreme Court of the United States

JANUARY TERM, 1975

No.

CONSUMERS UNION OF UNITED STATES, INC.,

Petitioner,

Vv.

Henry A. KISSINGER, Secretary of State

~ and

Jutius L. Katz, Deputy Assistant Secretary of State,

Respondents.

PETITION.FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Consumers Union of United States, Inc. (“Consumers

Union”), on behalf of itself and its members, consumers

of steel products, hereby respectfully petitions for a writ

of certiorari to review the judgment of the United States

Court of Appeals for the District of Columbia Circuit

entered in this case on December 2, 1974.

OPINIONS BELOW

The opinion of the Court of Appeals is reported at

506 F.2d 186 and set forth in the appendix at pages

yi Re,

2

la-29a.’ The opinion of the District Court is reported

at 352 F. Supp. 1319 and is set forth in the appendix

at pages 30a-35a.

JURISDICTION

The opinion of the Court of Appeals for the Dis-

trict of Columbia Circuit was rendered on October 11,

1974. A timely petition for rehearing and suggestion

for reconsideration en banc was denied on December

2, 1974, and this petition is filed within 90 days of that

date. The Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1).

QUESTION PRESENTED

Whether, in order to regulate foreign commerce

through agreements establishing steel quotas, the Execu-

tive must comply with express substantive and proce-

dural requirements in a Congressional statute authorizing

the Executive to negotiate such agreements.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

(1) United States Constitution, Art. I, § 8, 973:

The Congress shall have Power . . . To regulate

Commerce with foreign Nations... .

(2) United States Code, Title 19, Sections 1901 and

1982. (The Escape Clause of the Trade Expansion Act

of 1962, Sections 301 and 352)?

1 Citations to the petition’s appendix are in the form “App. ee

-A certified copy of the Joint Appendix printed for use of the

Court of Appeals has been furnished to this Court, and references

to it are in the form, “D.C. Cir. App. 4s

2? These provisions have been modified, in “respects not relevant

to this case, and have been recodified, by the Trade Act of 1974, Pub.

L. No. 93-618, §§ 201, 202 and 203 (Jan. 3, 1975), 19 U.S.C.

§§ 2251, 2252, and 2253. ,

3

The complete texts of these sections are reproduced at

App. 36a-40a. The most relevant parts provide:

19 U.S.C. § 1901(b) (1)

Upon the request of the President upon resolution

of either the Committee on Finance of the Senate or

the Committee on Ways and Means of the House of

Representatives, upon its own motion, or upon the

filing of a petition under subsection (a) (1) of this

section [by the industry], the Tariff Commission

shall promptly make an investigation to determine

whether, as a result in major part of concessions

granted under trade agreements, an article is being

imported into the United States in such increased

quantities as to cause, or threaten to cause, serious

injury to the domestic industry producing an article

which is like or directly competitive with the im-

ported article.

19 U.S.C. § 1901(d) (1)

In the course of any investigation under subsec-

tion (b) (1) of this section, the Tariff Commission

shall, after reasonable notice, hold public hearings

and shall afford interested parties opportunity to be

present, to produce evidence, and to be heard at such

hearings.

19 U.S.C. § 1982(a)

After receiving an affirmative finding of the Tariff

Commission under section 1901(b) of this title with

respect to an industry, the President may, in lieu of

exercising the authority contained in section 1981

(a) (1) of this title [to impose a tariff or quota]

negotiate international agreements with foreign coun-

‘tries limiting the export from such countries and

the import into the United States of the article caus-

ing or threatening to cause serious injury to such

industry, whenever he determines that such action

would be more appropriate to prevent or remedy

serious injury to such industry than action under

section 1981(a) (1) of this title.

4

STATEMENT OF THE CASE

The subject of this litigation is detailed, written agree-

ments negotiated and concluded in 1972 between the De-

partment of State and European and Japanese steel

producers under which the producers restrain sales to the

United States (D.C. Cir. App. 30a-47a). Such agreements

constitute—in terms of the number of parties, the volume

of trade, impact on import levels and prices *—perhaps

the most significant restraints ever concluded by this

country. The agreements specify detailed tonnage and

percentage limitations according to product line; include

limitations on the geographic distribution of steel sales

within the United States; obligate the signatory European

producers to “use their best efforts” to “induce” non-

signatory producers to limit their shipments to the

United States of specified steel mill products to detailed

tonnage limitations; and, provide for communication to

permit, inter alia, upward adjustment of the specified

limitation on steel pipe imports whenever American steel

producing companies are unable to fulfill the demand in

the American market. The undertaking of the Japanese

producers is conditioned upon the understanding that their

“share of total United States imports of steel mill

products, will not be disadvantageous” as compared with

the undertakings of the other signatory producers; and,

the undertakings of the European producers include

the understanding that there will be consultation with

representatives of the U.S. Government in the event that

the European producers believe that “they have been placed

in a disadvantagous position with respect to other ex-

porters of steel to the United States by developments in

the international steel market.”

3In 1971, steel sales amounted to $17.2 billion, and imports rep-

resented 18% of the domestic market or 18 million tons (D.C. Cir.

App. 190a).

5

In 1968, the Johnson Administration concluded that

steel imports should be reduced because it believed ex-

cessive imports were injuring the domestic steel industry

and causing market disruption (D.C. Cir. App. 114a-

1l5a and 186a). After examining possible alternatives

to achieve this result, the Department of State chose to

negotiate restraints with steel producers of Japan and

the European Community. A quota agreement * in the

form of a joint undertaking by the producers to restrain

their steel exports to the United States during a three-

year period was concluded in 1968 (D.C. Cir. App. 172a-

184a).

Early in 1970, domestic steel producing interests pri-

vately urged the Executive branch to open negotiations

with the foreign steel companies for a renewal of the

steel quota agreements. New negotiations were under-

taken over a one and one-half year period and eventually

resulted in agreements, dated May 2, 1972, under which

steel sales to the U.S. were restrained during 1972, 1973

and 1974. The 1972 agreements involved far more re-

strictive and detailed quotas than did those negotiated in

1968.

While Congress has authorized the President to ne-

gotiate quota agreements, the Congressional legislation

requires that specified criteria be met and procedural

safeguards followed before any such negotiation. The

purpose of these requirements is to ensure that the views

of all economically affected parties, including consumers,

will be properly presented and considered in the decision-

‘The restraints on steel and similar restraint undertakings on

other commodities are variously termed “restraint arrangements”,

“voluntary restraint arrangements”, “restraint agreements”, and

“orderly marketing agreements”. In this petition, the term “quota

agreements” will generally be used. The adjective “voluntary” is,

of course, a misnomer to the extent :: implies anything further

than that these parties, like parties to any contract, voluntarily

entered into their obligations.

6

making process, and that restraints are only imposed

when consistent with the legislative purpose. At no time

were the procedural requirements of the specific law au-

thorizing quota agreements to alleviate injury of a do-

mestic industry or of any other trade law complied with

in connection with the steel quota agreements. Although

the quota agreements were negotiated after detailed,

private consultation with American steel interests (App.

lla), there was no public notice of an intention to im-

pose restraints on steel imports, no opportunity for public

comment on such a proposal, no public hearings, no

public record, and no public determination why such re-

straints were needed.

On May 24, 1972, petitioner Consumers Union filed

suit challenging the legality of the 1972 steel quota agree-

ments on two grounds. First, Consumers Union main-

tained that the respondents acted illegally in concluding

quota agreements of the kind in question without com-

plying with the substantive criteria and _ procedural

safeguards enacted by Congress for such agreements.

Alternatively, petitioner maintained in a separate count

that the agreements were an unreasonable restraint of

trade in violation of Section 1 of the Sherman Act, 15

U.S.C. $1. Thereafter, petitioner amended the complaint

dropping the Sherman Act count, but continuing to main-

tain that the agreements could not be immunized by the

Executive from the antitrust laws.

In a Memorandum Opinion, Declaration and Order,

dated January 8, 1973, the District Court concluded that

the Executive was not precluded by the trade laws from

negotiating the steel quota agreements.* But the District

Court ruled that the President did not have the power

to secure action which would be in violation of the

5 The District Court heard the matter on cross-motions for sum-

mary judgment, and the facts are not in dispute.

7

Sherman Act or any other law enacted by Congress oF

to grant immunity from such laws.

The Court of Appeals issued a divided opinion. Both

majority and dissent agreed that the antitrust issue

disappeared from the case when petitioner amended its

complaint and dropped the count addressed specifically

to its antitrust claim. The Court of Appeals thus vacated

the District Court’s declaration concerning the antitrust

laws. With respect to the trade issue, the majority

found that the President possessed inherent authority

to regulate commerce by negotiating trade restraints of

the kind in question ; that Congress had most likely oc-

cupied the field of “enforceable” import restraints; but

that no conflict existed between the steel quota agree-

ments and Congressional legislation in the trade area

since the steel quotas were not “enforceable”.

Judge Leventhal, dissenting, found otherwise. He stated

that the steel restraint arrangements were inconsistent

with Congressional statutes entailing “a comprehensive

scheme occupying the field of import restraints” involv-

ing a prescribed “nrocedure with safeguards and right

of comment by affected interests” (App. lla). He also

found that Congress had expressly authorized quota

agreements of the very kind in this case; but the rele-

vant legislation required procedures not undertaken by

the respondents before negotiating and concluding the

steel quota agreements. Noting that the steel agreements

were, in any event, enforceable, he concluded they were

subject to procedures and requirements in the Trade

Expansion Act which were not complied with, and were

thesefore unlawful.

REASONS FOR GRANTING THE WRiT

Petitioner only seeks review of the Court of Appeals

decision involving the trade law issue.” Petitioner pre-

6 The case in the Court of Appeals was a consolidation of seven

civil actions with the Secretary of State and the Deputy Assistant

eI, Senne er Pas or

yey

8

sents a clearly defined, important question of “federal

law which has not been, but should be, settled” by this

Court:* May the Executive regulate foreign commerce

through detailed, written agreements establishing stee!

quotas in violation of the substantive criteria and proce-

dural requirements provided in the statute authorizing

the negotiation of such agreements? Furthermore, peti-

tioner seeks review because the majority decision is “in

conflict with the decision of another court of appeals” on

the same matter.“

Petitioner respectfully submits this Court should grant

certiorari and hold that when Congress, consistent with

an historical pattern, legislates that import barriers, in-

cluding quota agreements, may be achieved only if cer-

tain substantive criteria are satisfied and procedural

safeguards followed, the Executive may not act in vio-

lation of those criteria and safeguards, and, therefore.

the steel quota agreements are invalid.

This sharply focussed question is of great importance.

The Court of Appeals decision represents an unprece-

dented inroad into the traditional authority of the Con-

gress in the area of trade regulation and. if permitted

to stand, will allow the respondents to continue blithely

to disregard congressionally mandated criteria and proce-

dural safeguards in restricting this nation’s imports. As

Judge Leventhal warns, if defendants’ theory is left

standing, the President will be able to utilize it “with all

Secretary of State as defendants in one action involving the trade

law issue and a second action involving the antitrust issue, and the

domestic and foreign steel companies as defendants in the others.

The petitioner seeks review only of the Court of Appeals decision

with respect to the trade issue and hence only the civil action in-

volving the Department of State defendants, No. 73-1132.

* Supreme Court Rule 19.

8 Id.

9

industry on every aspect of domestic, as well as foreign

commerce. This is dangerous doctrine” (App. 21a).”

Petitioner contends, further, that certiorari should be

granted because the Court of Appeals majority has ren-

dered a decision in conflict with the decision of the

Fourth Circuit in United States v. Guy W. Capps, Inc.,

204 F.2d 655 (4th Cir. 1953), aff'd on other grounds, 348

U.S. 296 (1955), on the same matter of Executive au-

thority to conclude quota agreements.

I. The Effect Of The Majority Decision Is To Permit

The Executive Branch To Regulate Commerce In Vio-

lation Of The Substantive Policies And Procedural

Safeguards Established By Congress.

It is undisputed that the steel quota agreements, the

subjects of this litigation, regulate commerce.” The very

* Although the steel quota agreements originally challenged in

1972 expired on December 31, 1974, the case is not moot. The

Department of State has declined to state it will not renew the

agreements. The renewal in 1972 did not occur until the earlier

agreeemnts had lapsed for over five months. The Court should

not find this case moot, for to do so would prevent petitioner from

ever successfully challenging the short-term steel restraint arrange-

ments, would leave the Department of State free to continue to fol-

low what it claims is, over recent history, a pattern of restraint ar-

rangements based on inherent authority (App. 21a), and would per-

mit the continuation of an invalid instrusion by the Executive into

the Constitutional powers of Congress. Quota agreements are in-

variably short-term since they are used as interim solutions (D.C.

Cir. App. 115a). In situations like this, when limited duration

government actions are involved, this Court has regularly reached

the merits on the rationale that otherwise the actions would evade

review. Moore v. Ogilvie, 394 U.S. 814 (1969); Southern Pacific

Terminal Co. v. ICC, 219 U.S. 498 (1911). The Court has applied

that doctrine particularly where, as in this case, repeated violations

are involved. U.S. v. W.T. Grant Co. 345 U.S. 629 (1953); Roe

v. Wade, 410 U.S. 113 (1973).

10 To put this case in proper context, it is important to under-

stand what this case does not involve. It is not a situation

in which the Department of State’s objectives are related to political

foreign policy issues; rather, the respondents’ own characterization

SC Seager hl eA AR a Fo

10

purpose of the agreements “was to manage commerce

between the United States and the foreign producers in-

volved ....” (App. 13a-14a). The foreign steel pro-

ducers, after an extended formal negotiation. committed

themselves to limit sales to the United States, took their

obligations under the agreements seriovsly, and did, in

fact, restrict sales.

The Constitution, by Article I, $8, 43, confers on

Congress plenary powers over foreign and interstate

commerce. Congress has delegated to the Executive, under

appropriate guidelines and appropriate procedural safe-

guards, primary responsibility for carrying out the Na-

tion’s legislated trade policies."

of their objectives places their actions solely in the area of inter-

national commerce, with a purpose to protect a domestic industry

from competition (D.C. Cir. App. 112a-124a and 185a-186a). The

case is not one in which an embargo or some other action affecting

trade is incidental to Presidential objectives aimed at traditional!

“foreign policy” goals such as avoiding the appearance of taking

sides in a foreign dispute (United States v. Curtiss-Wright Export

Corp., 299 U.S. 304 (1936)); responding to war-like acts by a

foreign enemy (Little v. Barreme (The Flying Fish)), 6 U.S. (2

Cranch) 170 (1804)); or participating in the impesition by an

international organization of economic sanctions against a trouble-

making country (South Puerto Rico Sugar Co. Trading Corp. V.

United States, 334 F.2d 622 (Ct. Cl. 1964), cert. denied, 379 U.S. 964

(1965) ). It is, instead, a case of Executive action aimed at pro-

tecting a domestic industry from the competition of foreign im-

ports; preserving our liberal! trade policy; avoiding a precedent for

restraints of imports other than steel; and, avoiding the danger

of retaliation against our exports under GATT (D.C. Cir. App.

112a-124a and 185a-186a). In such circumstances Executive action

has traditionally been strictly limited by the parameters of Con-

gressional delegation. See, e.g., Star-Kist Foods, Inc. v. United

States, 275 F.2d 472 (C.C.P.A. 1959); Star Industries, Inc. v.

United States, 320 F. Supp. 1018 (Cust. Ct. 1970), rev'd on other

grounds, 462 F.2d 557 (C.C.P.A.), cert. denied, 409 U.S. 1076

(1972).

1! See, e.g., the House Report for the Trade Agreements Act of

1924, which includes the observation:

CONGRESS DETERMINES THE POLICY—THE PRESI-

DENT EXECUTES THE POLICY OF CONGRESS

: [Footnote continued on page 11]

11

Respondents claim, in spite of Article I, § 8, 93, that

the Executive possesses inherent authority over foreign

commerce to the extent utilized in the steel quota agree-

ments.? However, the question of the extent of in-

11 [Continued]

In order that this purpose may be carried out, in other words,

in order that the policy declared by Congress may be ap-

propriately executed, certain powers are accorded to the Ex-

ecutive Branch of the Government, the President.

The official of the Government who represents all the people,

having the entire United States as his constituency, is given

the responsibility for carrying out the will of Congress. This

is the appropriate method in a government that exists, of, by,

and for the people.

