Presidential Authority Under the Trade Expansion Act to

Adjust Shipments of Oil to and from Puerto Rico

Neither the uniformity of duties clause of the Constitution, Art. I, § 8, cl. 1, nor the port 

preference clause, Art. I, § 9, cl. 6, require uniformity o f import quotas between the 

mainland and Puerto Rico.

The President has authority under § 232(b) of the Trade Expansion Act o f 1962 to impose 

separate quantitative restrictions on oil imports into the U.S. mainland and Puerto Rico, 

respectively.

Any system of separate quotas imposed under the Trade Expansion Act must be justified 

by national security concerns.

By implication, § 232(b) authorizes the President to impose quotas on shipments of oil 

from Puerto Rico to the U.S. mainland in order to make the separate import quotas 

effective.

February 6, 1980

MEMORANDUM OPINION FOR THE 

GENERAL COUNSEL, DEPARTM ENT OF THE TREASURY,

AND THE

GENERAL COUNSEL, DEPARTM ENT OF ENERGY

This responds to your request for our opinion on several questions 

relating to the importation of oil through Puerto Rico. Section 232(b) 

of the Trade Expansion Act of 1962, 19 U.S.C. § 1862(b), authorizes the 

President to “take such action . . . as he deems necessary to adjust the 

imports of [an] article . . . so that such imports will not threaten to 

impair the national security. . . The President may do so after the 

Secretary of the Treasury has completed an investigation and has concluded that the article “is being imported into the United States in such 

quantities or under such circumstances as to threaten to impair the 

national security. . . On March 14, 1979, the Secretary of the Treasury completed such a report and concluded that imports of oil and 

certain oil products threatened to impair the national security. See 44 

Fed. Reg. 18818 (1979). On July 15, 1979, the President announced that 

he would impose an oil import quota. See 15 Weekly Comp. Pres. Doc. 

1235 (July 23, 1979). You asked for our analysis of three questions 

concerning the form of that quota:

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(1) May the President adjust shipments of oil, which are derived from Puerto Rican oil imports, from Puerto Rico to 

the U.S. mainland pursuant to his authority under § 232(b) 

of the Trade Expansion Act?

(2) Does the answer to the first question depend on whether oil 

imported into Puerto Rico is itself adjusted under the 

§ 232(b) authority?

(3) If the answer to the second question is affirmative, what 

kind of adjustment of Puerto Rican oil imports will suffice? 

Specifically, may the adjustment involve an unrestricted 

quota for imports into Puerto Rico intended for Puerto 

Rican consumption with an accompanying limitation on 

shipments from Puerto Rico to the U.S. mainland?

For the reasons that follow, we believe that the President may 

impose a quantitative restriction on shipments of oil from Puerto Rico 

to the U.S. mainland if that restriction is reasonably ancillary to a 

system of import adjustments, imposed under § 232(b), that applies to 

both the mainland and Puerto Rico. That system of adjustments need 

not be a single quota for the entire combined territory of the mainland 

and Puerto Rico; the President may impose separate quotas on Puerto 

Rico and the mainland respectively. The separate quota for Puerto 

Rico may be unlimited even if imports into the mainland are limited. 

We believe that this is the most defensible basis for restricting shipments from Puerto Rico to the mainland.1

I. The President May Impose Separate Quotas on Imports into the

Mainland and Puerto Rico, Respectively.

As this Office has previously concluded, the Constitution does not 

prevent Congress from authorizing the President to impose separate 

quotas on different regions. Section 232(b) is an exercise of Congress’ 

power to regulate foreign commerce. See U.S. Const., Art. I, § 8, cl. 3. 

It is well established that regulations of commerce need not be uniform, 

see, e.g., Currin v. Wallace, 306 U.S. 1, 13-14 (1939); see also Mulford v. 

Smith, 307 U.S. 38, 48-49 (1939), unless some other constitutional 

provision—such as the uniformity of duties clause, Art. I, § 8, cl. I,2 or 

the port preference clause, Art. I, § 9, cl. 6 3—requires uniformity. The

1 If the President uses this approach, he will not have to interpret “im ports" in § 232(b) to include 

shipments from Puerto Rico to the mainland. This interpretation is questionable. There appear to be 

no other statutes that explicitly define shipments from Puerto Rico to the mainland as “im ports.” See,

e.g.. 15 U.S.C. §§ 2001(10), 2052; 16 U.S.C. § 1159(0; 42 U.S.C. § 6291(a)(l 1). Puerto Rico is included 

in the "custom s territory o f the United States" for tariff purposes. 19 U.S.C. § 1202 headnote 2. It is 

unclear w hether shipments from Puerto Rico to the mainland are “im ports" for constitutional purposes. Compare Hooven & Allison Co. v. Evatt, 324 U.S. 652, 668-79 (1945), with id. at 670 n.5 and

Dooley v. United States, 183 U.S. 151, 154-55 (1901).

