NIPPON Steel and United States Steel claimed former President Joe Biden unfairly prejudged their US$14.1 billion merger and gave the companies no chance for feedback on a “sham” national security review before he blocked the deal.
The steel makers, which sued last month, said in an opening brief on Monday (Feb 3) that the Committee on Foreign Investment in the United States (Cfius) violated their due process rights last year by allowing “virtually no substantive engagement” with the companies.
Cfius, which is supposed to conduct an apolitical review to protect national security, ignored its procedures after Biden said in March 2024 he’d block the merger, the companies told a federal appeals court in Washington. They claim he did that to gain favour with union steelworkers in Pennsylvania while he was seeking re-election. The panel’s review spanned nine months before Biden formally blocked the deal in January, according to the court filing.
The review was “a Potemkin process designed from the beginning to reach President Biden’s predetermined result”, Nippon Steel and US Steel told the US Court of Appeals for the District of Columbia Circuit. “To effectuate this sham process, Cfius violated its own procedures.”
Those violations included a failure to address proposals by the companies to “mitigate any purported national security risk”, as required by law; leaking confidential information about Cfius deliberations to a rival and a top union official; and failing to document the position by each of several federal agencies involved in the Cfius review, according to the filing.
‘No ambiguity’
“The government cannot plausibly assert that President Biden’s decision was made in January 2025 when the order was issued,” according to the filing. “There was no ambiguity or equivocation in the president’s consistent and definitive statements disapproving the merger, starting in March 2024.”
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Nippon Steel and US Steel want the US Court of Appeals for the District of Columbia Circuit to set aside what they call the “unlawful” Cfius review and Biden’s order to block the deal on national security grounds. They seek a new review.
Cfius is an interagency body, led by the Treasury Department, charged with assessing national security risks from foreign investment in US businesses.
As part of their filing, the companies included a declaration from a former Cfius official who said his own assessment had found the review of the steel merger was “predetermined, thus violating Cfius’s statutory and regulatory obligations and practices”. Richard Sofield, who handled about 1,500 reviews and is now in private practice, said Cfius’s conduct was “so far outside” standards that they “appear to be motivated by interests other than national security”.
A Treasury Department spokesperson did not immediately respond to a request for comment.
Trump opposition
While Biden is no longer in office, President Donald Trump has expressed his own opposition to the deal.
“Why would they want to sell US Steel now when tariffs will make it a much more profitable and valuable company?” Trump said on his social media platform, Truth Social, last month, before he began announcing a broad range of tariffs he’d promised during the campaign. “Wouldn’t it be nice to have US Steel, once the greatest company in the world, lead the charge towards greatness again?”
The companies also have filed a lawsuit in federal court in Pittsburgh against rival US steelmaker Cleveland-Cliffs and chief executive officer Lourenco Goncalves, as well as United Steelworkers President David McCall, alleging coordinated anticompetitive and racketeering activities designed to allow only Cliffs to acquire US Steel. BLOOMBERG