H.R. Rep. No. 1000, 73d Cong., 2d Sess. 14 (1934) ( emphasis

added)

This same understanding of the Constitutional scheme is reflected

most recently in the Senate report on the Trade Act of 1974. See

S. Rep. No. 1298, 93d Cong., 2d Sess. 14-15 (1974).

12No case law, however, supports that proposition. The only

Constitutional provisions which speak to Presidential foreign rela-

tions powers are—(1) “The President shall be Commander in

Chief ...,” Art. II, §2, 71; (2) “CH]e shall have Power, by and

with the Advice and Consent of the Senate, to make Treaties . . . ie

Art. IJ, § 2, § 2; and (3) “TH]e shall receive Ambassadors and other

public Ministers,” Art. II, §3. From this, a foreign affairs power

has properly been implied, but the quantum leap of adducing au-

thority to establish foreign commerce policy cannot be made. Peti-

tioner has been able to find only two cases involving Executive ac-

tion in the area of trade regulation without statutorily delegated

authority, and in both cases it was found that the Executive acted

unlawfully. United States v. Guy W. Capps, Inc., 204 F.2d 655 (4th

Cir. 1953), aff'd on other grounds, 348 U.S. 296 (1955); Yoshida

International, Inc. v. United States, 378 F. Supp. 1155 (Cust. Ct.

1974). All other cases in the area involve Executive action under

Congressionally delegated authority : and each of those reflects the

unvarying assumption that the President cannot act in such area.

except where there has been a delegation by Congress. See, ¢.9.,

Field v. Clark, 143 U.S. 649, 690-691 (1892); Star-Kist Foods,

Ine. Vv. United States, 275 F.2d 472 (C.C.P.A. 1959) ; and sec gen-

erally, The Brig Aurora, 11 U.S. (7 Cranch) 382 (1813); J. Ws

Hampton, Jr. & Co. V. United States, 276 U.S. 394 (1928). The

cases relied upon by the respondents in support of independent

Executive authority in the area of trade regulation, such as United

TURE ORTOR OE as kt es Dy ee ae

12

herent Executive power need not be reached in the present

case if the Court finds, as petitioner believes it must,

that Congress has legislated on the subject in question.

Here, as petitioner will demonstrate below and as Judge

Leventhal properly decided, Congress has so legislated

and, indeed, has established the country’s trade policy

in both basic and detailed terms. The Executive, in con-

cluding the steel quota agreements, has acted in contra-

vention of that basic policy and specific criteria and pro-

cedures. When the Congress exercises its Constitutional

prerogative to regulate commerce, there is no question

that Presidential action contrary to basic legislative policy

and specific criteria is unlawful,’* and, likewise, failure to

follow explicit procedural safeguards invalidates any such

action.**

States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936), and

Chicago & Southern Air Lines, Inc. vy. Waterman S.S. Corp., 333 U.S.

103 (1948), in fact involve delegations of authority by Congress

to the President. And, in those cases where no delegation has

been found necessary, United States v. Belmont, 301 U.S. 324

(1937), and United States v. Pink, 315 U.S. 203 (1942), the

President was held to have authority to take actions having an

incidental effect on commercial transactions only because these

actions were an essential part of an explicit Constitutional power

to receive Ambassadors, i.e., recognize foreign governments.

13The Supreme Court articulated this doctrine in the Steel

Seizure case:

When the President takes measures incompatible with the

expressed or implied will of Congress, his power is at its

lowest ebb, for then he can rely only upon his own constitu-

tional powers minus any constitutional powers of Congress over

the matter.

Youngstown Sheet & Tube Company v. Sawyer, 343 U.S. 579, 637

(1952) (concurring opinion of Mr. Justice Jackson). See also The

Flying Fish, 6 U.S. (2 Cranch) 170, 177-178 (1804) ; South Puerto

Rico Sugar Co. Trading Corp. v. United States, supra; Rich v.

Naviera Vacuba S.A., 197 F. Supp. 710, 717 (E.D. Va.), aff'd, 295

F.2d 24 (4th Cir. 1961).

14 See, e.g., Best Foods Inc. v. United States, 218 F. Supp. 576

(Cust. Ct. 1963) ; Schmidt Pritchard & Co. v. United States, 167

F. Supp. 272 (Cust. Ct. 1958).

13

Congress has comprehensively legislated in the trade

field, starting with the passage of the Tariff Act of

1930." Two aspects of U.S. trade law ave fundamental.

First, the overriding objective of legislative trade policy

has been to encourage reductions in trade barriers, in

order to open markets for American products abroad,

and to encourage healthy import competition for our in-

dustries at home.” Second, deviations to protect domestic

15 Tariff Act of 1930, Ch. 497, 46 Stat. 590, 19 U.S.C. §§ 1001-

1654; Trade Agreements Act of 1934, Ch. 474, 48 Stat. 943, 19

U.S.C. §§ 1351-1354; Trade Agreements Extension Act of 1943,

Ch. 118, 57 Stat. 125; Trade Agreements Extension Act of 1948,

Ch. 678, 62 Stat. 1053; Trade Agreements Extension Act of 1949,

Ch. 585, 63 Stat. 697; Trade Agreements Extension Act of 1951,

Ch. 141, 65 Stat. 72; Trade Agreements Extension Act of 1955,

Ch. 169, 69 Stat. 162; Trade Agreements Extension Act of 1958,

Pub. L. No. 85-686, 72 Stat. 673: Trade Expansion Act of 1962,

Pub. L. No. 87-794, 76 Stat. 872, 19 U.S.C. §§ 1801-1991; Trade

Act of 1974, Pub. L. 93-618 (Jan. 3, 1975) 19 U.S.C. §§ 2111-2487.

Agricultural Act of 1956, Section 204, 7 U.S.C. §1854; Agricultural

Adjustment Act of 1933, Section 22, 7 U.S.C. § 624.

16 This “free trade” policy reached its high point in the Trade

Expansion Act of 1962, whose objectives were perhaps best de-

scribed in President Kennedy’s message to Congress urging its

enactment:

Our efforts to prevent inflation will be reinforced by expanded

trade. Once given a fair and equal opportunity to compete in

oversea markets, and once subject to healthy competition from

oversea manufacturers for our own markets, American man-

agement and labor will have additional reason to maintain

competitive costs and prices, modernize their plants, and in-

crease their productivity. The discipline of the world market-

place is an excellent measure of efficiency and a force to sta-

bility. To try to shield American industry from the discipline

of foreign competition would isolate our domestic price level

from world prices, encourage domestic inflation, reduce our

exports still further, and invite less desirable governmental

solutions.

* * * 7

Increased imports stimulate our own efforts to increase effi-

ciency, and supplement antitrust and other efforts to assure

competition. . . . Message From the President of the United

States Relative to the Reciprocal Trade Agreements Program,

Hearings on H.R. 9900 Before the House Comm. on Ways and

Means, 87th Cong., 2d Sess., at 3 and 5 (1962).

E,

a

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3

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as

sit abie ~ 1d nt . as.

| oe oN, een ee Seen penneemen

iassgttgoibanshanent i

risa le eee erent, &

14

industry against import-related injury are only author-

ized where specific, statutory substantive criteria are

satisfied, and only after compliance with relevant proce-

dural safeguards. As Judge Leventhal emphasized with

regard to procedural safeguards:

The Congressional pattern makes clear that such

executive action [the imposition of restraints, in-

cluding imposition through quota agreements] is tol-

erated only if it is accompanied and safeguarded by

procedural protections that ensure a right of com-

ment by those whose interests may be affected. This

not only avoids the vice of complete secrecy within

the Government, it also avoids the vice of cozy confi-

dentiality, in which the public is informed only when

the matter is a fait accompli. App. 18a.

In the present case, the respondents stated that quota

protection was necessary to protect the domestic steel

industry from injury caused by imports (D.C. Cir. App.

185a). In what is known as the Escape Clause (Sections

301, 302, 351 and 352 of the Trade Expansion Act of

1962, 19 U.S.C. $$ 1901, 1902, 1981 and 1982),'* Con-

gress set forth the criteria which must be met and the

procedures which must be followed (including a Tariff

Commission investigation, a determination, and public

hearings) before protection can be provided for injury

resulting from imports. Once those criteria are met and

those procedures followed, the President is authorized

to impose a tariff or a quota (19 U.S.C. § 1981) or to

negotiate an orderly marketing agreement (19 U.S.C.

$ 1982)"* of the type which respondents have. concluded

17 The Escape Clause has been reenacted in the Trade Act of

1974, see note 2, supra, and again authorizes the President

to achieve protection by negotiating restraint agreements to prevent

injury to domestic industry and labor.

18In fact, concern in Congress about the inadequacy of non-

public consideration by cabinet committees of the kind relied upon

in this case played a significant role in the enactment of the Orderly

Marketing Provisions. Hearings on H.R. 9900 Before the House

Comm., on Way and Means, 87th Cong., 2d Sess., Pt. 6, pp. 3854

3855.

15

with respect to steel. The Orderly Marketing Agreement

provision was a tailor-made response’ to Executive

branch concern “about the serious problem that excessive

imports have posed for our steel workers and our steel

industry” (D.C. Cir. App. 185a), and to the stated objec-

tive of “enabl [ing] domestic steel producers to make their

plans with confidence that imports will not be disruptive

in the domestic market” *° (D.C. Cir. App. 186a).

In sum, Congress has authorized the President to ne-

gotiate restraint arrangements of ‘the type utilized for

steel, and to alleviate the very problems respondents

believe to exist in the steel industry." But Congress has

19 Respondents originally contended in the, District Court that

they were exempt from the Escape Clause and the Orderly Market-

ing Agreement provision because’ the steel industry could not meet

the test of that clause—it could not show, they believed, that injury

was concession-related. Respondents changed their emphasis and

developed an enforceability argument when petitioner pointed out

that steel was, indeed, a concession item. But, the Department of |

State’s argument is, in any event, preposterous on its face. The

Department’s position, quite simply, is that in any situation where

an industry cannot meet the criteria carefully defined by Congress,

the President is still free to achieve import restraints, and, in-

deed, he is free to do so without regard for any procedural re-

quirements whatever. It would appear, then, that the more Congress

attempts to legislate free trade and to define situations in, which

the President may achieve import restraints pursuant to procedural

requirements, the more it thereby expands the circumstances under

which the President may deviate from the Congressional policy of

free trade without regard for any criteria or procedural require-

ments. The paradoxical result is that if an industry is injured, it

must follow procedures ; and if it is not injured, it may simply have

the Department of State negotiate the same quota agreements with-

out the inconvenience of a Tariff Commission investigation and

hearing. :

20 Senator Muskie, who introduced the provision in the Senate,

described it as providing “... 4 tool for the President to use .. -

in, giving domestic manufacturers a breathing space in which to

adjust to changing competitive conditions” 108 Cong. Rec. 19859

(1962) (Remarks of Senator Muskie). For its purpose, see S. Rep.

No. 2059, 87th Cong., 2d Sess., 1962 U.S. Code Cong. & Ad. News

at 3115.

21 The Congress has also enacted Section 232 of the Trade Ex-

pansion Act of 1962 (as amended by Section 127 of the Trade Act

|

ed

a

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&

8

H

a

2

3

etary

SPOR WALD he ——

16

granted such authorization only in the context of sub-

stantive criteria and procedural safeguards, not utilized

in connection with steel, to assure that those seeking a

deviation from free trade policy could demonstrate that

they were entitled to relief. The steel quota agreements

are invalid because, in concluding them, the respondents

ignored the requirements imposed by Congress.

The majority opinion of the Court of Appeals con-

cluded that Congress had most likely by statute occupied

the field of “enforceable” import, restrictions, “if it did

not, indeed, have exclusive possession thereof by the

terms of Article I of the Constitution” (App. 8a'.

The majority, however, concluded that the steel quota

agreements were unenforceable (i.e., because they did

not “purport” to be enforceable contracts or because

observance allegedly could not be compelled at the border),

and therefore did not conflict with the trade laws (App.

8a) .**

of 1974), the National Security Provision. Where the President

determines that an article is “being imported into the United

States in such quantities or under such circumstances as to

threaten to impair the national security”, he is authorized, after

following specified procedures, to:

. take such action, and for such time, as he deems necessary

to adjust the imports of such article . . . so that such imports

will not so threaten to impair the national security. 19 U.S.C.

§ 1862(b). ;

Respondents claim this provision could not be utilized because the

national security aspects were insufficient to trigger the provision

(D.C. Cir. App. 116a).

_ #2The concurring opinion of the Court of Appeals likened the

steel restraint arrangements to “jawboning” and hence concluded

them unenforceable. But the facts of this case are far from a

“jawboning” situation. The Department of State’s actions did not

merely involve approaches or exhortations or expressions of view

or attempts to “reason together”. Involved here were painstaking

negotiations over a period of many months between foreign steel

representatives and a U.S. delegation, leading to the creation of

clear-cut obligations in a detailed written restraint agreement.

17

The majority is patently incorrect in framing the

question in terms of “enforceable” and “unenforceable”

restraints. The majority’s novel doctrine, conceived and

articulated without reference to any judicial precedent,

is inconsistent both with the plain language of the relevant

statutory provision and the purpose and logic of the Con-

gressional scheme.

The Orderly Marketing Agreement provision of the

Escape Clause, 19 U.S.C. § 1982(a), plainly covers all

quota agreements. It states the President may negotiate

quota agreements only after “receiving an affirmative

finding of the Tariff Commission under Section 1901

(b)” that imports into the United States of the articie

are causing or threatening to cause serious injury to such

industry. The language does not exempt a particular

type of restraint agreement. It says simply that the

requirement of an affirmative finding must be met for

quota agreements whether or not the President sub-

sequently chooses to invoke the separate authority to ex-

clude goods shipped in excess of the quota provided in

the agreement.

Not only is the language of the statute plain, but its

purpose and logic wholly refute the majority’s holding.

Congress has, as clearly as is possible, stated that there

shall be free trade, except where certain circumstances

exist justifying a deviation. The majority has contrived

an unprecedented and unsupported distinction which im-

putes to Congress the bizarre intention to exempt re-

straints which can and have undercut the very purpose

of its comprehensive free trade legislation. For, an “un-

enforceable” quota agreement is the functional equivalent

of an “enforceable” agreement. As J udge Leventhal

stated: “Here the undertakings have an economic effect

that parallels that of import quotas proclaimed by the

President” (App. 14a). In the case of the (allegedly ‘“‘un-

forceable”) steel quota agreements, as in any “enforce-

able” agreement, the foreigners assumed a clear-cut ob-

BR AR SN ©

18

litigation, stated they would comply with that obligation,

and in fact reduced sales to the U. S. in accordance with

their obligations. If an “unenforceable” or “enforceable”

restraint agreement works properly, the issue of enforce-

ment never arises. The distinction thus not only fails to

reflect the realities of international trade relations, but

files in the face of the fundamental doctrine that Presi-

dential power must yield to Congress’ regulation of com-

merce.**

II. The Decision Of The Court Of Appeals Conflicts

With The Decision Of Another Court of Appeals On

The Same Matter Of Executive Authority To Con-

clude Quota Agreements.

On‘ one prior occasion a federal appellate court has

addressed itself directly to the question of the Executive’s

authority to negotiate and conclude a voluntary quota

agreement without complying with the criteria and pro-

cedures of an existing statute authorizing the imposition

of restraints. In United States v. Guy W. Capps, Inc.,

204 F.2d 655 (4th Cir. 1953), aff'd on other grounds,

348 U.S. 296 (1955), Chief Judge Parker unequivocally

held (1) that a “voluntary” quota agreement negotiated

by the Executive was void because the Executive failed

to comply with statutory criteria and procedures; and

(2) that the Executive could not negotiate a “voluntary”

quota agreement on the basis of inherent Executive

authority.

23 While petitioner believes that the majority’s distinction is

erroneous, nevertheless the majority’s characterization of the

steel quota agreements as unenforceable is incorrect. As Judge

Leventhal notes (App. 15a), they involve written commitments

which, under the doctrine of promissory estoppel, can be enforced in

U.S. courts. See, e.g., Dickerson v. Colgrove, 100 U.S. 578, 580

(1880) ; Goodman v. Dicker, 169 F.2d 684, 685 (D.C. Cir. 1948).

Furthermore, they are enforceable under international law in an

international forum. See Eastern Greenland Case, Denmark v.

Norway, [1938] P.C.I.J., Ser. A/B, No. 3.

