No Agreement on Modifying Section 301 Injunction, Akin Gump Says

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.

Akin Gump proposes to remove "practically all" the wording in the PI order that addressed the suspension of liquidations, the filing said. It would replace it "with a single clause reflecting what we had hoped would be the Defendants’ agreement to refund any Section 301 List 3 and 4A duties paid on any entries liquidated" since the PI order. The approach "eliminates the need for any work" and additional expense for the government or the plaintiffs "associated with suspending liquidation on such entries," the filing said. The proposed modification also "avoids the expense of stacking potentially multiple continuous bonds while the litigation continues -- an unintended consequence of a preliminary injunction suspending liquidation indefinitely," it said.

The plaintiffs "see no downside to this alternative for any party, and significant upside for affected entities," including the court, the filing said. The government has "not yet identified any concerns with the proposed stipulation," it said. Though DOJ hasn't taken a position on the proposal, "we hope the Court will urge Defendants to accept this approach," because it will "save everyone involved countless resources and so that all parties can focus on the merits of the litigation," it said. Despite "our best efforts" to work with the government on joint proposed modifications to the PI order, including the revision proposing refunds, "we were unable to come to an agreement," Akin Gump said.

The inability of CBP to prevent entries from liquidating inadvertently during the 28-day temporary restraining order period under the PI order when no entries can liquidate prompted DOJ lawyers at the status conference to say they will propose a modification in the order. The change would stipulate that any entries that improperly liquidate during the 28 days can be reliquidated at the end of the litigation with a refund of “any duties that are found to have been unlawfully collected” if the plaintiffs win. Under questioning from Chief Judge Mark Barnett, DOJ lawyer Jamie Shookman said the government now concedes the court has the authority to order refund or reliquidation relief in limited instances -- in this case to preserve the "integrity" of the PI order.

The “repository” for importers to identify their unliquidated entries was to have been created July 20 under the PI order (see 2107150069), but DOJ wants it delayed eight days to July 28, it said in a motion filed late on July 19 that made no mention of the government or Akin Gump proposals to stipulate refunds. The government also wants a 30-day extension to Aug. 27 of the TRO period in which no entries can liquidate. Akin Gump says it wants the repository creation date pushed back to Aug. 2 and the TRO period extended 90 days to early October. "This ensures sufficient time to allow Plaintiffs to submit the necessary information, if a repository is needed at all," Akin Gump said.

CBP needs the additional time the government proposes to “establish and fully operationalize” the repository and finalize instructions on its use, plus “manage the logistics involved,” DOJ said. Putting off the repository creation date for only eight days is "insufficient," Akin Gump said. Extending repository creation to early August "will provide the needed additional time for the Government to set up the system," it said.