2 "[A]ll Duties, Imposts and Excises shall be uniform throughout the United States."

3 “ N o Preference shall be given by any Regulation o f Com m erce or Revenue to the Ports of one 

State over those o f another."

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uniformity of duties clause probably does not apply to Puerto Rico. See

Rasmussen v. United States, 197 U.S. 516, 520 (1905); Downes v. Bidwell,

182 U.S. 244 (1901).4 The port preference clause may or may not apply 

to Puerto Rico. See, e.g., Secretary o f Agriculture v. Central Roig Refining Co., 338 U.S. 604, 616 (1950) (a “vexing problem”); Alaska v. Troy,

258 U.S. 101, 111-12 (1922). But even if it does apply, it would not 

proscribe separate quotas for the mainland and Puerto Rico respectively. The net effect of separate quotas may be to benefit mainland 

ports at the expense of Puerto Rican ports, or vice versa, but legislation 

does not violate the port preference clause merely because it “greatly 

benefit[s] particular ports and . . . incidentally result[s] to the disadvantage of other ports. . . ." Louisiana Public Service Commission v. Texas

& New Orleans Railroad Co., 284 U.S. 125, 131 (1931). See also Alabama

Great Southern Railroad Co. v. United States, 340 U.S. 216, 229 (1951). 

[T]he clause, in terms, seems to import a prohibition 

against some positive legislation by congress [looking to a 

direct privilege or preference of the ports of any particular State over those of another] . . . , and not against any 

incidental advantages that might possibly result from the 

legislation of congress upon other subjects connected with 

commerce, and confessedly within its power.

Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421, 

435 (1856). This distinction is not easy to draw, but the Supreme Court 

seems never to have invalidated legislation under the clause simply 

because it affects the prosperity of different States’ ports differently. 

See, e.g., Louisiana Public Service Commission v. Texas <£ New Orleans

Railroad Co., 284 U.S. 125, 131-32 (1931). Moreover, in Secretary of

Agriculture v. Central Roig Refining Co., 338 U.S. 604, 616 (1950), the 

Court brushed aside the suggestion that a system of regional quotas 

might violate the port preference clause. Central Roig involved production and marketing quotas, not import quotas, but their effect was 

similar to the effect that might be expected from a system combining a 

restrictive quota on oil imports into the mainland with an unlimited 

quota on shipments into Puerto Rico.5 For these reasons, this Office

4 In Downes v. Bidwell ihe Supreme C ourt held that the uniformity clause applied only to the states 

and to those territories that have been incorporated into the United States. 182 U.S. at 251, 287. The 

Court has also decided that statutes that governed the status of Puerto Rico between 1900 and 1950 

did not incorporate it into the United States within the meaning o f Downes. See, e.g., id.: Balzac v. 

Puerto Rico, 258 U.S. 298, 305-13 (1922). This Office has expressed the view that statutes currently in 

force do not change Puerto Rico's status in this respect. But § 2 of the Foraker Act, 48 U.S.C. § 739, 

has an effect similar to that of the uniformity o f duties clause and does limit the President's pow er 

under § 232(b).

5 M ore recently, the C ourt has held that another clause that appears to require geographical 

uniformity—the bankruptcy clause, Art. I, §8, cl. 4—permits explicit distinctions between or among 

regions. “The uniformity provision does not deny Congress pow er to take into account differences 

that exist between different parts o f the country, and to fashion legislation to resolve geographically 

isolated problems.” Blanchette v. Connecticut General Insurance Corps. (Regional R ail Reorganization

Act Cases), 419 U.S. 102, 159 (1974); see id. at 160-61 (com paring uniformity requirement o f bankruptcy clause with Art. I, § 8, cl. I, the uniformity o f duties clause).

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has previously expressed the view that the port preference clause does 

not prohibit a system of regional quotas as opposed to a single overall 

national quota; therefore it would not proscribe separate quotas for the 

mainland and Puerto Rico. Thus, separate quotas seem to pose no 

constitutional problem.

