Nippon Steel files two lawsuits over Biden decision to block U.S. Steel sale

Following President Joe Biden’s decision to block the sale of the Pennsylvania-based U.S. Steel Corporation to a Japanese steelmaker, both companies involved in the deal are suing to move forward with the sale. Nippon Steel Corporation and U.S. Steel announced two lawsuits on Monday, arguing that Biden ignored the law to gain political favor with the United Steelworkers union and that the Committee on Foreign Investment in the United States failed to conduct a good-faith review of the sale. 

The steelmakers are asking the United States Court of Appeals for the District of Columbia Circuit to set aside Biden’s order blocking the sale and direct CFIUS to conduct a new review of the proposed sale. 

In a separate lawsuit, the steelmakers are suing Ohio steel manufacturer Cleveland-Cliffs, its CEO, Lourenco Goncalves, and United Steelworkers President David McCall, accusing them of “illegal and coordinated actions” to prevent the sale of U.S. Steel. 

In a document detailing the lawsuits, Nippon Steel and U.S. Steel argued that Cleveland Cliffs, Goncalves and McCall “entered into an illegal agreement to subvert the Transaction in order to allow Cliffs to monopolize key North American steel markets.”

“Today’s legal actions demonstrate Nippon Steel’s and U.S. Steel’s continued commitment to completing the Transaction – despite political interference with the CFIUS process and the racketeering and monopolistic conspiracies of Cleveland-Cliffs and USW President David McCall – for the benefit of all stakeholders, including U.S. Steel’s shareholders, who will receive the agreed-upon $55.00 per share upon the Transaction closing,” the companies said in a joint statement. “We remain confident that the Transaction is the best path forward to secure the future of U.S. Steel – and we will vigorously defend our rights to achieve this objective.”

Goncalves, in a statement issued on Monday, accused Nippon Steel and U.S. Steel of deflecting blame for the blocked sale, calling the proposed sale a “self-inflicted disaster.”

“As of this morning, Nippon Steel and U.S. Steel continue to play the blame game in a desperate attempt to distract from their own failures. Today’s lawsuits against the U.S. Government, the USW, and Cleveland-Cliffs represent a shameless effort to scapegoat others for U.S. Steel’s and Nippon Steel’s self-inflicted disaster,” Goncalves said. “U.S. Steel’s executives did not get their personal payouts. Now that it is clear that they have miserably failed the very shareholders they always say they work for, they are lashing out with petulance as a result. Once again, bad course of action.”

Goncalves continued: “The final decision by the President of the United States to block the Nippon deal follows a year-long national security review, and underscores the importance of maintaining American control over our country’s critical steelmaking infrastructure.”

Biden announced last Friday that he would block the sale of U.S. Steel, saying that if the sale were to go through, it “would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”

The move drew a mix of responses from Pennsylvania officials. While some, like U.S. Sen. John Fetterman, welcomed the move, others, including Pennsylvania Senate President Pro Tempore Kim Ward and U.S. Rep. Dan Meuser, have blasted Biden’s decision. 

On Monday, Ward told KDKA talk radio host Marty Griffin that Biden’s decision on the sale was “confounding,” adding that the sale of U.S. Steel to Nippon Steel is the “only viable plan” for the Pittsburgh-based steel manufacturer. “We must save these jobs, we have to do that,” Ward said. 

Ward also said that Gov. Josh Shapiro should consider joining the lawsuit challenging Biden and the CFIUS, which accuses both the president and the committee of violating constitutional due process and statutory rights. 

“I think the governor should consider ... joining U.S Steel and Nippon in the CFIUS due process lawsuit. He should speak out. He should join in that lawsuit and not work behind the scenes. That didn’t work. It clearly failed if that’s what he was doing. So let’s go, governor. Let’s use your considerable power and position to help this and keep these jobs in Southwestern Pennsylvania,” Ward said. “Join the lawsuit.”

As of publication, Shapiro has not commented publicly on the lawsuits from U.S. Steel and Nippon Steel. Following Biden’s order blocking the sale, Shapiro said he expects “any other potential buyers to demonstrate the strong commitments to capital investment and protecting and growing Pennsylvania jobs that Nippon Steel placed on the table during my continued dialogue with their leadership – and I will continue to engage with all interested parties directly as I continue to fight for Pennsylvania.”