‘Not Possible’ to Suspend Section 301 Liquidations en Masse: DOJ

DOJ, in a Section 301 litigation policy reversal, said Monday it agreed to stipulate that refunds will be available on liquidated customs entries from China with Lists 3 and 4A tariff exposure if importers prevail in the massive volume of cases inundating the U.S. Court of International Trade to vacate the tariffs and declare them unlawful. Akin Gump lawyers for sample case plaintiffs HMTX Industries and Jasco Products said (in Pacer) Tuesday in docket 1:21-cv-52 that they're "pleased" with the government's stipulation as something the plaintiffs advocated for months, but aren't happy with DOJ's "bewildering" proposal that importers would still be required to file spreadsheet submissions in a Customs and Border Protection repository.

CBP will still create the repository, but only for importers to identify unliquidated customs entries eligible for refunds after the litigation, not to request on-the-spot suspensions of those liquidations, as previously proposed, said DOJ in a status report (in Pacer) Monday also in docket 1:21-cv-52. Importers will be required to file spreadsheets of their entries in the repository each quarter, not more frequently as previously proposed, said DOJ. The stipulation applies only to entries that were unliquidated at the time of a plaintiff’s submission into the repository, and for which the Section 301 duties are later found to have been unlawfully imposed, said the government. The stipulation and the issue of refunds would be moot if importers fail in their legal challenge, it said.

After seven weeks of “concerted efforts” to create a system for suspending the liquidations of an “unprecedented volume” of entries, “it has become apparent that it is not possible” to do so, said the government. “The resources required to adapt existing systems, designed for very different purposes, to suspend liquidation on this scale do not exist,” and would be “catastrophic” for CBP’s “many other critical functions,” it said.

The government maintains, as it has argued for months, that reliquidation "is not generally available as a remedy" in actions like the Section 301 complaints, except when necessary to "enforce and protect the integrity" of court orders, said DOJ. But the government now believes that stipulation is "the only possible option" for complying with the court's July 6 preliminary injunction order to freeze liquidations, it said. DOJ's lead trial attorney Jamie Shookman told a July 25 status conference the government could envision no "scenario" in which it would support a refund stipulation, but she didn't entirely rule it out (see 2107230051).

DOJ offers no rationale -- and "none exists" -- for its "bewildering position" that plaintiff importers would "still be required to make ongoing, entry-by-entry requests for suspension of liquidation to trigger the benefits of the stipulation," said Akin Gump lawyers for HMTX and Jasco. "In light of the changed circumstances," the court "should eliminate any make-work burden" on the plaintiffs or the government "that serves no purpose in facilitating the proposed stipulation," they said. Friday is the court’s latest deadline for CBP to create the repository -- the subject of a status conference scheduled for 10 a.m. Wednesday, where DOJ's proposals on the spreadsheet submissions could be debated.

The stipulation approach "eliminates the need for any work and additional expense" by either side "associated with ongoing, entry-by-entry submissions," said Akin Gump's lawyers. Since the government "does not intend to suspend liquidation, it does not need any entry-by-entry data -- or any further information whatsoever," they said. The stipulation requires the government "to do nothing (other than liquidate in the ordinary course) unless and until" importers prevail on the merits of the litigation, they said. "This approach also fully preserves the Government’s right to appeal the availability of refunds for List 3 and 4A duties paid on entries that liquidated" before the July 6 preliminary injunction order, they said.

Instead of requiring the repository submissions, "it would be far more sensible, fair, and efficient" for plaintiffs and the government "to collaborate on ways to simplify the generation of relevant reports at the remedial stage that would cover the potential refund periods at issue" at the end of the trial if importers win the litigation, said the Akin Gump lawyers "That collaboration has already begun in significant part with these Repository-related discussions, and can continue in parallel with the merits so as to minimize burdens on all parties and the Court at the end of this litigation."

Chief Judge Mark Barnett expressed worry at a July 15 status conference about what he said from his court experience was the need to address the possible refund burden “upfront,” not wait until the litigation is over (see 2107150049). Amid the number of entries and importers involved in the massive litigation, deferring the burden until after the case is resolved will result in a “guaranteed train wreck of epic proportions,” Barnett said then.