Court Opinion

ID: 7838203
Source: CourtListenerOpinion
Date Created: 2022-09-08 16:37:37.095835+00
Date Added: 2024-06-11T15:54:26.792374
License: Public Domain

McGOWAN, Circuit Judge:
These consolidated cross-appeals are directed respectively to two declarations made by the District Court in a suit *77challenging efforts by the Executive Branch of the United States Government to bring about reductions in steel imports by means of self-imposed limitations 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 producers, individually and in association. In the form eventually taken by the litigation in the District Court, we consider that the only question before us is whether the actions of the Executive were a regulation of foreign commerce foreclosed to it generally by Article I, Section 8, Clause 3 of the Constitution, and in particular by the Trade Expansion 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 period 1958-68, with the great bulk of imports coming from Japan and the countries of the European Communities.1 The effect of this development on the domestic steel industry, which is deemed to be of great importance to the nation’s security as well as to its peacetime economy, became a matter of widespread concern. In 1968 bills with substantial backing were introduced in Congress to impose mandatory import quotas on steel.
The Executive Branch regarded the problem created by steel imports as temporary in nature2 and thus amenable to a short-term solution.3 It concluded, moreover, that unilaterally imposed mandatory 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 rejected on the State Department’s advice that negotiated official restrictions, if achievable, would have political consequences for the foreign governments that would also affect our external affairs adversely. Accordingly, the Executive Branch concluded in 1968 that voluntary import restraint undertakings by foreign producers offered the best hope of alleviating the domestic industry’s temporary problems at the least cost to United States foreign, economic and trade policies.
After an initial showing of interest by the foreign producer associations, State Department officials entered into discussions that lasted from June to December, 1968, and resulted in letters being sent to the Secretary in which the Japanese and European producer associations stated their intentions to limit steel shipments to the United States to specified maximum tonnages for each of the years 1969, 1970, and 1971.4 During *781970, domestic industry and union representatives 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 Committee issued a report to like effect. When various executive organs, such as the President’s Council of Economic Advisors, had made the same recommendation, the President directed the Secretary to seek extensions of the limitation representations. Such extensions, covering 1972 through 1974, were forthcoming in letters dated early in May, 1972, and announced by the President on May 6.5
The two 1972 letters are substantially alike. . Each states the signatories’ intention to limit exports of steel products to the United States both in aggregate tonnage and, within such limits, in terms of product mix. Each represents that the signatories “hold themselves [itself] ready to consult with representatives 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.6 In addition, each states that its undertaking is based on the assumptions that (1) the effect will not be 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 representations do not violate United States or international laws.
II
The original complaint in this action contained two separate and distinct claims. They were respectively denominated “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 letters of intent to be in violation of that statute, and to enjoin all of the named defendants from engaging in any act to effectuate the import reductions contemplated 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 “facilitating, 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 relief sought was a declaration that the 1972 export limitations are illegal, and an injunction addressed to all the defendants, prohibiting acts in furtherance of the arrangement.
After answers had been filed by some of the defendants and a motion to dismiss or alternatively for summary judgment had been made by the State Department defendants, the parties stipulated that the first claim in the complaint be dismissed with prejudice, and an amended complaint was filed. The violation of law alleged in the amended com*79plaint was that the State Department officials had acted to regulate foreign commerce within the meaning of Article 1, Section 8, Clause 3 of the Constitution, and of the laws relating to the regulation 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 defendants 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 for summary judgment, 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 Opinion, Declaration and Order.” The court concluded its discussion of the issues by making two declarations. The first was that “the Executive has no authority under the Constitution or acts of Congress to exempt the Voluntary Restraint Arrangements on Steel 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 foreign steel concerns so long as these undertakings do not violate legislation regulating foreign 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 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 inappropriate, and denied the respective motions for summary judgment to the extent that they were “inconsistent” with the declarations made by it. It concluded by saying that “no further proceedings are required,” and “no costs will be awarded.”
Appeals were filed by the State Department defendants and by the domestic and foreign producers. The plaintiff filed a cross-appeal “insofar as any declaration, or ruling on the relief requested, has been decided adversely to the plaintiff.”
Ill