19

Under Section 22 of the Agricultural Adjustment Act

of 1933, as amended, 7 U.S.C. § 624, the Executive was

authorized, after due investigation and appropriate find-

ings by the Tariff Commission, to proclaim quotas on

agricultural imports 1n order to protect threatened price

support programs. The Secretary of Agriculture, with-

out following procedural safeguards, sought to protect

a domestic commodity program from imported Canadian

agreed to, and did, require that exporters include in con-

tracts provisions limiting use of potatoes to be sold to

customers in the United States. The United States sued

such a customer for failure to comply with such a con-

tractual provision.

The Fourth Circuit held that the “voluntary” quota

agreement was invalid. It said:

We think that whatever the power of the executive

with respect to making executive trade agreements

regulating foreign commerce in the absence of ac-

tion by Congress, it is clear that the executive may

not through entering into such an agreement avoid

complying with a regulation prescribed by Congress

_. , The executive may not by-pass congressional

limitations regulating such commerce by entering

into an agreement with the foreign country that the

regulation be exercised by that country through its

control over exports. - - - 204 F.2d 659-660.

During the course of the argument, the government

contended that, quite apart from the statute, it had in-

herent authority to enter into a voluntary quota agree-

ment. The Court give this argument short shrift:

[Whhile the President has certain inherent powers

under the Constitution . . ., the power to regulate

interstate and foreign commerce is not among the

powers incidental to the Presidential office, but is

expressly vested by the Constitution in Congress

20

* * * Imports from a foreign country are foreign

commerce subject to regulation, so far as this coun-

try is concerned, by Congress alone... . Even though

the regulation prescribed by the executive agreement

be more desirable than that prescribed by Congres-

sional action, it is the latter which must be accepted

as the expression of national policy. 204 F.2d at

659, 660.

Finally, the Court emphasized that:

Since the purpose of the agreement as well as its

effect was to bar imports which would interfere with

the Agricultural Adjustment program, it was neces-

sary that the provisions of this statute be complied

with and an executive agreement excluding such im-

ports which failed to comply with it was void. 204

F.2d at 659.

In Guy Capps, as here, Congress had enacted a statute

addressed to the problem of concern to the Executive

branch. The statute in Guy Capps authorized trade re-

strictions when imports threatened programs under the

Agricultural Adjustment Act; in the present case, the

“Escape Clause” authorizes trade restrictions (of the

exact type used, i.e., negotiated quota agreements) when

imports threaten to cause or have caused injury to a

domestic industry—the very problem that motivated the

Department of State to act.

The conclusion that respondents lacked authority to

negotiate the steel restraint agreements is far more com-

pelling than the decision reached by the Guy Capps Court

in voiding the potato agreement for two reasons. There

was nothing in the Agricultural Adjustment Act, nor

in any other statute in existence at that time, which dealt

with the subject of voluntary quota agreements (or, in-

deed, enforceable quota agreements). Nor was there any

indication that Congress had contemplated an emergency

situation, like that created by the bumper potato crop,

which could not await the completion of a Tariff Com-

21

mission investigation when it enacted Section 22. Thus,

it could quite reasonably be argued in Guy Capps that

poth the particular import problem at issue and the

kind of action taken by the Executive branch in response

were outside the contemplation of Congress in Section 22

or in any other statutory provision. Indeed, it could be

said in that case that the only way for the Executive

branch to accomplish the purposes of Section 22 was to

take the action which it took. Nonetheless, the Court of

Appeals found that action invalid.

By contrast, here, the respondents have not been able

to argue that the Department of State based its “unen-

forceable” actions upon the very criteria specified in the

statutory provisions which authorized action of the kind

in question; they have been compelled instead to argue

that the Department chose the route of an “ynenforceable”

voluntary quota agreement because the statutory criteria

authorizing negotiation of an “enforceable” voluntary

quota agreement would have been difficult to meet. And

here, respondents have not been able to argue that ad-

herence to the procedural prerequisites for “enforceable”

Executive action would have meant frustration of the

statutory objective because of an emergency situation

not contemplated by Congress; they have been compelled

instead to argue that the President acted outside the

statutory criteria in order to achieve a departure from

statutory policy.” To let the steel quota agreements

24 Furthermore, the Guy Capps case cannot be distinguished from

the present case on the grounds that Guy Capps involved “enforce-

able restraints” while the steel restraint arrangements are “un-

enforceable”. First, the type of enforceability of particular im-

portance to the majority opinion in this case is halting violative

importations at the border. The Guy Capps agreement did not pro-

vide for such enforcement, and the government did not attempt

such enforcement. Second, the remedy sought in the lawsuit was

predicated, not on the underlying restraint arrangement, but on a

subsequent private contract. The government could, in the case of

steel, seek precisely the same type remedy. Following the con-

99

— J

stand thus would be plainly in conflict with the Fourth

Circuits decision in Guy Capps.

CONCLUSION

For the above reasons, a Writ of Certiorari should

issue to review the judgment and opinion of the District

of Columbia Circuit.

Respectfully submitted,

RICHARD A. FRANK

ELDON V. C. GREENBERG

JOSEPH N. ONEK

CENTER FOR LAW AND SOCIAL

POLICY

1751 N Street, N.W.

Washington, D. C. 20036

(202) 872-0670

Attorneys for Petitioner

Dated: March 3, 1975

Washington, D. C.

clusion of the steel restraint arrangements, various foreign steel

companies, in cartel fashion, allocated among themselves the quota

provided their country in the arrangements. If a foreign company

were to ship to the U.S. more than its allocated share, the U.S.

would be in precisely the same position as it was in Guy Capps, and

could sue as a third party beneficiary, alleging violation of the

implementing cartel agreement and seeking damages for the over-

shipment or injunctive relief.

la

506 FEDERAL REPORTER, 2d SERIES

CONSUMERS UNION OF U.S., INC.

v.

Henry 4. KISSINGER, Secretary of State,

et ul., United States Stee! Corpora-

tion, Appcttast.

CONSUMERS UNION OF U.S., ENC.

..

Menry A. KISSINGER, Secretary of State,

and dulius L. Katz, Deputy Assistant

Secretary of State for Economic Af-

fairs, Appellants.

CONSUMERS UNION OF U. S., INC.

Vv.

Renry A. KISSINGER, Secretary of State,

et al., Arscrican Iron and Sice!

institute, Appellant.

CONSUMERS UNION OF U.S. INC.,

Appeiiant,

v.

Menry A. KISSINGER, Secretary of

State, et al. |

CONSUMERS UNION OF 1

v.

et al., British Steel Corpo

Appeliant.

CONSUMERS UNION OF U.5., INC.

v.

JAPAN IRON AND STEEL EXVORT-

ERS ASSOCIATION

and

Nippon Steel Corporatioa, Appellants.

CONSUMERS UNION OF U. S., INC.

v.

Henry A. KISSING®R, Secretary of State,

et a!., Fried, Krupo ilucttenwerke,

A.G., Appeliant.

Nos, 72-1005 to 73-1097, 73-1132, 73-1133,

73-1135 and 73-1158.

United States Court of Appeals,

District of Columbia Circuit.

Argued May 31, 1973.

Decided Oct. 11, 1974.

Rehearing Denied Dec. 2, 1974.

Consumers organization brought

suit against the State Department, and

foreign and domestic stcel producers, in-

dividually and in association, challenging

efforts by the Executive Branci: to bring

about reduction in steel imports by

means of self-imposed limitations on

foreign producers. The United States

District Court for the District of Colum-

bia, Gerhard A. Gesell, J., entered mem-

orandum of opinion, declaration and or-

der in which it declared that the Execu-

tive had no authority to exempt the vol-

untary restraint agreements from the

antitrust Jaws and that the Executive

was not preempted and could enter into

agreements or diplomatic arrangenients

with private foreign stecl concerns 50

long us those undertakings did not vio-

late legislation regulating furcign com-

merce, and cross appeals were taken.

The Court of Appeals, McGowan, Cir-

cuit Judge, held that declarations in

District Court’s order with respect to

antitrust exemption were required 10

be vacated since for all practical pur-

poses the Sherman Act issue disappear-

ed from ‘he case when plaintiff stipu-

lated its dismissal with prejudice, tnat

without a proper delexzation on part

of Congress the President cannot in-

crease or decrease tarif{s or impose 1an-

datory import quotas but that actions

of the Exeentive in securing instant

voluntary agreements were not a res

ulation of forcign commerce foreclosed

w the Exccutive either by the Constitu-

tion or by the Trade Expansion Act.

Modified and affirmed.

Danaher, Senior Circuit Judge, fil-

ed concurring opinion; Leve athal, Cir-

cuit Judge, dissented and filed opinion.

1. Declaratory Judgment 385

Declarations in distiict court’s or-

der that the Chief Execut:v- hac no au-

thority to exempt from tne antitrust laws

voluntary arrangements whereby foreign

steel producers would limit their im-

ports into United States and that such

arrangements weie not exempt were

vacated since Sherman Act issue had

disappeared from suit challenging such

arrangement when plaintiff stipulated

its dismissal with prejudice; in any

event since there was nothing in the re-

. + é eo N

‘ ee eS eT ees ere ae

% ied voes

ehiayy aR, adi. lee

tats

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite as 500 F.2d 136 (1874)

cord to show the Executive as purporting

to grant such an exemption, such obser-

vations did not have the stature of a

declaratory disposition of an actual con-

troversy. Sherman Anti-Trust Act, § 1,

15 US.C.A. § 1.

2. Customs Duties 3

Trade Expansion Act of 1962 has

as its principal purpose the stimula-

tion of the economic growth of the

United States and the maintenance and

enlargement of foreign markets for its

products. U.S.C.A.Const. art. 1, § 8,

cel. 3; Trade Expansion Act of 1962,

§ 102 et seq., 19 U.S.C.A. § 1801 et seq.

3. Customs Duties 6

Without a proper delegation, such

as that contained in the Trade Expan-

sion Act, the’President may not increase

or decrease tariffs, issue commands to

the customs service to refuse or delay

entry of goods into the country or im-

pose mandatory import quotas; to make

use of such delegated power the Presi-

dent is required to proceed strictly in

accordance with the procedures speci-

fied in the statutes conferring the dele-

gation; however, where he does not pre-

tend to the possession of such power no

such conformity is required. Trade

Expansion Act of 1962, §§ 261, 221, 223,

301 et seq., 351, 352, 19 U.S.C.A. §§ 1821,

1841, 1843, 1901 ct seq., 1981, 1982.

4. Commerce @79

Custoras Duties @6

Actions of the Chief Executive in

attempting to bring about reductions in

stcel import by means of self-imposed

limitations on foreign producers, with

President’s actions taking form of let-

ters stating the signatories’ intention

to limit exports of steel products to

United States and to hold themscives

ready to consult with representatives of

United States Government when any

problem or question might arise with

respect to such voluntary undertaking,

did not constitute a regulation of for-

eign commerce foreclosed to the Presi-

dent by the Constitution or the Trade

Expansion Act. U.S.C.A.Const. art. i

506 F.26—9¥2

§ 8, cl. 3; Trade Expansion Act of 1962,

§ 102 et seq., 19 U.S.C.A. § 1801 et seq.

—_——_>——_—_

Abe Krash, Washington, D.C., with

whom Jerome I. Chapman and David

Bonderman, Washington D.C., were on

the brief, for appellant in No. 73-1095.

Irwin Goldbloom, Atty. Dept. of Jus-

tice, with whom Morton Hollander and

David J. Anderson, Attys. Dept. of Jus-

tice J. Dapray Muir, Asst. Legal Advis-

er, Dept. of State, were on the brief for

appellanis in No. 72-1096.

Lloyd N. Cutler, Washington, D.C.,

with whom Max O. Truitt, Jr., Daniel

K. Mayers and Ronald J. Greene, Wash-

ington, D.C., were on the brief, for ap-

pellants in No. 73-1097, also argued for

all other appellants.

William B. Pennell, New York City,

with whom Richard A. Whiting, Monroe

Leigh, Danicl J. Plaine and Virginia M.

Dondy, Washington, D.C., were on the

brief, for appdllant in No. 73-1133 also

argued for ajjpellants in No. 73-1135

and No. 73-1133.

Steven Brodsky, Washington, D.C.,

with whom kichard A. Frank, Washing-

ton, D.C., pre on the brief, for appellant

in No. 72-1 2 and uppellee in Nos. 73-

1695, 73- caoa. 92- 1097, 73-1133, 73-

1135, and 73-11

Noel Hemmen¢inger, Washington, D.

C., and Isaac Shapiro, New York City,

were on the bri ’ for appellants in No.

73-1135.

Milo G. Coerher, Washington, D.C.,

was on the brief for appellant in No. 73-

1138.

Shirley Z. Johnson, Washington, D.C.,

filed a brief on behalf of Philip A. Hart

as amicus curiae urging affirmance.

Before DANAHEE, Senior Circuit

Judge, and MceGOWAN and LEVEN-

THAL, Circuit Judges.

McGOWAN, Circuit Judge:

These consolidated cross-appeals are

Girected respectively to two declarations

made by the District Court in a suit

3a

506 FEDERAL REPORTER, 2d SERIES

challenging efforts by the Executive

Branch of the United States Government

to bring about reductions in steel im-

ports by means of self-imposed limita-

tions on foreign producers. Arrayed

against each other are a complaining

consumers organization, on the one side,

and, on the other, the State Department,

and foreign and domestic steel pro-

ducers, individually and in association.

In the form eventually taken by the liti-

gation in the District Court, we consider

that the only question before us is

whether the actions of ‘the Exccutive

were a regulation of forcign commerce

foreclosed to it generally by Article I,

Section 8, Clause 3 of the Constitution,

and in particular by the Trade Expan-

sion Act of 1962, 19 U.S.C. § 1801 et

seq. To the extent that the District

Court declared no such conflict to exist,

we affirm its decision.

I

Steel imports into the United States

increased more than tenfold over the pe-

riod _ 958-68, ¥ the great bulk of im-

ports coming from Japan and the coun-

tries of the European Communities."

The effect of this development on the

domestic stecl industry, whica is deemed

to be of great importance to the nation’s

security as well as to jts peacetime econ-

omy, became a matter of widespread con-

cern. In 1968 bills with substantial

backing were introduced in Congress to

impose mandatory import quotas on

steel.

{. The District Court heard the matter on

cross-motions for summary judgment, and the

facts are not in dispute. This section of the

opinion draws mainly upon the affidavit of

Julius L. Katz, ove of the State Department

defendants and Deputy Assistant Secretary of

State for International Resources and Food

Policy, filed in support of the motion for sum-

mary judgment.

2. The bulk of steel import increases were not

attributed to the Kennedy Round reductions

in tariffs, which would be continuing in Da-

ture, because they predated the effective dates

of those reductions, and cost and price dif-

ferentials between foreign and domestic prod-

ucts greatly exceeded the pre-reduction tariffs.

The Executive Branch regarded the

problem created by steel imports as tem-

porary in nature? and thus amenable

to a short-term solution.? It concluded,

moreover, that unilaterally imposed man-

datory quotas would pose a danger of

retaliation under the General Agreement

on Trade and Tariffs, prove inflexible

and difficult to terminate, and have a

seriously adverse impact on the foreign

relations of the United States. Import

limiting agreements negotiated with

other governments were likewise reject-

ed on the State Department's advice that

negotiated official restrictions, if achiev-

able, would have political consequences

for the foreign governments that would

also affect our external affairs adverse-

ly. Accordingly, the Executive Branch

concluded in 1968 that voluntary import

restraint undertakings by foreign pro-

ducers offered the best hope of alleviat-

ing the domestic industry’s temporary

problems at the least cost to United

States foreign, economic and trade poli-

cies.

After an initial showing of interest by

the foreign producer associations, State

Department officials entered into dis-

cussions that lasted from June to Decem-

ber, 1968, and resulted in letters being

sent to the Secretary in which the Japa-

nese and European producer associa-

tions stated their intentions to limit

steel shipments to the United States to

specified maximum tonnazes for each of

the years 1969, 1970, and 1971.4 During

3. Factors believed to cause the import in-

crease, such 28 excess capacity and & tech-

nological advantage in the foreign stecl in-

dustry. were both regarded as probably short-

run phenomena. Whether foreign govern-

ments’ policies of assisting their steel indus-

tries, amd lower labor costs abroad, were also

thought to be temporary in nature is not clear.

4. The letters to the Secretary, dated Decem-

ber 23, 1968, were appros ingly read by Presi-

dent Johnson after their receipt. and were

transmitted by the Secretary on January 14.

