Injunctions, Not Remands, Needed to Counter Cash Deposit Instructions, Exporter Tells CAFC

Judges on the U.S. Court of Appeals for the Federal Circuit heard arguments June 6 in a lumber exporter's case. The exporter is challenging its 2020 cash deposit rate set by a 2019 review after the Commerce Department previously ordered liquidation of its 2019 entries at a lower rate carried over from 2018 (J.D. Irving v. U.S., Fed. Cir. # 23-1652).

CAFC Judges Kara Stoll and Tiffany Cunningham, along with U.S. District Court for the District of New Jersey Judge Claire Cecchi, seemed to lean toward affirming Court of International Trade Judge Timothy Reif’s holding that the trade court lacks subject matter jurisdiction to hear this case (see 2301250060) as they questioned exporter J.D. Irving’s attorney, Jay Campbell, and DOJ attorney Eric Laufgraben.

The judges pressed Campbell as to why jurisdiction under U.S. 1581(c) wouldn’t apply in this case. Under that jurisdiction, the court can hear challenges to the decisions made by a binational panel under the USMCA. If 1581(c) jurisdiction applies, 1581(i) likely can’t -- unless the plaintiff can show that relief under 1581(c) would be manifestly inadequate, they pointed out.

The U.S. said that J.D. Irving is “trying to avoid a binational panel” with this appeal.

Campbell argued that USMCA binational panels can’t provide the kind of relief J.D. Irving is looking for. Those panels don’t have the power to issue injunctions, but an injunction is required to prevent Commerce from ordering CBP to set the cash deposit rate of J.D. Irving’s 2020 entries at the 2019 margin, he said.

Neither importers, exporters nor petitioners sought an administrative review of J.D. Irving for 2020. When the Commerce Department began the 2020 review of Canadian lumber, it ordered CBP to liquidate the non-reviewed J.D. Irving’s entries at the 1.57% rate that was then in effect since the 2018 review because the results of the 2019 review hadn't been released yet. No parties contested Commerce's move, so that, plus their decision to not seek a 2020 review of J.D. Irving, meant all were happy with J.D. Irving's 1.57% rate, the exporter argued.

However, Commerce then finished its second review of the products -- for which J.D. Irving was a non-selected respondent -- resulting in an 11.59% AD margin for the exporter. Commerce ordered that that would be the cash deposit rate for all of J.D. Irving's entries in 2020.

Normally, when no party requests that a particular company be included in an upcoming yearly administrative review, that company maintains their previous rate from the last time they served as a review respondent, selected or not. In J.D. Irving's case, therefore, it would maintain its 2019 rate of 11.59% through 2020.

However, J.D. Irving argued that Commerce's instruction to liquidate its 2019 entries at 1.57% should have overruled the final results of the 2019 administrative review as applied to it. Therefore, the error isn't in the final results themselves, but rather in the department's subsequent instruction to CBP to follow the results when those results were made "outdated" by the previous instructions liquidating J.D. Irving's 2019 entries at the 2018 rate.

Because only an injunction can make Commerce change a cash deposit instruction, and because a USMCA panel wouldn't be able to issue an injunction, the relief offered under 1581(c) would be "manifestly inadequate," Cambell said.

He provided an example in which, in a review, Commerce set a company’s dumping rate in 2019 at 5%. Then, arbitrarily, Commerce instructed CBP to impose a 100% cash deposit rate. This instruction couldn’t be remedied except by injunction, he said. The situation is the same here, he argued, as the problem was Commerce’s instruction to impose an 11.59% cash deposit rate on J.D. Irving, not the final results of the 2019 review.

The U.S. disagreed. There is no way to give J.D. Irving what it wants without changing the final review, Laufgraben said.

The remedies that can be provided by CIT and a USMCA panel are “parallel,” he said; agreeing with a judge, he explained that USMCA can force Commerce to make changes to the 2019 review’s final results via a remand order.