Importers File Replies at SCOTUS Against Legality of IEEPA Tariffs

Two of the importers, Learning Resources and Hand2Mind, leaned heavily into the textual and historical arguments regarding IEEPA, first arguing that Congress never has delegated the authority to impose a tariff or tax through the word "regulate." Although the U.S. may try to sweep tariff power under this word, the government can't cite one instance of the word "regulate" being used in the U.S. Code to confer a tariff or tax power, the brief said.

Learning Resources emphasized the difference between the power to tax and the power to regulate in the Constitution, the high court's precedent and the text of IEEPA itself. Throughout its history, IEEPA's power to "regulate" has given the president the "power to control the flow of goods coming into and leaving the country, such as by restricting their quantity or quality and requiring inspections or quarantines." This power to "regulate," however, has never let the president impose taxes, the brief said.

In its brief, the U.S. said "regulate" may carry different meanings in different contexts (see 2509220014). However, the government can't explain why IEEPA is the only place in the U.S. Code where the power to "regulate" includes the power to tax, Learning Resources said. In fact, where Congress has sought to provide the power to tax and regulate, "it has named the two as individually distinct powers."

And while the U.S. says "regulate" means "tax" when paired with the term "importation," since imposing tariffs is a traditional and common way to regulate importation, Learning Resources said, "if that were so, it is odd that the phrase has nowhere else been construed to delegate an authority to tax imports." The importer emphasized this point by noting that every tariff statute on the books specifically uses the word "tariff" or "duty" or otherwise much more clearly provides this power.

Learning Resources added that the government's reading of the statute renders it unconstitutional in part. The term "regulate" must be given the same meaning for every word that it applies to. Since regulate also applies to the term "exportation," the power to regulate can't mean the power to tax, given that it's explicitly unconstitutional to tax exports, the brief said.

"The Government has no persuasive response to that gaping interpretive hole," Learning Resources argued. In its brief, the U.S. "feebly contends (without any citation)" that exports from U.S. territories or the District of Columbia are exempt from this prohibition, Learning Resources said. That the U.S. interpretation renders IEEPA unconstitutional "only" with respect to the 50 states "is hardly a reason to prefer it over a fully unconstitutional one," the brief said.

The U.S. also argued that "regulate" should be "understood to have an 'ordinary (fixed) meaning,' but one 'whose broad contours are contextually shaped by the object of the regulation,'" signaling that the term should have a different meaning when applied to "importation" vs. "exportation." Learning Resources called this a "head-scratcher." If the term "regulate" is "contextually shaped," then its meaning isn't fixed. The power to "regulate ... importation or exportation" either includes the taxing power or it doesn't, the brief said. "The Government cannot have it both ways."

In vying for "regulate" to include the power to tax, the U.S. emphasized that IEEPA lets the president ban all imports from a given country. Surely, then, the statute includes the "lesser" power to tax. In response, Learning Resources said the power total isn't a "lesser" or "more modest" power. Instead, "the Framers viewed taxation -- with its potential to enrich the taxer at the expense of the taxed -- as a uniquely awesome power to be carefully guarded by Congress, the branch closest to the American people," the brief said.

Learning Resources added that IEEPA can't be used to impose tariffs, since the statute only lets the president "regulate ... importation" on property in which a foreign party has an interest. The importer noted that some imports "have never been foreign owned," adding that IEEPA doesn't let the president tax "American-owned property just because it was once foreign owned." Congress could have included "property formerly subject to a foreign interest" under the umbrella of IEEPA, but it didn't, the brief said.

Another brief in the case, filed by importers led by V.O.S. Selections, made similar textual and constitutional arguments. V.O.S. Selections also homed in on the role played by one key precedential decision: Yoshida International v. U.S. In that ruling, the predecessor court to the U.S. Court of Appeals for the Federal Circuit upheld a duty surcharge imposed by President Richard Nixon under the Trading With the Enemy Act, IEEPA's predecessor that uses the same operative language.

The U.S. leaned heavily on Yoshida in its brief, arguing that Congress passed IEEPA after Yoshida was decided, indicating Congress' decision to keep the same "regulate ... importation" language was a clear "eyes open" delegation of power to the president. In response, V.O.S. Selections noted that Congress gave the president the exact tariff power Nixon claimed under TWEA in a different statute: Section 122. "Congress then repealed TWEA outside wartime, substituting more limited peacetime powers in IEEPA," the brief said. "That is not an endorsement of broad tariff powers."

V.O.S. Selections also contested the government's claim that the president deserves greater deference here, since the tariff power is a "foreign affairs" and "national security" power. The importer said "the Framers, well aware that tariffs had foreign policy implications, still vested the power in Congress." In addition, the burden of these taxes "is borne by Americans. Taxing Americans is an odd way to combat foreign threats," the brief said.