Whether Congress has authorized the President to impose separate 

quotas is a more difficult question. Section 232(b) does not expressly 

confer such power on the President, but it does grant power in broad 

terms without expressly withholding the authority to impose separate 

quotas. As the Supreme Court has said:

Section 232(b) authorizes the President to act after a finding by the Secretary of the Treasury that a given article is 

being imported “in such quantities or under such circumstances as to threaten to impair the national security.” 

[Emphasis added.] The emphasized language reflects Congress’ judgment that “not only the quantity of 

imports . . . but also the circumstances under which they 

are coming in: their use, their availability, their character” 

could endanger the national security and hence should be 

a potential basis for Presidential action.

Federal Energy Administration v. Algonquin SNG, Inc., 426 U.S. 548, 561 

(1976), quoting 104 Cong. Rec. 10542-43 (1958) (remarks of Representative Mills).

The legislative history of § 232(b) and its predecessors, moreover, 

makes it plain that the President was to consider the domestic effects of 

imports. In this respect, § 232(b) contrasts sharply with several statutes 

which delegate power to the President but instruct him to focus on 

international concerns. See, e.g., 19 U.S.C. §2132 (correcting balance of 

payments disequilibria); 50 U.S.C. §§ 1701-1706 (international emergency economic powers). Specifically, when Congress enacted § 232(b) 

it wanted the President to address himself to the effects of imports on 

various domestic industries that it thought were important to national 

security.6 See § 232(c), 19 U.S.C. § 1862(c). The needs of “national 

security” industries may, of course, differ from region to region. A 

single, overall national quota might be a very crude and ineffective way 

of serving those needs; since Congress wanted the President to serve 

them, it is reasonable to suppose that Congress authorized him to use

6 For example, the hearings leading up to (he predecessor o f § 232(b) dealt extensively with the 

effects imports had on industries that witnesses believed vital to the nation's security. See Hearings on

H.R. 1 ("Trade Agreements Extension") before the House Comm, on Ways and Means, 84th Cong., 1st 

Sess. 178-79, 194-95, 883-85, 1000, 1006-13, 1051-54, 1266, 1308-09, 1327-28, 2118-24 (1955); Hearings on H.R. I ("Trade Agreements Extension") before the Senate Comm, on Finance, 84th Cong., 1st 

Sess. 113-15, 331-55, 602, 721, 878-88 (1955). T he Senate R eport on this provision said that “[t]he 

C om m ittee believes that this am endm ent will provide a means for assistance to . . . various national 

defense industries.'* S. Rep. No. 232, 84th C ong., 1st Sess. 4 (1955). T he Senate floor debate focused 

on w hether § 232(b) would protect the leading industries o f various Senators’ states. See, e.g., 101 

Cong. Rec. 5297-99 (1955).

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more refined methods. See Federal Energy Administration v. Algonquin

SNG, Inc., 426 U.S. 548, 561-62 (1976). Different regional quotas are 

one of the obvious refinements that Congress might have envisioned.

Indeed, Presidents have imposed regional quotas since they began 

using their § 232(b) power. In general, separate quotas were set for the 

area west of the Rockies, the area east of the Rockies, and Puerto Rico. 

See, e.g., § 2 Proclamation No. 3279, 24 Fed. Reg. 1781, 1783 (1959). So 

far as we have been able to determine, no court has ever decided 

whether imposing these regional quotas exceeded the President’s authority under § 232(b).7 But Congress reenacted the provisions of 

§ 232(b) while regional quotas were in force without specifying that the 

President had no power to impose them. See, e.g., Trade Expansion Act 

of 1962, Pub. L. No. 87-794, § 232(b), 76 Stat. 872, 877 (1962), 

reenacting Trade Agreements Extension Act of 1958, Pub. L. No. 85- 

686, § 8, 72 Stat. 673, 678 (1958). The Supreme Court has said that such 

reenactments can indicate that Congress accepted the President’s interpretation of the statute. Federal Energy Administration v. Algonquin

SNG, Inc., 426 U.S. 548, 570 (1976); see, e.g., Norwegian Nitrogen Co. v. 

United States, 288 U.S. 294, 313-15 (1933). For these reasons, we 

believe that § 232(b) permits the President to impose separate quotas on 

the mainland and Puerto Rico.