1969, to the respective Chairmen of the Sen-

ate Finance Committee avd the House Ways

and Means Committee. The recipients there-

upon issued & joint announcement welcoming

rrr em es

4a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite as 506 F.2d 136 (1974)

1970, domestic industry and union rep-

resentatives urged the State Department

to seek renewal of the restraints beyond

1971 to provide greater time within

which to achieve needed changes, and

the House Ways and Means Committce

issued a report to like effect. When

various executive organs, such as the

President’s Council of Economic Advi-

sors, had made the same recommenda-

tion, the President directed the Secre-

tary to seck extensions of the limitation

representations. Such extensions, cover-

ing 1972 through 1974, were forthcom-

ing in letters dated early in May, 1972,

and announced by the President ori May

65

The two 1972 letters are substantially

alike. Each states the signatories’

intention to limit exports of stecl prod-

ucts to the United States both in aggre-

gate tonnage and, within such limits, in

terms of product mix. Each represents

that the signatories “hold themselves

[itself] ready to consult with represent-

atives of the United States Government

on any problem or question that may

arise with respect to this voluntary

restraint undertaking” and expect the

United States Government so to hold

itself ready. In addition, each states

that its undertaking is based on the as-

sumptions that (1) the effect will not he

to place the signatories at a disadvantage

relative to each other, (2) the United

States will take no unilateral actions to

restrict exports by the signatories to the

United States, and (3) the representa-

tions do not violate United States or

international laws.

the voluntary restraints and relensing the

texts of the producers’ and the Secretary's let-

ters. No mandatory import quota legislation

= recommended by the committees there-

after.

$. The British steel industry, which had not

participated in the 1965S statements of intent,

joined in the 1972 letter from the European

Communities steel producer associations. It

did so through both the Britixh Independent

Steel Producers Association and the British

II

The original complaint in this action

contained two separate and distinct

claims. They were respectively denomi-

nated “FIRST CLAIM (Antitrust)” and

“SECOND CLAIM (Unlawful Action by

State Department Officials)”. The first

claim sought declaratory and injunctive

relief with respect to what were said to

be continuing violations of Section 1 of

the Sherman Act, 15 U.S.C. § 1. The

court was asked to declare the 1972 let-

ters of intent to be in violation of that

statute, and to enjoin ali of the named

defendants from engaging in any act to

effectuate the import reductions con-

templated by those letters.

The second claim, as its title implies,

sought relief only with respect to the

State Department defendants, who were

said to have violated the law by “facili-

tating, bringing about and negotiating”

the limitations set forth in the 1972

letters of intent without compliance

with Section 301 or Section 352 of the

Trade Expansion Act of 1962. The re-

lief sought was a declaration that the

1972 export limitations are illegal, and

an injunction addressed to all the de-

fendants, prohibiting acts in furtherance

of the arrangement.

After answers had been filed by some

of the defendants and a motion to dis-

miss or alternatively for summary judg-

ment had been made by the State De-

partment defendants, the parties stipu-

lated that the first claim in the complaint

be dismissed with prejudice, and an

amended complaint was filed.. The vio-

lation of law alleged in the amended com-

Steel Corporation, an enterprise controlled by

the Mritish government,

6. It is undisputed that “{i]n negotiating the

Orrangements aid all of their specifie termes,

the ‘State Department officers explained to

the foreign producers that they were being

asked to make the requested commitments by

the Executive Branch of the United States

Government on the ground that they were

in the national interest of the United States.”

JA 1550.

5a

506 FEDERAL REPORTER, 2d SERIES

plaint was that the State Department

officials had acted to regulate foreign

commerce within the meaning of Article

1, Section 8, Clause 3 of the Constitu--

tion, and of the laws relating to the reg-

ulation of foreign trade set forth in Title

19 of the U.S.Code, including Sections

301 and 352 of the Trade Expansion Act

of 1962. The foreign producer defend-

ants ‘were said to be violating the same

laws to the extent that they took steps

to effectuate the limitations sought by

the defendant State Department officials

acting in excess of their authority. The

relief sought was a declaration that the

actions of the State Department officials

in ‘seeking the export limitations were

ultra vires, and an injunction against

the defendants from furthering the 1972

letters of intent in any way.

Answers to the amended complaint

were filed by certain of the defendants

and others moved fcr summary judg-

ment, as did the plaintiff. The matter

came on for hearing in the District

Court on the cross-motions for summary

judgment. Its disposition was embodied

in what is styled a “Memorandum Opin-

jon, Declaration and Order.” The court

concluded its discussion of the issues by

making two declarations. The iirst was

that “the Executive has no authority un-

der the Constitution or acts of Congress

to exempt the Voluntary Restraint Ar-

rangements on Stec! from the antitrust

laws and that such arrangements are

not exempt.” The second was that “the

Executive is not preempted and may

enter into agreements or diplomatic

arrangements with private forcign stecl

concerns so long as these undertakings

do not violate legislation regulating for-

eign commerce, such as the Sherman Act,

and that there is no requirement that

all such undertakings be first processed

under the Trade Expansion Act of 1962.”

The court then went on to say that,

although the question of whether there

was a violation of the Sherman Act was

7. In o post-argument communication to the

District Court, the Department of Justice

represented that ‘no assurances of immunity

from the antitrust laws had been given to any-

/

not before’it by reason of the stipulated

dismissal of the antitrust claim with

prejudice, it was apparent to the court

that “very serious questions can and

should be raised as to the legality of the

arrangements under the [Sherman]

Act”; and the parties were “urged to

reexamine their positions and premises

in the light of this memorandum, and

the declarations made.” The court

characterized injunctive relief as inap-

propriate, and denied .the respeetive

motions for summary judgment to the

extent that they were “inconsistent”

with the declarations made by it. It

concluded vy saying that “no further

proceedings are required,” and “no costs

will be awarded.”

Appeals were filed by the State De-

partment defendants and by the domestic

and foreign producers. The plaintiff

filed a cross-appeal “insofar as any dec-

laration, or ruling on the reiief re-

quested, has been decided adversely to

the plaintiff.”

Il

A’ substantial portion of the briefs

and argument before us has been de-

voted to the Sherman Act. The defend-

ant-appellants are, not surprisingly, per-

turbed by some of the comments made

by the District Court with respect to

possible Sherman Act liability. Al-

though the court stated in terms that,

by reason of the stipulation of dismissal,

“the question of whether or not a viola-

tion of the Sherman Act is present is not

before the Court to decide,” it did not

leave the matter at that. One of its dee-

larations is that the Executive has no

authority to exempt frora the antitrust

laws the arrangements here involved,

and “that such arrangements are not

exempt.”

{1] Since there is nothing in the rec-

ord that shows the Executive as purport-

ing to grant such an ex ption,? this

one. It went on to Kay that “the Executive

Branch did not and it- would not request any

party to enter into any arrangement it be-

lieved to be unlawful.”

‘

atin hase aime

os

porate

all

CONSUMERS UNION OF U.S.,

INC. v. KISSINGER

Cite as 06 F.2d 136 (1974)

observation by the court does not have

the stature of a declaratory disposition

of an actual controversy. The court’s

other comments in this connection are

not couched in adjudicatory form, as in-

deed, so the court recognized, they could

not be in the light of the abandonment

by the plaintiff of its antitrust claim.

With the declaration vacated, as we shall

direct in our judgment, these expressions

of the court’s opinion are without judi-

icial force or effect and are not appro-

priate for pursuit upon appeal.

We think that the Sherman Act issue,

for all practical purposes, disappeared

from this case when the plaintiff, for

reasons best known to itself, stipulated ,

its dismissal with prejudice. It is ap-

parent from the face of the original

complaint that the Sherman Act claim.

was originally conceived by the plaintiff

as a vital aspect of its lawsuit. Its reso-

lution would almost certainly have re-

quired the exploration by adversarial

trial of a number of complex questions

of fact and law, aad the making of legal

rulings in an area not distinguished for

its simplicity. When the plaintiff, con-

fronted by that formidable prospect,

elected to abandon its antitrust claim, the

Sherman Act could no longer play a sig-

nificant part in this controversy, and we

have no occasion to concern ourselves

8. As might be expected in light of the stipu-

Jation, the amended co: yplaint nowhere refers

expressly to the Sherman Act. Under the

caption “VIOLATION OF LAW § AL-

LEGED,” it charges that the actions of the

State Department defendants constitute a pro-

hibited regulation of foreign commerce “with-

in the meaning of the luws of the United

States relating to the regulation of foreign

trae aos set forth in Title 19 of the Vahes

States Code, including Sections 201 and 252

of the Trade Expansion Act of 1962, 19 U.S.C.

Sections 1901, 1982." Having asserted these

actions to be unlawful for this reason, the

complaint does fo on to say that the State

Department defendants, by securing the lim-

{tation arrangements in a manner not au-

thorized by Congress (i. ¢., by not using the

provisions of Title 19), acted in conflict with

the power of Congress “to determine the anti-

‘ trust’ policy of the United States by enacting

the antitrust laws and to determine the cir-

cumstances under which exceptions to those

of intent,

with the discussions by the parties of the

precise reach of that statute.

f

IV

[2] We turn, then, to the District

Court’s declaration that, in respect of

the actions of the Executive culminating

in the undertakings stated in the letters

“the Exccutive is not pre-

empted . and that there is no

requirement that all such undertakings

‘be first processed under the Trade Ex-

pansion Act of 1962.” That statute, as

its name suggests, had as its principal

purpose the ‘stimulation of the economic

growth of the United States and the

maintenance and enlargement of foreign

markets for its products®

This was to be achieved through trade

agreements reached by the President

with foreizn countries. Title Il] of the

Act provided that, fora period of five

years (1962-67),‘the President was au-

thorized to enter into such agreements

whenever he determined that any exist-

ing tariff duties or other import restric-

tions of either the United States or any

foreign country were unduly burdening

and restricting the foreign trade of the

United States. Upon reaching. any such

trade agreement, the President was dele-

‘gated the unmistakably legislative power

to modify or continue existing tariffs or

laws shall be permitted.” To the extent that

this seems to say that there was an antitrust

violation because the State Departinent of-

ficials did not employ the provisions of Tithe

1%, the point fails in the light of our boliing

hereinafter that the Executive did not engage

in conduct implicating thom provisions,

We note that the third aud last paragraph

under this caption in the amemled conpiaint

alleges that the foreign defendants acted in

violation only of provisions of Title 19, whieh,

of course, does net contain the Sherman Act.

The domestic stecl producers, in our reading

of the amended complaint, are not alleged to

have acted in violation of any luw. .

9. The other stuted purposes were “to strenzth-

eu economic relations with foreiga countries

through the development of open and nendie-

criminatery trading in the {ree world”; and

“to prevent C. ist ec pestle By

19 U.S.C. § 1501.

. ERR oh.)

were

Vo ae

Ta

506 FEDERAL REPORTER, 24 SERIES

other import restrictions, to continue

existing duty-free or excise treatment,

or to impose additional import restric-

tions, as he determined to be necessary

or appropriate to the carrying out of the

agreement. 19 U.S.C. § 1821. In con-

nection with the first two of these pow-

ers, the Tariff Commission was given

an advisory function, which included pub-

tic hearings; and public hearings were

also directed to be held, by an agency

designated by the President, in connec-

tion with any proposed trade agreement.

19 U.S.C. §§ 1841, 1843.

Title III of the Trade Expansion Act

of 1962, recognizing that domestic inter-

ests of various kinds may be adversely

affected by concessions granted under

trade agreements, authorizes the making

of compensating adjustments of various

kinds. Section 301 (19 U.S.C. § 1901)

provides that the Tariff Commission

shall undertake investigations of injuries

allegedly being done to domestic busi-

nesses or workers by such things as in-

creased imports flowing from a trade

agreement. After holding public hear-

ings, the Tariff Commission shall make

a report to the President. If it affirma-

tively finds injury to domestic industry,

the President may under Section 351

increase or impose tariff duties or other

import restrictions, 19 U.S.C. § 1981, or

alternatively he may under Section 352

negotiate agreements with foreign gov-

ernments limiting the export from such

countries to the United States of the

article causing the injury. 19 U.S.C.

§ 1981. If this latter option is taken,

the Act provides that the President is

authorized to issue regulations govern-

ing the entry or withdrawal from ware-

10. The Katz affidavit asserts that considera-

tion was given to the utilization of both See-

tion 252 and Section 232. The former “could

not seriously be considered” because it was in

terinn made available by Congress only for the

purpose of xoftening injuries to domestic

commerce caused in major part by prior con-

cessions in trade agreements; and this was

pot a major cause in this instance. As to Sec-

tion 232, national security was only one of the

factors contributing to the problem, and the

attempt to solve it by method which armed

house of the article covered by the agree-

ment.

The foregoing description of the Trade

Expansion Act of 1962 covers, among

others, Sections 301 and 352. They are

the only provisions expressly identified

in the amended complaint as constituting

the allegedly preemptive exercise by Con-

gress of its constitutional power to regu-

late foreign commerce that, so it is said,

forecloses the actions of the Executive

challenged in this case. The description

extends also to Sections 302 and 351,

which are referred to in plaintiff-appel-

lant Consumers Union's brief, as is also

Section 232, 19 U.S.C. § 1862. This

last is the so-called national security

clause which provides that the President

shall not decrease or eliminate tariffs or

other import restrictions if to do so

would impair the national security. The

Director of the Office of Emergency

Planning is directed to investigate any

situation where imports threaten to im-

pair the national security; and if he

finds such threat, and the President con-

curs, action shall be taken “to adjust the

imports” of the article in question, which

means that the article may by regulation

be excluded from entry or withdrawal

from warehouse.'®

[3] What is clear from the foreyoing

is a purpose on the part of Congress to

delegate legislative power to the Presi-

dent for use by him in certain defined

circumstances and in furtherance of cer-

tain stated purposes. Without such a

delegation, the President could not in-

crease or decrease tariffs, issue com-

mands to the customs service to refuse

or delay entry of goods into the country,

or impose mandatory import quotas."!

the President with legixlative power fo stop

foreign imports at the water's edge would

have had on unfortunate impact on foreign

trade poliey and international relationship.

il. The United States Customs Court has quite

recently invalidated the imposition by l’resi-

dential proclamation of a 10% supplemental

tariff increase on imported merchandise.

Yoshida International, Inc. v. United States,

378 F.Supp. 1155 (Cust.Ct.1974). This action

was held by the court to be an exercise of leg-

8a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite as 500 F.2d 1386 #:974)

To make use of such delegated power,

the President would of course be re-

quired to proceed strictly in accordance

with the procedures specified in the

statutes conferring the delegation.

Where, as here, he does not pretend to

the possession of such power, no such

conformity is required.

{4] The steel import restraints do

not purport to be enforceable, either as

contracts or as governmental actions

with the force of law; and the Execu-

tive has no sanctions to invoke in order

to compel observance by the foreign pro-

ducers of their self-denying representa-

tions. They are a statement of intent

on the part of the foreign producer as-

sociations. The signatories’ expecta-

tions, not unreasonably in light of the

reception given their undertakings by the

Executive, are that the Executive will

consult with them over mutual concerns

about the steel import situation, and that

it will not have sudden recourse to the

unilateral steps available to it under the

Trade Expansion Act to impose legal

restrictions on importation. The Presi-

dent is not bound in any way to refrain

from taking such steps if he later deems

them to be in the national interest, or if

consultation proves unavailing to mect

unforeseen difficulties; and certainly

the Conyress is not inhibited from enact-

ing any legislation it desires to regulate

by law the importation of steel.

The formality and specificity with

which the undertakings are expressed

does not alter their essentially precatory

nature insofar as the Executive Branch

is concerned. In effect the President

has said that he will not initiate steps

to limit stcel imports by law if the vol-

ume of such imports remains within tol-

erable bounds, Communicating, through

the Secretary of State, what levels he

ixlative power by the Executive in tho regula-

tion of foreign commerce, for which no dele-

gated authority could be discerned in the stat-

utes relating to turiffs. We mention the case

not with reference to the rightness or wrong-

ness of the decision but ouly becouse of the

contrast between the action taken by the Ex-

considers tolerable merely enables the

foreign producers to conform their ac-

tions accordingly, and to avoid the risk

of guessing at what is acceptable. Re-

gardiess of whether the producers run

afoul of the antitrust laws in the manner

of their response, nothing in the process

leading up to the voluntary undertakings

or the process of consultation under them

differentiates what the Executive has

done here from what all Presidents, and

to a lesser extent all high executive of-

ficers, do when they admonish an indus-

try with the express or implicit warn-

ing that action, within either their ex-

isting powers or enlarged powers to be

sought, will be taken if a desired course

is not followed voluntarily.