A substantial portion of the briefs and argument before us has been devoted to the Sherman Act. The defendant-appellants are, not surprisingly, perturbed by some of the comments made by the District Court with respect to possible Sherman Act liability. Although the court stated in terms that, by reason of the stipulation of dismissal, “the question of whether or not a violation of the Sherman Act is present is not before the Court to decide,” it did not leave the matter at that. One of its declarations is that the Executive has no authority to exempt from the antitrust laws the arrangements here involved, and “that such arrangements are not exempt.”
Since there is nothing in the record that shows the Executive as purporting to grant such an exemption,7 this *80observation 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 indeed, 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 judicial force or effect and are not appropriate 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 apparent 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 resolution would almost certainly have required the exploration by adversarial trial of a number of complex questions of fact and law, and the making of legal rulings in an area not distinguished for its simplicity. When the plaintiff, confronted by that formidable prospect, elected to abandon its antitrust claim, the Sherman Act could no longer play a significant part in this controversy, and we have no occasion to concern ourselves with the discussions by the parties of the precise reach of that statute.8
IV
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 of intent, “the Executive is not preempted . . . and that there is no requirement that all such undertakings be first processed under the Trade Expansion 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.9
This was to be achieved through trade agreements reached by the President with foreign countries. Title II of the Act provided that, for a period of five years (1962-67), the President was authorized to enter into such agreements whenever he determined that any existing tariff duties or other import restrictions 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 delegated the unmistakably legislative power to modify or continue existing tariffs or *81other import restrictions, to continue existing duty-free or excise treatment, or to impose additional import restrictions, as he determined to be necessary or appropriate to the carrying out of the agreement. 19 U.S.C. § 1821. In connection with the first two of these powers, the Tariff Commission was given an advisory function, which included public hearings; and public hearings were also directed to be held, by an agency designated by the President, in connection with any proposed trade agreement. 19 U.S.C. §§ 1841, 1843.
Title III of the Trade Expansion Act of 1962, recognizing that domestic interests 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 businesses or workers by such things as increased imports flowing from a trade agreement. After holding public hearings, the Tariff Commission shall make a report to the President. If it affirmatively 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 governments 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 governing the entry or withdrawal from warehouse of the article covered by the agreement.
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 Congress of its constitutional power to regulate 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-appellant 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 impair the national security; and if he finds such threat, and the President concurs, 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.10
What is clear from the foregoing is a purpose on the part of Congress to delegate legislative power to the President for use by him in certain defined circumstances and in furtherance of certain stated purposes. Without such a delegation, the President could not increase or decrease tariffs, issue commands to the customs service to refuse or delay entry of goods into the country, or impose mandatory import quotas.11 *82To make use of such delegated power, the President would of course be required 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.
The steel import restraints do not purport to be enforceable, either as contracts or as governmental actions with the force of law; and the Executive has no sanctions to invoke in order to compel observance by the foreign producers of their self-denying representations. They are a statement of intent on the part of the foreign producer associations. The signatories’ expectations, 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 President 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 meet unforeseen difficulties; and certainly the Congress is not inhibited from enacting 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 steel imports by law if the volume of such imports remains within tolerable bounds. Communicating, through the Secretary of State, what levels he considers tolerable merely enables the foreign producers to conform their actions accordingly, and to avoid the risk of guessing at what is acceptable. Regardless 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 officers, do when they admonish an industry with the express or implicit warning that action, within either their existing powers or enlarged powers to be sought, will be taken if a desired course is not followed voluntarily.
The question of congressional preemption 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 it is faithfully to execute the laws. From the comprehensive pattern of its legislation 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 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. There is no potential for conflict, however, between exclusive congressional regulation of foreign commerce — regulation en- ■ forced ultimately by halting violative importations at the border — and assurances 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 *83departures from them have been treated.12
In holding, as we do, that the District Court did not err in declining to characterize 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 Sherman Act to the events in issue here. The Sherman Act is not, as noted above, one of the regulatory statutes charged as preempting the field, 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 is 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 Constitution or Title 19 of the U.S.Code. As so confined, the order appealed from is affirmed.
It is so ordered.

