California Court Says Orders Imposing Tariffs 'Laws' of the US, Dismisses IEEPA Tariff Suit

Scott dismissed the case rather than transfer it to CIT, per California's request, allowing the state to appeal the decision to the U.S. Court of Appeals for the 9th Circuit.

The decision adds to the growing split on whether CIT has exclusive jurisdiction to hear IEEPA tariff cases (see 2505290040). So far, the trade court has ruled that it has exclusive jurisdiction to hear the suit, with the court most recently declaring as much in its decision vacating Trump's executive orders implementing the tariffs (see 2505280068). Federal district courts in Florida and Montana have held similarly, though the U.S. District Court for the District of Columbia said it has jurisdiction, not CIT, since the case arises out of IEEPA, and IEEPA doesn't provide for tariffs (see 2505290037).

In her decision, Scott said California's suit challenging Trump's tariff action "grows out of, and flows from the executive orders through which the President imposed tariffs." The executive orders modify the HTS, "which is a statutory provision." Specifically, Section 3004(1)(C) says the HTS includes modifications made to it by the president "under authority of law." Since the orders are "laws of the United States," the lawsuit is one arising out of a law of the U.S. providing for tariffs, invoking Section 1581(i), the court said.

California argued that orders aren't laws of the U.S., citing decisions from the 9th Circuit and the U.S. Court of Appeals for the D.C. Circuit. In the 9th Circuit case, Leath v. Stetson, the court said an executive order is not a law of the U.S. for purposes of giving district courts jurisdiction under the federal question statute. Scott said the Leath court "said nothing about whether executive orders imposing tariffs are laws of the United States for purposes of section 1581."

The D.C. Circuit, in Sierra Club v. U.S. Dep't of Energy, said an executive order is not a law within the meaning of the Constitution. Scott again said this decision "says nothing about whether executive orders regarding tariffs are laws within the meaning of section 1581," noting that the Sierra Club case concerned executive orders devoted solely to the internal management of the executive branch. Conversely, the executive orders here aren't "broad formulations of policy or directions regarding Executive Branch management" but instead are "modifications to the Harmonized Tariff Schedule set by statute."

Finding that the executive orders aren't laws of the U.S. would "contradict section 3004," the judge said. And while California says the orders are outside of Section 3004, since they weren't made under authority of law, the judge said it matters not at this juncture whether the president's authority was valid.

Scott also said it would cut against congressional intent for district courts to hear the case, since trade matters are meant to go before the trade court. Section 1581 was amended by Congress to give CIT exclusive jurisdiction over cases that arise out of a law of the U.S. "pertaining to international trade," which is the case here. "It would be inconsistent with Congressional intent for this Court to nevertheless exercise its jurisdiction, as California urges, to decide whether the tariffs are lawful," the judge said, adding that this inconsistency would be compounded if different courts reach different conclusions, confounding the uniformity of judicial review of trade disputes.

The court then explained its decision to dismiss the case rather than transfer it to CIT. Scott said it's in the "interest of justice" to dismiss the case so that the question of whether the case is in the right forum can be addressed on appeal by the 9th Circuit. Dismissing the suit will let the 9th Circuit "decide whether this Court has jurisdiction over a lawsuit challenging the President’s imposition of tariffs and/or to what extent district courts should consider the merits of a case in deciding if a matter falls within the CIT’s exclusive jurisdiction."

California sought dismissal rather than transfer after a case in Montana challenging Trump tariff action was transferred to CIT. The plaintiffs in that case, four members of the Blackfeet Nation tribe, are appealing the decision, though the government is arguing that a transfer order isn't an appealable decision (see 2505020054).