The question of congressional preemp-

tion is simply not pertinent to executive

action of this sort.” Congress acts by

making laws binding, if valid, on their

objects and the President, whose duty 1%

is faithfully to execute the laws. From

the comprehensive pattern of its legis-

lation regulating trade and governing

the circumstances under and procedures

by which the President is authorized to

act to limit imports, it appears quite

likely that Congress has by statute oc-

cupied the field of enforccable import re-

strictions, if it did not, indeed, have

exclusive possession thereof by the terms

of Article I of the Constitution. There

is no potential for conflict, however, be-

tween exclusive congressional regulation

of foreign commerce—regulation en-

forced ultimately by halting violative

importations at the border—and assur-

ances of voluntary restraint given to the

Executive. Nor is there any warrant for

creating such a conflict by straining to

endow the voluntary undertakings with

legally binding effect, contrary to the

manifest understanding of all concerned

and, indeed, to the manner in which

ecutive in that case, i. ¢., goods from abroad

were excluded by furce of asserted law unless

the supplemental dutics were paid, with wheat

was done here, i. ¢., no legal power to exclude

foreign steel imports was either claimed or

exercised by the Executive.

9a

506 FEDERAL R EPORTER,

departures from them have been

treated.'*

In holding, as we do, that the District

Court did not err in declining to charac-

terize the conduct of the Executive here

under attack as in conflict with the

Trade Expansion Act of 1962, we are

not to be understood as intimating any

views as to the relationship of the Sher-

man Act to the events in issue here. The

Sherman Act is not, a3 noted above, one

of the regulatory statutes charged as

preempting the ficld, and the question

of its possible substantive applicability

vanished from this case with the original

complaint.

The declaration in the District Court’s

order with respect to antitrust exemption

js vacated, and the declaratory aspect of

that order is confined to the proposition

that the State Department defendants

were not precluded from following the

course they did by anything in the Con-

stitution or Title 19 of the U.S.Code.

As so confined, the order appealed from

is affirmed.

It is so ordered.

DANAHER, Senior Circuit Judge

(concurring):

Assuredly I join in Judge McGowan’'s

excellent opinion. Pragmatic in the

sense that it represents the view of a

jurist skilled in law and state affairs,

Judge McGowan’s treatment does not

ignore the background of the problem

here posed nor does it fail to take account

of the allegations of Consumers’ amended

complaint with its appended exhibits and

the agreed statement of facts submitted

in the District Court. I feel impelled to

voice additional comment only in view

of the approach of fered in dissent by our

respected collcague.

At the outset, J udge Leventhal correct-

ly has stated that this case “must be

decided as if the complaint had never

contained a claim under the antitrust

12. Ip 1969 the Japanese, and in 1972 all for-

eigu prvtucers, exported to the United States

more ater) or particular types of steel product

than their ucdertakings contemplated. In no

2d SERIES

laws”. The original complaint had in-

deed set up a purported antitrust predi-

cate, but Consumers on the record caused

that count to be dismissed “with prej-

udice”.

Next, even were we to assume that the

District Court had jurisdiction under the

Federal Declaratory Judgments Act, it

was “under no compulsion to exercise

that jurisdiction”, Brillhart v. Excess

Ins. Co., 316 U.S. 491, 494, 62 S.Ct, 1173,

1175, 86 L.Ed.2d 1620 (1942), citing

Actna Casualty Co. v. Quarles, 92 F.2d

321 (4 C.A. 1937) with Judge Parker's

discussion at 325 which here we might

profitably recall, For present purposes,

we may pass that point for even though

the antitrust claim had been dism'ssed,

the District Judge declared that “the

Executive is not preempted and may

enter into agreements or diplomatic ar-

rangements with private foreign steel

concerns . + *'s Consumers Union of

U. S., Inc. v. Rogers, 352 F.Supp. 1319,

1323 (DDC1973). (Emphasis added.)

The District Judge explained that the

Acts, such as those cited in the dissent,

“cannot be read as a congressional direc-

tion to the President prohibiting him

from negotiating jn any manner with

private foreign companies as to commer-

cial matters”. Id.

So we turn to the area urged in the

dissent in rejection of the District

Court's declaration and in the assertion

that congressional authority is “plenary”.

We may join issue here.

1.

Our dissenting colleague regards the

arrangements with the foreign private

concerns as “solemn negotiated bilateral

understandings”. The record shows that

the private producers themselves limited

their own exports. Our colleague sces

the Executive in position to call upon

nonjudicial exercises of power if the

foreign producers violate the arrange-

ments. He suggests, ©: g., that there

case were the “excess” goods denied entry into

the United States. Rather, consultations

were sought and the next year's voluntary

quota reduced by the amount of the excess.

10a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite ax 506 F.2d 136 (1974)

could be “possibly a call to reduce as-

sistance programs” to the country of a

foreign producer. He ventures “Suppose

the President directed customs officials

to deny entry to United States ports of

commodities violating the undertaking.”

None of these things happened.

Rather, the record shows, that during

the years 1957 through 1968 there de-

veloped an unprecedented increase in

steel imports, particularly from produc-

ers in Japan and European countries.

Import tonnages of steel mill products

in 1957 totaled 1,155,000 net tons which

by 1968 had become 17,960,000 net tons.

Bills were introduced in Congress di-

rected toward the imposition of re-

straints and controls of steel imports,

with the result that worriment overtook

our own officials as well as representa-

tives of‘ forcign producers. A Japanese

economic mission sent its chairman in

March 1968 to discuss problems of the

steel trade with the particular objective

of avoidance of congressionally imposed

limitations upon the entry of Japanese

stecl.

It is not to be doubted that importantly

placed officials in our Executive depart-

ments were fully aware of our tariff

Jaws and regulations and of the legisla-

tive restrictions upon Presidential action.

By May 1968 Department of State of-

ficials and European steel industry re-

presentatives had joined in discussions

which went forward through June and

July 1968. Perhaps it is not too much

to “suppose” (our colleague’s word) that

President Johnson said “Why don’t you

get those peuple in here and sce if you

can reason together with them?"—~or

words to that effect.

Before the undertakings by and among

the foreign steel producing companies

were activated, the Department of State

sought and obtained the views of mem-

bers of Congress, representatives of do-

§. Cf. United States v. Guy W. Capps, Inec.,

WS U.S. 206, at 207, 75 8.Ct. 326, 99 L.Ed.

829 (1955) refusing to pass upon the ruling

by the court of appeals (204 F.2d at GOS) that

an international agreement to limit Canadian

506 F.26—10

mestic steel producing interests, unions

involved in the steel industry and others.

II.

So successful were the original three-

year programs, so happily without inci-

dent, that an extension for an additional

three years went forward only to be

challenged in this action.

In this great nation with its complex

economy and its varying conflicts re-

quiring judicious accommodation, flex-

ibility in achieving desirable results is a

constant imperative. Fairly we may

say that here there had been no Presi-

dential action, legislative in character,

undercutting the congressional preroya-

tives deemed by the dissent to be “plen-

ary”. If it be a penchant of our press

to coin applicable expressions, “jawbon-

ing” could here be taken as apt and that

is what happened, nothing el!se.!

Collaterally and obviously not here

controlling, we mizht well today applaud

exhortations by our officials to compan-

ies producing oil in the Middle East to

reduce their charges and to increase

their exports of oil to our power starved

economy. We might take it to be desir-

able that coffee producing companies in

nations such as Brazil and Cuiombia be

induced by our officials not to exploit

our dependence upon their product by

the imposition of unreasonable and ex-

orbitant charges for their coffee exports.

Surely no formal trade agrecment should

be required to persuade companies to

export to us the bauxite so essential to

the continued maintenance of our alumi-

num industry.

Judge McGowan, it is submitted, suc-

cinctly and authoritatively has concluded

that “the State Department defendants

were not precluded from following the

course they did by anything in the Con-

stitution or Title 19 of the U.S.Code”.

exports was void “as not authorized by Con-

gress and aw contravening the provision for

procedure through the Tariff Commission”, id.

348 US. at 301, 75 S.Cr. at 320. See Ap-

pendix, id. at 205, 75 S.Ct. 326.

lla

506 FEDERAL REPORTER, 2d SERIES

LEVENTHAL, Circuit Judge (dis-

senting):

With all respect, I must record my dis-

agreement with the ruling of the major-

ity that the President had the authority

to negotiate detailed arrangements with

foreign steel producers to limit their

shipments of products to the United

States. ©

In my view, this case is controlled by

Congress's evercise of its plenary au-

thority over the regulation of foreign

commerce through passage, over the past

forty years, of legislation establishing

a comprehensive scheme occupying the

field of import restraints. While there

is room for a role based on inherent au-

thority of the executive, in this case the

actions taken by the President are in-

consistent, by fair implication, with the

scheme Congress has provided. My point

js not that the President has tuken the

kind of action that Congress had forbid-

den to the Executive. On the contrary,

the statutes passed by Congress estab-

lished a broad executive discretion, and

with a subject like steel imports and the

kind of expansive scope of the “national

security” provision (which emerged in

the 1950's and now appears in § 222 of

the Trade Expansion Act of 1962) that

permits a restriction of imports which

threaten to impair the national security

by weakening the internal economy, there

is a likelihood that the President would

have been able to make the findings re-

quired by that law. But Congress has

made the exercise of executive authority

over import restraints dependent on pub-

lic ventilation of the issues and has

prescribed a procedure with safeguards

and right of comment by affected inter-

ests. The President has concededly not

followed that procedure, and this course

cannot stand consistently with the stat-

utory pattern.

Recent events, notably those affecting

currency exchange rates and prices and

supptics of fuels, have dramatically

changed the economic climate that

sparked these trade arrangements.

While the particular issue may be less

pressing, there has been no dilution of

the principle that the Executive cannot

circumvent procedures delineated by Con-

gress. That principle is paramount even

though it may sometimes lead judges

to particular results that are dubious

pragmatically. Compare Wilderness

Society v. Morton, 156 U.S.App.D.C. 121,

479 F.2d 842 (1973); Natural Resources

Defense Council, Inc. v. Morton, 148

U.S.App D.C. 5, 458 F.2d 827 (1972).

I am not persuaded by the majority's

pronouncement that the statutes are not

pertinent to the present case because the

arrangements, incorporated in letters

from foreign steel producers which de-

scribe themselves as “voluntary restraint

undertakings,” did not contemplate the

mandate of judicial enforceability.

These undertakings by the President and

foreign steel producers were carefully

structured in considerable detail, obvi-

ously after detailed consultation with

American steel interests, without expo-

sure to the kind of input by purchasers

that would have been provided if the

Congressional procedures had been fol-

lowed. These undertakings are bilateral.

and establish obligations. Their bite

persists notwithstanding the majority's

effort to coat them bland vanilla. The

majority tolerates executive detours

around the limits staked by Congress in

the ficld it has occupied. Its concept

that a different route is available for

executive arrangements discerned as not

intended for judicial enforcement is, in

my view, unsound.

I. THE 1972 LETTERS

The subject of this litigation is, spe-

cifically, the arrangements made in 1972

between the Executive and foreign steel

producers. In early 1970, various steel

industry and labor union representatives,

still concerned about the effect of drama-

tically increased steel imports on domes-

tic industry, urged the State Department

to seck an extension of commitments

that had been made for the years 1968

to 1971. Following a study by a special

committee, the President, in December

1970, directed the Department of State

to seek new pledges from the foreign

rcpt tes

l%a

2

>

CONSU™ERS UNION OF U. S., INC. v. KISSINGER’

Cite ax 506 F.2d 136 (1974)

producers. The State Department, ac-

cording to the affidavit of a cognizant

official, “met with various domestic in-

terests,” and “received information and

advice from diverse elements of the steel

industry.” The affidavit goes on to say:

‘“The arrangements ‘were entirely the

result of negotiations between the for-

eign producer representatives and State

Department officials who . . . spoke

for and represented the policy judgments

of the United States Government

alone.” ?

The 1972 arrangements were embodied

in separate letters to the Secretary of

State—from the Japan Iron and Steel

Exporters’ Association, and from the

steel producers of the European Econom-

ic Community, including the United

Kingdom. The letters were released by

the White House on May 6, 1972, along

with a Statement by the President and

a Fact Sheet. President Nixon charac-

terized this “welcome development” as

the product of more than a year's effort

by Deputy Under Secretary of State

for Economic Affairs Nathaniel Samuels.

The President’s Statement announced

that under the 1972 arrangements the

foreign stecl producers “pledge a three-

year restraint” on steel exports to the

United States, and further stated that

this undertaking “represents a substan-

tial improvement” over prior arrange-

ments.

§. Affidavit dated August 25, 1972, of Julius

L. Katz, Deputy Assistant Seeretary of State

for International Kesources and Food Policy,

Bureau of Economie Affairs, paragraph 14.

2. Paragraph 5 of the May 2, 1972. letter of

the assoriations of the steel producers of the

U.K. and the EEC, provides:

Consultations—The above-mentioned pro-

ducer associations, through their authorized

representatives, hold themselves ready to

consult with representatives of the United

States Government on any problem or ques-

tion that may arise with respect to this vol-

untary restraint undertaking. They expect

that, similarly, the United States Govern-

ment would be prepared to consult with

their representatives on any problem or ques-

tion that may arise with respect to this vol-

antary restraint undertaking. They reserve

‘fhe arrangements set limitations on

total amounts of stec! mill products to be

shipped to the United States in 1972—

6.498 million short tons from Japan, and

8,013,754 short tons from the United

Kingdori and European Community; and

a limit of 2.5% vf growth increase in

each of the folluwing two years. There

were also .uwure specific and detailed ar-

rangements, summarized as foliows in

the White House Fact Sheet:

“The provisions of the renewed under-

takings a!so include a firmer under-

Standing on product mix and geo-

graphic distribution, with specific ton-

nage limitations on each of the three

categories of specialty steel—stainless,

tool and other alloys.”

Thus the limit on shipments of stain!ess

steel mill products in 1972 was set at

16,873 metric tons for the steel producers

of U.K. and EEC, and at 72,462 metric

tons for the stecl producers of Japan.

Each of the letters contained a para-

graph on “Consultations’—which re-

corded the understanding that the pro-

ducer associutions “hold themselves

ready to consult with representatives of

the United States Government peas

{and] expect that, similarly, the United

States Government wou!d be prepared to

consult with their representatives on any

problem or question that may arise with

respect to this voluntary restraint under-

taking.” ®

the right to request consultation in the event

that they consider they have been placed in

a disadvantazeous position with respect to

other exporters of steel to the United States

by developinents in the international steel

market taking place subsequent to entering

this undertaking, or if developments in the

international steel market should take place

whieh could substantially impair the ear-

rying out of this undertaking. Similarly,

they recognize that the United States Gov-

ernment may request cynsultation if it ceon-

siders that developments in the interna-

tional steel market have taken place dur-

ing the term of this undertaking which sub-

stantially affect any of the provisions of thix

arrangement.

Tho above-mentioned producer axsociations

reserve the right to request consultation

with respect to the exclusion in particular

13a

506 FEDERAL REPORTER, 2d SERIES

Each letter stated that its “voluntary

restraint undertaking is based upon the

following assumptions”—(a) that the

disadvantages imposed by the arrange-

ments should be equalized for importing

producers, (b) that the United States

Government will take no unilateral action

to restrict the quantity of steei imports,

or to raise tariffs, or to impose supple-

mental duties on import of steel, and

(c) that the undertaking is not in vio-

lation of “any law of the United States

or international rule.”

It is undisputed that the President, in

negotiating these steel import limita-

tions, did not act pursuant to any author-

ity delegated by Congress. The State

Department affidavit tendered by the

defendants sets forth that Executive ac-

tion under existing statutory authority

was pondered and rejected? Presiden-

tial imposition of import: quotas is au-

thorized under the “escape clause” pro-

visions of Title III of the Trade Expan-

sion Act of 1962, 19 U.S.C. § 1901, but

only on a finding of injury caused in

major part by “concessions” granted un-

der trade agrecraents; and the difficul-

ties of the domestic steel industry were

ascribed to excess capacity, superior tech-

nology, and a cheaper supply of labor

available to foreign producers, rather

than to concessions.

