Washington: U.S. Steel and Nippon Steel have filed a lawsuit against the Biden administration, alleging constitutional violations over the blocking of a $14.9 billion merger through a national security review they claim was politically influenced. The companies seek a federal court ruling to overturn the decision and allow a new, impartial review.
The lawsuit accuses President Joe Biden of prejudging the review process conducted by the Committee on Foreign Investment in the United States (CFIUS), which assesses foreign investments for national security risks. The companies argue this decision deprived them of a fair and objective evaluation, violating their rights.
The merger became a contentious political issue ahead of the U.S. presidential election, with both President Biden and Republican candidate Donald Trump opposing the deal to appeal to voters in Pennsylvania, where U.S. Steel is headquartered. United Steelworkers union (USW) President David McCall also opposed the merger, emphasizing the importance of keeping U.S. Steel under American ownership.
Nippon Steel had proposed relocating its U.S. headquarters to Pittsburgh and committed to maintaining existing agreements with the USW, but these concessions failed to sway opposition. The companies allege Biden acted to gain favor with union leadership in Pennsylvania as part of his reelection strategy.
In a joint statement, U.S. Steel and Nippon Steel said, “As a result of President Biden’s undue influence to advance his political agenda, the Committee on Foreign Investment in the United States failed to conduct a good faith, national security-focused regulatory review process.”
The White House defended the decision, with a spokesperson stating, “A committee of national security and trade experts determined this acquisition would create risk for American national security. President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains.”
Claims of Flawed Review Process
Nippon Steel Vice Chair Takahiro Mori criticized the CFIUS review, describing it as lacking integrity. In an interview, Mori revealed the company received no written feedback on its proposed national security agreement and encountered no expressed concerns during multiple meetings.
Experts note that courts typically defer to CFIUS decisions on national security. The Justice Department declined to comment, and the Treasury Department, which oversees CFIUS, did not respond to requests for remarks.
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Second Lawsuit Targets Cleveland-Cliffs and USW
The companies also filed a separate lawsuit against rival Cleveland-Cliffs, its CEO Lourenco Goncalves, and USW President McCall. The suit accuses them of orchestrating an “illegal campaign” to block the merger and monopolize the domestic steel market.
According to the lawsuit, Goncalves assured investors that the Biden administration would prevent the Nippon Steel deal. The companies are seeking an injunction against further anticompetitive behavior and billions of dollars in damages. McCall called the allegations baseless, while Cleveland-Cliffs and Goncalves did not immediately respond to requests for comment.
Historic Company Under Pressure
Founded in 1901, U.S. Steel played a significant role in America’s industrial development but has faced declining revenues and profits in recent years. The company has become an attractive acquisition target as rivals aim to strengthen their foothold in the U.S. steel market.
The lawsuit highlights claims that Biden’s opposition to the deal, even before the CFIUS review began, undermined the regulatory process. The companies assert this conduct manipulated the review’s outcome, depriving them of the due process guaranteed by law.
