DOJ Defenses 'All Fail' Against Section 301 Injunction, Says Proposed Reply

“Good cause exists” for the U.S. Court of International Trade to grant Section 301 sample-case plaintiffs HMTX Industries and Jasco Products leave to reply to DOJ’s opposition to the preliminary injunction plaintiffs seek to freeze liquidation of unliquidated customs entries from China with Lists 3 and 4A tariff exposure, said Akin Gump’s motion (in Pacer) filed Thursday in docket 1:21-cv-52.

The government’s May 14 response to Akin Gump’s April 23 preliminary injunction motion (see 2105160001) was “the first instance” in which DOJ “detailed its views” opposing the availability of tariff refunds, and it “delves deeply” into Office of the U.S. Trade Representative defenses of the Lists 3 and 4A tariffs, said Thursday’s filing. Plaintiffs believe the court “would benefit from hearing all of the arguments” before deciding on the injunction, which is why it should grant leave and accept the reply, it said.

Injunctive relief freezing the “status quo” of still-unliquidated entries “has regrettably become necessary” due to the reversal in the government’s “litigating position” opposing refunds if plaintiffs prevail on the merits, despite having supported refund relief in recent federal cases, said Akin Gump. DOJ’s arguments opposing the injunction “all fail,” it said. Though the government claims complying with the injunction would place enormous administrative burdens on Customs and Border Protection, “it has at its disposal an easy solution: offering the same stipulation as to reliquidation that it concededly offered as recently as last year in precisely these circumstances,” it said.

Plaintiffs are likely to succeed on the merits, meeting the first of several bars for landing an injunction, said Akin Gump’s proposed reply (in Pacer). The USTR used its Trade Act Section 307 modification authority five times in the history of the statute, not including the current case, it said. Four times it used the authority to terminate a Section 301 investigation, and in another, it delayed implementation of a trade remedy action “to allow for completion of review under a trade agreement,” it said. “What the USTR has never done” is rely on Section 307 “to expand a tariff action -- never mind by such a mind-boggling magnitude” as it did when it imposed Lists 3 and 4A, it said.

HMTX-Jasco also are likely to succeed on their arguments that USTR violated the Administrative Procedure Act by running sloppy tariff rulemakings that lacked transparency, said Akin Gump. USTR “neither provided a meaningful opportunity for comment nor considered the public’s comments in a meaningful way,” it said. “USTR’s cavalier approach to the comment process -- including imposing new truncated procedures and its decision to announce the imposition of List 3 duties mere days after the comment period ended -- underscores the fact that the agency never intended to consider the views of thousands of American businesses and trade associations that described the wide-ranging detrimental impacts these additional tariffs would have on global supply chains, U.S. jobs, and U.S. consumer prices.”

The government “cannot dodge the inevitable risk of irreparable harm absent interim relief,” said Akin Gump. “Defendants barely attempt to justify their grossly inequitable litigation strategy that, if successful, would guarantee that even currently unliquidated entries will become permanently unrecoverable once liquidated.” Making matters worse, said Akin Gump, some Section 301 plaintiff importers report that CBP “is declining to extend the period for liquidation through an otherwise routine regulatory request in light of this litigation.” CBP didn’t comment Friday.

The government “overstates the complexity of implementing a preliminary injunction against liquidation,” said Akin Gump. CBP can run a query in its Automated Commercial Environment that identifies all entries corresponding to each importer of record (IOR) number that have Lists 3 and 4A tariff exposure, it said: “While taking these steps for each of the 6,500+ plaintiffs may take time, none is exceptionally difficult.”

The strict terms in DOJ’s “alternative proposed order,” which the government submitted May 14 as a proposal if it loses the injunction fight, are “unworkable,” said Akin Gump. Plaintiffs have no problem providing the government the “information necessary to suspend their entries,” including their IOR numbers and the filing dates of their complaints, it said. But the plaintiffs’ steering committee “should not be required to collect that information from all plaintiffs,” thousands of whom are not even clients of steering member law firms, it said. It's not the steering committee’s job “to play that role while Defendants seek to overturn binding precedent (which is the only reason suspension of liquidation is necessary in the first place),” it said. DOJ didn’t respond to questions.