Government Appeals CIT Orders; Seeks to Stymie IEEPA Tariff Refund Process
By John H. Kester
Proceedings before the Court of International Trade (“CIT”) and the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) in June leave no doubt that the government is continuing to fight blanket refund of tariffs unlawfully imposed using the International Emergency Economic Powers Act (“IEEPA”). These efforts include the government’s filing now consolidated appeals opposing the CIT’s orders that all importers have IEEPA duties removed from their entries. The government’s appellate briefs are due August 3rd.
The June developments should serve as a wakeup call to importers who viewed as panacea the April 20th launch of Customs and Border Protection’s Consolidated Administration and Processing of Entries (“CAPE”) system. The CAPE system has been providing refunds on some entries that fall within its limited parameters, but CAPE also has left many importers without an extrajudicial mechanism to seek refund for the billions of dollars non-refundable in its present iteration.
In particular, importers with entries that have been liquidated for more than 90 days should be aware that the government is asserting those importers cannot recover any refund of IEEPA duties on those entries unless each such importer receives a specific court order from CIT ordering reliquidation.
- The government has asserted CIT lacks the legal authority to issue a universal injunction directing refund to all importers with entries on which IEEPA tariffs were imposed;
- The government appealed the universal injunction altogether on June 3rd, and its position is that the CIT cannot apply such an order to importers who were not party to the specific refund cases in which the injunction was made.
- The government has asserted that even if CIT had the authority to issue such a universal injunction, the government would be incapable of complying with such an order immediately;
- CIT had issued this injunction in more than one tariff refund case, but had put on pause the requirement that IEEPA tariffs be removed from the accounting immediately. Apparently growing impatient with the speed of refunds, particularly to smaller importers, CIT Senior Judge Eaton on May 27th ordered the government to show why he should not now require immediate compliance with the injunction.
- As of writing, the pause as to immediate compliance remains in effect.
- The government has asserted that any importer whose entry has been liquidated without a refund for more than 90 days is not entitled to any refund whatsoever, unless the CIT orders reliquidation;
- The government is asserting that Customs and Border Protection is legally unable to reliquidate an entry that has been liquidated for more than 90 days.
- Plaintiffs in a June 9th CIT hearing in O.S. Selections expressed frustration with what they characterized as the government’s failure to offer any legal basis for its assertion that individualized court orders were needed.
- In the same hearing, the government emphasized that finally liquidated entries comprised less than 6.9 percent of the total IEEPA tariff funds collected. Senior Judge Eaton clarified, “So, are we talking about ten billion dollars?… Well, even I think that’s real money.” Later in the hearing, the amount was said to be more than 11 billion.
- The government has asserted that importers affected by IEEPA tariffs should not be certified as a class, for which Plaintiffs in O.S. Selections had moved on June 4th to bypass the government’s arguments against the universal injunction and its assertion that individual court orders were needed for reliquidation of finally liquidated entries.
- On June 26th, the government filed its opposition to class certification, and asserted that even if a class encompassing all IEEPA-affected importers were certified, importers would still need individualized court orders for reliquidation of their finally liquidated entries.
- The Senior Judge ordered that Plaintiffs may file a reply brief on the class certification issue on or before July 22nd.
In the June 9th hearing, Senior Judge Eaton broadly implored the government to yield:
“My appeal to you is: withdraw your appeal…you win nothing…if the Court of Appeals says that my Order…is…unlawful. This is a situation that’s simply never going to happen again. Or, you could stipulate to the Order and then you wouldn’t have any precedent of any kind….”
But the government’s attorney Ms. Burke made clear that the government fears that its actions with regard to IEEPA refunds may have some effect as higher Court(s) evaluate the Section 122 tariffs it imposed immediately after the IEEPA tariffs were ruled unlawful:
“I hesitate to say this…. The Section 122 case [has] already been appealed. That is very similar to this…. I understand that the Court is saying that…this is a one-off [but] I think that very soon, within the next year, we’re going to be hit with a lot of people saying, ‘Why don’t you just do it the same way that you did it before?’”
The CIT already has ruled the Section 122 tariffs are unlawful and the issue is now to be considered by the Federal Circuit.
GKG Law remains prepared to file complaints on behalf of importers who paid unlawful IEEPA duties, including those importers with finally liquidated entries. We are further prepared to file claims on behalf of those importers who have paid unlawful Section 122 tariffs.
John H. Kester is a Customs attorney with GKG Law. He additionally passed Customs and Border Protection’s rigorous Customs Broker License Exam and his application for a Customs Broker License is pending. He is reachable at jkester@gkglaw.com.
Brendan Collins and Oliver M. Krischik, Principals with GKG Law, additionally participated in the firm’s numerous filings in opposition to the Section 301 tariffs implemented by President Trump’s first administration. They are reachable at bcollins@gkglaw.com and okrischik@gkglaw.com respectively.