Japanese steelmaker Nippon Steel and U.S. Steel have filed lawsuits against the Biden administration following its decision to block their acquisition plan, with the administration's stance, citing national security and supply chain concerns, now formally contested by both companies.

The lawsuits against the administration claim the federal government’s decision undermines investments aimed at strengthening the American steel industry and providing benefits to U.S. workers and communities, as the Daily Wire reports.

On Monday, Nippon Steel and U.S. Steel initiated legal action in Washington, D.C., and Pennsylvania district courts. According to the lawsuits, the Biden administration violated due process by rejecting the acquisition without adequately assessing the implications for national security.

The companies argue that their plan would have fortified the domestic steel sector and revitalized regions dependent on steel manufacturing.

Companies Push Back Against National Security Rationale

The White House announced last week that the deal was blocked due to concerns over supply chain stability and foreign ownership of a critical U.S. industry. President Joe Biden emphasized the importance of keeping U.S. Steel under domestic ownership to protect national interests.

“It is my solemn responsibility as President to ensure that...America has a strong domestically owned and operated steel industry,” Biden stated, underscoring his commitment to keeping the company “American-owned and operated.”

Despite these concerns, Nippon Steel and U.S. Steel contend that their proposal would enhance, not jeopardize, national security. They pledged a $2.7 billion investment in the U.S. steel industry as part of the acquisition, which they argue would have bolstered the supply chain and shielded it from competition, particularly from China.

Investment Pledge Canceled Following Rejection

The companies’ acquisition plan included a $55-per-share payout for U.S. Steel shareholders, a benefit nullified by the administration's decision. They maintain that the blocked deal denies both shareholders and communities the financial and economic opportunities that would have accompanied the proposed investment.

Nippon Steel and U.S. Steel also allege that the decision was influenced by union interests, particularly the United Steelworkers (USW) union. The union had previously supported Cleveland-Cliffs, an Ohio-based steelmaker that had its own bid for U.S. Steel rejected. The lawsuits accuse the USW and Cleveland-Cliffs of colluding to sway the administration’s decision.

Bipartisan Opposition to Deal

The rejection of the acquisition has drawn rare bipartisan alignment. Former President Donald Trump expressed opposition to the proposal, citing concerns about foreign ownership. “I’m totally against the once great and powerful U.S. Steel being bought by a foreign company,” Trump said, mirroring Biden’s position on the matter.

Nippon Steel and U.S. Steel maintain that their partnership would have ensured the company’s long-term viability while benefiting its employees and surrounding communities. The companies claim they engaged transparently and in good faith throughout the process to demonstrate the acquisition’s alignment with national interests.

Lawsuits Challenge Biden Administration’s Process

Central to the lawsuits is the claim that the Committee on Foreign Investment in the United States (CFIUS) failed to conduct a thorough review of the acquisition’s potential impact on national security. The companies assert that such an analysis would have supported their position and refuted concerns over foreign ownership.

The lawsuits also highlight the missed opportunity to revitalize regions reliant on steel production. They argue that their investment would have preserved jobs, strengthened supply chains, and reduced vulnerabilities posed by international competition.

The steelmakers’ allegations of union influence add a layer of complexity to the case. According to the lawsuits, the USW prioritized its relationship with Cleveland-Cliffs over broader industry benefits. Nippon Steel and U.S. Steel claim that the union’s actions undermined a plan designed to uplift the American steel sector.

Broader Implications for Steel Industry

The administration’s decision has reignited debates over balancing national security with economic development. Critics argue that blocking the deal could deter foreign investments critical to sustaining U.S. industries.

The blocked acquisition reflects broader tensions within the steel industry, where global competition and domestic priorities often clash. Nippon Steel and U.S. Steel’s lawsuit underscores the challenges of navigating U.S. regulatory frameworks while pursuing cross-border partnerships.

For now, the future of U.S. Steel remains uncertain. The lawsuits could result in a reassessment of the decision, but the administration’s strong stance suggests a prolonged legal battle ahead. Whether the companies can prove their claims of due process violations and economic benefits remains to be seen.