. 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, one of the State Department defendants and Deputy Assistant Secretary of State for International Resources and Food Policy, filed in support of the motion for summary judgment.

. The bulk of steel import increases were not attributed to the Kennedy Round reductions in tariffs, which would be continuing in nature, because they predated the effective dates of those reductions, and cost and price differentials between foreign and domestic products greatly exceeded the pre-reduction tariffs.

. Factors believed to cause the import increase, such as excess capacity and a technological advantage in the foreign steel industry, were both regarded as probably short-run phenomena. Whether foreign governments’ policies of assisting their steel industries, and lower labor costs abroad, were also thought to be temporary in nature is not clear.

. The letters to the Secretary, dated December 23, 1968, were approvingly read by President Johnson after their receipt, and were transmitted by the Secretary on January 14, 1969, to the respective Chairmen of the Senate Finance Committee and the House Ways and Means Committee. The recipients thereupon issued a joint announcement welcoming *78the voluntary restraints and releasing the texts of the producers’ and the Secretary’s letters. No mandatory import quota legislation was recommended by the committees thereafter.

. The British steel industry, which had not participated in the 1968 statements of intent, joined in the 1972 letter from the European Communities steel producer associations. It did so through both the British Independent Steel Producers Association and the British Steel Corporation, an enterprise controlled by the British government.

. It is undisputed that “[i]n negotiating the arrangements and all of their specific terms, 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 155a.

. In a 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 anyone. It went on to say that “the Executive Branch did not and it would not request any party to enter into any arrangement it believed to be unlawful.”

. As might be expected in light of the stipulation, the amended complaint nowhere refers expressly to the Sherman Act. Under the caption “VIOLATION OF LAW ALLEGED,” it charges that the actions of the State Department defendants constitute a prohibited regulation of foreign commerce “within the meaning of the laws of the United States relating to the regulation of foreign trade as set forth in Title 19 of the United States Code, including Sections 301 and 352 of the Trade Expansion Act of 1962, 19 U.S.O. Sections 1901, 1982.” Having asserted these actions to be unlawful for this reason, the complaint does go on to say that the State Department defendants, by securing the limitation arrangements in a manner not authorized by Congress (i. e., by not using the provisions of Title 19), acted in conflict with the power of Congress “to determine the antitrust policy of the United States by enacting the antitrust laws and to determine the circumstances under which exceptions to those laws shall be permitted.” To the extent that this seems to say that there was an antitrust violation because the State Department officials did not employ the provisions of Title 19, the point fails in the light of our holding hereinafter that the Executive did not engage in conduct implicating those provisions.
We note that the third and last paragraph under this caption in the amended complaint alleges that the foreign defendants acted in violation only of provisions of Title 19, which, of course, does not contain the Sherman Act. The domestic steel producers, in o-ur reading of the amended complaint, are not alleged to have acted in violation of any law.

. The other stated purposes were “to strengthen economic relations with foreign countries through the development of open and nondiscriminatory trading in the free world”; and “to prevent Communist economic penetration.” 19 U.S.C. § 1801.

. The Katz affidavit asserts that consideration was given to the utilization of both Section 352 and Section 232. The former “could not seriously be considered” because it was in terms made available by Congress only for the purpose of softening injuries to domestic commerce caused in major part by prior concessions in trade agreements; and this was not a major cause in this instance. As to Section 232, national security was only one of the factors contributing to the problem, and the attempt to solve it by a method which armed the President with legislative power to stop foreign imports at the water’s edge would have had an unfortunate impact on foreign trade policy and international relationships.

. The United States Customs Court has quite recently invalidated the imposition by Presidential 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*82islative power by the Executive in the regulation of foreign commerce, for which no delegated authority could be discerned in the statutes relating to tariffs. We mention the case not with reference to the rightness or wrongness of the decision biit only because of the contrast between the action taken by the Executive in that case, i. e., goods from abroad were excluded by force of asserted law unless the supplemental duties were paid, with what was done here, i. e., no legal power to exclude foreign steel imports was either claimed or exercised by the Executive.

. In 1969 the Japanese, and in 1972 all foreign producers, exported to the United States more steel or particular types of steel product than their undertakings contemplated. In no 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.