US Steel, Nippon Steel Sue Biden Administration Over Blocked Merger

A portion of U.S. Steel's Edgar Thomson Works in Braddock, Pa., on April 28, 2024. AP Photo/Gene J. Puskar, File

U.S. Steel and Nippon Steel are suing to challenge the Biden administration’s decision that blocked a nearly $15 billion deal for the Japanese company to take over its Pittsburgh-based competitor.

The lawsuit, filed on Jan. 6 in the U.S. Court of Appeals for the District of Columbia Circuit, accuses President Joe Biden and senior administration officials—including Treasury Secretary Janet Yellen and Attorney General Merrick Garland—of violating the companies’ due process rights in a review process they said was “manipulated” for political reasons.

In a separate legal action, the companies sued Cleveland-Cliffs, which previously attempted to acquire U.S. Steel for $7 billion but was rebuffed, along with its CEO Lourenco Goncalves and United Steelworkers International President David McCall. The lawsuit alleges that the Cleveland-based steelmaker and the labor union unlawfully coordinated to undermine the acquisition.

Biden blocked the merger on Jan. 3, affirming a stance he had vowed to uphold during his reelection campaign.

Handing over one of the United States’ largest steel producers to foreign control would jeopardize national security and critical supply chains, the president contended.

“It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad,” Biden said in a statement about the decision. “And it is a fulfillment of that responsibility to block foreign ownership of this vital American company.”

The decision followed a review by the Committee on Foreign Investment in the United States, which screens foreign investment in U.S. businesses for national security risks. The committee, chaired by Yellen, did not reach a consensus on the potential risks posed by the deal.

U.S. Steel and Nippon Steel have rejected the administration’s rationale, arguing that it would harm rather than protect U.S. interests if the deal fell through.

“From the outset of the process, both Nippon Steel and U.S. Steel have engaged in good faith with all parties to underscore how the Transaction will enhance, not threaten, United States national security, including by revitalizing communities that rely on American steel, bolstering the American steel supply chain, and strengthening America’s domestic steel industry against the threat from China,” the companies said in a prepared statement on Jan. 6.

U.S. Steel also warned that without the Japanese investment, the company might have to shut down steel plants in Pennsylvania’s Monongahela Valley and in Gary, Indiana, that were slated for a multibillion-dollar upgrade following the completion of the sale.

“Nippon Steel is the only partner both willing and able to make the necessary investments—including no less than $1 billion to Mon Valley Works and approximately $300 million to Gary Works as part of the $2.7 billion committed—to protect and grow U.S. Steel for the benefit of employees, the communities in which it operates, and the entire American steel industry,” the company said.

U.S. Steel’s fate has been complicated by the politics of an election year. Both Democratic and Republican candidates had spoken out against the acquisition in their efforts to win Pennsylvania, a crucial swing state deeply tied to the steel industry.

President-elect Donald Trump, who has publicly opposed the sale since it was announced in December 2023, suggested on Jan. 6 that U.S. Steel would become competitive again through tariffs.

“Why would they want to sell U.S. Steel now when Tariffs will make it a much more profitable and valuable company?” Trump wrote in a post on his Truth Social platform. “Wouldn’t it be nice to have U.S. Steel, once the greatest company in the World, lead the charge toward greatness again? It can all happen very quickly!”