To say that § 232(b) permits separate quotas, however, is not to say 

that they may be imposed for any reason. Section 232(b) authorizes the 

President only to “take such action, and for such time, as he deems 

necessary to adjust the imports of [an] article . . . so that such imports will not threaten to impair the national security. . . .” Any 

system of separate quotas, then, must be justified by national security 

concerns. The March 14, 1979, findings of the Secretary of the Treasury endorse import adjustment as a way “to reduce domestic oil consumption and increase domestic production of oil and other sources of 

energy.” 44 Fed. Reg. 18818, 18819, 18823 (1979). The legislative history of § 232(b) firmly establishes that increasing the domestic production of oil is a legitimate national security aim; recent practice, acquiesced in by the Supreme Court, suggests that reducing the consumption 

of oil is similarly comprised by “national security.” See Federal Energy

Administration v. Algonquin SNG, Inc., 426 U.S. 548, 553-55 (1976). We 

understand that the reason for imposing a separate quota on Puerto 

Rico is that, since the island has no indigenous oil, any gains from 

limiting its imports will be outweighed by the risk of severe economic 

dislocation. We believe that this too is a suitable national security 

justification. Section 232(c), 19 U.S.C. § 1862(c), makes it plain that 

economic dislocation which results from excessive imports is the sort of

7 In New England Governors' Conference v. Morton, Civ. No. 72-13-59 (D. Me. Sept. 7, 1973), the 

system o f regional quotas was challenged, but the com plaint was voluntarily dismissed.

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impairment of the national security that the President may act to 

prevent:

In the administration of this section, the Secretary and the 

President shall further recognize the close relation of the 

economic welfare of the Nation to our national security, 

and shall take into consideration the impact of foreign 

competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease 

in revenues of government, 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.

Section 232(c), 19 U.S.C. § 1862(c). Whatever exactly the national security is,8 there is no reason to believe that economic dislocations with 

this origin threaten it more than similar dislocations caused by insufficient amounts of imported goods. Congress’ unrestrictive language— 

“without excluding other factors”—suggests that it would not have 

opposed this interpretation. Thus, if the President concludes that a 

strict import quota would enhance national security on the mainland 

but only impair it further in Puerto Rico by disrupting the island’s 

economy, § 232(b) authorizes him to impose separate quotas. Moreover, 

we see nothing in § 232(b) that prohibits the President from specifying 

an unlimited quota for Puerto Rico, if that is what the national security 

demands.9 In any event, the link between the national security and the 

quota system which the President finally chooses should be stated in 

the materials accompanying the proclamation of the quota.

We emphasize that we are discussing only the legality of separate 

quotas—that is, separate quantitative restrictions—for Puerto Rico and 

the mainland. In 1970, this Office advised the Executive Director of the 

Cabinet Task Force on Oil Import Control that, under § 232(b), the 

President cannot impose tariffs or fees on products entering Puerto 

Rico that differ from those he imposes on the same products entering 

the continental United States. We reached this conclusion on the basis

8 A pparently the national security requirement o f § 232(c) has never been interpreted by a court.

® A letter to this Office from the D eputy G eneral Counsel o f the D epartm ent of Energy asks 

w hether the President can regulate shipments of crude oil and its derivatives from Puerto Rico to the 

mainland if imports o f crude oil into Puerto Rico are not adjusted under § 232(b) As we have said, the 

most appropriate basis for regulating shipments of oil from Puerto Rico to the mainland would be that 

such regulation is necessary to enforce a system of import adjustments, imposed under § 232(b), that 

embraces both the mainland and Puerto Rico. See p. 2 and n.l supra. But since the national security 

apparently would justify the President's allowing unlimited imports into Puerto Rico as a part of that 

system o f adjustm ents, shipments from Puerto Rico to the mainland can be regulated even if imports 

o f oil into Puerto R ico are in fact com pletely unrestricted.

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of § 2 of the Foraker Act, 48 U.S.C. § 739, which provides, in part: 

The same tariffs, customs, and duties shall be levied, collected, and paid upon all articles imported into Puerto 

Rico from ports other than those of the United States 

which are required by law to be collected upon articles 

imported into the United States from foreign countries.

We concluded that this specific prohibition limited the President’s 

powers under § 232(b). Similar problems may arise if the President 

imposes a license fee or “tariff quota” system in which imports can 

enter free-of-charge up to a certain level but must pay a tariff or fee 

beyond that level; if the level from which duties are charged is not the 

same for both the mainland and Puerto Rico, we would have considerable doubt about the ability of the program to survive a challenge in 

court.10

II. The President May Impose Quotas on Shipments of Oil from Puerto

Rico to the Mainland as a Necessary Incident of a System of Separate

Import Quotas.

