CIT Stays Liquidation of Entries in Section 232 Steel 'Derivative' Challenge

The Court of International Trade stayed the liquidation of steel and aluminum "derivative" imports potentially subject to the Section 232 national security tariffs, in an Aug. 2 decision. Due in part to a recent U.S. Court of Appeals for the Federal Circuit decision, Transpacific Steel LLC et al. v. U.S., CIT permitted the U.S.'s motion for a stay of liquidation for entries that would be assessed the 25% tariff on steel and aluminum derivatives.

The stay order comes from the PrimeSource Building Products, Inc. v. U.S. case where a three-judge panel at the court ruled that the president's decision to extend the Section 232 tariffs onto derivative products violated procedural time limits (see 2104050049). In particular, the majority found that the extension was made well after the 105-day deadline for tariff action laid out in the statute following the Commerce Department's report that led to the initial imposition of the Section 232 duties in 2018. The U.S. appealed this decision to the Federal Circuit, also making a stay request in CIT to ensure that they do not preemptively liquidate entries without the 25% national security tariffs.

The landscape of the PrimeSource appeal shifted drastically, however, when the Federal Circuit ruled on July 13 that the president's decision to hike the Section 232 tariffs on Turkish steel from 25% to 50% beyond the 105-day deadline was permitted (see 2107130059). So long as the move can be construed as part of a "plan of action" in line with the original purpose of the 2018 report, the president can skirt these time constraints established in the 1988 amendments to the statute, the court ruled. While certainly not good news for the PrimeSource crew, some voices urged caution when interpreting the Transpacific decision, seeing as the set of facts and scope of the president's decision differs between the two challenges (see 2107150051).

While CIT said that it has not arrived at the conclusion that the Transpacific case is completely damning for the PrimeSource appeal, the principle of "continuing" authority is enough to establish a likelihood of success, one of the factors required for a stay. "Even though Transpacific II and this case arose from somewhat different facts, we nevertheless conclude that the opinion of the Court of Appeals potentially affects the outcome of this litigation," the court said. "In reaching this conclusion, we do not opine on whether Transpacific II necessarily controls that outcome, i.e., whether the President’s adjusting of tariffs on derivatives of steel products falls within what the Court of Appeals termed, in a different factual setting, 'a continuing series of affirmative steps deemed necessary by the President to counteract the very threat found by the Secretary,' but for purposes of ruling on the instant stay motion, it is sufficient that the discussion in Transpacific II of the 'continuing' nature of Presidential Section 232 authority is expressed in broad terms."

The stay order enjoined liquidation of entries affected by the litigation and instructed PrimeSource and the U.S. to confer to "seek to reach agreement on PrimeSource’s monitoring and continuous bonding for entries of merchandise within the scope of Proclamation 9980 that have occurred, and will occur, on and after April 5, 2021, to secure potential liability for duties and fees."

(PrimeSource Building Products, Inc. v. United States, Slip Op. No. 21-94, CIT # 20-00032 dated 08/02/21, Judges Stanceu, Choe-Groves and Baker. Attorneys: Jeffrey Grimson of Mowry & Grimson for plaintiff PrimeSource, Brian Boynton for defendant U.S. government)