US Supreme Court's Tariff Decision: A Moment Of Constitutional Reassertion [Part II]
In a landmark decision that will be remembered as a moment of constitutional reassertion, the Supreme Court of the United States (SCOTUS/the Court) has declined to read the words 'regulate importation' under Section 1702(a)(1)(B) of the International Emergency Economic Powers Act (IEEPA) as a charter for unbridled presidential authority to impose tariffs. In doing so, the Court set aside one of the most consequential assertions of unbounded executive authority by US President Donald Trump.
As discussed earlier on this platform, the US Court of International Trade and Court of Appeals for the Federal Circuit had struck down the tariff measure adopted by the Trump- administration as unconstitutional. The question before the SCOTUS hinged on the interpretation of section 1702 of the IEEPA to read (or not to read) 'regulate importation' to include wide discretionary power to levy tariffs and delegation of excessive authority in explicit or implicit terms.
Interestingly, opinions in matters having drastic political and economic ramifications have rarely been rendered by the SCOTUS in a singular voice without any discordant notes. Treading a similar path, the decision of the Court was sharply divided in defining the contours of executive power within the statutory framework of IEEPA. Its central probing revolved around the applicability of Major Questions Doctrine that plays a critical role in discerning congressional intent behind any statute whenever a highly consequential authority is claimed to be delegated by Congress to the Executive.
Major Questions Doctrine
The separation of powers doctrine is the guiding principle underpinning Major Questions Doctrine (MQD). It is also underscored by the philosophy that Congress does not hide elephants in mouseholes- effectively meaning, any highly consequential power is explicitly delegated by the Congress, thereby obviating any implicit claim to such authority by the Executive.
MQD originated in the backdrop of administrative law. Justice Stephen Breyer, who is credited with giving the doctrine intellectual heft long before joining the US Supreme Court, argued that Congress answers 'major questions' itself and does not leave them open to executive exploitation. From his viewpoint, this doctrine is more informed by judicial pragmatism, derived from a reasonable interpretation of laws enacted by Congress. For example, in Whitman v. American Trucking (2001), few trucking companies challenged the Environmental Protection Agency's (EPA) prescribed air quality standards for non- consideration of the economic cost of implementation. After carefully analysing the Clean Air Act, the US Supreme Court noted that powers of the EPA are statutorily well- defined which, however, do not include an assessment of implementation cost. In conclusion, the court held if Congress had conferred such authority on the EPA, it would have done so explicitly as it 'does not hide elephants in mouseholes'. Following this conclusion, the Court implicitly applied the MQD principle to the Clean Air Act, a process driven by reasonable interpretation of laws.
In the long, implicit trajectory of MQD, West Virginia v. EPA (2022) marked a pivotal shift. In this case, the US Supreme Court for the first time expressly postulated MQD and entrenched it as a formal legal test. However, over the year, the Court has refined its understanding and held divergent views over the content, scope and applicability of the doctrine.
On a serious evaluation, three crucial approaches to MQD surface: 'Clear Statement', 'Contextual' and 'Hybrid'. The clear statement approach is spearheaded by Justice Gorsuch who links MQD to a 'clear statement'. According to his view, delegation of any power that entails 'vast economic and political significance' by Congress shall be made through an unambiguous expression of legislative intent. In other words, Congress does not delegate highly consequential power without incorporating clear, express and specific wording. Absence of such wording, proposes Gorsuch, would lead to unauthorised encroachment of congressional function, and result in breach of the Constitution. Testing this view in extreme case scenario, he submits Congress cannot constitutionally delegate its core functions (like enacting laws) even through an unambiguous expression of intent, which is clearly impermissible in light of the 'non- delegation clause' in Article I of the US Constitution. This understanding considers MQD as a structural guardrail.
In contrast, the (con)textual approach advanced by Justice Barret regards MQD as an interpretive tool to ascertain the most natural meaning of any legal text, which is guided by context where ambiguity prevails. This approach places currency on a holistic reading of an enactment alongside various legal conventions and commonsense principles of communication to extract the proper meaning, nature and scope of congressional delegation of authority. According to her, the 'clear statement approach' is in concordance with the 'contextual approach' only insofar as clarity in delegation of authority by Congress is concerned. Otherwise, the 'clear statement approach' appears to militate against the actual legal text.
Blending these two approaches together, Chief Justice John Roberts weaves a hybrid MQD model that is situated somewhere in the middle. According to him, unambiguous intention of an ordinary legislator (clear statement) to delegate vast and significant power needs to be pragmatically interpreted (contextual) in the backdrop of institutional history, discovery of authority and degree of overall impact. This is also called the 'Unheralded Test', which is sceptical towards agencies discovering sweeping authority in an obscure enactment. Effectively meaning, agencies cannot savour new wine in an old bottle.
For instance, in West Virgina, Roberts braided together the institutional history with a reasonable statutory construction in order to reject an expansive reading of EPA authority within the statutory framework of the Clean Air Act. The authority claimed by EPA to make a transformational shift from coal to green energy, as per Roberts, was a significant power neither granted by Congress nor claimed by the institution in its long history. This cumulatively connotes absence of such power as not intended by Congress. Therefore, in the judicial articulation of Roberts, pragmatism alongside clear discernment of legislative intent plays a key role in the application of MQD.