Under § 232 of the Trade Expansion

Act of 1962, 19 U.S.C. § 1862, the Presi-

dent has authority to limit imports to

protect the national security, but this

authority was also eschewed, for the

reason that national security was only

one of several factors pointing toward

import restrictions.

Il. THESE ARRANGEMENTS ARE

IN SUBSTANCE INTERNATION-

AL AGREEMENTS NEGOTIATED

BY THE PRESIDENT THAT EM-

BODY OBLIGATIONS AND MUST

situations from the export limitation quan-

tity in paragraph 1 above of shipments of

large-diumeter line pipe.

The May 4, 1972 letter of the Japanese steel

producers contains a virtually identical para-

graph.

COMPLY WITH THE PROCEDUR-

AL SAFEGUARDS PRESCRIBED

BY CONGRESS AS A CONDITION

OF EXECUTIVE RESTRAINTS

ON IMPORTS

The contention, accepted by the major-

ity, that the President's action is valid,

notwithstanding its lack of statutory

authorization, is based on two proposi-

tions: (1) the action is within the

President’s independent “foreign af-

fairs” power; and (2) the import re-

straint achieved as a result of the Presi-

dent’s action is not pre-empted by the

Congressional regulatory structure.

Though there is no specific Constitu-

tional clause granting the President

power to conduct foreign affairs, that

power has long been recognized. See

United States v. Curtiss-Wright Export

Corp., 299 U.S. 2304, 320, 57 S.Ct. 216,

81 L.Ed.2d 255 (1936). The President’s

role in shaping foreign policy is rooted

in and enhanced by his ability to com-

municate with foreign governments in

the conduct of diplomacy. See L. Henk-

in, Foreign Affairs and the Constitution

47 (1972). Presumably, diplomacy or-

dinarily comprehends negotiation with

officials of foreign governments, rather

than direct negotiations with foreign

firms as here, but I hesitate to suggest

that this constitutes an absolute limita-

tion on the President's authority. What

has been called the “foreign relations

‘apparatus,’ Henkin, supra, at 46, gath-

ers a variety of commercial information

in foreign countries, and this function

inevitably involves contact with foreign

firms, whether or not their governments

are a conduit for communication.

However, to say that executive com-

munications with a foreign national are

within the President’s foreign affairs

role only opens the door to analysis.

Here the purpose of the communication

was to manage commerce between the

3. Affidavit of Mr. Katz, ¢ 7, JA 115a-117a.

referring to 1605 consideration “by senior of-

ficiala of the responsible agencies of the Gov-

ernment.”

l4a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite an 508 F.24 136 (1974)

United States and the foreign producers

involved—a matter over which Congress

has plenary power conferred by Article

I, § 8. While it would be too narrow a

view of the executive function to say

that foreign commercial relations are

not a proper subject of executive com-

munications with foreign entities, the

executive cannot, through its communi-

cations, manage foreign commerce in a

manner lying outside a comprehensive,

regulatory scheme Congress has enacted

pursuant to its Article I, § 8 power. As

Mr. Justice Jackson said in speaking of

shared Congressional and executive pow-

ers:

When the President takes measures

incompatible with the expressed or im-

plied will of Congress, his power is at

its lowest ebb, for then he can rely on-

ly upon his own constitutional powers

Minus any constitutional powers of

Congress over the matter.

Youngstown Sheet & Tube Company v.

Sawyer, 343 U.S. 579, 637, 72 S.Ct. 863,

871, 96 L.Ed. 1153 (1952) (concurring

opinion).

The proper inquiry, then, is whether

the executive action in obtaining the

agreements for stecl import restrictions

comports with the Congressional pro-

gram for forcizn trade, or whether Con-

gress, by occupution of the field of for-

eign import restraints, has precluded

the President's taking action on an in-

dependent basis without complying with

the standards and procedures provided

by Congress as a condition of executive

effectuation of import restraints.

The majority says that the steel im-

port restraints are in harmony with the

Statutory program because they are not

enforcezble in courts of law: they are

Said to be mere precatory expressions

which Congress never intended to cir-

cumscribe by the procedural! reguire-

ments applicable to mandatory import

controls.

This response presents an issue that

focuses on the nature and effect of the

undertakings before us. Turning first

to effect, Presidents may engage in

many activities that have a perceivable

economic impact upon the volume of

commodities imported. The effects vary

in terms of their stability, their specific-

ity, and their duration. At one pole

would lie general Presidential exhorta-

tions—say, to consumers to “Buy Amer-

ican”--or general alarms, announcing

that protective legislation will be sought

if imports are not contained. Such ap-

peals are valid even though they may

have the effect of inhibiting some mar-

ket behavior, and no one would view

them as‘prohibited by even the strongest

Congressional “free trade” legislation.

At the other extreme is a Presidential

proclamation that foreign-trade com-

mnodities will not be allowed to enter,

which plainly cannot be reconciled with

the existing statutory structure, or le-

gitimated by refecence to some aura of

“inherent” Presidential authority. In

between is a continuum of restrictions.

In my view, the comprehensive statuto-

ry program constrains some but not all

of the activities in this continuum.

Here, the undertakings have an econom-

ie effect that puruilels that of import

quetas proclaimed by thé President.

Turning to its nature, the Presiden-

tial action here gous far beyond a speech

or anunouncement-—even one preceded by

“feelers” to foreign governments to us-

certain how much they will tolerate.

Far from being mere expressions of de-

Sire and intent, there zre sclermn nego-

tiated bilateral understandings.

The arrangements are not unilateral

announcements but the culmination of

bilateral discussions that were sot only

participated in, but initiated by State

Department officials. Although the

fizal letters that embody the specific

Lmitations are astutely couched in a

litany of a “volustary restraint under-

taking” on the part of the foreign steel

producers, the circumstances ate in-

Stinct with bilateral undertaking.

Obviously, fureign firms that have

vigorously marketed their products in

the United States do not voluntarily

withhold procect.on without sume recip-

real aspect indicating that forbearance

15a

506 FEDERAL REPORTER, 2d SERIES

is to their advantage. Here, the under-

takings of the foreign producers rest on

Government assurances that disadvan-

tages would be equalized among pro-

ducers; that the United States Govern-

ment—or at least the not uninfluen-

tial Executive Branch—would not take

or start other measures to limit steel

imperts or increase duties; and that the

transaction would not violate any law

of the United States.‘

The specificity of the limitations im-

posed by the undertakings® also indi-

cates that they were the result of bi-

lateral bargaining and agreement.

Sicnificantly, by the terms of the ar-

rangements, the parties contemplate

cont:suing consultations. The foreign

stecl producers “hold themselves ready

to consult” on any question that may

arise on the interpretation of their

“undertaking.” Does one accompany 4

unilateral declaration of intent with an

offer to “consult” about what he has

declared? When the foreign producers

go on to say that their undertakings are

based on their expectation that the

United States Government will consult

with them on questions that arise, and

the White House releases these letters,

along with a detailed Fact Sheet, as a

“welcome development” that is the pr od-

uct of Executive negotiation can it be

meaningfully denied that there is a re-

ciprocal undertaking by the United

States Government to engage in consulta-

tions with the producers?

The inference of bilateral undertaking

is strengthened when the arrangement

is placed in the context of historical

practice. Export forbearance by foreign

producers has historically been obtained

by Giplomatic exchange of notes between

the United States and foreign govern-

ments. Tne diplomatic notes themselves

have referred to an “agreement” or “gen-

themen’s agreement” to limit shipments.®

4. Leters of the European Economic Com-

munty and United Kingdom associations of

s’erl producers and of the Japan Iron end

Stec| Fxporters’ Association, § 6, JA 1318

aod 1370.

International agreements are not lim-

ited to those embodied in formal docu-

ments, authenticated with ceremony, but

include, as here, the specifying of an ar-

rangement, together with mutual assur-

ances and understandings as to how all

parties will behave in response. To cast

the steel restraints as unilateral under-

takings rather than as agreements is to

exalt form over substance.

The majority asserts that, unlike

agreements negotiated pursuant to stat-

ute, which may be enforced by executive

regulations and ultimately by judicial

sanctions, the steel arrangements are

unenforceable. But it is by no means

clear that the Executive is without sanc-

tions if the producers fail to abide by

the arrangements. The very specificity

of the limitations described by the letters

makes violations easy to detect and the

arrangements easy to enforce. That the

threat of sanctions may carry consid-

erable weight is indicated by the cooper-

ation of the Japanese producers in mak-

ing compensatory adjustments when they

exceeded the quota for 1969 established

by the original agreement. The remedy

wae a reduction of the 1970 quota by the

amount of the overshipment. See Fif-

teenth Annual Report of the President of

the United States on the Trade Agree-

ments Program 28 (1970), Similarly,

when the Japanese producers exceeded

their aggregate quotas for 1972. “consul-

tations” resulted in an agreement by the

Japanese producers to charge the 1972

overshipments against 1973 quotas. See

Seventeenth Annual Report of the Presi-

dent of the United States on the Trade

Agreements Program 44 (1972).

If, as the Government argues, the

President has inherent power to nego

tiate these and similar restraints, I fail

to see why the courts would or should re-

frain from enforcement if sought. Prod-

ucts shipped to the United States in ex-

cess of the restraints might be denied

5. Sce pp. 146-1458 supra.

6. See the 1935 limitation on imports of

Japanese cotton gourls and the 1936 limitation

on imports of Japanese cotton rugs, both de-

scribed in the Appendix, infra.

16a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite as 506 F.2d 130 (1974)

entry, or domestic firms might be en-

joined from handling them.

The common law of international

agreements respects voluntary under-

takings even in the absence of the “con-

sideration” that is required under his-

toric Anglo-American common law for

domestic agreements to be enforceable

in most state courts. If there must be

a diplomatic peppercorn, there is con-

sideration in the fact that the under-

takings by the producers were plainly

not meant to be revocable at will, and

were based on a United States Govern-

ment undertaking for consultation in

the event problems arose and for avoid-

ance of unilateral action against imports

and tariffs. As I earlier indicated, this

undertaking was binding on the Govern-

ment which released and thus acknowl-

edged this aspect of the letter arrange-

ments. Further, principles of promis-

sory estoppel may bind the foreign par-

ties, even in the absence of a finding of

initial consideration, once the Executive

has relied on their representation that

they intend to abandon any right they

may have had to exceed the stated limi-

tations on imports—as it has relied here

by failing to take other Steps to limit

imports. See Dickerson v. Colgrove, 100

U.S. 578, 580, 25 L.Ed. 618 (1879);

Casey v. Galli, 94 U.S. 673, 680, 24 L.

Ed. 168 (1876); Goodman v. Dicker, 83

U.S.App.D.C. 353, 354, 169 F.2d 684, 685

(1948).

Even if judicial enforcement was not

contemplated by the parties, the ar-

rangements still embody a restraint.

Trade agreements between foreign na-

tions, and indeed many international

agreements, may be “enforceable” only

in the sense that they depend for en-

forcement on “good faith” performance

by the parties. That does not make

them any the less solemn agreements,

that are both intended to affect the

conduct of the parties and likely to have

that result.

7. This assumes the court would pass on the

— A court might well dismiss an ac-

t on another ground, like lack of clean

bands.

Moreover, the Executive may call on

non-judicial resources if foreign pro-

ducers violate the arrangements. Ac-

tions that would ordinarily be resisted

as inconsistent with amicable relations,

possibly a call to reduce assistance pro-

grams to the country in question, could

hardly be assailed in the face of foreign

producer bad faith.

A deliberate breach may well have an

outco.ne intermediate between direct ju-

dicial enforcement and complete non-in-

volvement on the part of the judiciary.

Suppose the President directed customs

officials to deny entry to United States

ports of commodities violating the un-

dertaking, and suppose such actions

were sought to be enjoined. It seems to

me entirely likely that the parties might

have contemplated both this executive

action, and the judicial consequence—on

the assumption that the negotiations

were valid—that the courts had no basis

for holding the executive action invalid.?

What is the significance of the reiter-

ation that these undertakings were “‘vol-

untary” on the part of the foreign pro-

ducers? It is commonplace for a busi-

nessman to decide “voluntarily” that he

will enter into an agreement, although

the agreement, once entered into, has

binding effect. The mandate may issue

from a court of law or arbitration. But

the obligations enforced in a court of

commercial good faith and good will

are as rigorous and insistent as a black-

robed judgment. Congress has express-

ly authorized negotiated limitations in

the orderly marketing ayreement provi-

sion, § 352 of the Trade Expansion Act

of 1962. And the national security pro-

vision authorizes restrictions imposed

by Presidential proclamation, which em-

braces the authority to arranze re-

straints to which foreign producers con-

sent?

In my view, the steel quotas before us

present an import restraint having a

composite characteristic, in terms of ef-

8. See p. 155 infra.

9. See pp. 155-156 infra.

17a

506 FEDERAL REPORTER, 2d SERIES

fect and nature, as to be subject to the

procedures and requirements set forth

in the Trade Expansion Act of 1962.

This is the critical question in the

case—where to draw the line. There is

a continuum of restraints, as noted

above. In my view, the critical distine-

tion is between executive actions that

rest wholly in the domain of appeals

and exhortations, and executive actions

that culminate in obligations. A good

faith agreement with the kind of spec-

ificity present here puts an obligation

on the foreign producer, in any realistic

assessment. Accordingly, 1 think the

executive negotiation and acceptance of

these undertakings are activity in a

field that has been preempted by Con-

gress, and can only be engaged in by fol-

lowing the procedures set forth in the

Congressional enactments.

There is only local color, no legal sig-

nificance, in the fact that in this case

the Chairmen of key House and Senate

Committees concerned with regulation

of international trade voiced their ap-

10. Defendants cite a statement in the con-

ference report accompanying the first national

security provision that “it is the wnderstand-

ing of all the conferees, both House and Sen-

ate, that it in not intemled to, and does not,

diminish or impair any authority the Presi-

dent may hare uwler any other law.” ILR.

Report No. 745, 4th Cong., Ist Sew. 6

(1955) (emphasis ackdesd).

The Conference Keport. however, continues:

for example, it was emphasized that if the

"President sees fit to stockpile eritieal ma-

terials under any other law that action may

be taken wholly sxicde from the authority

contained in this amendment.

The circumapection of Congress, in avoiding

any possible contention that it intended to

limit other authority of the President, like

the stockpiling of eritien| materials, cannot

fuirly be stretched into an acquiescence in an

inherent general authority to limit imports.

The same approach undercuts defendants”

reliance on a statement in the House Report

accompanying the Trade Agreements Exten-

sion Act of 1953S, in whieh the national se¢-

curity provision was reenacted with modifiea-

glen: *. « « the President may alxo take

any action available to him under any of his

other powers.” I1.K.Rep.No.1761, Soth Cong..

2d Sexs. 14 (195%). The entire sentence in

the House Report reads:

proval on the occasion of the White

House announcement of the undertak-

ings. The Government does not con-

tend, and I do not see how it could right-

fully contend, that such participation by

particular Congressmen can invest the

President with executive authority not

otherwise possessed, or constitute a le-

gally decisive def inition of the demarca-

tion between the zone that belongs to

Congress as a whole and that which be-

long solely to the President. .

1 am unimpressed with defendants’

citation of statements from the legisla-

tive history of various trade provi-

sions as indicating a legislative intent

that agreements could be reached with-

out prescribed procedures.

If the entire legislative history is ap-

praised, weight must be given to the two

secasions—in the passage of the 1962

law, and again in 1971—when Congress

has declined to give the President au-

thorization to impose import restraints

without observing procedural require-

ments.' However, the legislative his-

In emergencies and for such time ns necen-

anry. the President may siso take any action

available to him under any of his other pow-

ers. (Emphasis addled.)

Jiefendants have never attempted to charac

terize the executive netion taken here a te

sponse to an emergency. The foregoing lan-

guage seems irrelevant to the problems before

us.

11. In 1962 the Senate approved a bill with a

broad authority in the President to limit im-

ports, in this provision (denominated as &

253) :

Notwithstanding any other provision of law,

the President may, when he finds it in the

national interest, proclaim with respect to

any article imported into the United

States—

. . . . +.

(3) the imposition of such other import

restrictions as be finia necessary. ILR.

11970, Sith Cong. 24 Sexe, (12).

This provision did not survive im the Trade

Expansion Act of 1962 because it wan deleted

in Conference. Ser IL. .Rep.No.2as, sTth

Cong.. 2d Seas. 1% (172).