Shipments of oil between regions can, of course, nullify any system 

of regional quotas. Sometimes, market conditions and transportation 

costs combine to prevent such transshipments. If they do not, however, 

and if § 232(b) gives the President the power to establish separate 

regional quotas, then by implication § 232(b) authorizes the President to 

restrict transshipments directly in order to make the separate regional 

quotas effective. The Supreme Court is, “in the absence of compelling 

evidence that such was Congress’ intention, unwilling to prohibit 

administrative action imperative for the achievement of an agency’s 

ultimate purposes. . . . We cannot . . . conclude that Congress has 

given authority inadequate to achieve with reasonable effectiveness the 

purposes for which it has acted.” Permian Basin Area Rate Cases, 390 

U.S. 747, 780, 777 (1968). Elsewhere the Court has indicated that unless 

Congress says otherwise, an agency has power to do that which is 

“reasonably ancillary to the effective performance of [its] various responsibilities. . . .” United States v. Southwestern Cable Co., 392 U.S. 

157, 178 (1968). Neither the text nor the legislative history of § 232(b) 

suggests that Congress intended to withhold from the President all 

authority to regulate shipments between regions. The President may, 

then, impose ‘quotas on shipments of oil from Puerto Rico to the 

mainland if he decides that such quotas are reasonably necessary to 

enforce the import adjustment scheme he has adopted under § 232(b).11

10 The Supreme C ourt recently declined 10 decide the analogous issue arising under the uniformity 

o f duties clause. See Federal Energy Administration v. Algonquin SN G . Inc.. 426 U.S. 548, 560 n .ll 

(1976).

11 In G u lf Oil Corp. v. Hickel, 435 F.2d 440 (D.C. Cir. 1970), the United States C ourt o f Appeals 

for the District of Columbia Circuit tacitly endorsed the President's pow er to restrict shipments of oil 

from Puerto Rico to the mainland. In 1968 a presidential proclam ation under § 232(b) imposed

381
It is not difficult to see why restrictions on transshipments will be 

necessary if Puerto Rico’s quota is unlimited and the mainland’s has 

some significant effect on imports. Nonetheless, it would be advisable 

for the President to explain his reasoning if and when he adopts such 

restrictions. Moreover, we wish to emphasize that § 232(b) authorizes 

only those controls on interstate shipments which are reasonably ancillary to a system of import adjustments adopted under § 232(b). Section 

232(b) does not give the President a general power to adjust interstate 

shipments of oil.

Again, our conclusions apply only to quotas or other quantitative 

restrictions on shipments from Puerto Rico to the mainland. A tariff or 

fee would violate § 3 of the Foraker Act, 48 U.S.C. § 738:

All merchandise and articles coming into the United 

States from Puerto Rico and coming into Puerto Rico 

from the United States shall be entered at the several 

ports of entry free of duty and in no event shall any tariff 

duties be collected on said merchandise or articles.

See also Dooley v. United States, 182 U.S. 222, 233-36 (1901). As we 

said in connection with § 2 of the Foraker Act, 48 U.S.C. § 739, this 

specific prohibition limits the President’s general § 232(b) powers.

L a r r y A . H a m m o n d

Acting Assistant Attorney General

Office o f Legal Counsel

separate quotas on oil shipped into the mainland and Puerto Rico. See Proclam ation No. 3823, 33 Fed. 

Reg. 1171 (1968), amending Proclam ation No. 3279, 24 Fed. Reg. 1781 (1959). T he Puerto Rican quota 

was allocated among several producers. Section 3(b)(2) o f the proclam ation instructed the Secretary of 

the Interior that if a producer shipped more oil from Puerto Rico to the mainland than that producer 

had shipped during a certain base year, the producer’s allocated share of the Puerto Rican import 

quota for the next year was to be reduced by an equal amount. The obvious purpose and effect o f this 

provision was to ensure that shipments of oil from Puerto Rico to the mainland would not exceed the 

base year levels. T he District o f Columbia C ircuit noted that this provision was “in furtherance of the 

large design o f the overall regulatory scheme, to restrict im portation of foreign oil into the continental

United States.'* Id. at 443 (emphasis added). T he court proceeded to decide a dispute, arising under 

this provision, about how to calculate the base year figure. T he legality o f the restriction on shipments 

from Puerto Rico to the mainland was apparently not challenged, and the court never questioned it.

382