The Majority Opinion
Now turning our attention to the present controversy, we find that the Court by a majority of 6-3 denied President Trump his crowning glory- the power to become a Tariff King. MQD formed the most crucial component of the Court's reasoning in declaring the executive action of tariff imposition as unlawful. The cardinal question before the Court was whether the IEEPA confers a 'highly consequential power' on the President to impose such tariffs having 'vast economic and political' consequences.
On a textual analysis of the IEEPA, the Court observed that the interpretive indicators built within the statute allow only for its narrow construction. If president's assertion to impose tariffs under the frame of regulate importation is approved, it will unleash unpropitious constitutional consequences.
First, it will amount to striping Congress of its birthright power of the purse i.e. levying taxes, tariffs and duties. The Court observed that the Vesting Clause under Article I of the US Constitution alone gives Congress access to the pockets of the people. By stretching the word regulate importation to mean unchecked authority to impose tariffs, would amount to offending the separation of powers doctrine and the non- delegation principle.
Second, the Court held that if Congress wanted the President to exercise such a broad and unfetter discretion to impose desirable tariffs, it would have done so explicitly. The Court invoked MQD to resolve the issue pertinent to delegation of tariff- making power, which is the sole prerogative of Congress and constitutes a 'highly consequential power'. The Court found that the text of IEEPA does not delegate any such sweeping breadth of authority to the President over national economy. Put simply, the Court held that quotidian terms like regulate are evidently not a clear expression of legislative delegation. Further, the conspicuous absence of such authorisation from the statutory language of IEEPA is reflective of congressional intent.
Third, statutory language adopted in the IEEPA, in the opinion of the Court, instructively omitted words like 'tariff' or 'duty', which is apparent from a comparable reading of other statutes like the Trade Act of 1974. Therefore, as a necessary sequitur, congressional delegation of tariff- making power must be express and axiomatic. As a result, legislative intent becomes clearly distinguishable, making it completely impermissible to read the IEEPA in a fashion that confers on the President unbounded authority to impose tariffs. Further, interpreting the statute in any other manner would render it unconstitutional.
The aforementioned majority views were asserted by Chief Justice Roberts alongside Justices Gorsuch and Barret applying the MQD principle to the present controversy. However, agreeing in part Justices Kagan, Jackson and Sotomayor refused to apply the MQD principle and favoured simple statutory construction to hold presidential actions unconstitutional.
The Minority Opinion
The minority opinion consisting Justices Kavanaugh, Thomas and Alito navigated the present challenge to presidential power by associating it with an expansive reading of the words regulate importation. In their opinion, the word regulate is capacious enough to accommodate the practice of imposing taxes, duties and tariff. Further, braiding the word regulate with importation crystalises a clear delegation of authority to impose desirable tariffs under IEEPA.
The minority opinion conceives the MQD principle as a constraining doctrine that forces legislators to use a specific statutory language to convey a particular intent. Pertinently, this approach frustrates the correct judicial interpretation of an enactment, enforces a 'magic word test' regime and prevents congressional delegation of authority through broad statutory terms. Interestingly, on a granular analysis, majority of the Court rejects the application of MQD to the present controversy, emphasising the need to adopt a simple statutory construction (Justices Kavanaugh, Thomas and Alito dissenting and Justices Kagan, Jackson and Sotomayor partly concurring with the dissent on interpretive methodology).
The minority resolves the non- delegation issue by positing its inapplicability to foreign trade and commerce. According to Justice Thomas, foreign trade and commerce is closely connected with sovereign privilege which is governed by law of nations and not private individuals. Concomitantly, Congress, in his view, can delegate the authority to regulate foreign commerce by imposition of tariff in broad and sweeping terms. Correspondingly, Justice Thomas has firmly asserted that Congress can permissibly delegate all its authority excluding setting conditions for depriving life and liberty.
In sum, the minority holds the words regulate importation in the IEEPA to include unbridled presidential power to levy tariffs as it is a means to regulate foreign trade and commerce, which is a sovereign privilege. Further, it held the MQD and non- delegation principle to be inapplicable when a context requires an assessment of elements connected to foreign trade. Judicial intervention in such matter, the minority cautioned, would inhibit Executive's ability to use economic statecraft against adversaries.
This decision marks the culmination of three rounds of litigation where, in all instances, President Trump's iniquitous policies have faced judicial reproachment. Despite a secular rejection of his actions, he refuses to eat the humble pie and has unleashed new tariffs giving rise to yet another series of challenges.
From a constitutional standpoint, Donald Trump's claim to possess unbridled authority to impose tariffs—an exercise of power that ultimately proved double-edged, harming U.S. businesses as well—was plainly far-reaching. On a historical evaluation, it becomes abundantly clear that the IEEPA was enacted to curb similar tendencies of Executive overreach. The Trading with Enemy Act (TWEA), precursor to IEEPA, had no oversight mechanism to check the unbounded authority of the President while dealing with external economic aggression. However, such powers technically stranded the US in a perpetual state of emergency. The IEEPA ushered in a new, accountable regime.
The challenged set of actions appeared to revert the US to a pre- IEEPA era, marked by a dearth of accountability and absence of an oversight mechanism. Nonetheless, despite being a Republican dominated court, the SCOTUS has foiled such an endeavour in a moment that can be aptly characterised as a moment of constitutional reassertion against the rising tide of incremental authoritarianism.
Author is an Advocate practicing at High Courts of Delhi and Madhya Pradesh. Views are personal.