Monday, March 05, 2012

Federal Energy Administration vs. Algonquin Sng, Inc. (1976)

Facts: Under the §232(b) of the Trade Expansion Act of 1962, the President of the United States is authorized to 

“take such action, and for such time, as he deems necessary to adjust the imports of [the] article and its derivatives so that… imports [of the article] will not threaten to impair national security.” 

This gave the President the authority to adjust the imports of petroleum and petroleum products by imposing QUOTAS on such imports. In 1973, President Nixon authorized the Secretary of Treasury to determine the effects of petroleum imports to national security. The Secretary concluded that the current import policy of the United States and its dependence on foreign oil threaten to impair national security. To address this, the President, through the Federal Energy Administration decided to impose an additional measure to curtail oil importation by imposing a licensing fees structure. 

The controversy was raised by governors of several states who challenged the imposition of the fees. The District Court of DC dismissed their petition, but the Court of Appeals reversed it. 

Issue: Was the imposition of fees beyond the President’s constitutional and statutory authority? 

Held: No. The imposition of license fees for petroleum imports was within the mandate accorded by the Congress to the President in the protection of national security. 

1. The language of §232 (b) of the Trade Expansion Act grants the President power. 

The Supreme Court rejected the governors’ contention that the section should be construed narrowly to avoid an unconstitutional delegation of legislative power. According to the Supreme Court, the contended statute had an intelligible principle (Hampton Jr. v US) that fulfills the precondition required for the President to be allowed to exercise such power. There needs to be a determination of threat to national security and the same was done in this case when the Secretary of Treasury determined such imminent threat. In addition, §232 (c) of the same statute accords additional guidelines on the exercise of the power granted in the earlier provision. 

In addition, the discretion given to the President was broad enough to accommodate any method of how he deems imports should be adjusted. It does not prescribe that it should only be through quantitative methods (quota), but also by controlling how the circumstances that the import is received (license fees). 

2. The legislative history shows that Congress intended to vest the president with such power. 

The Court looked at the history of the statute since 1955. An interesting discussion was with regard to the promulgation of the Trade Expansion Act of 1962. The Court of Appeals showed an amendment that showed clear stipulations on the President having the power to impose import duties. This amendment was REJECTED. The Court of Appeals then construed legislative intent to have taken down such power that the President is now implicitly claiming over another provision. The Supreme Court disagreed since the rejected proposal was incomplete because it did not provide for the same requisite of a prior investigation by an executive department prior to the Presidential action. It also contends that since the rejected amendment used “national interest” it is more BROAD than the language in §232(b) which uses “national security”. 

Ultimate conclusion: §232(b) authorizes the president to impose license fees, however the Court says that it should not be concluded that any action the President might take as long as it is related to imports is authorized. 

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