The other proposal to enlarge Prexidentin!

authority to restrict imports emerged during

consideration of the Revenue Act of 1971.

New quota authority was proposed by tLe

ATI LD EAD 1 he ODEN ee

18a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite ax 506 F.2d 136 (1974)

tory, as conventionally ascertained, does

not give an independent view of Con-

gressional intent, and this must be dis-

cerned from basic analysis of the stat-

utes passed by Congress. The deep-

seated and comprehensive Congressional

insistence on. procedural safeguards can

best be appreciated in the light of per-

tinent history.

Ill. COMPREHENSIVE ENACT-

MENTS OCCUPYING THE

FIELD OF PRESIDENTIAL AC-

TIONS RESULTING IN .OBLIGA-

TORY IMPORTS RESTRAINTS

The ascertainment of pertinent legis-

lative intent depends not only on express

wording of the Trade Expznsion Act of

1962, and specific notations in its im-

mediate legislative history, but on its

character as a culmination of compre-

hensive enactments on the subject of ex-

ecutive actions resulting in obligatory

foreign trade restraints, including

agreements by the executive regarding

imports. The Congressional pattern

makes clear that such executive action

is tolerated only if it is accompanied

and safeguarded by procedural protec-

tions that ensure a right of comment by

those whose interests may be affected.

This not only cvoids the vice of com-

plete secrecy within the Government, it

also avoids the vice of cozy confidenti-

ality, in which the public is informed

only when the matter is a fait accompli.

1. Gencral legislation on tariffs and

trade agreements

A. The Tariff Act of 1930, 46 Stat.

590, enacted a comprehensive schedule

of duties. It gave the President the

power to adjust dutics to equalize dif-

ferences in costs of production between

domestic and foreign firms—but only

after a Tariff Commission investigation

Senate to mect balance-of-~nyments emergen-

cies, which were defined with a breadth suf-

ficient to justify the present quotas. Again,

however, the proposal was rejected during

Jlouxe-Senute Conference. ILR.Rep.No.708,

W2A Conz., Int Sean. 54 (1971).

12. Sertion 26, 46 Stat. at 701.

$2 F 26—16v

and recommendation."* This indicates

the Congressional practice of regarding

the regulation of trade as its own prov-

ince. Certain authority was passed to

the President, but this was limited both

in scope and procedurally. Certain fac-

tual findings must be made by an inde-

pendent body before the Exccutive can

act, even when its goal is the protection

of domestic industry.

B. The 1934 amendments to the Tar-

iff Act of 1930, 48 Stat. 943, delegated

to the President a then-unprecedented

authority to reduce tariff barriers

through trade agreements with foreign

governments “whenever he finds zs a

fact that any existing duties or import

restrictions of the United States or any

foreign country are unduly burdening

and restricting the foreign trade of the

United States.” This authority was re-

newed some nine times and then set

forth in the Trade Expansion Act of

1962.43 It represents Congress's under-

standing that the Executive's power in

regard to the negotiation of trade agree-

ments derives from statutory authoriza-

tion by Congress.

In drafting the 1962 Act Congress un-

dertook a comprehensive review of the

international trade program. Section

201(a)'* authorized the President to en-

ter into trade agreements with foreign

countries and gave him not only the

power to adjust tariffs, within the lim-

its established by § 201(b), but also the

power to modify existing or impose ad-

ditional non-tariff import restrictioas,

including quotas."* However, before «n-

tering into negotiations the President

was required to publish a list of com-

modities which would be the subject of

the proposed agreement.'® On the basis

of this list, the Tariff Commission was

to conduct an investigation, including

the holding of public hearings, and to

13. 19 U.S.C. § 1821(a).

14. 19 U.S.C. § 1821 (a).

15. See S.Rep.No.2059, Sith Cong., 2 Sess.

7 (1962); ILK.Rep.Nu.is8is, Sith Cong. 2d

Sess. 2 (1962).

16. 19 U.S.C. § 1541.

19a

' $06 FEDERAL REPORTER, 2d SERIES

advise the President of the “probable

economic effect of modifications.” "7

The President was also to seek advice

from other executive departments.’*

Finally, the President was obliged ‘to

“afford an opportunity for any interest-

ed person to present his views” by des-

ignating, if necessary, an additional

agency or an intra-agency committee to

hold public hearings.®

The President’s general authority to

enter into new trade agreements under

§ 201 of the Trade Expansion Act ex-

pired in July, 1967, and has not been

renewed. What has survived is the

statute’s pattern, that is, a legislative

recognition of the need for specified

regulatory capability in the President,

coupled with procedural requirements

of investigations and hearings.

2. Specific import restrictions

Congress has itself established spe

cific restrictions on the import of cer-

tain commocities.?¢

It has also delegated to the President

discretionary authority to impose im-

port restrictions om agricultural com-

modities *4—but only after notification

by the Secretary of Agriculture that -

articles are being or are practically cer-

tain of being imported in such quan-

tities as to “render ineffective, or mate-

rially interfere with” agricultural price

support programs, and only after a

Tariff Commission investigation that

includes hearings.

Section 204 of the Agricultural Act

of 1956, 7 U.S.C. § 1854, authorizes the

President to negotiate agreements re-

stricting the import of agricultural

goods and textiles. Unlike prior au-

thorizations of Presidential action, this

17. 19 T.S.C. § 1941.

18. 19 U.S.C. § 1842.

iy. 19 U.S.C. 3 1843.

20. EF. g., the Surar Act of 1948, ch. 519, § 1

et seq., 61 Stat. 922-9.34, as amended, 7 USC.

$ 1100 et seq.;

TR Stat. 59%.

20. Section 22(b) of the Agricultural Adjust-

ment Act of 1932, as added, Act of August 24,

the Meat Act of 1964, § 2,

section requires no procedures to be

followed in its exercise. However, this

feature, of lack of required procedures,

is a signal departure from the pattern

of trade legislation, as has been re-

marked by members of Congress and |

commentators,?? and is limited to cer-

tain commodities.

3. General import restrictions

Congress has passed not only legisla-

tion for specific commodities, but also

general provisions available to the

President in accomplishing restrictions

on the import of any commodity. These

provisions, however, retain procedural

safeguards to ensure against Executive

finalization of restraints in secrecy.

a. By prociamation under the escape

clause.

Without reviewing in detail the origin

of the escape clause in the 1934 legisla-

; tion and the provision of requisite pro-

cedures in § 7 of the Trade Agreements

Extension Act of 1951, 65 Stat. 72, it

is instructive to examine the structure

of § 301 of the Trade Expansion Act of

1962, 19 U.S.C. § 1901, which is the cur-

rent embodiment of this clause. Sec-

tion 201(b) provides that the Tariff

Commission, in certain circumstances,

is to conduct an investigation to deter-

mine whether there exists or is threat-

ened, “serious injury” to domestic in-

dustry caused “in major part” by trade

agreement concessions. Section 301(e)

provides ,that the Commission, if it

makes such a determination, shall rec-

ommend a tariff increae or other import

restriction “which is necessary to pre-

vent or remedy: such injury.” The

President may by proclamation increase

or impose import restrictions under this

1935, ch. Gil, § 21, 49 Stat. 773, as ameruled,

7 USC. § €24(b).

22. See, ¢. 9. Mearings on H.R. 9900 Lefore

the House Coinmittee on Ways ond Means,

87th Cong., 2d Sess. 2553-55 (1962) ; M-D.H.

Smith, Voluntary Export Quotas and US.

Trade Policy—A New Nowtariff Barrier, 5

Law & Policy in Intl. Iusiness 10,

(1973).

21-32

ae |

Se RE ey SO Se eee eee

‘anak,

Ao iawn eotietd aie pats

~

>

ee

wee 2) Oe,

SAA Eh ROMEO Hee 8 Bs

20a

, CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite an 06 F.24 126 (1974)

clause, but only after he receives an

“affirmative finding” by the Commis-

sion. Section 351(a) of the Trade Ex-

pansion Act of 1962, 19 U.S.C. § 1981

(a).

b. Orderly marketing agreements.

Of particular pertinence is the alter-

native provision in § 352 of the Trade

Expansion Act.23 It provides that the

President—-after receiving the Tariff

Commission’s affirmative finding under

§ 301(b), and in licu of issuing a proc-

lamation imposing duty or other import

restriction under § 351—may “negotiate

international agreements with foreign

countries limiting the export from such

countries and the import into the United

States of the article causing or threaten-

ing to cause serious injury to [a domes-

tic) industry, whenever he determines

that such action would be more appro-

priate to prevent or remedy serious in-

jury to such industry than action under”

§ 351(a)(1). Here again there is indi-

cation of Congressional authorization as

underpinning for Executive power to

negotiate trade agreements, including

those restricting importé.

ce. National security provision.

Another provision for import restric-

tions, applicable to any commodity, is

the “national security provision,” which

originated in the, 1950’s*4 and was

transposed into § 232 of the Trade Ex-

pansion Act of 1962, 19 U.S.C. § 1862.

The term “national security” is given

an expansive definition in § 232(c) of

‘the Act,?5 which provides in part:

In the administration of this section,

the Director and the President shall

further recognize the close relation

of the econornic welfare of the Nation

to our national security, and shall

take into consideration the impact of

foreign competition on the economic

23. Codifiel in 19 U.S.C. § 1952, and eap-

tioned “Orderly marketing agreements.”

24. In Sertion 7 of the Trade Agreements Ex-

tension Act of 1955, GD Stat. 162. Tis was

niodified by Section 8 of the Trade Azgree-

tients Extension Act of 1058, 72 Stat. 673.

, welfare of individual doméstic indus-

tries; and any substantial unemploy-

ment, decrease in revenues of govern-

ment, loss of skills or investment, or

other serious effects resulting from

the displacement of any domestic

products by excessive imports shall be

considered, without excluding other

factors, in determining whether such

weakening of our internal economy

may impair the national security.

The President may adjust imports un-

der this provision, but only after the

Director .of the Office of Emergency

Planning conducts an investigation and

reports that continued importation of a

commodity is a threat to national securi-

ty. Section 232(d), 19 U.S.C. § 1862

(d), requires publication of a report of

each investigation made by the Director

and requires the Director to “publish

procedural regulations to give effect to

the authority conferred on him by sub-

section (b).” These regulations were

intended to provide for public hearings

except where it would be impracticable

or injurious to the national security to

do so.?6 :

Existing regulations of the Office of

Emergency Planning provide that public

notice of an investigation shall appear

in the Federal Register unless “contrary

to the interests of national defense,”

and that interested parties shall have

an opportunity to make written presen-

tations, to inspect the presentations

filed by other .parties, and to submit

rebuttal presentations. The Director al-

so must “seck information or advice

from appropriate Government depart-

ments and agencies” and may, “when he

deems it appropriate,” hold public hear-

ings.?27

The national security clause repre-

sents another Congressional action to

authorize Executive adjustment of im-

ports in times of domestic crisis, but,

25. 19 U.S.C. § 1862(c).

26. ILR.Kep.No.1761, 85th Cong., 2d Sess. 15

(195s).

27. O.L.I'-Reg.NoA, Sec. 1(b), Tle). 70;

SA C.F.R. 97 (1073).

OLA OO NE eS

2la

506 FEDERAL REPORTER, 2¢ SERIES

once again, the Executive is not per-

mitted to act in secrecy, without regard

to interests that might be adversely af-

fected.

Congress has enacted a comprehensive

statutory scheme that identifies the Ex-

ecutive’s role in shaping the terms of

foreign trade. In doing so Congress has

followed a well-established practice of

combining broad executive discretion

with procedural protection for those

who may be effected by its exercise.**

The only exception—in 7 U.S.C. § 1854,

which permits the President to negoti-

ate import restrictions on textiles and

agricultural products without mandatory

procedural prerequisites—proves the

rule.

When the President’s tariff adjust-

ment authority, conferred by the Tariff

Act of 1922, was challenged as an un-

constitutional delegation of legislative

power, the prerequisite of a Tarif{ Com-

mission investigation and hearing was

a prominent feature noted by the Su-

preme Court in its rejection of the chal-

lenge. See J. W. Hampton, Jr. & Com-

pany v. United States, 276 U.S. 394, 405,

48 S.Ct. 348, 72 L.Ed. 624 (1928).*9

The procedures by which Congress

has circumscribed executive power to

shape the terms of forcign trade are no

mere technicalities. While freeing the

making of internaticnal trade policy

from the encumbrances of the legisla-

tive process, Congress has sought to

maintain public ventilation of the issues

relevant to policy formation. To say,

as the majority opinion does, that the

28. Compare Natural Gas Act, § 5, 15 U.S.C.

§ ZITA (FPPC whall determine “jast and rea-

sonable rute{s]” after bearing) ; Federal

Aviation Act of 1958, § 491, 49 U.S.C. § 1371

(Beard may ixsue license to engage in air

fransportation if it finds, after hearing, that

transportation is “required by the public

convenience ond necessity.”); Communica-

tions Act of 1934, § 209, 47 USC. § 309

(hearings may be heid on licenses to be grant-

ed in the “public i st, convenience, and

nevessity.”).

29. Professor Davis has suggested that 2

modern “delegation doctrive” should embody

steel arrangements workéd out by the

President fall within an inherent Pres-

idential authority not preempted by

Congress is to allow the circumvention

of these procedural safeguards when-

ever that suits the Executive. If de-

tailed letters of intent are no different

from genera! appeals to industry, the

President would be within his authority

to enter into such [etters-of-intent ar-

rangements with all industry on every

aspect of domestic, as well as foreign

commerce. This is dangerous doctrine.

Whatever may be the President's pre-

rogative when Congress has not spoken,

it ig untenable, in my view, to assert a

continuing inherent Executive authority

to negotiate import restraints outside

and in disregard of a consistent and

comprehensive Congressional pattern for

protective procedures.

IV. PRIOR EXECUTIVE PRACTICE

The Government and the foreign stecl

producers urge on the court that Presi-

dents have long negotiated restraints

similar to the stecl quotas without spe-

cific statutory authority, and that this

tradition validates the President's action

here. An appeal to past executive prac-

tice is not without relevance, but it is

not decisive and often raises as many

questions as it purports to answer.

So far as this case is corcerned, it

suffices to say that while defendants

cite examples of import restraints, de-

scribed more fully in the Appendix,

they fail to present a history of import

restraints consistently negotiated by the

President without regard for the pro-

a quest for safeguarls azainst arbitrary ar-

tion, including open procedures where precise

standards limiting executive discretion - are

not available. KC. Davis, Administrative

Law Text § 2.08 at $4 (Sd ed. 1972). Com

pare Yukus v. United States, B21 US. 414,

433 (6, Gt S.Ct. Ga, 38 LFA, Sot (i944);

Amalgamated Mest Cutters and sutcner

Workmen of North America, AFL-Ci0 ¥.

Connally, 337 F.Supp. 737, 759-762 (D.DCL.,

3-jadge court, 1971).

30. Wilderness Society v. Morton, 156 U.S.

App.D.C. 121, 144, 479 F.2¢ 842, 865 (1973).

eit ot Ome H EA ee Be

22a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite ax 508 F.2d 136 (1974) °

cadares established by Congress and so

represented to the Congress.

In the seventeen Annual Reports on

the Trade Agreements Program that the

President has submitted to Congress

every year since 1957, there is no indica-

tion that import limitations on foreign

products were sought by the President

of the United States acting outside stat-

utory authority. The only exception is

that of the steel import quotas involved

in the case at bar, described in the re-

ports of 1968 through 1971. Congress

cannot fairly be said to have acquiesced

in an executive practice perceivable only

dimly if at all.

Some of the examples that the Gov-

ernment cites describe executive action

colored with statutory authority. This

characterization fairly describes the

voluntary oi! import program of 1957,

the 1936 limitation on export of Cana-

dian red cedar shingles, and six of the

ten commodity limitations cited in Con-

gressional testimony of Secretary of

State Dulles.44 Taken as a whole, the

examples do not show that the Presi-

dent has consistently asserted an extra-

statutory authority to regulate imports

by agreements with foreign govern-

ments or firms.

Finally, all the import restraints cited

by the defendants were obtained before

the enactment of the Trade Expansion

Act of 1962. When it enacted the Trade

Expansion Act of 1962, Congress had an

opportunity to review all of the Presi-

dent’s power to regulate imports. In

my view, the Act has scope as a Con-

gressional preemption which “occupies

the field” of import restrictions. This

approach is heightened by the fact the

1962 Act included authority under § 201

that was expressly limited to run to

June 30, 1967. Congress deliberately

contracted Presidential latitude by per-

mitting the expiration of that authority,

as of July 1, 1967, notwithstanding Ex-

ecutive requests for extension.

