Written by Susan Kohn Ross

It appears somewhat more likely the trade community will get a decision sooner rather than later from the Courts about the IEEPA refunds. However, in the meantime, CBP has said do not file a Post Summary Correction, they will not be accepted as a matter of policy. The current lawsuits all proceed under 26 U.S.C. § 1581(i), which is the Court’s residual jurisdiction provision. This is significant in the sense that protests would not be considered valid. The supporting view is that no decision by CBP is involved in the liquidation process, so there are no grounds for a protest to be filed. The opposite view argues CBP chose to assess the tariffs and that is reviewable by filing a protest. Which position do you take?

On the other hand, if entries liquidate with the IEEPA tariff charged after February 20, those should be subject to protest since CBP made the decision to illegally assess the IEEPA tariff after it was ruled illegal by the Supreme Court. These are two separate courses of action possible, which further complicates how companies will move forward. Because there are so many unknowns, consulting with trade counsel is highly recommended.

V.O.S., one of the successful plaintiffs at the Supreme Court, filed a request for a permanent injunction ordering the refunds. The CIT gave the government until February 27th to file its response. As such, importers likely want to get with their trade counsel to file lawsuits before the Court publishes its decision. If your lawsuit has already been filed and the Court decides liquidated entries will not be the subject of refunds unless there is a claim, by filing now, you have your claim perfected. Due to the current lack of clarity, it may turn out that lawsuits may not be needed, depending on how the Court rules, but better safe than sorry!

On Friday, the 27th, the Government filed its response. To no one’s surprise, the response denies there is a need for quick action. According to the logic applied by the Dept. of Justice (“Justice”), the damages incurred by importers is one related to money, and being owed money is typically not a ground on which to speed a matter to resolution. Justice also points out the actual order has yet to be transmitted by the Supreme Court to the Court of Appeals for the Federal Circuit (“CAFC”) and by the CAFC to the Court of International Trade (“CIT”). Each court ordered the lower court to stay the action. As such, Justice concludes there is no reason to lift the current stay just yet. It wants time for the process to run its course, include giving Congress time to act. One interesting side note is V.O.S. filed its motion at the CIT, whereas the Government filed its opposition/response at the CAFC. Since each side filed before a different court, this raises the question of which Court actually has jurisdiction to make the decision? How will that be resolved?

One must feel somewhat sorry for the CIT judges, since they are already inundated with lawsuits focused around refunding the IEEPA tariffs. The last count was something in the vicinity of 2,000 lawsuits have been filed.

In terms of the pending motion, the first question is which court has authority? Once that is decided, next comes will there be oral argument or will that Court decide the motion on the pleadings filed? Of course, another outcome could be the C.I.T. dismisses the motion filed by V.O.S. on the grounds it was filed in the wrong court. Alternatively, the CAFC could find Justice filed before the wrong court and dismiss the opposition or transfer it to the CIT. Either way, it is reasonable to expect the losing side will seek to transfer their original filing to the other court or quickly refile at the “correct” court. That still leaves open the question of whether oral argument will occur or the court will decide the motion on the pleadings.

Once we finally get to the point of a Court issuing an order for the refunds, the next question is whether that decision will be appealed. Also, we have yet to see what process might apply to importers filing refund claims. There are some “edge” issues which must also be addressed, such as the impact on drawback and reconciliation entries, plus those tariffs where a bilateral agreement applies, the tariff was capped at a specific percentage and was paid as part of the “regular” duties at time of entry.

The other topic which is potentially lurking is those entries which were in-transit. The definition of in-transit generally means goods were clearly en route to the U.S. However, the IEEPA tariffs are written to say the goods not only need to be en route, but also on their final carrier. Will that revised definition be found valid? FYI – that same language also appears in the Section 122 Executive Order. So, lots of things to iron out before refunds will actually be issued. Stay tuned for more update.

This article is a follow up to “IEEPA Tariffs Overturned“

For timely updates on this and other topics, please see Su Ross’ LinkedIn page, HERE.