Nippon, US Steel file lawsuit against Biden administration

Nippon Steel and US Steel have filed a federal lawsuit challenging the Biden administration’s decision to block a proposed $15bn acquisition of US Steel by Nippon Steel, a move that could have significantly reshaped the US steel industry. The lawsuit, filed on Monday, argues that the decision by the Committee on Foreign Investment in the United States (CFIUS) was politically motivated and deprived the companies of a fair review.

The companies claim that US President Joe Biden's involvement in the process, which led to the December 2023 decision, improperly influenced the outcome. They allege that Biden, aiming to secure political support in Pennsylvania ahead of the 2024 election, prejudiced the CFIUS decision. Nippon Steel had offered to invest $2.7bn to revitalize US Steel’s aging facilities, including those in Gary, Indiana, and Mon Valley, Pennsylvania, but the deal was blocked on national security grounds.

Biden argued that the merger posed risks to US steel production at a time of heightened concerns over China’s dominance in the sector. The decision marked the first time a US president has blocked a merger between a US and Japanese company.

In addition to challenging the block itself, the steelmakers have filed separate lawsuits accusing rival Cleveland-Cliffs and its CEO Lourenco Goncalves, along with David McCall, head of the United Steelworkers union, of engaging in coordinated efforts to prevent the acquisition. They claim the move was part of a broader attempt to manipulate the regulatory process for political and competitive gain. McCall, however, called the allegations "baseless."

The dispute over the acquisition has become increasingly politicized, with both Democratic and Republican figures voicing opposition. While Biden’s administration blocked the deal, then-President Donald Trump also opposed the merger during the 2024 election campaign, reflecting the high-stakes political context surrounding the deal.

A pivotal legal battle

The outcome of the lawsuit remains uncertain, as US courts typically defer to the expertise of CFIUS on matters of national security. However, experts note that the case may face challenges due to the level of deference traditionally given to presidential decisions in such matters.

A White House spokesperson defended the block, stating that national security experts had determined the acquisition would pose risks to the US. The lawsuit also targets key members of the CFIUS, including Treasury Secretary Janet Yellen and Attorney General Merrick Garland.

The legal battle is expected to continue, with the companies arguing that their right to a fair review has been undermined. "It is clear that the review process was manipulated," they said, emphasizing the lack of due process.

For now, the future of the $15bn deal remains in limbo as the steel giants push forward with their challenge.