CIT Says Reliquidation Possible for Section 232 Tariff Exclusion Cases, Remands to Commerce

The Court of International Trade in a Sept. 6 opinion rejected a U.S. motion to dismiss cases from three importers challenging the Commerce Department's denial of their Section 233 steel tariff exclusion requests. The government said the cases should be tossed since they concern entries that already had been finally liquidated, but Judge M. Miller Baker held that it's possible for the court to order liquidation in Administrative Procedure Act cases brought under Section 1581(i), even if liquidation is final.

"The Court's decision is well-reasoned and compelling," said Paul Rosenthal, counsel for AM/NS Calvert, in an email. "We hope that this decision will lead to a just resolution of this long-running dispute."

After rejecting the motion to dismiss, Baker granted Commerce's bid for a voluntary remand to reconsider the exclusion requests from importers AM/NS Calvert, California Steel Industries and Valbruna Slater Stainless. The government asked for the remand for three reasons. The first was that there was little to no explanation for the exclusion denials, as was the case in a separate case at CIT concerning the denials that the court remanded for the same reason (see 2008050066).

The second centered on the absence of documentation of Commerce's ex parte communications with interested parties related to the exclusion denials. The U.S. said it was concerned the court could find that the record is incomplete. The final reason was that since the importers are looking to overturn the denials, and that Commerce might grant some or all of the exclusion requests on remand, the request would expedite relief.

The importers objected to remand on the grounds that Commerce could grant the exclusions, then the court could refuse to order reliquidation given a supposed bar on reliquidating entries for which liquidation is final. To this, Baker said that "the court's remand to an agency is an exercise of its equitable powers," adding that a court can adjust its relief to the "exigencies of the case" when remanding to protect the parties' interests. As such, the court can "condition remand on requiring Commerce" to tell CBP to restore the importers to the "same positions they would have occupied had the Department originally granted their requests, even if the relevant entries have since finally liquidated."

Despite asking for a remand, the government also said the case should be dismissed since the importers' claims are moot, given the entries' liquidation status. Baker addressed the motion to dismiss as a request for judgment on the pleadings since the claim implicates the case's merits. The dismissal bid centered heavily around the U.S. Court of Appeals for the Federal Circuit's ruling in Shinyei, in which the appellate court rejected the suggestion that a statute's silence on reliquidation in the context of Commerce's error can be found as a prohibition on reliquidation.

The judge cited that holding, ruling that since no other statute bars reliquidation under APA in 1581(i) cases, this relief is available. However, Baker clarified that this doesn't mean that such relief is available as of right and instead "is subject to ordinary equitable principles, no more and no less." The court ruled that it can't apply judicially divined presumptions to deny relief otherwise allowed by the APA and consistent with these equitable principles.

In effect, the government invoked the laches defense, Baker noted, finding that this defense is not a "free-floating doctrine allowing us to deny at will equitable relief authorized by Congress by merely pronouncing a plaintiff guilty of 'sleeping on its rights' or declaring such relief vaguely not 'appropriate.'" For a proper laches defense, there must be a delay and prejudice by the plaintiffs. Since the importers have shown neither, this defense was rejected by the court.

(AM/NS Calvert v. United States, California Steel Industries v. United States, Valbruna Slater Stainless v. United States, Slip Op. 23-129, CIT #s 21-00005, -00015, -00027, dated 09/06/23; Judge: M. Miller Baker; Attorneys: Ann Motto for defendant U.S. government; Paul Rosenthal of Kelley Drye for plaintiff AM/NS Calvert; Sanford Litvack of Chaffetz Lindsey for plaintiff California Steel Industries; Craig Lewis of Hogan Lovells for plaintiff Valbruna Slater Stainless)