V. DISPOSITION

This case must be decided as if the

complaint had never contained a claim

under the antitrust laws. However, in

considering whether this is a claim on

which relief may be given, I would take

into account that relief in adjudicating

invalidity may be wrought so as not to

engender injustice in any future claim

under the antitrust laws based on the

conduct of the foreign producers. Any

defense foreign producers ‘might raise

in future actions of reliance upon au-

thoritative * repregentations by govern-

ment officials ah an executive purtici-

pation in the arrangement insulated

them from antitrust liability would be

undercut by a conclusion that executive

participation is not authorized.

When a court is asked for a declara-

tory judgment—here that executive ac-

tion restricting steel imports is invalid

—it may act on the basis of equitable

principles, and may respond to broad

public interest concerns beyond those

articulated by the parties. United

States v. Morgan, 307 U.S. 183, 194, 59

S.Ct. 795, 83 L.Fd. 1211 (1959). In this

extraordinary situation, the steel pro- -

ducers have since 1969 engaged in ac-

tions designed to further an arrange-

ment that all assumed was lawfuly enter-

ed into. The need to protect the reliance

interests of these parties is highlighted

by the complexity and the closeness of

the issue of the validity of executive ac-

tion. Compare Blair v. Freeman, 125 U.

S.App.D.C. 207, 217, 370 F.2d 229, 239

(19v6). Accordingly, in my view, a dec-

laration that executive participation in

the agreements is invalid should be giv-

en prospective effect only. This would

permit courts to rule, should the question

arise, that liabilitics of the parties for

acts prior to the effective date of the

judgment be determined as if executive

participation in the agreements were va!-

id. Compare Zuber v. Allen, 131 U.S.

App.D.C. 109, 124-125, .402 F.2d 660,

31. Hearings on Renewal of Trade Agreements Act Before the House Committee on Ways and

Means, &5th Cong., 2d Sess. 399 (1958).

23a

506 FEDERAL REPORTER, 2d SERIES

675-676 (1968), aff'd, 396 U.S. 168, 90

S.Ct. 314, 24 L.Ed.2d 345 (1969).

It remains to consider the prospective

effect that I would give a holding that

the action here was outside Executive

authority. It is likely that the Execu-

tive would have had authority to invoke

the national security clause—if minded

to do so after following its hearing pro-

cedures and appraising the comments of

all affected interests. Here the Execu-

tive has failed to follow the procedures

mandated by Congress. In reviewing

the decision of an administrative agency

that has not exceeded its powers but has

failed to follow due procedures, we have,

in appropriate cases, remanded the ac-

tion to the agency to allow subsequent

correction of the deficiency, without de-

stroying the original decision. See Ken-

necott Copper Corporation v. EPA, 149

U.S.App.D.C. 221, 462 F.2d 846 (1972);

International Harvester Company Vv.

Ruckelshaus, 155 U.S.App.D.C. 411, 478

F.2d 615 (1973); Portland Cement As-

sociation v. Ruckelshaus, 158 U.S.App.

D.C. 308, 486 F.2d 375 Rig cert.

denicd, 417 U.S. 921, 94 S.Ct. 2628, 41

L.Ec.2d 226 (1974). I believe that an

ana'ogous disposition would be appro-

priate for the present case. I would

withhold the court’s mandate for a peri-

od of 90 days. This would permit the

President, if he should conclude that it

is now desirable to limit steel imports

and that either the escape clause or the

national security provision is applicable,

to invoke their procedures.

Alternatively, the President may wish

to seck legislation authorizing him to

negotiate the kind of voluntary import

restraints at issue here, or perhaps

broader import control authority. The

terms and history of any such legisla-

tion might support a ruling of a rati-

fication of the authority of the Presi-

dent to achieve the steel arrangements

before us. I would consider it appropri-

ate to entertain an application by the

Government for this court to stay its

mandate so as to provide a reasonable

opportunity to consider validating legis-

lation.

Although I would decide this case

against the executive, I am sensitive to

the delicacy of the issue of preemption.

Where, as here, the power of Congress

to regulate a matter committed express-

ly to it by the Constitution is at stake,

a close case should be decided so as to

protect Congressional power. But it is

likewise appropriate, in a matter so

laced with delicate international rela-

tionships, for the court to shun a Pro-

crustean rigidity in deference to possi-

ble clarification or correction by the

President and Congress together.

Appendix: Executive Limitation of

Imports Outside Statutory

Authority

The Government and the domestic

steel producers cite four examples in sup-

port of their contention that there exists

a “long-standing executive practice” of

obtaining import ‘restrictions without

resort to any statutory authority. I will

discuss each of these seriatim.

I. Restrictions on Japanese Imports

During 1930 Decade

On October 12, 1935, the State Depart-

ment announced that Japanese exporters

were restrictings their shipments of cot-

ton piece gous ‘to the Philippine Islands

(then an American protectorate) to a

fixed annf¥piquota, “provided the re is

no nee the Philippine tariff.” 3

Foreign Ations of the United States,

1935, at 1008-09 (1953). Although the

Department's release

rangement as unt laterd

nese manufacturers,4

talks during the

(VS

fix months

preg

between Department officials and the

Japanese ambassador refer to the ar-

rangement fis un “agreeme nt” or a “gen-

tlemen’s agreement.” See 3 Foreign

Relations of the United States, 1935,

supra, at 951-1048.

On December 21, 1935, similar restric-

tions on the export of Japanese cotton

goods to the United States were an-

nounced. 13 State Department Press

bie UN eS

24a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite ax 506 F.2d 136 (1974)

Releases 581 (1935). The Department’s

press release stated that the Japanese

ambassador was responding to State

Department suggestions that “some

agreement be reached providing for

voluntary control by Japanese export-

ers.”

On April 4, 1936, the State Depart-

ment announced that Japanese exporters

of cotton rugs had agreed to observe

annual quotas on specific products. 14

State Department Press Releases 291

(1936).

The foregoing arrangements were all

negotiated through regular diplomatic

channels rather than by direct govern-

ment-to-industry communication.

II. Limitation on Canadian

Red Cedar Shingles, 1936

The defendants also cite a 1936 state-

ment by Senator Nye. The statement

describes an agreement with Canada to

limit the import of Canadian red cedar

shingles to 255% of the domestic con-

sumption, see 80 Cong.Rec. 9107-08

(1936), but it adverts to the Reciprocal

Trade Agreements Act of 1934, 48 Stat.

943, which empowers the President to

“enter into foreign trade agreements

with foreign governments or instrumen-

talities thereof” and to proclaim “such

additional import restrictions . .

as are required or appropriate to carry

out any foreign trade agreement the

President has entered into.”

III. The List Presented by

Secretary of State Dulles

Voluntary restraints pertaining to ten

commodities were cited by Sceretary of

State Dulles in testimony before the

House Ways and Means Committee, dur-

ing its consideration of the Trade Agree-

ments Extension Act of 1958. Hearings

on Renewal of Trade Agrecments Act

Ecfore the House Committee on

Ways and Means, 85th Cong., 2d Sess.

399 (1958). The commodities are simply

listed as “items on which voluntary quo-

tas have been imposed since January 1,

1953, by exporting countries.” No in-

formation is given as to the character of

the restraints, the dates on which they

were imposed, or their duration. More-

over, the President appears to have acted

in this case within the broad authority

given him by the Trade Agreements Ex-

tension Acts of 1951, 1953 and 1955. The

President was empowered in pursuance

of trade agreements made under these

Acts to impose additional imports re-

strictions as are appropriate to carry out

any foreign trade agreement, as well as

to implement restrictions under the es-

cape clause, or, after 1955, the national

security provision.

Procedural requirements were attach-

ed to the exercise of these statutory pow-

ers, and with respect to most of the com-

modities these requirements were sub-

stantially met. (Sce Table 1.) All but

two of the commodities (items 5 & 7)

were the subject of Tariff Commission

investigation and hearings, The Com-

mission recommended relief on six of

the eight commodities which were the

subject of an investigation (items 1, 3,

4, 6, 9, 10), and the President proclaim-

ed restrictions on five of these (items 1,

3, 4, 6, 9).

The pattern is not entirely consistent.

Voluntary restraints may have been

negotiated on hardwood, plywood, sewing

machines, toyo cloth caps, and tuna with-

out Commission action. Yet the evi-

dence taken as a whole negatives the as-

sumption of a deliberate, advertent disre-

gard of statutory procedures, predicated

on an asserted inherent executive author-

ity untrammeled by Congressional ac-

tion. In my view, the information pro-

vided to Congress was not sufficient to

put Congress on notice that Presidential

power to act outside statutory authority

was being claimed, and it is insufficient

now to establish Congressional acqui-

escence.

25a

506 FEDERAL REPORTER, 2d SERIES

IV. 1956 Agreement With Japan

Limiting Textile Imports

On May 16, 1956, the United States

concluded an agreement with Japan lim-

iting the import of Japanese textiles.

The agreement resulted from communi-

cations between the governments since

1955, a period during which domestic

manufacturers had expressed great con-

cern about Japanese textile imports and

had filed several petitions before the

Tariff Commission! for escape clause

relief. oe

At approximately the same time, pro-

posed legislation that eventudlly became

§ 204 of the Agricultural Act of 1956, 70

Stat. 188, was pending in Congress. It

would authorize the President to negoti-

ate with foreign governments in order to

obtain agreements limiting imports of

agricultural commodities or textile prod-

ucts, and to issue regulations governing

the entry or withdrawal from warchouse

of products subject to suck agreements.

See H.R.Report No.1986, 84th Cong.

2d Sess, 15 (1956). The legislation that

included this jirovision was passed by

both houses of Congress, but was vetoed

because of its commodity price support

provisions. See 102 Cong.Rec. 6107

(Senate passage), 6158 (House passage),

6317-18 (President’s veto message)

(1956).

An identical provision was incorporat-

ed in legislation introduced in the House

after the veto, see 102 Cong.Rec. 7229

(1956); H.R.Rep.No.2077, 84th Cong.,

2d Sess, 8-9 (1956), and its applicability

to the then-prevailing concern about

Japanese textile imports was pointed out

by Representative Cooley, House sponsor

of the bill. See 102 Cong.Rec. 7346

(1956). Legislation delegating the new

authority was passed by both houses ?

and was signed into law on May 28,

1956.3 :

{. The negotiation of the agreement and its

terms are deacribed in W. Hunsberger, Japan

and the United States in World Trade 317-22

(190).

2. Kee 102 Cong.Rec. 7450 (House passaze),

8514 (Senate passage). The Conterence Re-

The agreement with the Japenese gov-

ernment was concluded eight days be-

. fore the authorizing legislation received

final approval, but the quotas were not

announced publicly until January, 1957.

In context, the exchange of notes was a

de facto interchange in contemplation of

the de jure executive authority that

Congress was about to provide. To all

public appearances the textile quotas

were not established until after the au-

thorizing legislation had been enacted.

Subsequent to 1956 the statute has been

represented to Congress, and cited by

commentators, as the authority for the

agreement. See Hearings on H.R. 9900

Before the House Committee on Ways

and Means, 87th Cong., 2d Sess. 3794

(1962) (testimony of Secretary of Com-

merce Hodges); M.D.H. Smith, Volun-

tary Export Quotas and U. S. Trade

Policy—A New Nontariff Barrier, 5

Law & Policy in Int'l. Business 10, 31-32

(1973).

V. Voluntary Quotas on Oil

Imports

In July, 1954, President Eisenhower

established an Advisory Committee on

Energy Supplies ard Resources Policy

to study the devclopraent of enerzy re-

sources. See Report of the Presidential

Advisory Committce on Energy Supplies

and Resources Policy, 1955-56, February

26, 1955, quoted in Cabinct Task Force

on Oil Import Control, The Oil Import

Question 163 (1970) (hereinafter cited

as Oil Import Question). Ia November,

1954, a task force appointed by the Com-

mittee concluded that there was a pos-

sible threat to national security in “re-

liance beyond present relative levels on

foreign crude oil to supply domestic mar-

kets” and recommended that the existing

ratio of imports to domestic production

be maintained by “voluntary, individual

action of the importing companies.” Oil

port on the legislation, which resolved differ-

ences between the houses not material here,

was adopted on May 23. Sce 102 Cong.Rec.

8654 (Senate passage), 8532 (Tiouxe passage).

3. See 102 Cong.Rec. 9799 (Presidential a>

proval).

(peers cers a mk

26a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite ax 506 F.2d 136 (1974)

Import Question 171 (emphasis added).

The Advisory Committee, in its report to

the President in February, 1955, follow-

ed these recommendations. Oil Import

Question 165-166. It is unclear precisely

what, if any, government action follow-

ed from the Committee report. It was

apparently limited to exhortations to oil-

importing companies to exercise re-

straint. First Annual Report on the Op-

eration of the Trade Agreements Pro-

gram, H.Doc.No.93, 85th Cong., 1st Sess.

10 (1957).

The national security provision was

enacted in June, 1955, in part because of

concern with the President's authority to

deal with oil imports. On October 17,

1956, the Presidential Advisory Com-

mittee renewed its recommendation to

the President that the 1954 ratio be

maintained in all but one region of the

United States, but again recommended

only voluntary, individual action. Oil

Import Question 176-78. On October 22,

however, the Director of the Office of

Defense Mobilization held hearings in

response to a pctition that had been filed

by petroleum companies in August, 1956,

requesting action under the national se-

curity provision. At the hearing, the

Director received views supporting and

opposing Section 7 action to limit oil im-

ports. On April 24, 1957, he advised the

President that “{p]lursuant to section 7

of the Trade Agreements Extension Act

of 1955 I have reason to believe

that crude oil is being imported into the

U.S. in such quantities as to threaten

to impair the national security.” Oil Im-

port Questions 183, 194.

On June 26, the President established

a Special Cabinet Committee to Investi-

gate Crude Oil Imports, which on July

29-reported with a plan for liraiting oil

imports into each reg.on, with import

volume limits for individual companies

to be determined and administered by

the Department of the Interior and the

Office of Defense Mobilization. The

4 This conclusion ix strengthened by a later

reprceeatation to Congress that the President's

ete were taken pursuant to the national

“"SMty provision. See [ecarings on Resewal

taf 24-41

Committce’s proposal contemplated vol-

untary compliance by the petroleum com-

panies, but concluded that if no such com-

pliance was forthcoming the President

should “find that there is a threat to the

national security within the meaning of

Section 7. -” Oil Import Questioa

186. The President immediately direct-

ed the Secretary of the Interior and the

Director of O.D.M. to implement the

Committee’s proposal.

The Voluntary Oil Import Program

thus established continued for nearly

two years. The Presidert’s Special Com-

mittee maintained oversight and, in Jcn-

uary, 1959, requested that the Director

of the Office of Civil and Defense Mo-

bilization initiate another investigation.

On February 27, 1959, tae Director made

another finding of harm to national se-

curity, and on March 16 the President

proclaimed mandatory quotas, invoking

his section 7 powers. Oil Import Ques-

tion 195-203.

Although the defendants cite the oil

program cf 1957 as an illustration of

Presidential establishment of “volun-

tary” limitation of imports, without the

aid of statutory authority, the program

was created only after the Director of

O.D.M. held hearings and made the find-

ing mandated by section 7. The Special

Committce’s plan and the President's ap-

proval of it were reported to Congress

as actions under the national security

amendment to the trade acts. See Sec-

ond Annual! Report on the Trade Agres-

ments Program, H.Doc.No.534, 85th

Cong., 2d Sess. 8 (1955); Third Annual

Report of the President of the United

States on the Trade Agreements Pro-

gram 12 (1959). The President did not

invoke the full extent of his section 7

authority, but, having complied with the

Statutory procedures, the President was

entitled to exercise less than the full

measure of his statutory authority.* The

voluntary program limiting oil imports

of Trade Agreements Act Before the House

Committee on Ways and Means, Sith Couz,

Ist Sess. 2685 (1958) (statement of Deputy

Under Secretury of State C. Douglas Dillon).

27a

CONSUMERS UNION OF U. S., INC. v. KISSINGER

Cite as 500 F.2d 136 (1974)

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29a

NION OF U.S., INC. v. KISSINGER

Cite as 6 F.2d 130 (1974)

CONSUMERS U

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