Nippon Steel and US Steel filed a federal lawsuit challenging the Biden administration’s decision to block a proposed $15 billion acquisition of US Steel by Nippon Steel, a move that could have significantly reshaped the steel industry American. The lawsuit, filed 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 say U.S. President Joe Biden’s involvement in the process, which led to the December 2023 decision, unduly influenced the outcome. They allege that Biden, in an effort to gain political support in Pennsylvania ahead of the 2024 election, undermined the CFIUS decision. Nippon Steel had proposed investing $2.7 billion to revitalize aging U.S. Steel facilities, including those in Gary, Indiana, and Mon Valley, Pennsylvania, but the deal was blocked over concerns national security.
Biden argued that the merger posed risks to U.S. steel production at a time of heightened concerns about China’s dominance in the sector. This is the first time that an American president has blocked a merger between an American and Japanese company.
In addition to challenging the block itself, steelmakers have filed separate lawsuits accusing rival Cleveland-Cliffs and its CEO Lourenco Goncalves, as well as David McCall, head of the United Steelworkers union, of leading coordinated efforts to prevent the block. ‘acquisition. They say the move was part of a broader attempt to manipulate the regulatory process for political and competitive purposes. McCall, however, called the allegations “baseless.”
The dispute over the acquisition has become increasingly politicized, with Democratic and Republican figures expressing opposition. While the Biden administration blocked the deal, then-President Donald Trump also opposed the merger on the campaign trail in 2024, reflecting the high-stakes political environment surrounding the deal.
A crucial legal battle
The outcome of the trial remains uncertain, with U.S. courts generally deferring to CFIUS’s expertise on national security matters. However, experts note that the case could face difficulties because of the level of deference traditionally given to presidential decisions in such cases.
A White House spokesperson defended the blockage, saying national security experts had determined the acquisition would pose risks to the United States. The lawsuit also targets key CFIUS members, 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 compromised. “It is clear that the review process was manipulated,” they said, pointing to the lack of due process.
For now, the future of the $15 billion deal remains in limbo as the steel giants continue their challenge.
