Paul Gluckman

The Justice Department, in a major Section 301 litigation policy reversal, said Aug. 31 it agreed to stipulate that refunds will be available on liquidated customs entries from China with lists 3 and 4A tariff exposure if importers prevail in the massive volume of cases inundating the Court of International Trade to vacate the tariffs. Akin Gump lawyers for sample case plaintiffs HMTX Industries and Jasco Products responded on Aug. 31 that they're "pleased" with the government's stipulation as something the plaintiffs have advocated for months, but not with DOJ's "bewildering" proposal that importers would still be required to file spreadsheet submissions in a CBP repository.

There’s been a steady recent uptick in the volume of Section 301 complaints at the Court of International Trade, but lawyers with active cases told us they're not sure if that has anything to do with the two-year anniversary of the Federal Register notice on Aug. 20, 2019, that put the List 4A tariffs into effect on Sept. 1, 2019, on goods from China. All the roughly 3,800 complaints inundating the court, and counting, seek to vacate the lists 3 and 4A tariffs and get the paid tariffs refunded on grounds that the duties are unlawful under the 1974 Trade Act and violate 1930 Administrative Procedure Act protections against sloppy rulemakings.

The U.S. Court of International Trade, per an order Aug. 18, scheduled a status conference in the Section 301 litigation for 10 a.m. on Sept. 1, two days before CBP is required to create a repository for importers to request liquidation suspensions of customs entries from China with lists 3 or 4A tariff exposure. The court has extended the deadline three times since ordering CBP to establish the repository in its July 6 preliminary injunction order (see 2108170049). The plaintiffs’ steering committee and the Department of Justice negotiated agreements on some previously contested terms for setting up the repository but are still far apart on others.

Section 301 sample case plaintiffs HMTX Industries and Jasco Products “persuasively argue” that the Office of the U.S. Trade Representative “clearly exceeded its authority” under the 1974 Trade Act when it imposed the “massive” lists 3 and 4A tariffs on “virtually all imports” from China “without connecting them to the underlying investigation of China’s trade practices,” said the Consumer Technology Association, the National Retail Federation and five other trade groups Aug. 9 in an amicus brief in docket 1:21-cv-52 at the U.S. Court of International Trade.

The Trump administration’s “radical escalation” of Section 301 tariffs on lists 3 and 4A Chinese goods “transgressed the statutory limits carefully delineated by Congress” when it crafted the 1974 Trade Act and delegated foreign-trade powers to the executive branch, Akin Gump lawyers for sample case plaintiffs HMTX Industries and Jasco Products said. This came in a cross-motion for judgment on the agency record filed the evening of Aug. 2 at the Court of International Trade in docket 1:21-cv-52. Akin Gump’s proposed order asks that the lists 3 and 4A tariffs be vacated, that any duties paid be refunded with interest and that the government be “permanently enjoined” from imposing the tariffs again.

The Court of International Trade postponed for two weeks an Aug. 6 deadline for CBP to create the repository through which Section 301 importers can seek to freeze liquidations of customs entries from China with lists 3 and 4A tariff exposure under the court's July 6 preliminary injunction (PI) order. Judge Claire Kelly told a status conference Aug. 2 that the court also is postponing for two weeks the Aug. 6 deadline for plaintiffs and the government to propose modifications to the PI order.

Importers seeking suspended liquidations of customs entries from China with Section 301 lists 3 and 4A tariff exposure under the July 6 preliminary injunction (PI) order of the Court of International Trade would need to file their requests in a “repository” to be set up in CBP's ACE database and back them up with emails to their appropriate CBP Center of Excellence and Expertise (CEE), say draft DOJ instructions filed with the court Friday in docket 1:21-cv-52. “We have conferred with plaintiffs and understand that they will respond separately with their responses to these draft instructions,” DOJ attorneys said. Akin Gump lawyers for sample case plaintiffs HMTX Industries and Jasco Products didn’t immediately comment. Lawyers on the plaintiffs' steering committee may repeat many of the same objections they raised at a July 23 status conference that the government, in complying with the PI order to suspend liquidations, is putting too much onus on importers for CBP's processing of their liquidation-suspension requests.

The government rejected the proposal from Section 301 plaintiffs at a U.S. Court of International Trade status conference July 23 that would have entitled importers to refunds from reliquidated customs entries from China with lists 3 and 4A tariff exposure if they prevail on the merits at the end of the litigation.

Justice Department lawyers “are still conferring internally” about modifications proposed by the Section 301 plaintiffs to the July 6 preliminary injunction (PI) order freezing liquidations of unliquidated customs entries from China with lists 3 and 4A tariff exposure, said a government filing late Tuesday at the U.S. Court of International Trade, made “under protest” due to defendants’ opposition to the PI. “A lack of response to any specific proposal should not be interpreted as agreeing to that proposal,” Justice said. The government supports reliquidating, if the plaintiffs win the litigation, any entries that liquidated inadvertently during the PI order’s temporary restraining order (TRO) period due to CBP limitations, it said. “CBP only has the functionality to return liquidated entries to unliquidated status one entry at a time, and very few CBP personnel are knowledgeable and trained to utilize this very limited and extraordinary functionality,” Justice said.

All customs entries from China with Section 301 lists 3 and 4A tariff exposure not yet liquidated as of the U.S. Court of International Trade's July 6 preliminary injunction (PI) order freezing liquidations would liquidate "in the ordinary course" and be refunded to the plaintiff importers at the end of the litigation if they win, Akin Gump lawyers proposed July 20 for sample case plaintiffs HMTX Industries and Jasco Products. Akin Gump seized on the proposal after DOJ lawyers at a status conference July 15 opened the door a crack to the possibility they would support a refund stipulation after months of refusing to do so.